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on Environmental Economics |
| By: | Annette Cowie; Uwe A. Schneider (Research unit Sustainability and Global Change, Hamburg); Luca Montanarella |
| Abstract: | There is potential for synergy between the global environmental conventions on climate change, biodiversity and desertification: changes in land management and land use undertaken to reduce net greenhouse gas emissions can simultaneously deliver positive outcomes for conservation of biodiversity, and mitigation of desertification and land degradation. However, while there can be complementarities between the three environmental goals, there are often tradeoffs. Thus, the challenge lies in developing land use policies that promote optimal environmental outcomes, and in implementing these locally to promote sustainable development. The paper considers synergies and tradeoffs in implementing land use measures to address the objectives of the three global environmental conventions, both from an environmental and economic perspective. The intention is to provide environmental scientists and policy makers with a broad overview of these considerations, and the benefits of addressing the conventions simultaneously. |
| Keywords: | Climate change, LULUCF, Biodiversity, Desertification, Sustainable development. |
| JEL: | Q54 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:123&r=env |
| By: | Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | Estimates of the marginal damage costs of carbon dioxide emissions suggest that, although climate change is a problem and some emission reduction is justified, very stringent abatement does not pass the cost-benefit test. However, current estimates of the economic impact of climate change are incomplete. Some of the missing impacts are likely to be positive and others negative, but overall the uncertainty seems to concentrate on the downside risks and current estimates of the damage costs may have a negative bias. The research effort on the economic impacts of climate change is minute, and should be strengthened, with a particular focus on the quantification of uncertainties; estimating missing impacts, interactions between impacts and higher-order effects; the valuation of biodiversity loss; the implications of extreme climate scenarios and violent conflict; and climate change in the very long term. |
| Keywords: | Climate change, impacts, valuation, cost-benefit analysis |
| JEL: | Q54 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:116&r=env |
| By: | Kruger, Joseph; Oates, Wallace E.; Pizer, William A. (Resources for the Future) |
| Abstract: | In 2005, the European Union introduced the largest and most ambitious emissions trading program in the world to meet its Kyoto commitments for the containment of global climate change. The EU Emissions Trading Scheme (EU ETS) has some distinctive features that differentiate it from the more standard model of emissions trading. In particular, it has a relatively decentralized structure that gives individual member states responsibility for setting targets, allocating permits, determining verification and enforcement, and making some choices about flexibility. It is also a “cap-within-a-cap,” seeking to achieve the Kyoto targets while only covering about half of EU emissions. Finally, it is a program that many hope will link with other greenhouse gas trading programs in the future—something we have not seen among existing trading systems. Examining these features coupled with recent EU ETS experience offers lessons about how cost effectiveness, equity, flexibility, and compliance fare in a multi-jurisdictional trading program, and highlights the challenges facing a global emissions trading regime. |
| Keywords: | emissions trading, Kyoto Protocol, European Union, linking, climate change |
| JEL: | Q54 Q58 F53 |
| Date: | 2007–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-02&r=env |
| By: | Katrin Rehdanz (Research unit Sustainability and Global Change, Hamburg); David J. Maddison |
| Abstract: | Hitherto the task of valuing differences in environmental quality arising from air pollution and noise nuisance has been carried out mainly by using the hedonic price technique. This paper proposes a different approach to deriving information on individual preferences for local environmental quality. It analyses data drawn from the German socio economic panel in an attempt to explain differences in self-reported levels of well-being in terms of environmental quality. Mindful of existing research a large number of other explanatory variables are included to control for socio-demographic differences, economic circumstances as well as neighbourhood characteristics. Differences in local air quality and noise levels are measured by how much an individual feels affected by air pollution or noise exposure in their residential area. The evidence suggests that even when controlling for a range of other factors higher local air pollution and noise levels significantly diminish subjective well-being. But interestingly differences in perceived air and noise pollution are not capitalised into differences in house prices. |
| Keywords: | air pollution, environmental quality, Germany, life-satisfaction, noise exposure, well-being |
| JEL: | R19 Q53 Q58 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:119&r=env |
| By: | Richard S.J. Tol (Economic and Social Research Institute, Dublin); Stephen W. Pacala; Robert H. Socolow |
| Abstract: | We compile a database of energy uses, energy sources, and carbon dioxide emissions for the USA for the period 1850-2002. We use a model to extrapolate the missing observations on energy use by sector. Overall emission intensity rose between 1850 and 1917, and fell between 1917 and 2002. The leading cause for the rise in emission intensity was the switch from wood to coal, but population growth, economic growth, and electrification contributed as well. After 1917, population growth, economic growth and electrification pushed emissions up further, and there was no net shift from fossil to non-fossil energy sources. From 1850 to 2002, emissions were reduced by technological and behavioural change (particularly in transport, manufacturing and households), structural change in the economy, and a shift from coal to oil and gas. These trends are stronger than electrification, explaining the fall in emissions relative to GDP. |
| Keywords: | Carbon dioxide emissions, decomposition, environmental Kuznets curve, USA, history |
| JEL: | Q54 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:100&r=env |
| By: | Klaus Keller; Louise I. Miltich; Alexander Robinson; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | Analyzing the risks of anthropogenic climate change requires sound probabilistic projections of CO2 emissions. Previous projections have broken important new ground, but many rely on out-of-range projections, are limited to the 21st century, or provide only implicit probabilistic information. Here we take a step towards resolving these problems by assimilating globally aggregated observations of population size, economic output, and CO2 emissions over the last three centuries into a simple economic model. We use this model to derive probabilistic projections of business-as-usual CO2 emissions to the year 2150. We demonstrate how the common practice to limit the calibration timescale to decades can result in biased and overconfident projections. The range of several CO2 emission scenarios (e.g., from the Special Report on Emission Scenarios) misses potentially important tails of our projected probability density function. Studies that have interpreted the range of CO2 emission scenarios as an approximation for the full forcing uncertainty may well be biased towards overconfident climate change projections. |
| Keywords: | economics of climate change, scenarios, data assimilation |
| JEL: | Q54 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:124&r=env |
| By: | David Anthoff (Research unit Sustainability and Global Change, Hamburg University); Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | Estimates of the marginal damage costs of carbon dioxide emissions require the aggregation of monetised impacts of climate change over people with different incomes and in different jurisdictions. Implicitly or explicitly, such estimates assume a social welfare function and hence a particular attitude towards equity and justice. We show that previous approaches to equity weighing are inappropriate from a national decision maker’s point of view, because domestic impacts are not valued at domestic values. We propose four alternatives (sovereignty, altruism, good neighbour, and compensation) with different views on concern for and liability towards foreigners. The four alternatives imply radically estimates of the social cost of carbon and hence the optimal intensity of climate policy. |
| Keywords: | Domestic climate policy, social cost of carbon, equity weights |
| JEL: | Q54 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:127&r=env |
| By: | Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | A model of carbon dioxide emissions of the USA is presented. The model consists of population, income per capita, economic structure, final and primary energy intensity per sector, primary fuel mix, and emission coefficients. The model is simple enough to be calibrated to observations since 1850. The model is used to project emissions until 2100. Best guess carbon dioxide emissions are in the middle of the IPCC SRES scenarios, but incomes and energy intensities are on the high side, while carbon intensities are on the low side. The confidence interval suggests that the SRES scenarios do not span the range of not-implausible futures. Although the model can be calibrated to reflect structural changes in the economy, it cannot anticipate such changes. The data poorly constrain crucial scenario elements, particularly energy prices. This suggests that the range of future emissions is wider still. |
| Keywords: | Climate change, emissions scenarios, USA |
| JEL: | Q54 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:101&r=env |
| By: | Onno J. Kuik; Barbara Bucher; Michela Catenacci; Etem Karakaya; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | This paper discusses methodological aspects of recent climate change damage studies. Assessing the total and/or marginal damage costs of environmental change is often difficult and it is certainly difficult in the case of climate change. A major obstacle is the uncertainty on the physical impacts of climate change, especially related to extreme events and so-called ‘low-probability high-impact’ scenarios. The subsequent transposition of physical impacts into monetary terms is also a delicate step, given that climate change impacts involve both market and non-market goods and services, covering health, environmental and social values, and that impacts may be distant in time and space. The complexity of climate change cost assessment thus involves several crucial dimensions, including non-market evaluation, risk and uncertainty, baseline definition, equity and discounting, further elaborated in this paper in the course of the overview of the literature and of the overview and evaluation of the key methodological issues. |
| Keywords: | Climate change damage costs, cost of inaction, methodological aspects, risk and uncertainty, discounting, equity |
| JEL: | Q54 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:122&r=env |
| By: | David Anthoff; Cameron Hepburn; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | Climate change would impact different countries differently, and different countries have different levels of development. Equity-weighted estimates of the (marginal) impact of greenhouse gas emissions reflect these differences. Equity-weighted estimates of the marginal damage cost of carbon dioxide emissions are substantially higher than estimates without equity-weights; equity-weights may also change the sign of the social cost estimates. Equity weights need to be normalised. Our estimates differ by two orders of magnitude depending on the region of normalisation. A discounting error of equity weighted social cost of carbon estimates in earlier work (Tol, Energy Journal, 1999), led to an error of a factor two. Equity-weighted estimates are sensitive to the resolution of the impact estimates. Depending on the assumed intra-regional income distribution, estimates may be more than twice as high if national rather than regional impacts are aggregated. The assumed scenario is important too, not only because different scenarios have different emissions and hence warming, but also because different scenarios have different income differences, different growth rates, and different vulnerabilities. Because of this, variations in the assumed inequity aversion have little effect on the marginal damage cost in some scenarios, and a large effect in other scenarios. |
| Keywords: | marginal damage costs, climate change, equity |
| JEL: | Q54 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:121&r=env |
| By: | Christine Roeckmann; Uwe A. Schneider; Michael A. St.John; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | This study adds a cost analysis of the Eastern Baltic cod fishery to the existing model presented in Röckmann et al. (forthcoming). As cost data on this international fishery do not exist, available data from Denmark are extrapolated to the whole international fishery. Additionally, unit and total variable costs are simulated and the sensitivity to a set of different cost-stock and cost-output elasticities is tested. The study supports preliminary conclusions that a temporary marine reserve policy, which focuses on protecting the Eastern Baltic cod spawning stock in ICES subdivision 25, is a valuable fisheries management tool to (a) rebuild the overexploited Eastern Baltic cod stock and (b) increase operating profits. The negative effects of climate change can be postponed for at least 20 years – depending on the assumed rate of future climate change. Including costs in the economic analysis does not change the ranking of management policies as proposed in the previous study where costs were neglected. |
| Keywords: | Development, Baltic cod, cost-stock elasticity, cost-output elasticity, sensitivity analysis, climate change scenario, management, policy, temporal marine reserve |
| JEL: | Q22 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:106&r=env |
| By: | Erik Ansink (Wageningen University); Arjan Ruijs (Wageningen University) |
| Abstract: | We analyse agreements on river water allocation between riparian countries. Besides being efficient, water allocation agreements need to be stable in order to be effective in increasing the efficiency of water use. In this paper, we assess the stability of water allocation agreements, using a game theoretic model. We consider the effects of climate change and the choice of a sharing rule on stability. Our results show that both a decrease in mean river flow and an increase in the variance of river flow decrease the stability of an agreement. An agreement where the downstream country is allocated a fixed amount of water has the lowest stability compared to other sharing rules. |
| Keywords: | Water Allocation, Stability, Climate Change, Game Theory |
| JEL: | C7 Q25 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.16&r=env |
| By: | Kerstin Ronneberger; Luca Criscuolo; Wolfgang Knorr; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | We test the hypothesis that models should be coupled to accurately project the impacts of climate change on the agro-economic and agro-environmental system. We couple the LPJ-C global dynamic vegetation model for crops to the global agricultural land-use model KLUM. Potential crop yields, from LPJ-C, and crop prices drive the land-use decisions; cropland allocation from KLUM scale the carbon entering the soil litter pool in LPJ-C. Through the crop prices, economic effects are projected directly on the carbon cycle. Global change impacts are projected on the agricultural sector and can be economically assessed. The coupled model performs reasonably well for the observed climate and prices for 6 crops in Europe on a 0.5x0.5 longitude-latitude grid. We estimate the impact of climate change on agriculture in Europe for A1 and B2 scenarios of the IPCC. The coupled model reproduces the essential processes and interactions of the modeled system. Simulations with the uncoupled models are used to estimate the accuracy added by the model coupling. Sign and size of the biases from ignoring the feedbacks are substantial for some parameters, and particularly their spatial pattern, while for other parameters (e.g., the European total of soil organic carbon) biases are negligible. The answer to the question “Should models be coupled?” is “It depends on what you’re interested in”. |
| Keywords: | Climate change, land use, soil carbon, model coupling |
| JEL: | Q54 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:113&r=env |
| By: | Katsumasa Tanaka; Richard S.J. Tol (Economic and Social Research Institute, Dublin); Dmitry Rokityanskiy; Brian C. O'Neill; Michael Obersteiner |
| Abstract: | Global Warming Potentials (GWPs) are evaluated as proxies of the historical temperature by applying them to convert historical CH4 and N2O emissions to equivalent CO2 emissions. Our GWP analysis is based on the historical Earth system evolution obtained from the inverse calculation for the Aggregated Carbon Cycle, Atmospheric Cycle, and Climate Model (ACC2). Indices higher than the Kyoto GWPs are required to reproduce the historical temperature. The GWP for N2O, in particular, does not approximate the historical temperature with any time horizon because the GWP definition and calculations assume a background system different from the ACC2 inversion results. In addition, indices have to be progressively updated upon the acquisition of new measurements and/or the change in our understanding on the Earth system processes. |
| Keywords: | global warming potentials |
| JEL: | Q54 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:118&r=env |
| By: | Jan-Peter Voß (Öko-Institut, Berlin, and Institute for Governance Studies, University of Twente) |
| Keywords: | governance, emissions trading, policy technology |
| JEL: | O3 Q58 |
| Date: | 2007–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:158&r=env |
| By: | Pizer, William A. (Resources for the Future) |
| Abstract: | Momentum may be building for federal climate change policy in the United States. Assuming this leads to mandatory greenhouse gas regulations, the door will be open for the United States to constructively re-engage other countries concerning an international climate regime. Such a regime will need to recognize that binding international limits are unlikely to attract U.S. participation and, therefore, will require a different approach than the Kyoto Protocol. In particular, a future regime will need to accommodate and encourage, rather than force or constrain, domestic actions to focus more narrowly on major economies and emitting nations, to balance mitigation and technology objectives, and to engage developing countries on as many levels as possible. In place of a heavy emphasis on negotiating commitments in advance, there likely will need to be greater emphasis on evaluating actions in retrospect. Such an approach not only matches recent trends in the United States but arguably follows from broader experience over the decade since the negotiation of the Kyoto Protocol. |
| Keywords: | climate change, international treaty, Kyoto, emissions trading |
| JEL: | H87 Q54 D62 D63 |
| Date: | 2007–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-04&r=env |
| By: | Pizer, William A. (Resources for the Future) |
| Abstract: | This paper argues that while a long-term solution to climate change may require the global market-based solution envisioned in the Kyoto Protocol, a more flexible near-term approach is necessary. First, a broad range of domestic policies need to be embraced and encouraged by an international agreement, not constrained or discouraged by it. Second, developing countries need to be an increased focus of engagement, with expansion and reform of project-based crediting. Finally, a global agreement needs to recognize both technology and mitigation policies and to develop ways to evaluate efforts along each of these dimensions. Over the longer term, such an agreement should evolve toward greater reliance on global market-based solutions, and therefore near-term steps should be viewed both in terms of their immediate practicality and their potential to be refined over time. |
| Keywords: | climate change, international treaty, Kyoto, emissions trading |
| JEL: | H87 Q54 D62 D63 |
| Date: | 2007–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-03&r=env |
| By: | Giovanni Bella (University of Cagliari) |
| Abstract: | A model of different species competing for the same environment is presented, and possible explanations of peaceful coexistence or rather internecine conflicts are consequently derived. By means of a Lotka-Volterra dynamic system we describe the evolution of two populations (bees and locusts) that differently approach the management of those natural resources they contend for, and thus make a simple parable of today’s societies playing the current environmental scenario. |
| Keywords: | Competing, Species, Lotka-Volterra, Dynamics, Natural Resource Management |
| JEL: | C61 Q34 Q57 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.18&r=env |
| By: | P. Michael Link; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | The integrated assessment model FUND 2.8n is applied in an analysis of the overall economic consequences in a scenario of a shutdown of the thermohaline circulation (THC). Monetized market and non-market impacts of changes in environmental conditions following a THC collapse are determined for 207 individual countries. Eight different response patterns can be identified. The dominant pattern is that a THC shutdown has an offsetting effect on the underlying warming trend. Depending on whether the impacts of warming are initially beneficial or detrimental, the economic effects of a THC collapse show distinct regional variability. Key economic sectors affected in a THC shutdown scenario are water resources and energy consumption, as well as cardiovascular and respiratory diseases among health impacts. The maximum, national impact of a collapse of the THC turns out to be of the magnitude of a few per cent of GDP, but the global impact is much smaller. Considering the low probability of occurrence, a THC shutdown does not call for drastic action at present. |
| Keywords: | Fisheries, climate change |
| JEL: | Q54 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:103&r=env |
| By: | Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | A simulation model of international tourist flows is used to estimate the impact of a carbon tax on aviation fuel. The effect of the tax on travel behaviour is small: A global $1000/tC would change travel behaviour to reduce carbon dioxide emissions from international aviation by 0.8%. This is because the imposed tax is probably small relative to the air fare. A $1000/tC tax would less than double air fares, and have a smaller impact on the total cost of the holiday. In addition, the price elasticity is low. A carbon tax on aviation fuel would particularly affect long-haul flights, because of high emissions, and short-haul flights, because of the emission during take-off and landing. Medium distance flights would be affected least. This implies that tourist destinations that rely heavily on short-haul flights (that is, islands near continents, such as Ireland) or on intercontinental flights (e.g., Africa) will see a decline in international tourism numbers, while other destinations may see international arrivals rise. If the tax is only applied to the European Union, EU tourists would stay closer to home so that EU tourism would grow at the expense of other destinations. Sensitivity analyses reveal that the qualitative insights are robust. A carbon tax on aviation fuel would have little effect on international tourism, and little effect on emissions. |
| Keywords: | International tourism, tax, carbon dioxide, aviation |
| JEL: | L83 L93 Q54 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:120&r=env |
| By: | Edwin van der Werf |
| Abstract: | Quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution. The empirical foundation for both is generally lacking. This paper estimates the parameters of two-level CES production functions with capital, labour and energy as inputs, and is the first to systematically compare all nesting structures. Using industry-level data from 12 OECD countries, we find that the nesting structure where capital and labour are combined first, fits the data best, but for most countries and industries we cannot reject that all three inputs can be put into one single nest. These two nesting structures are used by most climate models. However, while several climate policy models use a Cobb-Douglas function for (part of the) production function, we reject elasticities equal to one, in favour of considerably smaller values. Finally we find evidence for factor-specific technological change. With lower elasticities and with factor-specific technological change, some climate policy models may find a bigger effect of endogenous technological change on mitigating the costs of climate policy. |
| Keywords: | Climate policy, input substitution, technological change |
| JEL: | O13 Q32 Q43 Q55 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1316&r=env |
| By: | P. Michael Link; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | A bioeconomic model of key fisheries of the Barents Sea is run with scenarios generated by an earth system model of intermediate complexity to assess how the Barents Sea fisheries of cod (Gadus morhua) and capelin (Mallotus villosus) are affected by changes in the Atlantic thermohaline circulation arising from anthropogenic climate change. Changes in hydrographic conditions have an impact on recruitment success and survival rates which constitute a lasting effect on the stocks. The economic development of the fisheries is assessed for the 21st century, considering both adaptive and profit-maximizing harvesting strategies. Results show that a substantial weakening of the THC leads to impaired cod stock development, causing the associated fishery to become unprofitable in the long run. Simultaneous improvements in capelin stock development help the capelin fishery, but are insufficient to offset the losses incurred by the cod fishery. A comparison of harvest strategies reveals that in times of high variability in stock development, profit maximization leads to more stable economic results of these fisheries than the adaptive fishing strategy. |
| Keywords: | Fisheries, climate change |
| JEL: | Q22 Q54 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:104&r=env |
| By: | Grigorieva N.V.; Grigoriev A. (METEOR) |
| Abstract: | We address the valve location problem, one of the basic problems in design of long oil pipelines. Whenever a pipeline is depressurized, the shutoff valves block the oil flow and seal the damaged part of the pipeline. Thus, the quantity of oil possibly contaminating the area around the pipeline is determined by the volume of the damaged section of the pipeline between two consecutive valves. Then, ecologic damage can be quantified by the amount of leaked oil and the environmental characteristics of the accident area. Given a pipe network together with environmental characteristics of the area, and given a number of valves to be installed, the task is to find a valve location minimizing the maximal possible environmental damage. In this paper we present a complete framework for fast computing of an optimal valve location. |
| Keywords: | environmental economics ; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2007007&r=env |
| By: | Kelly C. de Bruin; Rob B. Dellink; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | Integrated Assessment Models (IAMS) have helped us over the past decade to understand the interactions between the environment and the economy in the context of climate change. Although it has also long been recognized that adaptation is a powerful and necessary tool to combat the adverse effects of climate change, most IAMs have not explicitly included the option of adaptation in combating climate change. This paper adds to the IAM and climate change literature by explicitly including adaptation in an IAM, thereby making the trade-offs between adaptation and mitigation visible. Specifically, a theoretical framework is created and used to implement adaptation as a decision variable into the DICE model. We use our new AD-DICE model to derive the adaptation cost functions implicit in the DICE model. In our set-up, adaptation and mitigation decisions are separable and AD-DICE can mimic DICE when adaptation is optimal. We find that our specification of the adaptation costs is robust with respect to the mitigation policy scenarios. Our numerical results show that adaptation is a powerful option to combat climate change, as it reduces most of the potential costs of climate change in earlier periods, while mitigation does so in later periods. |
| Keywords: | integrated assessment modelling, adaptation, climate change |
| JEL: | Q54 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:126&r=env |
| By: | Gary W. Yohe; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | Using a simple model designed for transparency but nonetheless calibrated to support the much-quoted damage estimates of the Stern Review of the Economics of Climate Change, we demonstrate significant sensitivity of those results to assumptions about the pure rate of time preference, the discounting time horizon, rates of risk and equity aversion used to compute certainty- and equity equivalent annuities, and presumed static regional vulnerability. Manipulation of any of these parameters one at a time across reasonable ranges can diminish damage estimates by as much as 84% or, in the case of extending the time horizon, increase damage estimates by 900%. We also confirm the usual result that limiting atmospheric concentrations to specific benchmarks above 400 ppm cannot eliminate damages. Nonetheless, we applaud the Stern Review author team for reconfirming that the climate problem can productively be approached as an economic problem whose solutions can be explored with the tools of decision analysis. |
| Keywords: | economics of climate change, certainty equivalent and equity equivalent annuity, relative risk aversion, equity aversion, pure rate of time preference |
| JEL: | Q54 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:125&r=env |
| By: | Narain, Urvashi (Resources for the Future); Krupnick, Alan J. (Resources for the Future) |
| Abstract: | This paper estimates the impact on Delhi’s air quality of a number of policy measures recently implemented in the city to curb air pollution using monthly time-series data from 1990 to 2005. The best known of these measures is the court-mandated conversion of all commercial passenger vehicles—buses, three-wheelers, and taxis—to compressed natural gas (CNG). Broadly, the results point to the success of a number of policies implemented in Delhi but also to a number of areas of growing concern. For example, the results suggest that the conversion of buses from diesel to CNG has helped to reduce PM10, CO, and SO2 concentrations in the city and has not, contrary to conventional wisdom, led to the recent increase in NO2. At the same time, however, the conversion of three-wheelers from petrol to CNG has not had the same benefit, possibly because of poor technology. Another policy measure that appears to have had a positive impact on air quality is the reduction in the sulfur content of diesel and petrol. This has led to a decrease in SO2 levels and, because of conversion of SO2 to sulfates (a fine particle), a decrease in PM10 concentrations. Some of these gains from fuel switching and fuel-quality improvements are, however, being negated by the increase in the proportion of diesel-fueled cars, which is leading to an increase in PM10 and NO2 levels, and by the sheer increase in the number of vehicles. |
| Keywords: | air pollution, compressed natural gas, low-sulfur diesel, diesel-fueled cars, Delhi |
| JEL: | Q53 R41 R48 |
| Date: | 2007–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-06&r=env |
| By: | Jacqueline M. Hamilton; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | We downscale the results of a global tourism simulation model at a national resolution to a regional resolution. We use this to investigate the impact of climate change on the regions of Germany, Ireland and the UK. Because of climate change, tourists from all three countries would spend more holidays in the home country. In all three countries, climate change would first reduce the number of international arrivals – as Western European international tourist demand falls – but later increase numbers – as tourism demand from increasingly rich tropical countries grows. In Ireland and the UK, the regional pattern of demand shifts is similar to the international one: Tourism shifts north. In Germany, the opposite pattern is observed as the continental interior warms faster than the coast: Tourism shifts south. |
| Keywords: | International tourism, domestic tourism, climate change, regional impacts |
| JEL: | Q54 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:115&r=env |
| By: | Quariguasi Frota Neto, J.; Walther, G.; Bloemhof-Ruwaard, J.M.; Nunen, J.A.E.E van; Spengler, T. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | Recent literature on sustainable logistics networks points to two important questions: (i) How to spot the preferred solution(s) balancing environmental and business concerns? (ii) How to improve the understanding of the trade-offs between these two dimensions? We posit that a complete exploration of the efficient frontier and trade-offs between profitability and environmental impacts are particularly suitable to answer these two questions. In order to deal with the exponential number of basic efficient points in the frontier, we propose a formulation that performs in exponential time for the number of objective functions only. We illustrate our findings by designing a complex recycling logistics network in Germany. |
| Keywords: | Recycling logistics network;Environmental impacts;Profitability;Eco-efficiency; |
| Date: | 2006–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30009884&r=env |
| By: | M. Scott Taylor |
| Abstract: | In the 16th century, North America contained 25-30 million buffalo; by the late 19th century less than 100 remained. While removing the buffalo east of the Mississippi took settlers over 100 years, the remaining 10 to 15 million buffalo on the Great Plains were killed in a punctuated slaughter in a little more than 10 years. I employ theory, data from international trade statistics, and first person accounts to argue that the slaughter on the plains was initiated by a foreign-made innovation and fueled by a foreign demand for industrial leather. Ironically, the ultimate cause of this sad chapter in American environmental history was of European, and not American, origin. |
| JEL: | F1 Q2 Q5 Q56 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12969&r=env |
| By: | Rafael Reuveny (School of Public and Environmental Affairs, Indiana University); John W. Maxwell (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) |
| Abstract: | The economic literature on conflict employs a static game theoretic frame- work developed by Jack Hirshleifer. We extend this literature by explicitly introducing conflict dynamics into the model. Our specific application is based on two stylized facts. First, conflict often arises over scarce renew- able resources, and second those resources often lack well-defined and/or enforceable property rights. Our stylized model features two rival groups, each dependent on a single contested renewable resource. Each period, the groups allocate their members between resource harvesting and resource appropriation (or conflict) in order to maximize their income. This leads to a complex non-linear dynamic interaction between conflict, the two populations, and the resource. The system's steady states are identified and comparative statics are computed. As developed, the model relates most closely to conflict over renewable resources in primitive societies. The system's global dynamics are investigated in simulations calibrated for the historical society of Easter Island. The model's implications for contemporary lesser developed societies are examined. |
| Keywords: | Conflict, Dynamics, Renewable Resources |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2004-26&r=env |
| By: | Kerstin Ronneberger; Maria Berrittella; Francesco Bosello; Richard S.J. Tol (Economic and Social Research Institute, Dublin) |
| Abstract: | In this paper the global agricultural land use model KLUM is coupled to an extended version of the computable general equilibrium model (CGE) GTAP in order to consistently assess the integrated impacts of climate change on global cropland allocation and its implication for economic development. The methodology is innovative as it introduces dynamic economic land-use decisions based also on the biophysical aspects of land into a state-ofthe- art CGE; it further allows the projection of resulting changes in cropland patterns on a spatially more explicit level. A convergence test and illustrative future simulations underpin the robustness and potentials of the coupled system. Reference simulations with the uncoupled models emphasize the impact and relevance of the coupling; the results of coupled and uncoupled simulations can differ by several hundred percent. |
| Keywords: | Land-use change, computable general equilibrium modeling, integrated assessment, climate change |
| JEL: | C68 R14 Q17 Q24 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:sgc:wpaper:105&r=env |
| By: | Julien Morel (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II]) |
| Abstract: | L'eau est un enjeu essentiel pour le siècle à venir. Les secteurs, agricole, industriel, domestique, utilisent de grandes quantités d'eau, mais de façon inégale selon les régions du monde. L'objet de cette synthèse est de cerner et de comprendre l'ensemble des éléments essentiels de la problématique de l'eau aujourd'hui, en terme d'adéquation besoin/ressource. <br />Pour cela, on aborde successivement les concepts clés des ressources en eau à partir du cycle hydrologique, l'usage mondial de l'eau, le changement climatique et ses conséquences sur l'eau, et enfin l'impact de l'augmentation ou de la diminution de la disponibilité en eau par personne sur la population mondiale.<br />Les besoins en eau de la planète ne sont pas du tout satisfaits aujourd'hui et on ne peut que penser que les conditions vont se détériorer à l'avenir, sous les contraintes de la population et du changement climatique. Les projections sur les précipitations et l'écoulement dépendent des modèles et des scénarios d'émission de gaz à effet de serre et ces projections restent incertaines localement. Les estimations de demande future sont par ailleurs peu fiables. On peut toutefois retenir que le cycle hydrologique est accéléré, amplifié, et que sa variabilité augmente à cause du réchauffement global ; la fréquence des évènements extrêmes, tels que sécheresse, inondations, augmente. Pour certaines zones, comme la Méditerranée, les modèles s'accordent pour prévoir une diminution des précipitations d'ici 2050. <br />La ressource en eau renouvelable ne permettant pas de garantir les besoins de la population mondiale, à cause de l'inégale répartition dans le temps et dans l'espace, il faut envisager des solutions pour l'avenir, de deux types : gestion par l'offre, avec production d'eau non conventionnelle, ou gestion par la demande. |
| Keywords: | eau ; usage de l'eau ; ressource renouvelable |
| Date: | 2007–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00134979_v1&r=env |