Abstract: Harrington (J Public Econ 37: 29-53, 1988) shows that a suitable strategy for regulators to make enforcement more efficient is to target surveillance resources according to past compliance records. Such scheme generates enforcement leverage as non-compliance triggers greater future scrutiny increasing the expected costs of non-compliance beyond the avoidance of immediate fines.
We analyze optimal social discount rates when people derive utility from relative consumption, i.e. their own consumption level relative to the consumption level of others. We compare the social, private, and conventional Ramsey rates. Assuming a positive growth rate, we find that (1) the social discount rate exceeds the private discount rate if the importance of relative consumption increases with consumption, and that (2) the social discount rate is lower than the Ramsey rate given quasi-concavity in own and others' consumption and risk aversion with respect to others' consumption.
Land conflicts in developing countries are costly both directly and through increased land degradation. An important policy goal is to create respect for borders. This often involves mandatory, expensive interventions. We propose a new policy design, which in theory promotes neighborly relations at low cost. A salient feature is the option to by-pass regulation through consensus. The key idea combines the insight that social preferences transform social dilemmas into coordination problems with the logic of forward induction.
When designing schemes such as conditional cash transfers or payments for ecosystem services, the choice of whom to select and whom to exclude is critical. We incentivize and measure actual contributions to an environmental public good to ascertain whether being excluded from a rebate can affect contributions and, if so, whether the rationale for exclusion influences such effects. Treatments, i.e., three rules that determine who is selected and excluded, are randomly assigned.
This thesis consists of three self-contained chapters on issues related to spillover effects of behavioral and policy interventions aimed at reducing negative incentives provided by consumption and production subsidies, and discusses the implications for environmental policy design. The first two chapters investigate spillover effects of a behavioral intervention aimed at incentivizing residential water savings in Colombia.
Improving welfare through climate-friendly agriculture: The case of the System of Rice Intensification
We use rich survey data to investigate the economic impact of a climate-friendly rice farming method known as the system of rice intensification (SRI) on the welfare of rain-dependent smallholder farmers in Africa. SRI reduces water consumption by half, which makes it a promising farming system in the adaptation to climate change in moisture-constrained areas, and it does not require flooding of rice fields, resulting in reduced methane emissions.
An attempt to reconcile the effects of temperature on economic productivity at the micro and macro levels produces predictions of global economic losses due to climate change that are much higher than previous estimates.
The Climate conference in ParisDecember 2015 is described as “last chance” or “5 to twelve” but in the climate arena there is a risk that we have over-utilized the doomsday vocabulary already in the run-up to Copenhagen, 2009 the better part of a decade ago. For those who have worked on climate issues for several decades it poses a special challenge to calibrate language.Words like “immediate” need careful explanation.
Make wind and solar power even cheaper by opening up access to the electricity gridand ending fossil-fuel subsidies, urge Gernot Wagner and colleagues. Putting a price on carbon dioxide and other greenhouse gases to curb emissions must be the centrepiece of any comprehensive climate-change policy. We know it works: pricing carbon creates broad incentives to cut emissions. Yet the current price of carbon remains much too low relative to the hidden environmental, health and societal costs of burning a tonne of coal or a barrel of oil. The global average price is below zero, once half a trillion dollars of fossil-fuel subsidies are factored in.
The EfD Report 2014/15 gives you an excellent overview of the EfD centres´ achievements during 2014 and ongoing work during 2015. Ranging from interesting policy stories on how economic research is put to use around the world to collaborative research programs, a wide range of publications, and our academic capacity building program.
The PhD program Global Change and Climate Economics (formerly environmental and climate economics) started in a modest way already in 1991. Since then Sida has supported 30 PhD’s from start to completion of a successful defense and more than 270 students have participated in one or many of our specialization courses. The program constantly evolves and improves based on the experiences of its students, faculty and administrative staff.
Divergence in Stakeholders’ Preferences: Evidence from a Choice Experiment on Forest Landscapes Preferences in Sweden
Biodiversity plays a key role in sustaining the functioning of ecosystems and thus in the provision of ecosystem services. A great deal of biodiversity is to be found in private forests, thus the way in which these forests are managed has major implications for biodiversity.
In this paper we analyze the effects of environmental policies on the size distribution of firms. We model a stationary industry where the observed size distribution is a solution to the profit maximization problem of heterogeneous firms that differ in terms of their energy efficiency. We compare the equilibrium size distribution under emission taxes, uniform emission standards, and performance standards. Our results indicate that, unlike emission taxes and performance standards, emission standards introduce regulatory asymmetries favoring small firms.
On The Strategic Effect of International Permits Trading on Local Pollution: Tha Case of Multiple Pollutants
We introduce a model of strategic environmental policy where two firms compete á la Cournot in a third market under the presence of multiple pollutants. Two types of pollutants are introduced, a local and a transboundary one. The regulator can only control local pollution as transboundary pollution is regulated internationally. The strategic effect present in the original literature is also replicated in this setup.
This policy brief discusses the whether the preference of Swedish forestry stakeholders is biodiversity or production goals. Healthy and productive forests benefit us all, but what are the priorities of those directly managing Swedish forests? This brief presents a comparison of the preferences of key stakeholders regarding Swedish forest management and biodiversity protection.
States have treaty-based and customary international law-based responsibilities to ensure that greenhouse gas emissions emanating from their territory do not cause transboundary harm. However, those international legal responsibilities conflict with the observed behavior of states, which suggests a general rule of irresponsible treatment of the global commons.
Digging deeper into Hardin's pasture: the complex institutional structure of ‘the tragedy of the commons’
A revised application of Ostrom's (Ostrom, 2007) Social-Ecological System (SES) framework to Hardin's ‘tragedy of the commons’ (Hardin, G. (1968), Science, 162(3859): 1243–1248) demonstrates that its institutional structure is more complex than either Hardin or Ostrom had imagined.
Top-down climate negotiations embodied by the Kyoto Protocol have all but stalled, chiefly because of disagreements over targets and objections to financial transfers. To avoid those problems, many have shifted their focus to linkage of bottom-up climate policies such as regional carbon markets.
We measure people's pro-social behavior, in terms of voluntary money and labor contributions to an archetypical public good, a bridge, and in terms of voluntary money contributions in a public good game, using the same non-student sample in rural Vietnam at four different points in time from 2005 to 2011.
The optimal provision of a state-variable public good, where the global climate is the prime example, is analyzed in a model where people care about their relative consumption.
Building on new institutional theory, this paper develops an analytical framework for analyzing constraints to the institutionalization of strategic environmental assessment (SEA) at four different institutional levels.
In this paper, we study the determinants of rental values in urban housing markets in Kigali, Rwanda.
Traditional sectors such as agriculture and fishing often receive special treatment from policymakers because such sectors are perceived to be associated with traditional cultural public good values. However, these values are often difficult to measure and few attempts have been made to do so.
We live at a unique moment in history when rapid economic growth has finally lifted hundreds of millions out of deep poverty, not only in Asia and Latin America but increasingly in Africa (Sala-i-Martin and Pinkovskiy, 2010). Yet the impending damage of climate change could reverse this.
Optimal tax and expenditure policy in the presence of migration – are credit restrictions important?
Purpose: Empirical studies have found an inverted-U curve relationship between emigration and per capita income. In this paper, a theoretical underpinning for this phenomenon is presented based on credit restrictions. The implications for tax policy are also analyzed.
The European Union's Emissions Trading Scheme (EU ETS) is so far the largest emissions trading system in the world. A rigorous ex post empirical analysis of the scheme is presented. The effect of the scheme on firms' investment decisions in carbon-reducing technologies is analysed by using detailed firm-level data from Swedish industry. Based on difference-in-difference estimation as well as a before–after difference estimation, the results reveal that the EU ETS has not had a significant effect on firms’ decisions to invest in carbon-mitigating technologies. However, although the EU ETS appears to have no direct effect on investments, it is too early to dismiss the system. Consideration is given to how the EU ETS can realize its potential to become an effective tool in the EU climate and energy policy portfolio.
The Environment for Development Initiative: lessons learned in research, academic capacity building and policy intervention to manage resources for sustainable growth
This article reviews the history of the Environment for Development (EfD) initiative, its activities in capacity building and policy-oriented research, and case studies at its centres in Chile, China, Costa Rica, Ethiopia, Kenya, South Africa and Tanzania.
Previous studies on improved cook stove adoption in developing countries use cross-sectional data, which make it difficult to control for unobserved heterogeneity and investigate what happens to adoption over time. We use robust non-linear panel data and hazard models on three rounds of panel data from urban Ethiopia to investigate the determinants of adoption and disadoption of electric cook stoves over time.
Previous studies of poverty in developing countries have to a great extent focused on the characteristics of the household head and used these as proxies for the underlying ability of the household to generate income. This paper uses five rounds of panel data to investigate the persistence of poverty in urban Ethiopia, with a particular focus on the role of intra-household heterogeneity in occupations.
We study the optimal and equilibrium distribution of industrial and residential land in a given region. The trade-off between the agglomeration and dispersion forces, in the form of pollution from stationary forces, production externalities, and commuting costs, determines the emergence of industrial and residential clusters across space. In this context, we define two kinds of spatial policies that can be used in order to close the gap between optimal and market allocations.
When designing choice experiments for nonmarket valuation the role of the price attribute is of major importance. In the energy sector the uncertainty of future direction of changes in prices makes it difficult to include an adequate price vector in the design.
The joint EfD Report 2013/14 showcases the work undertaken by the Environment for Development Initiative.
The U.S., Brazil and a number of European and other countries worldwide have introduced various support schemes for bioethanol and biodiesel. The advantage of these biofuels is that they are relatively easily integrated with the current fossil fuel-based transport sector, at least up to a certain point.
This paper investigates how different levels of entrance fees affect donations for a public good, a natural park.
The bulk of existing work on the statistical forecasting of air quality is based on either neural networks or linear regressions, which are both subject to important drawbacks.
Financial insurance for extreme events can play an important role in hedging against the implications of climate change. This paper combines a comprehensive estimation strategy and a unique panel dataset to study the role of financial insurance in farmers' welfare under uncertainty.
Payment Types and Participation in Payment for Ecosystem Services Programs: Stated Preferences of Landowners
Because the effectiveness of payment for ecosystem services (PES) programs depends on landowners’ engagement, understanding the relationship between the type of payment and participation is a key issue. This paper reports on a choice experiment that quantifies landowners’ preferences for cash and educational in-kind payment. The main results indicate a positive correlation between participation in a PES contract and the magnitude of the cash payment, while participation seems uncorrelated with the magnitude of the educational in-kind payment.
In this paper, we investigate how different levels of entrance fees affect donations for a public good, a natural park.
On 31 March, the Intergovernmental Panel on Climate Change (IPCC) released its latest report on the impacts of climate change on humans and ecosystems (see go.nature.com/ad5v1b). These are real risks that need to be accounted for in planning for adaptation and mitigation. Pricing the risks with integrated models of physics and economics lets their costs be compared to those of limiting climate change or investing in greater resilience.
This paper concerns optimal redistributive non-linear income taxation in an OLG model, where people care about their own consumption relative to (i) other people's current consumption, (ii) own past consumption, and (iii) other people's past consumption. We show that both (i) and (iii) affect the marginal income tax structure whereas (ii) does not. We also derive conditions under which atemporal and intertemporal consumption comparisons give rise to exactly the same tax policy responses.
Although the financial and economic crises have diverted attention from global and local environmental threats and natural resources management issues in developing and developed economies, environment and development concerns must remain on the agendas. The IPCC just released the Working Group I contribution to the IPCC 5th Assessment Report, which will focus World’s attention on topics such as the impact of climate change and the possible mitigation and adaptation options. This report follows the June 2012 United Nations Conference on Sustainable Development held in Rio.
Previous studies of poverty in developing countries have to a great extent focused on the characteristics of the household head and used these as proxies for the underlying ability of the household to generate income.
Unlike most studies of subjective well-being in developing countries, we use a fixed effects regression on three rounds of rich panel data to investigate the impact of relative standing on life satisfaction of respondents in urban Ethiopia.
What do respondents bring to contingent valuation? A comparison of monetary and labour payment vehicles
In the contingent valuation method, both the goods being valued and the payment vehicles used to value them are mostly hypothetical. However, although numerous studies have examined the impact of experience with the good on the willingness to pay, less attention has been given to experience with the payment vehicles.
This paper studies how different NOx abatement technologies have diffused under the Swedish system of refunded emissions charges and analyzes the determinants of the time to adoption. The policy, under which the charge revenues are refunded back to the regulated firms in proportion to energy output, was explicitly designed to affect investment in NOx reducing technologies.
Uncertainty about the future is an important determinant of well-being, especially in developing countries where financial markets and other market failures result in ineffective insurance mechanisms. However, separating the effects of future uncertainty from realised events, and then measuring the impact of uncertainty on utility, presents a number of empirical challenges.
Scaling Up of Sustainable Land Management in the Western People's Republic of China Evaluation of a 10-years Partnership
The People’s Republic of China-Global Environment Facility Partnership to Combat Land Degradation in Dryland Ecosystems promotes an integrated ecosystem management (IEM) approach to restore, sustain and enhance the productive capacity of dryland ecosystems.
The transport sector contributes almost a fifth of the current global emissions of greenhouse gases (GHG), and its share is likely to increase in the future. The US, Brazil, and a number of European and other countries worldwide have introduced various support schemes for biofuels.
This paper reviews and in part extends an emerging literature that integrates development and environmental thinking. It focuses on a small part of the literature: economic evaluation, and goes on to develop the notion of sustainable development and construct a unified language for sustainability and policy analyses.
In Rwanda, access to water is seen as a significant constraint to development in both urban and rural areas. The government and foreign donors give priority to improving access to water for agricultural use.