International Versus National Actions Against Nitrogen Pollution of the Baltic Sea

Large nitrogen loads to the Baltic Sea play an important role for currentdamages caused by eutrophication: large sea bottom areas without anybiological life, low stocks of cods, and toxic blue green algae. In spite of therelatively large supply of biological and physical data on the sea,difficulties remain with respect to linking costs of nitrogen reductions withthe dispersion of associated benefits among countries. The purpose of thisstudy is therefore to analyse and calculate efficient nitrogen reductionsand associated net benefits under international co-ordination of nitrogenreductions and single country actions for two different specifications ofmarginal benefits: uniform and differentiated. Further, comparisons aremade with the current ministerial agreement of 50 per cent nitrogenreduction to the Baltic Sea. The empirical results show that total netbenefits under internationally co-ordinated actions are considerablyhigher than when countries act on their own. Another result is thatdifferentiated benefits give higher total net benefits than uniform, and alsoimply larger differences in net benefits among countries. However, resultsindicate that uniform marginal benefits generate net benefits for allcountries from co-ordinated actions as compared to single country actions.     

The Replacement Value of Wetlands in Sweden

Wetlands, in Sweden and elsewhere, have been suggestedas effective and low-cost sinks for agriculturalpollution. This paper estimates the value of usingwetlands for abatement of agricultural nitrogen loadon the Baltic Sea. A replacement value of wetlands isestimated for Sweden. The replacement value is definedand estimated as the difference between twocost-effective reductions of agricultural nitrogenpollution: one that uses wetlands for nitrogenabatement, and one that does not. It is shown that theuse of wetlands as nitrogen sinks can reduce the totalabatement costs of nitrogen emissions by 30% forSwedish agricultural sources of nitrogen pollution.     

Value of land as a pollutant sink for international waters

The purpose of this paper is to analyse and compare the values of a marginal change in the area of land as a pollutant sink under different decision-making contexts and objectives: international coordination versus national policies for pollutant reduction, and maximization of net benefits versus minimization of costs for pollutant reductions. The analytical results show that a coordinated policy between countries generates a higher value of a marginal change in the supply of land as a pollutant sink than an uncoordinated policy. It is also shown that the value is lower (higher) under the decision objective of maximizing net benefits when the efficient pollutant load is higher (lower) than the load target under the cost effectiveness approach. An application to the Baltic Sea drainage basin land as a nitrogen sink for the management of eutrophication reveals that the differences between values under different policy contexts and objectives can be quite large in magnitude.     

Selective versus Random Moose Harvesting: Does it Pay to be a Prudent Predator?

Seeking to act as prudent predators in many biological systems, humans try to harvest in a sustainable manner. In Sweden, wildlife managers and moose hunters use information about the future contribution of individual moose to population growth (i.e., their reproductive value), in order to harvest low-and non-reproductive animals. This selective harvest strategy results in a significantly faster overall population growth rate. To investigate whether this selective harvest policy is economically beneficial, we calculated the present value of the selective moose hunting policy used in Sweden compared to the present value of a non-regulated (i.e. random) moose harvest. Present values of the moose hunting produced by the different hunting regimes were calculated for a period of ten years and at interest rates ranging between 1% and 10%. The difference in present value between the selective hunting policy and the average outcome of random harvesting was SEK 310 million ($ 36 million) and SEK 300 million ($ 34 million), or SEK 1 321 ($ 154) and SEK 1 279 ($ 149) for an average moose hunter, when using interest rates of 3% and 4%, respectively. To determine whether the current selective moose hunting policy is economically profitable or not, benefit estimates like these should be weighted against the costs of upholding the policy. Most of the costs probably lie in providing the hunters with information about the future harvesting prospects and reducing the risk of divergences from the policy. The welfare effects of a hunting policy will also be dependent on the individual hunter's preferences, for instance in terms of their attitudes towards risk. This revised version was published online in August 2006 with corrections to the Cover Date.     

Reconciling economic and biological modeling of migratory fish stocks: Optimal management of the Atlantic salmon fishery in the Baltic Sea

The paper puts forward a model of the Atlantic salmon fishery in the Baltic Sea that integrates the salient biological and economic characteristics of migratory fish stocks. Designed to be compatible with the framework used for actual stock assessments, the model accounts for age-structured population dynamics, the seasonal harvest and competing harvesting by commercial and recreational fishermen. It is parameterized for the Simojoki River stock. The socially optimal policy for maximizing discounted net benefits from the fishery within an uncertain environment is determined using a dynamic programming approach and numerical solution method. Our results indicate that substantial economic benefits could be realized under optimal management without compromising stock sustainability.     

Delegation of Decision-Rights for Wetlands

Different nutrient abatement activities jointly determine water quality. Policies are determined by governments at central and local level, implying that decisions can be affected by strategic considerations. In this article, decentralization of wetland policies is analyzed with regard to the environmental and economic consequences. A two-stage game is used to investigate strategic abatement decisions regarding nitrogen fertilizer reductions, waste water treatment plant phosphorus reductions and wetlands, assuming that wetland decision can be decentralized. It is shown that under particular circumstances, strategic consideration may imply that a central government undertakes more abatement than socially optimal, but in most cases the opposite is likely to occur. Decentralization of wetland decisions is advantageous to the central government but only benefits the local government if its wetland technology is considerably more efficient that the central government’s. This paper explains why local governments often hesitate to take on additional responsibilities for environmental management, and identifies conditions under which local governments make smaller losses or even gain from delegation. The results also contribute to understanding how strategically optimal matching grants are chosen when governments only take into account their own direct costs of abatement and the central government needs to satisfy the local government’s participation constraint.     

Economic Impacts of Multiple Agro-Environmental Policies on New Zealand Land Use

This paper investigates the implications of policy on farm income, land use, and the environment when New Zealand landowners face multiple environmental constraints. It also looks at the interaction between climate and nutrient reduction policy and the extent to which one policy can be used to meet the other’s objectives. We use a non-linear, partial equilibrium mathematical programming model of New Zealand land use to assess the economic impacts of climate and water policies at the New Zealand territorial authority level. The spatially explicit agro-environmental economic model estimates changes in land use, agricultural output, land management, and environmental impacts. The policies investigated include a range of carbon prices on land-based emissions ($0–30/tCO\(_{2\mathrm{e}}\)) as well a range of prices on nitrogen leaching from diffuse sources ($0–30/kgN). We estimate that implementing stand-alone greenhouse gas and nutrient emissions reduction policies for the agricultural and forestry sectors will create environmental benefits outside the scope of the policy. However, not all environmental outputs improve, and net farm revenue declines by between 0 and 11%. Simultaneously implementing the two policies results in the desired goals of reductions in nitrogen and greenhouse gas emissions with a marginal economic burden on landowners (i.e. 1–2% additional loss in farm profit relative to a stand-alone policy).     

The fiscal consequences of public health investments in disease-modifying therapies for the treatment of multiple sclerosis in Sweden

Abstract

Background and aims: The economic consequences of multiple sclerosis (MS) are broader than those observed within the health system. The progressive nature suggests that people will not be able to live a normal productive life and will gradually require public benefits to maintain living standards. This study investigates the public economic impact of MS and how investments in disease-modifying therapies (DMTs) influence the lifetime costs to government attributed to changes in lifetime tax revenue and disability benefits based on improved health status linked to delayed disease progression.

Methods: Disease progression rates from previous MS Markov cohort models were applied to interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab using a public economic framework. The established relationship between expanded disability status scale and work-force participation, annual earnings, and disability rates for each DMT were applied. Subsequently, we assessed the effect of DMTs on discounted governmental costs consisting of health service costs, social insurance and disability costs, and changes in lifetime tax revenues.

Results: Fiscal benefits attributed to informal care and community services savings for interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab were SEK340,387, SEK486,837, SEK257,330, and SEK958,852 compared to placebo, respectively. Tax revenue gains linked to changes in lifetime productivity for interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab were estimated to be SEK27,474, SEK39,659, SEK21,661, and SEK75,809, with combined fiscal benefits of cost savings and tax revenue increases of SEK410,039, SEK596,592, SEK326,939, and SEK1,208,023, respectively.

Conclusion: The analysis described here illustrates the broader public economic benefits for government attributed to changes in disease status. The lifetime social insurance transfer costs were highest in non-treated patients, and lower social insurance costs were demonstrated with DMTs. These findings suggest that focusing cost-effectiveness analysis only on health costs will likely underestimate the value of DMTs.     

Cost-minimization analysis of fingolimod compared with natalizumab for the treatment of relapsing–remitting multiple sclerosis in Sweden

Abstract

Background:

Fingolimod and natalizumab have the same European Union licence for the treatment of relapsing multiple sclerosis, and are considered by the Committee for Medicinal Products for Human Use (CHMP) to have broadly similar efficacy.

Objective:

A cost-minimization analysis was performed to compare differences in treatment costs between fingolimod and natalizumab from a societal perspective in Sweden.

Methods:

This analysis included costs associated with initiating and following treatment (physician visits and monitoring), continuing therapy (drugs and administration), and lost patient productivity and leisure time. Unit costs (in Swedish krona [SEK]) were based on regional data (median prices for physician visits and monitoring sessions). Natalizumab infusion costs were obtained from the national cost-per-patient database. Drug costs for both therapies were 15,651 SEK/28 days.

Results:

After 3 years, fingolimod use was associated with savings of 124,823?SEK/patient compared with natalizumab (total cost/patient: 566,718 SEK vs 691,542 SEK). Cost savings with fingolimod were 40,402 SEK/patient after 1 year and 301,730 SEK/patient after 10 years. Treatment with natalizumab was 18% more expensive than fingolimod therapy after 1 year and 23% more expensive after 10 years.

Limitations:

Based on the CHMP assessment, it was assumed that fingolimod and natalizumab have similar efficacy. The analysis was conducted for Sweden, and caution is needed in extrapolating the results to other countries.

Conclusion:

Fingolimod is cost-saving compared with natalizumab for the treatment of relapsing–remitting multiple sclerosis in Sweden.     

A Strategic Analysis of Eutrophication Abatement in the Baltic Sea

Cooperation between the littoral countries of the Baltic Sea to mitigate eutrophication has proven difficult in the past. In this study, we explore the countries’ incentives to free-ride on agreements, find stable coalitions where free-riding is deterred, and propose alternative ways of designing stable agreements that would reduce eutrophication in the sea. We conclude that strong free-riding incentives for some countries preclude the socially optimal solution in the absence of an enforcing authority. A stable agreement can, however, be formed with some loss in efficiency. The research shows that a treaty with modest abatement targets between all the littoral countries would be more efficient than a coalition between fewer countries but with more ambitious targets. We compare the two international institutions involved in the protection of the Baltic Sea—the intergovernmental Helsinki Commission and the partly supranational European Union—and show that the European Union would not benefit from enforcing an agreement among its member states on the Baltic without Russia being involved in the conservation efforts. Our results suggest that efficient abatement and full participation could be achieved by using the power the European Union has to enforce such an agreement among its members and, simultaneously, negotiating with Russia within the Helsinki Commission.     

Potential ecological and economic impacts of sea lice from farmed salmon on wild salmon fisheries

This paper examines the possible ecological and economic effects of sea lice from salmon farms on wild salmon populations and fisheries. A bioeconomic model is developed incorporating an age-structured population dynamics model of wild pink and chum salmon with mortality caused by farm-derived sea lice. Our model incorporates capture fisheries under two management policy scenarios. Results suggest that the ecological and economic effects are minor when the sea lice induced mortality rate is below 20%, while they can be severe if the mortality is greater than 30%. Sea lice have greater ecological and economic impacts on pink salmon than on chum salmon. The impact of farm lice epizootics on wild salmon is greater under a fixed exploitation rate than under a target escapement policy. As a result, a precautionary principle should be adopted, and appropriate management schemes and policy strategies should be developed to minimize these effects.     

Benefits of a Reallocation of Nitrate Emission Reductions in the Rhine River Basin

In an attempt to improve ecological conditions of theRhine, emission reduction targets have been set fordifferent substances. For most substances targets havebeen met. However, nutrient emission reductions arebehind schedule. It may be clear from intuition, andhas also often been described in economic literature,that a flat reduction rate applied to all emittingsectors, though appealing because of equity reasons,may not be cost-effective. This paper explores theleast cost allocation of nitrate emission reductionsfor the Rhine river basin, analysing differentagricultural sectors and wastewater treatment plants.Results show that costs of meeting emission reductiontargets can be brought down by almost 20% through aclever allocation of these targets.     

Economic Valuation of the Threat Posed by the Establishment of the Asian Tiger Mosquito in Australia

Invasive species policy could be better informed if we understood how much people value reductions in the risks posed by these organisms. This study investigates the public’s willingness to pay (WTP) for additional measures to reduce the risk of invasion of the Australian mainland by the Asian tiger mosquito (ATM). The study contributes to the literature by applying a stated preference method to estimate the public’s WTP to reduce the risk of an ATM invasion, expressed as a change in probability. It is the first ex ante invasive species analysis to test over two discrete invasion reduction probabilities based on management effort. Further, to overcome the challenges in valuing changes in probabilities, the study presented respondents with a well-defined discrete difference in the final probability, with one scenario reducing risk from 50 to 25% and the other from 50 to 5%. We find a significant difference in the mean WTP values between these two scenarios (A$67 vs. A$90). The overall conclusion is that estimated benefits of reducing the probability of an ATM incursion outweigh the costs.     

Water pollution abatement by Chinese industry: cost estimates and policy implications

Factory-level data are used to estimate water pollution abatement costs for Chinese industry. Joint abatement cost functions are utilized which relate total costs to treatment volume and the simultaneous effect of reductions in suspended solids, chemical oxygen demand, biological oxygen demand and other pollutants. Tests of alternative functional forms suggest that a very simple (constant elasticity) model fits the data as well as a complex (translog) model, permitting sophisticated policy experiments with relatively simple calculations. From the results, the cost-effectiveness of current pollution control policy in China is analysed. Basic conclusions are (1) The benefits of stricter discharge standards should be weighed carefully against the costs. For the sample of 260 factories, a shift across the existing range of standards entails a present-value difference of US$330 million in abatement costs. (2) Emissions charges as low as US$1.00/ton would be sufficient to induce 80% abatement of suspended solids for cost-minimizing factories. Charges of US$3, US$15 and US$30 per ton would be sufficient to induce 90% abatement of TSS, COD and BOD. (3) The current regulatory system provides an economic incentive to abate by charging a levy on pollution in excess of the standard. However, the results suggest that changing to a full emissions charge system would greatly reduce overall abatement costs. For the 260 factories in the sample, the current overall abatement rate could be attained under a charge system at a reduced annual cost whose present value is US$344 million.     

Willingness to pay for improved air quality in Sweden

The aim of the paper is to quantify individual willingness-to-pay measures of improved air quality in Sweden by using the Contingent Valuation Method (CVM). Such measures are important for policy makers when deciding about public investments and policy instruments in order to regulate environmental impacts, e.g. from road transportation and industry. The mean willingness to pay (WTP) for a 50% reduction of harmful substances where the respondents live and work was about 2000 SEK/year, which is of the same order of magnitude as earlier stated preference studies in Nordic countries. Most parameters in the econometric analysis had the expected sign. WTP was increasing in income, wealth and education; it was larger for men, members of environmental organizations, people living in big cities (which are on average more polluted), and people who own their house or apartment. It was lower for retired people. However, the additional WTP for people in big cities, although significantly higher than for other people, was lower than expected, indicating a possible insensitivity-to-scope effect.     

Administrative Costs and Instrument Choice for Stochastic Non-point Source Pollutants

This paper extends the empiricalanalysis of non-point source pollution to thecase where the pollutant is stochastic andalternative regulatory instruments havedifferent administrative costs. It also appliesa method of stochastic programming whereemissions are log-normally distributed. Forthe Kennet catchment in South West England werank a range of policies in terms of abatementcosts alone, and total costs (abatement andadministrative costs). On the basis ofabatement costs alone, a uniform emission taxis the cost minimising policy, but on the basisof total cost a nitrogen input tax is theleast-cost policy. Furthermore, the policyranking, based on total costs, changes as thereliability standard increases.     

The economics of the adoption of BMPs: the case of mariculture water management

How shrimp mariculture interacts with the natural environment is a topic receiving growing attention from industry members and environmental organizations. The farms’ use of water, and subsequent discharge problems, represent important inter- and intra-industry externalities. The non-point source nature of the pollution problem suggests direct effluent regulation is unfeasible, and voluntary adoption of best management practices is the current approach favored by the industry and international organizations. This paper provides an in-depth analysis of one such management practice, reduced water exchange. Significant reductions in pond pumping diesel costs, alongside possible reductions in pond productivity and shrimp size, are expected from this technique. Social benefits could follow from the reduction of nitrogen and other effluent loadings. But adoption problems are expected due to the current inability to value longer-term private and social benefits of the practice and the risk-creating nature of the technique. Voluntary compliance with sustainable practices could be enhanced by complementary policy tools and a role of governments in coastal zone management.     

Economic integration and tax policy with endogenous foreign firm ownership

This paper analyses the impact of economic integration on tax policy in a model where corporate taxation is motivated by the desire to tax profits accruing to foreigners and the number of foreign owned firms is endogenous. Increasing economic integration is modeled as a decline in trade costs or tariffs. It turns out that declining trade costs lead to increasing profit taxes if the government may use import tariffs. If tariffs are not available, declining trade costs induce profit taxes to decline as well. A mandatory reduction in tariffs also triggers profit tax reductions. We conclude that the existence of foreign firm ownership may fail to prevent profit taxes from declining as economic integration proceeds.     

Cost effectiveness of benralizumab for severe,uncontrolled oral corticosteroid–dependent asthma in Sweden

Abstract

Aim: We investigated cost effectiveness of benralizumab vs. standard of care (SOC) plus oral corticosteroids (OCS) for patients with severe, eosinophilic OCS-dependent asthma in Sweden.

Materials and methods: A three-state, cohort-based Markov model of data from three Phase III benralizumab clinical trials (ZONDA [NCT02075255], SIROCCO [NCT01928771], and CALIMA [NCT01914757]) was used to assess the incremental cost-effectiveness ratio of benralizumab vs. SOC plus OCS. Health outcomes were estimated in terms of quality-adjusted life-years (QALYs). The model included costs and disutilities associated with extrapolated OCS-related adverse events. Patients with severe asthma were defined as those receiving OCS ≥5?mg/day.

Results: Benralizumab demonstrated a cost-effectiveness ratio vs. SOC plus OCS of 2018 Swedish Kronor (SEK) 366,855 (€34,127) per QALY gained, based on increases of 1.33 QALYs and SEK 488,742 (€45,344) per patient. Benralizumab treatment costs contributed most to incremental costs. The probability of benralizumab’s being cost-effective with willingness-to-pay (WTP) thresholds between SEK 429,972 (€40,000) and SEK 752,452 (€70,000) ranged from 75% to 99%.

Limitations: Potential limitations of these analyses include the use of combined data from three different clinical trials, a one-way sensitivity analysis that did not include mortality and transition estimates, and Observational & Pragmatic Research Institute (OPRI) data from the UK as a proxy of the Swedish health care system.

Conclusions: The results of these analyses demonstrate that benralizumab has a high probability of being cost-effective compared with SOC plus OCS for a subgroup of patients with severe, eosinophilic asthma receiving regular OCS treatment and may support clinicians, payers and patients in making treatment decisions.     

Phase I Completed: An Empirical Assessment of the 1990 CAAA

With the conclusion of Phase I trading of SO₂ allowances, the EPA declared the allowance trading policy to be a success. The time had come to include cap-and-trade programs in the arsenal of effective policy tools. In terms of reducing atmospheric emissions of sulfur dioxide, the program appears to be successful. It is not clear, however, whether or not the program has minimized the cost of achieving the emission reductions. The measure of the true success of a market-based incentive program, however, has yetto be quantified: Has the program resulted in converging marginalabatement costs across participant plants? In this study I report theshadow prices of Phase I power plants from 1994 to 1998 anddetermine that there are more costs to be saved within theambitious public policy experiment.