Spatial organization, transport, and climate change: Comparing instruments of spatial planning and policy

Approaching the analysis of climate policies from a spatial organization perspective is necessary for realizing both efficient and effective mitigation of greenhouse gas (GHG) emissions. In particular, it allows assessing the potential contribution of specific mechanisms of spatial organization and related spatial planning and policy to climate policy goals. So far, this spatial organization angle of climate policy has hardly received attention in the literature. The main sector significantly contributing to GHG emissions and sensitive to spatial organization and planning is urban transport. A qualitative evaluation of the available spatial organization policy options is provided, on the basis of four standard ‘E criteria’ and a decomposition of CO₂ emissions.     

气候变化经济学和气候政策

在气候变化经济学和气候政策的文献综述基础上,剖析了经济学原理在全球气候变化研究中的应用。在总结西方流行的气候变化的经济影响评估、预测、分析方法和模型的前提下,回顾了不同空间和时间尺度上温室气体减排成本估算的方法和结果,特别分析和强调了气候变化不确定性的特点对经济模型和政策设计的影响,提供了有效的基于市场的政策选择。     

Behavioral economics and climate change policy

The policy recommendations of most economists are based on the rational actor model. The emphasis is on achieving efficient allocation by insuring that property rights are completely assigned and that market failures are corrected. This paper takes the position that so-called behavioral “anomalies” are central to human decision-making and, therefore, should be the starting point for effective economic policies. This contention is supported by game theory experiments involving humans and closely related primates. This research suggests that the standard economic approach to climate change policy, with its focus on narrowly rational, self-regarding responses to monetary incentives, is seriously flawed.     

Carbon leakage revisited: unilateral climate policy with directed technical change

Using a stylized theoretical model, we argue that current economic analyses of climate policy tend to over-estimate the degree of carbon leakage, as they abstract from the effects of induced technological change. We analyse carbon leakage in a two-country model with directed technical change, where only one of the countries enforces an exogenous cap on emissions. Climate policy induces changes in relative prices, that cause carbon leakage through a terms-of-trade effect. However, these changes in relative prices also affect the incentives to innovate in different sectors. This leads to a counterbalancing induced-technology effect, which always reduces carbon leakage. We therefore conclude that the leakage rates reported in the literature may be too high, as these estimates neglect the effect of price changes on the incentives to innovate.      

Adaptation,mitigation and risk-taking in climate policy

The future consequences of climate change are highly uncertain and estimates of economic damages differ widely. Governments try to cope with these risks by investing in mitigation and adaptation measures. In contrast to most of the existing literature, we explicitly model the decision of risk averse governments on mitigation and adaptation policies. We also consider the interaction of the two strategies in presence of uncertainty. Mitigation efforts of a single country trigger crowding out as other countries will reduce their mitigation efforts. This may even lead to lower mitigation on the global scale. In contrast, a unilateral commitment to large adaptation efforts benefits the single country and can reduce the global risk from climate change at the expense of other countries.     

Public enterprises,planning and policy adoption: three welfare propositions

Despite widespread privatizations over the last three decades, public enterprises, as production units under government control, are still present in several countries and sectors. While the academic and political debate on the costs and benefits of privatization is vast, a focus on the rationale for public enterprises, from the standpoint of Social Cost Benefit Analysis, is missing. This paper aims at filling this gap and provides a normative discussion on public enterprises in a general equilibrium setting. The conditions under which public provision may be beneficial and the metrics for evaluating polices and projects under (a)symmetric information and (non)benevolent governments are presented in three welfare propositions. The main policy message points to the overall quality of institutions as a necessary pre-condition for socially desirable public enterprises. A sound institutional environment provides policy-makers with the correct incentives to design and implement meaningful policies even if public administrators adopt sub-optimal plans. Institutions should constrain self-interested policy-makers from disrupting the key welfare signals for policy adoption as well as for project appraisal, while bias in management is a relatively less important concern.     

What really matters: Discounting, technological change and sustainable climate

This paper discusses the interplay between the choice of the discount rate, greenhouse gas mitigation and endogenous technological change. Neglecting the issue of uncertainty it is shown that the Green Golden Rule stock of atmospheric carbon is uniquely determined, but is not affected by technological change. More generally it is shown analytically within the framework of a reduced model of integrated assessment that the optimal stationary stocks of atmospheric carbon depend on the choice of the discount rate, but are independent of the stock of technological knowledge. These results are then reinforced numerically in a fully specified integrated assessment analysis.     

Energy substitutions,climate change and carbon sinks

We determine the optimal exploitation time-paths of two energy resources, one being depletable and polluting, namely a fossil fuel, the other being renewable and clean. These optimal paths are considered along with the two following features. First, the cumulative atmospheric pollution stock is set not to exceed some critical threshold and second, the polluting emissions produced by the use of fossil fuel can be reduced at the source and stockpiled in several carbon sinks of limited capacity. We show that, if the renewable resource flow is abundant, the optimal path requires that sequestration is implemented only once the ceiling is reached. Moreover, the reservoirs should be completely filled by increasing order of their respective sequestration costs.     

Energy substitutions, climate change and carbon sinks

We determine the optimal exploitation time-paths of two energy resources, one being depletable and polluting, namely a fossil fuel, the other being renewable and clean. These optimal paths are considered along with the two following features. First, the cumulative atmospheric pollution stock is set not to exceed some critical threshold and second, the polluting emissions produced by the use of fossil fuel can be reduced at the source and stockpiled in several carbon sinks of limited capacity. We show that, if the renewable resource flow is abundant, the optimal path requires that sequestration is implemented only once the ceiling is reached. Moreover, the reservoirs should be completely filled by increasing order of their respective sequestration costs.     

SIAM: Strategic Impact and Assumptions-Identification Method for project,program, and policy planning

This paper presents a method, called SIAM, for assessing the “social soundness” of projects, programs, and policies (with emphasis here on the first two). It is based on work by R.O. Mason, I.I. Mitroff, and J.R. Emshoff. SIAM was applied initially as one part of a computer-assisted framework for the socioeconomic assessment of highway infrastructure plans. It has since proven useful in a wide range of projects and programs.A development project at the planning stage is a future scenario. Its final form and impact will be conditioned not only by its structural and economic characteristics, but also by the characteristics of the environment in which it is embedded. It is vital therefore to assess not only a project's technical and economic viability, but also its strategic viability involving sociopolitical considerations. A project embodies certain expectations about the present and future behavior of a variety of interests. These assumptions are implicit in the technical design and projected impacts, including the estimated benefits. The success of the project hinges on the validity and stability of these assumptions. SIAM provides a procedure for the comprehensive identification of relevant stakeholders, stakeholder-project linkages, and for identifying the critical assumptions implicit in the technical design of the project and in its economic assessment.     

Economists, value judgments, and climate change: A view from feminist economics

A number of recent discussions about ethical issues in climate change, as engaged in by economists, have focused on the value of the parameter representing the rate of time preference within models of optimal growth. This essay examines many economists' antipathy to serious discussion of ethical matters, and suggests that the avoidance of questions of intergenerational equity is related to another set of value judgments concerning the quality and objectivity of economic practice. Using insights from feminist philosophy of science and research on high reliability organizations, this essay argues that a more ethically transparent, real-world-oriented, and flexible economic practice would lead to more reliable and useful knowledge.     

Central bank instruments, fiscal policy regimes, and the requirements for equilibrium determinacy

This paper examines the role of the monetary instrument choice for local equilibrium determinacy under sticky prices and different fiscal policy regimes. Corresponding to Benhabib et al.'s results for interest rate feedback rules [Benhabib, J., Schmitt-Grohé, S., Uribe, M., 2001. Monetary policy and multiple equilibria. American Economic Review 91, 167–185], the money growth rate should not rise by more than one for one with inflation when the primary surplus is raised with public debt. Under an exogenous primary surplus, money supply should be accommodating—such that real balances grow with inflation—to ensure local equilibrium determinacy. When the central bank links the supply of money to government bonds by controlling the bond-to-money ratio, an inflation stabilizing policy can be implemented for both fiscal policy regimes. Local determinacy is then ensured when the bond-to-money ratio is not extremely sensitive to inflation, or when interest payments on public debt are entirely tax financed, i.e., the budget is balanced.     

Second-best theory and the use of multiple policy instruments

In many cases policy makers employ multiple instruments to address a single environmental problem, but much of the economics literature on instrument choice focuses on comparing properties of single policy instruments. We argue that under a fairly broad set of circumstances the use of multiple policy instruments can be justified as optimal in a second-best world. We examine two broad categories of second-best policy making: cases with multiple market failures only some of which can be corrected at any one time; and cases with exogenous (often political) constraints that cannot be removed. The fact that the use of multiple policy instruments can be justified economically in these two cases does not imply, however, that all multiple instruments employed in actual practice are economically justified.     

Trade and transport connectivity: a spatial approach

This article aims to analyse whether transport connectivity affects trade flows using a spatial approach. We consider first-order contiguity and incorporate logistics network structure dependence in a spatial autoregressive model. The results provide evidence regarding the role of the location of logistics platforms for satisfying existing demand for transport structure in Spain.     

Opening a policy window for organisational change and full-cost accounting: The creation of BC Hydro's water use planning program

British Columbia's Water Use Planning (WUP) program is a multi-stakeholder process that revises the operating plans of BC Hydro's hydroelectric facilities in order to consider water values beyond hydropower. Using a model of policy change, this paper analyses the circumstances that enabled the emergence of WUP and prompted BC Hydro to change its decision-making processes to better consider environmental and social concerns.External factors, including dam operations' ecological impacts, an imprecise regulatory environment, and worsening relationships with regulators, highlighted the need for a change in operating BC Hydro facilities. Factors internal to BC Hydro included the development of a business case, concerns regarding the utility's reputation and public expectations. While different approaches were explored for solving BC Hydro's problems, a policy window for change opened within a shifting context provided by the election of a more progressive government, the growth of the environmental movement, and new approaches to taking complex multi-stakeholder, multiple resource decisions. Following a successful pilot process and government direction to expand WUP, factors that enabled its institutionalisation included financial resources to compensate for the foregone power, the presence of visionary individuals, the background preparation that facilitated a successful pilot WUP, and the urgent need of a solution.     

Technology licensing and environmental policy instruments: Price control versus quantity control

This paper analyzes the welfare implications of abatement technology licensing under taxation and emission trading schemes. We demonstrate that a firm with a better abatement technology optimally sells a per-unit royalty license to a competitor under both schemes but offers a higher royalty rate under the latter. The emission trading scheme may outperform the taxation scheme regarding social surplus by inducing more production by the licensor and less production by the licensee. These are reversals of the welfare implications suggested by the literature that adopts a partial equilibrium approach or omits either the market for the advanced technology or the final goods.     

Political economy of climate change, ecological destruction and uneven development

The purpose of this paper is to analyze climate change and ecological destruction through the prism of the core general principles of political economy. The paper starts with the principle of historical specificity, and the various waves of climate change through successive cooler and warmer periods on planet Earth, including the most recent climate change escalation through the open circuit associated with the treadmill of production. Then we scrutinize the principle of contradiction associated with the disembedded economy, social costs, entropy and destructive creation. The principle of uneven development is then explored through core-periphery dynamics, ecologically unequal exchange, metabolic rift and asymmetric global (in)justice. The principles of circular and cumulative causation (CCC) and uncertainty are then related to climate change dynamics through non-linear transformations, complex interaction of dominant variables, and threshold effects. Climate change and ecological destruction are impacting on most areas, especially the periphery, earlier and more intensely than previously thought likely. A political economy approach to climate change is able to enrich the analysis of ecological economics and put many critical themes in a broad context.     

Spatial dynamics and convergence: The spatial AK model

We study the optimal dynamics of an AK economy where population is uniformly distributed along the unit circle. Locations only differ in initial capital endowments. Spatio-temporal capital dynamics are described by a parabolic partial differential equation. The application of the maximum principle leads to necessary but non-sufficient first-order conditions. Thanks to the linearity of the production technology and the special spatial setting considered, the value function of the problem is found explicitly, and the (unique) optimal control is identified in feedback form. Despite constant returns to capital, we prove that the spatio-temporal dynamics, induced by the willingness of the planner to give the same (detrended) consumption over space and time, lead to convergence in the level of capital across locations in the long-run.