Local environmental quality and life-satisfaction in Germany

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 derive 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.     

Cost Liability and Residential Space Heating Expenditures of Welfare Recipients in Germany*

Within the German welfare system, recipients’ heating expenditures are generally fully covered by the government. This paper empirically tests the hypothesis that households receiving welfare payments turn to overconsumption of residential space heating. We use micro‐data from two different data sources to explore whether the conditional heating expenditures of these households differ significantly from those of other households. Our empirical findings suggest that even when controlling for a range of other factors, this is indeed the case, as their heating expenditures lie about 7–8 per cent above those of other households. These results are fairly robust to sensitivity analyses. Comparing the results with those for a control group, expenditures for heating are still more than 5 per cent higher. Our results imply that there is potential scope for cost savings if this policy is changed.     

China’s CO2 emissions from power generating stations and the role of subsidies – a first exploration

Our analysis is the first of its kind to explore patterns of subsidization and CO₂ emissions in China’s electricity-producing sector. Applying data for all power plants across China and controlling for the age, capacity and location of generating stations, we find that plants attracting a higher government subsidy are also the plants generating a disproportionate share of CO₂ emissions. This distortion is incongruent with China’s aspiration for a greener economy but may be eliminated if China delivers on its November 2013 announcement to review many industry subsidies on its way to a fully fledged market economy.     

The amenity value of climate to households in Germany

Despite the importance of as comprehensive as possible damagecost estimates to cost benefit analyses of global attempts toreduce greenhouse gas emissions, few researchers have attemptedto monetize the direct impact of climate change on households.This study uses the hedonic technique to measure the amenityvalue of the climate to German households. Evidence suggeststhat the amenity value of climate variables is capitalized mainlyinto hedonic house price differentials. Overall, German householdsappear to prefer warmer winters with less rainfall. Combiningestimates of amenity values with the predicted changes in climateassociated with the IPCC's A2 emissions scenario we find thatthe overall impact of climate change on German households, whilstnegative, is typically not statistically different from zero.This occurs in part because the prediction is for warmer butwetter winters and also because the amenity value of some climatevariables cannot be measured with sufficient precision.     

The impact of climate on life satisfaction

We analyse the influence of climate on average life satisfaction in 79 countries using data from the World Values Survey. Climate is described in terms of ‘degree-months’ calculated as the cumulated monthly deviations from a base temperature of 65 °F (18.3 °C). Our results suggest that countries with climates characterised by a large number of degree-months enjoy significantly lower levels of life satisfaction. This finding is robust to a wide variety of model specifications. Using our results to analyse a particular climate change scenario associated with the IPCC A2 emissions scenario points to major losses for African countries, but modest gains for Northern Europe.     

Water scarcity and the impact of improved irrigation management: a computable general equilibrium analysis

Increasing water scarcity combined with an increasing demand for food and water for irrigation call for a careful revision of water use in agriculture. Currently, less than 60% of all the water used for irrigation is effectively used by crops. Based on the new version of the GTAP‐W model we analyze the effect of potential water savings and the welfare implications of improvements in irrigation efficiency worldwide. The results show that a water policy directed to improve irrigation efficiency led to global and regional water savings, but it is not beneficial for all regions. The final effect on regional welfare will depend on the interaction of several different causes. For instance, higher irrigation efficiency changes opportunity costs and reverses comparative advantages, modifying regional trade patterns and welfare. For water‐stressed regions the effects on welfare are mostly positive. For nonwater scarce regions the results are more mixed and mostly negative. The results show that exports of virtual water are not exclusive of water abundant regions.