Putting a price on the future of our children and grandchildren

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Discounting has the dubious distinction of being the most controversial issue in social cost-benefit analysis. This is largely because choosing the discount rate will often dominate other choices a modeler makes. For example, consider how we might estimate future damages from greenhouse gas emissions.

In spite of the multiple layers of uncertainty surrounding natural science issues, most of the controversy over Stern’s The Economics of Climate Change concerned one number: the discount rate.

Climate Change

Electricity provision with intermittent sources of energy

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We analyze the interaction between a reliable source of electricity production and intermittentsources such as wind or solar power. We first characterize the optimal energy mix, emphasizing the availability of the intermittentsource as a major parameter for the optimal investment in capacity.

Climate Change, Policy Design

Regulation of a Spatial Externality: Refuges versus Tax for managing pest Resistance.

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We examine regulations for managing pest resistance to pesticide varieties in a temporally and spatially explicit framework. We compare the performance of the EPA’s mandatory refuges and a tax (or subsidy) on the pesticide variety under several biological assumptions on pest mobility and the heterogeneity of farmers’ pest vulnerability.

Policy Design

The distributional impact of common-pool resource regulations

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Regulating common-pool resources is welfare enhancing for society but not necessarily for all users who therefore may oppose regulations. We examine the short-term impact of common-pool resource regulations on welfare distribution.

Fisheries

Discounting: Unbalanced Growth, Uncertainty, and Spatial Considerations

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The economics of climate change and the various measures that should be implemented to reduce future damages are highly tied to the use of cost-benefit analysis. Traditional approaches ignore the fact that environmental amenities do not experience the same growth rate as do most of the sectors in the economy, which leads to changing relative prices. Uncertainty should also be considered, especially when one is conducting cost-benefit analysis involving the long-run damages from climate change.

Climate Change

Synergies and Trade-offs between Climate and Local Air Pollution: Policies in Sweden

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In this paper, we explore the synergies and tradeoffs between abatement of global and local pollution. We built a unique dataset of Swedish heat and power plants with detailed boiler-level data 2001-2009 on not only production and inputs but also emissions of CO2 and NOx.

Climate Change, Policy Design

Climate Policy, Uncertainty, and the Role of Technological Innovation

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We study how uncertainty about climate change severity affects the relative benefits of early abatement and a portfolio of research and development (R&D) in lowering future abatement costs. Optimal early abatement depends on the curvature of the marginal benefit and marginal abatement cost (MAC) functions and how the uncertain parameter affects marginal benefits.

Climate Change, Policy Design

How Should Support for Climate-Friendly Technologies Be Designed?

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Stabilizing global greenhouse gas concentrations at levels to avoid significant climate risks will require massive ‘‘decarbonization’’ of all the major economies over the next few decades, in addition to the reduced emissions from other GHGs and carbon sequestration. Achieving the necessary scale of emissions reductions will require a multifaceted policy effort to support a broad array of technological and behavioral changes. Change on this scale will require sound, well-thought-out strategies.

Climate Change, Policy Design

Are experienced people affected by a pre-set default option—Results from a field experiment

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The objective of the present paper is to investigate the robustness of the well-known result that pre-set default options determine people’s choices. We do so by conducting a field experiment among environmental economists attending a large international conference on environmental economics.

Climate Change, Policy Design, Experiments

The Fossil Endgame: Strategic Oil Price Discrimination and Carbon Taxation

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This paper analyzes how fossil fuel-producing countries can counteract climate policy. We analyze the exhaustion of oil resources and the subsequent transition to a backstop technology as a strategic game between the consumers and producers of oil, which we refer to simply as ‘OECD’ and ‘OPEC’, respectively.

Climate Change, Policy Design, Carbon Pricing