nep-ene New Economics Papers
on Energy Economics
Issue of 2010‒06‒11
23 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Energy access, efficiency, and poverty : how many households are energy poor in Bangladesh ? By Barnes, Douglas F.; Khandker, Shahidur R.; Samad, Hussain A.
  2. Energy, Aesthetics and Knowledge in Complex Economic Systems By John Foster
  3. Optimal Transmission Regulation in an Integrated Energy Market By Tangerås, Thomas P.
  4. Multistage Stochastic Portfolio Optimisation in Deregulated Electricity Markets Using Linear Decision Rules By Paula Rocha; Akwum Daniel Kuhn
  5. Liquidity risks on power exchanges By DE MAERE DÕAERTRYCKE, Gauthier; SMEERS, Yves
  6. Evaluation of hydropower upgrade projects - a real options approach By Elverhøi, Morten; Fleten, Stein-Erik; Fuss, Sabine; Heggedal, Ane Marte; Szolgayova, Jana; Troland, Ole Christian
  7. The Global Bioenergy Expansion: How Large Are the Food−Fuel Trade-Offs? By Fabiosa, Jacinto F.; Beghin, John C.; Dong, Fengxia; Elobeid, Amani; Tokgoz, Simla; Yu, Tun-Hsiang
  8. Evaluating the Consumer Response to Fuel Economy: A Review of the Literature By Gloria Helfand; Ann Wolverton
  9. Not driving alone: Commuting in the Twenty-first century By Stephen B. DeLoach; Thomas Tiemann
  10. External Capital Structures and Oil Price Volatility By John D. Burger; Alessandro Rebucci; Francis E. Warnock; Veronica Cacdac Warnock
  11. Why are natural resources a curse in Africa, but not elsewhere? By Fabrizio Carmignani; Abdur Chowdhury
  12. The Empire Struck Back: The Mexican Oil Expropriation of 1938 Reconsidered By Noel Maurer
  13. Government Revenue Volatility in Alberta By Smith, Constance; Landon, Stuart
  14. Asthma Medication Use and Air Pollution in California: A Cross-Sectional Analysis By Charles Griffiths; Nathalie B. Simon; Tracey J. Woodruff
  15. Model predictive control, the economy, and the issue of global warming By BRECHET, Thierry; CAMACHO, Carmen; VELIOV, Vladimir
  16. Kyoto Project Mechanisms and Technology Diffusion By Matthieu Glachant; Yann Ménière
  17. Cities in Germany and their climate commitments: More hype than substance? By Sippel, Maike
  18. Invention and Transfer of Climate Change Mitigation Technologies on a Global Scale: A Study Drawing on Patent Data By Antoine Dechezleprêtre; Matthieu Glachant; Ivan Hascic; Nick Johnstone; Yann Ménière
  19. What Drives the International Transfer of Climate Change Mitigation Technologies? Empirical Evidence from Patent Data By Antoine Dechezleprêtre; Matthieu Glachant; Yann Ménière
  20. Markets for emission permits with free endowment: a vintage capital analysis By BRECHET, Thierry; TSACHEV, Tsvetomir; VELIOV, Vladimir
  21. The Challenges of Global Environmental Change for Urban Africa By Simon, David
  22. The Economics of Adaptation to Extreme Weather Events in Developing Countries By Brian Blankespoor; Benoit Laplante; David Wheeler; Susmita Dasgupta
  23. Discounting and Divergence of Opinion By Elyès Jouini; Jean-Michel Marin; Clotilde Napp

  1. By: Barnes, Douglas F.; Khandker, Shahidur R.; Samad, Hussain A.
    Abstract: Access to energy, especially modern sources, is a key to any development initiative. Based on cross-section data from a 2004 survey of some 2,300 households in rural Bangladesh, this paper studies the welfare impacts of household energy use, including that of modern energy, and estimates the household minimum energy requirement that could be used as a basis for an energy poverty line. The paper finds that although the use of both traditional (biomass energy burned in conventional stoves) and modern (electricity and kerosene) sources improves household consumption and income, the return on modern sources is 20 to 25 times higher than that on traditional sources. In addition, after comparing alternate measures of the energy poverty line, the paper finds that some 58 percent of rural households in Bangladesh are energy poor, compared with 45 percent that are income poor. The findings suggest that growth in electrification and adoption of efficient cooking stoves for biomass use can lower energy poverty in a climate-friendly way by reducing carbon dioxide emissions. Reducing energy poverty helps reduce income poverty as well.
    Keywords: Energy Production and Transportation,Energy and Environment,Environment and Energy Efficiency,Climate Change Mitigation and Green House Gases,Energy Demand
    Date: 2010–06–01
  2. By: John Foster (School of Economics, The University of Queensland)
    Abstract: It is argued that the fact that economic systems are dissipative structures must be taken fully into account in economics if we are to understand the nature of the economic-ecological interface and how to deal with emergent environmental problems, such as global warming. Such problems are a product of economic growth, which is widely accepted to be the outcome of the acquisition and application of knowledge. Drawing upon disparate literatures within and outside economics, it is argued that economic growth should be more properly viewed as the outcome of a co-evolutionary process that involves the autocatalytic interaction of new knowledge and access of increasing amounts of free energy to do increasingly specialized forms of work. The conventional view is that energy is just a factor of production used increasingly as new knowledge is employed. The possibility of reverse causation is considered here. Specifically, the relevance of the ‘energy hypothesis,’ associated with Eric Schneider and his collaborators, is assessed. This hypothesis states that all dissipative structures have, as their primary objective, the reduction of accessible free energy gradients. It is concluded that such a hypothesis cannot be rejected in the context of economic behaviour and that this opens up an important research agenda for economists. It is argued that such research has to be interdisciplinary because our economic behaviour is driven by aspirational goals which are aesthetic constructions in the mind and strongly connected to our emotions. In this regard, recent neuropsychological literature, arguing that certain emotional dispositions are necessary before we can employ our cognitive capabilities effectively, is important to digest. Thus, the possibility exists that it is in the emotional domain of the mind that the energy hypothesis is operative. Aesthetic constructions are, thus, connecting agents in the knowledge-energy co-evolutionary process. Some of the macroeconomic evidence concerning the relationship between free energy use and economic growth is considered and it is found that the energy hypothesis cannot be rejected in the economic domain. However, considerably more research needs to be undertaken before any firm conclusions can be drawn.
    Date: 2010
  3. By: Tangerås, Thomas P. (Research Institute of Industrial Economics (IFN))
    Abstract: The capacity of the transmission network determines the extent of integration of a multinational energy market. Cross-border externalities render coordination of network maintenance and investments across countries valuable. Is it then optimal to collect powers in the hands of a single regulator? Should a common system operator manage the entire network? I show that optimal network structure depends on (i ) how the common regulator would balance the interests of the different member states; (ii ) how the gains from market integration vary across countries; (iii ) network characteristics (substitutability versus complementarity); and (iv ) the social cost of operator rent.
    Keywords: Multi-national Energy Market; Transmission; Supranational Regulation; System Operation; Multi-contracting
    JEL: D62 D82 L51 L94
    Date: 2010–06–01
  4. By: Paula Rocha; Akwum Daniel Kuhn
    Abstract: The deregulation of electricity markets increases the financial risk faced by retailers who procure electric energy on the spot market to meet their customers’ electricity demand. To hedge against this exposure, retailers often hold a portfolio of electricity derivative contracts. In this paper, we propose a multistage stochastic mean-variance optimisation model for the management of such a portfolio. To reduce computational complexity, we perform two approximations: stage-aggregation and linear decision rules (LDR). The LDR approach consists of restricting the set of decision rules to those affine in the history of the random parameters. When applied to mean-variance optimisation models, it leads to convex quadratic programs. Since their size grows typically only polynomially with the number of periods, they can be efficiently solved. Our numerical experiments illustrate the value of adaptivity inherent in the LDR method and its potential for enabling scalability to problems with many periods.
    Keywords: OR in energy, electricity portfolio management, stochastic programming, risk management, linear decision rules
    Date: 2010–06–03
  5. By: DE MAERE DÕAERTRYCKE, Gauthier (UniversitŽ catholique de Louvain, CORE and INMA, B-1348 Louvain-la-Neuve, Belgium); SMEERS, Yves (UniversitŽ catholique de Louvain, CORE and INMA, B-1348 Louvain-la-Neuve, Belgium)
    Abstract: Financial derivatives are important hedging tool for assetÕs manager. Electricity is by its very nature the most volatile commodity, which creates big incentive to share the risk among the market participants through financial contracts. But, even if volume of derivatives contracts traded on Power Exchanges has been growing since the beginning of the restructuring of the sector, electricity markets continue to be considerably less liquid than other commodities. This paper tries to quantify the effect of this insufficient liquidity on power exchange, by introducing a pricing equilibrium model for power derivatives where agents can not hedge up to their desired level. Mathematically, the problem is a two stage stochastic Generalized Nash Equilibrium and its solution is not unique. Computing a large panel of solutions, we show how the risk premium and playerÕs profit are affected by the illiquidity.
    Keywords: illiquidity, electricity, power exchange, artitrage, generalized Nash Equilibrium, equilibrium based model, coherent risk valuation
    JEL: C61 G13
    Date: 2010–02–01
  6. By: Elverhøi, Morten; Fleten, Stein-Erik; Fuss, Sabine; Heggedal, Ane Marte; Szolgayova, Jana; Troland, Ole Christian
    Abstract: When evaluating whether to refurbish existing hydropower plants or invest in a new power plant, there are two important aspects to take into consideration. These are the capacity chosen for the production facilities and the timing of the investment. This paper presents an investment decision support framework for hydropower producers with production facilities due for restoration. The producer can choose between refurbishing existing power plants and investing in a new production facility. A real options framework is proposed to support the investment decision. Using a case from Norsk Hydro ASA, a Norwegian hydropower producer, we employ the framework to evaluate the investment opportunities. Our main contribution is an approach that combines hydropower scheduling and real options valuation, and the results from our analysis suggest feasible investment strategies for Norsk Hydro ASA.
    Keywords: Electricity price uncertainty; reservoir management; hydroelectric scheduling; investment under uncertainty; electricity markets
    JEL: G31 G13 Q4
    Date: 2010–05–07
  7. By: Fabiosa, Jacinto F.; Beghin, John C.; Dong, Fengxia; Elobeid, Amani; Tokgoz, Simla; Yu, Tun-Hsiang
    Abstract: We summarize a large set of recent simulations and policy analyses based on FAPRI’s world multimarket, partial-equilibrium models. We first quantify and project the emergence of biofuel markets in US and world agriculture for the coming decade. Then, we perturb the models with incremental shocks in US and world ethanol consumption in deviation from this projected emergence to assess their effects on world agricultural and food markets. Various food-biofuel trade-offs are quantified and examined. Increases in food prices are moderate for the US ethanol expansion and even smaller for the ethanol expansion outside the United States, which is based on sugarcane feedstock, which has little feedback on other markets. With the US expansion, the high protection in the US ethanol market limits potential adjustments in the world ethanol markets and increases the demand for feedstock within the United States. Changes in US grain and oilseed market prices propagate to world markets, as the United States is a large exporter in these markets. With changes in world prices, land allocation in the rest of the world responds to the new relative prices as in the United States but with smaller magnitudes because price transmission to local markets is less than full.
    Keywords: ethanol; biofuel; land effects; food prices; trade-offs
    Date: 2010–01–01
  8. By: Gloria Helfand; Ann Wolverton
    Abstract: In modeling how the U.S. market responds to changes in national fuel economy standards, the question of how consumers evaluate trade-offs between the cost of consuming more fuel economy than they would otherwise choose and the expected fuel savings that result is potentially quite important. Consumer vehicle choice models are a means to predict the change in vehicle purchase patterns, as well as the effects of these changes on compliance costs and consumer surplus. This paper surveys the literature on consumer choice models and finds a wide range in methods and results. A large puzzle raised is whether automakers build into their vehicles as much fuel economy as consumers are willing to purchase. This paper examines possible reasons why there may be a gap between the amount consumers are willing to pay for fuel economy and the amount that automakers provide.
    Keywords: consumer behavior, vehicle purchase decision
    Date: 2009–08
  9. By: Stephen B. DeLoach (Department of Economics, Elon University); Thomas Tiemann (Department of Economics, Elon University)
    Abstract: This paper investigates recent commuting trends in American workers. Unlike most studies of commuting that rely on Census data, this study utilizes the unique American Time Use Survey to detail the complex commuting patterns of modern-day workers. The data confirm what has been suspected, that incidence of driving alone has decreased substantially in recent years while carpooling has rebounded. The results from the multi-nominal logistic estimation of workersÕ commuting choices yield support for both the traditional economic determinants as well as for the newer, socio-economic factors. In addition to the cost savings, many commuters appear to value the social aspect of carpooling. Surprisingly, there is little evidence that the need for autonomy plays much of a factor in explaining workerÕs choice of the journey to work. The estimated short-run ÒelasticityÓ of carpooling with respect to real gas prices appears to be quite high and largely accounts for the significant decline in the incidence of Òdriving aloneÓ.
    Keywords: Ride sharing, carpooling, commuting, gasoline process, social capital
    JEL: R4
    Date: 2010–03–22
  10. By: John D. Burger; Alessandro Rebucci; Francis E. Warnock; Veronica Cacdac Warnock
    Abstract: This paper assesses the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. Two Caribbean economies highly vulnerable to oil price shocks are considered: an oil importer (Jamaica) and an oil exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. It is found that both countries could alter their international portfolio to provide a better buffer against such shocks.
    Keywords: Hedging, Oil, Foreign assets and liabilities, International portfolios
    JEL: F3 G1
    Date: 2010–05
  11. By: Fabrizio Carmignani; Abdur Chowdhury (School of Economics, The University of Queensland)
    Abstract: We study the nexus between natural resources and growth in Sub-Saharan Africa (SSA) and find that SSA is indeed special: resources dependence retards growth in SSA, but not elsewhere. The natural resources curse is thus specific to SSA. We then show that this specificity does not depend on the type of primary commodities on which SSA specializes. Instead, the SSA specificity appears to arise from the interaction between institutions and natural resources.
    Date: 2010
  12. By: Noel Maurer (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: The Mexican expropriation of 1938 was the first large-scale non-Communist expropriation of foreign-owned natural resource assets. The literature generally makes three assertions: the U.S. government did not fully back the companies, Mexico did not fully compensate them for the value of their assets, and the oil workers benefitted from the change in ownership. This paper musters data and evidence that supports only the first of those assertions, and only to a limited extent: the companies devised political strategies that maneuvered Roosevelt into supporting their interests, and they were more than fully compensated by the Mexican government as a result.
    Date: 2010–06
  13. By: Smith, Constance (University of Alberta, Department of Economics); Landon, Stuart (University of Alberta, Department of Economics)
    Abstract: The Alberta government is heavily exposed to energy price volatility as it relies to a great extent on revenue derived from the production of oil and natural gas. Energy prices change substantially and unpredictably, causing large and uncertain movements in revenues. Adjusting to these movements typically involves economic, social and political costs. Alberta government revenues are considerably more volatile than the revenues of other provinces, but Alberta’s own-source revenues less royalty payments are of similar size and volatility as those of other provinces. Several methods to reduce the volatility of revenues are assessed. An often-suggested method, tax base diversification (for example, use of a retail sales tax), is shown to have a minor effect on overall revenue volatility since Alberta’s royalty revenues are such a large share of total own-source revenues. Revenue smoothing using futures and options markets can be expensive, is associated with significant political risks, and cannot eliminate all revenue volatility. The Canadian dollar tends to appreciate (depreciate) when energy prices rise (fall), so exchange rate movements have smoothed Alberta government revenues, although not by a large amount. A simulation using Alberta data shows that a revenue savings fund could significantly reduce revenue volatility. This type of fund leads to greater revenue stability because the revenue it contributes to the budget in any particular year is based on revenues averaged over prior years. Revenue uncertainty is also reduced with a savings fund since future revenue depends on known past contributions.
    Keywords: government revenue volatility; energy prices; tax base diversification; government savings fund
    JEL: G13 H20 H71 O13 Q33
    Date: 2010–05–01
  14. By: Charles Griffiths; Nathalie B. Simon; Tracey J. Woodruff
    Abstract: In this study, we examine the effects of chronic exposure to air pollution on asthma exacerbation through a cross-sectional analysis of asthma prescriptions for quick-relief medications at the 5 digit zip code level in California. Using information on the use of maintenance therapies by each patient, we are able to stratify our data by asthma severity as well as by age. In general, we find a positive relationship between asthma and both PM10 and ozone levels. We find that prescriptions for quick-acting inhalers for children increases with PM10, and this relationship generally does not level off effect except for mild intermittent asthmatics. Ozone also generally increases the number of prescriptions for ages 5 through 17, as well as for severe asthmatics and some moderate asthmatics at younger ages. However, prescriptions and ozone show the opposite relationship for the adults and the very young (ages 0-4).
    Keywords: asthma, air pollution
    Date: 2009–10
  15. By: BRECHET, Thierry (UniversitŽ catholique de Louvain, CORE and Louvain School of Management, Chair Lhoist Berghemans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium); CAMACHO, Carmen (UniversitŽ catholique de Louvain, Belgian National Foundation of Scientific Research and Economics Department, B-1348 Louvain- la-Neuve, Belgium); VELIOV, Vladimir (ORCOS, Institute of Mathematical Methods in Economics, Vienna University of Technology, A-1040 Vienna, Austria)
    Abstract: This study is motivated by the evidence of global warming, which is caused by human activity but affects the efficiency of the economy. We employ the integrated assessment Nordhaus DICE-2007 model [16]. Generally speaking, the framework is that of dynamic optimization of the discounted inter-temporal utility of consumption, taking into account the economic and the environmental dynamics. The main novelty is that several reasonable types of behavior (policy) of the economic agents, which may be non-optimal from the point of view of the global performance but are reasonable form an individual point of view and exist in reality, are strictly defined and analyzed. These include the concepts of Òbusiness as usualÓ, in which an economic agent ignores her impact on the climate change (although adapting to it), and of Òfree riding with a perfect foresightÓ, where some economic agents optimize in an adaptive way their individual performance expecting that the others would perform in a collectively optimal way. These policies are defined in a formal and unified way modifying ideas from the so-called Òmodel predictive controlÓ. The introduced concepts are relevant to many other problems of dynamic optimization, especially in the context of resource economics. However, the numerical analysis in this paper is devoted to the evolution of the world economy and the average temperature in the next 150 years, depending on different scenarios for the behavior of the economic agents. In particular, the results show that the Òbusiness as usualÓ, although adaptive to the change of the atmospheric temperature, may lead within 150 years to increase of temperature by 2¡C more than the collectively optimal policy.
    Keywords: environmental economics, dynamic optimization, optimal control, global warming, model predictive control, integrated assessment
    Date: 2010–05–01
  16. By: Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech); Yann Ménière (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: The paper deals with the diffusion of GHG mitigation technologies in developing countries. We develop a model where an abatement technology is progressively adopted by firms and we use it to compare the Clean Development Mechanism (CDM) with a standard Cap and Trade scheme (C&T). In the presence of learning spillovers, we show that the CDM yields a higher social welfare than C&T if the first adopter receives CDM credits whereas the followers don't. This result lends support to the policy proposal of relaxing the CDM additionality constraint for projects which generate significant learning externalities.
    Keywords: climate policy, technology diffusion, Kyoto Protocol, Clean Development Mechanism, emissions trading
    Date: 2010
  17. By: Sippel, Maike
    Abstract: While nation states debate climate policy at an international scale, on a local level, cities across the globe have committed to emission targets and mitigation activities. This study analyses the actual performance of municipal climate action against their targets. Official information material from large cities in Germany was collected and complemented with questionnaires from officials in 40 municipalities. While 77% of cities have adopted emission targets in a voluntary act, and 80% of these cities are engaged in at least basic emission reporting, only a quarter of them are on course to reach their targets. All of these ‘successful’ cities are situated in Eastern Germany – and their emission reductions can mainly be explained by the industrial decline in the 1990s after the German Reunification. Not a single city in Western Germany is on course to reach its reduction commitment. Cities average mitigation performance is slightly worse than the German average, and the effect of city networks on cities is not very clear. It can be concluded that cities are currently not living up to their ambitions. The practice of urban emission reporting does in many cases not allow for proper quality management of greenhouse gas policies. For a more meaningful contribution to the battle against climate change, cities could follow a double strategy: Firstly they could report emissions regularly and adopt realistic and city-specific targets and action plans based on their emission patterns. Secondly, they could complement their targets with a visionary approach: This would include pilot projects that demonstrate how low carbon cities could look like, as well as a more ambitious target which they would be able to reach – provided that optimal framework conditions for local mitigation activities would be put in place by other policy levels.
    Keywords: Cities; climate policy; mitigation; emission inventories; emission reporting; targets
    JEL: Q38 H77 Q28 D78 R59
    Date: 2010–06
  18. By: Antoine Dechezleprêtre (CERNA - Centre d'économie industrielle - Mines ParisTech, Grantham Research Institute on Climate Change and the Environment - London School of Economics and Political Science); Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech); Ivan Hascic (chercheur indépendant - Casa de Velázquez); Nick Johnstone (chercheur indépendant - Casa de Velázquez); Yann Ménière (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: This paper uses the EPO/OECD World Patent Statistical Database (PATSTAT) to provide a quantitative description of the geographic distribution of inventions in thirteen climate mitigation technologies since 1978 and their international diffusion on a global scale. Statistics suggest that innovation has mostly been driven by energy prices until 1990. Since then, environmental policies, and climate policies more recently, have accelerated the pace of innovation. Innovation is highly concentrated in three countries—Japan, Germany and the USA—which account for 60% of total innovations. Surprisingly, the innovation performance of emerging economies is far from being negligible as China and South Korea together represent about 15% of total inventions. However, they export much less inventions than industrialized countries, suggesting their inventions have less value. More generally, international transfers mostly occur between developed countries (73% of exported inventions). Exports from developed countries to emerging economies are still limited (22%) but are growing rapidly, especially to China.
    Date: 2010
  19. By: Antoine Dechezleprêtre (CERNA - Centre d'économie industrielle - Mines ParisTech, Grantham Research Institute on Climate Change and the Environment - London School of Economics and Political Science); Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech); Yann Ménière (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: Using patent data from 66 countries for the period 1990–2003, we characterize the factors which promote or hinder the international diffusion of climate-friendly technologies on a global scale. Regression results show that technology-specific capabilities of the recipient countries are determinant factors. In contrast, the general level of education is less important. We also show that restrictions to international trade—e.g., high tariff rates—and to a lesser extent lax intellectual property regimes negatively influence the international diffusion of patented knowledge. A counter-intuitive result is that barriers to foreign direct investments can promote transfers. We discuss different possible interpretations.
    Keywords: Climate change, technology diffusion, technology transfer
    Date: 2010
  20. By: BRECHET, Thierry (UniversitŽ catholique de Louvain, CORE and Louvain School of Management, Chair Lhoist Berghemans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium); TSACHEV, Tsvetomir (Institute of Mathematics and Informatics, Bulgarian Academy of Sciences, 1113 Sofia, Bulgaria); VELIOV, Vladimir (ORCOS, Institute of Mathematical Methods in Economics, Vienna University of Technology, A-1040 Vienna, Austria)
    Abstract: In this paper we develop a vintage capital model for a firm involved in a market for tradable emission permits. We analyze both the firmÕs optimal investment plans and the market equilibrium. This allows us to scrutinize how firms use permits free endowment, and to highlight the implications of non-optimal uses both at the firm and at the market level. We provide a new rationale for the market of tradable permits not to be cost-efficient. The novel technical points in this context are the use a distributed (vintage) optimal control model of the firm, the use of optimality conditions for non-smooth problems, and the involvement of a nonlinear Fredholm integral equation of the first kind for the description of the equilibrium price of permits, and its practical meaning for market regularization.
    Date: 2010–05–01
  21. By: Simon, David
    Abstract: Cities-especially those with substantial poor populations-will face increasingly severe challenges in tackling the impacts of global environmental change (GEC). As economic dynamos and increasingly important population concentrations, cities both contribu
    Keywords: global environmental change, climate change, African cities, mitigation,
    Date: 2010
  22. By: Brian Blankespoor; Benoit Laplante; David Wheeler; Susmita Dasgupta
    Abstract: Without a better understanding of the interactions between international players, households and public sector, it will be difficult for climate negotiators and donor institutions to determine the appropriate levels and modes of adaptation assistance. This paper contributes by assessing the economics of adaptation to extreme weather events. [Working Paper 199]
    Keywords: weather, donor, institutions, developing countries, international assistance, public sector, climate change, geographically, vulnerability, communities, households, international, vulnerability, socio economic, demographic, population, droughts, economies, human development,
    Date: 2010
  23. By: Elyès Jouini (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS : UMR7534 - Université Paris Dauphine - Paris IX); Jean-Michel Marin (INRIA Futurs - SELECT - INRIA - Université Paris Sud - Paris XI, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Clotilde Napp (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX)
    Abstract: The objective of this paper is to adopt a general equilibrium model and determine the socially efficient discount factor, risk free rate and discount rate when there are heterogeneous anticipations about the growth of the economy as well as heterogeneous time preference rates. Among others we tackle the following questions. Is the socially efficient discount factor an arithmetic average of the individual subjectively anticipated discount factors? More generally, can the Arrow-Debreu prices, the risk free rates, the subjectively expected socially efficient discount factors and discount rates be obtained as an average of the individual subjectively anticipated ones? Can beliefs dispersion be analyzed as a sort of additional risk or uncertainty leading to possibly lower discount rates? Is it socially efficient, when diversity of opinion is taken into account, to reduce the discount rate per year for more distant horizons? If so, what is the trajectory of the decline?
    Keywords: discount rate, risk free rate
    Date: 2010–03

This nep-ene issue is ©2010 by Roger Fouquet. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.