nep-res New Economics Papers
on Resource Economics
Issue of 2011‒11‒07
four papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Estimates of the Social Cost of Carbon: Background and Results from the RICE-2011 Model By William D. Nordhaus
  2. Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States By Matthew J. Kotchen; Kevin J. Boyle; Anthony A. Leiserowitz
  3. Italian consumers’ willingness to pay for renewable energy sources By Bigerna, Simona; Polinori, Paolo
  4. Energy, the Environment and Behaviour Change: A survey of insights from behavioural economics By Baddeley, M.

  1. By: William D. Nordhaus
    Abstract: A new and important concept in global warming economics and policy is the social cost of carbon or SCC. This concept represents the economic cost caused by an additional ton of carbon-dioxide emissions or its equivalent. The present study describes the development of the concept as well as its analytical background. We estimate the SCC using an updated version of the RICE-2011 model. Additional concerns are uncertainty about different aspects of global warming as well as the treatment of different countries or generations. The most important results are: First, the estimated social cost of carbon for the current time (2015) including uncertainty, equity weighting, and risk aversion is $44 per ton of carbon (or $12 per ton CO2) in 2005 US$ and international prices). Second, including uncertainty increases the expected value of the SCC by approximately 8 percent. Third, equity weighting generally tends to reduce the SCC. Finally, the major open issue concerning the SCC continues to be the appropriate discount rate.
    JEL: H21 H23 H87 Q5 Q54
    Date: 2011–10
  2. By: Matthew J. Kotchen; Kevin J. Boyle; Anthony A. Leiserowitz
    Abstract: This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.
    JEL: Q4 Q48 Q5
    Date: 2011–10
  3. By: Bigerna, Simona; Polinori, Paolo
    Abstract: EU Directive 2009/72/CE imposes to the European Countries environmental and energy targets. The Italian goal is to attain a 17% share in electricity production from renewable energy sources (RES) by 2020. To make investment in renewables attractive, market prices must be profitable and the gap between the private and social costs of renewables must be filled using “persuasive” tools. The acceptance of such a burden may be controversial because it results in an increase in prices. It is interesting to estimate the consumer’s willingness to pay (WTP) for green electricity. We based our research on a national survey conducted in November 2007 in Italy. We used a stochastic payment card (SPC) including a “certainty correction” and proposing five degrees of acceptance. An empirical analysis shows that there is a substantial willingness among Italian consumers to partially cover the cost of achieving the RES goal.
    Keywords: contingent valuation; interval data; stochastic payment card; renewable energy sources
    JEL: Q41 Q26 C24
    Date: 2011–10–30
  4. By: Baddeley, M.
    Abstract: Evidence of climate change is largely undisputed but moderating the impacts not only of climate change but also of resource depletion is a complex, multi-faceted problem. Technical solutions will have a large role to play but engineering behaviour change within households and firms is essential to harnessing the potential for energy efficient consumption, production and investment. To inform debates about behavior change, this paper explores some insights from behavioural economics including analyses of bounded rationality, cognitive bias / heuristics, temporal discounting, social in uences, well-being and emotions.
    JEL: Q5 Q58
    Date: 2011–10–28

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