nep-res New Economics Papers
on Resource Economics
Issue of 2016‒09‒04
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Difference in Preferences or in Preference Orderings? Comparing Choices of Environmental Bureaucrats, Recreational Anglers, and the Public By Eggert, Håkan; Kataria, Mitesh; Lampi, Elina
  2. What Do Capital Markets Tell Us About Climate Change? By Marcelo Ochoa; Dana Kiku; Ravi Bansal
  3. Priority for the Worse Off and the Social Cost of Carbon By Matthew Adler; David Anthoff; Valentina Bosetti; Greg Garner; Klaus Keller; Nicolas Treich

  1. By: Eggert, Håkan (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (Department of Economics, School of Business, Economics and Law, Göteborg University); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Do Environmental Protection Agency (EPA) bureaucrats represent the general public or are they more in line with an interest group? We study preferences for environmental policy using a choice experiment (CE) on three populations; the general public, Swedish EPA bureaucrats, and recreational anglers. We also test for existence of multiple preference orderings, i.e., whether responses differ depending on the decision role assigned. Half of the respondents were asked to choose the alternatives that best corresponded with their opinion, and the other half was asked to take the role of a policymaker and make recommendations for environmental policy. The SEPA bureaucrats have the highest marginal willingness to pay (MWTP) to improve environmental quality. These differences are robust and not due to differences in socio-economic characteristics across the populations. We found little evidence of multiple preference orderings, but in one case the difference in MWTP between the two roles was substantial.
    Keywords: choice experiment; distribution; environmental valuation; Homo Economicus; Homo Politicus; multiple preference orderings; willingness to pay
    JEL: D61 H41 Q51 Q58
    Date: 2016–08
  2. By: Marcelo Ochoa (Federal Reserve Board of Governors); Dana Kiku (University of Ilinois); Ravi Bansal (Duke University)
    Abstract: We use the forward-looking information from the US and global capital markets to estimate the economic impact of long-run temperature fluctuations. We find that global warming has a significant negative effect on asset valuations and that temperature risks carry a negative price. We also find that the negative elasticity of equity prices to temperature risks have been increasing over time, which suggests that the impact of climate change on the macro-economy has been rising. We use our empirical evidence to calibrate a long-run risks model with temperature-induced disasters in future output and growth and quantify the social cost of carbon emissions. The model simultaneously matches the projected temperature path, the observed consumption growth dynamics, discount rates provided by the risk-free rate and equity market returns, and the estimated temperature elasticity of equity prices. We show that a preference for early resolution of uncertainty and long-run impact of temperature on growth imply a significant social cost of carbon emissions.
    Date: 2016
  3. By: Matthew Adler (Duke University School of Law); David Anthoff (Energy and Resources Group, University of California); Valentina Bosetti (Bocconi University); Greg Garner (The Pennsylvania State University); Klaus Keller (The Pennsylvania State University and Carnegie Mellon University); Nicolas Treich (INRA, University of Toulouse)
    Abstract: The social cost of carbon (SCC) is a monetary measure of the harms from carbon emission. Specifically, it is the reduction in current consumption that produces a loss in social welfare equivalent to that caused by the emission of a ton of CO2. The standard approach is to calculate the SCC using a discounted-utilitarian social welfare function (SWF)—one that simply adds up the well-being numbers (utilities) of individuals, as discounted by a weighting factor that decreases with time. The discounted-utilitarian SWF has been criticized both for ignoring the distribution of well-being, and for including an arbitrary preference for earlier generations. Here, we use a prioritarian SWF, with no time-discount factor, to calculate the SCC in the integrated assessment model RICE. Prioritarianism is a well-developed concept in ethics and theoretical welfare economics, but has been, thus far, little used in climate scholarship. The core idea is to give greater weight to well-being changes affecting worse off individuals. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCC.
    Keywords: Prioritarianism, Social Welfare Function, Social Cost of Carbon
    JEL: Q54 I30
    Date: 2016–08

This nep-res issue is ©2016 by Maximo Rossi. 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.