nep-res New Economics Papers
on Resource Economics
Issue of 2023‒07‒10
five papers chosen by
Maximo Rossi
Universidad de la República

  1. The Social Cost of Carbon under Climate Volatility Risk By Xu Lin; Sweder van Wijnbergen
  2. Does COVID-19 Help or Harm the Climate? Modelling Long-run Emissions under Climate and Stimulus Policies By Paolo Zeppini; Jeroen C.J.M. van den Bergh
  3. Comparison of policies for increasing sustainable transport mode shares in Swedish cities By Pyddoke, Roger
  4. The Economics of Forest Fuel Removals on Federal Lands By Wibbenmeyer, Matthew; Joiner, Emily; Wear, David N.
  5. Screening for Collusion in Wholesale Electricity Markets: A Review of the Literature By Brown, David P.; Eckert, Andrew; Silveira, Douglas

  1. By: Xu Lin (University of Amsterdam); Sweder van Wijnbergen (University of Amsterdam)
    Abstract: We calculate the social cost of carbon (SCC) under stochastic climate volatility resulting from uncertainty about future climate risk regimes where weather extremes are becoming more frequent and intense. Using a stochastic dynamic integrated climate-economy model where representative agents are endowed with Duffie-Epstein recursive preferences, we find that climate volatility risks substantially increase the SCC both in the business-as-usual and optimal abatement policy scenario. We also show that switching to a regime with more intense disasters increases the SCC more than a switch to a regime with more frequent disasters for equal expected value. Overall we show that stochastic volatility has a major impact on the SCC.Classification-JEL: G12, G13, Q51, Q54
    Keywords: stochastic volatility, social cost of carbon, climate damage, Duffie-Epstein preference
  2. By: Paolo Zeppini (Université Côte d'Azur; GREDEG, CNRS, France; Department of Economics, University of Bath, UK); Jeroen C.J.M. van den Bergh (ICREA, Barcelona, Spain; Institute of Environmental Science and Technology, Universitat Autònoma de Barcelona, Spain; School of Business and Economics & Institute for Environmental Studies, VU University Amsterdam, the Netherlands)
    Abstract: We propose a model of global energy competition, GLO-COV, to shed light on long-run effects of COVID-19. It accounts for the joint impact of lockdown, economic stimulus programs and climate policy on CO2 emissions. The model also captures the role of peak oil. It incorporates evolutionary self-reinforcing dynamics which allows addressing path-dependence and lock-in. The model is empirically calibrated on historical energy demand, economic growth, emission intensity, and factors specific to COVID-19. The resulting long-term assessment complements previous studies that focus on short-term effects of the pandemic. We find that without countervailing climate policy, COVID-19 increases long-run emissions. With a carbon tax already in place, COVID-19 leads to lower emissions than scenarios without the pandemic or without policy. On their own, climate and stimulus policies increase variability of, and thus uncertainty about, emissions, while their combination reduces variability. A further advantage of combining stimulus and carbon taxation is that it creates strong synergy, resulting in maximal reduction of long-term emissions.
    Keywords: Climate change, economic crisis, energy, lock-in, path-dependence, tipping points
    Date: 2023–05
  3. By: Pyddoke, Roger (Swedish National Road & Transport Research Institute (VTI))
    Abstract: The EU is currently promoting sustainable mobility in its cities. This promotion can take the form of subsidies for cycling and public-transport infrastructure. This paper compares existing Swedish policy instruments for promoting more sustainable transport: government subsidies to infrastructure for sustainable modes in the form of city environmental agreements (CEAs), congestion and parking charges and a hypothetical incentive to reduce the mode share of cars. Analyses of the CEAs indicate that they do not reliably affect mode choice. The results for congestion and parking charges, on the contrary, indicate that these have a substantial potential to shift mode choices and improve welfare by pricing external costs. The outcomes of the hypothetical incentive based on achieved effects will depend on the extent to which cities are willing to use externality pricing and to which citizens are willing to change modes. The management and evaluation of this hypothetical incentive poses considerable requirements on data and estimations of a counter factual outcomes without incentives, and its necessary costs. Provided these requirements can be met, the incentive model appears to be a possible instrument for stimulating cities to move faster towards sustainable transport.
    Keywords: Sustainable transport; Cities; Mode shares; Policy
    JEL: H23 H54 H71 R48 R49 R51
    Date: 2023–06–15
  4. By: Wibbenmeyer, Matthew (Resources for the Future); Joiner, Emily (Resources for the Future); Wear, David N. (Resources for the Future)
    Abstract: Despite large recent investments by Congress, the costs of fuel removal and forest restoration needs in the western United States dramatically exceed available funding. Engaging the private sector may provide a means for enhancing the pace and scale of fuel removals to reduce wildfire hazard, but thus far this strategy—which has typically focused on increasing demand for small-diameter fuels—has not been broadly successful. To assess the economics of fuel treatments in the western United States, we develop a spatially explicit model of the revenues and costs of fuel removal in Idaho and Montana, under a variety of treatment scenarios. We find that fuel treatment sales would not be economically feasible across most of the study region unless prices of small-diameter material were to rise significantly, potentially via subsidies or another policy. Nevertheless, under current market conditions, bundling small amounts of sawtimber harvest with treatments is capable of dramatically expanding treatable area. Such an approach is a promising path to reducing fire hazard on public lands; however, a different approach will be necessary to encourage fuel removal on private lands, which make up a disproportionate share of forested lands near communities.
    Date: 2023–06–12
  5. By: Brown, David P. (University of Alberta, Department of Economics); Eckert, Andrew (University of Alberta, Department of Economics); Silveira, Douglas (University of Alberta, Department of Economics)
    Abstract: Wholesale electricity markets have several features that increase the likelihood of collusion, including frequent interaction, multimarket contact, and a high degree of information transparency. As a result, screening techniques for detecting collusive agreements are desired. In this paper, we survey the existing literature on collusive screens and collusion in electricity markets. We discuss key features of non-competitive behaviour to be reflected in screens and suggest directions for improved screening in this industry. In particular, there is considerable potential to include machine learning and data mining techniques in screens in the electricity sector due to recent improvements in these methods.
    Keywords: Screening Methods; Collusion; Electricity Markets
    JEL: L13 L40 L94 Q40
    Date: 2023–06–13

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