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Abstract: Climate Change Economics, Volume 13, Issue 04, November 2022.
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Authors:SHUMIN YU, YINHAO WU Abstract: Climate Change Economics, Volume 13, Issue 04, November 2022. With an intention to pursue an international carbon trade system and to find its implications for post-Paris climate agreements, we develop in this paper an international climate policy game with a mitigation agreement and a carbon market with endogenous permits choice. We explore incentives in a game-theoretic model for market participation, incentives to join a mitigation agreement and the interlinkages between the two. Our numerical results show that the presence of a carbon market with endogenous permits choice could improve the single mitigation coalition by engaging more regions with climate mitigation actions and inducing the Pareto improvement to some specific mitigation coalitions. Yet, more alternative strategic options offered by carbon trade are a disincentive for some regions to join a mitigation coalition. Nonetheless, this minor negative influence can be overwhelmed by more involvement in climate actions, higher global mitigation level and welfare gains resulted from an extra carbon market. Citation: Climate Change Economics PubDate: 2022-05-05T07:00:00Z DOI: 10.1142/S2010007822500063 Issue No:Vol. 13, No. 04 (2022)
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Authors:BRYAN K. MIGNONE, JONATHAN E. HUSTER, SARAH TORKAMANI, PATRICK O’ROURKE, MARSHALL WISE Abstract: Climate Change Economics, Volume 13, Issue 04, November 2022. Land use change (LUC) CO2 emissions associated with bioenergy production depend on the amount of land required to produce bioenergy crops, the carbon stored in such crops (including in the leaves, stalk, roots and soil), and the carbon emitted when another land cover is directly or indirectly displaced as a result. In this study, we use a global integrated assessment model [the Global Change Analysis Model (GCAM)] to explore the differences in estimates of LUC CO2 emissions for two crops (corn and switchgrass) used to produce ethanol in the United States under alternative assumptions about natural lands protection. Varying the latter assumptions for corn ethanol results in net LUC CO2 emissions between 7 and 41 gCO2 per MJ of ethanol, whereas varying the same assumptions for switchgrass ethanol results in net emissions between [math]26 and 14 gCO2 per MJ of ethanol. The low-end estimate for each occurs when natural lands are assumed to be fully protected everywhere, which leads to significant cropland intensification. The high-end estimate for each occurs when natural lands are assumed to be unprotected everywhere, leading to greater cropland expansion and associated conversion of unmanaged forest and pasture. Results from this study could be used to inform scenarios of future energy system change or life cycle assessment of biofuels for which LUC emissions would be an input. Citation: Climate Change Economics PubDate: 2022-05-05T07:00:00Z DOI: 10.1142/S2010007822500087 Issue No:Vol. 13, No. 04 (2022)
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Authors:JANKA VANSCHOENWINKEL, MARK VANCAUTEREN, STEVEN VAN PASSEL Abstract: Climate Change Economics, Volume 13, Issue 04, November 2022. Most farm adaptations are reactive actions that run the risk of locking farm systems into suboptimal long-term trajectories. This is especially the case with regard to water management as water scarcity will be aggravated by climate change. This paper looks into farm irrigation choices in combination with crop choices because a proper crop choice has the potential to reduce water requirements. It proposes an extended Ricardian model to capture multiple adaptation decisions explicitly. The new simultaneous irrigation-crop farm decision model uses spatially detailed farm-level data of over 18,000 European farms on irrigation and seven different crop choices. The analysis shows that larger farmers and farmers in less water-scarce regions that use irrigation are more sensitive to temperature increases than rain-fed agriculture. This might be explained by the fact that these farmers do not experience the real cost of water scarcity because of which they take less efficient decisions. Citation: Climate Change Economics PubDate: 2022-05-05T07:00:00Z DOI: 10.1142/S2010007822500099 Issue No:Vol. 13, No. 04 (2022)
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Authors:TAKUMI HAIBARA Abstract: Climate Change Economics, Volume 13, Issue 04, November 2022. The rebound effect requires a rethink of revenue recycling. It is this that this paper offers an alternative to mitigate this effect. Specifically, we adapt and extend the consumption-neutral tax reform of Haibara (Journal of Globalization and Development, 8, 1–11, 2017) to include pollution externalities. Unlike a revenue-neutral tax reform, this reform increases welfare irrespectively of the level of intercommodity tax distortions. With consumption-neutral schemes, exogenous energy efficiency improvements induce higher taxes on the dirty good consumption. Such tax hikes improve welfare more than would be the case in their absence. Consumption-neutral reforms can translate economic costs into a negative rebound effect and increase the first dividend. The double dividend is welcome but need not be a policy priority. Citation: Climate Change Economics PubDate: 2022-04-30T07:00:00Z DOI: 10.1142/S2010007822500051 Issue No:Vol. 13, No. 04 (2022)
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Authors:NAN ZHANG, DAIGEE SHAW, CHUAN-YAO LIN Abstract: Climate Change Economics, Volume 13, Issue 04, November 2022. We examine the implicit price of job mortality rates, climate, and air pollution in Taiwan under the hedonic wage frame with panel data from 1999 to 2014. We adopt a fixed-effects model to control for the omitted year-specific factors and time-invariant individual, industry, and city factors that may affect the wage. The within-individual variations in climate and air pollution from workers who have changed their job locations make it possible to identify the impacts of climate and air pollution on wages. We find that workers in Taiwan are willing to pay 308 USD (in 2014 value terms) for the January temperature to increase by 1∘C,781 USD for the July temperature to decline by 1∘C, indicating a net loss from global warming. Besides, the implicit price of air quality is 45 USD for PM 10 concentrations to fall by 1 unit ([math]), and the implicit price of job risks is 140 USD per unit (1/100,000). Citation: Climate Change Economics PubDate: 2022-04-30T07:00:00Z DOI: 10.1142/S2010007822500075 Issue No:Vol. 13, No. 04 (2022)
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Authors:GÖKÇE AKIN-OLÇUM, MADANMOHAN GHOSH, ELISABETH GILMORE, PETER JOHNSTON, MOHAMMAD M. KHABBAZAN, RUBEN LUBOWSKI, MARGARET MCCALLISTER, NICK MACALUSO, SONJA PETERSON, MALTE WINKLER, MAOSHENG DUAN, MENGYU LI, RAMIRO PARRADO, SEBASTIAN RAUSCH Abstract: Climate Change Economics, Ahead of Print. This paper presents the overall and distributional welfare effects of alternative multi-regional emissions trading coalitions relative to unilateral action. It focusses on meeting Paris Agreement pledges and more emissions reduction targets consistent with 2∘C and 1.5∘C temperature pathways in 2030. The results from seven computable general equilibrium (CGE) models are compared. Across all models, welfare gains are highest with a global market and increase with the stringency of targets. All regional coalitions also show overall welfare gains, although lower gains than the global market. The models show more variability in the gains by a participant. Depending on the model, participants may benefit more from some regional arrangements than from a global market or face modest losses compared to the domestic reductions alone, due to interactions between carbon targets and fossil fuel markets. The scenario with a joint China–European Union emissions trading system in all sectors is consistently favorable for participants and provides the highest economic gains per unit of emissions abated. Citation: Climate Change Economics PubDate: 2022-11-11T08:00:00Z DOI: 10.1142/S2010007823500094
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Authors:RICKY N. LAWTON, DANIEL FUJIWARA Abstract: Climate Change Economics, Ahead of Print. Following the UK’s hosting of the United Nations Convention of the Parties Climate Summit in 2021, political targets for reducing greenhouse gas emissions — “Net-Zero” — have gained momentum. We address the gap in how public preferences are accounted for in climate decision-making by applying Contingent-Valuation techniques which ask people to state their Willingness-to-Pay (WTP) for the UK’s 2050 Net-Zero target. Mean WTP is £37.57/household to support Net-Zero (median £11.25), with a present-value of £2.3 billion across UK households. While younger people are more likely to experience the long-term impacts of climate change, older generations are willing to pay more to support it, suggesting that public support for Net-Zero is largely based on “nonuse” benefits, rather than direct “use” benefits to oneself. The COVID-19 epidemic affected WTP bids in a quarter of respondents. Finally, we explore how choice of positive or normative discount rate affects policy conclusions when monetizing consumer preferences. Citation: Climate Change Economics PubDate: 2022-10-17T07:00:00Z DOI: 10.1142/S2010007823500070
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Authors:CHUN-I LEE, CHUEH-YUNG TSAO Abstract: Climate Change Economics, Ahead of Print. We find evidence of negative returns, greater volatility, higher turnover, and lower liquidity around a tropical cyclone. Before the land warnings are issued, there is significant under-reaction by investors. Throughout the storm, market volatility increases with negative returns. This leverage effect is similarly present in liquidity before and after the storm. The abnormal returns, volatility, and activities are not related to the characteristics of the storm and exist after the weather effect and various determinants have been accounted for. These findings strongly suggest that underlying all the negative market reaction is the prevalent emotional distress, anxiety, and fear among investors evoked by the destructive and deadly forces of the storm. These negative emotions presumably are stronger when faced with stronger storms and may be managed with better preparedness. This is indeed the case given that we find evidence of more significant market reaction to moderate and severe typhoons and in the early years than in recent years. Citation: Climate Change Economics PubDate: 2022-09-20T07:00:00Z DOI: 10.1142/S2010007823500069
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Authors:YISHUANG LIU, JINPENG HUANG, HANMIN DONG Abstract: Climate Change Economics, Ahead of Print. Under the pressure of economic uncertainty and environmental protection in the post-COVID-19 era, achieving a new round of employment dividends has become one practical choice. Using the panel data of 30 Chinese provinces from 2007 to 2019, this study estimates the employment outcomes of carbon ETS pilots based on the difference-in-differences model. The findings of this study indicate the following: (1) Carbon ETS pilots can positively increase employment scales with an average effect of 7.12%. (2) This promoting effect will become more significant in provinces with high education levels, provinces with high average wages, and eastern region provinces. But there is no obvious difference between gender. (3) This positive effect can be transferred and enhanced by market competition and energy consumption. At the crossroads of green economic recovery, it will be greatly beneficial to formulate the national carbon market development roadmap under the carbon neutrality strategy. Citation: Climate Change Economics PubDate: 2022-09-19T07:00:00Z DOI: 10.1142/S2010007823400018
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Authors:ANELÍ BONGERS, MICHAEL A. TAMOR Abstract: Climate Change Economics, Ahead of Print. Climate science suggests that moving to a zero-carbon economy will not immediately halt the environmental and economic damage caused by anthropogenic greenhouse–gas (GHG) emissions. Whereas air temperature increase will (almost) stop when the CO2 concentration in the atmosphere is stabilized, ocean temperature will continue to increase for decades. In this paper, we introduce an environmental dynamic general equilibrium model with a natural transition from fossil to renewable fuels and then use that model to explore this temperature disconnect. We find that the transition to nonfossil energy is accelerated when damages due to persistent ocean temperature rise are taken into account. Sensitivity analysis reveals that (i) economic growth increases energy consumption but accelerates the transition; (ii) energy-augmented technological change does not accelerate the transition; (iii) emissions efficiency technological change has perversely harmful effects on the energy transition; and (iv) the elasticity of substitution between dirty and clean energy sources and the discount factor are key in determining optimal energy transition path. Citation: Climate Change Economics PubDate: 2022-09-01T07:00:00Z DOI: 10.1142/S2010007823500082
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Authors:NAGISA SHIIBA, HIDE-FUMI YOKOO, VORAVEE SAENGAVUT, SIRAPRAPA BUMRUNGKIT Abstract: Climate Change Economics, Ahead of Print. Understanding the triggers of individual adaptation behavior is critical for empowering those who are highly vulnerable to climate change. This study explores the effect of ambiguity aversion on adaptation behaviors in the context of climate change. We conduct a field survey among 230 rice farmers in northeastern Thailand to examine the association between elicited ambiguity aversion and the implementation of climate change adaptation. We find that ambiguity aversion does not encourage farmers’ adaptation behaviors and can even discourage the uptake of adaptation strategies. The role of ambiguity aversion varies depending on the characteristics of the adaptation strategy: ambiguity-averse farmers are less likely to adopt adaptation strategies that entail shifts from the status-quo. A deliberate approach is needed to understand farmers’ adaptation behaviors outside the laboratory setting and to reduce ambiguity in the results concerning adaptation to increasing climate risk. Citation: Climate Change Economics PubDate: 2022-08-13T07:00:00Z DOI: 10.1142/S2010007823500057
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Authors:YEN-HENG HENRY CHEN, ERIK LANDRY, JOHN M. REILLY Abstract: Climate Change Economics, Ahead of Print. Climate change mitigation efforts, which require the transition away from carbon-intensive activities, can pose financial risks for owners of fossil fuel assets and investors that the finance companies are engaged in greenhouse gas-emitting activities. For instance, fossil fuel extraction may be significantly scaled-back, and coal-power plants may be idled or even phased out prematurely, thus becoming stranded assets for the shareholders. Using a global general equilibrium model with detailed energy sector and capital stock structures, we estimate the corresponding stranded assets under various emissions mitigation scenarios. Our findings reveal that, depending on the policy scenario, the global net present value of unrealized fossil fuel output through 2050 relative to a “no policy” scenario is between 21.5 and 30.6 trillion USD, and that of stranded assets in coal power generation is between 1.3 and 2.3 trillion USD. The analytical framework presented in our study complements existing research, in which macroeconomic variables required for estimating the stranded assets are often derived from models with more simplified assumptions. Therefore, individual firms and financial institutions can combine our economy-wide analysis with details on their own investment portfolios to determine their climate-related transition risk exposure. Citation: Climate Change Economics PubDate: 2022-07-28T07:00:00Z DOI: 10.1142/S2010007823500033
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Authors:SON H. KIM, STEPHANIE T. WALDHOFF, JAMES A. EDMONDS Abstract: Climate Change Economics, Ahead of Print. The transportation sector is experiencing a period of unprecedented and disruptive change from the rapid improvement in the performance and cost of battery electric vehicles (BEVs). We quantify the carbon mitigation cost impact from transport electrification with BEVs under policies to limit the Earth surface temperature change to [math]C. Our results show that the reduction in carbon mitigation costs from transport electrification is as high as 40%. While BEVs without decarbonization policies merely shift the sources of emissions, aggressive BEV adoption with policies dramatically reduces the cost of addressing climate change because power sector decarbonization costs are capped by a broad range of emission-free power technologies. The decarbonization of electricity caps road transport decarbonization costs with BEVs. Without BEVs, transportation decarbonization costs escalate as the liquid fuel costs rise sharply with carbon penalties on fossil fuels and large-scale biofuels production. Electrification of transport with BEVs transforms a “problem” sector into a major part of the climate solution. Citation: Climate Change Economics PubDate: 2022-07-08T07:00:00Z DOI: 10.1142/S2010007823500045
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Authors:BEYE ASSANE, DIOP WAOUNDÉ Abstract: Climate Change Economics, Ahead of Print. This paper analyzes the determinants of adaptation options in pastoral drylands and investigates whether adaptation strategies can be used jointly. We assume that decisions can be made jointly as complements or substitutes and investigates whether herders in Senegal adapt to climate change by pursuing multiple strategies. We use a multinomial probit model with primary data collected from 410 herders of Senegalese drylands to identify adaptation determinants. Results show that 73.7% of the surveyed households rely on at least one adaptation strategy including storage of livestock feed, increased mobility, changes in water management, diversification of activities and changes in herd composition. Moreover, we notice that adaptation decisions of pastoral households can be taken jointly and those with mobility do not pursue other adaptation strategies, while those lacking mobility undertake multiple strategies. The diversity of factors explaining adaptation calls for targeted policies that promote adaptation strategies to strengthen the resilience of pastoralists. Citation: Climate Change Economics PubDate: 2022-06-25T07:00:00Z DOI: 10.1142/S201000782350001X
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Authors:FRÉDÉRIC BABONNEAU, MARC VIELLE Abstract: Climate Change Economics, Ahead of Print. Last year, Chile updated its Nationally Determined Contributions, moving from intensity-based emissions reductions to an effective emissions target. This paper aims to assess the economic and environmental impacts of this change in the current context of high uncertainty Chile faces with social protests and the COVID-19 pandemic. Using the computable general equilibrium model GEMINI-E3, we performed a sensitivity analysis assuming different levels of economic growth through 2030. Though at first glance the revised commitments appear more ambitious, we found that they could lead to higher emissions in low-growth scenarios. The results show that intensity-based emissions targets indeed become less stringent when assuming high levels of economic growth and thus may result in highly uncertain effective emissions in 2030. On the other hand, given the uncertainty surrounding Chilean economic growth, the updated commitments would be politically more amenable as it would lead to lower welfare losses. In addition, we analyze different redistribution schemes of a CO2 tax and we show that a per capita redistribution rule makes the CO2 tax more progressive and thus fiscally more acceptable. Citation: Climate Change Economics PubDate: 2022-06-15T07:00:00Z DOI: 10.1142/S2010007823500021
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