Works published in this series are relevant for public policy. Some of them are also published in the Working Papers series.
The FAERE Policy Papers are included in EconPapers and RePEc.

2020

PP 2020-02
Qui émet du CO2? Panorama critique des inégalités écologiques en France

Antonin Pottier – Emmanuel Combet – Jean-Michel Cayla – Simona de Lauretis – Franck Nadaud

Abstract
This article provides an overview of the inequalities in greenhouse gas (GHG) emissions between French households. It presents in a detailed and critical manner the methodological conventions used to compute “household emissions”, and the related assumptions. The most common principle of attribution, the carbon footprint, which assigns to households the emissions of the products they consume, conveys implicit conceptions of responsibility. It focuses attention on the contributions of individuals, on their choices, and may obscure the role of non-individual actors as well as the collective component of GHG emissions, and neglect the dimensions of responsibility not related to consumption choices.
We estimate the distribution of household carbon footprints based on data from the 2011 French Expenditure Survey. Household emissions tend to increase with income, but they also show a strong variability linked to geographical and technical factors that force to use fossil fuels.
Based on sectoral surveys (ENTD 2008; PHEBUS 2013), we also reconstruct household CO2 emissions linked to housing and transport energy. For transport, emissions are proportional to the distances travelled due to the predominant use of private cars. Urban settlement patterns constraint both the length of daily commuting and access to less carbon-intensive modes of transport. For housing, while house size increases with income and distance from urban centres, the first factor to account for variability of emissions is the heating system. It has little to do with income but more to do with settlement patterns, which constrain access to the various energy carriers.
Finally, we discuss the difficulties, both technical and conceptual, involved in estimating emissions from the super-rich (the top 1 percent).

PP 2020-01
Low-carbon options for the French power sector: What role for renewables, nuclear energy and carbon capture and storage?

Behrang Shirizadeh – Philippe Quirion

Abstract
In the wake of the Paris agreement, France has set a zero net greenhouse gas emission target by 2050. This target can only be achieved by rapidly decreasing the share of fossil fuels and accelerating the deployment of low-carbon technologies. We develop a detailed model of the power sector to investigate the role of different low emission and negative emission technologies in the French electricity mix and we identify the impact of the relative cost of these technologies for various values of the social cost of carbon (SCC).
We show that for a wide range of SCC values (from 0 to 500€/tCO2), the optimal power mix consists of roughly 75% of renewable power. For a SCC value of 100€/tCO2, the power sector becomes nearly carbon neutral while for 200€/tCO2 and more, it provides negative emissions. The availability of negative emission technologies can decrease the system cost by up to 18% and can create up to 20MtCO2/year of negative emissions, while the availability of new nuclear is much less important. This study demonstrates the importance of an effective SCC value (as a tax for positive emissions and remuneration for negative emissions) to reach carbon neutrality for moderate costs. Negative emissions may represent an important carbon market which can attract investments if supported by public policies.
 

2019

PP 2019-07
Planning and sustainable development in the twenty‐first century

Emmanuel Combet

Abstract
Although fallen into disrepute in the 80s, the use of planning has been put back on the agenda, with the 2008 financial crisis, but also with the growing recognition of the inability of nowadays societies to tackle their long‐term development challenges. Thirty years later, I follow the Malinvaud‐Chakravarty’s line of reasoning by questioning the form and usefulness of collective planning. A review of recent insights from different fields of economic thoughts shows that what may be lacking is good formation and coordination of expectations (expectational coordination, public economics, political economics, collective decision making and planning). I elaborate on one particular analytical approach to planning, the main objective of which is to foster collective deliberation and bargaining. Rather than determining alone what is the optimal policy, a ‘dialogue analysis’ aims at clarifying the sources of disagreements about the best design of sustainable development strategies. Two applications confront this theoretical reflexion to concrete challenges of the twenty-first century: The design of national strategies against climate change and carbon pricing policies.

PP 2019-06
French Attitudes over Climate Change and Climate Policies

Thomas Douenne – Adrien Fabre

Abstract
This paper aims to assess the prospects for French climate policie safter the Yellow Vests crisis halted the planned increase in the carbon tax. From a large representative survey, we elicit knowledge, perceptions and values over climate change, we examine opinions relative to carbon taxation, and we assess support for other climate policies. Specific attention is given to the link between perceptions of climate change and attitudes towards policies. The paper also studies in detail the determinants of attitudes in terms of political and socio-demographic variables. Among many results, we find limited knowledge but high concern for climate change. We also document a large rejection of the carbon tax but majority support for stricter norms and green investments, and reveal the rationales behind these preferences. Our study entails policy recommendations, such as an information campaign on climate change. Indeed, we find that climate awareness increases support for climate policies but no evidence for the formation of opinions through partisan cues as in the US, suggesting that better access to science could foster support for climate policies.

PP 2019-05
Can We Reconcile French People with the Carbon Tax? Disentangling Beliefs from Preferences

Thomas Douenne – Adrien Fabre

Abstract
Using a new survey and National households’ survey data, we investigate French perception over carbon taxation. We find that French people largely reject a tax and dividend policy where revenues of the tax would be redistributed uniformly. However, their perception about the properties of the tax are biased: people overestimate the negative impact on their purchasing power, wrongly think the scheme is regressive, and do not perceive it as environmentally effective. Our econometric analysis shows that correcting these three bias would suffice to generate majority acceptance. Yet, we find that people’s beliefs are persistent and their revisions biased towards pessimism, so that only few can be convinced.

PP 2019-04
How sensitive are optimal fully renewable power systems to technology cost uncertainty?

Behrang Shirizadeh – Quentin Perrier – Philippe Quirion

Abstract
Many studies have demonstrated the feasibility of fully renewable power systems in various countries and regions. Yet the future costs of key technologies are highly uncertain and little is known about the robustness of a renewable power system to these uncertainties. We build 315 long-term cost scenarios on the basis of recent prospective studies, varying the costs of key technologies. We model the optimal renewable power system for France over 18 meteorological years, simultaneously optimizing investment and dispatch.
Our results show that the optimal energy mix is highly sensitive to cost assumptions: the installed capacity in PV, onshore wind and power-to-gas varies by a factor of 5, batteries and offshore wind even more. Nevertheless, we have a robust result showing that the cost of a 100% renewable power system will not be higher than today. Finally, we show that the cost of not installing the absolutely ‘optimal’ mix is limited. Contrary to current estimates of increasing integration costs, this indicates that renewable technologies will become by and large substitutable.

PP 2019-03
Carbon Pricing and Power Sector Decarbonisation: Evidence from the UK

Marion Leroutier

Abstract
The electricity and heat generation sector represents about 25% of global greenhouse gas (GHG) emissions. Policy-makers have implemented a variety of instruments to decarbonise their power sector. This paper examines the UK Carbon Price Floor (CPF), a novel carbon pricing instrument implemented in the United Kingdom in 2013. After describing the potential mechanisms behind the recent UK power sector decarbonisation, I apply the synthetic control method on country-level data to estimate the impact of the CPF on per capita emissions. I discuss the importance of potential confounders and the amount of net electricity imports imputable to the policy. Depending on the specification, the abatement associated with the introduction of the CPF range from 106 to 185 millions tons of equivalent CO2 over the 2013-2017 period. This implies a reduction of between 41% and 49% of total power sector emissions by 2017. Several placebo tests suggest that these estimates capture a causal impact. This paper shows that a carbon levy on high-emitting inputs used for electricity generation can lead to successful decarbonisation.

PP 2019-02
The economic value of NBS restoration measures and their benefits in a river basin context: A meta-analysis regression

Nabila Arfaoui – Amandine Gnonlonfin

Abstract
The study collects original monetary estimates for Nature Based Solutions (NBS) and benefits, with restoration approach in a basin context. A database of 187 monetary estimates is constructed to perform the first meta-analysis, which will assess how individuals value the NBS restoration measures and their primary and co-benefits. Demonstrating the monetary value of these benefits should improve decision-making in promoting the adoption of NBS and lead to greater protection of ecosystems. We find that individuals value, in particular, global climate regulation, local environmental regulation, recreational activities, and habitat and biodiversity benefits. We find also that NBS measures aimed at floodplains and river streams are more highly valued. The results of this study suggest that the Willingness-to-pay (WTP) is weakly influenced by the methodological variables. We found that primary studies using the contingent valuation method report higher WTP compared to those using choice experiment method. Moreover, the payment modes (local-tax, national-tax, donation and water bill) and econometric estimation methods (parametric, semiparametric and non-parametric) have only a marginal effect. Indeed most of these variables are insignificant with the exception of local-tax, water-bill and parametric variables which are significantly negative. Survey modes (internet, face to face and mix) are never significant. Finally, the coefficients of America and Europe are significantly positive, indicating that the monetary value of river restoration is higher in countries in these areas.

PP 2019-01
The Economics of Recycling Rate: new insights from a Waste Electrical and Electronic Equipment

Florian Fizaine

Abstract
In this paper, we address the issue relative to the determinants of metal recycling rate. The literature on recycling flows is scarce and does not directly address the issue of achieving high recycling rate. In addition, the existing literature has not quantified the recycling rate response to metal price. This is why we explore factors of the recycling rate of different metals embodied in computer. We examine the effect of metal price, metal concentration in product, and relative concentration ratio (competition between primary and secondary supply) on recycling rate. Although we find a significant effect of metal price on recycling rate, the marginal response is very low across different type of models (OLS, GLM, FRMER, left censored Tobit). This effect is not surprising and in line with the existing literature relative to recycling flows. Conversely, it seems that recycling rate is more elastic to other technical factors like the metal concentration in products or the relative concentration ratio. We discuss public policies deriving from our results. We need more data and interdisciplinary studies to support these preliminary results.

2018

PP 2018-09
Evolution of EROIs of Electricity Until 2050: Estimation and Implications on Prices

Adrien Fabre

Abstract
The EROI –for Energy Returned On Invested– of an energy technology measures its ability to provide energy efficiently. Previous studies draw a link between the affluence of a society and the EROI of its energy system, and show that EROIs of renewables are lower than those of fossil fuels. Logically, concerns have been expressed that system-wide EROI may decrease during a renewable energy transition. First, I explain theoretically that the EROIs of renewables themselves could then decrease as energy-efficient fossil fuels would be replaced by less energy-efficient renewables in the supply-chain. Then, using the multiregional input-output model THEMIS, I estimate the evolution of EROIs and prices of electric technologies from 2010 to 2050 for different scenarios. Global EROI of electricity is predicted to go from 12 in 2010 to 11 in 2050 in a business-as-usual scenario, but down to 6 in a 100% renewable one. Finally, I study the economic implication of a declining EROI. An inverse relation between EROI and price is suggested empirically, even though theory shows that both quantities may move in the same direction.

PP 2018-08
The Role of Individual Preferences in Explaining the Energy Performance Gap

Salomé Bakaloglou – Dorothée Charlier

Abstract
The aim of this research is to understand the role of socio-economic characteristics and individual preferences to explain the energy performance gap in the residential sector. The gap reflects the difference between theoretical energy consumption of home assessed by engineering models and real energy consumption. Using the ratio of the two consumptions as a measure of the gap, we perform a quantile regression to tease out the effects of preferences on the entire distribution of the energy performance gap spectrum instead of focusing on the conditional average. As a result, this research provides an original contribution: depending on the sense of the gap, our findings suggest that some significant drivers are individual preferences for comfort over economy, explaining until 12% of the gap variability, and poverty. In such a context, some warnings to public authorities are provided regarding the issues of rebound effect and household welfare.

PP 2018-07
Competitive Advantage in the Renewable Energy Industry: Evidence from a Gravity Model

Published in Renewable energy (2018), 131, 472-481.

Onno Kuik – Frédéric Branger – Philippe Quirion

Abstract
Pioneering domestic environmental regulation may foster the creation of new eco-industries. These industries could benefit from a competitive advantage in the global market place. This article examines empirical evidence of the impact of domestic renewable energy policies on the export performance of renewable energy products (wind and solar PV). We use a gravity model of international trade with a balanced dataset of 49 (for wind) and 40 (for PV) countries covering the period 1995-2013. The stringency of renewable energy policies are proxied by installed capacities. Our econometric model shows evidence of competitive advantage positively correlated with domestic renewable energy policies, sustained in the wind industry but brief in the solar PV industry. We suggest that the reason for the dynamic difference lies in the underlying technologies involved in the two industries.

PP 2018-06
From residential energy demand to fuel poverty : income-induced non-linearities in the reactions of households to energy price fluctuations

Forthcoming in The Energy Journal.

Dorothée Charlier – Sondès Kahouli

Abstract
In this paper, we propose a panel threshold regression (PTR) model to empirically test the sensitivity of French households to energy price fluctuations – as measured by the elasticity of residential heating energy prices – and to analyze the overlap between their income and fuel poverty profiles. The PTR model allows to test for the non-linear effect of income on the reactions of households to fluctuations in energy prices. Thus, it can identify specific regimes differing by their level of estimated price elasticities. Each regime represents an elasticity-homogeneous group of households. The number of these regimes is determined based on an endogenously PTR-fixed income threshold. Thereafter, we analyze the composition of the regimes (i.e. groups) to locate the dominant proportion of fuel-poor households and analyse their monetary poverty characteristics.
Results show that, depending on the income level, we can identify two groups of households that react differently to residential energy price fluctuations and that fuel-poor households belong mostly to the group of households with the highest elasticity. By extension, results also show that income poverty does not necessarily mean fuel poverty.
In terms of public policy, we suggest focusing on income heterogeneity by considering different groups of households separately when defining energy efficiency measures. We also suggest paying particular attention to targeting fuel-poor households by examining the overlap between fuel and income poverty.

PP 2018-05
The vertical and horizontal distributive effects of energy taxes: A case study of a French policy

Thomas Douenne

Abstract
This paper proposes a micro-simulation assessment of the distributional impacts of the French carbon tax. It shows that the policy is regressive, but could be made progressive by redistributing the revenue through a flat-recycling. However, it would still generate large horizontal distributive effects and harm an important share of low-income households. The determinants of the tax incidence are characterized precisely, and alternative targeted transfers are simulated on this basis. The paper shows that given the importance of unobserved heterogeneity in the determinants of energy consumption, horizontal distributive effects are much more difficult to tackle than vertical ones.

PP 2018-04
Energy efficiency as a credence good: A review of informational barriers to building energy savings

Louis Gaëtan Giraudet

Abstract
Information problems have early been suspected to be the main barrier to energy-efficiency investment. I review the vast yet piecemeal research that has been carried out since. Focusing on energy efficiency in buildings, I organize the review around the concept of credence good: just like that of auto repairs or taxi rides, the quality of energy-efficiency measures is never fully revealed to the buyer; as a result, it is subject to multiple information asymmetries. My first contribution is to distinguish symmetric-information problems from information asymmetries. The former arise when information is either incomplete or imperfect, but equally shared by contracting parties; as non-market failures, these can be addressed by technological progress and insurance markets. My second contribution is to give structure to the information asymmetries associated with energy efficiency by disentangling screening, signalling, moral hazard and price discrimination within a variety of contractual relationships involving buyers and sellers, owners and renters, and borrowers and lenders. I find evidence of information asymmetries to be compelling in landlord-tenant relationships, unclear in real estate markets, and scarce in retrofit contracting and financing. I conclude by discussing the intricacies between informational and behavioural problems in energy-efficiency decisions.

PP 2018-03
A preliminary assessment of the indicators for Sustainable Development Goal (SDG) 14 “Conserve and sustainably use the oceans, seas and marine resources for sustainable development”

Laura Recuero Virto

Abstract
The SDGs are intended to address sustainable development processes in both developed and developing countries, and to facilitate action at all levels and with all actors, including government, civil society, the private sector and the science community to strengthen the capacity of the State to achieve the desired outcomes. The SDG 14 “Conserve and sustainably use the oceans, seas and marine resources for sustainable development” covers, among other features, economic pressures on the marine environment, as well as the Small Island Developing States (SIDS) and coastal communities since they are particularly impacted by the economic pressures and dependent on the oceans in socio-economic terms. This paper reviews the rational for the SDG 14, as well as the framework for the SDG 14 indicators including (i) the basic concepts, i.e. the role of uncertainty, irreversibility and thresholds in the marine context, the multidimensionality of the SDG 14 indicators, and how to ensure effective SDG 14 monitoring and implementation through SMART SDG 14 targets; (ii) synergies and trade-offs among the SDG 14 targets and between SDG 14 and other SDGs targets, and how to track progress on policy coherence at the national level; (iii) synergies between SDG 14 indicators, and ocean-related Millennium Development Goals (MDGs) 7 and Multilateral Environmental Agreements (MEAs) targets and indicators; and (iv) the role of non-traditional sources of data such as big data. In addition, some preliminary indicators for the SDG 14 at the global and national scales (France) are also explored. As a result of this analysis, some areas for future research in the framework of SDG 14 indicators are proposed, i.e. building on the frontiers of ocean science, the development of innovative approaches for data collection, the development of common approaches in valuing marine ecosystem services and national accounting, the provision of incentives for best practice and peer-learning, the harmonisation of measurement methodologies and the selection of SDG 14 indicators according to the geographical level of intervention.

PP 2018-02
Do Entrepreneurship Policies Work? Evidence from 460 Start-Up Program Competitions Across the Globe

Geoffrey Barrows

Abstract
Many organizations around the world implement programs designed to encourage entrepreneurship, including grant prize awards, accelerator programs, incubators, etc. The goal of these programs is to supply entrepreneurs with early-stage support and visibility to help develop ideas and attract capital; but, if capital markets are efficient, good business ideas should find funding anyways. In this paper, I present evidence from the first global-scale, quasi-experimental study of whether entrepreneurship programs improve outcomes for start-up firms. I employ a regression discontinuity design to test whether winners of start-up program competitions perform better ex-post than losers, where the threshold rank for winning the competition provides exogenous variation in program participation. With 460 competitions across 113 countries and over 20,000 competing firms, I find that winning a competitions increases the probability of firm survival by 64%, the total amount of follow-on financing by $260,000 USD, and total employment by 47%, as well as other web-based metrics of firm success. Impacts are driven by medium-size prize competitions, and are precisely estimated both in countries where the costs of starting a business are low and where these costs are high. These results suggest that capital market frictions indeed prohibit start-up growth in many parts of the world.

PP 2018-01
On the power of indicators: how the choice of the fuel poverty measure affects the identification of the target population

Forthcoming in Applied Economics.

Florian Fizaine – Sondès Kahouli

Abstract
We propose a critical analysis of fuel poverty indicators and demonstrate that choosing a given fuel poverty indicator and, in particular, its threshold level, is central to the identification of the fuel-poor population.
First, we conducted an inter-indicator analysis to show how profiles of fuel-poor households vary depending on the indicator selected. More specifically, after identifying groups of affected house- holds using a set of objective and subjective measures, we designed a multidimensional approach based on a combination of complementary methods, namely, a multiple correspondence analysis and a hierarchical and partitioning clustering analysis to analyse their characteristics. Through this framework, we highlight the difficulty of identifying a “typical profile” for fuel-poor households because of the significant variability in their characteristics and we show that the composition of the population depends on the choice of the indicator.
Second, we applied an intra-indicator analysis using two objective expenditure-based indicators with thresholds. In particular, we conducted a sensitivity analysis based on a logit model including variables describing household and dwelling characteristics. We show that the profiles of fuel-poor households as well as the drivers of fuel poverty vary considerably with the chosen threshold level.
Given these findings, we stress the need to review how we currently rely on conventional fuel poverty indicators to identify affected groups and give some recommendations.

2017

 

PP 2017-09
Transitional Restricted Linkage between Emissions Trading Schemes

Forthcoming in Environmental and Resource Economics (2018).

Simon Quemin – Christian de Perthuis

Abstract
Linkages between Emissions Trading Systems are deemed an important element of the future climate policy landscape. They are, however, difficult to agree and remain few and far between. Temporary restrictions on permit trading have potential to facilitate and gradually approach unrestricted, full linkage. We compare the relative merits of several link restrictions in this respect, namely quantitative restrictions, border permit taxes, exchange and discount rates, and unilateral linkage. To this end, we develop a simple model to have a unifying, comparative framework which, in conjunction with lessons from real-world experiences, serves a basis for a broader, policy-oriented discussion.

PP 2017-08
Compensating households from carbon tax regressivity and fuel poverty : a microsimulation study

Published in Energy Policy (2019), 124, 81-94.

Audrey Berry

Abstract
For households, taxing carbon raises the cost of the energy they use to heat their home and to travel. This paper studies the distributional impacts of the recently introduced French carbon tax and the design of compensation measures. Using a microsimulation model built on a representative sample of the French population from 2012, I simulate for each household the taxes levied on its consumption of energy for housing and transport. Without recycling, the carbon tax is regressive and increases fuel poverty. However, I show how compensation measures can offset these impacts. A flat cash transfer offsets tax regressivity by redistributing <60% of households’ contribution. This result falls to 17% when the transfer is targeted at low income households. Furthermore, I find that targeting the cash transfer reduces fuel poverty by up to 50% below its pre-tax level with a 30.50€/tCO2 carbon tax. These results demonstrate compensating households is achievable at reasonable cost relative to carbon tax revenues. Carbon taxation even constitutes an opportunity to finance ambitious policies to fight fuel poverty.

PP 2017-07
La coopération climatique après l’Accord de Paris – Valeur des émissions négatives et coût de la non-action quand la concentration de CO2 dépasse 400ppm

Dominique Bureau

Abstract
The concern for universal participation in the Paris Agreement has been costly in terms of ambition. In the absence of corrections to the trajectories envisioned for the 2030 horizon by national contributions, not only the carbon budget compatible with the objective of containing global warming below 2°C will be by far exceeded at this horizon, but the rupture to be made at that time and the emission reduction rates to be achieved beyond that point make the very feasibility of the 2°C objective problematic […].

PP 2017-06
A cost-benefit approach for prioritizing invasive species

Published in Ecological Economics (2018), 146, 607-620.

Pierre Courtois – Charles Figuières – Chloé Mulier – Joakim Weill

Abstract
Biological invasions entail massive biodiversity losses and tremendous economic impacts that justify significant management efforts. Because the funds available to control biological invasions are limited, there is a need to identify priority species. This paper first reviews current invasive species prioritization methods and explicitly highlights their pitfalls. We then construct a cost-benefit optimization framework that incorporates species utility, ecological value, distinctiveness, and species interactions. This framework offers the theoretical foundations of a simple method for the management of multiple invasive species under a limited budget. We provide an algorithm to operationalize this framework and render explicit the assumptions required to satisfy the management objective.

PP 2017-05
Does social housing mitigate fuel poverty?

Dorothée Charlier – Bérangère Legendre – Anna Risch

Abstract
Fuel poverty in developed countries is a growing concern as between 50 and 125 million Europeans are unable to afford the energy needed for adequate heating, cooking, light, and use of appliances in the home. Tackling fuel poverty has thus become a public policy challenge. The literature reports that rising fuel prices, low incomes, and energy-inefficient housing are the main causes of fuel poverty. However, existing public policies focus mainly on price- and income-based measures to reduce fuel poverty. One government policy, social housing, impacts all three causes of fuel poverty. Since it is highly regulated and heavily influenced by government policies, social housing might be a powerful policy instrument to reduce fuel poverty. Social housing has the potential to fight housing energy inefficiency, which is one cause of fuel poverty, especially as governments promote the construction and renovation of social housing. In this paper, we assess the effectiveness of such measures through matching methods and find that living in social housing decreases fuel poverty by 4.1% to 8.5%, depending on the definition of fuel poverty.

 

PP 2017-04
Impact du changement climatique sur l’agriculture : détermination de l’existence d’un biais de prix dans les études ricardiennes

Fabrice Ochou – Philippe Quirion

Abstract
This study shows the existence of a price bias in the so-called “Ricardian” studies inspired by Mendelsohn et al. (AER, 1994) and quantifies this bias. To do this, we use panel data on the 45 provinces of Burkina Faso over 12 years. The crops studied are maize, millet and sorghum. The analysis shows that the effects of climate variables on the yield and value of production per hectare of maize and millet are not the same, reflecting the presence of a price bias. In the case of Sorghum, the effects of climatic variables on yields and the value of production per hectare are practically the same, indicating the absence of statistically significant price bias. Quantifying the price bias in cases where it exists, ie for maize and millet shows that the more unfavorable the climate change, the greater the price bias will be. In the worst case, it reaches a gap of 2.05 percentage point for millet and 0.92 percentage point for maize. From this analysis, Ricardian in cross sectional or even panel studies assuming constant prices underestimate the impact of climate change by using income or value of production.

PP 2017-03
Does the literature support a high willingness to pay for green label buildings? An answer with treatment of publication bias

Published in Revue d’économie politique (2018), 128(5), 1013-1046.

Florian Fizaine – Pierre Voye – Catherine Baumont

Abstract
Increasing attention is being paid to the building sector due to its importance in the climate change debate. In recent years, a growing literature on the price premium paid by consumers to access more efficient and sustainable buildings has emerged as a common topic in hedonic model estimations. In this paper, we aim to provide a summary of this literature by conducting a meta-analysis of more than 50 studies from around the world. In this way, based on a random effects models and weighted OLS robust clustering estimations, we offer an average estimation of the price premium accepted by economic agents (in terms of sale prices) in order to enjoy energy efficient and sustainable buildings. This supports the argument that investing in building refurbishment is worthwhile and economically relevant. However, our data seem to show a major publication bias. Correcting for this bias leads us to halve the original estimation (from 8% to 4%). In addition, we analyze the sources of result dispersion by performing a meta-regression using different moderators (type of publication, sample analysis period, econometric method, etc.). We also carry out different statistical tests and use alternative selection criteria in order to check whether our estimations are robust. Finally, we make recommendations for future hedonic studies as well as for upcoming meta-analyses of the green building premium.

PP 2017-02
Can Land Fragmentation Reduce the Exposure of Rural Households to Weather Variability?

Published in Ecological Economics (2018), 154, 42-51.

Stefanija Veljanoska

Abstract
Climate change continuously affects African farmers that operate in rain-fed environments. Coping with weather risk through credit and insurance markets is almost inexistent as these markets are imperfect in the African economies. Even though land fragmentation is often considered as a barrier to agricultural productivity, this article aims at analyzing whether land fragmentation, as an insurance alternative, is able to reduce farmers’ exposure to weather variability. In order to address this research question, I use the Living Standards Measurement Study-Integrated Surveys on Agriculture (LSMS-ISA) data on Uganda. After dealing with the endogeneity of land fragmentation, I find that higher land fragmentation decreases the loss of crop yield when households experience rain deviations. Therefore, policy makers should be cautious with land consolidation programs.

PP 2017-01
French nuclear bet

Published in Energy Economics (2018), 74, 858-877.

Quentin Perrier

Abstract
After the first oil shock, France fully engaged in the world’s largest nuclear program, ordering 36 reactors within two years. These reactors are now reaching the end of their lifetime, so a new policy must be defined: Should they be retrofitted or decommissioned? What are the prospects for nuclear afterwards? The best economic decision crucially depends on the future costs of nuclear, demand levels and CO2 price, which are all subject to significant uncertainty.
To deal with these uncertainties, we apply the framework of Robust Decision Making to determine which plants should be retrofitted. We build an optimization model of investment and dispatch, calibrated for France. Then we use it to study 27 retrofit strategies for all combinations of uncertain parameters.
Based on nearly 3,000 runs, our analysis reveals one robust strategy, which is to shut down from 7 to 14 of the oldest 14 reactors, and then extend the lifetime of all remaining reactors. Departing from cost-minimization strategies and from the French official scenarios, this provides a hedge against unexpected high retrofit cost, decreasing demand or low CO2 price. But we also show how this strategy remains vulnerable to a combination of these three elements, which helps understand and put numbers on the current debate.
In the longer term, we show that the optimal share of nuclear in the power mix decreases. If the cost of new reactors (EPR or else) remains higher than 80 €/MWh, this optimal share drops below 40% in 2050. A combination of variable renewables, hydropower and gas becomes competitive, even if the price of CO2 reaches 200 €/tCO2.

2016

PP 2016-08
Multiple Standards: the Case of the French Building Industry

Mireille Chiroleu-Assouline

Abstract
The building sector is simultaneously characterized by regulation pervasiveness, by the superposition and overlapping of technical standards, and by a profusion of labels. This paper analyzes the rationale for such a multiplicity of mandatory and voluntary standards. The main consequences are the risk of confusion in the minds of buyers and the rise in prices due to the additional costs imposed by the continuous progression of requirements and the need to comply with many different standards. Both effects seriously hamper the penetration of the market by the products with the most demanding labels. The simplification of this regulatory and normative package would likely improve the economic efficiency of the sector.

PP 2016-07
The land use change time-accounting failure

Marion Dupoux

Abstract
Land use change (LUC) is the second human-induced source of greenhouse gases (GHG). This paper warns about the LUC time-accounting failure in internalizing GHG impacts in economic appraisal (within policies). This emerges from (i) relative carbon prices commonly following the Hotelling rule as if climate change were regarded as an exhaustible resource problem and (ii) a uniform annualization (i.e. constant flows over time) of LUC impacts supported by most energy policies. First, carbon prices time evolution should account for the climate change framework specificities (natural carbon absorption, uncertainty), which makes a departure from the Hotelling rule necessary. Second, there is a carbon dynamic after land conversion: GHG impact flows are strictly decreasing over time. With a theoretical framework, I show that the employment of the uniform annualization, within a benefit-cost analysis, enhances both the discounting overwhelming effect and the carbon price increase, whatever the type of impact (emissions or sequestrations). It results in skewed values of LUC-related projects as long as relative carbon prices deviate from the Hotelling rule. I apply this framework to global warming impacts of bioethanol in France and quantify this bias. In particular, carbon profitability payback periods under the uniform approach do not reflect the LUC effective carbon investment. This potentially modifies the conclusions regarding a project’s achievement of imposed environmental criteria.

PP 2016-06
Fuel Poverty: a Composite Index Approach

Forthcoming in The Energy Journal.

Dorothée Charlier – Bérangère Legendre

Abstract
Fuel poverty is an increasingly serious problem across countries. However, fuel poverty is not well defined and measured. Today, fuel poverty objective measure which takes into account monetary constraint, bad energy efficiency of the dwelling and heating restriction does not exist. Fuel poverty has been mainly treated as a problem of monetary poverty. However households concerned by a fuel poverty issue are not exactly the same than those concerned by monetary problems. Thus, in this paper, we provide the first Fuel Poverty Index (FPI) taking into account all dimensions of the definition. This index is calculated using objective measures such as (i) the disposable income to consider the monetary constraint, (ii) the energy consumption as a measure of energy efficiency and (iii) the indoor temperature in order to capture heating restriction. Using a matching estimation, the quality of the indoor temperature as a proxy of heating restriction is demonstrated.

PP 2016-05
An evaluation of French municipal solid waste pricing system

Houévoh Amandine Gnonlonfin

Abstract
This study investigates the preventive effect and substitution effect of the Municipal Solid Waste (MSW) pricing policy in France. We examine the relationship between quantities of MSW and incentive taxes with the use of a panel of 96 French metropolitan departments between 2005 and 2011, and we use panel data and Heckman two-step estimation in order to consider sample selection. We perform the analysis for the collection of MSW and six technologies of management of the waste, namely recycling materials, composting, incineration with and without energy recovery, landfilling and dumping. We estimate the elasticity of the collection of MSW and the elasticity of these technologies in relation to three incentive taxes of the French pricing system by considering the endogeneity of municipality’s decisions about both local incentive tax and technology choice. The results confirm that the French MSW pricing system has a preventive and a substitution effect and show that these effects are complementary.

PP 2016-04
Natural capital accounts and public policy decisions: Findings from a survey

Published in Ecological Economics (2018), 144, 244-259.

Mathilde Jeantil – Laura Recuero Virto – Jean-Louis Weber

Abstract
The initiatives in natural capital accounting have multiplied in the recent years, particularly concerning ecosystem accounts. Policy commitmments in natural capital accounts are also proliferating. Yet, natural capital accounting has been rarely used so far to inform public policy decisions. Based on a survey for statistical offices and ministries and independent experts worldwide, we seek to bring some light on the obstacles in the use of natural capital accounts for public policy decisions. We find that, independently of the income level, countries are equally engaged in the integration of natural capital accounts in theircommitments and strategies. And yet, there is very little use of natural capital accounts for public policy decisions and, more so, in developing countries. The most relevant obstacles are the lack of political support by key people and institutional leadership unable to promote policy use by other ministries. Even if projects should preferably be demand-driven, raising awareness on the existence and uses of accounts is essential among the different levels of government administration. Concerning developing countries, the factor which is considered as the most relevant in preventing the use of natural capital accounts for policy making is the stage of development of the country. In addition, respondents from statistical institutes and developing countries are particularly concerned about institutional obstacles and, to a lesser extent, data availability and cooperation. Respondents from ministries and independent experts are also particularly concerned about design obstacles, such as the difficulty to draw a link between natural capital accounts and policy decisions and unclear guidelines forthe creation of the accounts. Besides, natural capital accounts are used for policy decisions with a certain lag with respect to their creation and hence no rapid action should be expected immediately following initial investments on accounts. A key result of the survey is the need to evaluate the value-added of natural capital accounts with respect to statistics, prior to the development of accounts. Indeed, localproblems and habitats might be better addressed through cost-benefit analysis. To conclude, most probably only once we witness a major environmental event, natural capital accounts will be considered as sufficiently relevant from a policy standpoint to attain the same degree of maturity as national income accounts both in their development and in their integration in the decision-making process.

PP 2016-03
Interaction between CO2 emissions trading and renewable energy subsidies under uncertainty: feed-in tariffs as a safety net against over-allocation

Published in Climate Policy (2019), 18(9), 1002-1018.

Oskar Lecuyer – Philippe Quirion

Abstract
We study the interactions between a CO2 emissions trading system (ETS) and renewable energy subsidies under uncertainty over electricity demand and energy costs. We first provide evidence that uncertainty has generated over-allocation (defined as an emissions cap above business-as-usual emissions) during at least part of the history of most ETSs in the world. We then develop an analytical model and a numerical model applied to the European Union electricity market in which renewable energy subsidies are justified only by CO2 abatement. We show that in this context, when uncertainty is small, renewable energy subsidies are not justified, but when it is big enough, these subsidies increase expected welfare because they provide CO2 abatement even in the case of over-allocation.
The source of uncertainty is important when comparing the various types of renewable energy subsidies. Under uncertainty over electricity demand, renewable energy costs or gas prices, a feed-in tariff brings higher expected welfare than a feed-in premium because it provides a higher subsidy when it is actually needed i.e. when the electricity price is low. Under uncertainty over coal prices, the opposite result holds true. These results shed new light on the ongoing switch from feed-in tariffs to feed-in premiums in Europe.

PP 2016-02
La transition énergétique est-elle favorable aux branches à fort contenu en emploi ? Une approche input-output pour la France

Published in Revue d’économie politique (2017), 127(5), 851-887.

Quentin Perrier – Philippe Quirion

Abstract
In the public debate on energy transition in France, employment figures prominently. We calculate, for the French economy in 2010, the employment content and greenhouse gas intensities in different branches, that is to say the number of jobs and tonne-CO2 equivalent per million euro of final demand. For this we use the input-output table at the most disaggregated level available (64 branches). We develop and then apply a unique methodology to decompose the differences in job content between industries in five factors: the rate of imports of final products, the rate of imports of intermediate goods, the rates of taxes and subsidies, the levels of wages and the share of labor compensation in value added. Finally, we study some intersectoral substitutions that would result from an energy transition to reduce emissions of greenhouse gases.

PP 2016-01
Reducing the Energy Burden of the Poor and Greenhouse Gas Emissions: Can We Kill Two Birds with One Stone?

Published as “Energy Burden Alleviation and Greenhouse Gas Emissions Reduction: Can We Reach Two Objectives With One Policy?”, Ecological Economics (2017), 143, 294-313.

Dorothée Charlier – Anna Risch – Claire Salmon

Abstract
In this article, we assess current public policies, designed to reduce greenhouse gas (GHG) emissions, lower energy consumption, and fight the “energy burden” in the long term, so that it might offer relevant policy recommendations. We develop an existing partial equilibrium model to take into consideration key determinants of excessive energy burden. This analysis reveals that public policies are not sufficient to reach the ambitious objectives for reducing energy consumption and GHG emissions in France. Moreover, the decreases that might occur disguise significant social disparities across households. The joint implementation of multiple instruments leads to interactions that diminish overall policy outcomes. Overall, current public policies produce estimated free-riding rates of 75%. Energy efficiency measures are thus insufficient; governments need to focus more on monetary poverty as a cause of low renovation rates and consider subsidies of renovation costs as a potential solution.

2015

PP 2015-06
Environmental Impacts of the French Final Consumption

Laurent Meunier – Frédéric Gilbert – Eric Vidalenc

Abstract
In order to fight against climate change, ambitious targets have been set, such as decreasing carbon emissions by 75% in France compared to 1990. Yet, focusing on territorial impacts leads to overlook import-embedded impacts. As a matter of fact, French territorial greenhouse gases (henceforth GHG) emissions have slightly decreased since 1990, whereas consumption-based emissions have been shown to increase. This is why we focus in this paper on consumption-based emissions rather than territorial emissions. Moreover, our analysis is not carbon-emissions focused. Indeed, the following environmental impacts are taken into account: air acidification, photochemical oxidation and non-dangerous industrial wastes. This a first contribution. Secondly, we build a scenario of French households final consumption in 2030 aiming at decreasing its environmental impacts. Finally, a deep matrix algebra analysis gives us precious hints on the reliability of the results.

PP 2015-05
L’information préventive améliore-t-elle la perception des risques majeurs? Impact de l’Information Acquéreur Locataire sur le prix des logements

Amélie Mauroux

Abstract
This article evaluates the impact of a seller’s disclosure, the ”Information Acquéreur Locataire” (IAL), on the housing prices and natural risk perception in at-risk areas. The date of implementation of the IAL, June the 1st 2006, as an exogenous shock on the buyers’ information on risk exposure of the housing units. A difference-in-differences hedonic price model is estimated on an unique database merging notary data on individual transactions in 2006 and the maps of the at-risk regulated areas. The results suggest that the implementation of the IAL increased the share of informed buyers : every else hold equal, in towns under a PPRi the price of some housing units under IAL decreased compared to the price of similar units located outside the at-risk regulated perimeters. It is the case for apartments on the first floor or in towns hit by a natural disaster the year before the sale. The implementation of the IAL also decreased the probability that, after June 2006, at-risk individual houses were sold to buyers living in another town and thus less likely to be informed on the local natural risk exposure.

PP 2015-04
The Long Run Impact of Biofuels on Food Prices

Ujjayant Chakravorty – Marie-Hélène Hubert – Michel Moreaux – Linda Nostbakken

Abstract
More than 40% of US corn is now used to produce biofuels, which are used as substitutes for gasoline in transportation. Biofuels have been blamed universally for past increases in world food prices, and many studies have shown that these energy mandates in the US and EU may have a large (30-60%) impact on food prices. In this paper, we use a partial equilibrium framework to show that demand-side effects – in the form of population growth and income-driven preferences for meat and dairy products rather than cereals – may play as much of a role in raising food prices as biofuel policy. By specifying a Ricardian model with differential land quality, we find that a significant amount of new land will be converted to farming, which is likely to cause a modest increase in food prices. However, biofuels may increase aggregate world carbon emissions, due to leakage from lower oil prices and conversion of pasture and forest land for farming.

PP 2015-03
Cross-commuting and housing prices in a polycentric modeling of cities

Vincent Viguié

Abstract
Long term strategies, relying on city planning and travel demand management, are essential if deep GHG reduction ambitions are to be achieved in urban transport sector. However, how to precisely design such strategies remains unclear. Indeed, whereas there is a broad consensus that urban spatial structure is a key determinant in explaining travel pattern generation, the mechanisms are not yet fully understood. Especially, the interplay between commuting and localization choices leading to cross commuting in a polycentric city remains an open question, and cannot be easily explained using existing urban economics frameworks. In this study, we introduce a novel urban economic framework, fully micro-economic based, which describes land prices, population distribution and commuting travel choices in a polycentric city, with jobs locations exogenously given. It relies on the modeling of moving costs and market imperfections, especially housing-search imperfections. Using Paris as a case study, we show how this model, when adequately calibrated, reproduces available data on the internal structure of the city (rents, population densities, travel choices). A validation over the 1900-2010 period also shows that the model captures the main determinants of city shape evolution over this time. This suggests that this tool can be used to inform policy decisions

PP 2015-02
Quel  mode  de  soutien  pour  les  énergies  renouvelables  électriques ?

Published in Revue Française d’Economie (2015), XXX(4), 105-140.

Philippe Quirion

Abstract
While most developed and emergent countries support renewable energies in the power sector, they do so in a different manner. The three main existing support systems are feed-in-tariffs, feed-in-premiums and tradable renewable quotas. We provide a survey of the literature which compares these support systems. We conclude that tradable renewable quotas suffer from many weaknesses compared to the other two: bad reaction to uncertainty, important risk for funders which increases investment cost, higher transaction costs. Both feed-in-tariffs and premiums have pros and cons and there is little evidence that the transition from the former to the latter, currently occurring in Germany and France, is justified. Finally, beyond the choice between tariff and premium, many concrete choices are at least as important such as the way to finance the support and the differentiation between market segments, necessary to limit the rents but potentially a source of inefficiency.

PP 2015-01
Global Sensitivity Analysis of an Energy-Economy Model of the Residential Building Sector

Published in Environmental Modelling & Software (2015), 70, 45-54.

Frédéric Branger – Louis-Gaëtan Giraudet – Céline Guivarch – Philippe Quirion

Abstract
In this paper, we discuss the results of a sensitivity analysis of Res-IRF, an energy-economy model of the demand for space heating in French dwellings. Res-IRF has been developed for the purpose of increasing behavioral detail in the modeling of energy demand. The different drivers of energy demand, namely the extensive margin of energy efficiency investment, the intensive one and building occupants’ behavior are disaggregated and determined endogenously. The model also represents the established barriers to the diffusion of energy efficiency: heterogeneity of consumer preferences, landlord-tenant split incentives and slow diffusion of information. The relevance of these modeling assumptions is assessed through the Morris method of sensitivity analysis, which allows for the exploration of uncertainty over the whole input space. We find that the Res-IRF model is most sensitive to energy prices. It is also found to be quite sensitive to the factors parameterizing the di fferent drivers of energy demand. In contrast, inputs mimicking barriers to energy efficiency have been found to have little influence. These conclusions build confidence in the accuracy of the model and highlight occupants’ behavior as a priority area for future empirical research.

2014

PP 2014-03
Reaping the carbon rent: abatement and overallocation profits in the European cement industry, insights from an LMDI decomposition analysis

Published in Energy Economics (2015), 47, 189-205.

Frédéric Branger – Philippe Quirion

Abstract
We analyse variations of carbon emissions in the European cement industry from 1990 to 2011, at the European level (EU 27), and at the national level for six major producers (Germany, France, Spain, United Kingdom, Italy and Poland). We apply a Log-Mean Divisia Index (LMDI) method, crossing data from three databases: the Getting the Numbers Right (GNR) database developed by the Cement Sustainability Initiative, the European Union Transaction Log (EUTL), and the Eurostat International Trade database.
Our decomposition method allows disentangling seven channels of emissions change: activity, clinker trade, clinker share, alternative fuels, thermal and electric energy efficiency, and electricity decarbonisation. We find that, apart from a slow trend of emissions reductions coming from technological improvements (first from a decrease in the clinker share, then from an increase in alternative fuels), most of the emissions changes can be attributed to the activity effect.
Using counterfactual scenarios, we estimate that the introduction of theEU ETS brought small but positive technological abatement (2.0% plus or minus 1.1% between 2005 and 2011). Moreover, we find that the European cement industry have gained 3.5 billion euros of « overallocation profits », mostly due to the slowdown of production. Based on these findings, we advocate for output-based allocations, based on a stringent hybrid clinker and cement benchmarking

PP 2014-02
Assessing and ordering investment in polluting fossil-fueled and zero-carbon capital

Oskar Lecuyer – Adrien Vogt-Schilb

Abstract
We study the transition from preexisting polluting fossil-fueled capital (coal power) to cleaner fossil-fueled capital (gas) and zero-carbon capital (renewable). We model exhaustible resources, irreversible investment, adjustment costs and a carbon budget; both fossil-fuel and renewable energy consumption are subject to capacity constraints. To smooth investment and spread costs, optimal investment in expensive renewable power may start before the cheaper fossil resources are exhausted. Gas power operates as a bridge technology between coal and renewable: it allows building less renewable at the beginning of the transition, moving some efforts from the short to the middle term. Finally, the popular criteria of the levelized cost of electricity is biased toward cheaper and lower-potential alternatives (gas instead of renewable) if computed against current prices. We provide numerical simulations of the European power sector based on the Commission’s energy roadmap to 2050.

PP 2014-01
Towards a Clean Vehicle Fleet: from Households’ Valuation of Fuel Efficiency to Policy Implications

Bénédicte Meurisse – Maxime Le Roy

Abstract
This paper investigates household behaviour with regard to vehicle fuel efficiency. We propose to approach the Willingness to Pay (WTP) for better fuel efficiency through the Hicksian compensating variation in income. Specifically, we distinguish the Willingness to Pay or to Accept (WTA) buying a more fuel-efficient car from the theoretical WTP for a reduction in fuel consumption without changing one’s car. Then by assuming that the household has to replace its car, we estimate a WTP for the cleanest car.
We also analyse what effect a fuel tax and/or a feebate scheme (e.g. a bonus-malus scheme) have on the WTP for the cleanest car and on the driven mileage. We find that the WTP for the cleanest car decreases following the implementation of a fuel tax. To the contrary, a feebate system leads to an increase in this WTP. But we also find that reducing the market price of the new vehicle (i.e. through a bonus) is not worthwhile in the light of the rebound effect. However, a fuel tax – as soon as it exceeds a certain level – is able to nullify the rebound effect.