2024.09 A local versus global descriptive social norm: A DCE applied to waste sorting behavior in Phnom Penh, Cambodia

Lucie Point – Pierre-Alexandre Mahieu

Abstract

2024.08 The dynamics of fertility under environmental concerns

Paolo Melindi-Ghidi –Thomas Seegmuller

Abstract

2024.07 Revisiting the resource curse: Does volatility matter?

Yassine Kirat

Abstract

2024.06 Les déterminants des distances domicile-travail : cas des aires urbaines françaises métropolitaines

Romain Gaté – Mohamed Hilal

Abstract

2024.05 Does the the EU-ETS affect the firm’s capital structure? Evidence from French manufacturing firms

Pascale Combes Motel – Aimé Okoko – Sonia Schwartz

Abstract

2024.04 Urban Foodprint and Mitigation Strategies: A Theoretical Analysis

Charles Bee-Leroux – Dorothée Brécard -Frédéric Aprahamian

Abstract

The aim of this paper is to investigate the effect of introducing a local label on consumers’ preferences for sustainable labels. The recent literature shows the interest of firms and consumers for labelling schemes. This success is a proof of the increasing sensitivity of consumers to the sustainable market. The other side of the coin is the proliferation of labels which generates confusion in consumers’ choices and leads to mistrust, reducing the visibility of the quality that labels have to guarantee. Labelling has to be like a milestone that guide consumers in their choices, but the multiplication of labels erases this role. Nevertheless, labelling remains one of the main policy tools for sustainable development, especially in the
agri-food sector, so it is necessary to remain cautious with new labelling project. Using data from a survey of more than 900 seafood consumers in the Region Sud of France, we analyze their preferences between a local label, a health label, an eco-label, and a fair-trade label, using a ranking method. The aim is to understand how the new regional seafood certificate created by the Region Sud might exacerbate consumers’ difficulties in correctly distinguishing between the different labels. Using a rank-ordered model, we show that the “health” label, which remains the preferred label for a large proportion of consumers, is clearly distinguishable from the other three labels. On the other hand, the presence of a local label creates some confusion among consumers with respect to the eco-label and the fair trade label, which it tends to replace. We conclude that the introduction of this new label promoting regional fishing will create more confusion.

Adrien Fabre – Thomas Douenne – Linus Mattauch

Abstract
We document majority support for policies entailing global redistribution and climate mitigation. Recent surveys on 40,680 respondents in 20 countries covering 72% of global carbon emissions show strong support for an effective way to jointly combat climate change and poverty: a global carbon price funding a global basic income, called the “Global Climate Scheme” (GCS). Using complementary surveys on 8,000 respondents in the U.S., France, Germany, Spain, and the UK, we test several hypotheses that could reconcile strong stated support with a lack of salience in policy
circles. A list experiment shows no evidence of social desirability bias, majorities are willing to sign a real-stake petition, and global redistribution ranks high in the prioritization of policies. Conjoint analyses reveal that a platform is more likely to be preferred if it contains the GCS or a global tax on millionaires. Universalistic attitudes are confirmed by an incentivized donation. In sum, our findings indicate that global policies are genuinely supported by a majority of the population. Public opinion is therefore not the reason that they do not prominently enter political debates.

Published in Environmental Economics and Policy Studies (2023), 25: 435–469

Aliénor Cameron – Marc Baudry

Abstract
On 14 July 2021, the European Commission formally adopted a proposal for a Carbon Border Adjustment Mechanism to mitigate the risk of carbon leakage caused by its increasingly ambitious environmental policies. There is a gap between the ways in which this issue is discussed in political spheres and the evidence provided by economic literature on it. The aim of this paper is to bridge this gap by presenting the context and policy debate surrounding carbon leakage and CBAs in the EU, reviewing the state of the economic literature on this topic, and discussing further research that is necessary to answer remaining policy concerns and unresolved research questions.

Emmanuel Combet – Gaëlle Le Treut – Aurélie Méjean – Antoine Teixeira

Abstract
This paper examines the macroeconomic and distributive impacts of carbon pricing reforms. Nous effectuons une analyse croisant des considérations de macroéconomie moderne, d’économie publique et de fiscalité, et d’économie de l’énergie et de l’environnement. We analyse an alternative widely debated for the use of carbon tax revenues: lump-sum transfers vs. cuts in existing distortionary taxes. We provide new insights on the efficiency vs. equity trade-offs of carbon pricing policies in the context of an open economy with the case study of France. We show that the terms of the equity-efficiency dilemma and the hierarchy of revenue recycling options crucially depend on the macroeconomic context and on the type of inequalities considered. We show that it is paramount to identify the most vulnerable households and to define the criteria used to award lump-sum transfers accordingly. We conclude that no revenue recycling option is universally superior to another, and more case studies should be carried out to account for specific macroeconomic and national contexts.

PP 2021-01
Output-Based Allocation and Output-Based Rebates: A survey

Philippe Quirion

Abstract
Output-based refunding consists in distributing the value of taxes on pollution, or that of tradable emission allowances, to operators of emitting facilities, in proportion of their current production level. It is called output-based rebating in the case of taxes and output-based allocation in the case of tradable emission allowances. This practice is widespread, especially in climate policies, and has important economic consequences. We analyse these consequences, first in a deterministic setting and then accounting for uncertainty. While output-based refunding is detrimental to welfare in a deterministic, closed economy without prior distortions, it also provides some benefits. In particular, it is an efficient way to limit carbon leakage.
Then, we present the implementation of output-based allocation in the European Union, California, China, New-Zealand and Alberta, and discuss whether it should be maintained or phased out in the coming decades.

Published in Economica (2022), 89, 997–1023.

Christian Gollier – Sébastien Pouget

Abstract
Socially responsible investors constitute an important force in today’s global financial markets. This paper examines conditions under which socially responsible investors induce companies to behave responsibly. We develop an asset pricing model in which some shareholders are active owners, i.e., they engage companies by voting on strategic decisions. Differences of objective among shareholders arise because socially responsible investors value corporate externalities. In our baseline model, we show that a firm may choose a responsible strategy, even if the majority of investors are not responsible. We also demonstrate that such choice of a responsible strategy might be fragile because it might depend on investors’ self-fulfilling beliefs. We then extend our baseline model to analyse the link between divestment and engagement strategies, the case with multiple firms, the role of benefit corporation charters and the impact of a large investor.

WP 2021.14 Limites à la croissance et destruction créatrice dans le cadre d’un modèle à générations de capital

Published in Revue Francophone du Développement Durable (2021), 18, 1-18.

Marc Germain

Abstract
This paper studies the path of a resource-constrained economy in an original vintage capital growth model involving a Schumpeterian process of creative destruction.
The path of the economy is characterized by three successive phases: (i) unsustainable « high » growth; (ii) after a peak, a deep and brutal decline; (iii) slower growth gradually leading to equilibrium. The slowdown and reversal of the economy are due to the continuous rise in the cost of exploiting the resource, which occurs despite technical progress due to the creative destruction process.
This process also has a non-monotonic trajectory, in particular its destruction component behind the economic obsolescence of equipment. The latter evolves in the opposite direction to production, in contradiction with the widespread assumption of a constant capital depreciation rate.

WP 2021.13 How can ports act to reduce underwater noise from shipping? Identifying effective management frameworks

Published in Marine Pollution Bulletin (2022), 174, 113136.

Laura Recuero Virto – Hervé Dumez – Carlos Romero – Denis Bailly

Abstract
Through a survey and interviews with representative stakeholders, this paper aims to find mechanisms to align commercial interests with underwater noise reductions from commercial shipping. While acknowledging the wide variations in ports’ specificities, port actions could support a reduction in underwater noise emissions from commercial shipping through changes in hull, propeller and engine design, and through operational measures associated with reduced speed, change of route and travel in convoy. Though the impact of underwater noise emissions on marine fauna is increasingly shown to be serious and wide-spread, there is uncertainty in the mechanisms, the contexts, and the levels which should lead to action, requiring precautionary management. Vessels owners are already dealing with significant investment and operating costs to comply with fuel, ballast water, NOx and CO2 requirements. To be successful, underwater noise programs must align with these factors.

Ports could propose actions such as discounted port fees and reduced ship waiting times at ports, both depending on underwater noise performance. Cooperation between ports to scale up actions through environmental indexes and classification societies’ notations, and integration with other ports’ actions could help support this. However, few vessels know their underwater noise baseline as there are very few hydrophone stations, and measurement methodologies are not standardized. Costs increase and availability decreases dramatically if the vessel buyer wants to improve the noise profile. Local demands regarding airborne noise close to airports boosted global pressure on the aviation industry to adopt existing quieting technology. This experience of the aviation noise control could inform the underwater noise process. Since 2017, the Vancouver Fraser Port Authority has been implementing a voluntary vessel slowdown trial for commercial vessels in key known foraging areas for southern resident killer whales, which are locally considered an emblematic species.

WP 2021.12 Sectoral, resource and carbon impacts of increased paper and cardboard recycling

Published in  Environmental Modeling & Assessment (2023), 28: 189–200

Etienne Lorang – Antonello Lobianco – Philippe Delacote

Abstract
Recycling is emerging as an alternative to extraction in many industries and one of the corner stones of the circular economy. In this paper, we assess the role of paper and cardboard recycling on the forest sector, both from an economic and carbon perspective. For that purpose, we model this recycling industry within our forest sec- tor model, in order to relate it to other wood products. As the forest sector has an important potential for climate change mitigation, this model allows us to assess the effects on the resource and the carbon balance of the forest sector. We show that these results are strongly linked to the hypothesis of substitution or complementarity between recycled and wood-pulp.

WP 2021.11 Price incentives and unmonitored deforestation: Evidence from Indonesian palm oil mills

Valentin Guye – Sebastian Kraus

Abstract
We create a novel, spatially explicit microeconomic panel of Indonesian palm oil mills, to provide the first estimates of deforestation price elasticities based on observations of the actual prices paid at mill gates. To identify the price elasticity, we spatially model how deforestation in upstream plantations is exposed to downstream, conditionally exogenous, shocks on mill-gate prices. We provide the first evidence that deforestation for smallholder plantations, and illegal deforestation, are price elastic. This implies that a price instrument can disincentivize deforestation where it is most difficult to monitor, and contain leakages from conservation regulations.

WP 2021.10 Technological progress and carbon price formation: an analysis of EU-ETS plants

Marc Baudry – Anouk Faure

Abstract
This study investigates the nature of technological progress in six manufacturing industries covered under the EU-ETS, plus the power sector, and its effect on carbon price formation using marginal abatement cost curves. We adopt a technological frontier framework that we calibrate to input and output data at the plant level from 2013 to 2017, with a directional distance function approach. Our results reveal that most of the time, technological progress resulted in inflating baseline emissions, despite decreasing the carbon intensity of production. In our sample industries, technological progress therefore leads to increase abatement efforts, raising the equilibrium price of carbon.

WP 2021.09 Decomposing weather impacts on crop profits: the role of agrochemical input adjustments

Published in American Journal of Agricultural Economics (2023): 1-31 under the title “Structural Identification of Weather Impacts on Crop Yields: Disentangling Agronomic from Adaptation Effects”

François Bareille – Raja Chakir

Abstract
The costs of climate change borne by agriculture are critically dependent on farmers’ adaptation. In this paper, we investigate how farmers adjust their input mix in response to weather fluctuations during the growing season using individual panel data from Meuse (France) between 2006 and 2012. Specifically, we consider weather and price information to estimate structural models of profit-maximizing farmers with crop-specific yields and input-crop-specific demand functions, conditionally on farm and annual fixed effects. The results show that weather fluctu-ations affect crop yields but that farmers adapt their fertilizer and pesticide applications. We use our estimates to simulate the impacts of a climate change scenario: we show that farmers in Meuse would increase fertilizer applications by 2.60% but reduce pesticide applications by6.92% under an RCP 4.5 scenario in 2050. These adjustments limit the negative direct impacts of climate change on plant growth, though heterogeneously among crops. In total, the added value of the agricultural sector is likely to reduce by 3.02%. Society could benefit from adaptation as the reduction in damage due to agrochemicals’ negative externalities represents twice the market costs borne by the agricultural sector.

WP 2021.08 The impact of income inequality on public environmental expenditure with green consumerism

New version – November 2023

Lesly Cassin – Paolo Melindi-Ghidi – Fabien Prieur

Abstract
This article analyzes the impact of income inequality on environmental policy in the presence of green consumers. We first develop a model with two main ingredients: citizens, with different income capacities, have access to two commodities whose consumption differs in terms of price and environmental impact, and they vote on the environmental policy. In this setting, there exists a unique political equilibrium in which the population is split into two groups, that differ in the type of good, conventional vs. green, they consume. The analysis shows that a change in the level of inequality induces variations in both the size and composition of these two groups of citizens. This in turn determines whether or not more inequality stimulates the public policy. We then conduct an empirical investigation on a panel of European countries over the period 1996-2019. We find the existence of an inverted J-shape relationship between inequality and public environmental spending. This outcome can be explained by the combination of a composition effect, affecting the green group, and a substitution effect between private green consumption and public environmental spending.

WP 2021.07 Tackling Transport-Induced Pollution in Cities: A Case Study in Paris

Marion Leroutier – Philippe Quirion

Abstract
Urban road transport is an important source of local pollution and CO₂ emissions. To tackle these externalities, it is crucial to understand who contributes to emissions today and what are the alternatives to high-emission trips. We estimate individual contributions to transport-induced emissions, by bringing together data from a travel demand survey in the Paris area and emission factor data for local pollutants and CO₂. We document high inequalities in emissions, with the top 20% of emitters contributing 75-85% of emissions on a representative weekday, depending on the pollutant. Top emissions result from a combination of high distances travelled, a high reliance on car and, mainly for local pollutants, a higher emission intensity of cars. We estimate with counterfactual travel times that 53% of current car drives could be shifted to electric bikes or public transport with a limited time increase. This would reduce the emissions from daily mobility by 19-21%, with corresponding annual health and climate benefits of around €245m.

WP 2021.06 The Environmental Unsustainability of Pubic Debt: Non-Renewable Resources, Public Finances Stabilization and Growth

Nicolas Clootens – Francesco Magris

Abstract
This paper introduces a public debt stabilization constraint in an overlapping generation model in which non-renewable resources constitute a necessary input in the production function and belong to agents. It shows that stabilization of public debt at high level (as share of capital) may prevent the existence of a sustainable development path. Public debt thus appears as a threat to sustainable development. It also shows that higher public debt-to-capital ratios (and public expenditures-to-capital ones) are associated with lower growth. Two transmission channels are identified. As usual, public debt crowds out capital accumulation. In addition, public debt tends to increase resource use which reduces the rate of growth. We also analyze the dynamics and we show that the economy is characterized by saddle path stability. Finally, we show that the public debt-to-capital ratio may be calibrated to implement the social planner optimal allocation.

WP 2021.05 Should we fear transition risks? A review of the applied literature

Louis Daumas

Abstract
The transition to a low-carbon economy will entail sweeping transformations of energy and economic systems. To such an extent that a growing literature has been worrying about the effect of such strain on the stability of financial system. This “financial transition risk”’ literature has highlighted that the conjunction of climate policy, technological change and changing consumption patterns may propagate to financial markets. If too brutal or unexpected, such dynamics may result in a “Climate-Minsky’” moment of systemic implications. Yet, recent historical developments have shown that financial markets can prove resilient to shocks onto transition-exposed industries such as fossil fuel producers. Should we thus fear transition risks? To answer this question, I propose a critical review of the relevant applied modelling and econometric literatures. Three sub-fields will be examined: the asset stranding literature, the financial econometrics of the low-carbon transition and the direct assessment of transition risks through prospective models. I will expound some key results of these literatures, and critically assess underlying methodologies.

WP 2021.04 Intragenerational inequality aversion and intergenerational equity

Robert D. Cairns – Stellio Del Campo – Vincent Martinet

Abstract
We study the interplay between intragenerational and intergenerational equity in an economy with two countries producing and consuming from national capital stocks. We characterize the sustainable development path that a social planner would implement to achieve intertemporal egalitarianism. If intergenerational equity is defined with respect to the global consumption of each generation, regardless of its distribution between countries, consumption in the poor country should be set as low as possible to maximize investment and hasten convergence, resulting in important intragenerational inequalities. When social welfare accounts for intragenerational equity, the larger the intragenerational inequality aversion (IIA), the smaller the sacrifice asked of the poor country, but the lower the sustained level of generational welfare. Along the intertemporal welfare-egalitarian path with IIA, consumption in the poor country increases, while it decreases in the rich country, resulting in a global degrowth.

WP 2021.03 Output-Based Allocation and Output-Based Rebates: A survey

Philippe Quirion

Abstract
Output-based refunding consists in distributing the value of taxes on pollution, or that of tradable emission allowances, to operators of emitting facilities, in proportion of their current production level. It is called output-based rebating in the case of taxes and output-based allocation in the case of tradable emission allowances. This practice is widespread, especially in climate policies, and has important economic consequences. We analyse these consequences, first in a deterministic setting and then accounting for uncertainty. While output-based refunding is detrimental to welfare in a deterministic, closed economy without prior distortions, it also provides some benefits. In particular, it is an efficient way to limit carbon leakage.
Then, we present the implementation of output-based allocation in the European Union, California, China, New-Zealand and Alberta, and discuss whether it should be maintained or phased out in the coming decades.

WP 2021.02 Common pool resource management and risk perceptions

Can Askan Mavi and Nicolas Quérou

Abstract
Motivated by recent discussions about the issue of risk perceptions for climate change related events, we introduce a non-cooperative game setting where agents manage a common pool resource under a potential risk, and agents exhibit different risk perception biases. Focusing on the effect of the polarization level and other population features, we show that the type of bias (overestimation versus underestimation biases) and the resource quality level before and after the occurrence of the shift have first-order importance on the qualitative nature of behavioral adjustments and on the pattern of resource conservation. When there are non-uniform biases within the population, the intra-group structure of the population qualitatively affects the degree of resource conservation. Moreover, unbiased agents may react in non-monotone ways to changes in the polarization level when faced with agents exhibiting different types of bias. The size of the unbiased agents’ sub-population does not qualitatively affect how an increase in the polarization level impacts individual behavioral adjustments, even though it affects the magnitude of this change. Finally, it is shown how perception biases affect the comparison between centralized and decentralized management.

WP 2021.01 Expenditure-elasticity and income elasticity of GHG emissions: a survey of literature on household carbon footprint

Antonin Pottier

Abstract
The relationship between income of households and their carbon emissions is often summed up by a number, the elasticity of the carbon footprint with respect to income. I survey here the cross-sectional studies of household carbon footprints and their estimation of elasticities with respect to income and with respect to expenditures. The distinction between the two elasticities comes from the fact that the saving rate rises with income.
I compile published estimates of elasticities of carbon footprint or energy requirements, and I compute new estimates. This totals around eighty estimates (a third of which are newly computed) for over twenty countries. It shows that, generally, the carbon footprint grows less rapidly than expenditures, and confirms that the incomeelasticity is lower than expenditure-elasticity. Unambiguously, the assumption of an income- elasticity equal to 1 is not supported by the published literature. I discuss the difference between carbon inequality and carbon concentration, the ambiguity in the literature between income-elasticity and expenditures-elasticity. I present the limitations of our knowledge on the income-carbon footprint relationship, from contestable assumption in the methodology as well as measurement errors in household budget surveys. I examine how elasticity can be used in “top-down” assessment of global distribution of carbon footprint.