Dear everyone,

The French Association of Environmental and Resource Economists is very happy to inform you of the latest publications and scientific events organized by its members within our scientific community. We look forward to seeing many of you at Remini next week for the traditional FAERE social event organized on the sidelines of the EAERE 2002 Conference, and in Rouen in September for the 9th FAERE Annual Conference!

Join the FAERE reception at the EAERE 27th Annual Conference!

The FAERE will hold its traditional reception during the EAERE Annual Conference in Rimini. This social event will take place on June 30, between 6 pm and 8 pm, that is, after the last parallel session of the day and before the Conference Dinner held at Coconuts. Meet us at Ristorante “Nettuno”, Piazzale John Fitzgerald Kennedy, nicely located on the beach, close to Coconuts. We look forward to seeing you in person in Rimini!

Registration for the 2022 FAERE Annual Conference is still open!

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The 9th Annual Conference of FAERE, organized by the LERN (Laboratoire d'Economie Rouen Normandie), will take place on September 8 and 9, 2022, on the Pasteur campus of the Rouen Normandie University. The keynote speakers will be Marc Fleurbaey (Paris School of Economics, CNRS) and Stephane Hess (University of Leeds and Delft University of Technology).

During the conference, a prize will be awarded for the best article written by a young researcher. Registration deadline is July 1! https://faere2022.sciencesconf.org/resource/page/id/5

Feedback on the 12th FAERE Thematic Workshop

The 12th FAERE Thematic Workshop organized by the University Paris-Saclay last April on the extremely burning problem of global warming was a great success. About fifty researchers and students rushed to attend this two-day scientific event, marked by the keynote speech given by Thomas Sterner on “Designing climate policies to be fair and effective”. Participants also had the chance to attend an exciting round table, around which five expert economists in climate change confronted their points of view: Bertille Delaveau (Centre sur le Changement Climatique de la Banque de France), François Lanavère (AXA Climate), Benoît Leguet (I4CE – Institut de l’économie pour le climat), José Lopez (AFD – Agence Française de Développement), and Aleksandar Rankovic (Sciences-Po Paris). A replay will be available soon: http://msh-paris-saclay.fr/conference-economie-et-management-du-changement-climatique-21-et-22-avril-2022/

Submit your work at the FAERE Working Paper Series!

The Editorial Board directed by Francesco Ricci provides a benevolent refereeing before publication on the FAERE website. They are also referenced in EconPapers and  IDEAS/RePEc. A frank and anonymous report is sent to the authors within a quite short time. The publication of each FAERE working paper is also announced on Twitter @FAERE_Press.

WP 2022.03 Carbon Footprints, Traded Emissions and Carbon-Price Cooperation Equity

Dominique Bureau

Abstract
Existing gaps between territorial inventories of CO2 emissions and carbon footprints resulting from the final domestic demands of countries highlight the need to reduce imported emissions in developed countries. Generalized carbon border pricing would help but it requires avoiding the risk of its use as a trade barrier. However, such an import tax is not the unique possible approach and it is not a substitute for enhanced climate cooperation. In addition to the advantages usually put forward in terms of efficiency and mechanism design, the setting of a common carbon price, by the means of national taxes or a cap and trade mechanism, would present a threefold interest in this context: of discarding the objections of trade distortions against climate policies; of regulating imported emissions and internal emissions with the same level of ambition; and of acting both on the use of products as well as on their processes. Footprint taxation is then unnecessary, except with non-participants. But a Green Fund is needed for fair sharing of the burden of the efforts. Moreover, its rules must be adapted when integrating trade-related emissions, which has not been pointed out so far in the debates on Article 6 of the Paris Agreement. Corresponding conditions are specified here and it is underlined that this approach has also the advantage having to deal only with the net distributive effects involving trade in carbon.

WP 2022.02 Drought exposure and accuracy: Motivated reasoning in climate change beliefs

Guglielmo Zappalà

Abstract
Despite scientific consensus, there is no unanimity among individuals in the beliefs about climate change and its consequences. Understanding how people form these beliefs and what drives their interpretation of climatic events is essential, especially in developing countries and among agricultural communities, which may most suffer the consequences of climate change. Using survey data from rural households in Bangladesh together with a meteorological measure of excess dryness relative to historical averages, this paper studies how long-term average exposure to dryness and short-term deviations shape beliefs of increase in droughts and the interpretation of drought events. To explore how agents interpret past droughts, I use an instrumental variable approach and investigate whether individual beliefs lead to distortions of objective information in an asymmetric manner. The results show that individuals’ interpretation of droughts is biased in the direction of their prior beliefs, providing suggestive evidence of confirmation bias as a directional motivated reasoning mechanism. The findings highlight the need for models that account for behavioral factors to study climate change beliefs and their implications for effective communication and adaptation policies.

WP 2022.01 Local economic development through clean electricity generation – an analysis for Brazil and a staggered difference-in-difference approach

Swaroop Rao – David Grover – Dorothée Charlier

Abstract
Adaptation of energy systems worldwide to move away from fossil fuels is widely accepted to be a key step in responding to the challenge of climate change. For developing countries and their development banks, this challenge is compounded by the need to ensure economic development, particularly to lift parts of the population out of poverty. In this article, we analyse the economic impacts of electricity generation projects of the Brazilian national development bank. We use a two-way fixed-effects (TWFE) estimator on a 15-year municipality-level panel with time-varying (or “staggered”) treatment that accounts for recent findings in the panel data analysis literature. Our study finds that clean electricity generation has weaker economic effects compared to fossil electricity generation and compared to other projects of the development bank. This differentiated impact is particularly notable when it comes to the impact of investment on employment creation and wage levels. This is the first study that uses microdata to analyse the different economic impacts of clean electricity generation and fossil electricity generation at the local level. We posit that the differences in labour intensities of clean electricity generation jobs and the jobs created by fossil electricity generation as well as other types of development bank investment account for these different impacts of project investments. We recommend that the cost of externalities of these projects be internalised in order for development banks and policymakers to get a fuller picture of the benefits brought about by them. Smaller economic impacts of certain development bank investments might also have negative implications for poverty reduction efforts in the country.