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.
