SWEEEP: A pan-institute Series of Webinars in Environmental and Energy Economics and Policy

SWEEEP: A pan-institute Series of Webinars in Environmental and Energy Economics and Policy

 

Environmental, energy, and ecological problems have grown faster than their solutions. Economists have an important role to play to address these issues by using the latest science, rigorous methods and innovative policy solutions. The SWEEEP webinar series aims to convene the academic community to contribute to the scientific, economic, and policy discourses on important environmental and energy issues.


About the founding institutions

The European Institute on Economics and the Environment (eiee.org) is a partnership between Resources for the Future and Foundation CMCC. EIEE’s impartial economic and environmental research aims to facilitate the transition to a sustainable, inclusive society. Reference: Prof. Massimo Tavoni

 

The Energy Management research team at the Grenoble Ecole de Management (GEM) combines research on economics, strategic management, technology innovation and energy policy in order to create and share knowledge that will help society move towards a low-carbon future.

Reference: Prof. Sébastien Houde

 

The ZEW – Leibniz Centre for European Economic Research is a leading German economic policy institute and a member of the Leibniz Association. ZEW’s applied research aims to study and help design well-performing markets and institutions in Europe. In particular, it seeks to understand how to create a market framework that will enable the sustainable and efficient development of European economies.

Reference: Prof. Sebastian Rausch

 

The Centre for Energy Policy and Economics (CEPE) was established in 1999 to complement the natural science and technical-oriented disciplines at ETH Zurich, by contributing to research and teaching in energy policy and economics.  Through rigorous application of modern empirical methods, the goal of CEPE is to make critical contributions to the design and evaluation of energy and climate policy instruments.

Reference: Prof. Massimo Filippini


Wednesday, 16 September 2020, 3.00-4.00 PM CET

Title: Enforcement in service delivery: Smart meters and the returns to electricity quality improvements

Speaker: Robyn Meeks, Duke University

Abstract

Poor service quality and theft are challenges common to the electricity sector in developing countries. Smart meters provide additional information to both consumers and utilities, potentially mitigating these challenges. In a randomized experiment in Kyrgyzstan, smart meters replaced houses’ old meters. Post-intervention electricity service quality was significantly better among the treatment group relative to the control group. Consumers’ returns to electricity quality improvements were substantial. Treated households’ peak electricity consumption and expenditures on electric appliances increased, consistent with an improvement in consumer welfare. The utility benefits from the meters, via increased billed consumption and bill payment, albeit less than consumers do.

More info is available here.


Wednesday, 23 September 2020, 3.00-4.00 PM CET

Title: Inequality, information failures and air pollution

Speaker: Catherine Hausmann, University of Michigan

Abstract

Research spanning several disciplines has repeatedly documented disproportionate pollution exposure among the poor and communities of color. Among the various proposed causes of this pattern, those that have received the most attention are income inequality, discrimination, and firm costs (of inputs and regulatory compliance). We argue that an additional channel – information – is likely to play an important role in generating disparities in pollution exposure. We present multiple reasons for a tendency to underestimate pollution burdens, as well as empirical evidence that this underestimation can disproportionately affect low-income households. Using a model of housing choice, we then derive conditions under which “hidden” pollution leads to an inequality – even when all households face the same lack of information. This inequality arises because households sort according to known pollution and other disamenities, which we show are positively correlated with hidden pollution. To help bridge the gap between environmental justice and economics, we discuss the relationship between hidden information and three different distributional measures: exposure to pollution; exposure to hidden pollution; and welfare loss due to hidden pollution.

More info is available here.


Wednesday, 30 September 2020, 3.00-4.00 PM CET

Title: Are economists getting climate dynamics right and does it matter?

Speaker: Simon Dietz, London School of Economics

Abstract

We show that economic models of climate change produce climate dynamics inconsistent with current climate science models: (i) the delay between CO2 emissions and warming is much too long and (ii) positive carbon cycle feedbacks are mostly absent. These inconsistencies lead to biased economic policy advice. Controlling for how the economy is represented, different climate models result in significantly different optimal CO2 emissions. A long delay between emissions and warming leads to optimal carbon prices that are too low and attaches too much importance to the discount rate. Similarly, we find that omitting positive carbon cycle feedbacks leads to optimal carbon prices that are too low. We conclude it is important for policy purposes to bring economic models in line with the state of the art in climate science and we make practical suggestions for how to do so.

More info is available here.


Wednesday, 14 October 2020, 3.00-4.00 PM CET

Title: Use and Non-Use Value of Nature and the Social Cost of Carbon

Speaker: Frances Moore, UC Davis

Abstract

Climate change is damaging ecosystems throughout the world with serious implications for human well-being. Quantifying the benefits of reducing emissions requires understanding these costs but the unique and non-market nature of many goods provided by natural systems makes them difficult to value. Detailed representation of ecological damages in models used to calculate the costs of greenhouse gas emissions has been largely lacking. Here we include natural capital as a form of wealth in a cost-benefit integrated assessment model and show that accounting for the use and non-use value of nature has large implications for climate policy. In our model, optimal emissions reach zero at the year 2050, limiting warming to 1.5◦C by the end of the century, substantially lower than the standard model, which approaches 3°C by 2100. We show that the cost of climate change could be alleviated by investments in natural capital and that capturing the effect of climate change on natural systems and the welfare effects of these changes should be a high priority for future research.

More info is available here


Wednesday, 21 October 2020, 3.00-4.00 PM CET

Title: Optimal fuel taxation with suboptimal health choices

Speaker: Linus Mattauch, U Oxford

Abstract

Transport has a large number of significant externalities including carbon emissions, air pollution, accidents and congestion. Increased active travel such as cycling and walking can reduce these externalities. Moreover, public health research has identified large additional social gains from active travel due to health benefits of increased physical exercise. We introduce health benefits and active travel options into a model of transport externalities to study appropriate policy responses. We characterise the optimal second-best fuel tax analytically: when physical exercise is considered welfare-enhancing, the optimal fuel tax increases. Under our central assumptions, the increase is 34% in the US and 38% in the UK when health benefits from physical exercise are included. We argue that fuel taxes should be implemented jointly with other policies aimed at increasing the uptake of active travel to reap the full health benefits.

More info is available here.


Wednesday, 28 October 2020, 3.00-4.00 PM CET

Title: Mandatory Energy Efficiency Disclosure in Housing Markets

Speaker: Erica Myers, U Illinois Urbana-Champaign

Abstract

Mandatory disclosure policies are implemented broadly despite sparse evidence that they improve market outcomes. We study the effects of requiring home sellers to provide buyers with certified audits of residential energy efficiency. Using similar nearby homes as a comparison group, we find this requirement increases price premiums for energy efficiency and encourages energy-saving investments. We additionally present evidence highlighting the market failure – incomplete information by both buyers and sellers – that prevents widespread voluntary disclosure of energy efficiency in housing transactions. Our findings support that disclosure policies can improve market outcomes in settings with symmetrically incomplete information.


Wednesday, 11 November 2020, 3.00-4.00 PM CET

Title: Energy Transitions in Regulated Markets

Speaker: Ashley Langer, U Arizona

Abstract

Regulated U.S. electricity markets have transitioned from coal to natural gas more slowly than restructured markets. This contrasts with the predictions from canonical models of regulation that regulated utilities would over-invest in new capital because they are allowed a fair rate of return on capital. In addition, observers have alleged that regulated utilities are operating coal plants even when this is inefficient because they are subject to a “used and useful” standard the only allows them a return on power plants that they use sufficiently. We develop and estimate a dynamic model of energy transitions in regulated electricity markets that can explain these stylized facts. In our model, regulators reimburse utilities for the use of productive assets, while aiming to keep electric rates low by limiting returns on capital when prices to electricity consumers are high. In the short-run, utilities make hourly dispatch decisions to maximize profits given incentives set up by the regulatory structure. This regulatory structure provides two opposite incentives: utilities will overuse expensive coal plants to meet the used and useful standard but this overuse will be constrained to the extent that it results in high electricity prices. In the long-run, utilities decide which plants to retire and in which new technologies to invest. We show that regulation slowed the energy transition from coal to natural gas, and that it may have important consequences for the transition to renewable electricity generation.

More info is available here


Wednesday, 25 November 2020, 3.00-4.00 PM CET

Title: Progressive revenue recycling can alleviate poverty, reduce inequality and improve wellbeing

Speaker: Francis Dennig, Yale-NUS College, Singapore

Moderator: Johannes Emmerling, RFF‐CMCC European Institute on Economics and the Environment (EIEE), Centro Euro‐Mediterraneo sui Cambiamenti Climatici, Italy

Abstract

Existing estimates of optimal climate policy ignore the possibility that the revenues from a carbon tax could be used in a progressive way; as a result, these models imply that near-term climate action must come at some cost to the poor. Here we show that this storyline reverses when progressive revenue recycling is taken into account. We find that an equal per capita refund of carbon tax revenues implies that a 2°C target can pay large and immediate dividends for improving wellbeing, reducing inequality, and alleviating poverty. In an optimal policy calculation (without a pre-specified temperature constraint) that weighs the benefits against the costs of mitigation, the recommended policy is characterized by aggressive near-term climate action followed by a slower climb towards full decarbonization; this pattern prevents runaway warming while also preserving tax revenues for redistribution. Our approach corrects a long-standing bias against strong immediate climate action.

More info is available here.


Wednesday, 9 December 2020, 3.00-4.00 PM CET

Title: Regulating Untaxable Externalities: Evidence from Vehicle Air Pollution

Speaker: Arthur van Benthem, University of Pennsylvania

Abstract

In this paper we assess the effects of fire-related smoke on population health in the Brazilian Amazon. Our empirical strategy is based on a municipality-by-month fixed effects model, coupled with an instrumental variables approach that explores wind direction and smoke in surrounding areas in order to exogenously shift exposure to smoke at the locality. We find that exposure to smoke, measured by PM2.5 concentration levels, is robustly associated with an increase in hospital admissions for respiratory conditions. The effects are higher among children and the elderly, and increase non-linearly with pollution levels. Our benchmark estimates indicate that an increase of one standard deviation in PM2.5 is related to an increase of 1.5% of the monthly hospitalization rate for respiratory conditions. The latter estimate reaches 14% if monthly average PM2.5 crosses thresholds as high as 75µg/m3 . We do not observe significant effects on hospitalization rates related to other health conditions nor on mortality rates.

More info is available here.


Wednesday, 16 December 2020, 3.00-4.00 PM CET

Title: Winds of Fire and Smoke: Air Pollution and Health in the Brazilian Amazon

Speaker: Andrè Albuquerque Sant’Anna, Brazilian Development Bank (BNDES) and Universidade Federal Fluminense

Abstract

In this paper we assess the effects of fire-related smoke on population health in the Brazilian Amazon. Our empirical strategy is based on a municipality-by-month fixed effects model, coupled with an instrumental variables approach that explores wind direction and smoke in surrounding areas in order to exogenously shift exposure to smoke at the locality. We find that exposure to smoke, measured by PM2.5 concentration levels, is robustly associated with an increase in hospital admissions for respiratory conditions. The effects are higher among children and the elderly, and increase non-linearly with pollution levels. Our benchmark estimates indicate that an increase of one standard deviation in PM2.5 is related to an increase of 1.5% of the monthly hospitalization rate for respiratory conditions. The latter estimate reaches 14% if monthly average PM2.5 crosses thresholds as high as 75µg/m3 . We do not observe significant effects on hospitalization rates related to other health conditions nor on mortality rates.

More info is available here.


 

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