67,546 research outputs found

    Externalities revisited: the use of an environmental equity account

    Get PDF
    This exploratory paper attempts to restart a debate about the incorporation of environmental externalities into the cost structure of the organisation. A number approaches are considered; regulation together with all that would follow such as audit and policing; pollution permits, which probably can only be used with a sinking lid application; and other charging mechanisms such as making the private sector pay for public sector capital funding. The fourth alternative, the use of an environmental equity account, has not been widely considered in the literature. The paper proposes the use of an environmental equity account (after Boone and Rubenstein, 1997) with the express intent of generating a charge for environmental impact based on the cost of control. That is, the cost of implementing state of the art technology compared to that currently in use within the organisation, is used as a balance which may be either paid as a capital sum or carried as a balance sheet entry upon which dividend payments would have to be made. It is envisaged that both capital sums and dividend payments would go to an agency responsible for environmental remediation activity

    Sustainability Policy and Environmental Policy

    Get PDF
    A theoretical, representative agent economy with a depletable resource stock, polluting emissions and productive capital is used to contrast environmental policy, which internalises externalised environmental values, with sustainability policy, which achieves some form of intergenerational equity. The obvious environmental policy comprises an emissions tax and a resource stock subsidy, each equal to the respective external cost or benefit. Sustainability policy comprises an incentive affecting the choice between consumption and investment, and can be a consumption tax, capital subsidy or investment subsidy, or combination thereof. Environmental policy can reduce the strength of sustainability policy needed. More specialised results are derived in a closed economy with a non-renewable resource, and in a small open economy with no environmental effects on utility.sustainability, optimality, externalities, tax, policy

    Distributive impact of structural change: does environmental degradation matter?

    Get PDF
    Vulnerability to reduction of natural capital depends on defensive substitution possibilities that, in turn, are affected by the availability of other productive factors. However in several developing countries asset distribution tends to be highly skewed. Taking into account these elements, this paper proposes a model considering an economy polarized into two classes (the rich and the poor) and characterized by the following stylized facts: income and productivity of the rural poor is highly dependent on natural resources; labour remuneration in rural sector represents the opportunity cost for wage labour; the rich can partially substitute natural capital with physical capital accumulation and wage labour employment. In this context, agents differ for feed back mechanisms and interactions between their choices of production and environmental dynamics. Moreover environmental depletion may trigger economic transition, but the structural change is likely to result regressive.structural change, environmental externalities, economic development, poverty alleviation.

    Volatility and the welfare costs of financial market integration

    Get PDF
    The authors examine the effect of volatility on the costs and benefits of financial market integration. The authors use a basic framework that combines the costly state verification model and the contract enforceability approach. They assess the welfare effects of financial market integration by comparing welfare under financial market integration and comparing welfare under financial autarky and financial openness. Under financial openness, foreign banks, which have lower costs of intermediation and a lower markup rate, have free access to domestic capital markets. The analysis shows that financial integration may be welfare-reducing if world interest rates under openness are highly volatile. The authors extend the basic framework in various directions. They show that opening the economy to unrestricted inflows of capital, in particular, may magnify the welfare cost of existing distortion, such as congestion externalities or deposit insurance.Banks&Banking Reform,Economic Theory&Research,Environmental Economics&Policies,Financial Intermediation,Financial Economics

    Cost-Benefit Analysis of POME Biogas Power Plant: Case Study of PLTBg Suka Damai

    Get PDF
    Palm Oil Mill Effluent (POME) is a byproduct of processing fresh palm fruit bunches into crude palm oil (CPO) which has negative externalities in the form of gas containing methane, carbon dioxide and other greenhouse gases (GHG) which is very dangerous for sustainability environment. The use of pome as feedstocks for biogas power plants (PLTBg) changes the negative externalities of pome into positive externalities such as increased electrification in the area around the palm oil mill (PKS) and also good for environmental sustainability. PLTBg Suka Damai with a capacity of 2.4 Mw is planned to reach the Commercial Operating Date (COD) in 2019, the financial calculation has a cost-benefit ratio of 1.19, percentage of Internal Rate of Return (IRR) of 12.84%, percentage of weighted cost of capital (WACC) 10% and a Net Present Value (NPV) of Rp 21,275,609,209.00. Using the cost-benefit analysis method, the authors calculate the positive externalities generated by PLTBg Suka Damai by comparing the value of benefits into three (3) alternative scenarios. The scenario I add the social cost of carbon (SCOC) as additional benefits; scenario II adds carbon credit income parameters from the REDD+ scheme; scenario III only utilizes the benefits of electricity sales and the electrification without adding additional benefits. Comprehending all the results, the first scenario with SCOC is the most optimize scenario for it provides far greater benefits to the community, far greater than the financial revenue received by the PLTBg itself

    Capital Planning, Selection, and Investment (Integrating Sustainability in Decision-making)

    Get PDF
    Inspired by Pope Francis’s call for a new journey that instills the importance of conservation and care for the environment, we propose a practical model that mathematically incorporates sustainability issues into capital planning, selection, and investment.Evidence suggests that managers apply net present value (NPV) methodologies in a way that disadvantages environmentally sustainable investments. If an NPV model does not consider the costs and risks of non-sustainable projects, then the potential benefits of alternative sustainable investments will appear much less valuable than present costs. Sustainable investments also often require larger initial investments with long-term benefits and distant cash flow time horizons that are discounted at exponentially higher rates. Moreover, identified environmental costs and benefits are generally limited to savings associated with energy costs, while hidden reductions in externalities are ignored. Thus, as commonly used, NPV models bias against sustainable alternatives in investment selection.This article integrates accounting, finance, and engineering literatures to develop a model that incorporates sustainability and environmental impacts into capital selection through a life-cycle impact assessment (LCIA) appraisal. We operationalize LCIA so that hidden environmental costs and benefits can be identified, analyzed, and priced, thus resulting in a better prediction of cash flows. The model also integrates environmental risks into the cost of capital by developing a sustainability risk-adjusted discount rate and sustainability-cost NPV that effectively captures the sustainability exposures of capital projects, thus resulting in a risk-adjusted sustainable framework for decision-making

    Capital Planning, Selection, and Investment (Integrating Sustainability in Decision-making)

    Get PDF
    Inspired by Pope Francis’s call for a new journey that instills the importance of conservation and care for the environment, we propose a practical model that mathematically incorporates sustainability issues into capital planning, selection, and investment. Evidence suggests that managers apply net present value (NPV) methodologies in a way that disadvantages environmentally sustainable investments. If an NPV model does not consider the costs and risks of non-sustainable projects, then the potential benefits of alternative sustainable investments will appear much less valuable than present costs. Sustainable investments also often require larger initial investments with long-term benefits and distant cash flow time horizons that are discounted at exponentially higher rates. Moreover, identified environmental costs and benefits are generally limited to savings associated with energy costs, while hidden reductions in externalities are ignored. Thus, as commonly used, NPV models bias against sustainable alternatives in investment selection. This article integrates accounting, finance, and engineering literatures to develop a model that incorporates sustainability and environmental impacts into capital selection through a life-cycle impact assessment (LCIA) appraisal. We operationalize LCIA so that hidden environmental costs and benefits can be identified, analyzed, and priced, thus resulting in a better prediction of cash flows. The model also integrates environmental risks into the cost of capital by developing a sustainability risk-adjusted discount rate and sustainability-cost NPV that effectively captures the sustainability exposures of capital projects, thus resulting in a risk-adjusted sustainable framework for decision-making

    Life Cycle Costing and Food Systems: Concepts, Trends, and Challenges of Impact Valuation

    Get PDF
    Our global food systems create pervasive environmental, social, and health impacts. Impact valuation is an emerging concept that aims to quantify all environmental, social, and health costs of food systems in an attempt to make the true cost of food more transparent. It also is designed to facilitate the transformation of global food systems. The concept of impact valuation is emerging at the same time as, and partly as a response to, calls for the development of legal mechanisms to address environmental, social, and health concerns. Information has long been understood both as a necessary precursor for regulation and as a regulatory tool in and of itself. With global supply chains and widespread impacts, data necessary to produce robust and complete impact valuation requires participation and cooperation from a variety of food system actors. New costing methods, beyond basic accounting, are necessary to incorporate the scope of impacts and stakeholders. Furthermore, there are a range of unanswered questions surrounding realizations of impact valuation methods, e.g. data sharing, international privacy, corporate transparency, limitations on valuation itself, and data collection standardization. Because of the proliferation of calls for costing tools, this article steps back and assesses the current development of impact valuation methods. In this article, we review current methods and initiatives for the implementation of food system impact valuation. We conclude that in some instances, calls for the implementation of costing have outpaced available and reliable data collection and current costing techniques. Many existing initiatives are being developed without adequate consideration of the legal challenges that hinder implementation. Finally, we conclude with a reminder that although impact valuation tools are most often sought and implemented in service of market-based tools for reform, they can also serve as a basis for robust public policies

    Environmental Costs Account: a base for measuring sustainability in transport plans.

    Get PDF
    Each city need to develop sustainable transport plans according to its fu-ture developments. This means identifying the best policy package of transport measures that could produce more sustainable future scenarios: lowest environmental impact, but also better social standards and at mini-mum cost. To that end, it is necessary to measure the environmental and social costs of each alternative transport mode. This paper proposes a me-thodology to calculate those costs in different city contexts: city centre and metropolitan suburbs. It provides a measure of the following environmen-tal costs: pollution, noise, green house gasses and land taken. Then the so-cial costs as congestion and accident costs. These two cost categories are calculated for each mean of transport: metro, bus, private car and taxi. The methodology has been applied to Madrid Region through modeling its mobility demand in 2004. The outputs are costs per passenger-km in each mode and Area: city centre and metropolitan ring. Therefore it is possible to assign monetary costs to environmental and social costs of each trans-port option; for example, car environmental costs are four times higher than buses on average, but it differs a lot from city centre to outskirt areas. Finally, some guidelines can be extracted to develop a more sustainable transport policy for Madrid Region

    Is UK agriculture sustainable? Environmentally adjusted economic accounts for UK agriculture

    Get PDF
    Agricultural sectors in most advanced economies have come under severe criticism for lacking the characteristics of 'sustainability'. What is usually meant is that a combination of subsidies and modern farming methods is producing an economically and environmentally non-viable agricultural sector. Using economic valuation techniques, and adjusting for prevailing subsidies, we seek to re-estimate the contribution that the agricultural sector made to the UK economy in the year 1998. The sector is markedly smaller if adjustments are made for subsidies. But these subsidies allow the sector to be a generator of both substantial environmental benefits, and also of extensive environmental damages
    corecore