Contracts for environmental outcomes: the use of financial contracts in environmental markets

In environmental markets, parties frequently exchange obligations through environmental contracts. These contracts imply a distribution of risk between parties. The main focus of our paper is to identify contracts that enable risk in environmental markets to be reduced, distributed at least cost, or managed efficiently. The risks that we consider are: moral hazard risk, price risk, exogenous environmental risk, measurement risk and production risk. The first section of our paper outlines some of the contracts currently utilised in financial and insurance markets to achieve these objectives. These are: futures and options contracts, spread contracts, weather contracts and catastrophe bonds. We then provide a snapshot of current applications of these contracts both in real markets and in the literature. Finally we discuss some possible applications in the environmental sector and indicate how the use of these contracts may alter the way government manages environmental assets and responsibilities. We also suggest a staged process to the introduction of contracts that recognises the current limitations faced by government. This paper does not propose new or novel contracts for tackling the problems of risk in exchange. Rather it extends the application of existing contractual arrangements to a new type of problem: environmental markets.Environmental Economics and Policy,

Global priorities for climate change and mental health research.

BACKGROUND: Compared with other health areas, the mental health impacts of climate change have received less research attention. The literature on climate change and mental health is growing rapidly but is characterised by several limitations and research gaps. In a field where the need for designing evidence-based adaptation strategies is urgent, and research gaps are vast, implementing a broad, all-encompassing research agenda will require some strategic focus. METHODS: We followed a structured approach to prioritise future climate change and mental health research. We consulted with experts working across mental health and climate change, both within and outside of research and working in high, middle, and low-income countries, to garner consensus about the future research priorities for mental health and climate change. Experts were identified based on whether they had published work on climate change and mental health, worked in governmental and non-governmental organisations on climate change and mental health, and from the professional networks of the authors who have been active in the mental health and climate change space. RESULTS: Twenty-two experts participated from across low- and middle-income countries (n = 4) and high-income countries (n = 18). Our process identified ten key priorities for progressing research on mental health and climate change. CONCLUSION: While climate change is considered the biggest threat to global mental health in the coming century, tackling this threat could be the most significant opportunity to shape our mental health for centuries to come because of health co-benefits of transitioning to more sustainable ways of living. Research on the impacts of climate change on mental health and mental health-related systems will assist decision-makers to develop robust evidence-based mitigation and adaptation policies and plans with the potential for broad benefits to society and the environment

Dynamic incentive regulation of diffuse pollution

Diffuse pollution from agriculture and extractive industries reduces air and water quality and contributes to climate change. We consider a setting in which a regulator must incentivize unobserved abatement given that firms have limited liability, and when they can enter and exit. We demonstrate that a simple dynamic incentive scheme can solve this difficult regulatory problem: firms pay a constant tax and receive rebates following periods of low pollution. We apply the model to water pollution from a fracking operation and simulate the contract to explore the volatility of the firm's payments and the costs of limited liability

Essays in energy economics and environmental regulation

© 2016 Dr Andrea La NauzeThis thesis consists of three essays in environmental and energy economics. Chapter 2 analyses a field experiment designed to document how imperfect information generates heterogeneous effects in information treatments. Using household survey data and high-frequency electricity meter data, high and low energy users are shown to symmetrically underestimate and overestimate their relative energy use pre-treatment. Responses to personalised high-frequency feedback and peer comparisons however, are asymmetric. Households that overestimate their relative use and low users both respond to treatment by consuming more. These boomerang effects provide further evidence that peer-comparison information programs, even those coupled with injunctive norms, are not guaranteed to lead to increases in prosocial behaviour. Chapter 3 analyses the electricity consumption of solar homes. Like households who sell excess goods and services in other aspects of the sharing economy, high prices raise a solar household's income but also the opportunity cost of self-consumption. Yet when solar households are paid more to sell excess electricity, they consume more and sell less. Instrumental variables estimates that exploit a discontinuity in the cost of consumption, reveal no evidence of inattention to the opportunity cost of consuming solar power. Rather, households sell 40\% less electricity because they do not treat solar income as fungible. They spend a higher proportion of a dollar of solar income on consuming electricity than a dollar earned elsewhere. Higher subsidies to sell may reduce sales of electricity by solar homes because the income effect can dominate. Chapter 4 uses the continuous time methods pioneered by Sannikov (2008) to study the regulation of diffuse emissions in a dynamic setting. Diffuse emissions cause pollution problems that can be intractable in theory and are difficult to manage in practice. In the model, unobserved firm emissions contribute to stochastic ambient pollution. In this environment, a regulator must design incentives for emission abatement while respecting transfer constraints and participation constraints. In the optimal contract the regulator uses a simple incentive mechanism: they collect a constant tax and promise future rebates that will depend on the realised flow of pollution. Each firm collects a payment when their stock of promised rebates exceeds a threshold. Without constraints on the transfer from the firm, the optimal solution is a tax on the flow of pollution

Replication Programs for: Power from the people: rooftop solar and a downward-sloping supply of electricity

Copy of programs used to create the final results

The lump sum: here today, gone tomorrow

A quarter of the 15 million adult Australians are aged between 50 and 69. Most people think they are living the good life - married, homeowners, full-time employees earning good incomes, with kids out of the home. They can choose what they\u27d like to do when they retire. But is this the true picture? Simon Kelly, Carol Farbotko and Ann Harding argue to the contrary

Letting children be children: stopping the sexualisation of children in Australia

This paper explains why the current patchwork of media and advertising regulation is failing to prevent the premature sexualisation of Australian children. A number of improvements are proposed based on a review of current regulatory arrangements for the areas most responsible for the sexualisation of children: girls\u27 magazines, television and outdoor advertising, and television programs. This paper is a companion to Corporate Paedophilia: The sexualisation of children in Australia.&nbsp

Corporate paedophilia: the sexualisation of children in Australia

The sexualisation of Australian children in the interest of corporate profit is increasing and exposes children to a wide range of risks from a very young age, according to an analysis by Emma Rush and Andrea La Nauze. Children are increasingly being portrayed in clothing and posed in ways designed to draw attention to adult sexual features that they do not yet possess in the interest of the corporate bottom line

Contracts for environmental outcomes: the use of financial contracts in environmental markets

In environmental markets, parties frequently exchange obligations through environmental contracts. These contracts imply a distribution of risk between parties. The main focus of our paper is to identify contracts that enable risk in environmental markets to be reduced, distributed at least cost, or managed efficiently. The risks that we consider are: moral hazard risk, price risk, exogenous environmental risk, measurement risk and production risk. The first section of our paper outlines some of the contracts currently utilised in financial and insurance markets to achieve these objectives. These are: futures and options contracts, spread contracts, weather contracts and catastrophe bonds. We then provide a snapshot of current applications of these contracts both in real markets and in the literature. Finally we discuss some possible applications in the environmental sector and indicate how the use of these contracts may alter the way government manages environmental assets and responsibilities. We also suggest a staged process to the introduction of contracts that recognises the current limitations faced by government. This paper does not propose new or novel contracts for tackling the problems of risk in exchange. Rather it extends the application of existing contractual arrangements to a new type of problem: environmental markets

Replication Data for: "Tell Me Something I Don’t Already Know: Informedness and the Impact of Information Programs"

Replication Data for: "Tell Me Something I Don’t Already Know: Informedness and the Impact of Information Programs