Book review: climate policy after Copenhagen

Karsten Neuhoff’s compact contribution aims to scope the role of and recent experience with carbon pricing, and provides all the reasons why a global carbon pricing scheme is a truly formidable undertaking, finds Dominic Mora

Modelling Agricultural Diffuse Pollution: CAP – WFD Interactions and Cost Effectiveness of Measures

Within the context of the Water Framework Directive (WFD) and the Common Agricultural Policy (CAP), the design of effective and sustainable agricultural and water resources management policies presents multiple challenges. This paper presents a methodological framework that will be used to identify synergies and trade-offs between the CAP and the WFD in relation to their economic and water resources environmental effects, and to assess the cost-effectiveness of measures to control water pollution, in a representative case study catchment in Scotland. The approach is based on the combination of a biophysical simulation model (CropSyst) with a mathematical programming model (FSSIM-MP), so as to provide a better understanding and representation of the economic and agronomic/environmental processes that take place within the agricultural system.Bio-economic Modelling, Water Framework Directive, Common Agricultural Policy, Agricultural and Food Policy, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,

Public Preferences for Broiler Chicken Welfare: Evidence from Stated Preference Studies

Animal welfare presents particular policy challenges. Good welfare provides private productivity benefits to producers and some level of positive external benefits to people who care about animal welfare status. In enacting welfare legislation and setting regulatory standards, government needs to measure costs and benefits of welfare changes. While costs are generally observable, the nature of market failure means that welfare benefits are not truly observed in welfare related transactions. Accordingly non-market benefits assessment methods are required to measure the total economic value of welfare improvement. This paper compares the results of two stated preference methods to measure the policy benefits of the proposed EU broiler Welfare Directive. Contingent valuation presents the welfare improvement as a policy bundle and elicits willingness to pay in a referendum or one-off purchase decision. Choice experiments break down the welfare good into its constituent attributes, which may be of interest in designing policy. The methods provide divergence aggregate benefit estimates, which are an artefact of the methodology and the payment methods.Broiler welfare, choice experiments, contingent valuation, Livestock Production/Industries, Consumer/Household Economics,

INVESTIGATING USER PREFERENCES FOR SERVICES IN RURAL AREAS OF SCOTLAND: A TERRITORIAL APPROACH

Territorialisation of rural policies requires moving from a sectoral approach to service provision, and policies that focus exclusively on health and education, for example, to an understanding of overall service provision and quality, differentiated by rural area definition, not primarily by sector. An investigation of the expectations of stakeholders in rural Scotland, relating to availability, quality and accessibility of services, revealed that preferences were often different within different areas. The results input to the debate about the need to territorialise rural policy, and provide information for allocation decisions relating to resources aimed at creating sustainable rural communities in Scotland.Services, participatory methods, Scotland, user preferences, territorial rural policies, Community/Rural/Urban Development,

The non-market benefits of rural service provision

The provision of services in rural areas is constrained by a number of issues arising from the remoteness of such areas and the relative sparsity of rural populations. These factors combine to increase the cost of supply and reduce the demand for services, which consequently threatens the viability of service provision whether by the public or private sectors. A possible to solution to these issues lies in the co-location of rural services, which in general means that two or more distinct services are located within the same premises thus reducing the delivery costs associated with one or more of these services. Beyond the simple economics of service provision lies the existence of nonmarket elements of services in terms of benefits to local communities of service provision that might arise from the social elements of local provided services such as community cohesion. This paper applies non-market valuation to quantify these benefits in three case studies across Scotland. The results indicate that relative degree of these benefits can be related to the remoteness of rural communities in that more remote communities particularly value the community aspects of services whereas less remote communities are more resistant to increased distances to access services. More generally, the results provide evidence on the inherent trade-offs between factors such as opening hours, levels of service and distance that can be used in determining the optimal configuration of service provision.Community/Rural/Urban Development,

Exploring the meaning of disproportionate costs for the practical implementation of the Water Framework Directive

The Water Framework Directive (WFD) is perhaps the most ambitious piece of environmental legislation in the history of the European Union. The Directive consolidates existing water-related legislation and has the stated objective of delivering good status (GS) for Europe’s surface waters and groundwaters. But meeting GS is cost dependent, and in some water bodies pollution abatements costs may be high or judged as disproportionate. The exact definition and assessment of disproportionate costs is central for the justification of time-frame derogations and/or lowering the environmental objectives (standards) for compliance at a water body. Official guidance is somewhat discretionary about the interpretation of disproportionate costs. Building on basic cost-benefit theory, this paper attempts to clarify the meaning of disproportionate cost to non-economists, and to convey a consistent interpretation that should underlie the development of a practical derogation decision making across all member statesDerogations, Cost-Effectiveness Analysis (CEA), Cost Benefit Analysis (CBA), Marginal Abatement Costs (MAC), Marginal Social Costs (MSC), Resource /Energy Economics and Policy,

Book Reviews

Teaching/Communication/Extension/Profession,

Measuring the economic benefits and costs of Bluetongue virus outbreak and control strategies in Scotland

This paper provides an ex-ante economic analysis, comparing six alternative control strategies for the eradication of Bluetongue virus 8 against five incursion scenarios in cattle and sheep populations. The economic analysis assumes a common baseline unavoidable cost of public and private measures that together contribute to prevention of incursion of BTV8 into Scotland. These costs continue over the five year horizon of this analysis regardless of whether a BTV8 epidemic ensues in Scotland and their total present value was found to be approximately £141m over the 5year period. The benefit of this investment is the costs of a BTV8 outbreak avoided; which depends on the time, location and nature of the incursion, on the control strategies adopted to counter each incursion, on the persistence of the incursion and on the opportunities to mitigate the damage. Specific variations in all these aspects were explored. The benefit-cost ratios were ranked within each incursion scenario to evaluate the efficiency of control outlays. Although the economic model found that benefit-cost ratios were greater than 1 for all interventions strategies examined, the control strategy option with 100% vaccination and protection zone set at Scottish Borders were economically preferable. This implies that if avoided this control option would deliver the greatest benefit from investment in baseline prevention costs. However, in terms of outbreak losses, this vaccination strategy was always most costly. On the other hand, the control strategy with 50% vaccination and all Scotland as a protection zone often provides the lowest benefits in all control options examinedbluetongue virus, epidemiology, direct and indirect costs, benefit analysis, Risk and Uncertainty,

Improving the Accuracy of UK Regulatory Cost Estimates

UK Government departments are required to undertake a Regulatory Impact Assessment (RIA) when introducing any policy change that places a burden on businesses, charities, the voluntary sector or individuals. Part of this assessment involves the appraisal of the costs (and benefits) associated with complying with all the available options, as well as the wider economic costs. Recent evidence has suggested that the compliance costs, when assessed ex post, tend to be lower than the ex ante assessment made beforehand (see e.g. Harrington et al 1999). Accurate cost estimates are important as errors can lead to under or over regulation. This, in turn, can result in growth and innovation being hindered or, in the case of under regulation, growth being achieved at the expense of the natural resource base (including human health and well being). In order to shed more light on the validity of RIA cost estimates and identify ways of improving their accuracy, Defra decided to commission a study comparing the ex ante and ex post costs of complying with regulatory changes. A total of eight case studies were carried out for this study, covering a range of recent environmental, agricultural and food-related regulations in the UK. Preliminary findings of this study indicate that while ex ante costs are often overestimated, there can also be significant underestimates. Reasons for errors in cost estimation are discussed and strategies for improving their accuracy suggested.Public Economics,

Marginal abatement cost curves for UK agriculture, forestry, land-use and land-use change sector out to 2022

Greenhouse gas emissions from agriculture, land use, land use change and forestry (ALULUCF) are a significant percentage of UK industrial emissions. The UK Government is committed to ambitious targets for reducing emissions and all significant industrial sources are coming under increasing scrutiny. The task of allocating shares of future reductions falls to the newly appointed Committee on Climate Change (CCC), which needs to consider efficient mitigation potential across a range of sectors. Marginal abatement cost curves are derived for a range of mitigation measures in the agriculture and forestry sectors over a range of adoption scenarios and for the years 2012, 2017 and 2022. The results indicate that in 2022 around 6.36 MtCO2e could be abated at negative or zero cost. Further, in same year over 17% of agricultural GHG emissions (7.85MtCO2e) could be abated at a cost of less than the 2022 Shadow Price of Carbon (£34tCO2e).Environmental Economics and Policy,