The Role of Discounting in Energy Policy Investments

For informing future energy policy decisions, it is essential to choose the correct social discount rate (SDR) for ex-ante economic evaluations. Generally, costs and benefits—both economic and environmental—are weighted through a single constant discount rate. This leads to excessive discounting of the present value of cash flows progressively more distant over time. Evaluating energy projects through constant discount rates would mean underestimating their environmental externalities. This study intends to characterize environmental–economic discounting models calibrated for energy investments, distinguishing between intra- and inter-generational projects. In both cases, the idea is to use two discounting rates: an economic rate to assess financial components and an ecological rate to weight environmental effects. For intra-generational projects, the dual discount rates are assumed to be constant over time. For inter-generational projects, the model is time-declining to give greater weight to environmental damages and benefits in the long-term. Our discounting approaches are based on Ramsey's growth model and Gollier's ecological discounting model; the latter is expressed as a function of an index capable of describing the performance of a country's energy systems. With regards to the models we propose, the novelty lies in the calibration of the "environmental quality" parameter. Regarding the model for long-term projects, another innovation concerns the analysis of risk components linked to economic variables; the growth rate of consumption is modelled as a stochastic variable. The defined models were implemented to determine discount rates for both Italy and China. In both cases, the estimated discount rates are lower than those suggested by governments. This means that the use of dual discounting approaches can guide policymakers towards sustainable investment in line with UN climate neutrality objectives

L’ANALISI ECONOMICA DEL RISCHIO DI PROGETTO. CRITERI E TECNICHE

With regard to investment initiatives, a careful analysis of the multiple associated risk components is required, even more so if the objectives to be pursued are not only financial but also social, cultural and environmental. The present work envisages taking stock of the risk concept and the techniques commonly used for risk analysis in the economic evaluation of projects. In order to detect critical issues and to outline research perspectives

A model to support the public administration decisions for the investments selection on historic buildings

The historical buildings can become an instrument for the growth of a territory in connection with the historic and artistic value, the ability to characterize environments and urban, rural and natural landscapesand on the basis of historical and documentary interest. This is confirmed in the numerous legislative measures that deal with urban planning at the international level. Most of the time, however, the interventions on the historical-architectural building heritage do not respond to logic capable of simultaneously ensuring the conservation and valorization. This problem is accentuated when the decision-making process is not supported by operating logical models capable of bringing into account the many effects of aninvestment, which are not only financial, but also social, cultural and environmental nature. The operational research, in particular discrete linear programming crossed with multicriteria analysis, can support the definition of useful models to the selection of investments on historical buildings. Intended for public authorities called to choose the projects to be financed, the model defined and tested in the presentwork can be easily adapted also to the case of resources allocation by private investor. The applicationof the model to a concrete case, concerning the definition of the projects portfolio for the valorization of buildings of historical-architectural value in a Municipality of South Italy, confirms the potential of the instrument in analysis

Costs and Benefits in the Recovery of Historic Buildings: The Application of an Economic Model

Until now, the policies on sustainability relating to regeneration interventions on historic buildings have dealt with the casing of the buildings in order to regulate and control the flow of air, light and energy from outside to inside and vice versa. However, recent technological developments in home comfort and energy savings highlight the efficiency of the plants and the proper management of the building-plant system, while respecting the criteria of integrated conservation and the multiple constraints that characterize historic buildings. This study proposes a methodological process that identifies the optimal steps from a technical and economical point of view, by providing a combination of traditional architectural conservation interventions with innovative technology systems. The calculation algorithms are developed with a specific software based on UNI TS 11300 regulations, which allows for the thermodynamic modelling of the structure. The preparation of the feasibility plan allows testing the cost-effectiveness of the work proposed, considering the environmental benefits resulting from the reduced CO2 emissions. The impact of the financial results of the evaluation is also analyzed. This protocol provides industry operators a useful instrument for selecting the least expensive initiatives among those compatible with the multiple constraints that affect the design choices

An economic model of risk assessment for water projects

Abstract The projects that concern water resources are characterized by the multiple risk rates – even extra–financial – that significantly affect their concrete feasibility. Although the risk assessment is decisive for expressing economic convenience judgements on these project initiatives, the decision-maker does not have precise references to determine whether the residual investment risk is acceptable. Thus, the purpose of the paper is to overcome the limit set by characterizing a model for the acceptability of project risk, also considering the plurality of environmental effects that the water projects generate on the community. The idea is to integrate the logic 'As Low As Reasonably Practicable' (ALARP) into the procedural schemes of Cost–Benefit Analysis (CBA). In accordance with this principle, widely applied in high-risk sectors such as those of industrial engineering, a risk is ALARP when the costs to further reduce it are disproportionate to the obtainable benefits. The application of the model to an irrigation reconversion intervention in a Municipality in the Province of Salerno (Italy) shows that the ALARP logic defines a general way of thinking and can contribute to the definition of effective forecasting protocols. In this sense, the proposed methodology becomes a useful support for environmental decision-making. (The paper is to be attributed in equal parts to the three authors.

VALORI FONDIARI, REDDITI E POPOLAZIONE RESIDENTE. INDAGINE SUI LIVELLI DI CORRELAZIONE TEMPORALE

The paper establishes the measure of the diachronic correlation between market values of the land and variables able to affect the mechanisms of price formation. Geographic Information Systems (GIS) are used to process cartographic representations useful for visualizing the spatial distribution of data, which pertain to the vast area of the Province of Salerno (Italy). The analytical path starts from the collection of information and construction of the datasets, passes through the selection of parameters and for the processing of the maps and can establish quantitatively the levels of correlation between market values and territorial variables. Thus, it provides useful elements for future research, with the aim to generalize the functional relationships between agricultural land values and socio-economic variables through the writing of a value function. DOI: http://dx.medra.org/10.19254/LaborEst.16.0

L’ANALISI COSTI-BENEFICI PER PROGETTI IN CAMPO AMBIENTALE. LA SCELTA DEL SAGGIO SOCIALE DI SCONTO

The use of constant Social Discount Rates (SDR) in Cost-Benefit Analyses (CBA) has the effect of the excessive contraction of financial terms that are pro-gressively more distant in time. For this reason, the choice of SDR becomes crucial in the ex-ante evaluations of projects with inter-generational environmental implications, the benefits of which often affect generations different from those who bear the costs. A possible solution to this problem can come from the discounting of environmental components to an “ecological” discount rate less than the “economic” one, the latter useful to evaluate the financial cash flows. With this paper, we intend to define a probabilistic model to estimate the declining function of the two rates, the economic and the ecological, taking into account the correlation between consumption and environmental quality. The estimate conducted for Italy demonstrates the implications that such a model has on the entire environmental decision-making process

CORRELAZIONI TRA VALORI IMMOBILIARI E SERVIZI ECOSISTEMICI

The market value of urban property depends not only on its specific characteristics, but also on macro-economic variables such as socio-demographic, productive, infrastructural, and environmental quality and associated ecosystem services. The links between urban property real estate values and ecosystem services, particularly those generated by urban forests, are not yet sufficiently investigated and hence are the focus of this research. The study site is the City of Syracuse, New York, USA, with well characterized urban forest ecosystem services and property values. The paper correlates real estate values and parameters of economic condition (per-capita income), ecosystem services (carbon sequestration), and urban forestry system (tree canopy area). The median home value correlation with both per capita income has an R2= 0.8748 and with carbon sequestration it has an R2 = 0.7757. The data are obtained in the online i-Tree Landscape tool. Geographic information systems analysis is used to create maps that support analysis of the correlation levels between the involved variables

Energy, environment and sustainable development of the belt and road initiative: The Chinese scenario and Western contributions

Abstract The Belt and Road Initiative has tremendously increased the interaction of China with the countries involved, pushing forward the integration and comparative phase, based on the main factors affecting the energy, environmental and development scenarios. The indicators of this process are strictly related to the environmental sustainability of projects and infrastructural initiatives which entail aspects regarding climate change, environmental impact, transport management, urbanization and effective utilization of energy. Through this osmotic program, which the Chinese government said in 2013 would be executed from east to west, the contributions Western countries may make to maximize the common efforts are foreseeably very important for the success of the whole BRI and, indirectly, for the harmonization of the very rapid Chinese growth. China held the first position in 2014 for electricity generation (5388 billion kwh/h) and coal production (4.27 billion short tons/year), as well as the second position for petroleum consumption. On the other hand, carbon dioxide emissions were 1.8 times those of the USA in 2015, and transport, urbanization and energy intensity still struggle to attain optimal levels. The quality of productive sectors, research and universities is still low in the world ranking, despite the huge efforts of the Chinese, due to a still slow and cumbersome internationalization process. This article aims to integrate the numerous excellent studies published in the last few years on sustainable development and energy effectiveness within the BRI (Table 1 provides some specific references), by carrying out a systematic analysis of the Chinese energy, environmental and sustainable landscape from a Western perspective, breaking the main areas of the Chinese scenario down into its components and identifying those where the contributions of Western countries can support the gaps coverage. In this respect, the change of viewpoint provided by this study may be beneficial to properly balance the BRI perspective along the east-west axis

IL PATRIMONIO COSTRUITO DEI CENTRI MINORI: INDICATORI PER L’ANALISI DELLE VALENZE STORICO-ARCHITETTONICHE

The small municipalities are characterized by a valuable material and immaterial heritage, evidence of identity memories and traditions. Over time, migration flows have led these realities to a gradual marginalization and demographic contraction. So that, nowadays, there are many initiatives aimed at contrasting their depopulation. The shared idea sees the valorisation of small towns as an essential action to mend the city-countryside relationship in view of the sustainable development of territories. The importance of adopting organic strategies for the recovery of small municipalities is recognized. Thus, with the aim of providing objective parameters for consistent decisions on the most effective valorisation strategies, criteria and sub-criteria are defined for the multi-criteria evaluation of investment projects. The focus is on indicators of historical-architectural value of the built heritage, so as to provide a reference panel