The Determinants of Energy Efficiency Investments in the U.S.

This paper analyses decisions on energy efficiency (EE) investments by small and medium manufacturing enterprises in the U.S. which have received assessment from the Department of Energy (DoE). The results confirm the importance of payback time and investment costs as the main determining factors in deciding whether to invest in energy efficiency. This behaviour is mantained over time. Such investment recommendations are frequently not implemented even though they apparently entail major advantages and give rise to considerable energy savings. The data show results which are compatible with a series of elementary valuation processes (limited by the availability of information), far removed from other, more academically ambitious methods such as Net Present Value (NPV) and the Real Options (RO) method. The paper analyses the impact of the physical situation of firms in line with their geographical locations in different US states, and changes over time from 1984 to 2008, i.e. 25 years of information. Finally, the paper examines the different levels of effectiveness of participating centres in getting firms to decide to make the investments proposed. EE investment decisions are analysed here using Logit models whose parameters are calibrated on the basis of the information held in the Industrial Assessment Centres (IAC) database. The results shed some light on impact assessment and suggest various policies for promoting investment in EE.Energy efficiency, energy assessments, energy policies

Willingness to pay for mortality risk reduction due to air pollution: a case study from Brazil

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The Determinants of Energy Efficiency Investments in the U.S.

31 p.This paper analyses decisions on energy efficiency (EE) investments by small and medium manufacturing enterprises in the U.S. which have received assessment from the Department of Energy (DoE). The results confirm the importance of payback time and investment costs as the main determining factors in deciding whether to invest in energy efficiency. This behaviour is mantained over time. Such investment recommendations are frequently not implemented even though they apparently entail major advantages and give rise to considerable energy savings. The data show results which are compatible with a series of elementary valuation processes (limited by the availability of information), far removed from other, more academically ambitious methods such as Net Present Value (NPV) and the Real Options (RO) method. The paper analyses the impact of the physical situation of firms in line with their geographical locations in different US states, and changes over time from 1984 to 2008, i.e. 25 years of information. Finally, the paper examines the different levels of effectiveness of participating centres in getting firms to decide to make the investments proposed. EE investment decisions are analysed here using Logit models whose parameters are calibrated on the basis of the information held in the Industrial Assessment Centres (IAC) database. The results shed some light on impact assessment and suggest various policies for promoting investment in EE

The DICER Model: Methodological Issues and Initial Results

This paper introduces DICER, a model for the integrated assessment of climate – economy interactions within an optimal growth framework developed based on the structure of the DICE2007 model. We present the methodological differences introduced so far in DICER and some preliminary results of its deterministic version. We observe interesting results in comparison to other IAMs, such as (i) lower peak temperatures; (ii) radiative forcing differences; (iii) differences in control rates; and (iv) sensitivity of results to parameters such as climate sensitivity. A further innovation of this work has been to account for uncertainty and risk through an application of option pricing. The method allows for a simple representation of the risks through measures of volatility in the damages and abatement costs and shows that taking these factors into account lowers maximum mean temperatures by about 0.5oC. We also present some methodological issues that need to be dealt with in the near future in DICER.Climate change, Integrated Impact Assessment Model (IAM), damage function

The Health Impacts of Climate Change: A Study of Cholera in Tanzania

Increased temperatures and changes in patterns of rainfall as a result of climate change are widely recognized to entail serious consequences for human health, including the risk of diarrheal diseases. Indeed, there is strong evidence that temperature and rainfall patterns affect the disease pattern. This paper presents the first study that links the incidence of cholera to environmental and socioeconomic factors and uses that relationship to predict how climate change will affect the incidence of cholera. Specifically, the paper integrates historical data on temperature and rainfall with the burden of disease from cholera in Tanzania, and uses socioeconomic data to control for impacts of general development on the risk of cholera. Based on these results we estimate the number and costs of additional cholera cases and deaths that can be attributed to climate change by year 2030 in Tanzania. The analyses are based on primary data collected from the Ministry of Health, Tanzania, and the Tanzania Meteorological Agency. The result shows a significant relationship between cholera cases and temperature and predicts an increase in the initial risk ratio for cholera in Tanzania in the range of 23 to 51 percent for a 1 degree Celsius increase in annual mean temperature. The cost of reactive adaptation to cholera attributed to climate change impacts by year 2030 in Tanzania is projected to be in the range of 0.02 to 0.09 percent of GDP for the lower and upper bounds respectively. Total costs, including loss of lives are estimated in the range of 1.4 to 7.8 percent of GDP by year 2030. Lastly, costs of additional cholera cases and deaths attributed to climate change impacts in Tanzania by the year 2030 largely exceed the costs of preventive measures such as household chlorination.Available at http://www.bc3research.or

The Health Impacts of Climate Change: A Study of Cholera in Tanzania

27 p.Increased temperatures and changes in patterns of rainfall as a result of climate change are widely recognized to entail serious consequences for human health, including the risk of diarrheal diseases. Indeed, there is strong evidence that temperature and rainfall patterns affect the disease pattern. This paper presents the first study that links the incidence of cholera to environmental and socioeconomic factors and uses that relationship to predict how climate change will affect the incidence of cholera. Specifically, the paper integrates historical data on temperature and rainfall with the burden of disease from cholera in Tanzania, and uses socioeconomic data to control for impacts of general development on the risk of cholera. Based on these results we estimate the number and costs of additional cholera cases and deaths that can be attributed to climate change by year 2030 in Tanzania. The analyses are based on primary data collected from the Ministry of Health, Tanzania, and the Tanzania Meteorological Agency. The result shows a significant relationship between cholera cases and temperature and predicts an increase in the initial risk ratio for cholera in Tanzania in the range of 23 to 51 percent for a 1 degree Celsius increase in annual mean temperature. The cost of reactive adaptation to cholera attributed to climate change impacts by year 2030 in Tanzania is projected to be in the range of 0.02 to 0.09 percent of GDP for the lower and upper bounds respectively. Total costs, including loss of lives are estimated in the range of 1.4 to 7.8 percent of GDP by year 2030. Lastly, costs of additional cholera cases and deaths attributed to climate change impacts in Tanzania by the year 2030 largely exceed the costs of preventive measures such as household chlorination

Morbidity costs associated with ambient air pollution exposure in Sao Paulo, Brazil

AbstractIn 2007 we conducted a contingent valuation survey in Sao Paulo, Brazil, to estimate the population's willingness–to–pay (WTP) to avoid one hospital admission (HA) and one emergency–room visit (ER) due to respiratory diseases in adults and children younger than 5 years old; and cardiovascular diseases in adults only; both associated with atmospheric air pollution. Our annual mean WTP estimates are €81.82 (adult) and €137.92 (child) for HA; €48.40 (adult) and €90.66 (child) for ER due to respiratory diseases; €53.57 (ER) and €90.08 (HA) for cardiovascular diseases. Our results suggest altruism towards children, and a strong income effect on WTP. Results will help analysts evaluating the health benefits of specific policies with potential air pollution impacts in Sao Paulo, Brazil

Regional IAM: analysis of risk-adjusted costs and benefits of climate policies

23 p.Across the full range of publications in the field of economics of climate change there is perhaps only one firm agreement: both costs and benefits of climate policy are highly uncertain. In an ideal world one would wait until a good deal of uncertainty is resolved and then make a final decision. Usually in the economic literature it would be interpreted as adopting a relatively weak policy now and adjusting it later. Unfortunately, in the context of path-dependency and irreversibility of climatic events there is no way to preserve a full flexibility for the future: near-term selection of an interim climate policy implies some irreversible consequences. Continued accumulation of GHG in the atmosphere makes some policy targets (expressed in temperature level or GHG ppm concentration) infeasible. The paper examines the application of real option analysis to calculate costs and benefits of an interim climate policy. In contrast to conventional CBA, the proposed methodology also accounts for lost and gained flexibility attributed to the adoption of an interim target

The DICER Model: Methodological Issues and Initial Results

31 p.This paper introduces DICER, a model for the integrated assessment of climate – economy interactions within an optimal growth framework developed based on the structure of the DICE2007 model. We present the methodological differences introduced so far in DICER and some preliminary results of its deterministic version. We observe interesting results in comparison to other IAMs, such as (i) lower peak temperatures; (ii) radiative forcing differences; (iii) differences in control rates; and (iv) sensitivity of results to parameters such as climate sensitivity. A further innovation of this work has been to account for uncertainty and risk through an application of option pricing. The method allows for a simple representation of the risks through measures of volatility in the damages and abatement costs and shows that taking these factors into account lowers maximum mean temperatures by about 0.5oC. We also present some methodological issues that need to be dealt with in the near future in DICER

Energy efficiency in Europe: trends, convergence and policy effectiveness

This paper analyses energy efficiency in the EU, both in terms of reductions in energy intensity and in terms of physical indicators, looking at the differences among sectors and among Member States. We test econometrically the existence of convergence in energy intensity across Europe. We find a sensible catching–up of less performing countries, particularly in the agricultural and in the industrial sectors. Against this background, we analyse the role played by energy policies in EU Member States and we identify the most effective classes of policies and measures by means of a panel analysis of the EU-15 and Norway. It turns out that, in the residential sector, energy efficiency is particularly affected by heating regulations, by subsidies as well as tax reductions; in the transport sector, effective policies are tax reductions, incentives to eliminate old and polluting cars, car sharing, commuter plan and traffic management; in the industrial sector, mandatory technology standards, financing at low interest rate, information activities, education and outreach proved to be effective.energy intensity, energy efficiency, convergence, European energy policy