Implications of and possible responses to climate change

Climate change is expected to worsen food insecurity and seriously undermines rural development prospects. It makes it harder to achieve the Millenium Development Goals and ensure a sustainable future beyond 2015. Findings from the recent 4th assessment report of IPCC, Working Group II indicate that already towards 2050 with respect to food crops yield losses between 10 and 30 % can be expected as compared to current conditions in large parts of Africa, including Western, Eastern and southern Africa. Climate change is likely to increase disparities between developed and the developing world, while many uncertainties remain. It is, for instance, estimated that developing countries would need to bear 75-80 % of the costs of damages caused by a changing climate. The prevention of such threats cannot rely on economic growth, but requires climate policies that combine enhancement of development with reduction of vulnerabilities and effective financing mechanisms that support the transition to low-carbon economics. The major strategies to reduce the potentially harmful effects of global changes, especially climate change are 1) adaptation of food and farming systems to climate change, 2) enhancing their resilience and adaptive capacity to changes in climate variability and extremes that are difficult to predict, and to global change more generally (including socio-economic changes), and 3) mitigation of climate change and trading the options to mitigate in low-income countries on the global carbon markets to create a substantial financial flow from the North to the South

A Matter of Opinion: How Ecological and Neoclassical Environmental Economists Think about Sustainability and Economics

The differing paradigms of ecological and neoclassical environmental economics have been described in various articles and books and are also embedded in different institutional settings. However, we cannot take for granted that the paradigm debates described in the literature are actually mirrored in exactly the same way in the perceptions and opinions of researchers looking at sustainability from an economic perspective. This paper presents empirical results from a German case study on how economists and others involved in economic sustainability research from different schools of thought think about the issues of sustainability and economics, how they group around these issues, how they feel about the current scientific divide, and what they expect to be future topics of sustainability research. Knowing that sustainability research is highly and still increasingly internationally intertwined, and assuming that the opinions of German economic sustainability researchers do not dramatically differ from those in other countries, we think that these results will be of interest to the international scientific community. We analyze the data using cluster analysis. Based on a literature survey, we generated forty sustainability-related statements and asked 196 economic sustainability researchers about their degree of agreement or disagreement with these statements. In evaluating our survey results, we discuss to what extent the clusters that we identified do - or do not - represent the two schools of thought of ecological and neoclassical environmental economics. We also propose some research concepts that can help to bridge the gaps amongst economic sustainability researchers as well as others more suitable for a scientific 'competition of ideas'. Key results of the study are: We identify two primary scientific clusters, one clearly confirming the existence of the ecological economics schools of thought, and the other largely capturing the neoclassical environmental view. Yet, there are some surprising exceptions: Both schools of thought share a conceptual definition of sustainability that is integrative in considering ecological, societal and economic dimensions ('three pillar concept') and is based on preserving the development potentials of society. We also find a shared critique of 'pure economic growth' strategies in our sample. These agreed opinions may provide bridging concepts between the schools of thought. Also both clusters agree with respect to a wide range of future fields of sustainability research. Yet, the research agenda of the ecological economics cluster contains a large number of additional topics, primarily related to social, distributional and evolutionary aspects of sustainable development as well as a strong microeconomic focus. Strong divides between the clusters that seem to be more suitable for a kind of scientific competition of ideas are primarily related to the question of how to achieve sustainability, including suitable environmental policy measures.

Can Minimum Prices Assure the Quality of Professional Services?

This papers studies the effects on service quality and consumer surplus of a minimum price which is fixed by a bureaucratic non-monopolistic professional association. It shows that the price floor set by a Niskanen-type professional assocation will maximize consumer surplus only if consumers demand the highest possible average quality. If consumers demand services of lesser quality, the association's price floor will be too high if measured by consumer surplus. Moreover we show that a de-regulated market will always reproduce the favorable result of a uniformly high price in the case of top quality demand while delivering superior results in the case of a mixed demand for high and low quality services. The general picture that emerges from this discussion is that the current EU Commission's initiative to abolish fixed price schemes for professional services will not lead to a decrease in quality that would be undesirable from a standpoint of consumer protection. This holds even if we acknowledge the opponent's claim that there is a chance of deprivation of professional ethics due to price competition.Liberal professions; Price regulation; Quality; Professional association; Self-regulation; EU competition policy; Intrinsic motivation

Is the Market Classification of Risk Always Efficient? - Evidence from German Third Party Motor Insurance

The efficiency of market-determined risk classification in automobile insurance is a lasting matter of controversy. It can be traced back to the 1950s (Muir, 1957) and received broad economic attention in the 1980s when spiralling car insurance premiums in the US were blamed on tariff regulations prohibiting the use of sex, age and location as risk characteristics (Blackmon/ Zeckhauser 1991, Cummins/ Tennyson 1992, Harrington/ Doerpinghaus 1993). In a mirroring move the EU saw a heated political and legal debate on the use of special tariffs for foreigners, in the 1980s, which resulted in a legal ban of ‘discriminatory’ tariffs for mandatory insurance schemes in many European countries. The latest blow against risk classification in car insurance comes with the EU Employment and Social Affairs’ draft directive on gender equality which proposes to prohibit gender specific calculation of all private insurance products, including non-mandatory branches such as life, private health or comprehensive car insurance.

The Political Economy of Natural Disaster Insurance: Lessons from the Failure of a Proposed Compulsory Insurance Scheme in Germany

This paper studies the politico-economic reasons for the refusal of a proposed compulsory flood insurance scheme in Germany. It provides the rationale for such scheme and outlines the basic features of a market-orientated design. The main reasons for the political down-turn of this proposal were the misperceived costs of a state guarantee, legal objections against a compulsory insurance, distributional conflicts between the federal government and the Ger-man states (Länder) on the implied administrative costs, and the well-known charity hazard of ad-hoc disaster relief. The focus on pure market solutions proved to be an ineffective strategy for policy advice in this field.

Sustainable rural development with emphasis on agriculture and food security within the climate change setting : SARD-climate final report

Sustainable Agricultural and Rural Development (SARD) is considered an essential step toward achieving the first Millenium Development Goal (MDG) of eradicating extreme hunger and poverty. In order to achieve this important goal, first it is important to find ways of increasing the incomes of the rural poor, who mostly depend on upon agriculture for their livelihoods. This means improving development, cooperation, trade and agricultural policy to improve agriculture's contribution to economic development and poverty reduction. Current projects estimate that 1.02 billion people will go hungry in 2009 alone; an indication that if efforts are not directed at reversing this trend it would most likely continue. The research on climate change effect on productivity and rural development is scarce. The high uncertainty of climate change effects and the implications on agriculture is based on extrapolations and scenarios. Our knowledge on local environmental issues and agriculture is insufficient and local agricultural research data do mostly not exist. The agricultural sector requires investments and incentives that can guarantee sustainable development. Farmers need credit possibilities in order to buy input, to make investments and to finance adaptation measures. Fair Trade certification offers one way to guarantee minimum prices for farmers