Discounting investments in mitigation and adaptation: a dynamic stochastic general equilibrium approach of climate change

We use a dynamic stochastic general equilibrium model to determine efficient discount rates for climate (mitigation and adaptation) and non-climate investment in the face of climate change. Our main result is that the non-diversifiable risk in the economy may be related to both shocks in aggregate wealth and shocks in global average temperature. Therefore, both aggregate wealth and global average temperature will carry a risk premium reflecting their contribution to the total amount of non-diversifiable risk. We characterize both climate and non-climate investments by means of a contingent claim and show that climate and non-climate investments will in general be discounted at different rates. We discuss the conditions under which the discount rates of climate investments will be lower than the discount rate of non-climate investments. September 2013 : There is an�updated version of this paper availlable, read CPB Discussion Paper 257 .

Better safe than sorry? Reliability policy in network industries

This report develops a roadmap for reliability policy in network industries. Based on economic theory, we analyse the relationship between reliability and various types of government policy: privatisation, liberalisation, regulation, unbundling, and 'commitment policy'. We let government policy depend on (1) the feasibility of competition between networks, (2) contractibility of reliability, and (3) the relation between profit maximisation and public interests. We test this roadmap on the basis of the empirical literature and case studies on electricity, natural gas, drinking water, wastewater, and railways.

Optimal regulation under unknown supply of distributed generation

As distributed generation (DG) continues to expand, larger low-voltage networks will be required in the future. However, regulated distribution network operators (DNOs) need to invest in new infrastructure without knowing a relevant determinant of network costs, the future amount of DG. Due to uncertainty, optimal network capacity needs to reflect the expected demand for capacity over all possible DG states. Therefore, not all capacity will be used if a low level of DG occurs. Optimal regulation that is set under asymmetric information about future DG needs to create incentives for the DNO to invest in this 'excess capacity' and also encourage optimal network utilization. In this case, an option menu that includes fixed fees and positive network charges on DG-producers fulfills these requirements and implements the first-best optimum. On the contrary, price-cap and revenue-cap regulation lead to either underinvestment or high information rents to the DNO.

Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information

In this CPB Discussion Paper, we study how regulators may improve upon the efficiency of their energy technology adoption programs by exploiting readily observable information to limit rent extraction by firms. Using panel data on 862 investment decisions in the Netherlands, we find that rent extraction is closely linked not only to technology characteristics, but also to the firm's capital budgetting technique. In particular, we find that rms are more likely to extract rent when either the technology's pay-back period or its required investment is lower, but less likely if they do not use a formal capital budgeting technique. Standard firm characteristics, such as size and sector, correlate with firms' use of capital budgeting techniques, thereby partly resolving the regulator's asymmetric information problem.

Databases Nederlands milieubeleid

In deze studie is nagegaan hoe zowel het proces van gegevensverzameling van emissies naar de lucht als de verdere verwerking van de gegevens voor de milieubalans tot stand komen. De verzameling van deze gegevens vindt plaats door de Nederlandse Organisatie voor Toegepast Natuurwetenschappelijk Onderzoek (TNO). De zogenaamde Individuele Emissieregistratie geeft een zo nauwkeurig mogelijk beeld van de uitstoot van vervuilende stoffen naar de lucht door grote individuele vervuilers. Op basis van deze gegevens wordt de uitstoot (bij)geschat van bedrijven die niet in de steekproef zijn opgenomen. Dit gebeurt door de bestanden van TNO te koppelen aan de Productie- en Investeringsstatistieken van het Centraal Bureau voor de Statistiek (CBS). Dit rapport bespreekt de emissieregistratie in detail en gaat na hoe de bijschattingen ten behoeve van de Milieubalans precies tot stand komen. Uitgebreid wordt ingegaan op de gevolgde steekproefmethodiek en de longitudinale opbouw van beide databases en wordt gedetailleerd aangegeven hoe de bijschattingen voor de milieubalans precies verlopen. Tenslotte wordt uiteengezet hoe op basis van een alternatieve koppelingsmethode tussen de CBS en TNO databases gedetailleerd inzicht kan worden verkregen in de effecten van het Nederlandse milieubeleid op de milieuproductiviteit van bedrijven

An Economic Analysis of Mixing Wastes

Using a general equilibrium model with heterogeneous waste, this paper studies optimal waste policy when households have to exert separation effort to produce near-homogeneous waste streams suitable for recycling. Our model explicitly allows for changes in the composition (quality) of waste streams depending on how much effort households are willing to spend on separating different types of waste. Accordingly, we are able to generalize some earlier contributions to the waste management literature and demonstrate that with both mixing and effort included, a first-best optimum is feasible under reasonable conditions. In particular, we find that a (modified) deposit-refund system still provides the optimal incentives to guide recycling as well as legal disposal (landfilling) and illegal dumping. Both the number and level of taxes and subsidies needed to reach the first-best depend crucially on the socially optimal level of dumping as well as the socially optimal composition of the mix

An Economic Analysis of Mixing Wastes

Using a general equilibrium model with heterogeneous waste, this paper studies optimal waste policy when households have to exert separation effort to produce near-homogeneous waste streams suitable for recycling. Our model explicitly allows for changes in the composition (quality) of waste streams depending on how much effort households are willing to spend on separating different types of waste. Accordingly, we are able to generalize some earlier contributions to the waste management literature and demonstrate that with both mixing and effort included, a first-best optimum is feasible under reasonable conditions. In particular, we find that a (modified) deposit-refund system still provides the optimal incentives to guide recycling as well as legal disposal (landfilling) and illegal dumping. Both the number and level of taxes and subsidies needed to reach the first-best depend crucially on the socially optimal level of dumping as well as the socially optimal composition of the mix

Tariefsysteem met verkeerde prikkels

Het niveaustelsel is niet alleen in theorie, maar ook in de praktijk een efficiënter tariefsysteem voor transport van elektriciteit

Een level playing field op de Nederlandse elektriciteitsmarkt. Een tariefstructuur voor het netgebruik

Uit ons onderzoek is naar voren gekomen dat het niveaustelsel de tariefstructuur is die het meest recht doet aan het 'level playing field'. Onder deze tariefstructuur betaalt iedereen een transporttarief dat zoveel mogelijk is gebaseerd op de kosten die men veroorzaakt. De tariefstructuur uit het wetsvoorstel, het cascadestelsel, voldoet hier veel minder aan. Onder het cascadestelsel is er sprake van een aanzienlijke mate van kruissubsidi?ring tussen consumenten op hetzelfde spanningsniveau, hetgeen niet overeenkomt met het principe dat de kostenveroorzaker betaalt. Dit wordt veroorzaakt doordat het cascadestelsel, in tegenstelling tot het niveaustelsel, geen rekening houdt met het spanningsniveau waarop de producent zijn elektriciteit invoedt. Onder het cascadestelsel zullen de afnemers van klein-schalig opgewekte elektriciteit fors meebetalen aan de kosten van het transport van grootschalig opgewekte elektriciteit. Doordat consumenten op het