Multi-Product Crops for Agricultural and Energy Production – an AGE Analysis for Poland

By-products from agriculture and forestry can contribute to production of clean and cheap (bio)electricity. To assess the role of such multi-product crops in the response to climate policies, we present an applied general equilibrium model with special attention to biomass and multi-product crops for Poland. The potential to boost production of bioelectricity through the use of multi-product crops turns out to be limited to only 2-3% of total electricity production. Further expansion of the bioelectricity sector will have to be based on biomass crops explicitly grown for energy purposes. The competition between agriculture and biomass for scarce land remains limited, given the availability of relatively poor land types and substitution possibilities. The importance of indirect effects illustrates that the AGE framework is appropriate.Applied general equilibrium (AGE), Biomass, Energy policy, Renewable energy

The Timing of National Greenhouse Gas Emission Reductions in the Presence of Other Environmental Policies

This paper shows in an empirical context that substantial cost reductions can be achieved in the implementation of Dutch national climate policy by (i) targeting the policy at the stock of greenhouse gases, thus allowing polluters flexibility in their timing of emission reductions; and (ii) integrating climate policy with other policies, thereby optimising the restructuring of the economy needed to achieve environmental policy targets. A dynamic applied general equilibrium model with bottom-up information on abatement techniques is used to show that the optimal timing of GHG emission reductions tends to follow the timing for the other environmental themes with an additional emphasis on emission reductions in the later periods. The optimal mix of technical measures and economic restructuring as source of emission reductions is affected by the strictness of environmental policy targets for all themes and hence can only be derived from an integrated analysis of these policies.Economic growth, Applied general equilibrium model, Climate change, Environmental policy

How Harmful are Adaptation Restrictions

The dominant assumption in economic models of climate policy remains that adaptation will be implemented in an optimal manner. There are, however, several reasons why optimal levels of adaptation may not be attainable. This paper investigates the effects of suboptimal levels of adaptation, i.e. adaptation restrictions, on the composition and level of climate change costs and on welfare. Several adaptation restrictions are identified and then simulated in a revised DICE model, extended with adaptation (AD-DICE). We find that especially substantial over-investment in adaptation can be very harmful due to sharply increasing marginal adaptation costs. Furthermore the potential of mitigation to offset suboptimal adaptation is investigated. When adaptation is not possible at extreme levels of climate change, it is cost-effective to use more stringent mitigation policies in order to keep climate change limited, thereby making adaptation possible. Furthermore not adjusting the optimal level of mitigation to these adaptation restrictions may double the costs of adaptation restrictions, and thus in general it is very harmful to ignore existing restrictions on adaptation when devising (efficient) climate policies.Integrated Assessment Modelling, Adaptation, Climate Change

Energy Biased Technical Change: A CGE Analysis

This paper studies energy bias in technical change. For this purpose, we develop a computable general equilibrium model that builds on endogenous growth models. The model explicitly captures links between energy, the rate and direction of technical change, and the economy. We derive the equilibrium determinants of biased technical change and show the importance of feedback in technical change, substitution possibilities between final goods, and generalequilibrium effects for the equilibrium bias. If the feedback effect is strong, or the substitution elasticity large, or both, our model tends to a corner solution in which only technologies are developed that are appropriate for production of non-energy intensive goods. --computable general-equilibrium models,endogenous technical change,energy,environment

AD-DICE: an implementation of adaptation in the DICE model

Integrated Assessment Models (IAMS) have helped us over the past decade to understand the interactions between the environment and the economy in the context of climate change. Although it has also long been recognized that adaptation is a powerful and necessary tool to combat the adverse effects of climate change, most IAMs have not explicitly included the option of adaptation in combating climate change. This paper adds to the IAM and climate change literature by explicitly including adaptation in an IAM, thereby making the trade-offs between adaptation and mitigation visible. Specifically, a theoretical framework is created and used to implement adaptation as a decision variable into the DICE model. We use our new AD-DICE model to derive the adaptation cost functions implicit in the DICE model. In our set-up, adaptation and mitigation decisions are separable and AD-DICE can mimic DICE when adaptation is optimal. We find that our specification of the adaptation costs is robust with respect to the mitigation policy scenarios. Our numerical results show that adaptation is a powerful option to combat climate change, as it reduces most of the potential costs of climate change in earlier periods, while mitigation does so in later periods.integrated assessment modelling, adaptation, climate change

International Cooperation on Climate Change Adaptation from an Economic Perspective

This paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects.Climate Change, Adaptation Funding, Integrated Assessment Modeling

International Cooperation on Climate Change Adaptation from an Economic Perspective. ESRI WP323. October 2009

What role could a property tax play in broadening the Irish tax base? Could a recurrent tax on immovable property provide greater stability than a system of stamp duties, while removing obstacles to mobility? What about the relationship between a property tax and ability to pay – should or could the bills facinThis paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects.g those with valuable houses and little income be reduced or eliminated without making a property tax a quasi-income tax? These are among the questions explored in this paper, which provides a broad picture of the issues, illustrated by detailed microsimulation of the impact of specific forms of property tax

An economy model for GISMO: DART-PBL technical documentation

The Global Integrated Sustainability Model (GISMO), developed at the Netherlands Environmental Assessment Agency (PBL), is a platform for analysing the complexity of sustainable development and human well-being with regards to the three sustainability domains: People, Planet, and Profit (PPP). The economic structure of the GISMO1.0 model is the International Futures model, developed at the University of Denver. To better address price behaviour in the model, the Computable General Equilibrium (CGE) model DART, developed by the Kiel Institute for the World Economy, was included in the GISMO framework and integrated with the International Futures model. The DART model is tuned to the needs of the GISMO project, and is further referred to as DART-PBL. This report provides an overview of the main changes and additions to the original DART model. The changes and additions include: 1) region and sector aggregation compatible with the GISMO framework; 2) human capital accumulation based on demographics, educational attainment and health level to better address human well-being; 3) introduction of a Linear Expenditure System to distinguish between basic and luxury consumption; 4) adjusted savings to take into account different saving patterns of a changing population structure; 5) heterogenic land prices linked with the IMAGE framework to address land scarcity and environmental impacts; and 6) partial labour mobility between agricultural and non-agricultural sectors, to assess changes in income distribution

A Weak Bargaining Set for Contract Choice Problems

In this paper, we consider the problem of choosing a set of multi-party contracts, where each coalition of agents has a non-empty finite set of feasible contracts to choose from. We call such problems, contract choice problems. The main result of this paper states that every contract choice problem has a non-empty weak bargaining set. The need for such a solution concept which is considerably weaker than the core arises, since it is well known that even for very simple contract choice problems, the core may be empty. We also show by means of an example that the bargaining set due to Mas-Colell (1989), as well as a weaker version of it, may be empty for contract choice problems, thereby implying that the weakening we suggest is in some ways tigh

A Proposal for the Attribution of Market Leakage to CDM Projects

Economic models suggest that in many cases, market leakage rates of greenhouse gas abatement reach the two-digit percentage range. Consequently, the Marrakesh Accords require Clean Development Mechanism (CDM) projects to account for leakage. Despite this, most project proponents neglect market leakage for their project, because the influence of an individual project on market prices seems to be negligible. Insufficient leakage accounting is facilitated by a lack of theories and applicable proposals regarding the quantification and attribution of leakage effects. The aim of this paper is to develop a proposal for the attribution of market leakage effects to CDM projects. To this purpose, we identify the transmission mechanisms for CDM project leakage, investigate the current practice of leakage accounting, and analyse alternative attribution methods for leakage effects that are transmitted through price changes. We find that project-specific approaches must fail to take account of such leakage effects. Consequently, we propose to estimate aggregate market leakage effects and attribute them proportionally to individual projects. Our proposal is based on commodity-specific leakage factors which can be applied by project developers to any emission reductions that are associated with a project's leakage-relevant demand or supply changes. The proposal is conservative, equitable, incentive compatible and applicable at manageable costs