Optimizing Voluntary Deforestation Policy in the Face of Adverse Selection and Costly Transfers

As part of international climate change policy, voluntary opt-in programs to reduce emissions in unregulated sectors or countries have spurred considerable discussion. Since any regulator will make errors in predicting baselines, adverse selection will reduce efficiency since participants will self-select into the program. In contrast, pure subsidies lead to full participation but require large financial transfers; this is a particular challenge across countries. A global social planner facing costless transfers would choose such a subsidy to maximize efficiency. However, any actual policy needs to be individually rational for both the buying (industrialized) and selling (developing) country. We present a simple model to analyze this trade-off between adverse selection and infra-marginal transfers. The model leads to the following findings. First, extending the scale of voluntary programs both improves efficiency and reduces transfers. Second, the set of individually rational and Pareto efficient policies typically features a combination of credit discounting and stringent assigned baselines which reduce efficiency. Third, if the industrialized countries can be persuaded to be more generous, the feasible policy set can come close to the globally efficient policy to avoid deforestation.Voluntary opt-in, adverse selection, deforestation, offsets, emissions trading, REDD, Agricultural and Food Policy, Community/Rural/Urban Development, Environmental Economics and Policy, Land Economics/Use, Q54, Q56,

Bigger is Better: Avoided Deforestation Offsets in the Face of Adverse Selection

Voluntary opt-in programs to reduce emissions in unregulated sectors or countries have spurred considerable discussion. Since any regulator will make errors in predicting baselines and participants will self-select into the program, adverse selection will reduce efficiency and possibly environmental integrity. In contrast, pure subsidies lead to full participation but require large financial transfers. We present a simple model to analyze this trade-off between adverse selection and infra-marginal transfers. We find that increasing the scale of voluntary programs both improves efficiency and reduces transfers. We show that discounting (paying less than full value for offsets) is inefficient and cannot be used to reduce the fraction of offsets that are spurious while setting stringent baselines generally can. Both approaches reduce the cost to the offsets buyer. The effects of two popular policy options are less favorable than many believe: Limiting the number of offsets that can be one-for-one exchanged with permits in a cap-and-trade system will lower the offset price but also quality. Trading ratios between offsets and allowances have ambiguous environmental effects if the cap is not properly adjusted. This paper frames the issues in terms of avoiding deforestation but the results are applicable to any voluntary offset program.Environmental Economics and Policy, deforestation, offsets, adverse selection, REDD, climate change policy, opt-in.,

Comparing theories: the dynamics of changing vocabulary. A case-study in relativity theory

There are several first-order logic (FOL) axiomatizations of special relativity theory in the literature, all looking essentially different but claiming to axiomatize the same physical theory. In this paper, we elaborate a comparison, in the framework of mathematical logic, between these FOL theories for special relativity. For this comparison, we use a version of mathematical definability theory in which new entities can also be defined besides new relations over already available entities. In particular, we build an interpretation of the reference-frame oriented theory SpecRel into the observationally oriented Signalling theory of James Ax. This interpretation provides SpecRel with an operational/experimental semantics. Then we make precise, "quantitative" comparisons between these two theories via using the notion of definitional equivalence. This is an application of logic to the philosophy of science and physics in the spirit of Johan van Benthem's work.Comment: 27 pages, 8 figures. To appear in Springer Book series Trends in Logi

A Simple Logic of Functional Dependence

This paper presents a simple decidable logic of functional dependence LFD, based on an extension of classical propositional logic with dependence atoms plus dependence quantifiers treated as modalities, within the setting of generalized assignment semantics for first order logic. The expressive strength, complete proof calculus and meta-properties of LFD are explored. Various language extensions are presented as well, up to undecidable modal-style logics for independence and dynamic logics of changing dependence models. Finally, more concrete settings for dependence are discussed: continuous dependence in topological models, linear dependence in vector spaces, and temporal dependence in dynamical systems and games.Comment: 56 pages. Journal of Philosophical Logic (2021

Compositionality in Context

Compositionality is a principle used in logic, philosophy, mathematics, linguistics, and computer science for assigning meanings to language expressions in a systematic manner following syntactic construction, thereby allowing for a perspicuous algebraic view of the syntax-semantics interface. Yet the status of the principle remains under debate, with positions ranging from compositionality always being achievable to its having genuine empirical content. This paper attempts to sort out some major issues in all this from a logical perspective. First, we stress the fundamental harmony between Compositionality and its apparent antipode of Contextuality that locates meaning in interaction with other linguistic expressions and in other settings than the actual one. Next, we discuss basic further desiderata in designing and adjudicating a compositional semantics for a given language in harmony with relevant contextual syntactic and semantic cues. In particular, in a series of concrete examples in the realm of logic, we point out the dangers of over-interpreting compositional solutions, the ubiquitous entanglement of assigning meanings and the key task of explaining given target inferences, and the dynamics of new language design, illustrating how even established compositional semantics can be rethought in a fruitful manner. Finally, we discuss some fresh perspectives from the realm of game semantics for natural and formal languages, the general setting for Samson Abramsky’s influential work on programming languages and process logics. We highlight outside-in coalgebraic perspectives on meanings as finite or infinitely unfolding behavior that might challenge and enrich current discussions of compositionality

Overlapping Climate Policies

Major carbon-pricing systems in Europe and North America involve multiple jurisdictions (countries or states). Individual jurisdictions often pursue additional Initiatives – such as unilateral carbon price oors, legislation to phase out coal, aviation taxes or support programs for renewable energy – that overlap with the wider carbon-pricing system. We develop a general framework to study how the climate benefit of such overlapping policies depends on their design, location and timing. Some policies leverage additional climate benefits elsewhere in the system while others backfire by raising aggregate emissions. Our model encompasses almost every type of carbon-pricing system used in practice

Understanding overlapping policies: Internal carbon leakage and the punctured waterbed

We present an integrated framework to understand the emissions impact of unilateral overlapping policies within a carbon-pricing system. "Internal carbon leak-age" captures emissions displacement within the system (e.g., due to greater product imports from a neighbouring country). The waterbed effect captures the policy's interaction with the system's overall emissions cap. Current market rules in the reformed EU ETS, California's carbon market and RGGI feature "punctured" waterbeds that allow overlapping policies to affect aggregate emissions. We present simple formulae to estimate internal carbon leakage for different types of policy such as a carbon price floor (perhaps with a border tax adjustment), an energy efficiency program, and renewables support. The sign and magnitude of the climate benefit from an overlapping policy varies widely depending on its design, location and timing. Punctured waterbeds raise the stakes: well-designed overlapping policies can be much more climate-effective but others now backfire