Production Functions for Climate Policy Modeling: An Empirical Analysis

Quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution. The empirical foundation for both is generally lacking. This paper estimates the parameters of two-level CES production functions with capital, labour and energy as inputs, and is the first to systematically compare all nesting structures. Using industry-level data from 12 OECD countries, we find that the nesting structure where capital and labour are combined first, fits the data best, but for most countries and industries we cannot reject that all three inputs can be put into one single nest. These two nesting structures are used by most climate models. However, while several climate policy models use a Cobb-Douglas function for (part of the) production function, we reject elasticities equal to one, in favour of considerably smaller values. Finally we find evidence for factor-specific technological change. With lower elasticities and with factor-specific technological change, some climate policy models may find a bigger effect of endogenous technological change on mitigating the costs of climate policy.Climate Policy, Input Substitution, Technological Change

Unilateral Climate Policy, Asymmetric Backstop Adoption, and Carbon Leakage in a Two-Region Hotelling Model

We study backstop adoption and carbon dioxide emission paths in a two-region model with unilateral climate policy and non-renewable resource consumption. The regions have an equal endowment of the internationally tradable resource and a backstop technology. We first study the case of a unilateral stock constraint (e.g. a 450 ppmv carbon dioxide concentration target), and show that the non-abating region makes the final switch to the backstop before the abating region does, though the latter region has two disjoint phases of backstop use if its marginal cost is sufficiently low. Furthermore, we show that the abating region has an inverse N-shaped emission path, with growing emissions in the period for which the ceiling is binding. In addition, there is a phase in which this region has a positive carbon price, but higher emissions than the non-abating region. With a global intertemporal carbon budget instead of a stock constraint, the order of definite backstop adoption is reversed and the abating region’s emissions are always lower. We also show that unilateral climate policy does not lead to international carbon leakage.climate policy, non-renewable resources, backstop technology, carbon leakage, unilateral climate policy

Effects of the compulsory indoor confinement of organic layer poultry: a dust storm!

In August 2005 an order was issued in the Netherlands for free range poultry to be kept indoors to prevent the introduction of avian influenza. The Animal Sciences Group of Wageningen UR (Wageningen University and Research Centre) conducted a telephone survey at the start of this indoor confinement regime to establish its effects on the wellbeing of laying hens and to chart the economic consequences for the poultry keepers. The survey revealed that, according to the poultry keepers, the impact on the wellbeing of the birds was not serious, thanks to the introduction of enrichment material such as extra litter and extra feeding. And the economic consequences were confined to an increase in the amount of work associated with the special enrichment measures. To obtain a more objective picture of the consequences of the indoor confinement order, the researchers visited 37 organic layer poultry farms during November and December. Despite the rules having been relaxed, these farms were still keeping their laying hens indoors. During each visit various parameters were scored, including: strain and age of hens, dimensions and equipment of the sheds, method of ventilation, general appearance of the hens, plumage, mortality and use of enrichment material. In addition, a quantitative measurement of dust was made in the sheds. Like the first study, this follow-up study also showed that compulsory indoor confinement had not led to any serious wellbeing problems. Admittedly, the condition of the laying hens' plumage often left something to be desired, but this depended to a very large extent on the strain of hens and their age. It was not possible to say to what extent the protracted indoor confinement of the hens was responsible for the mediocre condition of their plumage, since no control observations were made on farms where indoor confinement was not imposed. Serious feather pecking was observed occasionally, but did not lead to cannibalism. No correlation could be found between the outward appearance of the laying hens and the use of enrichment materials such as straw bales, etc. As this was an observational study, it is quite possible that the use of enrichment material was frequently prompted by the existing behaviour and general condition of the animals, as a result of which farms with few such problems had less need to take extra measures. Thus, it was not possible to determine the effect of the enrichment measures on the wellbeing of the animals in this way. In general, it emerged that poultry keepers often paid extra attention to their flocks at the start of the compulsory confinement period, providing extra litter or feed as enrichment, but gradually cut back on these extra measures. The study revealed that most farms were still using laying hens whose beaks had been tipped. It is not clear to what extent the absence of major feather pecking problems can be attributed to this. Further research is needed into the impact on feather pecking of the introduction (on 1 March 2006) of a prohibition on beak-tipping in organic poultry keeping, notably when animals are compulsorily confined indoors. Particularly striking were the high dust levels measured in the sheds (average 4.5 mg/m3). It was clear that the amount of dust in the sheds was directly related to the density of the laying hens and the strain of hen. The latter may be because a placid strain of hen is less prone to scratching and scraping and thus generates less dust. In particular, sheds with a "volière" (tiered aviary) system tended to have high dust concentrations (6.9 mg/m3). Previous researchers have reported that a dust concentration above 3.7 mg/m3 is bad for animal health. In summary, it can be stated that the harmful effects associated with indoor confinement can be mitigated by giving animals more enrichment. However, this present study is unable to pronounce on the effectiveness of the individual enrichment measures. It was clear that the dust levels in the sheds where laying hens are confined are too high and that this is related, inter alia, to the system employed in the sheds

Cooling lines as probes of the formation and buildup of galaxies and black holes

We discuss the use of SPICA to study the cosmic history of star formation and accretion by supermassive black holes. The cooling lines, in particular the high-J rotational lines of CO, provide a clear-cut and unique diagnostic for separating the contributions of star formation and AGN accretion to the total infrared luminosity of active, gas-rich galaxies. We briefly review existing efforts for studying high-J CO emission from galaxies at low and high redshift. We finally comment on the detectability of cooling radiation from primordial (very low metallicity) galaxies containing an accreting supermassive black hole with SPICA/SAFARI.Comment: to appear in the proceedings of "The Space Infrared Telescope for Cosmology & Astrophysics: Revealing the Origins of Planets and Galaxies", Oxford, July 2-8, 200

Modeling Linkages Between Climate Policy and Land Use: An Overview

Agriculture and forestry play an important role in emitting and storing greenhouse gases. For an efficient and cost-effective climate policy it is therefore important to explicitly include land use, land use change, and forestry (LULUCF) in economy-climate models. This paper gives an overview and assessment of existing approaches to include land use, land-use change, and forestry into climate-economy models or to link economy-climate models to land-use models.Climate Change, Climate Policy, Modeling, Land Use