Carmen Arguedas, AERNA Newsletter Editor
Dear AERNA colleagues and friends,
It is my great pleasure to present the contents of the third issue of our AERNA Newsletter, corresponding to Summer 2015.AERNA has just renewed the Council Board for the period 2015-2017. As new editor of the AERNA Newsletter, I want to start by warmly thanking the former editor Maria José Gutiérrez for her excellent work and impulse in the starting period of this interesting project. The present issue is mostly due to her, since she has managed the vast majority of the contents in this number. (read more ⇓)
This issue contains the traditional sections on Institutional Highlights, Research Highlights, Newsletter's Policy Commentary, Announcements and Institutional Membership directory.
The section on Institutional Highlights starts with an introductory letter from our new elected president, Antoni Riera, and follows with information about the latest AERNA Conference held in Girona, the latest AERNA awards, and the First AERNA Workshop on Game Theory and the Environment.
In the Research Highlights section, you will find three very interesting notes on Economic Growth and Natural Resources, Forest Carbon Sequestration, and Ecosystem Services. In the first note from Francisco Cabo, Guiomar Martín-Herrán and María Pilar Martínez García on Economic Growth and Natural Resources, the authors point out the conditions for growth sustainability when non-renewable resources are essential for production, and they stress the role of international trade for growth sustainability in the case of renewable resources. In the second short essay from Renan Goetz and Àngels Xabadia, the authors focus on forest carbon sequestration to highlight the effects of climate change on the multiple services that forests provide. The section ends with a note by Esther Blanco on Ecosystem Services, where she stresses how endogenous behavior may result in an increased likelihood that a major ecosystem disturbance occurs and this may compromise the capacity to generate ecosystem services.
Catarina Roseta-Palma leads the Newsletter's Policy Commentary section with a commentary on the Portuguese Green Tax Reform passed on last December 31. Catarina was one of the experts of the commission named by the Portuguese Government with the aim to prepare a proposal. She shows us her inside view of the whole process.
The Newsletter follows with the usual announcements section with information about several conferences with still open deadlines and other events and job opportunities. The Institutional Members section closes the Newsletter.
My purpose for the coming issues is to encourage the members of AERNA to share ideas and views. Besides the traditional sections, everyone in the association will have a space in the Newsletter to write brief notes on Environmental and Resource Economics problems. In particular, I wish to invite contributions from PhD students and young scholars in our field. I also want to encourage the recently created AERNA Research Groups to keep us informed about their progresses and activities through their group coordinators. Everyone in the Association can participate, so please, send me your contributions and ideas for the next issue before November 30, 2015, at email@example.com
I want to finish this introductory note by thanking Esther Blanco for her invaluable help in designing a new and refreshing look for the Newsletter. This new shape pretends to serve the purpose of being an open space for our intercommunication. I hope that you will enjoy it!
Antoni Riera, President of AERNA
On the past 24th of May, the 13th anniversary of AERNA foundation was commemorated. During these past years of activity, the Association has echoed the transformations that have taken place in the field of the Natural and Environmental Resources Economics, representing a reference point for the research undertaken in Spain and Portugal on the topic of sustainability and other related issues. (read more ⇓)
Increased research activity, better placement of publications in highly ranked journals and growing focus of investigations on present-day environmental problems are aspects that could satisfactorily summarize the distance traveled so far. No wonder, by considering the big picture of the research contributions realized in terms of analysis, proposals and specific case studies, it is inevitable to get the feeling that we are slowly accumulating a notable baggage of knowledge, results and experiences.
This is the result of the effort of researchers belonging to groups and institutions of international quality, who stand in front of society as experts to contribute, directly or indirectly, to the optimization of the complex interrelationships that arise between the economic system and the environment. Today, we understand these interactions much better than we did only two decades ago and, additionally, we have succeeded in identifying trajectories that appear to be effective in driving the economy towards achieving higher levels of welfare without the risk of overexploitation and exhaustion of natural resources and capital.
At this point, there is a need to reduce or eliminate the weaknesses that constrain the full exploitation of this potential to improve the economy and the environmental situation both in Spain and in Portugal. To identify these weaknesses it is sufficient to look outside and acknowledge our limited presence in public debates and the inadequate link between our research and the productive system. With respect to the first point, it emerges as necessary to present ourselves not as a simple aggregation of researchers with different focuses, but as a specialized group, capable of enriching and contrasting decision-makers' and interest groups' position over issues that we all care about. Concerning the second point, it seems evident that our research should approach more closely the production system (businesses) to contribute to the establishment of conditions that are requested by a new economy, which is more intelligent, more inclusive and more sustainable.
It is possible that this task is very demanding for researchers and research groups which fight each day to guarantee the survival of their organizational units, but, no doubt, all of us should make a joint effort to contribute towards this goal. As a consequence, there are reasons to take advantage from this new stage that AERNA has just began to make a double call for its members: to support the consolidation of what we are and simultaneously promote new initiatives that would allow us to gain additional capabilities and to take over new functions. This way, we will significantly increment our capacity to link together our work with the social environment and to develop new knowledge.
To conclude, both the Board of Directors and myself want to express our gratitude for the opportunity to lead this mission. Nothing can be more interesting and rewarding than being engaged in trying to solve issues that affect the welfare of society as a whole.
Renan Goetz, President of the Local Organizing Committee,
María José Gutiérrez and Àngels Xabadia, Presidents of the Scientific Committee
The VI Congress of the Spanish-Portuguese Association of Resource and Environmental Economics (AERNA), organized in collaboration with the Spanish Association for Energy Economics, took place at the Economics Faculty of the Universitat de Girona, from September 4th to 6th, 2014.
The congress comprised five parallel sessions and two plenary sessions during which 60 papers about environmental and resource economics issues were presented. The program covered a wide range of areas, such as, climate change, water management, forestry and fisheries management, environmental and energy policies, renewable energy or agricultural economics. (read more ⇓)
Over 70 participants from ten different countries discussed about these and other related issues.
It is important to remark the large participation of young researchers. About a third of the presentations were given by PhD students and young post-docs.
The conference received the support of several entities: Girona and Figueres city councils, the faculty of Business and Economic Sciences and the University of Girona Foundation. Finally, it is also worth mentioning the large quantity of people involved in the conference organization. The event was possible thanks to the colleagues in the program committee, the ones in the local organizing committee, including the five students that worked to have everything ready in time, and overall thanks to all presenters and participants, for being in Girona during those 3 busy days.Besides giving shape to the work of AERNA we hope that the conference has resulted in stimulating discussions and will lead to fruitful research collaborations.
to Elsa Varela, Forest Sciences Center of Catalonia-European Forest Institute
The organizing committee received 18 applications for the prize for the best paper presented at the conference by a PhD Student or a PhD holder that defended his/her thesis after 5th June 2012.
The IV AERNA Prize for the best presentation was awarded to Elsa Varela, from the Forest Sciences Center of Catalonia-European Forest Institute for her presentation: "Beyond the burnt area: insights on the social preferences for fire prevention management".
to Michael Finus, University of Bath, and Pedro Pintassilgo, Universidade do Algarve
Michael Finus, from the University of Bath, and Pedro Pintassilgo, from the Universidade do Algarve were awarded the III AERNA prize for the best published paper for their article "The Role of Uncertainty and Learning for the Success of International Climate Agreements", published in the Journal of Public Economics, Volume 103, July 2013, Pages 29–43.
Alejandro Caparrós, Coordinator of the Working Group on Game Theory and Environmental and Resource Economics
The AERNA Working Group on Game Theory and Environmental and Resource Economics will celebrate its first Workshop in Madrid on September 7-8, 2015. The Workshop will bring together papers that deal with environmental and resource economics problems using any of the branches of Game Theory, including theoretical and empirical contributions. Topics covered include coalition formation, dynamic games, bargaining, behavioral economics and experimental economics. The venue is the Facultad de Ciencias Económicas y Empresariales, Universidad Autónoma de Madrid, and the Workshop is co-organized by the Department of Economic Analysis of the Universidad Autónoma de Madrid and the Institute for Public Goods and Policies (IPP) of the Consejo Superior de Investigaciones Científicas (CSIC).
Francisco Cabo and Guiomar Martín-Herrán, Universidad de Valladolid,
María Pilar Martínez-García, Universidad de Murcia
In the literature on economic growth and the environment, when natural resources are regarded as productive inputs provided in limited amounts, sustainability can be identified as an unlimited economic growth with a finite natural resource sector. In what follows, the first section focuses on the conditions for sustainability when a non-renewable resource plays an essential role in the engine of growth of the economy. The second focuses on the role of international trade for sustainability considering a renewable natural resource. (read more ⇓)
Growth-essential natural resources
The finiteness of natural resources as productive inputs and the limits to grow was first emphasized by the Club of Rome in the Meadows report. The world-wide oil crisis of the mid 1970s fueled the interest in the macroeconomics of non-renewable natural resources and their scarcity. Exhaustible natural resources may cause diminishing returns to capital and labor taken together and, therefore, economic stagnation in the long run. The endogenous growth literature developed during the 1990s offered an opportunity to solve the problem (see, for example, Grimaud and Rougé (2003) and references therein). In this literature the resource was essential in the manufacturing sector, but it didn't enter into the production of knowledge or human capital (the real engine of growth). By contrast, if the non-renewable resource were essential for growth (entering directly or indirectly on the growth engine), the long-run sustainability of growth would be in danger. The previous models assumed constant returns to man-made inputs taken together (capital and knowledge). Slightly increasing returns (IR) would lead to explosive growth, while diminishing returns (DR) would lead to stagnation. Groth (2007) built a semi-endogenous growth model with DR to man-made inputs and a growth-essential non-renewable natural resource. Endogenous sustainable growth is feasible thanks to population growth. In contrast, Cabo et al. (2014a) show that if the economy comprises two separate sectors, final output and R&D, both directly or indirectly dependent on the exhaustible natural resource, IR to man-made inputs are compatible with non-explosive sustained growth. The instability problem usually associated with IR is overcome thanks to the existence of imperfect markets in a decentralized economy. In this case, growth is fully endogenous, since population growth is not necessary.
Cabo et al. (2014b) proves that this result may not be maintained when trade between non-homogeneous countries emerges. The main conclusion is that either the returns to man-made inputs are constant or, under increasing returns, stability turns out to be a \textquotedblleft knife-edge" possibility.
Technological diffusion through trade
One of the questions which has received most attention in the literature on economic growth and natural resources when international trade is taken into account is the resource curse hypothesis, which establishes a paradoxically negative relationship between natural resource abundance and economic growth (see, for example, Ploeg (2011)). A resource abundant economy, which specializes in harvesting and exporting natural resources in exchange for consumption and neglects other sectors of the economy faces the risk of a resource curse. However, trade can also be regarded as a transmission channel of economic growth between trading partners. Technical knowledge can be used within the country where innovation takes place or it can diffuse to other countries through a multitude of channels. In Cabo et al. (2008, 2014c, 2014d), technology diffusion through trade is the channel through which sustainable growth becomes feasible in developing economies, which are typically linked to the extraction of natural resources and carry out no innovative activities. By identifying technological knowledge with the number of intermediate goods à la Grossman and Helpman (1991), the trade in these intermediate goods plays a preponderant role as a mechanism for technological transfer.
Within this framework, for a developing economy well-endowed with a renewable natural resource, which is employed as a productive input, several questions worth analyzing. The first and most obvious one is whether sustainable economic growth is feasible even in the absence of any investment activity, but relying solely on the diffusion of knowledge through trade from a technological leading country. Once this question is answered affirmatively, a subsequent query is whether the developing country is better off relying on technology diffusion through trade or carrying out its own innovative activities. When the cost of transferring and adapting technology from the leading to the developing country is sufficiently low, the steady-state equilibrium growth rate in the latter is greater in the scenario in which technology is transferred through the trade of intermediate goods. A third research question is to what extent the definition of the property rights of the renewable natural resource affects economic growth, resource conservation and consumers' welfare, not only in the developing economy, but also in the innovative country. The resource is better preserved when owned by a single agent, and growth is faster when the owner is located in the technological leading economy. When the property rights of the resource are located in the developing country, consumers' welfare depends on whether the resource is managed by a central authority or the exploitation rights are equally distributed among many harvesters.
Finally, in this setting it is straightforward to end up analyzing the effect of resource wealth on economic growth, consumption and welfare. When the developing economy employs the natural resource as a necessary input to produce a consumption good exported in exchange for technology, instead of trading the resource as a raw material in exchange for a consumption good (as in Elíasson and Turnovsky (2004)), the economy may escape the anticipated resource curse. For a closed economy which carries out R&D activities and is endowed with a renewable natural resource, assuming that the resource is a necessary input, naturally implies a positive relationship between resource wealth and economic growth. Nevertheless, this resource blessing fades away once the economy opens to trade. The resource wealth becomes growth neutral regardless of whether the developing country develops its own research sector or purchases technology designed abroad. In this last scenario, although resource wealth has no effect on the growth rate of the economy, it raises consumption and welfare in the developing country.
Cabo, F., Martín-Herrán, G., & Martínez-García, M. P. (2008). Technological leadership and sustainable growth in a bilateral trade model. International Game Theory Review, 10(1), 73-100.
Cabo, F., Martín-Herrán, G., & Martínez-García, M. P. (2014a) A note on the stability of fully endogenous growth with increasing returns and exhaustible resources. Macroeconomic Dynamics, DOI: 10.1017/S1365100514000467.
Cabo, F., Martín-Herrán, G., & Martínez-García, M. P. (2014b) Can sustained growth be attained through trading exhaustible resources for foreign research? The Journal of International Trade and Economic Development, 23, 267-298.
Cabo, F., Martín-Herrán, G., & Martínez-García, M. P. (2014c). Property rights for natural resources and sustainable growth in a two-country trade model. Decisions in Economics and Finance, 37, 99-123.
Cabo, F., Martín-Herrán, G., & Martínez-García, M. P. (2014d). On the effect of resource exploitation on growth: domestic innovation vs. technological diffusion through trade, in Dynamic Optimization in Environmental Economics, E. Moser, W. Semmler, G. Tragler and V. Veliov (eds.). Springer, Vienna, Austria, Part II, 243-264.
Elíasson L. & Turnovsky, S. J. (2004). Renewable resources in an endogenously growing economy: balanced growth and transitional dynamics. Journal of Environmental Economics and Management, 48, 1018-1049.
Grimaud, A. & Rougé, L. (2003). Non-renewable resources and growth with vertical innovations: optimum, equilibrium and economic policies. Journal of Environmental Economics and Management 45, 433-453.
Grossman, G. M. & Helpman, E. (1991). Innovation and Growth in the Global Economy. The MIT Press, Cambridge.
Groth, C. (2007). A new-growth perspective on non-renewable resources, in Sustainable Resource Use and Economic Dynamics, L. Bretschger and S. Smulders (eds.), Springer, Dordrecht, 127-163.
Ploeg, F. van der (2011). Natural resources: curse or blessing? Journal of Economic Literature, 49(2), 366-420.
Renan Goetz and Àngels Xabadia, Universitat de Girona
Forests in the Iberian Peninsula are generally characterized by moderate tree growth and consequently by a low profitability with respect to timber production. In many areas it caused the abandonment of forestry; which has been particularly intense in the last decades (Lindner et al., 2010). (read more ⇓)
Yet, besides timber forests provide a wide variety of other services, such as amenity and recreational values, erosion control, natural water quality management, carbon sequestration, the protection of the landscape and the preservation of biodiversity (Croitoru, 2007). Often, forests byproducts in form of mushrooms, truffles, hunting, etc. generate higher benefits than the sale of timber and firewood. Therefore, the consideration of these multiple services in forest planning is essential for conserving forests.
However, forests and their related services may be severely affected by climate change. It is widely recognized that rising atmospheric CO2 concentrations are influencing the climate on a global scale. For the Iberian Peninsula, forecasts point to a general increase in temperatures and a decrease in rainfall. These changes likely affect the vital cycles of trees, through their impact on tree growth, reproduction and mortality. Thus, the management of forest ecosystems will need to be adapted to changes in the climatic conditions in order to use them best from a social point of view. Moreover, the long rotation periods of most tree species and varieties stresses the need to conduct studies that shed light on the interplay between climate change and forest ecosystem services. In this article, the authors summarize the findings of some of their studies and of the related literature on forest carbon sequestration as an example to highlight the effects of climate change on the multiple services that forests provide.
Carbon sequestration in forests
Through the photosynthesis, trees fix large amounts of carbon that are withdrawn from the atmosphere. Thus, climate mitigation policies have considered forest ecosystems as a potential sink for CO2 emissions from transport or industrial activities. In fact, the Kyoto Protocol allowed Annex I countries to deduct within limits carbon sequestered by land use, land-use change, and forestry from their national carbon emissions. The Spanish Forestry Plan for the period 2002-2032 specifically considers carbon sequestration in forest biomass as one of their main objectives to mitigate the effects of climate change. In Portugal, the National Strategy for Forests of 2006 also mentions carbon sequestration as one of the outstanding services that forests provide.
Thus, in recent years there has been an increasing interest in the literature to include carbon sequestration in forest management models and to analyze the potential of forest ecosystems to act as a carbon sink (see, for instance, Bravo et al., 2008; Caparrós, 2009; Cunha-e-Sá et al., 2013). The study by Díaz-Balteiro and Romero (2010) reveals that maximizing benefits from timber production is not fully compatible with maximizing carbon sequestration. Therefore, silvicultural practices need to be designed to achieve the best compromise between the production of timber and the sequestration of carbon. When the carbon price increases Goetz et al. (2010) show that it is optimal to increase the investment in the forest by incrementing the number of standing trees. In turn it also leads to an increase in the amount of sequestered carbon. They also show that sequestration costs for forests seem to be a significantly lower when the forest management regime is changed than when the land use is changed, i.e., a change from agriculture to forestry. This is due to the fact that a change in the management regime does not require the opportunity cost of the land to be taken into account, in contrast to afforestation activities. Given the magnitude of carbon sequestration costs these findings suggest that a change in the forest management regime can be considered as an interesting option for mitigating climate change.
However, as climate change takes place the role of forest carbon sequestration as a part of climate policies may need to be revised. Climatic changes will affect soil carbon dynamics, and processes such as reproduction, growth, and mortality of the trees. While growing trends of CO2 increase net ecosystem productivity (fertilization effect), i.e., timber production and carbon sequestration, an increase in global temperatures intensifies the decomposition of carbon in soils, accelerating its release to the atmosphere (soil carbon release effect). Rising temperatures also affect the forest carbon balance by reducing forest growth in areas with limited water availability (Vayreda et al., 2012). This may lead, under certain conditions, to a negative carbon balance over time, and forests may turn from sinks into sources of carbon emissions. Besides, it may reduce the effectiveness of carbon payments, and consequently, the cost of carbon sequestration in forests may be largely affected. The study by Goetz et al. (2013) shows indeed that climate change increases sequestration costs per ton, highlighting the fact that carbon sequestration in forests may be an interesting policy in the short and medium-term but less in the long term.
Even though the effects of climate change in timber production and its economic consequences have been widely analyzed in the past 20 years (Mur et al., 2014), the preceding paragraph has illustrated the fact that climatic changes will impact in forest resources in various and diverse aspects.
One of the largest risks perceived in the Portuguese and Spanish forestry sector for the next decades is the increase in fire hazard. Fires are expected to be more frequent due to global warming and episodes of extreme meteorological events. Moreover, the abandonment of marginal agricultural land has led to an extension of the land covered by unmanaged forests which in turn implies an accumulation of biofuel. Especially concerning are the predictions of an increase in the occurrence of medium and big fires, which cause significant environmental, social and economic damage.
Climate change may also be responsible for an increase in pests and diseases. Phytosanitary problems may extend and become more devastating, increase tree mortality and compromise the sustainability of forest resources.
Thus, society confronts the challenge to adapt forest management to exploit any potential positive effect of climatic changes and to reduce their risks. Many of these climatic alterations are unavoidable. Moreover, they will become apparent in the near future. This opens the need to conduct scientific studies that explore the impact of climate change on forest resources and evaluate the best adaptation strategies. Research will be essential to take full advantage of the forest resources and ensure its sustainable development.
Bravo, F., Bravo-Oviedo, A., Diaz-Balteiro, L. (2008) Carbon sequestration in Spanish Mediterranean forests under two management alternatives: a modeling approach. European Journal of Forest Research 127: 225–234.
Caparrós, A. (2009) Delayed carbon sequestration and rising carbon prices. Climatic Change 96: 421–441.
Croitoru, L. (2007) How much are Mediterranean forests worth? Forest Policy and Economics, 9: 536–545.
Cunha-e-Sá, M.A., Rosa, R., Costa-Duarte, C. (2013) Natural carbon capture and storage (NCCS): Forests, land use and carbon accounting, Resource and Energy Economics 35: 148–170.
Díaz-Balteiro, L., Romero, C. (2003). Forest management optimisation models when carbon captured is considered: a goal programming approach. Forest Ecology and Management 174: 447–457.
Goetz, R., Hritonenko, N., Mur, R., Xabadia, A., Yatsenko, Y. (2010) Forest Management and Carbon Sequestration in Size-Structured Forests: The Case of Pinus Sylvestris in Spain. Forest Science 56: 242–256.
Goetz, R., Hritonenko, N., Mur, R., Xabadia, A., Yatsenko, Y. (2013) Forest management for timber and carbon sequestration in the presence of climate change: The case of Pinus Sylvestris Ecological Economics 88: 86-96.
Lindner, M., Maroschek, M., Netherer, S., Kremer, A., Barbati, A., Garcia-Gonzalo, J., Seidl, R., Delzon, S., Corona, P., Kolström, M., Lexer, M.J., Marchetti, M. (2010) Climate change impacts, adaptive capacity, and vulnerability of European forest ecosystems. Forest Ecology and Management, 259: 698–709.
Mur, R.J., Goetz, R-U., Xabadia, A., Córdoba, F., Gracia, C. (2014) Adapting the optimal selective-logging of Scots pine (Pinus sylvestris L.) stands in NE Spain to increasing CO2 concentrations, Journal of Forest Economics 20: 286–304.
Vayreda, J., Martinez-Vilalta, J., Gracia M., Retana, J. (2012) Recent climate changes interact with stand structure and management to determine changes in tree carbon stocks in Spanish forests, Global Change Biology 18: 1028–1041.
Esther Blanco, University of Innsbruck, and The Vincent and Elinor Ostrom Workshop in Political Theory and Policy Analysis, Indiana University
Maintaining ecosystem services is one of the key challenges for the future, both for the well-being of humans and more broadly to virtually all species. The Millennium Ecosystem Assessment concluded that over the past 50 years humans have changed ecosystems more rapidly and extensively than in any comparable period of time in history. Consequently, the majority of the ecosystem services Earth provides are being degraded, diminishing the benefits that future generations can obtain from ecosystems. (read more ⇓)
Other global initiatives such as The Economics of Ecosystems and Biodiversity, and the Ecosystem Services for Poverty Alleviation also support the view that human prosperity and poverty reduction depend on maintaining the flow of benefits from ecosystems. Concurrently there is an explosion of research on programs that aim to develop contracts and other institutional arrangements to create markets for the provision of ecosystem services (see for example the discussion in Kinzig et al. 2011 and the ambitious United Nations Collaborative Programme REDD+ on reduced forest-based carbon emissions).
Interestingly, however, there remains a research gap on the behavioral determinants of conservation decisions necessary for the maintenance of the public good values of ecosystem services. A critical aspect that has been widely overlooked is that appropriation from natural resources can (endogenously) lead to probabilistic losses of ecosystem services beyond the day-to-day deterministic degradation associated with appropriation. These are relevant in a wide collection of settings (see TEEB, 2010) where increasing pressure by resource users results in an increased likelihood that a major ecosystem disturbance occurs and compromises (or diminishes) the capacity of the ecosystem to generate ecosystem services.
In the realm of experimental economics, Walker and Gardner (1992) addressed the issue early on by introducing an endogenous probability that a repeated play common-pool resource game would end, where the probability of ending the game increased in total group appropriation. Their main result is that if there is no safe threshold of group appropriation, the resource is rapidly destroyed in accordance with subgame-perfect equilibrium, but if there is a safe threshold, group behavior in some instances tends to focus on the best available equilibrium. Still, in general this equilibrium is not sustained and the resource is destroyed. This suggests a rather short-sighted strategy of play which does not sufficiently internalize the probabilistic losses as to sustain the resource.
Follow-up studies have addressed the role of endogenous probabilities in repeated play public goods settings. Dickinson (1998) and Gangadharan and Nemes (2009) address the relevance of an endogenous probability of a linear public good being provided where the probability of provision increases in total group contributions. Dickinson (1998) shows that subjects systematically adjust their contribution decisions to their expected per capita returns from investment in the public good. However, in a somewhat more complicated decision setting, Gangadharan and Nemes (2009) do not find a response to expected marginal incentives when combining exogenous and endogenous uncertainty over the probability of receiving a return from investments in the public good.
Blanco, Lopez and Walker (forthcoming, hereafter BLW) and Blanco, Haller and Walker (2014, hereafter BHW) explicitly address the role of expected marginal incentives by eliciting subjects' forecast of other group member's appropriation (first order beliefs) in one-shot menu games. BLW addresses the mediating effect of endogenous probabilistic degradation externalities on appropriation decisions under varying opportunity costs from conservation. The results show that the response of individual subjects to the addition of probabilistic degradation is conditional on their expected marginal net benefits to appropriate, which depend in turn on their first order beliefs of others' appropriation. In addition, there is evidence of an overall decreases in appropriation due to probabilistic degradation that is, however, not large enough to offset decreases in efficiency. BHW extends BLW by studying the responses to variations in the percentage loss parameter that the group can suffer, being either 10%, 50% or 90% of the remaining group resource after appropriation. Results show significant heterogeneous reactions to probabilistic degradation, but also greater awareness in terms of conservation of the resources as the potential losses increase. In particular, BHW finds that subjects who are more pessimistic about the scope of group pressures over the resource respond more systematically to changes in expected marginal net benefits. Whereas, subjects who are more optimistic about the prospects of conservation significantly decrease their own appropriation and are less sensitive to expected marginal incentives to appropriate.
In sum, this literature supports the conclusion that subjects respond significantly to endogenous probabilistic losses, although there is considerable individual heterogeneity in the direction of such response. Yet, most of the literature on institutional development for the creation of payments for ecosystem services begins with an assumption of deterministic settings, where the impact of alternative choices are known and guaranteed. In the field, it is very likely that extreme assumptions regarding the deterministic nature of conservation decisions do not hold. This observation raises the issue of what will be the implications for the development of contracts linking payments to the successful provision of the ecosystem services. For example, a critical topic in the design of payments for ecosystem services is the concept of additionality, namely that payments are only related to additional ecosystem services provided as compared to the counterfactual without the payment scheme. Thus, these contracts by definition relate outcome to compensation. However, when the provision of ecosystem services is probabilistic and this probability is defined by the aggregate pressures over the resource, new layers of complexity need to be considered in the institutional design. A critical issue is how to account for the potential risk that despite users efforts to reduce pressures on the ecosystem, the provision of ecosystem services may still be compromised due to "an adverse probabilistic draw" provided by nature. Thus, contracts based purely on outcomes could undermine joint efforts towards conservation, and even to eventually erode the internal motivations to mitigate ecosystem damage.
Blanco, E., Lopez-Pérez, M.C., and Walker, J.M. (forthcoming). The opportunity cost of conservation with deterministic and probabilistic externalities. Environmental and Resource Economics. DOI 10.1007/s10640-014-9868-7
Blanco, E., Haller, T., and Walker, J.M. (2014) Externalities in appropriation: responses to probabilistic losses. Working Papers in Economics and Statistics, 2014-32. University of Innsbruck.
Dickinson, D. L. (1998). The voluntary contributions mechanism with uncertain group payoffs. Journal of Economic Behavior & Organization, 35(4), 517-533.
Gangadharan, L., & Nemes, V. (2009). Experimental analysis of risk and uncertainty in provisioning private and public goods. Economic Inquiry, 47(1), 146-164.
Kinzig, A. P., Perrings, C., Chapin, F. S., Polasky, S., Smith, V. K., Tilman, D., and Turner, B. L. (2011) Paying for Ecosystem Services — Promise and Peril. Science, 334, pp. 603-604.
TEEB (2010) The Economics of Ecosystems and Biodiversity: Mainstreaming the Economics of Nature: A synthesis of the approach, conclusions and recommendations of TEEB.
Walker, J. M., & Gardner, R. (1992). Probabilistic destruction of common-pool resources: Experimental evidence. The Economic Journal, 1149-1161.
Catarina Roseta-Palma, Instituto Universitário de Lisboa
It is not often in our academic careers that we are given a chance to practice what we preach. During the year of 2014 the Portuguese Government decided to implement its first ever Green Tax Reform, aiming to contribute to resource use efficiency in the country, to reduce energy dependence and to induce more sustainable patterns of consumption and production, among other goals. The Commission's members were external experts, mostly specialists in tax and environmental law but also two environmental economists (both past members of the AERNA Council). The mandate was to work independently on a wide-ranging review of current environmental and energy taxation, presenting new options to internalize externalities while explicitly taking into account an overall aim of fiscal neutrality and a need for impact assessment. All this in six to nine months… (read more ⇓)
The herculean nature of the task was clear from our first meetings. We found a large set of small (even tiny) charges on items such as light bulbs and hunting permits, but also a number of special exemptions or tax benefits in many existing, non-environmental, taxes. A first decision was therefore to focus most efforts where we believed we could make a difference. From early on, this included a carbon tax on fuels affecting sectors outside the EU Emissions Trading System (EU ETS), to mitigate the inefficiencies associated with a European policy that covers only some sectors and emissions. A modelling task force was set up to look at the macroeconomic impacts of such a tax on GDP, energy consumption, public debt and employment, using existing models.
Other charges, such as vehicle registration, water and waste, were also revised, as were land-related taxes that affect Portuguese forests, yet we chose not to feed these into the general equilibrium simulations since our models were not sufficiently disaggregated and the monetary values involved are much smaller. Environmental taxes in Portugal accounted for €3,5 billion euros in 2012, 6,7% of total revenues from taxes and social contributions, which is slightly higher than the EU-28 average of 6% but an important drop from nearly 10% in 2002. Energy and transport taxes are dominant here as elsewhere, although the latter have decreased in recent years, mainly due to a significant fall in car sales. Resource and pollution charges have grown from practically nil in 2003 to 0,4% of environmental taxes (all data from Eurostat).
Throughout the year the Commission met many stakeholders, from government agencies, such as the Portuguese Environment Agency, to industry representatives and NGO´s. We had fruitful discussions and received numerous suggestions that helped us select those legal changes we would actually turn into a legal proposal and those that would merit inclusion in the report but only as recommendations, given the time constraints. After our initial proposal, in June, there was extensive public consultation, and the final proposal was delivered to the government in September 2014 (All documents, including the modelling outcomes, are available in www.portugal.gov.pt). The Portuguese Green Tax Reform was published on the 31st of December (Lei nº 82-D/2014). While many of our proposals were altered or fell by the wayside, and the challenge of turning theoretical insights into legislation that could be accepted by decision makers was abundantly clear, overall it was still a useful effort. Some positive changes were implemented, and the stage has been set for a significant discussion of green taxes, with the media providing copious reporting and thus spreading awareness. In the remainder of this piece the highlights of the approved law will be summarized.
The new carbon tax on fuels was established as an additional term on already existing fuel taxes, for simplicity. After much discussion, the Commission settled on a flexible value with a link to the EU ETS carbon price. Although the tax is fairly low for 2015 (we used 5€/ton as reference, yielding an increase of about €0,015 cents per liter in gas and diesel), the law states that the yearly values will be calculated based on the prices in EU ETS permit auctions. On transport, vehicle registration taxes (which already had a carbon component) climbed around 3%, with hybrids benefitting from lower taxes and electric vehicles excluded, as before. A few tax benefits were strengthened, a temporary end-of-life incentive scheme was re-instated, and some benefits for car-sharing and bike-sharing schemes were introduced. Still, quite a few of the commission's proposals were dropped, including one of our favorites, the "Public transportation voucher" (tax-free, similar to what now exists for meals, preschools and schools); a proposed charge on airline flights was also not approved.
Some relevant changes to the water and waste charges were agreed. In particular, values were updated: for example, the landfill charge increases from 5,5 €/ton to 11€/ton in 2020, to tackle the fairly high proportion of landfilled waste we still have (54% in 2012), although it should be noted that the Commission's proposal was 20€/ton in 2020. A few exemptions and reductions were revoked, but this proved to be quite a difficult task: although the Commission attempted to bring water charges closer for different users with similar impacts, the final version maintains special reductions for utility wastewater discharges and IPPC installations, for example, while some hydropower dams will continue to benefit from guaranteed capacity payments even when droughts occur and they are unable to produce. A new charge on lightweight plastic bags was approved, of €0,08 plus VAT, which will stop retailers giving away plastic bags for free, a policy that has placed Portugal in the top of plastic bag consumption according to estimates from the European Commission (nearly 500 bags per capita per year; see eur-lex.europa.eu).
The expected net revenue from the new environmental taxes is around €160 million per year. On the one hand, the Commission was criticized for not going far enough: for such small values the modelled impacts for various revenue recycling alternatives, although generally positive (lower emissions and public debt, long-term increase in employment and GDP) were rather modest. On the other, there were some very negative reactions from affected sectors (such as plastic, oil and transport companies), and the revenue recycling instrument is not clearly specified in the law. Still, we hope its implementation will create enough visible benefits to spur future, more ambitious reforms.
The Colorado School of Mines (CSM) Earth Resources Institute (ERI) and the Division of Economics and Business invite applications for a Visiting Researcher during the 2015-2016 academic year. As part of our mission of working across disciplines and research institutions, ERI has established a Visiting Scholars Program, the goal of which is to facilitate the residency of a limited number of distinguished scholars from other academic institutions or accomplished professionals whose expertise coincides with ERI's current research efforts. ERI's Visiting Scholar Program provides qualified researchers the opportunity to work alongside our research team, interact with faculty and students, and share and collaborate on research ideas – all in the beautiful Colorado environment.
The position allows the Visiting Researcher to pursue academic research in mineral, energy, and environmental economics and policy while on leave from their home institution. Preference is given to research topics that match the interests of faculty at the Division of Economics and Business at CSM.
Appointments will be generally be made for one Semester, either Fall (September-December) or Spring (January-April), though other timeframes will be considered. It is expected that the Visiting Researcher will generally spend the appointment term in residence at CSM. No teaching or CSM/Earth Resources Institute service is required, however the Researcher is expected to give one research seminar and interact with CSM graduate students and faculty. Further, there may be an opportunity for the Researcher to give a public lecture on a topic of interest to the Earth Resources Institute.
Candidates are expected to have a Ph.D. in Economics or related field and currently hold a full-time faculty position at a university or an equivalent position at a research institute. The Researcher will be compensated with round-trip economy travel expenses to CSM and a fixed monthly stipend meant to cover local accommodation while at CSM. Please submit a CV and cover letter describing the main research objective the candidate expects to undertake at CSM and, ideally, how this work fits into what is currently being done in the Division of Economics and Business. Submissions should be sent to Michael R. Walls, Interim Division Director at firstname.lastname@example.org
The Department of Environmental Science at Aarhus University, Roskilde, Denmark invites applications for two positions in Environmental Economics to strengthen the research, advisory, and teaching capability of the department. One of the positions is a fixed 4-year position as researcher (equivalent to assistant professor), while the other may be filled with a candidate at either the Senior researcher (equivalent to an associate professor) or researcher level. The positions are to be filled by 1 August 2015 or as soon as possible thereafter, subject to negotiation.
Further information on qualification requirements and job content may be found in the Memorandum on Job Structure for Academic Staff at Danish Universities, and in the Ministerial Order on the Appointment of Academic Staff at Danish Universities under the Danish Ministry of Science, Technology and Innovation.
The objective of the BC3 Summer School is to offer an updated and multidisciplinary view of the ongoing trends in climate change research. The BC3 Summer School is organized in collaboration with the University of the Basque Country and is a high quality and excellent summer course gathering leading experts in the field and students from top universities and research centres worldwide.
This sixth edition of the Summer School will continue with the multidisciplinary approach. The structure of the school will follow the IPCC (International Panel for Climate Change) general meetings:
The school is open to PhD Students, postdoctoral fellows and other researchers as well as policy makers interested in acquiring a deep understanding of climate change and the policies designed to fight it.
The program and other information can be found in the BC3 webpage (www.bc3research.org).
The Scientific Partners of BIOECON are pleased to announce the 17th Annual International BIOECON conference on the theme of "Experimental and Behavioural Economics and the Conservation of Biodiversity and Ecosystem Services". The conference will be held once again on the premises of Kings College Cambridge, England on the 13th – 15th September 2015. The conference will be of interest to both researchers and policy makers working on issues in the area of biodiversity, ecosystem services, and sustainable development, in both developed and developing countries. In particular, we wish to explore the role of experimental evidence and behavioural economics in informing economic instruments and conservation policy, both in developed and developing countries.
The conference takes a broad interest in the area of resource management, development and conservation, including but not limited to: the role of biodiversity and ecosystem services in economic development, plant genetic resources and food security issues, deforestation and development, fisheries and institutional adaptation, development and conservation, wildlife conservation, and international trade and regulation. The conference will have sessions on economic development, growth and biodiversity conservation, as well as on institutions and institutional change pertaining to the management of living resources. For a flavour of last year's conference go to BIOECON 16.
The Keynote Speakers for the 17th BIOECON Conference are: Professor Daan van Soest, University of Tilburg, The Netherlands; Professor Jeff Vincent, Duke University, USA.
Papers are specially invited on the themes of: Experimental (lab and field) approaches to biodiversity and ecosystem service conservation; The role of behavioural economics in biodiversity conservation policy design; Policy evaluation of biodiversity-related policies Institution-building for provision of global public goods; Institutional frameworks for resource conservation (property rights, market instruments etc.); Valuation methodology and its application to biodiversity conservation; Evaluation of conservation policy successes and failures Issues of governance and management of natural resources in developing countries; Development, growth and resource constraints; Resources management, distribution, development, poverty alleviation.
In addition, two expert policy panels will be held related to this them. The purpose of these panels will be to bring together practitioners (Government, private sector, NGO) and academics from different disciplines to discuss current policy related issues in biodiversity conservation and environment. The panel sessions will contribute to and be supported by the funding partners: UNEP, WWF, IUCN.
All other conference information is provided on the BIOECON web-site at www.bioecon-network.org.
Hosted by the Grantham Research Institute and the Centre for Economic Performance (London School of Economics and Political Science), together with other members of the Sinergia research network: ETH (Zurich), Graduate Institute (Geneva) and EPFL (Lausanne). Funding gratefully acknowledged from the Swiss National Foundation (SNF).
Keynote Speakers: Prof. Philippe Aghion, Harvard University, Prof. David Popp, Syracuse University, Prof. Sjak Smulders, Tilburg University
Conference details: Held in the surroundings of the Royal Society of the Arts, London, UK, the conference will cover a wide range of topics in the area of the economics of growth, development and technological change, including but not limited to: innovation in clean technologies (including fiscal and regulatory incentives for clean technology development), technology diffusion (including the role of intellectual property rights), growth and environmental policy, technology agreements and global environmental policy. The conference will be will be of interest to both researchers and policy makers working on issues related to the areas of the economics of innovation, growth and the environment.
ICES Annual Science Conference 2015: an exciting weeklong forum that brings together an international community of marine scientists, socio-economists, and students.
ICES welcomes all interested scientists, policy- and decision-makers, those who work with marine ecosystems, stakeholders, representatives from interested organizations and industry to join the discussions on science for sustainable seas.
The Department of Economics of European University at St. Petersburg (Russia) and CORE (Université catholique de Louvain, Belgium) are organizing a two-day international workshop to promote the use of advanced economic theory in the field of natural resources, environment and growth.
The workshop will be held in the European University at St. Petersburg (3, Gagarinskaya Str., St. Petersburg, Russia). Attending the workshop is free but place is limited. For registration, please send an email to email@example.com
All participants need a Russia visa issued according to an invitation letter sent by the European University at St. Petersburg. Participants with a tourist visa are not allowed to make presentation.
The purpose of the workshop is to identify and advance empirical and theoretical economic methods for analyzing climate change policy. The emphasis is on identifying (a) inadequacies in current methods and (b) identifying promising advances that are both significant and non-marginal. The ultimate goal is to advance the state-of-the-art of applied models and methods for analyzing climate policy.
A number of recent publications have suggested the importance of economics to formulating climate policy while underscoring the inadequacy of current knowledge on the economics of climate change. See for instance the September 2013 forum in the Journal of Economic Literature as well as the recent (April 2014) IPCC assessment on the economics of climate change (Chapter 3, WGIII, AR5). This in turn reduces the utility and reliability of integrated assessment models used for policy formation. Although the state of knowledge may be inadequate, there are many promising new research directions being pursued by a variety of economics researchers around the world. It is time to take stock of where we stand and what can be done to advance the state of knowledge in this important area.
Organizers: Profs. Marshall Burke and Charles Kolstad
Massive transformations in how and where energy is produced and consumed are drastically changing our energy economy. This dynamic energy landscape is challenging government and industry decision makers to formulate a clear path forward. Policy and investment decisions need to balance the use of natural resources with impacts on the environment and local economies. One answer is to stimulate innovative technologies to enable access to increasing supplies of energy as well as more efficient consumption. But doing this requires appropriate policies, incentives and mandates, something that challenges even the most well informed policy makers.
The conference will bring together business, government, academic and other professionals to explore these themes through a series of plenary, concurrent, and poster sessions. Speakers will address current issues and offer ideas for improved policies covering all facets of energy development and use. The conference also will provide networking opportunities for participants through informal receptions, breaks between sessions, public outreach, and student recruitment. There also will be offsite tours to provide a direct and close-up perspective on the region's dynamic energy landscape.
The 2015 conference will be held in Pittsburgh, Pennsylvania, one of the main centers of American energy. The region around Pittsburgh contains a rich history of energy, with the discovery of the Coal Hill seam in 1762, the commercialization of the Drake Oil Well in 1859, and the formation of Westinghouse Electric Company in 1886. Today, the Pittsburgh area is a U.S. leader in energy development and ranks amongst the top 25 employers in energy-related industries. Among other things, it is the center of one of the most active natural gas plays in North America, the Marcellus Shale, and is the locus of the first U.S. nuclear power plants being built in over 30 years. Over the past three decades, Pittsburgh has had a remarkable environmental evolution and has been repeatedly named one of America's most livable cities. The Pittsburgh region is fortunate to support a diverse mix of energy activities including nuclear, coal, natural gas, and renewables. The region is home to a host of energy businesses, research facilities, industry groups, and worldclass colleges and universities, many of which have active energy centered policy and academic programs. Finally, more than $1 billion per year in government-funded research flows through the region's academic, corporate and government energy research centers, assuring that new ideas and new technologies constantly emerge.
The 3rd Economics of Low-Carbon Markets Workshop is organized by the University of Sao Paulo, and aims at stimulating discussions among international researchers in the field of Environmental and Energy Economics and closely related areas such as Industrial Organization and Transport Economics.
All interested researchers are invited to submit their papers written in English in pdf format to firstname.lastname@example.org by July 30, 2015.
Conference Website: http://fearp.usp.br/lcm/
The Fifth AERE Summer Conference will be held June 9 - 11, 2016, at the Beaver Run Conference Center in Breckenridge, Colorado—a wonderful venue.
Co-chairs of the Organizing Committee: Harrison Fell (Colorado School of Mines) and Dan Kaffine (University of Colorado, Boulder).
Specific information about the conference will be posted this summer on the AERE web page, www.aere.org
The 22nd edition of the Annual Conference of the European Association of Environmental and Resource Economists is organized by the Swiss Federal Institute of Technology (ETH) in Zurich and EAERE.
Plenary speakers: Matti Liski (Aalto University), Rohini Pande (Harvard University) and Pietro Peretto (Duke University)
Co-chairs of the Scientific Program Committee are Lucas Bretschger and Karen Pittel.
Deadline for paper submissions: January 31, 2016.
Researchers from the respective Groups of Environmental and Resource Economics from IPP-CSIC, UCM, UPM and CIFOR-INIA organize since 2010 a series of seminars about Environmental and Resource Economics in Madrid (Madrid Environmental Economics Seminars, MEES). The seminars are organized approximately once each two months around two presentations, with rotating venues at UPM, UCM, IPP-CSIC and CIFOR-INIA. Usually, one presentation is given by a PhD student and the other one is given by a senior researcher, although there can be exceptions to this rule depending on the circumstances. PhD students are especially encouraged to participate, since this can constitute an excellent opportunity to present their work previous to their Dissertation defense. Participation by foreign students and researchers is also encouraged.
The specific dates and venues of future seminars will be announced in advanced at the MEES web page https://sites.google.com/site/madenvecosem/mees.
Recent speakers have included, among others, Giles Atkinson (London School of Economics), Pablo Campos (IPP-CSIC), Alejandro Caparrós (IPP-CSIC), Pere Mir (Universidad de Lleida), Elena Ojea (BC3), Diego Broz, (FCF-UNaM), Sergio Álvarez Gallego (ETSI Montes-UPM), Jesús Barreal (Universidade de Santiago de Compostela), Michael Finus (Universidad de Bath) and Luis Miguel de Castro (UCM).
The Technology Center of Marine and Food Research.
To imagine the future is a challenge that motivates and excites us everyday: To meet the demands of innovation and development in the marine and food industries. Together, we have no limits.
The BC3 is a Research Centre based in the Basque Country which aims to contribute to long term research on the causes and consequences of climate change in order to foster the creation of knowledge in this multidisciplinary science.
Factor CO2 is a global company that provides ideas and services to tackle climate change from innovative perspectives through our international network of offices. We have developed more than 900 projects for more than 380 clients in 30 different countries.
The Complutense University of Madrid (UCM) is an institution with a long history and broad social recognition. UCM aspires to be among the foremost universities in Europe, and a reference centre for Latin America.
Public and private institutions are invited to support the Association to further its aims by joining AERNA as institutional members. Incomes from institutional membership fees are used exclusively and completely to further the aims of the Association.
Consult our fees, and join us!