Words & Thoughts
Publications
Here you can find our most important output about our latest work. We have published 20 articles in Nature Publishing Group journals since 2018
All
Behavioural Data Science
Climate Impacts & Adaptations
Climate Justice
Climate Transition
Human Health & Migration
Macro-economics and Finance
Resilient Cities
Sustainable Innovation & Digitalization
Climate change impacts on the within-country income distributions
Journal of Environmental Economics and Management , Volume 127, September 2024, 103012 - 2024
This paper investigates the relationship between climate change and income inequality, recognizing that the economic impacts of climate change are not uniform across different levels
of income within and across countries. Using methods from the existing literature on climate
and economic growth, we analyze the economic impact of rising temperatures by withincountry income decile. Our findings suggest that climate change disproportionately affects
the poorer segments of the population within countries, even after accounting for a country’s
ability to adapt to climate impacts, while richer households suffer lower damages. In the
reference scenario without additional climate action (3.6◦C warming), we estimate that climate
impacts could lead to an increase in the Gini index by up to six percentage points, notably
in Sub-Saharan Africa. We project impacts to 2100 through the RICE50+ model and estimate
the income elasticity of impacts within countries. Our estimates indicate that climate change
damages are regressive, with an income elasticity of damages of 0.6 under our preferred
specification. On the other hand, climate benefits are approximately distribution-neutral or
slightly progressive.
The mutual benefits of comparing Energy System Models and Integrated Assessment Models
Open Research Europe , - 2024
Reducing the cost of capital to finance the energy transition in developing countries
Nature Energy , - 2024
Climate stabilization requires the mobilization of substantial investments in low- and zero-carbon technologies, especially in emerging and developing economies. However, access to stable and affordable finance varies dramatically across countries. Models used to evaluate the energy transition do not differentiate regional financing costs and therefore cannot study risk-sharing mechanisms for renewable electricity generation. In this study, we incorporated the empirically estimated cost of capital differentiated by country and technology into an ensemble of five climate–energy–economy models. We quantified the additional financing cost of decarbonization borne by developing regions and explored policies of risk premium convergence across countries. We found that alleviating financial constraints benefits both climate and equity as a result of more renewable and affordable energy in the developing world. This highlights the importance of fair finance for energy availability, affordability and sustainability, as well as the need to include financial considerations in model-based assessments.
Solar Geoengineering, Learning, and Experimentation
Journal of the Association of Environmental and Resource Economists , - 2024
Solar geoengineering (SGE) can offset climate change by directly reducing temperatures. Both SGE and climate change itself are surrounded by great uncertainties. Implementing SGE affects learning about these uncertainties. We model endogenous learning over two uncertainties: the sensitivity of temperatures to carbon concentrations (the climate sensitivity) and the effectiveness of SGE in lowering temperatures. We present both theoretical and simulation results from an integrated assessment model, focusing on the informational value of SGE experimentation. Surprisingly, under current calibrated conditions, SGE deployment slows learning, causing a less informed decision. For any reasonably sized experimental SGE deployment, the temperature change becomes closer to zero and thus more obscured by noisy weather shocks. Still, some SGE use is optimal despite, not because of, its informational value. The optimal amount of SGE is very sensitive to beliefs about both uncertainties.
Incorporating biodiversity impacts in land use decisions
Ecological Modelling , - 2024
We develop a framework for incorporating biodiversity impacts into land use optimization models. Using the countryside species–area relationship, six approaches to incorporating biodiversity are evaluated: constraint versus objective function, and with characterization factors, piecewise linear, or non linear implementation. We also consider the underlying ethical assumptions of different options for biodiversity evaluation considering taxa and ecoregions. To explore the six approaches, we use a case study that considers both climate change mitigation and the biodiversity impact due to habitat loss. We find that the characterization factor approach underestimates biodiversity loss, while the piecewise linear approach somewhat overestimates. Utilizing two approaches: biodiversity protection as the objective, and biodiversity as a constraint allows the construction of a Pareto frontier for cost versus loss of species. In addition to minimum cost solutions and minimum biodiversity loss solutions, the integrated model allows to identify (1) solutions with improved outcomes, those better for biodiversity and with small changes on costs, (2) mechanisms the model uses to achieve the improved solutions, (3) trade-offs and (4) challenges.
Managing forests for biodiversity conservation and climate change mitigation
Environmental Science & Technology , - 2024
We include biodiversity impacts in forest management decision making by incorporating the countryside species area relationship model into the partial equilibrium model GLOBIOM-Forest. We tested three forest management intensities (low, medium, and high) and limited biodiversity loss via an additional constraint on regional species loss. We analyzed two scenarios for climate change mitigation. RCP1.9, the higher mitigation scenario, has more biodiversity loss than the reference RCP7.0, suggesting a trade-off between climate change mitigation, with increased bioenergy use, and biodiversity conservation in forests. This trade-off can be alleviated with biodiversity-conscious forest management by (1) shifting biomass production destined to bioenergy from forests to energy crops, (2) increasing areas under unmanaged secondary forest, (3) reducing forest management intensity, and (4) reallocating biomass production between and within regions. With these mechanisms, it is possible to reduce potential global biodiversity loss by 10% with minor changes in economic outcomes. The global aggregated reduction in biodiversity impacts does not imply that biodiversity impacts are reduced in each ecoregion. We exemplify how to connect an ecologic and an economic model to identify trade-offs, challenges, and possibilities for improved decisions. We acknowledge the limitations of this approach, especially of measuring and projecting biodiversity loss.
A Multi-Model Assessment of Inequality and Climate Change
Nature Climate Change , - 2024
Climate change and inequality are critical and interrelated issues. Despite growing empirical evidence on the distributional implications of climate policies and climate risks, mainstream model-based assessments are often silent on the interplay between climate change and economic inequality. For example, all the major model comparisons reviewed so far in IPCC neglect within-country inequalities. Here we fill this gap through a model ensemble of eight large-scale Integrated Assessment Models belonging to different paradigms and featuring economic heterogeneity. We quantify the distributional implications of climate impacts, and of climate policies consistent with the Paris Agreement with different compensation schemes. We find that by 2100, climate impacts increase inequality by about 1.4 points of the Gini index, on average. Keeping global mean temperature below 1.5 °C reduces the inequality increase by a more than two-thirds but increases inequality slightly in the short-term (+0.1 Gini points). However, equal per-capita carbon revenue redistribution can offset this effect in the short to medium term, leading to an overall decrease in the Gini index by almost two points. Overall, we find robust evidence across models that well-designed policies can help achieve climate stabilization while promoting economic inclusion.
Planning reliable wind- and solar-based electricity systems
Advances in Applied Energy , - 2024
Resource adequacy, or ensuring that electricity supply reliably meets demand, is more challenging for wind- and solar-based electricity systems than for fossil-fuel-based systems. Here, we investigate how the number of years of past weather data used in designing least-cost systems relying on wind, solar, and energy storage affects resource adequacy. We find that nearly 40 years of weather data are required to plan highly reliable systems (e.g., zero lost load over a decade). In comparison, this same adequacy could be attained with 15 years of weather data when additionally allowing traditional dispatchable generation to supply 5% of electricity demand. We further observe that the marginal cost of improving resource adequacy increased as more years, and thus more weather variability, were considered for planning. Our results suggest that ensuring the reliability of wind- and solar-based systems will require using considerably more weather data in system planning than is the current practice. However, when considering the potential costs associated with unmet electricity demand, fewer planning years may suffice to balance costs against operational reliability.
Feasibility of peak temperature targets in light of institutional constraints
Nature Climate Change , - 2024
The long-term temperature goal of the Paris Agreement implies a small and quickly depleting remaining CO2 budget and the need for fast reductions in non-CO2 greenhouse gas emissions. Despite faster-than-expected progress in clean energy technology deployment, global annual CO2 emissions have increased for at least two consecutive years after the 2020 COVID shock. The feasibility of limiting warming to 1.5°C is therefore increasingly questioned. We here present a model-intercomparison study that accounts for emissions trends until 2023 and compares cost-effective scenarios with alternative scenarios with institutional, geophysical and technological feasibility constraints and enablers informed by previous literature. Our results show that the most ambitious mitigation trajectories with updated climate information and data still manage to limit peak warming to below 1.6°C (“low overshootâ€) with
31 around 60% likelihood. Accounting for feasibility constraints, especially in the institutional dimension (measured through government effectiveness to implement policies), however, decreases this maximum likelihood considerably to 10-50%. Additional interventions for accelerated transformation of energy demand can reduce economic costs for reaching staying below 2°C, but have only a limited impact on further increasing the likelihood of limiting warming to 1.6°C. Our study helps to establish a new benchmark of mitigation scenarios that go beyond the so far dominant cost-effective scenario design.
Fiscal implications of natural disaster and managed retreat: Evidence from Hurricane Sandy
Natural Hazards Review , - 2024
The Use of DEMs versus DSMs in Viewshed Analysis
Proceedings of the National Academy of Sciences , - 2024
Endogenous beliefs and social influence in a simple macroeconomic framework
Journal of Economic Interaction and Coordination , - 2024
This paper incorporates endogenously emerging beliefs and social influence into a stylized Islands model characterized by uncertainty, strategic complementarity, and frictional coordination. Individuals in the model hold pessimistic, neutral, or optimistic beliefs, which can change over time due to economic outcomes and social influence. The study aims to assess how social influence affects agents' coordination, economic stability, and welfare. We show that rational expectations are unstable in the absence of social influence. Agents coordinate over time on a pessimistic and highly inefficient stationary state in which output and welfare are below the rational expectations equilibrium. As the importance of social influence grows, the steady state becomes even more pessimistic. As it crosses a certain threshold, additional equilibria emerge. As a result, the economy may converge to the rational expectations steady state, in which welfare is highest, or to a much more optimistic equilibrium, which is not necessarily more efficient. Finally, we show that by reducing higher-order uncertainty, social influence can act as a coordination device with positive effects on welfare.
Divergences between mainstream and social media discourses after COP26, and why they matter
Oxford Open Climate Change , - 2024
International shipping in a world below 2°C
Nature Climate Change , - 2024
Strategic information avoidance, belief manipulation and the effectiveness of green nudges
Ecological Economics , - 2024
Many behavioral nudges harness social or self-image concerns to promote environmental-friendly choices. Their effectiveness may be reduced if people maintain their desired image through information avoidance and belief manipulation which justify selfish actions. To test the conditions that induce information avoidance and belief manipulation, we conducted an online experiment on air conditioning (AC) usage involving over 2,000 US households. Combining requests of effortful behavioral changes, in terms of increases in AC temperature, with greater salience of a social norm of energy conservation discourages people's acquisition of information on the impacts of AC and induces them to report beliefs that AC usage has low environmental impacts. Adding a costly behavioral change request to social norm salience fails to induce changes in AC thermostat settings. These findings are reinforced by field evidence from an energy conservation nudge: households avoid social information on their energy usage when high temperatures make AC use necessary. Our results highlight how context may trigger strategic information acquisition and motivated beliefs, potentially limiting the effectiveness of social norm nudges. Our study emphasizes the need to tailor environmental policies to the context and to broaden their scope to deal with all possible behavioral responses.
Multidimensional welfare indices and the IPCC 6th Assessment Report scenarios
Ecological Economics , - 2024
The IPCC’s 6th assessment report (AR6) has provided a wide range of variables and scenarios that meet climate targets of varying ambition. Many variables reported in the AR6 affect human welfare through climate change and mitigation, including but not limited to economic output, the natural environment, human health, and food and energy supply. In some of these dimensions, trade-offs exist between better performance in welfare-relevant dimensions and reaching more ambitious climate targets. Here, we apply recent advances in the theoretical multidimensional measurement of welfare, like the Human Development Index, to the AR6 database. The welfare metric is based on a welfare function approach, simple to apply, and intuitive. We apply a range of specifications of the welfare metric, aiming to derive robust rankings of climate policy targets that perform best in terms of the multidimensional welfare index. Across a large range of weights on welfare-relevant variables, we find that lower temperature is associated with higher welfare in 2100 unless there is a high weight on food supply.
The visual effect of wind turbines on property values is small and diminishing in space and time
Proceedings of the National Academy of Sciences , - 2024
Renewable power generation is the key to decarbonizing the electricity system. Wind power is the fastest growing renewable source of electricity in the United States. However, expanding wind capacity often faces local opposition, partly due to a perceived visual disamenity from large wind turbines. Here, we provide a first-of-its-kind US-wide assessment of the externality costs of wind power generation through the visibility impact on property values. To this end, we create a database on wind turbine visibility, combining information on the site and height of each utility-scale turbine having fed power into the U.S. grid, with a high-resolution elevation map to account for the underlying topography of the landscape. Building on hedonic valuation theory, we statistically estimate the impact of wind turbine visibility on home values, informed by data from the majority of home sales in the U.S. since 1997. We find that on average wind turbine visibility negatively affects home values in an economically and statistically significant way in close proximity (<5 miles/8 km). However, the effect is indistinguishable from zero for larger distances, substantially smaller for wind turbines that were installed more recently, and diminishes significantly over time following the installation of turbines.
Identification of reliable locations for wind power generation through a global analysis of wind droughts
Communications Earth & Environment , - 2024
Predicting wind farm wake losses with deep convolutional hierarchical encoder–decoder neural networks
APL Machine Learning , - 2024
Wind turbine wakes are the most significant factor affecting wind farm performance, decreasing energy production and increasing fatigue loads in downstream turbines. The layout of wind farms is designed to minimize wake interactions using a suite of predictive models with different levels of fidelity. In this work, we propose DeepWFLO, a deep convolutional hierarchical encoder–decoder neural network architecture, as an image-to-image surrogate model for predicting the wind velocity field to be used in wind farm layout optimization with substantial reduction in computational time.
Exploring the impact of livestock on air quality: A deep dive into Ammonia and particulate matter in Lombardy
Environmental Impact Assessment Review , Volume 105 - 2024
The linkage between agricultural activities, particularly livestock farming, and atmospheric pollution is broadly acknowledged, and its magnitude is widely analyzed. Lombardy, one of Europe's most critical areas with regard to air pollution, has significantly large contributions from the farming industry. Although studies aimed at informing policy reflect uncertain and moderate pollution reduction even under simulated stringent policy scenarios, granular causal evidence at a sub-sector level remains insufficient to inform local and regional policies effectively. In this study, we employ a spatially and temporally indexed econometric model to investigate the specific impact of bovine and swine farming on the concentration levels of ammonia (NH3) and coarse particulate matter (PM10) in Lombardy's atmosphere. Our findings indicate that an increase of 1000 units in livestock, equating to roughly a 1% and 0.3% rise in the average per-quadrant bovine and swine populations, respectively—triggers a corresponding daily increase in NH3 and PM10 concentrations. These increases are quantified as 0.26 [0.22; 0.33] and 0.29 [0.27; 0.41] μg/m3 for bovines (about 2% and 1% of the respective daily averages) and 0.01 [0.01; 0.05] and 0.04 [0.004; 0.16] μg/m3 for swine. Notably, these impacts are intensified under northerly upwind conditions, minimizing the potential for concurrent pollution sources and reinforcing the robustness of our estimated impacts. Finally, we employ our findings to extrapolate the potential environmental implications of reducing livestock emissions. Our analysis suggests that bovine and swine farming could account for up to 25% of local pollution exposure, empathizing the need for targeted mitigation strategies.
The formation of secondary inorganic aerosols: A data-driven investigation of Lombardy's secondary inorganic aerosol problem
Atmospheric Environment , Volume 327 - 2024
This study performs a data-driven investigation of the impact of agriculture on air pollution in Lombardy, Italy, focusing on secondary inorganic particulate matter (PM) formation resulting from ammonia (NH3) emissions. Leveraging on the predictive power of machine learning models and exploiting the reduction in non-agricultural emissions during the 2020 COVID-19 lockdown, we analyze the complex relationship between NH3, nitrogen dioxide (NO2), and secondary inorganic aerosols (SIA). We find that even substantially large reduction in precursor emissions may not deliver large drops in secondary inorganic PM. While NO2 plays a significant role in urban environments, in rural areas where NH3 levels are high, both NO2 and NH3 contribute to SIA formation. This emphasizes the importance of considering both NH3 and NO2 emissions in policies controlling secondary inorganic PM, as reductions in both precursors may be necessary for significant improvements. The study provides insights into the interplay between agricultural practices and air pollution, more specifically the NH3–NO2 regime and its implications for effective air pollution control strategies in Lombardy.
Impacts of agriculture on PM10 pollution and human health in the Lombardy region in Italy
Front. Environ. Sci. , Volume 12 - 2024 - 2024
Air pollution is one of the main environmental health concerns globally, with particulate matter (PM) as the primary threat. While many policies address emissions from transport and industry, there is growing evidence of agriculture’s significant impact on air quality. Evaluating how intensive farming impacts PM concentrations and public health is necessary for informed policy interventions. We focus on the Po Valley (Italy), characterized by intensive agricultural practices and substantial pollution levels. Our study examines secondary inorganic aerosol (SIA) concentrations between 2013 and 2020 in Lombardy. Our findings reveal key insights into the impact of intensive farming on air pollution and public health. First, we find that ammonium salts make up over 30% of the daily particulate matter
≤
10
μ
m (
PM
10
), with annual levels [11.6–11.8
μ
g/
m
3
] reaching half of the European Union’s proposed limit (20
μ
g/
m
3
). Second, exposure tends to peak in low-wind conditions. In Milan, ammonia predominantly flows from the east, aligning with heavy livestock activity, while nitrogen oxides’ (
NO
x
) impacts seem more localized. Rural SIA peaks correlate with winds from
NO
x
-rich areas. These outcomes imply that targeted, single-sector policies might fall short of significantly reducing
PM
10
concentrations. Additionally, manure spreading raises SIA levels by 2–3
μ
g/
m
3
in urban backgrounds the following days. Local sources also stand out in back-trajectory modeling of concentrations. Finally, applying long-term concentration-response functions to ammonium salts as a fraction of
PM
10
, our study suggests that pollution stemming from agricultural activities in Milan leads to approximately 589 [446–866] deaths annually, resulting in an average loss of 6,951 [5,267–10,222] life years. This equates to 43 [33–64] deaths and 511 [387–751] lost life years for every 100,000 residents.
Potential climate-induced impacts on trade: the case of agricultural commodities and maritime chokepoints
J. shipp. trd , 9, 11 - 2024
Economic quantification of Loss and Damage funding needs
Nature Reviews Earth and Environment , Volume 5, Issue 6, Pages 411 - 413 - 2024
Climate change impacts on the within-country income distributions
Journal of Environmental Economics and Management , Volume 127 - Article number 103012 - 2024
This paper investigates the relationship between climate change and income inequality, recognizing that the economic impacts of climate change are not uniform across different levels of income within and across countries. Using methods from the existing literature on climate and economic growth, we analyze the economic impact of rising temperatures by within-country income decile. Our findings suggest that climate change disproportionately affects the poorer segments of the population within countries, even after accounting for a country’s ability to adapt to climate impacts, while richer households suffer lower damages. In the reference scenario without additional climate action (3.6°C warming), we estimate that climate impacts could lead to an increase in the Gini index by up to six percentage points, notably in Sub-Saharan Africa. We project impacts to 2100 through the RICE50+ model and estimate the income elasticity of impacts within countries. Our estimates indicate that climate change damages are regressive, with an income elasticity of damages of 0.6 under our preferred specification. On the other hand, climate benefits are approximately distribution-neutral or slightly progressive.
Widening the scope: The direct and spillover effects of nudging water efficiency in the presence of other behavioral interventions
Journal of Environmental Economics and Management , Volume 127 - Article number 103037 - 2024
Policymakers and firms use behavioral interventions to promote sustainable development in various domains. A correct impact evaluation requires looking beyond the targeted domain and assessing its interactions with similar interventions. Existing evidence in this area is limited, leading to potential misestimation of behavioural interventions and poor guidance on their design. Here, we test the impact of a two-year social information campaign to nudge water conservation through a large-scale randomized controlled trial implemented with a multi-resource company,. We find that the water nudge significantly decreases water and electricity usage, but not that of gas. Spillovers arise for customers who do not receive nudges targeting the other resources. Customers receiving the water report are also significantly less likely to deactivate their gas and electricity contracts, regardless of whether they receive other reports. Our results suggest that multiple nudges strain users’ limited attention and ability to enact conservation efforts. Users’ constraints in attending to multiple stimuli need to be accounted in designing policy interventions to foster sustainable practices.
Assessing the Implications of a Global Net-Zero Transition for Developing Asia - Insights from Integrated Assessment Modeling
Asian Development Bank , ADB Economic Working Paper NO. 709 - 2023
This paper uses a global integrated assessment model to assess how developing Asia would develop in a world that meets Paris Agreement temperature goals. It finds that a profound transition is needed, with a rapidly decarbonized power sector and a dramatic drop in land-use emissions. Benefits are found to be far in excess of costs for Asia if an efficient set of decarbonization policies is deployed.
Mosquitoes and Potatoes: How Local Climatic Conditions Impede Development
Environmental and Resource Economics , 86, 851–892 - 2023
The aggregate effects of the structure of information in low-carbon transition policies: An application to France
Energy and Climate Change , Volume 4 - 2023
Whether the agents anticipate or not the low-carbon policies in the power system in the long run may influence the macroeconomic impacts of these policies. We combine a hybrid model that links a core dynamic general equilibrium model calibrated on French data to an optimization model for the power generation mix that characterizes the optimal development of each technology in the long run. The results show how the effects of the low-carbon energy transition on decarbonization, growth, and households’ well-being depend on whether the agents anticipate or not the decarbonization plan. Investment in durable goods and physical capital plays a critical role in explaining the results. Unanticipated low-carbon policies may result in slower decarbonization of the economy and higher economic growth.
Prosociality in variants of the dictator game: Evidence from children in El Salvador
Journal of Behavioral and Experimental Economics , 102084 - 2023
A critical review of green growth indicators in G7 economies from 1990 to 2019
Sustainability Science , - 2023
Green growth policies aim to address both climate change and economic growth and are now prevalent throughout many economies. While green growth is sufficiently assessed in qualitative, case-study-based literature, quantitative and cross-country analyses are still limited. In response to this research deficit, our aim is twofold: (1) to develop a classification framework to quantitatively analyse green growth and (2) to identify key policy inputs and techno-economic or environmental outputs for green growth through a novel taxonomy. We focus on the G7 countries, since they have, historically, tended to align their economic policies. We employ a machine-automated K-means clustering algorithm, as well as correlation analyses, to assess where green growth “win–wins,” or co-benefits to the economy and environment, might exist. Our findings suggest that enthusiasm should be tempered for public policy commitments for green growth; despite unified green growth policy in G7 countries—significant differences are observed for both policy inputs and environmental/economic outputs. As a result, we caution policymakers and researchers against drawing generalised conclusions about the effectiveness of green growth policies, even among highly developed economies. Finally, our research draws attention to data deficiencies which, evidently, reduce more robust assessment across countries and over time.
Forget-Me-Not: The Persistent Effect of Information Provision for Adopting Climate-Friendly Goods
Management Science , - 2023
It is well documented that people have misperceptions about energy costs. However, there is mixed empirical evidence about the effectiveness of information provision and its persistence over time. Understanding the interplay between information regarding the private and social benefits of low-carbon technologies and identifying mechanisms through which information treatments affect people’s long-term behaviors can help reconcile the mixed findings in the literature. In this paper, we measured the long-term effects of information provision through online experiments involving more than 3,000 households in China. We provided people with information on low-carbon light bulbs’ monetary and climate benefits and observed their purchasing decisions over 10 months. We find that information on private or social benefits leads to a temporary effect on most households and a persistent one on the uninformed. This evidence suggests that information provision works through two different mechanisms: increasing saliency and filling the information gap.
International knowledge spillovers in energy technologies
Energy Strategy Reviews , - 2023
This study examines the impact of barriers to knowledge diffusion in energy technologies in 29 countries from 1990 to 2015, distinguishing between efficient fossil-based generation and mature renewable options, namely wind and solar. We show that knowledge flows are higher in countries with similar technological profiles, particularly for mature renewables. The study finds that international knowledge spillovers have increased in intensity for wind and solar, while the opposite is true for fossil-based technologies. That means that foreign knowledge has increasingly informed domestic investors and points to the key role that knowledge flows from abroad had in promoting innovation in low-carbon technology options. Integrated assessment models should account for the role international knowledge spillovers play in the generation of new knowledge and in contributing to rapid decrease in costs.
Drinking Tea with the Neighbors: Informal Clubs, General Trust, and Trustworthiness in Mali
American Political Science Review , 1-20 - 2023
There has been scant empirical evidence linking associational membership to general trust and trustworthiness. This study explores urban youth clubs in Mali and asks: is membership in these groups associated with greater trust and trustworthiness toward society? It leverages 18 months of fieldwork, including 375 group surveys, 2,525 individual surveys, over 1,300 trust games, and transcripts from 66 focus groups. We use propensity score matching to analyze how members and nonmembers play the trust game with strangers. Members are more trustworthy; they return 12% more to their partners than nonmember peers. We do not find a systematic effect of membership on trust. Trustworthiness in the game is also positively correlated with self-reported trust and tolerance as well as real-world behaviors including volunteering and helping friends. Focus group data highlight five mechanisms by which membership fosters general trustworthiness: bonding among diverse members, bridging, public goods provision, socialization, and psychological support.
Climate change salience and electricity consumption: evidence from Twitter activity
RFF working papers , - 2023
We employ electricity-use data covering 1,500,000 Italian households for 2015–2019 and a granular measure of social media attention to climate change derived from universal-coverage Twitter data to show that increases in climate change salience induced by exogenous sociopolitical and climatic events cause a significant reduction in energy consumption. Sentiment analysis suggests that natural disasters and climate strikes are associated with emotions that are strong motivators for action. These results imply that episodes that draw attention to climate change may lead to actual behavioral change, but their effect is short-lived.
Clean Innovation and Heterogeneous Financing Costs
CAMA working paper series , - 2023
Access to finance is a major barrier to clean innovation. We incorporate heterogeneous and endogenous financing costs in a directed technical change model and identify optimal climate mitigation policies. The presence of a financing experience effect induces more ambitious policies in the short-term, both to shift innovation and production towards clean sectors and to reduce the financing cost differential across technologies, which further facilitates the transition. The optimal climate policy mix between carbon taxes and clean research subsidies depends on whether experience is gained through clean production or research. In our benchmark scenario, where clean financing costs decline as cumulative clean output increases, we find an optimal carbon price premium of 47% in 2025, relative to a case with no financing costs.
Aridification, precipitations and crop productivity: evidence from the aridity index
European Review of Agricultural Economics , - 2023
The economic effects of global warming have gained considerable attention in the recent economic literature. While the relationship between rainfall and agriculture is well known, precipitations alone do not capture the soil water availability, which depends on the evaporation of the water (potential evapotranspiration [PET]). This paper presents evidence of the relationship between aridification and agricultural productivity. We show that areas that have experienced increased precipitations have become arider due to increased PET. We then project future aridification patterns. We find that the global arid area will increase by 3.9 per cent by 2040. This implies a global loss of about 20 million tons of maize, 19 million tons of rice, 8 million tons of soybeans and 21 million tons of wheat until 2040 if no action to combat desertification is taken.
Climate, desertification, and local human development: evidence from 1564 regions around the world.
The Annals of Regional Science , - 2023
How global warming affects human development is a central question for economists as well as social scientists. While most of the literature has focused on the impact of weather on income, less is known on the relationship between climate and local human development. This paper considers shocks in precipitation, temperature, and an original measure of soil aridity to first exploit the association between climate warming and human development, and second, on its dimensions. We show that while precipitations do not have a significant long-term impact on human development growth, variations in temperature and potential evapotranspiration negatively affect two of the three determinants of the Human Development Index, namely life expectancy at birth and education. These results suggest that other climate indicators, such as the potential evapo-transpiration of the soil, should be considered in addition to the standard indicators, when evaluating the localized economic effects of climate change.
Unraveling Ambiguity Aversion
The Review of Economics and Statistics , 1–32 - 2023
We report the results of two experiments designed to better understand the mechanisms driving decision-making under ambiguity. We elicit individual preferences over different sources of uncertainty, entailing different degrees of complexity, from subjects with different sophistication levels. We show that (1) ambiguity aversion is robust to sophistication, but the strong relationship previously reported between attitudes toward ambiguity and compound risk is not. (2) Ellsberg ambiguity attitude can be partly explained by attitudes toward complexity for less sophisticated subjects only. Overall, regardless of the subject's sophistication level, the main driver of Ellsberg ambiguity attitude is a specific treatment of unknown probabilities.
SRM on the Table: The Role of Geoengineering for the Stability and Effectiveness of Climate Coalitions
RFF working papers , - 2023
Geoengineering, including solar radiation management (SRM) has received increasing scrutiny due to the rise of climate extremes and slow progress in mitigating global carbon emissions. This climate policy option, even as a possibility, can have consequential implications for international climate governance. Here we study how solar engineering affects the effectiveness and stability of a large set of regional coalitions through numerical simulations. We posit a requirement in terms of global political or economic power and analyze the exclusive membership coalition formation process when coalitions jointly decide on geoengineering and mitigation. We show that geoengineering can provide incentives for cooperation and partially solve the typical trade-off between stability and effectiveness of climate coalitions. However, temperature reduction mostly comes from deploying SRM within the coalition rather than from further emission reductions, thus exposing the world to relatively large-scale deployment of SRM with as of today uncertain potential side effects and risks.
New damage curves and multimodel analysis suggest lower optimal temperature
Nat. Clim. Chang. , 13, 434–441 - 2023
Economic analyses of global climate change have been criticized for their poor representation of climate change damages. Here we develop and apply aggregate damage functions in three economic Integrated Assessment Models (IAMs) with different degrees of complexity. The damage functions encompass a wide but still incomplete set of climate change impacts based on physical impact models. We show that with medium estimates for damage functions, global damages are in the range of 10% to 12% of GDP by 2100 in a baseline scenario with 3 °C temperature change, and about 2% in a well-below 2 °C scenario. These damages are much higher than previous estimates in benefit-cost studies, resulting in optimal temperatures below 2 °C with central estimates of damages and discount rates. Moreover, we find a benefit-cost ratio of 1.5 to 3.9, even without considering damages that could not be accounted for, such as biodiversity losses, health and tipping points.
Nudging Payment Behaviour: Evidence from a Field Experiment on Pay-as-You-Go Off-Grid Electricity
World Bank Economic Review , - 2023
This paper reports results from a randomized control trial with a pay-as-you-go (PAYG) solar system provider in Pakistan. In the default treatment, customers are told the amount to pay every month to keep the system active. In a first treatment, customers are assisted in planning this monthly payment. A second treatment discloses that payments can be made flexibly within the month. This disclosure may reduce contract cancellation by helping minimize transaction costs but may increase contract complexity and reduce discipline. A third treatment combines flexibility with assistance in planning payments. Disclosing flexibility increases contract cancellation relative to the default, but combining flexibility with planning offsets this effect. Treatment effects appear stronger among users facing high mental constraints and transaction costs. These findings support the idea that behavioral factors, such as inattention and commitment problems, lay behind the negative impact of flexibility on cancellation. The results suggest that providers of PAYG systems may face a trade-off between disclosing complex contractual features and customer retention. Planning helps customers handle the added complexity.
A multi-model framework to assess the role of R&D towards a decarbonized energy system
Climate Change , 176, Article number: 82 - 2023
Research and development (R&D) investments foster green innovation, which is key to decarbonize the energy system and attain long-term climate goals. In this paper, we link three integrated assessment models that possess a macroeconomic framework—WITCH, MERGE-ETL, and GEM-E3—with the bottom-up technology-rich energy system model TIAM-ECN, in order to quantitatively explore how investments in R&D can support deep decarbonization pathways. We take advantage of the endogenous technological learning feature of the first three models to derive R&D-induced capital cost reductions for strategic clusters of low-carbon technologies: solar energy, on- and offshore wind energy, carbon capture and storage, advanced fuels, and batteries for electric vehicles. We examine scenarios with different assumptions on CO2 mitigation and R&D policy. These assumptions are harmonized among our four models, and capital cost reductions driven by R&D are exogenously incorporated in TIAM-ECN, which enables a detailed assessment of the required energy transition. Our results show that the stringency of climate change mitigation policy remains the key factor influencing the diffusion of low-carbon technologies, while R&D can support mitigation goals and influence the contribution of different types of technologies. If implemented effectively and without worldwide barriers to knowledge spill-overs, R&D facilitates the deployment of mature technologies such as solar, wind, and electric vehicles, and enables lower overall energy system costs.
A regional input-output model of the COVID-19 crisis in Italy: decomposing demand and supply factors
Economic Systems Research , - 2023
We propose an empirically estimated inter-regional input-output model of the Italian economy designed for COVID-19 impact assessment, intended as a tool for public authorities facing comparable adverse events and requiring timely estimates of sectoral and regional economic impacts. We evaluate the contributions of demand- and supply-side factors to output losses in Italy during the pandemic, providing insights on the suitability of demand- and supply-side policies. Supply-side shocks, as a consequence of mandated closures, are the primary driver of output losses only during the nationwide lockdown of spring 2020. During the following stages, changes in final demand due to income losses and changes in mobility play a pivotal role at the aggregate, regional, and sectoral levels. While this result supports demand-side policies, the efficacy of such policies may be hampered when final consumption demand is low chiefly due to reduced mobility rather than income losses.
V for vaccines and variants
Journal of Evolutionary Economics , - 2023
In the context of the Covid-19 pandemic, we evaluate the effects of vaccines and virus variants on epidemiological and macroeconomic outcomes by means of Monte Carlo simulations of a macroeconomic-epidemiological agent-based model calibrated using data from the Lombardy region of Italy. From simulations we infer that vaccination plays the role of a mitigating factor, reducing the frequency and the amplitude of contagion waves and significantly improving macroeconomic performance with respect to a scenario without vaccination. The emergence of a variant, on the other hand, plays the role of an accelerating factor, leading to a deterioration of both epidemiological and macroeconomic outcomes and partly negating the beneficial impacts of the vaccine. A new and improved vaccine in turn can redress the situation. Vaccinations and variants, therefore, can be conceived of as drivers of an intertwined cycle impacting both epidemiological and macroeconomic developments.
Fossil extraction bans and carbon taxes: Assessing their interplay through multiple models
iScience , VOLUME 26, ISSUE 4 - 2023
Given concerns about the ambition and effectiveness of current climate policies, a case has been made for the combination of demand side policies such as carbon pricing with supply side bans on fossil fuel extraction. However, little is known about their interplay in the context of climate stabilization strategies. Here, we present a multi-model assessment quantifying the effectiveness of supply side policies and their interactions with demand-side ones. We explore a variety of fossil fuel bans with four integrated assessment models and find that international supply side policies reduce carbon emissions but not at sufficient levels to stabilize temperature increase to well below 2°C. When combined with demand side policies, supply side policies reduce the required carbon price, dampen reliance on CO2 removal technologies, and increase investment in renewable energy. The results indicate the opportunity to integrate fossil fuel bans alongside price-based policies when exploring pathways to reach ambitious mitigation targets.
A research and development investment strategy to achieve the Paris climate agreement
Nature Communications , - 2023
Climate stabilization requires the deployment of several low-carbon options, some of which are still not available at large scale or are too costly. Governments will have to make important decisions on how to incentivize Research and Development (R&D). Yet, current assessments of climate neutrality typically do not include research-driven innovation. Here, we link two integrated assessment models to study R&D investment pathways consistent with climate stabilization and suggest a consistent financing scheme. We focus on five low-carbon technologies and on energy efficiency measures. We find that timely R&D investment in these technologies lowers mitigation costs and induces positive employment effects. Achieving 2 °C (1.5 °C) requires a global 18% (64%) increase in cumulative low-carbon R&D investment relative to the reference scenario by mid-century. We show that carbon revenues are sufficient to both finance the additional R&D investment requirements and generate economic benefits by reducing distortionary taxation, such as payroll taxes, thus enhancing job creation.
National models of climate governance among major emitters
Nature Climate Change , - 2023
National climate institutions structure the process of climate mitigation policymaking and shape climate policy ambition and performance. Countries have, for example, been building science bodies, passing climate laws and creating new agencies. Here we provide the first systematic comparison of climate institutions across 21 of the largest emitters. Drawing on an original dataset, we identify in a bottom-up cluster analysis four national models of climate governance: Climate Technocracies, Climate Developmentalists, Carbon Fragmentists and Carbon Centralists. These national models of climate governance are associated with policy ambition and performance. Climate Technocracies and Developmentalists tend to score higher than Carbon Fragmentists and Centralists in policy ambition and performance. The relative ambition of national models of governance is associated with some macro-institutional and macro-economic features, but not others. This suggests potential for domestic and international policymakers to invest in building national climate institutions across country settings to strengthen climate policy capacity.
On the employment and health impact of the COVID-19 shock on Italian regions: a value chain approach
Regional Studies , - 2023
We evaluate the exposure of Italian regions to employment and the health risk associated with the spread of COVID-19. First, we estimate the degree of participation of Italian regions in a plurality of value chains linked to consumption, investment and exports. Second, we investigate the different levels of contagion risk associated with each value chain and the possibility of reducing such risk through remote work. We find that regions are affected differently by lockdown policies because of their highly heterogeneous embeddedness in different value chains, and their diverse sectoral contributions to each of them.
Overdraft economies
Elgar Encyclopedia of Post-Keynesian Economics , - 2023
Governing climate geoengineering: Side-payments are not enough
Journal of the Association of Environmental and Resource Economists , Volume 10, Number 5 - 2023
Climate geoengineering might reduce the economic and ecological impacts of global warming. However, its governance is challenging: since climate preferences vary across countries, excessive climate geoengineering relative to the socially optimal level is a likely risk. Through a laboratory experiment on a public good-or-bad game, we study to what extent side payments can curb geoengineering efforts and restore efficiency. Although the availability of side payments is theoretically effective, its impact is modest in the experiment, especially in a multilateral setup. Replacing unstructured bilateral agreements with a structured framework improves outcomes.
Climate Change, International Migration, and Interstate Conflicts
Ecological Economics , Volume 211 - 2023
Interstate conflicts are complex and often have a multitude of causes. These factors can be social, economic, or cultural. One social factor receiving little attention in the literature is international migration. This paper uses climate shocks as a driver of emigration to study the causal impact of immigration on conflicts. We find that climate-induced immigration increases the probability that the destination country initiates a conflict against the origin. This effect is moderated by attitudes in the receiving country and features of the specific flows. The results imply that countries severely impacted by climate change may face an exodus of migrants and be forced to confront conflicts initiated by the destination countries of these migrants.
Examining evidence for the Finite Pool of Worry and Finite Pool of Attention hypotheses
Global Environmental Change , Volume 78, January 2023, 102622 - 2023
The Finite Pool of Worry (FPW) hypothesis states that humans have finite emotional resources for worry, so that when we become more worried about one threat, worry about other threats decreases. Despite its relevance, no conclusive empirical evidence for the hypothesis exists. We leverage the sudden onset of new worries introduced by the COVID-19 pandemic as a natural experiment to test the FPW hypothesis and a related hypothesis, the Finite Pool of Attention (FPA) hypothesis. The FPA hypothesis proposes that when we pay more attention to one threat, our attention to other threats decreases. To test these two hypotheses, we assessed self-reported attention, self-reported worries, and Twitter/news attention to various threats (climate change, terrorism, economic problems, and others) throughout the pandemic in three countries (USA, Italy, and China). We find that as attention to and worry about COVID-19 increases, attention to climate change decreases, but worry does not. Our results are confirmed by further analysis of a large, longitudinal U.S. sample. We find that public perceptions that COVID-19 and climate change are related do not fully explain the positive relationship in worry between the two hazards. In summary, our findings suggest that while there may be a Finite Pool of Attention to threats, there is limited evidence for a Finite Pool of Worry.
Three Layers of Uncertainty
Journal of the European Economic Association , - 2023
We explore decision-making under uncertainty using a framework that decomposes uncertainty into three distinct layers: (1) risk, which entails inherent randomness within a given probability model; (2) model ambiguity, which entails uncertainty about the probability model to be used; and (3) model misspecification, which entails uncertainty about the presence of the correct probability model among the set of models considered. Using a new experimental design, we isolate and measure attitudes toward each layer separately. We conduct our experiment on three different subject pools and document, the existence of a behavioral distinction between the three layers. In addition to providing new insights into the underlying processes behind ambiguity aversion, we provide the first empirical evidence of the role of model misspecification in decision-making under uncertainty.
The Prospect of Direct Air Capture for Energy Security and Climate Stability
Frontiers , Chemical Engineering-Environmental Chemical Engineering, Volume 5 - 2023 - 2023
Energy policies aim at securing energy supply through domestic production or imports have significant consequences for climate change and its long-term impacts on the economy. Recent European energy crisis as a result of extensive reliance on imported Russian natural gas has highlighted the European Union (EU) energy vulnerability and has challenged its climate change commitments. While switching to alternative domestic fossil fuel sources such as coal in some member states has put the EU climate ambitions in jeopardy, it has also provided new opportunities for up-scaling renewable technologies as well as climate stability measures such as direct air capture (DAC). This paper examines the interaction between energy policy and climate stability by considering imported natural gas, domestic coal production, and possible DAC deployment in the EU under two scenarios of full cooperation and full competition among the EU member states. The results suggest that while cooperation induces higher reliance on imported energy, it also provides a strong incentive for DAC uptake. Competition on the other hand, may result in more reliance on domestic coal production and worse climate change outcomes despite the availability of DAC. Therefore, as the EU is striving for a more perfect union, it should consider better alignment of its short-term energy security policies with long-term climate stability ambitions.
Glasgow to Paris—The impact of the Glasgow commitments for the Paris climate agreement
iScience , - 2023
In the Glasgow COP26, several major emitters have announced new climate neutrality commitments. Others revised their nationally determined contributions (NDC). The climate, energy, and economic repercussion of these revised pledges is still unclear. Here, using a detailed-process integrated assessment model (WITCH), we analyze the impact of the Glasgow net-zero commitments and compare it to scenarios consistent with the Paris' agreement. We find that—if fully implemented—the Glasgow strategies would help close the gap to 2° C , covering more than 80% of the world’s needed emission reductions by 2070. The pledged commitments would exceed 1.5°C, with a temperature increase (50% likelihood) of 1.6° C- 1.8° C by the end of the century. We find that the Glasgow net-zero pledges would require substantial increases in investment in electric transportation and power generation in all major economies. Compared to a scenario with uniform carbon taxation, Glasgow differentiated pledges’ do not significantly increase global policy costs, are more fair, and save more lives by promoting cleaner air. However, they delay coal phase-out and increase the need for negative emission technologies.
Believe me when I say green! Heterogeneous expectations and climate policy uncertainty
London School of Economics and Political Science , Centre for Climate Change Economics and Policy Working Paper 419/Grantham Research Institute on Climate Change and the Environment Working Paper 395 - 2023
Fiscal multipliers, expectations and learning in a macroeconomic agent-based model
Economy inquiry , Volume60, Issue4 - 2022
This paper evaluates the government expenditure multiplier and the influence of agents' expectations and consumption choices thereupon in a pre-existing estimated macroeconomic agent-based model. If the simple consumption heuristic of the baseline model is replaced by inter-temporal optimization subject to a budget constraint based on agents' estimations of future income, the multiplier becomes significantly smaller. When agents' beliefs about the effects of expenditure shocks are explicitly introduced, they can strongly increase or decrease the multiplier. If agents are allowed learn about the effects of government expenditure on their income from repeated shocks, they are able to correctly predict these effects.
A method to identify barriers to and enablers of implementing climate change mitigation options
One Earth , Volume 5, Issue 11, 18 November 2022, Pages 1216-1227 - 2022
Mitigation option are not yet being implemented at the scale required to limit global warming to well below 2°C. Various factors have been identified that inhibit the implementation of specific mitigation options. Yet, an integrated assessment of key barriers and enablers is lacking. Here we present a comprehensive framework to assess which factors inhibit and enable the implementation of mitigation options. The framework comprises six dimensions, each encompassing different criteria: geophysical, environmental-ecological, technological, economic, sociocultural, and institutional feasibility. We demonstrate the approach by assessing to what extent each criterion and dimension affects the feasibility of six mitigation options. The assessment reveals that institutional factors inhibit the implementation of many options that need to be addressed to increase their feasibility. Of all the options assessed, many factors enable the implementation of solar energy, while only a few barriers would need to be addressed to implement solar energy at scale.
Beyond climate economics orthodoxy: impacts and policies in the agent-based integrated-assessment DSK model*
European Journal of Economics and Economic Policies: Intervention , - 2022
Stranding ahoy? Heterogeneous transition beliefs and capital investment choices
SSRN , - 2022
We study how conflicting beliefs on future transition dynamics interact with short- termist preferences in shaping investment decisions. We develop a simple model where firms choose between two technological options (high- and low-carbon) based on their expected profitability over a finite planning horizon. Profit expectations depend on beliefs about the speed of the transition and associated high-carbon capital stranding. Firms’ expectations are distributed around a central stranding projection, representing a dominant narrative, or ‘market norm’, with their dispersion increasing non-linearly over the planning horizon. We provide analytical and simulation-based insights on how belief dispersion affects investment decisions and interacts with agents’ farsightedness. We show that ambitious central expectations can temper the effect of belief heterogeneity and that the sensitivity of investment allocations to changes in belief dis- persion depends significantly on the central expectation. Belief heterogeneity and the discount rate can have conflicting effects. Finally, increasing agents’ farsightedness does not necessarily lead to more low-carbon investment in a situation of high heterogeneity.
Optimal climate policy as if the transition matters
London: London School of Economics and Political Science , Centre for Climate Change Economics and Policy Working Paper 413/Grantham Research Institute on Climate Change and the Environment Working Paper 387. - 2022
The optimal transition to a low-carbon economy must account for adjustment costs in switching from dirty to clean capital, technological progress, and economic and climatic shocks. We study the low-carbon transition using a dynamic stochastic general equilibrium model with emissions abatement costs calibrated on a large energy modelling database, solved with recursive methods. We show how capital inertia puts
upward pressure on emissions and temperatures in the short run, but that nonetheless it is optimal to actively disinvest from – to ‘strand’ – a significant share of the dirty capital stock. Conversely, clean technological progress, as well as uncertainty about climatic and economic factors, lead to lower emissions and temperatures in the long run. Putting these factors together, we estimate a net premium of 33% on the optimal carbon price today relative to a ‘straw man’ model with perfect capital mobility, fixed abatement costs and no uncertainty.
LE RELAZIONI TRA CLIMA E INQUINAMENTO ATMOSFERICO
ECOSCIENZA , N° 5/6, dicembre 2022, anno XIII - 2022
Cambiamenti climatici, infrastrutture e mobilità - Soluzioni e strategie per investimenti sostenibili
Il Mulino , Collana Percorsi - 2022
Climate change as a threat to health and well-being in Europe: focus on heat and infectious diseases
Publications Office of the European Union , Report No 7/2022 - 2022
Climate change poses multiple threats to human health and well-being in Europe. Extreme weather events, such as devastating floods, extensive wildfires or intense and long‑lasting heatwaves, that are more likely and more severe due to the changing climate have become part of our reality in recent years. The greatest direct climate-related threat to human health in Europe is heat, and the large number of excess deaths attributable to extremely high temperatures and prolonged heatwaves during the summer of 2022 is a case in point. Despite high average living standards, Europe's ageing society and prevalence of chronic diseases make its population particularly vulnerable to heat. The exposure of vulnerable groups to heat is increasing, driven not only by more frequent and intense heatwaves but also by ongoing urbanisation and the associated urban heat island effect, the fact that buildings and cities in most of Europe have not been constructed to protect people from high temperatures, or outdated work practices that ignore the dangers of heat exposure to human health. Vulnerable socio-economic groups are particularly affected by heat. This high vulnerability, combined with the projected substantial global warming, creates a dire picture of a future with growing numbers of heat-related deaths and ailments, as well as reduced labour productivity, affecting well‑being and prosperity across Europe. Climate-sensitive infectious diseases are another type of emerging threat discussed in this report. The increasing suitability of the climate for various pathogens or their vectors may translate into higher likelihood of disease transmission in larger parts of Europe. The arrival of travellers and goods into Europe from regions where dengue or malaria is endemic, combined with the increasing suitability of climate conditions for the mosquitoes that carry those diseases becoming permanent in parts of Europe, increases the probability of disease outbreaks.
The 2022 Europe report of the Lancet Countdown on health and climate change: towards a climate resilient future
The Lancet , VOLUME 7, ISSUE 11, E942-E965, - 2022
In the past few decades, major public health advances have happened in Europe, with drastic decreases in premature mortality and a life expectancy increase of almost 9 years since 1980. European countries have some of the best health-care systems in the world. However, Europe is challenged with unprecedented and overlapping crises that are detrimental to human health and livelihoods and threaten adaptive capacity, including the COVID-19 pandemic, the Russian invasion of Ukraine, the fastest-growing migrant crisis since World War 2, population displacement, environmental degradation, and deepening inequalities. Compared with pre-industrial times, the mean average European surface air temperature increase has been almost 1°C higher than the average global temperature increase, and 2022 was the hottest European summer on record. As the world's third largest economy and a major contributor to global cumulative greenhouse gas emissions, Europe is a key stakeholder in the world's response to climate change and has a global responsibility and opportunity to lead the transition to becoming a low-carbon economy and a healthier, more resilient society.
The Lancet Countdown in Europe is a collaboration of 44 leading researchers, established to monitor the links between health and climate change in Europe and to support a robust, evidence-informed response to protect human health. Mirroring the Global Lancet Countdown, this report monitors the health effects of climate change and the health co-benefits of climate action in Europe. Indicators will be updated on an annual basis and new indicators will be incorporated to provide a broad overview to help guide policies to create a more climate-resilient future.
The 2022 report of the Lancet Countdown on health and climate change: health at the mercy of fossil fuels
The Lancet , VOLUME 400, ISSUE 10363, P1619-1654 - 2022
Co-Evaluation of Climate Services. A Case Study for Hydropower Generation
Climate Services , Volume 28, December 2022, 100335 - 2022
Climate services are attracting growing attention and interest as instruments to promote climate change adaptation. The transparent assessment of the potential value brought by the services can play a major role. It can foster the commitment of the user towards a co-generation process increasingly central to climate services creation, can provide developers important information to better tailor the service to the user needs, and can finally increase recognition of the value of the service boosting confidence and trust in the tool.
This study presents and then demonstrates the applicability of an evaluation methodology based on the Bayesian framework derived from the information value theory. The specific case study is the Smart Climate Hydropower Tool (SCHT), a climate service designed to support management decisions in hydropower generation. The service uses freely available seasonal forecasts and machine learning algorithms to predict incoming discharge to hydropower reservoirs. The user is ENEL Green Power Italy, and the testing environments are two water basins in Colombia.
The study defines the expected value of perfect information, the expected value of the information currently used by the hydropower producer and the expected value of the service information. It then discusses pros and cons of the applicability of the method.
Environmental and economic accounting for biomass energy in Ethiopia
Energy, Sustainability and Society , 12, Article number: 30 - 2022
Energy consumption is inextricably linked with the economy and the environment. The interlinkages are particularly important in low-income countries such as Ethiopia where biomass fuels account for more than 85% of the total energy consumed. This paper aims to assess the energy and economic values, and environmental emissions of solid biomass fuels in Ethiopia.
The study considered four common solid biomass fuels (firewood, charcoal, crop residues, and cattle dung) in Ethiopia. The amount of biomass fuels during the Ethiopian fiscal year 2015/2016 was compiled from various data sources. Prices, net calorific values, and emission factors per mass of fuels were then used to calculate the economic, energy, and emission values of the solid biomass fuels.
The study showed that, in 2015/2016, the consumption of the four solid biomass fuels contributed between 33,327 and 44,547 ktoe to the total energy consumption with an estimated economic value of 4.4–7.7% of the GDP at current market prices. The stationary combustion of the biomass fuels could result in 165–219 Mt of CO2eq emissions, whereas the fuelwood consumption could potentially impinge on the size or quality of 730 thousand ha of forest, woodlands, and shrublands.
The results suggest that the country should scale-up its policy measures aimed at increasing households’ access to modern energy sources and energy-efficient cooking stoves while at the same time strengthening its afforestation and reforestation activities.
Increased energy use for adaptation significantly impacts mitigation pathways
Nature Communications , 13, Article number: 4964 - 2022
Climate adaptation actions can be energy-intensive, but how adaptation feeds back into the energy system and the environment is absent in nearly all up-to-date energy scenarios. Here we quantify the impacts of adaptation actions entailing direct changes in final energy use on energy investments and costs, greenhouse gas emissions, and air pollution. We find that energy needs for adaptation increase considerably over time and with warming. The resulting addition in capacity for power generation leads to higher greenhouse gas emissions, local air pollutants, and energy system costs. In the short to medium term, much of the added capacity for power generation is fossil-fuel based. We show that mitigation pathways accounting for the adaptation-energy feedback would require a higher global carbon price, between 5% and 30% higher. Because of the benefits in terms of reduced adaptation needs, energy system costs in ambitious mitigation scenarios would be lower than previous estimates, and they would turn negative in well-below-2-degree scenarios, pointing at net gains in terms of power system costs.
How to reduce emissions and energy use for Italy’s transport sector
Nature , - 2022
Technologies that allow Italy to reduce transport sector emissions and improve energy security do exist and are now affordable. What is needed is a combination of coordinated planning and well-designed policies.
Italy’s overall greenhouse gases emissions have been falling during the past 30 years, thanks to a combination of technological change, energy policies and sluggish economic growth. However, the transportation sector is a remarkable exception, with current emissions slightly above 1990 (+3.2%), This raises serious concerns about the feasibility of the goals of the European Green Deal. In order to investigate how the transport sector can be decarbonized, Enrico Giovannini - Minister of Sustainable Infrastructure and Mobility (MIMS) - has established a structure of independent experts, named STEMI, to help develop a policy for the ecological transition in these areas.
As members of STEMI, we have prepared a report that, based on the existing scientific literature and on consultation with stakeholders, has looked into the technological options for decarbonization available now and in the foreseeable future and has identified investment priorities. The key guiding principles were: emission abatement capacity, energy efficiency, cost, and industrial scalability. All major modes of transport were assessed (private cars, commercial vehicles, buses, trains, ships, airplanes).
The solutions based on direct electrification emerge as the most promising technological options for various segments, with strong growth prospects, especially for road transport (Figure 1). They reduce the energy use per km travelled by a factor of 3 or higher, compared to internal-combustion vehicles. Electrification can also reduce environmental impact, in line with the EU climate law on 2030 emission reductions and addressing the chronic Italian air pollution problems. Finally, it improves energy security, which has become a major European priority since the Russian invasion of Ukraine, as shown by the recent RePowerEU plan presented by the European Commission.
Energy Intensity Convergence and Its Long-Run Minimum
Politica Economica , - 2022
Exploring Global Climate Policy Futures and Their Representation in Integrated Assessment Models
Politics and Governance , Vol 10, No 3 (2022): Exploring Climate Policy Ambition - 2022
The Paris Agreement, adopted in 2015, paved the way for a new hybrid global climate governance architecture with both bottom-up and top-down elements. While governments can choose individual climate goals and actions, a global stocktake and a ratcheting-up mechanism have been put in place with the overall aim to ensure that collective efforts will prevent increasing adverse impacts of climate change. Integrated assessment models show that current combined climate commitments and policies of national governments fall short of keeping global warming to 1.5 °C or 2 °C above preindustrial levels. Although major greenhouse gas emitters, such as China, the European Union, India, the United States under the Biden administration, and several other countries, have made new pledges to take more ambitious climate action, it is highly uncertain where global climate policy is heading. Scenarios in line with long-term temperature targets typically assume a simplistic and hardly realistic level of harmonization of climate policies across countries. Against this backdrop, this article develops four archetypes for the further evolution of the global climate governance architecture and matches them with existing sets of scenarios developed by integrated assessment models. By these means, the article identifies knowledge gaps in the current scenario literature and discusses possible research avenues to explore the pre-conditions for successful coordination of national policies towards achieving the long-term target stipulated in the Paris Agreement.
Emissions Lock-in, Capacity, and Public Opinion: How Insights From Political Science Can Inform Climate Modeling Efforts
Politics and Governance , Vol 10, No 3 (2022): Exploring Climate Policy Ambition - 2022
The implementation of ambitious climate policies consistent with the goals of the Paris Agreement is fundamentally influenced by political dynamics. Yet, thus far, climate mitigation pathways developed by integrated assessment models (IAMs) have devoted limited attention to the political drivers of climate policymaking. Bringing together insights from the political science and socio-technical transitions literature, we summarize evidence on how emissions lock-in, capacity, and public opinion can shape climate policy ambition. We employ a set of indicators to describe how these three factors vary across countries and regions, highlighting context-specific challenges and enablers of climate policy ambition. We outline existing studies that incorporate political factors in IAMs and propose a framework to employ empirical data to build climate mitigation scenarios that incorporate political dynamics. Our findings show that there is substantial heterogeneity in key political drivers of climate policy ambition within IAM regions, calling for a more disaggregated regional grouping within models. Importantly, we highlight that the political challenges and enablers of climate policy ambition considerably vary across regions, suggesting that future modeling efforts incorporating political dynamics can significantly increase the realism of IAM scenarios.
The impact of COVID-19 lockdown on air pollution in Europe and North America: a systematic review
European Journal of Public Health , ckac118 - 2022
Multiple studies report reductions in air pollution associated with COVID-19 lockdowns.
We performed a systematic review of the changes observed in hazardous air pollutants known or suspected to be harmful to health, including nitrogen dioxide (NO2), nitrogen oxides (NOx), carbon monoxide (CO), sulfur dioxide (SO2), ozone (O3) and particulate matter (PM). We searched PubMed and Web of Science for studies reporting the associations of lockdowns with air pollutant changes during the COVID-19 pandemic in Europe and North America.
One hundred nine studies were identified and analyzed. Several pollutants exhibited marked and sustained reductions. The strongest was NO2 (93% of 89 estimated changes were reductions) followed by CO (88% of 33 estimated pollutant changes). All NOx and benzene studies reported significant reductions although these were based on fewer than 10 estimates. About three-quarters of PM2.5 and PM10 estimates showed reductions and few studies reported increases when domestic fuel use rose during COVID-19 lockdowns. In contrast, O3 levels rose as NOx levels fell. SO2 and ammonia (NH3) had mixed results. In general, greater reductions appeared when lockdowns were more severe, as well as where baseline pollutant levels were higher, such as at low-elevation and in densely populated areas. Substantial and robust reductions in NO2, NO, CO, CO2, PM2.5, PM10, benzene and air quality index pollution occurred in association with COVID-19 lockdowns. O3 levels tended to increase, while SO2 and NH3 had mixed patterns.
Our study shows the profound impact of human activity levels on air pollution and its potential avoidability.
The impact of air pollution on COVID-19 incidence, severity, and mortality: A systematic review of studies in Europe and North America
Environmental Research , Volume 215, Part 1, 114155 - 2022
Air pollution is speculated to increase the risks of COVID-19 spread, severity, and mortality. We systematically reviewed studies investigating the relationship between air pollution and COVID-19 cases, non-fatal severity, and mortality in North America and Europe. We searched PubMed, Web of Science, and Scopus for studies investigating the effects of harmful pollutants, including particulate matter with diameter ≤2.5 or 10 μm, ozone, nitrogen dioxide, sulfur dioxide and carbon monoxide, on COVID-19 cases, severity, and deaths in Europe and North America through to June 19, 2021. Articles were included if they quantitatively measured the relationship between exposure to air pollution and COVID-19 health outcomes. From 2,482 articles screened, we included 116 studies reporting 355 separate pollutant-COVID-19 estimates. Approximately half of all evaluations on incidence were positive and significant associations (52.7%); for mortality the corresponding figure was similar (48.1%), while for non-fatal severity this figure was lower (41.2%). Longer-term exposure to pollutants appeared more likely to be positively associated with COVID-19 incidence (63.8%). PM2.4, PM10, O3, NO2 and CO2 were most strongly positively associated with COVID-19 incidence, while PM2.5 and NO2 with COVID-19 deaths. All studies were observational and most exhibited high risk of confounding and outcome measurement bias. Air pollution may be associated with worse COVID-19 outcomes. Future research is needed to better test the air pollution-COVID-19 hypothesis, particularly using more robust study designs and COVID-19 measures that are less prone to measurement error and by considering co-pollutant interactions.
Staying home saves life, really!
Letters in Spatial and Resource Sciences , - 2022
When coronavirus disease (COVID-19) was spreading worldwide, many national and local governments started to impose socially restrictive measures to limit the spread of the virus. Such quarantine measures in different cities worldwide have brought a new trend in public safety improvement and crime reduction. Using daily crime reports in the U.S., this paper evaluates the immediate unintended effects of shelter-in-place orders on different crime categories using fine-grained spatial units (i.e., neighborhoods) rather than entire cities, states, or countries. Results for San Francisco suggest an immediate drop of between 10 and 20% points in the total number of crimes after one month from the introduction of the restrictions. In particular, we show that while theft, homicide, and traffic accidents have fallen sharply, domestic violence incidents and weapon possession offences were not affected by the lockdown. The results are robust to the inclusion of spatial and temporal dependence.
From optimal to robust climate strategies: expanding integrated assessment model ensembles to manage economic, social, and environmental objectives
Environmental Research Letters , Volume 17, Number 8 - 2022
Cost-benefit integrated assessment models generate welfare-maximizing mitigation pathways under a set of assumptions to deal with deep uncertainty in future scenarios. These assumptions include socio-economic projections, the magnitude and dynamics of climate impacts on the economy, and physical climate response. As models explore the uncertainty space within the boundaries of their objective functions, they risk providing scenarios which are too narrow and not sufficiently robust. Here, we apply robust and multi-objective decision-making methods to extract relevant information from a large ensemble of optimal emissions-reduction pathways generated by a regionalized cost-benefit integrated assessment model under deterministic welfare optimization. We show that shifting the focus from optimal to robust solutions reduces the uncertainty in mitigation strategies and aligns them toward the Paris goals. Moreover, we analyze the trade-offs between climatic (temperature), social (inequality) and economic (welfare) objectives and illustrate four robust pathways under various decision-making criteria. We show that robust mitigation strategies can lead to regional emission-reduction strategies which are fair. Our results show how to extract more comprehensive climate strategies from available scenario ensembles and that the highest discrepancies at the local level policies are found in the developing and most-impacted regions.
Climate-related risks in financial assets
Journal of Economic Surveys , - 2022
The financial risks and potential systemic impacts induced by climate change and the transition to a low-carbon economy have become a central issue for both financial investors and their regulators. In this article, we develop a critical review of the empirical and theoretical literature concerning the impact of climate-related risks on the price of financial assets. We first present the theoretical links between asset pricing and climate-related risks and develop a theory of how climate risk drivers transmit costs to firms and lead to asset price changes. We then discuss studies looking at past climate-related events, which show that both climate physical impacts and transition dynamics can trigger a revaluation of financial assets through multiple direct and indirect channels. Finally, we review the emerging literature that uses forward-looking methodologies to estimate future climate-related asset price changes, which suggests that climate financial risks can indeed have significant implications on financial stability.
Macrofinancial Risks of the Transition to a Low-Carbon Economy
Review of Environmental Economics and Policy , - 2022
A disorderly transition to a low-carbon economy may pose significant costs for both financial and nonfinancial firms through the stranding of physical assets, firms’ defaults, and volatility in asset prices. The spread of these disruptions through production and financial networks may exacerbate transition costs. Green financial and monetary policies may help to mitigate the cost of transitioning to a low-carbon future, but coordination among public institutions (governments, central banks, and financial supervisors) is needed. We discuss qualitative, empirical, modeling, policy, and institutional research on this topic and identify priorities for future research.
Can Hypothetical Time Discounting Rates Help Predict Actual and Incentivised Behaviour? Evidence from Senegal
World Development, , Volume 159, November 2022, 106029 - 2022
Time preferences are an important determinant of decision-making and are widely measured through hypothetical survey questions. However, the extent to which they offer a good representation of time discounting remains largely unexplored. This paper estimates time preference parameters using a commonly-applied hypothetical elicitation method. We explore whether our estimated parameters correlate with actual and incentivized behaviours related to time preferences. First, we consider the correlation between our hypothetical measures and the result of an incentivised experiment using the unique reference numbers of banknotes as a means of determining an individual’s willingness to save money. Individuals are given a banknote and informed that if they chose to retain this specific note for a randomly assigned period of time (2, 7 or 14 days) they will receive a second banknote, in effect doubling their initial endowment. Second, we consider the correlation between hypothetical measures and an individual’s observable saving behaviour, including ownership of a savings account and participation in a Rotating Credit and Savings Association (ROSCA). Overall, our results show that hypothetically-derived time preference parameters are not significantly correlated with our measures of actual or incentivized behaviour. We explore the extent to which our results are due to limited power and find that a version of our results comparable to the relevant literature can detect effect sizes in line with similar studies. Furthermore, we recognise that our incentivized experiment will be a noisy reflection of time discounting and subject to confounding factors, such as the inherent fungibility of money. We provide ancillary evidence suggesting that our main results remain robust to these considerations and others.
Forward‑Looking Belief Elicitation Enhances Intergenerational Beneficence
Environmental and Resource Economics , 81, pages743–761 (2022) - 2022
One of the challenges in managing the Earth’s common pool resources, such as a livable climate or the supply of safe drinking water, is to motivate successive generations to make the costly effort not to deplete them. In the context of sequential contributions, intergenerational reciprocity dynamically amplifies low past efforts by decreasing successors’ rates of contribution. Unfortunately, the behavioral literature provides few interventions to motivate intergenerational beneficence. We identify a simple intervention that motivates decision makers who receive a low endowment. In a large online experiment with 1378 subjects, we show that asking decision makers to forecast future generations’ actions considerably increases their rate of contribution (from 46% to over 60%). By shifting decision makers’ attention from the immediate past to the future, the intervention is most effective in enhancing intergenerational beneficence of subjects who did not receive a contribution from their predecessors, effectively neutralizing negative intergenerational reciprocity effects. We provide suggestive evidence that the attentional channel is the main channel at work.
Defining a sustainable development target space for 2030 and 2050
One Earth , - 2022
With the establishment of the sustainable development goals (SDGs), countries worldwide agreed to a prosperous, socially inclusive, and environmentally sustainable future for all. This ambition, however, exposes a critical gap in science-based insights, namely on how to achieve the 17 SDGs simultaneously. Quantitative goal-seeking scenario studies could help explore the needed systems' transformations. This requires a clear definition of the "target space." The 169 targets and 232 indicators used for monitoring SDG implementation cannot be used for this; they are too many, too broad, unstructured, and sometimes not formulated quantitatively. Here, we propose a streamlined set of science-based indicators and associated target values that are quantifiable and actionable to make scenario analysis meaningful, relevant, and simple enough to be transparent and communicable. The 36 targets are based on the SDGs, existing multilateral agreements, literature, and expert assessment. They include 2050 as a longer-term reference point. This target space can guide researchers in developing new sustainable development pathways.
Introduction and Framing. In IPCC, 2022: Climate Change 2022: Mitigation of Climate Change
Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change , - 2022
The Ethiopian energy sector and its implications for the SDGs and modeling
Renewable and Sustainable Energy Transition , Volume 2, August 2022, 100018 - 2022
The level and mix of energy supply and consumption have substantial roles in shaping the sustainable development pathway of a country. This is particularly important in developing regions where access to modern energy sources remains limited. This paper gives a narrative overview of the energy sector in Ethiopia. It presents the key historical trends and outstanding issues in the energy sector. It also explores the ways through which energy transition could support achieving the Sustainable Development Goals (SDGs) in the country. The review shows that energy supply and consumption in Ethiopia are dominated by bioenergy (88%) and by households (88%), respectively. Electricity barely accounts for 3% of the total energy supply although its generation has increased by more than four times between 2004/05 and 2018/19. Furthermore, the dominance of bioenergy source and households demand is projected to continue until the middle of the century. This study identifies research gaps, particularly, in terms of linking the energy sector with the rest of the economy and the environment using multi-sectoral economic models. Such advanced modeling is constrained by the lack of centrally coordinated energy data source among others. Creating an open platform that facilitates information exchange between energy planning institutions and academic researchers could be a crucial step in this regard.
The Social Cost of Carbon with Intragenerational Inequality under Economic Uncertainty
RFF Working Papers , Working Paper 22-08 - 2022
A formula is derived for the social cost of carbon (SCC) that takes account of intragenerational income inequality and its evolution with economic growth. The social discount rate (SDR) should be adjusted to account for intragenerational and intergenerational inequality aversion and for risk aversion. If growth increases (reduces) intra-generational inequality, the SDR is lower (higher) and the SCC higher (lower) than along an inequality-neutral growth path, especially if intra-generational and intergenerational inequality aversion are higher. The same qualitative result is shown for two welfare specifications, one with a representative agent with equally distributed equivalent (EDE) income and the other considers individuals separately
across the income distribution. The latter specification causes an additional impact of income inequality on the SDR and SCC because individuals are compared both within and between time periods. Our preferred EDE calibration to a scenario in which global intragenerational inequality declines over time, leads to a SCC in 2020 of $70/tCO2 compared to a value of $85/tCO2 without the effect of inequality.
Climate Change, Labor Availability, and the Future of Gender Inequality in South Africa
Climate and Development Journal , 21 May 2022 - 2022
Women in developing countries are more exposed to the adverse effects of climate change. We develop a structural model to study the long-term impacts of climate and socioeconomic changes on labour supply and the pay gap between male/female and high-skilled/low-skilled labour. We calibrate our model with empirical evidence on the impacts of increasing temperatures on labour availability in two general economic sectors with high and low exposure to rising temperatures. Using five waves of nationally representative micro-survey data in South Africa from 2008 to 2017, we find that while high-skilled labour availability is insensitive to climate change, higher temperatures have a negative impact on working hours of low-skilled labour specially among women in the high-exposure sector. We incorporate these findings in an overlapping generations (OLG) model to show that climate-induced reduction in labour availability increases the relative wages of low-skilled female labour and reduces the wage gap between male and female labour in the high-exposure sector, and between high-skilled and low-skilled female labour, in general. Considering climate change damages both on sectoral productivity and on labour availability, we project that by the end of the century, the output per adult will drop by about 11 percentage points under a severe climate scenario. This calls for more targeted adaptation policies that build on the potential benefits of climate change in reducing gender inequality and empowering women to take up more active roles in designing and implementing such policies at the local level.
Achievements, Gaps, and Emerging Challenges in Controlling Malaria in Ethiopia
Frontiers in Tropical Diseases , 2, 771030 - 2022
Highlights:
Ethiopia has made a remarkable progress in terms of controlling malaria, especially, since 2004.
It is further campaigning towards a “malaria free Ethiopia”.
This requires building strong cross-sectoral and cross-border coordination capacity.
It also needs to scale up research and surveillance on emerging malaria vectors.
The implications of irrigation and hydropower dams on malaria transmission should not be undermined.
Net economic benefits of well-below 2°C scenarios and associated uncertainties
Oxford Open Climate Change , Volume 2, Issue 1, 2022, kgac003 - 2022
Climate stabilization pathways reviewed by the Intergovernmental Panel on Climate Change depict the transformation challenges and opportunities of a low carbon world. The scenarios provide information about the transition, including its economic repercussions. However, these calculations do not account for the economic benefits of lowering global temperature; thus, only gross policy costs are reported and discussed. Here, we show how to combine low carbon pathways’ mitigation costs with the growing but complex literature quantifying the economic damages of climate change. We apply the framework to the scenarios reviewed in the Special Report on 1.5°C of the Intergovernmental Panel on Climate Change. Under a probabilistic damage function and climate uncertainty, we show that Paris-compliant trajectories have net present economic benefits but are not statistically different from zero. After mid-century, most scenarios have higher benefits than costs; these net benefits are most prominent in developing countries. We explore the robustness of results to an extensive set of damage functions published in the literature, and for most of the specifications examined, we cannot reject the null hypothesis of net benefits. Future research could improve these results with a better understanding of damage functions with greater coverage of damages and including adaptation and its cost.
Evaluating the impact of technological renovation and competition on energy consumption in the workplace
Journal of Environmental Economics and Management , Available online 14 April 2022, 102662 - 2022
This study investigates the effect of two interventions aimed at reducing electricity consumption among branches of a large Italian bank. The first intervention consists in the technological renovation of 70 branch buildings through the installation of an automated energy management system. The second is an energy-saving competition that involved more than 500 branches for a year. Using two separate difference-in-differences estimations, we find that the technological renovation curbs electricity consumption by 15.8 percent overall, and by more than 25 percent outside the main work schedule. The behavioral intervention reduces electricity consumption, by around 6 percent outside the main work schedule, and by 2.4 percent overall, although not significantly so. The estimated cost-effectiveness ranges between 3.4 and 8.8 € cents per kWh saved for the technological intervention, and 9.8 and 17.8 € cents per kWh saved for the behavioral intervention. Our findings suggest that for both interventions, energy savings in the workplace are more easily obtained by reducing passive energy waste than through behavioral change during working hours.
International Migration Projections across Skill Levels in the Shared Socioeconomic Pathways
Sustainability , 2022, 14(8), 4757 - 2022
International migration is closely tied to demographic, socioeconomic, and environmental factors and their interaction with migration policies. Using a combination of a gravity econometric model and an overlapping generations model, we estimate the probability of bilateral migration among 160 countries in the period of 1960 to 2000 and use these findings to project international migration flows and their implications for income inequality within and between countries in the 21st century under five shared socioeconomic pathways (SSPs). Our results show that international migration increases welfare in developing countries, and closes the inequality gap both within and between low-skilled and high-skilled labor in these countries as well. In most developed countries, on the contrary, international migration increases the inequality gap and slightly reduces output. These changes are not uniform, and vary significantly across countries depending on their population growth and human capital development trajectories. Overall, while migration is strongly affected by inequality between developed and developing countries, it has an ambiguous impact on inequality within and between countries.
A randomized trial of energy cost information provision alongside energy-efficiency classes for refrigerator purchases
Nature Energy , (2022) - 2022
Energy-efficiency classes provide coarse but easy-to-process information designed to help complex decisions. However, they are multi-attribute indices, imprecisely related to the running costs of graded products. Here we evaluate the impact of adding simple but accurate yearly or lifetime energy cost information to the European Union energy label. We conduct a field experiment with an online retailer of energy-using durables, measuring customers’ (n = 126,614) search and purchases of refrigerators. Providing precise energy costs leads to purchasing products with lower prices and in lower energy-efficiency classes, but with similar overall energy and total costs. Furthermore, information provision lengthens product search among buyers, with more attention paid to low energy class products. These results highlight that the use of energy classes involves a trade-off between short-term economic savings and higher search cost. By drawing attention away from energy costs, energy-efficiency classes might not be adequate in the context of a fair and transparent climate transition.
Agent-Based Covid economics (ABC): Assessing non-pharmaceutical interventions and macro-stabilization policies
Industrial and Corporate Change , Volume 31, Issue 2, April 2022, Pages 410–447 - 2022
We employ a new macroeconomic–epidemiological agent-based model to evaluate the “lives vs livelihoods” trade-off brought to the fore by coronavirus disease (Covid-19). An infectious disease spreads across the network of agents’ social and economic contacts and feeds back on the economic dimension of the model through various channels such as employment and consumption demand. Under a lockdown (LD) scenario, the model is able to closely reproduce the epidemiological dynamics of the first wave of the Covid-19 epidemic in the Lombardy region of Italy. We find that, in the presence of non-pharmaceutical interventions, there is no trade-off between lives and macroeconomic losses as a stricter LD eventually leads to superior outcomes along both dimensions. We also evaluate the efficacy of various macroeconomic stabilization policies designed to counteract the downturn generated by the epidemic and LD measures. In an agent-based setting we gain additional insights on the way in which such policies impact not only on gross domestic product but also, for instance, on firms’ defaults and relative prices. Liquidity support for firms, a short-time working scheme with compensation for workers, and direct transfer to households stand out as the most effective policy tools.
Assessing the Economic Impact of Lockdowns in Italy: A Computational Input–Output Approach
Industrial and Corporate Change , Volume 31, Issue 2, April 2022, Pages 358–409 - 2022
We build a novel interregional computational input–output model to assess the economic impact of lockdowns in Italy. Lockdowns are modeled as shocks to labor supply, calibrated on regional and sectoral employment data coupled with the prescriptions of government decrees. When estimated on data from the first lockdown, our model closely reproduces the observed economic dynamics during spring 2020. We also show that the model delivers a good out-of-sample performance during fall and winter 2020 and demonstrate that it can be used to analyze counterfactual scenarios.
Defining a sustainable development target space for 2030 and 2050
One Earth , Volume 5, Issue 2, P142-156, February 18, 2022 - 2022
With the establishment of the sustainable development goals (SDGs), countries worldwide agreed to a prosperous, socially inclusive, and environmentally sustainable future for all. This ambition, however, exposes a critical gap in science-based insights, namely on how to achieve the 17 SDGs simultaneously. Quantitative goal-seeking scenario studies could help explore the needed systems' transformations. This requires a clear definition of the "target space." The 169 targets and 232 indicators used for monitoring SDG implementation cannot be used for this; they are too many, too broad, unstructured, and sometimes not formulated quantitatively. Here, we propose a streamlined set of science-based indicators and associated target values that are quantifiable and actionable to make scenario analysis meaningful, relevant, and simple enough to be transparent and communicable. The 36 targets are based on the SDGs, existing multilateral agreements, literature, and expert assessment. They include 2050 as a longer-term reference point. This target space can guide researchers in developing new sustainable development pathways.
The source is the message: The impact of institutional signals on climate change-related norm perceptions and behaviors
Climatic Change , 166, Article number: 35 (2021) - 2021
With mandates and taxes to mitigate climate change proving politically challenging to implement, some scholars and policy makers have started looking to social norms as a vehicle for large-scale behavioral change. This raises the question of whether formal institutions or organizations are able to influence social norms and behavior. We designed a randomized experiment with a sample of 3627 American residents to investigate how social norm perceptions and behaviors change in response to institutional signals about climate change, and how this varies with signal source. We found that institutional signals, in particular when originating from science or business actors, shifted perceptions of descriptive social norms about climate action. Institutional signals also influenced intended pro-environmental behaviors, but did not increase personal contributions to environmental causes, suggesting that a shift in perceived norms may be insufficient to drive personal action, especially when it involves personal costs. Our study not only emphasizes the importance of institutional signals and messengers in changing perceptions of social norms, but also highlights the complexities involved in norm interventions ultimately aimed at influencing behavior.
Capital stranding cascades: The impact of decarbonisation on productive asset utilisation
Energy Economics , Volume 103, November 2021, 105581 - 2021
A timely low-carbon transition will require a significant decline in fossil fuel production and consumption. This in turn exposes the rest of economic sectors to the risk of reduced usability of physical capital stocks via international production network linkages. We propose and apply a simple measure to assess the extent to which fossil shocks might trigger underutilisation of capital stocks across countries and productive sectors (‘stranding multipliers’). Our results highlight the relevance of supply-side transition risks. First, among all productive activities, the global fossil sector exhibits the highest stranding multiplier on the rest of the economic system. Second, some of the most exposed sectors are downstream activities, mainly affected by second-round effects. Third, we rank countries according to their external stranding potential, finding France, Australia and Slovakia at the top, and the USA, Italy and China at its bottom. Finally, we rank countries according to their exposure to stranding risk and analyse more in depth the origins and transmission channels of the stranding links affecting some of the most exposed countries (USA, China and Germany).
Cost and attainability of meeting stringent climate targets without overshoot
Nature Climate Change , - 2021
Global emissions scenarios play a critical role in the assessment of strategies to mitigate climate change. The current scenarios, however, are criticized because they feature strategies with pronounced overshoot of the global temperature goal, requiring a long-term repair phase to draw temperatures down again through net-negative emissions. Some impacts might not be reversible. Hence, we explore a new set of net-zero CO2 emissions scenarios with limited overshoot. We show that upfront investments are needed in the near term for limiting temperature overshoot but that these would bring long-term economic gains. Our study further identifies alternative configurations of net-zero CO2 emissions systems and the roles of different sectors and regions for balancing sources and sinks. Even without net-negative emissions, CO2 removal is important for accelerating near-term reductions and for providing an anthropogenic sink that can offset the residual emissions in sectors that are hard to abate.
Social science research to inform solar geoengineering
Science , Vol 374, Issue 6569, pp. 815-818 - 2021
As the prospect of average global warming exceeding 1.5°C becomes increasingly likely, interest in supplementing mitigation and adaptation with solar geoengineering (SG) responses will almost certainly rise. For example stratospheric aerosol injection to cool the planet could offset some of the warming for a given accumulation of atmospheric greenhouse gases (1). However, the physical and social science literature on SG remains modest compared with mitigation and adaptation. We outline three research themes for advancing policy-relevant social science related to SG: (i) SG costs, benefits, risks, and uncertainty; (ii) the political economy of SG deployment; and (iii) SG’s role in a climate strategy portfolio.
Integrate health into decision-making to foster climate action
Environmental Research Letters , Volume 16, Number 4 - 2021
The COVID-19 pandemic reveals that societies place a high value on healthy lives. Leveraging this momentum to establish a more central role for human health in the policy process will provide further impetus to a sustainable transformation of energy and food systems.
Global Temperature Effects on Economic Activity and Equity: A Spatial Analysis
RFF Working Papers Series , Working Paper 22-1 - 2022
Since the first concerns about potential damages from climate change impacts, their economic assessment has emerged as one of the most challenging and controversial issues. While there is evidence of non-linear impact of climate change on economic activity at the country level, we use the highest resolution economic activity data available to revisit the relationship between climatic exposure and economic performance to investigate the potential distribution of future climate impacts across space. The increased detail of the economic processes involved allows us to study the impact of climatic stressors at the local level, explicitly accounting for spatial dependence and decreasing estimation biases. We find that the global optimal temperature maximizing economic activity is 9°C. As a result, a uniform increase of 1°C in temperature above the current grid-cell specific climatic conditions would reduce mean global economic activity by 7.9%. Extreme temperature events further exacerbate these negative impacts, one standard deviation increase in the frequency of warm spells could reduce mean global economic activity by approximately an additional 1.6%. The uneven distribution of impacts across grid-cells results in a significant worsening of income inequality both across and within countries. Gridcells with the lowest level of economic activity also experience the highest losses, while global average Gini
coefficient increases from the historical value of 0.33 to 0.46 in 2100. Inequality will increase within all the major continents and regions, with the highest increases in South America and Asia.
Internalizing air pollution health-economic impacts into climate policy – a global modelling study
The Lancet Planetary Health , Volume 6, Issue 1, E40-E48 - 2022
Climate change and air pollution are two major societal problems. Their complex interplay calls for an advanced evaluation framework that can support decision making. Previous assessments have looked at the co-benefits of climate policies for air pollution, but few have optimised air pollution benefits. In our study, we lay out a modelling framework that internalises air pollution's economic impacts on human mortality, while considering climate constraints and aerosol feedback.
We developed a modelling framework based on an integrated assessment model (World Induced Technical Change Hybrid [WITCH]) designed to assess optimal climate change mitigation policies. We included structural and end-of-pipe measures in a detailed process integrated assessment model, that is hard-linked to air pollution and climate models. We analysed a large set of baseline scenarios, including five shared socioeconomic pathways (SSPs). SSP scenarios were also tested with three different levels of value per statistical life, and were combined with the Paris Agreement temperature targets (TTs), focusing on the 2°C and 1·5°C TTs by the end of the century.
We found that, in the baseline scenarios, where no policies are applied, the number of annual premature deaths grew before declining slightly to 4·45 (range 3·86–6·11) million annual premature deaths by 2050. Reaching the Paris Agreement TT decreases mortality by approximately 0·47 million premature deaths by 2050 (up to 1·28 million premature deaths in SSP3 –1·5°C) with respect to the baseline. We showed that welfare-maximising policies accounting for air pollution benefits reduces premature mortality by 1·62 million deaths annually. This is three times greater than the co-benefits of climate policies. China is the region where most of the avoided mortality is possible, whereas the reforming economies (ie, non-EU eastern European countries, including Russia) region has the greatest welfare benefits. We find that global and regional welfare increases when air pollution impacts are internalised, with no negative repercussions on global inequality.
Air pollution control strategies are found to be an important complement to structural emission reductions. Accounting for air pollution impacts reduces climate mitigation costs and inequality and increases global and regional welfare. Results are robust to a broad set of scenarios and assumptions, including debated normative choices on how to value improved health.
Study on adaptation modelling - Recommended approach to analysis and modelling
Publications Office of the EU , - 2021
This report proposes recommended approaches to analysis and modelling for better informed decision-making on adaptation at various levels of governance. It also identifies research advancements to foster the development and application of the technical, financial, economic and non-monetary analysis and modelling of climate change hazards, risks, impacts, vulnerability and adaptation More specifically, building on the comprehensive desk review (reported separately), the present report will: - summarise, substantiate, prioritise, and outline a recommended approach for each of the main cases of technical, financial, economic and non-monetary analysis and modelling of climate change hazards, risks, impacts, vulnerability and adaptation. - define and outline relevant follow-up actions for the coming five years period with a view to improving the approach for each of the main cases ( use cases thereafter) analysed in a separate report. The present report develops along three main angles. Firstly, it identifies under a more conceptual perspective, key methodological steps enabling the development of an effective analysis of adaptation. Secondly, it analyses how the different models and methods scrutinized match these steps. This will substantiate a gap analysis highlighting what is feasible today, and what is not yet feasible. Thirdly, it suggests options to improve upon identified limits in adaptation assessment. In particular, the report identifies and prioritize the next-term (for the next five years) actions that can further facilitate the application of climate–impact-economic modelling for practical usable adaptation analyses. In what follows: section 2 describes the conceptual framework for the development of adaptation analysis, section 3 describes how existing methodologies fit to this framework, section 4 provides recommendations for priority actions in the next five years to bridge the gaps highlighted, section 5, starting from main cases examined in Task 4 derives operational examples on how gaps could be bridged.
Study on adaptation modelling Comprehensive desk review : climate adaptation models and tools
Publications Office of the EU , - 2021
This comprehensive desk review aims to address the European Commissions’ requirement to support better-informed decision making on climate adaptation at multiple governance levels: it provides a comprehensive, up-to-date and forward looking overview of the range of technical, financial, economic and non-monetary models and tools for hazards, risks, impacts, vulnerability and adaptation climate assessments. This therefore aims not only to collate current knowledge on climate adaptation assessment methodologies, but to highlight research gaps in each field. This review subsequently informs a recommended approach for adaptation modelling, detailed in further reports.
Economic contributions and synergies of biogas with the SDGs in Ethiopia
Energy Nexus , Volume 3, 15 December 2021, 100017 - 2021
Domestic biogas technology helps to foster sustainable development in different ways. It is particularly important in countries like Ethiopia where about 80% of the population lives in rural areas, and more than 90% of the households use solid biomass for cooking. In light of this, the Government of Ethiopia has launched a National Biogas Programme in 2008. The Programme, now in its third phase, has successfully installed tens of thousands of biogas digesters. This paper aims to give a macroeconomic insight on the role of the biogas sector in Ethiopia. The annual gross value of biogas outputs reached USD 7.7 million in 2015/16. Installing biogas digesters contributes USD 1.4 million each year to the construction industry. Results of the study indicate that the micro and macroeconomic contributions of biogas sector partly rely on the effective utilization of its co-product (i.e., the slurry) as fertilizer. Agricultural policies of the country should therefore highlight and link domestic biogas production with the extension services.
Current and projected regional economic impacts of heatwaves in Europe
Nature Communications , 12, Article number: 5807 - 2021
Extreme heat undermines the working capacity of individuals, resulting in lower productivity, and thus economic output. Here we analyse the present and future economic damages due to reduced labour productivity caused by extreme heat in Europe. For the analysis of current impacts, we focused on heatwaves occurring in four recent anomalously hot years (2003, 2010, 2015, and 2018) and compared our findings to the historical period 1981–2010. In the selected years, the total estimated damages attributed to heatwaves amounted to 0.3–0.5% of European gross domestic product (GDP). However, the identified losses were largely heterogeneous across space, consistently showing GDP impacts beyond 1% in more vulnerable regions. Future projections indicate that by 2060 impacts might increase in Europe by a factor of almost five compared to the historical period 1981–2010 if no further mitigation or adaptation actions are taken, suggesting the presence of more pronounced effects in the regions where these damages are already acute.
Where is the EU headed given its current climate policy? A stakeholder-driven model inter-comparison.
Science of The Total Environment , Volume 793 - 2021
Recent calls to do climate policy research with, rather than for, stakeholders have been answered in non-modelling science. Notwithstanding progress in modelling literature, however, very little of the scenario space traces back to what stakeholders are ultimately concerned about. With a suite of eleven integrated assessment, energy system and sectoral models, we carry out a model inter-comparison for the EU, the scenario logic and research questions of which have been formulated based on stakeholders' concerns. The output of this process is a scenario framework exploring where the region is headed rather than how to achieve its goals, extrapolating its current policy efforts into the future. We find that Europe is currently on track to overperforming its pre-2020 40% target yet far from its newest ambition of 55% emissions cuts by 2030, as well as looking at a 1.0–2.35 GtCO2 emissions range in 2050. Aside from the importance of transport electrification, deployment levels of carbon capture and storage are found intertwined with deeper emissions cuts and with hydrogen diffusion, with most hydrogen produced post-2040 being blue. Finally, the multi-model exercise has highlighted benefits from deeper decarbonisation in terms of energy security and jobs, and moderate to high renewables-dominated investment needs.
Challenges in the harmonisation of global integrated assessment models: A comprehensive methodology to reduce model response heterogeneity
Science of The Total Environment , Volume 783 - 2021
Harmonisation sets the ground to a solid inter-comparison of integrated assessment models. A clear and transparent harmonisation process promotes a consistent interpretation of the modelling outcomes divergences and, reducing the model variance, is instrumental to the use of integrated assessment models to support policy decision-making. Despite its crucial role for climate economic policies, the definition of a comprehensive harmonisation methodology for integrated assessment modelling remains an open challenge for the scientific community.
This paper proposes a framework for a harmonisation methodology with the definition of indispensable steps and recommendations to overcome stumbling blocks in order to reduce the variance of the outcomes which depends on controllable modelling assumptions. The harmonisation approach of the PARIS REINFORCE project is presented here to layout such a framework. A decomposition analysis of the harmonisation process is shown through 6 integrated assessment models (GCAM, ICES-XPS, MUSE, E3ME, GEMINI-E3, and TIAM). Results prove the potentials of the proposed framework to reduce the model variance and present a powerful diagnostic tool to feedback on the quality of the harmonisation itself.
Net zero emission pathways reduce the physical and economic risks of climate change
Nature Climate Change , Volume 11, pages1070–1076 - 2021
Mitigation pathways exploring end-of-century temperature targets often entail temperature overshoot. Little is known about the additional climate risks generated by overshooting temperature. Here we assessed the benefits of limiting overshoot. We computed the probabilistic impacts for different warming targets and overshoot levels on the basis of an ensemble of integrated assessment models. We explored both physical and macroeconomic impacts, including persistent and non-persistent climate impacts. We found that temperature overshooting affects the likelihood of many critical physical impacts, such as those associated with heat extremes. Limiting overshoot reduces risk in the right tail of the distribution, in particular for low-temperature targets where larger overshoots arise as a way to lower short-term mitigation costs. We also showed how, after mid-century, overshoot leads to both higher mitigation costs and economic losses from the additional impacts. The study highlights the need to include climate risk analysis in low-carbon pathways.
The Air Quality Effects of Uber
RFF Working Papers Series , Working Paper (21-34) - 2021
This study identifies the effect of Uber on the air quality of urban agglomerations in the United States. For this, we infer its causal impact on the Environmental Protection Agency’s air quality index with state-of-the-art difference-in-difference estimators accounting for Uber’s staggered implementation and dynamic treatment effects. Results show that Uber improves air quality. The value of the air quality index and the number of unhealthy air quality episodes decrease after its introduction. We provide evidence that the bulk of the improvement comes from declining ozone levels during the summer. Notably, results hold for a plethora of different specifications, samples, and robustness exercises. To the best of our knowledge, this article is the first to estimate the air quality effects of ride-hailing technologies empirically in the United States. However, further research is required to identify the exact mechanisms through which Uber’s impact on the transportation system affects air quality.
Constructing efficient portfolios of low-carbon technologies
Renewable and Sustainable Energy Reviews , - 2021
To foster the development, multiple sources of uncertainty associated with benefits and costs of innovation portfolios from low carbon investment need to be considered. We apply Modern Portfolio Theory to construct efficient portfolios of different low-carbon technology fields. The empirical framework is applied to four countries (i.e., Germany, the United Kingdom, Italy, and France) for six low-carbon technology fields (i.e., renewable energy, smart grid, energy efficiency, sustainable transport, carbon capture and storage, and nuclear power) categorized based on priority areas of the EU's 2008 Strategic Energy Technology Plan. The four main findings are: (1) the highest priority technology fields with the minimum risk portfolio are nuclear power in Germany, renewable energy in the United Kingdom, and energy efficiency in Italy and France, (2) the highest priority technology field with the maximum risk portfolio is sustainable transport in Germany, the United Kingdom, and France, and smart grid in Italy, (3) sustainable transport declines in priority as risk decreases in the portfolios of Germany, the United Kingdom, and France, while smart grid declines in priority as risk decreases in the portfolio in Italy, and (4) the presence of negative correlations over time among expected Return on Investments across energy technology fields improves using the Modern Portfolio Theory framework as risk diversification strategy. Our analysis provides efficient portfolios of low-carbon technologies, which can help shape the overall strategy and coordinate each country's comparative advantage by proposing new laws and policies, monitoring existing ones, and managing budget.
Turning opposition into support to immigration: The role of narratives
Journal of Economic Behavior & Organization , Volume 190, October 2021, Pages 785-801 - 2021
The way we collectively discuss migration shapes citizens perceptions of migrants and their influence on our society. This paper investigates whether a narrative about the positive impact of immigrants on the hosting economy affects natives’ behaviour towards migrants. To shed light on the underlying mechanism, we present a simple theoretical framework that models the relationship between beliefs, attitude and behaviour and identifies the sequential channels through which a narrative might be useful in changing behaviour. We test its predictions through an online survey experiment, where we deliver UK natives a favourable narrative about migrants. Treated subjects revise their beliefs about migrants and exhibit significantly more positive self-reported attitudes and more pro-migrant behaviour. Moreover, they update beliefs in a way that gives support to the existence of confirmation bias.
The effect of changing marginal-cost to physical-order dispatch in the power sector
RFF Working Papers Series , Working Paper (21-19) - 2021
The analysis of local environmental policies is essential when evaluating the consistency of national public policies vis-à-vis the compliance of global agreements to reduce climate change. This study explores one of these policies; the 2021 Mexican reform to change electric power dispatch from a marginal-cost-based to a command and control physical system prioritizing power generation from the state power company. The new law forces the dispatch of the state company power facilities before private power producers. We use the GENeSYS-MOD techno-economic model to determine the reform’s effect on the power system’s generation mix, cost structure, and anthropogenic emissions. For this, we optimize the model under three distinct scenarios; a business-as-usual scenario with no changes to the merit order, a model with the new physical order dispatch, and an additional case where in addition to the shift to the physical dispatch, we reduce the price of fuel oil below natural gas prices to simulate the current behavior of the power company. It is relevant to note that we optimize the energy system without any assumption regarding renewable targets or climate goals because of political uncertainty and the need of pinpoint the effect of the merit order change while avoiding possible variations in the state-space arising from other constraints. Our results show that by 2050, the new dispatch rule increases the market power of the state company to 99% of total generation and decreases the share of renewable technologies in the generation mix from 72%to 51%. Additionally, cumulative power sector emissions increase by 563 Mega-tons of CO2, which with the current cost of carbon in the European Emissions Trading System translates to around 36 billion Euros.
Air pollution and the productivity of high-skill labor: Evidence from court hearings
The Scandinavian Journal of Economics , - 2021
Air pollution’s influence on cognitive productivity is a highly relevant and not fully understood economic issue. This study provides evidence of an adverse effect of exposure on the productivity of Mexican judicial workers. The empirical strategy approximates productivity with the length of the hearing and infers causality through instrumental variable panel models. Results show that nitrogen dioxides and particulate matter decrease judicial workers’ productivity; increasing particulate matter by ten units raises hearings length by 6.7%. Back-of-the-envelope calculations suggest that if particulate matter had been ten units lower, the sample’s judicial system would have gained 81,712 minutes or roughly 56 workdays between 2015 and 2017.
Energy system developments and investments in the decisive decade for the Paris Agreement goals
Environmental Research Letters , Volume 16, Number 7 - 2021
The Paris Agreement does not only stipulate to limit the global average temperature increase to well below 2 °C, it also calls for 'making finance flows consistent with a pathway towards low greenhouse gas emissions'. Consequently, there is an urgent need to understand the implications of climate targets for energy systems and quantify the associated investment requirements in the coming decade. A meaningful analysis must however consider the near-term mitigation requirements to avoid the overshoot of a temperature goal. It must also include the recently observed fast technological progress in key mitigation options. Here, we use a new and unique scenario ensemble that limit peak warming by construction and that stems from seven up-to-date integrated assessment models. This allows us to study the near-term implications of different limits to peak temperature increase under a consistent and up-to-date set of assumptions. We find that ambitious immediate action allows for limiting median warming outcomes to well below 2 °C in all models. By contrast, current nationally determined contributions for 2030 would add around 0.2 °C of peak warming, leading to an unavoidable transgression of 1.5 °C in all models, and 2 °C in some. In contrast to the incremental changes as foreseen by current plans, ambitious peak warming targets require decisive emission cuts until 2030, with the most substantial contribution to decarbonization coming from the power sector. Therefore, investments into low-carbon power generation need to increase beyond current levels to meet the Paris goals, especially for solar and wind technologies and related system enhancements for electricity transmission, distribution and storage. Estimates on absolute investment levels, up-scaling of other low-carbon power generation technologies and investment shares in less ambitious scenarios vary considerably across models. In scenarios limiting peak warming to below 2 °C, while coal is phased out quickly, oil and gas are still being used significantly until 2030, albeit at lower than current levels. This requires continued investments into existing oil and gas infrastructure, but investments into new fields in such scenarios might not be needed. The results show that credible and effective policy action is essential for ensuring efficient allocation of investments aligned with medium-term climate targets.
Integrated perspective on translating biophysical to economic impacts of climate change
Nature Climate Change , Volume 11, pages 563–572 - 2021
Estimates of climate change’s economic impacts vary widely, depending on the applied methodology. This uncertainty is a barrier for policymakers seeking to quantify the benefits of mitigation. In this Perspective, we provide a comprehensive overview and categorization of the pathways and methods translating biophysical impacts into economic damages. We highlight the open question of the persistence of impacts as well as key methodological gaps, in particular the effect of including inequality and adaptation in the assessments. We discuss the need for intensifying interdisciplinary research, focusing on the uncertainty of econometric estimates of damages as well as identification of the most socioeconomically relevant types of impact. A structured model intercomparison related to economic impacts is noted as a crucial next step.
Meeting well-below 2°C target would increase energy sector jobs globally
One Earth , 4 (7), 1026--1036, July 2021 - 2021
To keep global warming well-below 2°C, fossil fuels need to dramatically decline and be replaced by low-carbon energy sources. While the technologies to replace fossil fuels are widely available, support for their expansion is often linked to the impact they have on fossil fuel jobs. Here, we analyze this question quantitatively by creating a novel dataset of job footprints in over 50 countries. These job intensities are applied to output from an integrated assessment model. We find that, by 2050, jobs in the energy sector would grow from today's 18 million to 21 million in the reference scenario and even more, to 26 million, under our well-below 2°C scenario. Overall, in 2050, under well-below 2°C scenario, of the total jobs, 84% would be renewable jobs, 11% fossil fuels, and 5% nuclear jobs. While fossil fuel extraction jobs rapidly decline, these losses are compensated by gains in solar and wind jobs, particularly in the solar and wind manufacturing sector.
A Research Agenda to Better Understand the Human Dimensions of Energy Transitions
Frontiers in Psycology , 25 June 2021 - 2021
The Social Sciences and Humanities (SSH) have a key role to play in understanding which factors and policies would motivate, encourage and enable different actors to adopt a wide range of sustainable energy behaviours and support the required system changes and policies. The SSH can provide critical insights into how consumers could be empowered to consistently engage in sustainable energy behaviour, support and adopt new technologies, and support policies and changes in energy systems. Furthermore, they can increase our understanding of how organisations such as private and public institutions, and groups and associations of people can play a key role in the sustainable energy transition. We identify key questions to be addressed that have been identified by the Platform for Energy Research in the Socio-economic Nexus (PERSON, see person.eu), including SSH scholars who have been studying energy issues for many years. We identify three main research themes. The first research theme involves understanding which factors encourage different actors to engage in sustainable energy behaviour. The second research theme focuses on understanding which interventions can be effective in encouraging sustainable energy behaviour of different actors, and which factors enhance their effects. The third research theme concerns understanding which factors affect public and policy support for energy policy and changes in energy systems, and how important public concerns can best be addressed as to reduce or prevent resistance.
Climate policy models need to get real about people — here’s how
Nature , 594, 174-176 - 2021
To predict how society and political systems might actually respond to warming, upgrade integrated assessment models. Political support for decarbonizing the global economy is at an all-time high. The good news is that about two-thirds of carbon emissions come from countries that have committed to reach ‘net zero’ by mid-century — they aim to cut their greenhouse-gas outputs and capture as much as they emit1. The bad news? The computer models that analysts use to assess routes to achieve such goals are missing a crucial factor: politics. These ‘integrated assessment models’ (IAMs) combine insights from climate science and economics to estimate how industrial and agricultural processes might be transformed to tackle global warming. They’re encoded with knowledge about technologies, such as pollution-free power plants and the cost of electric vehicles. Thus IAMs enable researchers to probe, for example, how a carbon tax might induce big cuts in emissions2, or how a drive to decarbonize the transport sector could shift investments towards greener fuels and electricity.[...] As a first step, we — a group of political economists and IAM specialists — identified eight key areas in which insights from our disciplines can improve models’ relevance for real-world policy and investment choices (see ‘Eight political economy insights’). We also assessed numerous potential reforms (see ‘How to improve models’ and Supplementary information for a full list of 11 reforms), so that researchers can examine the trade-offs between making models tractable and making them more useful for real-world decisions.
Adaptive mitigation strategies hedge against extreme climate futures
Climatic Change , 166, Article number: 37 - 2021
The United Nations Framework Convention on Climate Change agreed to “strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty” (UNFCCC 2015). Designing a global mitigation strategy to support this goal poses formidable challenges. For one, there are trade-offs between the economic costs and the environmental benefits of averting climate impacts. Furthermore, the coupled human-Earth systems are subject to deep and dynamic uncertainties. Previous economic analyses typically addressed either the former, introducing multiple objectives, or the latter, making mitigation actions responsive to new information. This paper aims at bridging these two separate strands of literature. We demonstrate how information feedback from observed global temperature changes can jointly improve the economic and environmental performance of mitigation strategies. We focus on strategies that maximize discounted expected utility while also minimizing warming above 2 °C, damage costs, and mitigation costs. Expanding on the Dynamic Integrated Climate-Economy (DICE) model and previous multi-objective efforts, we implement closed-loop control strategies, map the emerging trade-offs and quantify the value of the temperature information feedback under both well-characterized and deep climate uncertainties. Adaptive strategies strongly reduce high regrets, guarding against mitigation overspending for less sensitive climate futures, and excessive warming for more sensitive ones.
Three green financial policies to address climate risks
Journal of Financial Stability , Volume 54, June 2021, 100875 - 2021
Which policies can increase the resilience of the financial system to climate risks? Recent evidence on the significant impacts of climate change and natural disasters on firms, banks and other financial institutions call for a prompt policy response. In this paper, we employ a macro-financial agent-based model to study the interaction between climate change, credit and economic dynamics and test a mix of policy interventions. We first show that financial constraints exacerbate the impact of climate shocks on the economy while, at the same time, climate damages to firms make the banking sector more prone to crises. We find that credit provision can both increase firms’ productivity and their financial fragility, with such a trade-off being exacerbated by the effects of climate change. We then test a set of “green” finance policies addressing these risks, while fostering climate change mitigation: i) green Basel-type capital requirements, ii) green public guarantees to credit, and iii) carbon-risk adjustment in credit ratings. All the policies reduce carbon emissions and the resulting climate impacts, though moderately. However, their effects on financial and real dynamics is not straightforwardly positive. Some combinations of policies fuel credit booms, exacerbating financial instability and increasing public debt. We show that the combination of the three policies leads to a virtuous cycle of (mild) emission reductions, stable financial sector and high economic growth. Additional tools would be needed to fully adapt to climate change. Hence, our results point to the need to complement financial policies cooling down climate-related risks with mitigation policies curbing emissions from real economic activities.
The role of energy storage on the uptake of renewable energy: A model comparison approach
Energy Policy , - 2021
The power sector needs to ensure a rapid transition towards a low-carbon energy system to avoid the dangerous consequences of greenhouse gas emissions. Storage technologies are a promising option to provide the power system with the flexibility required when intermittent renewables are present in the electricity generation mix. This paper focuses on the role of electricity storage in energy systems with high shares of renewable sources. The study encompasses a model comparison approach where four models (GENeSYS-MODE, MUSE, NATEM, and urb-MX) are used to analyse the storage uptake in North America. The analysis addresses the conditions affecting storage uptake in each country and its dependence on resource availability, technology costs, and public policies. Results show that storage may promote emissions reduction at lower costs when renewable mandates are in place whereas in presence of carbon taxes, renewables may compete with other low-carbon options. The study also highlights the main modelling approach shortcomings in the modelling of electricity storage in integrated assessment models.
Climate variability, crop and conflict: Exploring the impacts of spatial concentration in agricultural production
Journal of Peace Research , - 2021
Although substantive agreement exists on the role of climate variability and food scarcity in increasing violence, a limited number of studies have investigated how food resources affect violent conflict. This article explores the complex linkages between climate variability, agricultural production and conflict onset, by focusing on the spatial distribution of crop production in a cross-country setting. We hypothesize that spatial differences in crop production within countries are a relevant factor in shaping the impact of climate variability on conflict in agriculturally -dependent countries. To test this hypothesis, we rely on high-resolution global gridded data on the local yield of four main crops for the period 1982–2015 and aggregate the grid-cell information on crop production to compute an empirical indicator of the spatial concentration of agricultural production within countries. Our results show that the negative impacts of climate variability lead to an increase in the spatial concentration of agricultural production within countries. In turn, the combined effect of climate extremes and crop production concentration increases the predicted probability of conflict onset by up to 14% in agriculturally dependent countries.
Impacts of a warmer world on space cooling demand in Brazilian households
Energy and Buildings , Volume 234, 1 March 2021, 110696 - 2021
Air Conditioning (AC) appliances are a highly effective adaptation strategy to rising temperatures, thus making future climate conditions an important driver of space cooling energy demand. The main goal of this study is to assess the impacts of climate change on Cooling Degree Days computed with wet-bulb temperature (CDDwb) and household space cooling demand in Brazil. We compare the needs under three specific warming levels (SWLs) scenarios (1.5 °C, 2 °C and 4 °C) to a baseline with historically observed meteorological parameters by combining CDDwb projections with an end-use model to evaluate the energy requirements of air conditioning. The effects of the climate change were isolated, and no future expansion in AC ownership considered. Carbon dioxide (CO2) emissions associated with AC energy demand are also calculated. Results show an increase in both average CDDwb and AC electricity consumption for the global warming scenarios in all Brazilian regions. The Northern region shows the highest increase in CDDwb (187% in CDDwb for SWL 4 °C), while the Southeast presents the highest AC energy consumption response (326% in the AC energy consumption for SWL 4 °C) compared to the baseline. At the national level, CDDwb and the AC energy consumption in all SWLs scenarios grow by 70%, 99% and 190%, respectively.
An integrated approach for the estimation of agricultural drought costs
Land Use Policy , Volume 100, January 2021, 104923 - 2021
This study proposes a novel method to assess the overall economic effects of agricultural droughts using a coupled agronomic-economic approach that accounts for the direct and indirect impacts of this hazard in the economy. The proposed methodology is applied to Italy, where years showing different drought severity levels were analysed. Agricultural drought stress was measured using the fraction of Absorbed Photosynthetically Active Radiation (fAPAR). Using a comprehensive, field-level dataset on agricultural yields, fAPAR-based statistical models were applied to major Italian crops and direct crop productivity impacts were estimated. Local-level, crop-dependent productivity shocks were fed into a regionalised Computable General Equilibrium model specifically calibrated for the Italian economy. Direct and indirect aggregate impacts after allowing for inter-regional trade and input reallocation were obtained. Total estimated damages ranged from 0.55 to 1.75 billion euro, depending on the overall drought severity experienced, while regional losses showed large spatial variability. Although most of the losses were concentrated on agriculture, other related sectors, such as food industry manufacturing and wholesale services, were also substantially affected. Moreover, our simulations suggested the presence of a land-use substitution effect from less to more drought-resistant crops following a drought. This study sheds light on the characterisation of the total damages caused by droughts while provides a tool with applicability in the implementation of drought risk management plans and the evaluation of drought management policies.
How efficient are German life sciences? Econometric evidence from a latent class stochastic output distance model
PLOS ONE , 16(3): e0247437 - 2021
This article investigates the technical efficiency in German higher education while accounting for possible heterogeneity in the production technology. We investigate whether a latent class model would identify the different sub-disciplines of life sciences in a sample of biology and agricultural units based on technological differences. We fit a latent class stochastic frontier model to estimate the parameters of an output distance function formulation of the production technology to investigate if a technological separation is meaningful along sub-disciplinary lines. We apply bootstrapping techniques for model validation. Our analysis relies on evaluating a unique dataset that matches information on higher educational institutions provided by the Federal Statistical Office of Germany with the bibliometric information extracted from the ISI Web of Science Database. The estimates indicate that neglecting to account for the possible existence of latent classes leads to a biased perception of efficiency. A classification into a research-focused and teaching-focused decision-making unit improves model fit compared to the pooled stochastic frontier model. Additionally, research-focused units have a higher median technical efficiency than teaching-focused units. As the research focus is more prevalent in the biology subsample an analysis not considering the potential existence of latent classes might misleadingly give the appearance of a higher mean efficiency of biology. In fact, we find no evidence of a difference in the mean technical efficiencies for German agricultural sciences and biology using the latent class model.
Climate change and specialty coffee potential in Ethiopia
Nature , Sci Rep 11, 8097 (2021) - 2021
Current climate change impact studies on coffee have not considered impact on coffee typicities that depend on local microclimatic, topographic and soil characteristics. Thus, this study aims to provide a quantitative risk assessment of the impact of climate change on suitability of five premium specialty coffees in Ethiopia. We implement an ensemble model of three machine learning algorithms to predict current and future (2030s, 2050s, 2070s, and 2090s) suitability for each specialty coffee under four Shared Socio-economic Pathways (SSPs). Results show that the importance of variables determining coffee suitability in the combined model is different from those for specialty coffees despite the climatic factors remaining more important in determining suitability than topographic and soil variables. Our model predicts that 27% of the country is generally suitable for coffee, and of this area, only up to 30% is suitable for specialty coffees. The impact modelling showed that the combined model projects a net gain in coffee production suitability under climate change in general but losses in five out of the six modelled specialty coffee growing areas. We conclude that depending on drivers of suitability and projected impacts, climate change will significantly affect the Ethiopian speciality coffee sector and area-specific adaptation measures are required to build resilience.
Challenges in the harmonisation of global integrated assessment models: A comprehensive methodology to reduce model response heterogeneity
Science of The Total Environment , Volume 783, 20 August 2021, 146861 - 2021
Harmonisation sets the ground to a solid inter-comparison of integrated assessment models. A clear and transparent harmonisation process promotes a consistent interpretation of the modelling outcomes divergences and, reducing the model variance, is instrumental to the use of integrated assessment models to support policy decision-making. Despite its crucial role for climate economic policies, the definition of a comprehensive harmonisation methodology for integrated assessment modelling remains an open challenge for the scientific community.
This paper proposes a framework for a harmonisation methodology with the definition of indispensable steps and recommendations to overcome stumbling blocks in order to reduce the variance of the outcomes which depends on controllable modelling assumptions. The harmonisation approach of the PARIS REINFORCE project is presented here to layout such a framework. A decomposition analysis of the harmonisation process is shown through 6 integrated assessment models (GCAM, ICES-XPS, MUSE, E3ME, GEMINI-E3, and TIAM). Results prove the potentials of the proposed framework to reduce the model variance and present a powerful diagnostic tool to feedback on the quality of the harmonisation itself.
Sharing the burden: quantifying climate change spillovers in the European Union under the Paris Agreement
Spatial Economic Analysis , 16 April 2021 - 2021
Climate change has emerged as a growing threat to the European economy, whose economic losses are relevant for global growth. Rising temperatures and worsening extreme events are expected to affect climate-vulnerable sectors. Due to the economic integration within the European Union (EU), these impacts will likely have spillover effects and feedback loops to and from other regions. This study uses spatial econometrics to account for the interdependencies between the subnational EU regions to estimate the future impacts of changes in temperature on sectoral labour productivity under the Paris Agreement. The study confirms the presence of spatial spillover effects of climate change, and finds that observations at the economy-wide level of a non-linear, concave and single-peaked relationship between temperature and productivity do not always hold true at the sectoral level.
Energy saving in a simulated environment: An online experiment of the interplay between nudges and financial incentives
Journal of Behavioral and Experimental Economics , Volume 93, August 2021, 101709 - 2021
Though nudges are gaining attention as complements to financial incentives, evidence of the interplay between these two policy instruments is lacking. Here, we discuss and evaluate how combinations of financial policies and nudges affect behaviors. Through a framed online experiment, we assess the effect of combining financial incentives (monetary reward) with nudges (goal setting and feedback). We introduce an innovative incentive-compatible energy-saving task: participants optimize their virtual energy consumption on a simulated washing machine. Our findings do not show evidence of synergies between traditional and behavioral interventions. On the contrary, the nudge seems to divert participants’ attention from the financial incentive.
Governing Climate Geoengineering: Side-Payments Are Not Enough
RFF Working Papers Series , 21-06, March 2021 - 2021
Climate geoengineering strategies can help reduce the economic and ecological impacts of global warming. However, governing geoengineering is challenging: since climate preferences vary across countries, excessive deployment relative to the socially optimal level is likely. Through a laboratory experiment on a public good-or-bad game, we study whether side-payments can address this governance problem. While theoretically effective, our experimental results show only a modest impact of side-payments on outcomes, especially in a multilateral setup. Replacing unstructured bilateral exchanges with a treaty framework simplifies the action space and performs moderately better.
Integrated assessment model diagnostics: key indicators and model evolution
Environmental Research Letters , April 2021 - 2021
Integrated assessment models (IAMs) form a prime tool in informing about climate mitigation strategies. Diagnostic indicators that allow comparison across these models can help describe and explain differences in model projections. This increases transparency and comparability. Earlier, the IAM community has developed an approach to diagnose models (Kriegler (2015 Technol. Forecast. Soc. Change 90 45–61)). Here we build on this, by proposing a selected set of well-defined indicators as a community standard, to systematically and routinely assess IAM behaviour, similar to metrics used for other modeling communities such as climate models. These indicators are the relative abatement index, emission reduction type index, inertia timescale, fossil fuel reduction, transformation index and cost per abatement value. We apply the approach to 17 IAMs, assessing both older as well as their latest versions, as applied in the IPCC 6th Assessment Report. The study shows that the approach can be easily applied and used to indentify key differences between models and model versions. Moreover, we demonstrate that this comparison helps to link model behavior to model characteristics and assumptions. We show that together, the set of six indicators can provide useful indication of the main traits of the model and can roughly indicate the general model behavior. The results also show that there is often a considerable spread across the models. Interestingly, the diagnostic values often change for different model versions, but there does not seem to be a distinct trend.
Can social information programs be more effective? The role of environmental identity for energy conservation
Journal of Environmental Economics and Management , Available online 27 April 2021, 102467 - 2021
Social information programs are widely used to nudge behavioural change. Their effec-tiveness strongly depends on household and individual traits. The existing evidence in economics and psychology points to the role of environmental values and identity in de-termining pro-environmental behavior and the impact of social information. In a large field experiment on household energy conservation, we combine electricity metering and survey data to test whether the impact of a social information program can be strengthened by leveraging environmental values and identity. We experimentally augment social infor-mation messages with an environmental self-identity prime. The self-identity prime does not strengthen the effectiveness of a social information program on average. Nonetheless, we find suggestive evidence that priming environmental self-identity can be effective if targeted to specific sub-groups.
Future Prospects of Direct Air Capture Technologies: Insights From an Expert Elicitation Survey
Frontiers in Climate , - 2021
Direct air capture (DAC) technologies are promising but speculative. Their prospect as an affordable negative emissions option that can be deployed in large scale is particularly uncertain. Here, we report the results of an expert elicitation about the evolution of techno-economic factors characterizing DAC over time and across climate scenarios. This is the first study reporting technical experts' judgments on future costs under different scenarios, for two time periods, for two policy options, and for two different DAC technologies. Experts project CO2 removal costs to decline significantly over time but to remain expensive (median by mid-century: around 200 USD/tCO2). Nonetheless, the role of direct air capture in a 2°C policy scenario is expected to be significant (by 2050: 1.7 [0.2, 5.9] GtCO2)1. Projections align with scenarios from integrated assessment model (IAM) studies. Agreement across experts regarding which type of DAC technology might prevail is low. Energy usage and policy support are considered the most critical factors driving these technologies' future growth.
Effectiveness, Spillovers, and Well-Being Effects of Driving Restriction Policies
RFF Working Papers Series , 21-13, May 2021 - 2021
TBD
Power systems' performance under high renewables' penetration rates: a natural experiment due to the COVID-19 demand shock
Environmental Research Letters , Volume 16, Number 6 - 2021
COVID-19 lockdowns make it possible to investigate the extent to which an unprecedented increase in renewables' penetration may have brought unexpected limitations and vulnerabilities of current power systems to the surface. We empirically investigate how power systems in five European countries have dealt with this unexpected shock, drastically changing electricity load, the scheduling of dispatchable generation technologies, electricity day-ahead wholesale prices, and balancing costs. We find that low-cost dispatchable generation from hydro and nuclear sources has fulfilled most of the net-load even during peak hours, replacing more costly fossil-based generation. In Germany, the UK, and Spain coal power plants stood idle, while gas-fired generation has responded in heterogeneous ways across power systems. Falling operational costs of generators producing at the margin and lower demand, both induced by COVID-19 lockdowns, have significantly decreased wholesale prices. Balancing and other ancillary services' markets have provided the flexibility required to respond to the exceptional market conditions faced by the grid. Balancing costs for flexibility services have increased heterogeneously across countries, while ancillary markets' costs, measured only in the case of Italy, have increased substantially. Results provide valuable evidence on current systems' dynamics during high renewables' shares and increased demand volatility. New insights into the market changes countries will be facing in the transition towards a clean, secure, and affordable power system are offered.
Persistent inequality in economically optimal climate policies
Nature Communications , 12, 3421 (2021) - 2021
Benefit-cost analyses of climate policies by integrated assessment models have generated conflicting assessments. Two critical issues affecting social welfare are regional heterogeneity and inequality. These have only partly been accounted for in existing frameworks. Here, we present a benefit-cost model with more than 50 regions, calibrated upon emissions and mitigation cost data from detailed-process IAMs, and featuring country-level economic damages. We compare countries’ self-interested and cooperative behaviour under a range of assumptions about socioeconomic development, climate impacts, and preferences over time and inequality. Results indicate that without international cooperation, global temperature rises, though less than in commonly-used reference scenarios. Cooperation stabilizes temperature within the Paris goals (1.80∘C [1.53∘C–2.31∘C] in 2100). Nevertheless, economic inequality persists: the ratio between top and bottom income deciles is 117% higher than without climate change impacts, even for economically optimal pathways.
Mexico and U.S. Power Systems Under Variations in Natural Gas Prices
Energy Policy , Volume 156, September 2021, 112378 - 2021
This study examines the impact of natural gas prices on the power systems of Mexico and the United States. For this, we develop an integrated modeling framework by soft linking three different techno-economic bottom-up models of the power and energy systems, one partial equilibrium model of the natural gas sector, and a partial equilibrium model of the Mexican energy sector. Our results show several interesting results: high natural gas prices raise the use of carbon-intensive technologies in the short-term and boost renewable investments at longer time intervals, increasing emissions in earlier periods and reducing them thereafter. Regarding system costs, because of more capital-intensive green power and lower expenditures in raw energy carriers, capital costs rise and operating costs decrease in the long haul. Furthermore, we see an increase in natural gas demand when its price is low, reducing long-term capital and operating costs through cheaper energy inputs in natural gas facilities and a lower share of capital-intensive renewable facilities in the power system. Concerning emissions, low natural-gas prices decrease coal use in the United States, reducing anthropogenic emissions until the last stages of the optimization period. For Mexico, they show heterogeneous results across models. Policymakers can use this study's results to understand the influence of natural gas prices in the Mexican and United States energy sectors.
Global Vulnerability of Crop Yields to Climate Change
Journal of Environmental Economics and Management , Volume 109, September 2021, 102462 - 2021
Using a newly-available panel dataset of gridded annual crop yields in conjunction with a dynamic econometric model that distinguishes between farmers' short-run and long-run responses to weather shocks and accounts for adaptation, we investigate the risk to global crop yields from climate warming. Over broad spatial domains we observe only slight moderation of short-run impacts by farmers' long-run adjustments. In the absence of additional margins of adaptation beyond those pursued historically, projections constructed using an ensemble of 21 climate model simulations suggest that the climate change could reduce global crop yields by 3–12% by mid-century and 11–25% by century's end, under a vigorous warming scenario.
A multidimensional feasibility evaluation of low-carbon scenarios
Environmental Research Letters , Volume 16, Number 6 - 2021
Long-term mitigation scenarios developed by integrated assessment models underpin major aspects of recent IPCC reports and have been critical to identify the system transformations that are required to meet stringent climate goals. However, they have been criticized for proposing pathways that may prove challenging to implement in the real world and for failing to capture the social and institutional challenges of the transition. There is a growing interest to assess the feasibility of these scenarios, but past research has mostly focused on theoretical considerations. This paper proposes a novel and versatile multidimensional framework that allows evaluating and comparing decarbonization pathways by systematically quantifying feasibility concerns across geophysical, technological, economic, socio-cultural and institutional dimensions. This framework enables to assess the timing, disruptiveness and scale of feasibility concerns, and to identify trade-offs across different feasibility dimensions. As a first implementation of the proposed framework, we map the feasibility concerns of the IPCC 1.5 °C Special Report scenarios. We select 24 quantitative indicators and propose feasibility thresholds based on insights from an extensive analysis of the literature and empirical data. Our framework is, however, flexible and allows evaluations based on different thresholds or aggregation rules. Our analyses show that institutional constraints, which are often not accounted for in scenarios, are key drivers of feasibility concerns. Moreover, we identify a clear intertemporal trade-off, with early mitigation being more disruptive but preventing higher and persistent feasibility concerns produced by postponed mitigation action later in the century.
Macro-Financial Transition Risks in the Fight Against Global Warming
RFF Working Papers Series , Working Paper (21-15) - 2021
The macro-financial transition risks that result from disorderly transitions to a carbon-free or low-carbon economy may entail significant costs due to the risk of stranded assets, defaults, collapse in stock market value, both for financial firms and non-financial firms. The effects of networks, contagion, and higher-round effects of stranding may exacerbate the problem. But green monetary and prudential policy and governance reforms may mitigate the problem. The qualitative, empirical, modelling, policy and institutional research on this topic is surveyed and various avenues for future research are identified.
Comparing expert elicitation and model-based probabilistic technology cost forecasts for the energy transition
Proceedings of the National Academy of Sciences , July 6, 2021 118 (27) e1917165118 - 2021
We conduct a systematic comparison of technology cost forecasts produced by expert elicitation methods and model-based methods. Our focus is on energy technologies due to their importance for energy and climate policy. We assess the performance of several forecasting methods by generating probabilistic technology cost forecasts rooted at various years in the past and then comparing these with observed costs in 2019. We do this for six technologies for which both observed and elicited data are available. The model-based methods use either deployment (Wright’s law) or time (Moore’s law) to forecast costs. We show that, overall, model-based forecasting methods outperformed elicitation methods. Their 2019 cost forecast ranges contained the observed values much more often than elicitations, and their forecast medians were closer to observed costs. However, all methods underestimated technological progress in almost all technologies, likely as a result of structural change across the energy sector due to widespread policies and social and market forces. We also produce forecasts of 2030 costs using the two types of methods for 10 energy technologies. We find that elicitations generally yield narrower uncertainty ranges than model-based methods. Model-based 2030 forecasts are lower for more modular technologies and higher for less modular ones. Future research should focus on further method development and validation to better reflect structural changes in the market and correlations across technologies.
Adaptive mitigation strategies hedge against extreme climate futures
Climatic Change , 166, Article number: 37 (2021) - 2021
The United Nations Framework Convention on Climate Change agreed to “strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty” (UNFCCC 2015). Designing a global mitigation strategy to support this goal poses formidable challenges. For one, there are trade-offs between the economic costs and the environmental benefits of averting climate impacts. Furthermore, the coupled human-Earth systems are subject to deep and dynamic uncertainties. Previous economic analyses typically addressed either the former, introducing multiple objectives, or the latter, making mitigation actions responsive to new information. This paper aims at bridging these two separate strands of literature. We demonstrate how information feedback from observed global temperature changes can jointly improve the economic and environmental performance of mitigation strategies. We focus on strategies that maximize discounted expected utility while also minimizing warming above 2 °C, damage costs, and mitigation costs. Expanding on the Dynamic Integrated Climate-Economy (DICE) model and previous multi-objective efforts, we implement closed-loop control strategies, map the emerging trade-offs and quantify the value of the temperature information feedback under both well-characterized and deep climate uncertainties. Adaptive strategies strongly reduce high regrets, guarding against mitigation overspending for less sensitive climate futures, and excessive warming for more sensitive ones.
Climate policy models need to get real about people — here’s how
Nature , 594, 174-176 (2021) - 2021
To predict how society and political systems might actually respond to warming, upgrade integrated assessment models.
Political support for decarbonizing the global economy is at an all-time high. The good news is that about two-thirds of carbon emissions come from countries that have committed to reach ‘net zero’ by mid-century — they aim to cut their greenhouse-gas outputs and capture as much as they emit1. The bad news? The computer models that analysts use to assess routes to achieve such goals are missing a crucial factor: politics.
These ‘integrated assessment models’ (IAMs) combine insights from climate science and economics to estimate how industrial and agricultural processes might be transformed to tackle global warming. They’re encoded with knowledge about technologies, such as pollution-free power plants and the cost of electric vehicles. Thus IAMs enable researchers to probe, for example, how a carbon tax might induce big cuts in emissions2, or how a drive to decarbonize the transport sector could shift investments towards greener fuels and electricity.[...]
As a first step, we — a group of political economists and IAM specialists — identified eight key areas in which insights from our disciplines can improve models’ relevance for real-world policy and investment choices (see ‘Eight political economy insights’). We also assessed numerous potential reforms (see ‘How to improve models’ and Supplementary information for a full list of 11 reforms), so that researchers can examine the trade-offs between making models tractable and making them more useful for real-world decisions.
A Research Agenda to Better Understand the Human Dimensions of Energy Transitions
Frontiers in Psycology , 25 June 2021 - 2021
The Social Sciences and Humanities (SSH) have a key role to play in understanding which factors and policies would motivate, encourage and enable different actors to adopt a wide range of sustainable energy behaviours and support the required system changes and policies. The SSH can provide critical insights into how consumers could be empowered to consistently engage in sustainable energy behaviour, support and adopt new technologies, and support policies and changes in energy systems. Furthermore, they can increase our understanding of how organisations such as private and public institutions, and groups and associations of people can play a key role in the sustainable energy transition. We identify key questions to be addressed that have been identified by the Platform for Energy Research in the Socio-economic Nexus (PERSON, see person.eu), including SSH scholars who have been studying energy issues for many years. We identify three main research themes. The first research theme involves understanding which factors encourage different actors to engage in sustainable energy behaviour. The second research theme focuses on understanding which interventions can be effective in encouraging sustainable energy behaviour of different actors, and which factors enhance their effects. The third research theme concerns understanding which factors affect public and policy support for energy policy and changes in energy systems, and how important public concerns can best be addressed as to reduce or prevent resistance.
Urgency and engagement: Empirical evidence from a large-scale intervention on energy use awareness
Journal of Economic Psychology , Volume 81, December 2020, 102275 - 2020
We study how to foster engagement in the energy sector, where signals about consumption are opaque and infrequent. We evaluate an energy company's large-scale communication campaign for promoting natural gas self-reading. Self-readings allow utilities to bill customers on the basis of real - as opposed to estimated - consumption. Exploiting variation in campaign messages, we test the impact of imposing a sense of urgency on customers through a deadline for submitting a meter reading. We find that messages that induce a sense of urgency are twice as effective than generic messages in encouraging self-readings, consistent with recent research on the urgency effect. The increased sense of urgency moves to action customers with both high and low levels of baseline engagement; the effect is stronger on the former.
Planning universal accessibility to public health care in sub-Saharan Africa
Proceedings of the National Academy of Sciences (PNAS) , 30 November 2020 - 2020
Achieving universal health care coverage—a key target of the United Nations Sustainable Development Goal number 3—requires accessibility to health care services for all. Currently, in sub-Saharan Africa, at least one-sixth of the population lives more than 2 h away from a public hospital, and one in eight people is no less than 1 h away from the nearest health center. We combine high-resolution data on the location of different typologies of public health care facilities [J. Maina et al., Sci. Data 6, 134 (2019)] with population distribution maps and terrain-specific accessibility algorithms to develop a multiobjective geographic information system framework for assessing the optimal allocation of new health care facilities and assessing hospitals expansion requirements. The proposed methodology ensures universal accessibility to public health care services within prespecified travel times while guaranteeing sufficient available hospital beds. Our analysis suggests that to meet commonly accepted universal health care accessibility targets, sub-Saharan African countries will need to build ∼6,200 new facilities by 2030. We also estimate that about 2.5 million new hospital beds need to be allocated between new facilities and ∼1,100 existing structures that require expansion or densification. Optimized location, type, and capacity of each facility can be explored in an interactive dashboard. Our methodology and the results of our analysis can inform local policy makers in their assessment and prioritization of health care infrastructure. This is particularly relevant to tackle health care accessibility inequality, which is not only prominent within and between countries of sub-Saharan Africa but also, relative to the level of service provided by health care facilities.
A hot topic in hot times: how media coverage of climate change is affected by temperature abnormalities
Environmental Research Letters , Volume 15, Number 11 - 2020
Media coverage of climate change is arguably a fundamental factor shaping climate change attitudes and possibly behaviors, but its trends and determinants are still underinvestigated. In this paper, we analyze a comprehensive dataset representing more than 1.7 million online news articles covering climate change in the 28 countries of the European Union in 22 different languages for the period 2014–2019. We combine our news dataset with observed temperature data to investigate whether and how temperature abnormalities influence media coverage of climate change. We find that the strongest determinants of media coverage are positive deviations from short-term average temperatures. Abnormalities with respect to average temperatures in recent years have stronger effects than abnormalities with respect to temperatures in baseline periods that climatologists use to identify changes in climate. This suggests that the media are less influenced by scientific accounts of climatic changes than by shorter-term changes in weather patterns.
COVID-19 lockdown only partially alleviates health impacts of air pollution in Northern Italy
Environmental Research Letters , - 2020
Evaluating the reduction in pollution caused by a sudden change in emission is complicated by the confounding effect of weather variations. We propose an approach based on machine learning to build counterfactual scenarios that address the effect of weather and apply it to the COVID-19 lockdown of Lombardy, Italy. We show that the lockdown reduced background concentrations of PM2.5 by 3.84 µg/m3 (16%) and NO2 by 10.85 µg/m3 (33%). Improvement in air quality saved at least 11% of the years of life lost and 19% of the premature deaths attributable to COVID-19 in the region during the same period. The analysis highlights the benefits of improving air quality and the need for an integrated policy response addressing the full diversity of emission sources.
Climate change and development in South Africa: the impact of rising temperatures on economic productivity and labour availability
Climate and Development Journal , - 2020
Climate change has a major impact on productivity of different economic sectors as well as different labour groups. Here we study the crucial linkage between gradual climate change and availability of low-skilled labour in rural areas of South Africa. Using a nationally representative panel of micro-survey data, we derive marginal impacts of rising temperatures on labour availability. Our econometric findings suggest that optimal conditions maximizing weekly labour supply are heterogeneous across sectors. We develop an analytical model of overlapping generations to study the long-term impacts of future climate and socioeconomic changes on labour supply and welfare. Overall, high exposure of low-skilled labour to climate change and rising temperatures reduces the supply of low-skilled labour which in turn, reduces the wage gap between high-skilled and low-skilled labour. However, the overall impact of climate change on economy remains negative and the welfare in terms of output per adult drops by 20% compared to the baseline case with no climate change.
Systematic review of the outcomes and trade-offs of ten types of decarbonization policy instruments
Nature Climate Change , Published 18 January 2021 - 2021
The literature evaluating the technical and socioeconomic outcomes of policy instruments used to support the transition to low-carbon economies is neither easily accessible nor comparable and often provides conflicting results. We develop and implement a framework to systematically review and synthesize the impact of ten types of decarbonization policy instruments on seven technical and socioeconomic outcomes. Our systematic review shows that the selected types of regulatory and economic and financial instruments are generally associated with positive impacts on environmental, technological and innovation outcomes. Several instruments are often associated with short-term negative impacts on competitiveness and distributional outcomes. We discuss how these trade-offs can be reduced or transformed into co-benefits by designing research and development and government procurement, deployment policies, carbon pricing and trading. We show how specific design features can promote competitiveness and reduce negative distributional impacts, particularly for small firms. An online interactive Decarbonisation Policy Evaluation Tool allows further analysis of the evidence.
The Energy Modeling Forum (EMF)-30 study on short-lived climate forcers: introduction and overview
Climatic Change , 163, pages1399-1408 - 2021
The Energy Modeling Forum inter-comparison study on short-lived climate forcers (EMF-30) focuses on black carbon (BC) and methane (CH4), two of the most important warming SLCFs. The study is aimed at quantifying the potential impact of methane and BC-focused reductions on climate change and at comparing the impact of idealized SLCF reductions as compared to idealized GHG reduction policies of the type long-analyzed by the modeling community.
The EMF-30 study takes a multi-model approach that includes nine integrated assessment models. Analysis of the interaction between dedicated SLCF and GHG reduction policies and the systematic implementation of stylized scenarios allows an assessment of the role of forcers individually and as they interact with different policy options. The multi-model analysis allows an assessment of how robust results are across different models and background scenario assumptions.
Air quality and health implications of 1.5–2°C climate pathways under considerations of ageing population: A multi-model scenario analysis
Environmental Research Letters , - 2021
Low-carbon pathways consistent with the 2°C and 1.5°C long-term climate goals defined in the Paris Agreement are likely to induce substantial co-benefits for air pollution and associated health impacts. In this analysis, using five global integrated assessment models, we quantify the emission reductions in key air pollutants resulting from the decarbonization of energy systems and the resulting changes in premature mortality attributed to the exposure to ambient concentrations of fine particulate matter. The emission reductions differ by sectors. Sulfur emissions are mainly reduced from power plants and industry, cuts in nitrogen oxides are dominated by the transport sector, and the largest abatement of primary fine particles is achieved in the residential sector. The analysis also shows that health benefits are the largest when policies addressing climate change mitigation and stringent air pollution controls are coordinated. We decompose the key factors that determine the extent of health co-benefits, focusing on Asia: changes in emissions, urbanization rates, population growth and ageing. Demographic processes, particularly due to ageing population, counteract in many regions the mortality reductions realized through lower emissions.
Distributional consequences of climate change impacts on energy demand across Italian households
RFF Working Papers Series , 21-04, February 2021 - 2021
The paper evaluates the distributional implications of climate-induced temperature changes on energy demand and energy poverty in Italy. We use two different simulation approaches that make it possible to analyze to what extent general equilibrium substitution and income effects moderate or amplify the first-order changes induced by climate change. Climate change impacts are regressive. While rich households reduce expenditure on heating fuels more than the poor, less affluent households increase electricity expenditure relatively more. For a given income level, whether households increase or decrease energy expenditure depends on the size of the shock, the existing climate conditions, and the energy sources used. The increase in electricity poor households highlights a new emerging risk related to those households who will be exposed to higher temperatures and will not being able to purchase the cooling services needed to protect themselves because of credit, institutional, infrastructural constraints. We shed new light on the importance of accounting for the distributional consequences of climate change impacts when designing climate policies.
Representing inequalities in integrated assessment modeling of climate change
One Earth , Volume 4, Issue 2, 19 February 2021, Pages 177-180 - 2021
Climate change affects human and natural systems unevenly. Solving it, by reducing greenhouse gases and adapting to climate impacts, will also be felt differently depending on levels of income and other dimensions of inequality. This leads us to ask: have the widely used integrated assessment models accommodated inequality considerations sufficiently?
Exploring the Possibility Space: Taking Stock of the Diverse Capabilities and Gaps in Integrated Assessment Models
Environmental Research Letters , - 2021
Integrated Assessment Models (IAMs) have emerged as key tools for building and assessing long term climate mitigation scenarios. Due to their central role in the recent IPCC assessments, and international climate policy analyses more generally, and the high uncertainties related to future projections, IAMs have been critically assessed by scholars from different fields receiving various critiques ranging from adequacy of their methods to how their results are used and communicated. Although IAMs are conceptually diverse and evolved in very different directions, they tend to be criticized under the umbrella of "IAMs". Here we first briefly summarise the IAM landscape and how models differ from each other. We then proceed to discuss six prominent critiques emerging from the recent literature, reflect and respond to them in the light of IAM diversity and ongoing work and suggest ways forward. The six critiques relate to (1) representation of heterogeneous actors in the models, (2) modelling of technology diffusion and dynamics, (3) representation of capital markets, (4) energy-economy feedbacks, (5) policy scenarios, and (6) interpretation and use of model results.
Integrated Assessment Models for Climate Change
Oxford Research Encyclopedia of Economics and Finance , - 2021
To guide climate change policymaking, we need to understand how technologies and behaviors should be transformed to avoid dangerous levels of global warming and what the implications of failing to bring forward such transformation might be. Integrated assessment models (IAMs) are computational tools developed by engineers, earth and natural scientists, and economists to provide projections of interconnected human and natural systems under various conditions.
These models help researchers to understand possible implications of climate inaction. They evaluate the effects of national and international policies on global emissions and devise optimal emissions trajectories in line with long-term temperature targets and their implications for infrastructure, investment, and behavior. This research highlights the deep interconnection between climate policies and other sustainable development objectives.
Evolving and focusing on one or more of these key policy questions, the large family of IAMs includes a wide array of tools that incorporate multiple dimensions and advances from a range of scientific fields.
A Satisficing Framework for Environmental Policy Under Model Uncertainty
Environmental Modeling & Assessment (2021) , - 2021
We propose a novel framework for the economic assessment of environmental policy. Our main point of departure from existing work is the adoption of a satisficing, as opposed to optimizing, modeling approach. Along these lines, we place primary emphasis on the extent to which different policies meet a set of goals at a specific future date instead of their performance vis-a-vis some intertemporal objective function. Consistent to the nature of environmental policymaking, our model takes explicit account of model uncertainty. To this end, the decision criterion we propose is an analog of the well-known success-probability criterion adapted to settings characterized by model uncertainty. We apply our criterion to the climate-change context and the probability distributions constructed by Drouet et al. (2015) linking carbon budgets to future consumption. Insights from computational geometry facilitate computations considerably and allow for the efficient application of the model in high-dimensional settings.
Rational policymaking during a pandemic
Proceedings of the National Academy of Sciences , Jan 2021, 118 (4) e2012704118 - 2021
Policymaking during a pandemic can be extremely challenging. As COVID-19 is a new disease and its global impacts are unprecedented, decisions are taken in a highly uncertain, complex, and rapidly changing environment. In such a context, in which human lives and the economy are at stake, we argue that using ideas and constructs from modern decision theory, even informally, will make policymaking a more responsible and transparent process.
Social interaction and technology adoption: Experimental evidence from improved cookstoves in Mali
World Development , Volume 144, August 2021, 105467 - 2021
Easy-to-use and low-risk technologies, which require little investment and potentially provide health and environmental benefits, often have low adoption rates. Using a randomized experiment in urban Mali, we assess the impact of a training session in which information on an improved cookstove (ICS) is provided along with the opportunity to purchase the product at the market price. We find strong effects from our invitation to the session on ICS ownership and usage while no discernible effects on product knowledge or household welfare. We find that some diffusion occurs beyond the intervention and provide evidence on the role of social interaction, mostly through imitation.
Subjective Well-Being at the Macro Level—Empirics and Future Scenarios
Social Indicators Research , 13 April 2021 - 2021
We estimate the impact of a large number of determinants of subjective well-being (SWB) across 143 countries, and project SWB across macro-regions for different socio-economic scenarios. We focus on the 23% of the variance in SWB that is explained by cross-country differences, as the remaining 77% is due to individual-specific factors. We estimate a mixed-effects model to quantify the contributions of various socio-demographic, environmental, energy-related, economic, and institutional factors in explaining SWB. We find that the contribution of institutions to SWB is as large as that of economic factors. We then generate projections on the evolution of SWB until 2100 based on the five Shared Socioeconomic Pathways (SSPs), a framework that facilitates the integrated analysis of future climate impacts, vulnerabilities, adaptation, and mitigation. Holding constant some institutional and economic factors for which SSP projections are not available, the results show significant differences in SWB across SSPs, of up to two points on the standard 0–10 scale of life satisfaction. The highest levels of projected material SWB are likely to occur in the Sustainable Development scenario (SSP1) and the conventional development scenario (SSP5) which lead to very similar SWB levels in material factors. Differences across regions are large. The OECD region and Latin America show the highest levels of SWB historically. The current projections reveal that Latin America could overtake the OECD countries in terms of subjective well-being. Overall, our results can provide valuable insights to policy evaluation in the context of climate change. Future work could expand these scenarios to include also further social and societal variables.
Energy efficiency and the role of energy-related financial literacy: evidence from the European residential sector
Energy Efficiency , 14(4), 2021 - 2021
In this paper, we analyze the level of efficiency in the use of electricity in the European residential sector relying on a cross-sectional data set comprised of 1375 households located in Italy, the Netherlands, and Switzerland and observed in 2016. To do this, we estimate an electricity demand frontier function using a stochastic frontier approach. The empirical results show that the residential sector in these three European countries could save approximately 20% of its total electricity consumption on average if it improves the level of efficiency in the use of electricity. These figures are in line with recent studies for Switzerland and for the US residential sector. Moreover, we link energy efficiency to energy-related financial literacy. We find that while energy-relevant knowledge per se does not play a significant role, stronger cognitive abilities are associated with higher levels of energy efficiency.
Population cluster data to assess the urban-rural split and electrification in Sub-Saharan Africa
Nature , Sci Data 8, 117 (2021) - 2021
Human settlements are usually nucleated around manmade central points or distinctive natural features, forming clusters that vary in shape and size. However, population distribution in geo-sciences is often represented in the form of pixelated rasters. Rasters indicate population density at predefined spatial resolutions, but are unable to capture the actual shape or size of settlements. Here we suggest a methodology that translates high-resolution raster population data into vector-based population clusters. We use open-source data and develop an open-access algorithm tailored for low and middle-income countries with data scarcity issues. Each cluster includes unique characteristics indicating population, electrification rate and urban-rural categorization. Results are validated against national electrification rates provided by the World Bank and data from selected Demographic and Health Surveys (DHS). We find that our modeled national electrification rates are consistent with the rates reported by the World Bank, while the modeled urban/rural classification has 88% accuracy. By delineating settlements, this dataset can complement existing raster population data in studies such as energy planning, urban planning and disease response.
Carbon Capture and Storage in the United States: Perceptions, Preferences, and Lessons for Policy
Energy Policy , Volume 151, April 2021, 112149 - 2021
Although Carbon Capture and Storage (CCS) technologies can potentially play an important role in climate change mitigation efforts, commercial CCS projects are still rare. Knowledge about the technical challenges of these technologies is rapidly advancing, but the challenges related to their public acceptance are still underinvestigated. Here we try to close this research gap by investigating public perceptions of CCS and public attitudes towards policies to scale up these technologies in the United States, where most existing industrial-scale CCS projects are operating. Based on a demographically representative sample of US residents, we find that awareness of CCS is very low. Using a conjoint experiment, we show that policies that outlaw the construction of new coal- and gas-fired power plants without CCS find higher public support than CCS subsidies and increases in taxes on unabated fossil fuel power generation. Public support decreases with rising costs of CCS deployment and decreasing minimal distance requirements of CCS plants from residential areas. Our results provide insights into the political feasibility of a large-scale deployment of CCS and show that specific policy design choices play an important role in influencing public support for policies to scale up these technologies.
Global climate marches sharply raise attention to climate change: Analysis of climate search behavior in 46 countries
Journal of Environmental Psychology , Volume 75, June 2021, 101596 - 2021
We examine attention to climate change in 46 countries across six continents from 2015 through 2019 by analyzing internet search activity in ten languages. We find that information seeking about climate change, measured by internet searches, notably increased in 2019 relative to prior years. Next, we analyze the impact of global climate marches on internet search activity and find that climate activist events are powerful drivers of attention compared to political events (United Nations Climate Change Conferences) and temperature abnormalities. To explore the role of media coverage, we estimate the effects of climate marches while controlling for weekly news coverage of climate change and find evidence supporting the notion of media attention mediating the effects of climate protests. Lastly, we quantify the duration of the increases in information seeking produced by these events. We find the durations are short-lived, with attention only staying above pre-event levels for several days. As the literature to date has paid scarce attention to public demonstrations as sources of influence on the public's attention to climate change, we suggest these results implore the field to focus more research on the impacts of climate activist events.
Faster or slower decarbonization? Policymaker and stakeholder expectations on the effect of the COVID-19 pandemic on the global energy transition.
Energy Research & Social Science , Volume 76, June 2021, 102025 - 2021
The COVID-19 pandemic might have tremendous consequences on decarbonization efforts across the globe. Understanding governments’ policy action in the short and medium term is key to assess whether the response to the crisis will crowd out or fast-track decarbonization efforts. We surveyed over 200 policymakers and stakeholders from 55 different countries to collect climate policy expectations in various sectors and regions in the next five years. While support for high-emitting sectors is not expected to dissolve completely, commitment to policies supporting the transition to low-carbon energy and transport sectors is expected to increase substantially. This is true for OECD and Asian countries, representing approximately 90% of global emissions. Our results suggest that expectations that the COVID-19 pandemic will accelerate decarbonization efforts are widely shared.
Risk, Ambiguity, and the Value of Diversification
Management Science , - 2021
Diversification is a basic economic principle that helps to hedge against uncertainty. It is, therefore, intuitive that both risk aversion and ambiguity aversion should positively affect the value of diversification. In this paper, we show that this intuition (1) is true for risk aversion but (2) is not necessarily true for ambiguity aversion. We derive sufficient conditions, showing that, contrary to the economic intuition, ambiguity and ambiguity aversion may actually reduce the diversification value.
Will the Economic Impact of COVID-19 Persist? Prognosis from 21st Century Pandemics
IMF Working Papers , No. 2021/119 - 2021
COVID-19 has had a disruptive economic impact in 2020, but how long its impact will persist remains unclear. We offer a prognosis based on an analysis of the effects of five previous major epidemics in this century. We find that these pandemics led to significant and persistent reductions in disposable income, along with increases in unemployment, income inequality and public debt-to-GDP ratios. Energy use and CO2 emissions dropped, but mostly because of the persistent decline in the level of economic activity rather than structural changes in the energy sector. Applying our empirical estimates to project the impact of COVID-19, we foresee significant scarring in economic performance and income distribution through 2025, which be associated with an increase in poverty of about 75 million people. Policy responses more effective than those in the past would be required to forestall these outcomes.
Taking stock of national climate policies to evaluate implementation of the Paris Agreement
Nature Communications , Volume 11, Article number: 2096 (2020) - 2020
Many countries have implemented national climate policies to accomplish pledged Nationally Determined Contributions and to contribute to the temperature objectives of the Paris Agreement on climate change. In 2023, the global stocktake will assess the combined effort of countries. Here, based on a public policy database and a multi-model scenario analysis, we show that implementation of current policies leaves a median emission gap of 22.4 to 28.2 GtCO2eq by 2030 with the optimal pathways to implement the well below 2 °C and 1.5 °C Paris goals. If Nationally Determined Contributions would be fully implemented, this gap would be reduced by a third. Interestingly, the countries evaluated were found to not achieve their pledged contributions with implemented policies (implementation gap), or to have an ambition gap with optimal pathways towards well below 2 °C. This shows that all countries would need to accelerate the implementation of policies for renewable technologies, while efficiency improvements are especially important in emerging countries and fossil-fuel-dependent countries.
Reforming the European Common Agricultural Policy: from price & income support to risk management
Journal of Policy Modeling , March 19, 2020 - 2020
Over the last 30 years, the European Union has significantly reformed its Common Agricultural Policy by introducing direct payments to farmers and reducing price support levels. While the European agricultural prices become more volatile, all economic models assessing these reforms remain static and ignore the risk dimensions. This paper develops an original stochastic computable general equilibrium model capturing the different sources of risk, farmers’ risk attitude and risk contingent markets. We find that the reduction of price support levels has modest market impacts but negative global welfare effects by exposing risk-averse European farmers to the world price volatility. This issue is not solved by the direct payments, which have negligible market and global welfare impacts through their wealth effects. On the other hand, we find that unbiased futures markets can solve this global welfare issue by allowing European farmers to transfer their price risks. Therefore, European policymakers should ensure well-functioning risk contingent markets rather than maintaining rigid intervention price levels.
Inequality and growth impacts from climate change - insights from South Africa
RFF Working Papers Series , May 2020 - 2020
The impact of climate change on economic growth has received considerable attention in recent years. We build on this literature, but instead of per-capita GDP, we consider inequality and poverty at the country and sub-national panel level with a focus on South Africa. Our analysis on both scales suggest a significant [-shaped relationship between inequality/poverty indices and local mean temperature. Inequality, hence tends to be lowest at moderate temperatures (11°C-17°C).
Early Retirement of Power Plants in Climate Mitigation Scenarios
Environmental Research Letters , - 2020
International efforts to avoid dangerous climate change aim for large and rapid reductions of fossil fuel CO2 emissions worldwide, including nearly complete decarbonization of the electric power sector. However, achieving such rapid reductions may depend on early retirement of coal- and natural gas-fired power plants. Here, we analyze future fossil fuel electricity demand in 171 energy-emissions scenarios from Integrated Assessment Models (IAMs), evaluating the implicit retirements and/or reduced operation of generating infrastructure. Although IAMs calculate retirements endogenously, the structure and methods of each model differ; we use a standard approach to infer retirements in outputs from all six major IAMs and—unlike the IAMs themselves—we begin with the age distribution and region-specific operating capacities of the existing power fleet. We find that coal-fired power plants in scenarios consistent with international climate targets (i.e., keeping global warming well-below 2°C or 1.5°C) retire one to three decades earlier than historically has been the case. If plants are built to meet projected fossil electricity demand and instead allowed to operate at the level and over the lifetimes they have historically, the roughly 200 Gt CO2 of additional emissions this century would be incompatible with keeping global warming well-below 2°C. Thus, ambitious climate mitigation scenarios entail drastic, and perhaps un-appreciated, changes in the operating and/or retirement schedules of power infrastructure.
Solar geoengineering may lead to excessive cooling and high strategic uncertainty
Proceedings of the National Academy of Sciences (PNAS) , June 1, 2020 - 2020
Climate engineering—the deliberate large-scale manipulation of the Earth’s climate system—is a set of technologies for reducing climate-change impacts and risks. It is controversial and raises novel governance challenges [T. C. Schelling, Climatic Change, 33, 303–307 (1996); J. Virgoe, Climatic Change, 95, 103–119 (2008)]. We focus on the strategic implications of solar geoengineering. When countries engineer the climate, conflict can arise because different countries might prefer different temperatures. This would result in too much geoengineering: the country with the highest preference for geoengineering cools the planet beyond what is socially optimal at the expense of the others—a theoretical possibility termed “free-driving” [M. L. Weitzman, Scand. J. Econ., 117, 1049–1068 (2015)]. This study is an empirical test of this hypothesis. We carry out an economic laboratory experiment based on a public “good or bad” game. We find compelling evidence of free-driving: global geoengineering exceeds the socially efficient level and leads to welfare losses. We also evaluate the possibility of counteracting the geoengineering efforts of others. Results show that countergeoengineering generates high payoff inequality as well as heavy welfare losses, resulting from both strategic and behavioral factors. Finally, we compare strategic behavior in bilateral and multilateral settings. We find that welfare deteriorates even more under multilateralism when countergeoengineering is a possibility. These results have general implications for governing global good or bad commons.
Welfare as equity equivalents
Journal of Economic Surveys , June 13, 2020 - 2020
Equity (or, its counterpart, inequity) plays a fundamental role in the evaluation of social welfare in different dimensions. In this paper, we revisit the concept of inequity – in the sense of unequal distributions – across individuals, time, and states of the world using a unified framework that generalizes the standard expected discounted utilitarianism approach. We propose a general measure of welfare as equity equivalents and a corresponding inequity index. We show that allowing for different attitudes toward inequity across different dimensions covers a scope of possible inequity preferences with different interpretations. We then prove that the order of aggregation across the different dimensions matters for welfare evaluations. Finally, we show that many of the welfare‐theoretical approaches recently developed in the literature can be interpreted as special cases of this general framework.
Should they stay or should they go? Climate migrants and local conflicts
Journal of Economic Geography , - 2020
There is extensive evidence that higher temperatures increase the probability of local conflict. There is also evidence that emigration represents an important margin of adaptation to a warming climate. In this article, we analyse whether migration influences the link between warming and conflicts by either attenuating this connection in countries of origin and/or by exacerbating it in countries of destination. We find that in countries where the propensity to emigrate—as measured by past diaspora—is higher, increases in temperature have smaller effects on the probability of armed conflict, compared to countries with lower migration propensity. This is consistent with emigration functioning as ‘escape valve’ for local tensions. We find no evidence that climate-induced migration increased the probability of conflict in receiving countries.
Reply to “High energy and materials requirement for direct air capture calls for further analysis and R&D”
Nature Communications , Volume 11, Article number: 3286 (2020) - 2020
We are writing in response to Chatterjee and Huang’s analysis on the material and energy requirements of Direct Air Carbon Capture and Sequestration (DACCS) plants, which cites our recently published paper on the potential role of such technologies in deep mitigation pathways. We agree with the authors that not only a thorough technoeconomic analysis but also a material and energy-needs assessment should be undertaken before any realistic role for DACCS can be finalized. This requires including life-cycle assessment (LCA) in the technoeconomic analysis provided by integrated assessment model (IAM) scenarios, going significantly beyond what is done in our analysis, and requiring major modeling innovation1, specifically to link chemical manufacturing sectors to energy and mitigation technology sectors, to a degree not done in IAMs so far.
The Role of Flexibility and Planning in Repayment Discipline: Evidence from a Field Experiment on Pay-as-You-Go Off-Grid Electricity
RFF Working Papers Series , Working Paper 20-14 - 2020
Flexibility can help households with irregular income flows meet their payment obligations. On the other hand, the rigidity of payment schedules is believed to foster discipline and reduce defaults. We test the impact of a novel form of flexibility, the ability to set one’s own payment schedule within a month, on payment performance through a field experiment with customers of a prepaid solar systems provider in rural southern Pakistan. We combine contract flexibility with planning prompts, to mitigate its potentially negative effects on repayment. We find that flexibility in isolation negatively affects payment quality, but that combining it with planning prompts offsets this negative effect, producing behavioral outcomes that are indistinguishable from those associated with a rigid payment schedule. While treatment impacts are short-lived, they result in significant effects on contract cancellation in the long term. Our findings have implications for the applicability of planning interventions to behavioral outcomes requiring sustained effort, and for the design of contract flexibility when technological developments make frequent payments possible.
Impact of methane and black carbon mitigation on forcing and temperature: a multi-model scenario analysis
Climatic Change , (2020) - 2020
The relatively short atmospheric lifetimes of methane (CH4) and black carbon (BC) have focused attention on the potential for reducing anthropogenic climate change by reducing Short-Lived Climate Forcer (SLCF) emissions. This paper examines radiative forcing and global mean temperature results from the Energy Modeling Forum (EMF)-30 multi-model suite of scenarios addressing CH4 and BC mitigation, the two major short-lived climate forcers. Central estimates of temperature reductions in 2040 from an idealized scenario focused on reductions in methane and black carbon emissions ranged from 0.18–0.26 °C across the nine participating models. Reductions in methane emissions drive 60% or more of these temperature reductions by 2040, although the methane impact also depends on auxiliary reductions that depend on the economic structure of the model. Climate model parameter uncertainty has a large impact on results, with SLCF reductions resulting in as much as 0.3–0.7 °C by 2040. We find that the substantial overlap between a SLCF-focused policy and a stringent and comprehensive climate policy that reduces greenhouse gas emissions means that additional SLCF emission reductions result in, at most, a small additional benefit of ~ 0.1 °C in the 2030–2040 time frame.
A review of estimating population exposure to sea-level rise and the relevance for migration
Environmental Research Letters , August 2020 - 2020
This review analyses global or near-global estimates of population exposure to sea-level rise (SLR) and related hazards, followed by critically examining subsequent estimates of population migration due to this exposure. Our review identified 33 publications that provide global or near-global estimates of population exposure to SLR and associated hazards. They fall into three main categories of exposure, based on definitions in the publications: (i) the population impacted by specified levels of SLR; (ii) the number of people living in floodplains that are subject to coastal flood events with a specific return period; and (iii) the population living in low-elevation coastal zones (LECZs). Twenty of these 33 publications discuss connections between population migration and SLR. In our analysis of the exposure and migration data, we consider datasets, analytical methods, and the challenges of estimating exposure to SLR followed by potential human migration. We underscore the complex connections among SLR, exposure to its impacts, and migration. Human mobility to and from coastal areas is shaped by diverse socioeconomic, demographic, institutional, and political factors; there may be 'trapped' populations as well as those who prefer not to move for social, cultural, and political reasons; and migration can be delayed or forestalled through other adaptive measures. While global estimates of exposed and potentially migrating populations highlight the significant threats of SLR for populations living in low-lying areas at or near coastlines, further research is needed to understand the interactions among localised SLR and related hazards, social and political contexts, adaptation possibilities, and potential migration and (im)mobility decision-making.
A High Spatiotemporal Resolution Global Gridded Dataset of Historical Human Discomfort Indices
Atmosphere , 2020, 11(8), 835 - 2020
Meteorological human discomfort indices or bioclimatic indices are important metrics to gauge potential risks to human health under varying environmental thermal exposures. Derived using sub-daily meteorological variables from a quality-controlled reanalysis data product (Global Land Data Assimilation System—GLDAS), a new high-resolution global dataset referred to as “HDI_0p25_1970_2018” is presented in this study. The dataset includes the following daily indices at 0.25° × 0.25° gridded resolution: (i) Apparent Temperature indoors (ATind); (ii) two variants of Apparent Temperature outdoors in shade (ATot); (iii) Heat Index (HI); (iv) Humidex (HDEX); (v) Wet Bulb Temperature (WBT); (vi) two variants of Wet Bulb Globe Temperature (WBGT); (vii) Thom Discomfort Index (DI); and (viii) Windchill Temperature (WCT). Spanning 49 years over the period 1970–2018, HDI_0p25_1970_2018 fills gaps in existing climate indices datasets by being the only high-resolution historical global-gridded daily time-series of multiple human discomfort indices based on different meteorological parameters, thus offering applications in wide-ranging climate zones and thermal-comfort environments.
Impacts of climate change on energy systems in global and regional scenarios
Nature Energy , Volume 5, pages794–802(2020) - 2020
Although our knowledge of climate change impacts on energy systems has increased substantially over the past few decades, there remains a lack of comprehensive overview of impacts across spatial scales. Here, we analyse results of 220 studies projecting climate impacts on energy systems globally and at the regional scale. Globally, a potential increase in cooling demand and decrease in heating demand can be anticipated, in contrast to slight decreases in hydropower and thermal energy capacity. Impacts at the regional scale are more mixed and relatively uncertain across regions, but strongest impacts are reported for South Asia and Latin America. Our assessment shows that climate impacts on energy systems at regional and global scales are uncertain due partly to the wide range of methods and non-harmonized datasets used. For a comprehensive assessment of climate impacts on energy, we propose a consistent multi-model assessment framework to support regional-to-global-scale energy planning.
Assessing the Impact of a Demand-Resource Bidding Market on an Electricity Generation Portfolio and the Environment
Energy Policy , Volume 147, December 2020, 111918 - 2020
Although numerous studies have examined the economic benefits of demand response programs, the environmental impacts of such programs have been relatively underexplored. This study assesses the impact of demand resource bidding on the wholesale energy market and the environment, based on three years of high temporal-resolution data from Korea. In this demand resource bidding program, successful bidders were paid the system marginal price for reducing their electrical load at a given hour, which in turn reduced the generation of power from various technologies. This investigation of how carbon dioxide and particulate matter emissions from existing power systems changed with the introduction of the demand bidding program finds that the program altered the system operator's electricity generation portfolio and marginally abated carbon dioxide and particulate matter emissions from the power sector. It also shows that the environmental impact of the program varied over the course of the day and the year. The modest but statistically significant environmental impact of the demand resource bidding program points to the importance of including electricity demand resources in the discussion and development of energy and environmental policies for the power sector.
An integrated approach for the estimation of agricultural drought costs
Land Use Policy , Volume 100, January 2021, 104923 - 2020
This study proposes a novel method to assess the overall economic effects of agricultural droughts using a coupled agronomic-economic approach that accounts for the direct and indirect impacts of this hazard in the economy. The proposed methodology is applied to Italy, where years showing different drought severity levels were analysed. Agricultural drought stress was measured using the fraction of Absorbed Photosynthetically Active Radiation (fAPAR). Using a comprehensive, field-level dataset on agricultural yields, fAPAR-based statistical models were applied to major Italian crops and direct crop productivity impacts were estimated. Local-level, crop-dependent productivity shocks were fed into a regionalised Computable General Equilibrium model specifically calibrated for the Italian economy. Direct and indirect aggregate impacts after allowing for inter-regional trade and input reallocation were obtained. Total estimated damages ranged from 0.55 to 1.75 billion euro, depending on the overall drought severity experienced, while regional losses showed large spatial variability. Although most of the losses were concentrated on agriculture, other related sectors, such as food industry manufacturing and wholesale services, were also substantially affected. Moreover, our simulations suggested the presence of a land-use substitution effect from less to more drought-resistant crops following a drought. This study sheds light on the characterisation of the total damages caused by droughts while provides a tool with applicability in the implementation of drought risk management plans and the evaluation of drought management policies.
Impact of market design on cost-effectiveness of renewable portfolio standards
Renewable and Sustainable Energy Reviews , Volume 136, February 2021, 110397 - 2020
A renewable portfolio standard (RPS) is a policy instrument designed to increase production of clean energy technologies by mandating a minimum market share for these technologies. However, the cost-effectiveness of RPS in achieving its goal depends on the market structure, which impacts the level of competition in the market. Here, we analyze the impact of market structure on RPS effectiveness by calculating the amount of subsidies needed to achieve RPS mandates. We identify a critical market share of renewable energy that can be achieved by providing an equal amount of subsidy in both regulated and deregulated markets. We find wide variation in the preferred market structure for state-level RPS policies across the United States. Overall, deregulated markets minimize subsidy requirements for clean energy technologies with lower penetration rates. In contrast, regulated markets minimize subsidy requirements for higher market share mandates. The critical market share can help policymakers design more cost-effective RPS mandates in both regulated and deregulated markets.
The interaction of descriptive and injunctive social norms in promoting energy conservation
Nature Energy , Volume 5, pages 900–909 - 2020
Behavioural interventions that leverage social norms are widely used to foster energy conservation. For instance, home energy reports combine information on others’ behaviour (descriptive feedback) and approval for norm compliant behaviour (injunctive feedback). In a randomized controlled trial, we investigated how descriptive and injunctive feedbacks interact to affect electricity use, and evaluate the effects of additional normative feedback presented in the form of descriptive or injunctive energy conservation norm primes. We found that consistent descriptive and injunctive feedback boosts the effectiveness of social information in inducing energy conservation. When descriptive and injunctive feedback are in conflict, conservation behaviour is a function of the relative strength of the two types of feedback. Additional normative feedback produces smaller gains when it reinforces existing information of the same type. These results suggest complementarities between different types of normative messages rather than superiority of any one kind of feedback.
Combining information on others’ energy usage and their approval of energy conservation promotes energy saving behaviour
Nature Energy , Volume 5, pages 832–833 - 2020
Households reduced their electricity use the most when they learnt both that they were using more energy than their neighbours and that energy conservation was socially approved. This suggests that efforts to use social information to nudge conservation should combine different types of social feedback to maximize impact.
Messages for policy
The content of social information messages determines their impact on energy conservation.
Combining descriptive information on neighbours’ efficient energy usage and injunctive social approval for energy efficiency maximizes the effectiveness of social information.
Delivering inconsistent descriptive and injunctive information reduces the impact of each piece of feedback.
Simply adding more pieces of feedback of the same type has a limited effect.
Green Transitions and the Prevention of Environmental Disasters: market-based vs. command-and-control policies
Macroeconomic Dynamics , Volume 24, Issue 7, Pages: 1861-1880 - 2019
The paper compares the effects of market-based (M-B) and command-and-control (C&C) climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on a model of endogenous growth and directed technical change, we show that M-B policies (carbon taxes and subsidies toward clean sectors) suffer from path dependence and exhibit bounded window of opportunities: delays in their implementation make them ineffective both in redirecting technical change, (i.e. triggering a transition toward clean energy) and in avoiding environmental catastrophes. On the contrary, we find that C&C interventions are favored by path dependence and guarantee policy effectiveness irrespectively of the timing of their introduction. As the hypothesis of path dependence in technological change has received vast empirical support and it is a key feature of many models of growth, we argue that C&C policies should be seen as a valuable and non-equivalent alternative to M-B interventions.
Robust portfolio decision analysis: An application to the energy research and development portfolio problem
European Journal of Operational Research , Volume 284, Issue 3, 1 August 2020, Pages 1107-1120 - 2020
Inspired by challenges in designing energy technology policy in the face of climate change, we address the problem of decision making under "deep uncertainty." We introduce an approach we call Robust Portfolio Decision Analysis, building on Belief Dominance as a prescriptive operationalization of a concept that has appeared in the literature under a number of names. The Belief Dominance concept synthesizes multiple conflicting sources of information to uncover alternatives that are intelligent responses in the presence of many beliefs. We use this concept to determine the set of non-dominated portfolios and to identify corresponding robust individual alternatives, thereby uncovering viable alternatives that may not be revealed otherwise. Our approach is particularly appropriate with multiple stakeholders, as it helps identify common ground while leaving flexibility for negotiation. We develop a proof-of-concept application aimed at informing decisions over investments into clean energy technology R&D portfolios in the context of climate change and illustrate how Robust Portfolio Decision Analysis helps identify robust individual investments.
Advances and challenges of life cycle assessment (LCA) of greenhouse gas removal technologies to fight climate changes
Journal of Cleaner Production , Volume 244, 20 January 2020, 118896 - 2020
Several greenhouse gas removal technologies (GGRTs), also called negative emissions technologies (NET) have been proposed to help meet the Paris Climate Agreement targets. However, there are many uncertainties in the estimation of their effective greenhouse gas (GHG) removal potentials, caused by their different levels of technological development. Life Cycle Assessment (LCA) has been proposed as one effective methodology to holistically assess the potential of different GGRT removal approaches but no common framework is currently available for benchmarking and policy development. In this article, challenges for LCA are reviewed and discussed together with some alternative approaches for assessment of GGRTs. In particular, GGRTs pose challenges with regards to the functional unit, the system boundary of the LCA assessment, and the timing of emissions. The need to account within LCA of GGRTs for broader implications which involve environmental impacts, economic, social and political drivers is highlighted. A set of recommendations for LCA of GGRTs are proposed for a better assessment of the GGRTs and better accounting of their carbon removal potentials to meet the targets established within the Paris Agreement.
Fast track or Slo-Mo? Public support and temporal preferences for phasing out fossil fuel cars in the United States
Climate Policy , Volume 20, 2020 - Issue 1 - 2020
Policies to phase out fossil fuel cars are key to averting dangerous and irreversible changes to the earth’s climate. Given the potential impacts of such policies on every-day routines and behaviours, the factors that might increase or decrease their public acceptance require investigation. Here we study the role of specific policy design features in shaping Americans’ preferences for policy proposals to phase out fossil fuel cars. In light of the urgency of action against climate change, we are specifically interested in citizens’ preferences with respect to the timing of phase-out policies. Based on a demographically representative sample of 1,520 American residents rating 24,320 hypothetical policy scenarios in a conjoint experiment, we find that Americans prefer phase-out policies to be implemented no later than 2030. Policy features other than timing are also important: higher policy costs significantly reduce public support; subsidies for alternative technologies are preferred over taxes and bans; and policy co-benefits in terms of pollution reduction increase public support only when they are substantial. The study also investigates the role of individual characteristics in shaping policy preferences, finding that perceived psychological distance of climate change and party identification influence policy preferences. The results of this study have important implications for the political feasibility of rapid decarbonization initiatives like the ‘Green New Deal’ that are now being discussed in the US and beyond. Among these is the insight that smart sequencing of policies (early implementation of subsidies for low-emission technologies, followed by tax increases and/or bans) might help ensure majority support for a fossil fuel car phase-out.
Robust multivariate analysis for mixed-type data: Novel algorithm and its practical application in socio-economic research
Socio-Economic Planning Sciences , 23 June 2020, 100907 - 2020
We propose a novel method and algorithm for the analysis and clustering of mixed-type data using a hierarchical approach based on Forward Search. In our procedure, the identification of groups is based on the identification of similar trajectories and then linked to very intuitive two-dimensional maps. The proposed algorithm can use different measures for the calculation of distance in the case of mixed-type data, such as Gower’s metric and Related metric scaling. A key feature of our algorithm is its ability to discard redundant information from a given set of variables. The practical usefulness of the algorithm is illustrated through two applications of high relevance for empirical economic research. The first one focuses on comparing different indicators of environmental policy stringency in different countries. The second one applies our procedure to identify clusters of countries based on information regarding their institutional characteristics.
Climatic change: CD-Links special issue on national low-carbon development pathways
Climatic Change , volume 162, pages 1779–1785(2020) - 2020
Schaeffer et al. (2020, this issue) explore the consequences of different policy assumptions and the derivation of globally consistent, national low-carbon development pathways for the seven largest GHG-emitting countries (EU28 as a bloc) in the world. They introduce the overall methodology for developing pathways used throughout papers included in the special issue, discussing the process by which global integrated assessment model (IAM) teams in the CD-Links project interacted and derived boundary conditions in the form of carbon budgets for the different countries. Carbon budgets derived for the different countries as a result of global IAM runs for the 2011–2050 period were then used in eleven different national energy-economy models and IAM for deriving low-carbon pathways for the seven countries in line with a well below 2 °C world up to 2050. The paper concludes by presenting a comparative assessment of the resulting pathways and of the challenges and opportunities associated with them, with results indicating quite different mitigation pathways for the different countries in terms of emissions reductions split by sectors and technological alternatives.
Technology innovation system analysis of decarbonisation options in the EU steel industry
Energy , Volume 212, 1 December 2020, 118688 - 2020
Decarbonisation of the iron and steel (I&S) industry is crucial in the efforts to meet the EU GHG emission reduction objectives in 2030 … 2050. Promoting decarbonisation in this sector will necessarily require the identification, development, and diffusion of breakthrough technologies for I&S production.
This paper uses an approach inspired by the Technology Innovation System (TIS) to analyse the development of technology in the EU I&S industry and identify potential avenues of its decarbonisation. We have described key elements of the TIS, analyse the functioning of these elements and their interactions in a more general context of innovation dynamics and policy design; The focus has been put on the role of actors and the identification of the main specific blocking and inducement mechanism in the TIS to better explain its functioning. Risks and uncertainties have also been discussed.
We argue that deep decarbonisation in the I&S industry is feasible but its TIS requires firm support, mostly political, to finance intensive R&D and reduce the business risk. To this end, all actors shall support more effectively the invention and implementation of new radical production technologies. The recommendations are mostly addressed to politicians although stressing the importance of collaboration of all actors.
Model Uncertainty in Climate Change Economics: A Review and Proposed Framework for Future Research
Environmental and Resource Economics , 77, pages475–501(2020) - 2020
We review recent models of choices under uncertainty that have been proposed in the economic literature. In particular, we show how different concepts and methods of economic decision theory can be directly useful for problems in environmental economics. The framework we propose is general and can be applied in many different fields of environmental economics. To illustrate, we provide a simple application in the context of an optimal mitigation policy under climate change.
Human Migration in the Era of Climate Change
Review of Environmental Economics and Policy , Volume 13, Issue 2, Summer 2019, Pages 189–206 - 2019
This paper reviews the recent literature across various disciplines in order to improve our understanding of the complex relationship between climate change and migration. To this end, the article discusses some consistent factors in the relationship between climate change and migration, identifies gaps in the literature, and recommends priorities for policy and future research in this area. More specifically, we will discuss the empirical evidence on the effects of different types of climatic events on different types of migration, examine the causes of heterogeneity in migratory responses to climate events, and highlight the interactions between different types of climate-induced adaptation and the mechanisms underlying the relationship
Connecting climate action with other Sustainable Development Goals
Nature Sustainability , Volume 2, pages 674–680 - 2019
The international community has committed to combat climate change and achieve 17 Sustainable Development Goals (SDGs). Here we explore (dis)connections in evidence and governance between these commitments. Our structured evidence review suggests that climate change can undermine 16 SDGs, while combatting climate change can reinforce all 17 SDGs but undermine efforts to achieve 12. Understanding these relationships requires wider and deeper interdisciplinary collaboration. Climate change and sustainable development governance should be better connected to maximize the effectiveness of action in both domains. The emergence around the world of new coordinating institutions and sustainable development planning represents promising progress.
Analysing Energy Innovation Portfolios from a Systemic Perspective
Energy Policy , 134, 110942 - 2019
A systemic perspective on energy innovation is required to design effective portfolios of energy innovation activities!
The role of the discount rate for emission pathways and negative emissions
Environmental Research Letters , - 2019
The importance of the discount rate in cost-benefit analysis of long term problems, such as climate change, has been widely acknowledged. However, the choice of the discount rate is hardly discussed when translating policy targets –such as 1.5 and 2°C– into emission reduction strategies with the possibility of overshoot. Integrated assessment models (IAMs) have quantified the sensitivity of low carbon pathways to a series of factors, including economic and population growth, national and international climate policies, and the availability of low carbon technologies, including negative emissions. In this paper we show how and to what extent emission pathways are also influenced by the discount rate. Using both an analytical and a numerical IAM, we demonstrate how discounting affects key mitigation indicators, such as the time when net global emissions reach zero, the amount of carbon budget overshoot, and the carbon price profile. To ensure inter-generational equity and be coherent with cost-benefit analysis normative choices, we suggest that IAMs should use lower discount rates than the ones currently adopted. For a 1000 GtCO2 carbon budget, reducing the discount rate from 5% to 2% would more than double today's carbon price (from 21 to 55 $/tCO2) and more than halve the carbon budget overshoot (from 46% to 16%), corresponding to a reduction of about 300 GtCO2 of net negative emissions over the century.
Contribution of the land sector to a 1.5°C World
Nature Climate Change , Volume 9, pages 817–828 - 2019
The Paris Agreement introduced an ambitious goal to limit warming to 1.5°C above pre-industrial levels. Here, we combine modelling and a meta-analysis of mitigation strategies to develop a land sector roadmap of priority measures and regions that can help to achieve the 1.5°C temperature goal. Transforming the land sector (agriculture, forestry, wetlands, bioenergy) towards more sustainable practices could contribute ~30% (15 GtCO2e/yr) of the global mitigation needed in 2050 to deliver on the 1.5°C target, however it will require substantially more ambitious effort than the 2˚C target. Addressing risks, barriers and incentives are necessary to scale up mitigation while maximizing sustainable development, food security, and environmental co-benefits.
Evidence for sharp increase in the economic damages of extreme natural disasters
Proceedings of the National Academy of Sciences (PNAS) , - 2019
Climate change has increased the frequency and intensity of natural disasters. Does this translate into increased economic damages? To date, empirical assessments of damage trends have been inconclusive. Our study demonstrates a temporal increase in extreme damages, after controlling for a number of factors. We analyze event-level data using quantile regressions to capture patterns in the damage distribution (not just its mean) and find strong evidence of progressive rightward skewing and tail-fattening over time. While the effect of time on averages is hard to detect, effects on extreme damages are large, statistically significant, and growing with increasing percentiles. Our results are consistent with an upwardly curved, convex damage function, which is commonly assumed in climate-economics models. They are also robust to different specifications of control variables and time range considered and indicate that the risk of extreme damages has increased more in temperate areas than in tropical ones. We use simulations to show that underreporting bias in the data does not weaken our inferences; in fact, it may make them overly conservative.
The public costs of climate-induced financial instability
Nature Climate Change , Volume 9, pages 829–833 - 2019
Recent evidence suggests that climate change will significantly affect economic growth and several productive elements of modern economies, such as workers and land1,2,3,4. Although historical records indicate that economic shocks might lead to financial instability, few studies have focused on the impact of climate change on the financial actors5,6. This paper examines how climate-related damages impact the stability of the global banking system. We use an agent-based climate–macroeconomic model calibrated on stylized facts, future scenarios and climate impact functions7 affecting labour and capital. Our results indicate that climate change will increase the frequency of banking crises (26–248%). Rescuing insolvent banks will cause an additional fiscal burden of approximately 5–15% of gross domestic product per year and increase the ratio of public debt to gross domestic product by a factor of 2. We estimate that around 20% of such effects are caused by the deterioration of banks’ balance sheets induced by climate change. Macroprudential regulation attenuates bailout costs, but only moderately. Our results show that leaving the financial system out of climate–economy integrated assessment may lead to an underestimation of climate impacts and that financial regulation can play a role in mitigating them.
Building Risk into the Mitigation/Adaptation Decisions simulated by Integrated Assessment Models
Environmental and Resource Economics , 74(4), 1687-1721, December 2019 - 2019
This paper proposes an operationally simple and easily generalizable methodology to incorporate climate change damage uncertainty into Integrated Assessment Models (IAMs). First uncertainty is transformed into a risk measure by extracting damage distribution means and variances from an ensemble of socio economic and climate change scenarios. Then a risk premium is computed under different degrees of risk aversion, quantifying what society would be willing to pay to insure against the uncertainty of the damages. Our estimates show that the premium for the risk is a potentially significant addition to the “standard average damage”, but highly sensitive to the attitudes toward risk. In the last research phase, the risk premium is incorporated into the climate change damage function of a widely used IAM which shows, consequently, a substantial increase in both mitigation and adaptation efforts, reflecting a more precautionary attitude by the social planner. Interestingly, adaptation is stimulated more than mitigation in the first half of this century, while the situation reverses afterwards.
Are policymakers ambiguity averse?
The Economic Journal , September 2019 - 2019
We investigate the ambiguity preferences of a unique sample of real-life policymakers at the Paris UN climate conference (COP21). We find that policymakers are generally ambiguity averse. Using a simple design, we are moreover able to show that these preferences are not necessarily due to an irrational behavior, but rather to intrinsic preferences over unknown probabilities. Exploring the heterogeneity within our sample, we also show that the country of origin and the degree of quantitative sophistication affect policymakers’ attitudes towards compound risk, but not towards ambiguity. Robustness results are obtained in a lab experiment with a sample of university students.
Can we make social information programs more effective? The role of identity and values
RFF Working Papers Series , - 2019
Social information programs are increasingly used to nudge behavioural change, and the
literature documents strong heterogeneity in their impact along household and individual
traits. Using data from a large field experiment on household energy conservation, we
combine electricity metering and survey data to study how environmental values affect the
impact of the program. We then leverage the role of values by augmenting social information messages with an environmental self-identity prime. We find that social information is more effective when environmental self-identity is made more salient, but only among individuals who acted pro-environmentally in the past.
Does harmful climate increase or decrease migration? Evidence from Rural Households in Nigeria
Climate Change Economics , volume 10(4), pp 1950013-1 - 1950013-36 - 2019
This paper analyzes whether migration is an adaptation strategy that households employ to cope with climate in Nigeria. We estimate our model using the cross-sectional variation in climate and long-term migration decisions because we are interested in the average response to longterm climatic conditions. For households that operate farms, we find that the relationship between climate and migration is nonlinear. In particular, climates closer to ideal farming conditions are associated with a higher propensity to migrate, whereas in the least favorable climatic conditions, the propensity to migrate declines. The marginal effect of rainfall and temperature changes on migration varies by season. We estimate the impact of climate change on the number of migrant households in 2031–2060 and 2071–2100, ceteris paribus. With current population levels, climate change generates between 3.6 and 6.3 million additional migrants, most of them being internal. However, these estimates are not statistically significant.
Migrant networks and adaptation
Nature Climate Change , volume 9, pp 907-908 - 2019
This paper tries to shed light on the importance of migrants’ networks aid in faciliating climate-induced migration. The point point raised by the article is that the ability to use migration as an ex-post strategy to cope with the impacts of a climate related shock relies heavily on the presence of a large established network of migrants. The finding that an existing migrant network potentially increases the chance of leaving a community after an extreme weather event is important because it gives some indication of where vulnerable populations might become locked into their geography, and where they might not.
Climate thresholds and heterogeneous regions: implications for coalition formation
The Review of International Organizations , pp 1–24 - 2019
The threat of climate catastrophes has been shown to radically change optimal climate policy and prospects for international climate agreements. We characterize the strategic behavior in emissions mitigation and agreement participation with a potential climate catastrophe happening at a temperature threshold. Players are heterogeneous in a conceptual and two numerical models. We confirm that thresholds can induce large, stable coalitions. The relationship between the location of the threshold and the potential for cooperation is non-linear, with the highest potential for cooperation at intermediate temperature thresholds located between 2.5 and 3 degrees of global warming. We find that some regions such as Europe, the USA and China are often pivotal to keeping the threshold because the rest of the world abandons ambitious mitigation and the threshold is crossed without their participation. As a result, their incentives to cooperate can be amplified at the threshold. This behavior critically depends on the characteristics of the threshold as well as the numerical model structure. Conversely, non-pivotal regions are more likely to free-ride as the threshold inverts the strategic response of the remaining coalition. Moreover, we find that our results depend on which equilibrium concepts is applied to analyze coalition formation as well as the introduction of uncertainty about the threshold.
Competence analysis for promoting energy efficiency projects in developing countries: The case of OPEC
Energy , Volume 189, 15 December 2019, 115996 - 2019
Enhancing energy efficiency is an important goal of climate change mitigation policies. Promoting energy efficiency projects in developing countries has faced several barriers, preventing optimal investments. One of the main barriers has been the lack of internationally recognized indices to compare projects across countries. In this era of global political turbulence and a looming trade-war that will likely lead to unjustified tariffs, it is critical to provide publicly available robust indices for investors. We construct the Energy Efficiency Country Attractiveness Index to evaluate countries' competitiveness in terms of energy efficiency potentials and related investment risks to aid investment decision-making in the oil and gas sector. Our index includes 30 indicators congregated in four pillars covering political, economic, social and technological factors, combined by means of Fuzzy measures and Choquet integral according to the preferences of a panel of experts. Although experts consider the economic and technological factors as the most important elements affecting investment in the energy related projects and they are moderately tolerant following disjunctive behaviour in dealing with the political, economic, social, and technological criteria, squared correlation analysis shows that, at least for OPEC countries, the political pillar is the crucial one in shaping the composite index.
Economy-wide effects of coastal flooding due to sea level rise: A multi-model simultaneous treatment of mitigation, adaptation, and residual impacts
Environmental Research Communications , Volume 2, Number 1 - 2020
This article presents a multi-model assessment of the macroeconomic impacts of coastal flooding due to sea level rise and the respective economy-wide implications of adaptation measures for two greenhouse gas (GHG) concentration targets, namely the Representative Concentration Pathways (RCP)2.6 and RCP4.5, and subsequent temperature increases. We combine our analysis, focusing on the global level, as well as on individual G20 countries, with the corresponding stylized RCP mitigation efforts in order to understand the implications of interactions across mitigation, adaptation and sea level rise on a macroeconomic level. Our global results indicate that until the middle of this century, differences in macroeconomic impacts between the two climatic scenarios are small, but increase substantially towards the end of the century. Moreover, direct economic impacts can be partially absorbed by substitution effects in production processes and via international trade effects until 2050. By 2100 however, we find that this dynamic no longer holds and economy-wide effects become even larger than direct impacts. The disturbances of mitigation efforts to the overall economy may in some regions and for some scenarios lead to a counterintuitive result, namely to GDP losses that are higher in RCP26 than in RCP45, despite higher direct coastal damages in the latter scenario. Within the G20, our results indicate that China, India and Canada will experience the highest macroeconomic impacts, in line with the respective direct climatic impacts, with the two first large economies undertaking the highest mitigation efforts in a cost-efficient global climate action. A sensitivity analysis of varying socioeconomic assumptions highlights the role of climate-resilient development as a crucial complement to mitigation and adaptation efforts.
Measuring Environmental Policy Stringency: Approaches, Validity, and Impact on Environmental Innovation and Energy Efficiency
Energy Policy , Volume 136, 111052 - 2020
Solid tests of the impact of environmental and energy policy on important economic outcomes, such as innovation, productivity, competitiveness and energy and carbon efficiency are impaired by the lack of appropriate empirical proxies for the commitment to, and stringency of, environmental policy. We contribute to the literature by: (1) computing different indicators of environmental policy stringency, (2) testing to what extent they convey similar insights through a statistical comparison exercise, and (3) showing the implications of using one or the other indicator in two illustrative empirical applications focused on environmental innovation and energy efficiency. We conclude by highlighting the implications of our analysis for empirical research focusing on the evaluation of policy impacts, and highlight fruitful future research avenues.
Reply to: Why fossil fuel producer subsidies matter
Nature , Volume 578, pages E5–E7(2020) - 2020
Replying to: P. Erickson et al. Nature https://doi.org/10.1038/s41586-019-1920-x (2020)
Climate change and green transitions in an agent-based integrated assessment model
Technological Forecasting and Social Change , Volume 153, April 2020, 119806 - 2020
In this paper we employ an agent-based integrated assessment model to study the likelihood of transition to green, sustainable growth in presence of climate damages. The model comprises heterogeneous fossil-fuel and renewable plants, capital- and consumption-good firms and a climate box linking greenhouse gasses emission to temperature dynamics and microeconomic climate shocks affecting labour productivity and energy demand of firms. Simulation results show that the economy possesses two statistical equilibria: a carbon-intensive lock-in and a sustainable growth path characterized by better macroeconomic performances. Once climate damages are accounted for, the likelihood of a green transition depends on the damage function employed. While energy efficiency shocks (which raise the demand of energy) exert little effects on the macroeconomic performance compared to labour productivity impacts, they disproportionally harm the chances of an energy transition by exacerbating path-dependence in the process of technical change in favour of fossil-fuel technologies. Finally, we run a series of policy experiments on carbon (fossil fuel) taxes and green subsidies. We find that the effectiveness of such market-based instruments is limited, though it also depends upon the different channels climate change affects the economy through. Complementary policies might be required to avoid carbon-intensive lock-ins.
The green transition: public policy, finance, and the role of the State
Vierteljahrshefte zur Wirtschaftsforschung , Vol. 88 (2019), Iss. 2: pp. 73–88 - 2020
While investments into renewable energy technologies are growing almost everywhere, the chances to meet ambitious emission and climate targets, as those envisaged in the Paris Agreement, are scant. To speed up the transition, policy makers need to design and implement a policy mix that could affect not just the quantity of green finance, but its quality as well. In this paper, we argue that a mission-oriented approach to the transition from an economy with high, to one with low greenhouse gas emissions, coupled with the state taking on the role of an entrepreneurial state, could provide an effective win-win strategy to address climate change concerns (embodied in emissions reduction and adaptation boosting) and build the basis for the next phase of growth and technological progress. In practice, this amounts to (i) abandoning the view that cost-internalization of environmental externalities would suffice to induce an effective transition (ii) developing a multi-level and cross-sectoral governance of the transition, with a clear direction in terms of the technological trajectory to favour, and (iii) designing a policy mix encompassing: fiscal instruments, targets and standards; public-private co-funding schemes; financial regulation; and disclosure practices. Social scientists should support such ambitious policy-design processes through adequate model development, where a combination of policies, and a directive role of the state, can be accommodated and examined in detail.
Climate Impacts on Nutrition and Labor Supply Disentangled – an Analysis for Rural Areas of Uganda.
Environment and Development Economics , March 2020, 1–26 - 2020
The entire agricultural supply chain, from crop production to food consumption, is expected to suffer significant damages from climate change. This paper empirically investigates the effects of warming on agricultural labor supply through variation in dietary intake in rural Uganda. We examine labor supply, food consumption, and overall social welfare under various climate change scenarios. First, we combine nationally representative longitudinal survey data with high-resolution climatic data using an instrumental variable approach. Controlling for calorie intake, our study shows that warming has a non-linear impact on agricultural labor supply, with the number of hours worked being optimized at an optimal temperature of 21.3°C. Using these econometric estimates to parametrize an overlapping generations model, we find that under RCP8.5, output per adult decreases by 20 per cent by the end of the century due to the combined effect of climate change on food consumption and labor supply.
Fiscal effects and the potential implications on economic growth of sea-level rise impacts and coastal zone protection
Climatic Change , 160, pages283–302(2020) - 2020
Climate change impacts on coastal zones could be significant unless adaptation is undertaken. One particular macroeconomic dimension of sea level rise (SLR) impacts that has received no attention so far is the potential stress of SLR impacts on public budgets. Adaptation will require increased public expenditure to protect assets at risk and could put additional stress on public budgets. We analyse the macroeconomic effects of SLR adaptation and impacts on public budgets. We include fiscal indicators in a climate change impact assessment focusing on SLR impacts and adaptation costs using a computable general equilibrium model extended with a detailed description of the public sector. Coastal protection expenditure is financed issuing government bonds, meaning that coastal adaptation places an additional burden on public budgets. SLR impacts are examined using several scenarios linked to three different Representative Concentration Pathways: 2.6, 4.5, and 8.5, and two Shared Socioeconomic Pathways: SSP2 and SSP5. Future projections of direct damages of mean and extreme SLR and adaptation costs are generated by the Dynamic Interactive Vulnerability Assessment framework. Without adaptation, all regions of the world will suffer a loss and public deficits increase respect to the reference scenario. Higher deficits imply higher government borrowing from household savings reducing available resources for private investments therefore decreasing capital accumulation and growth. Adaptation benefits result from two mechanisms: (i) the avoided direct impacts, and (ii) a reduced public deficit effect. This allows for an increased capital accumulation, suggesting that support to adaptation in deficit spending might trigger positive effects on public finance sustainability.
Climate change induced socio-economic tipping points: review and stakeholder consultation for policy relevant research
Environmental Research Letters , Volume 15, Number 2 - 2020
Tipping points have become a key concept in research on climate change, indicating points of abrupt transition in biophysical systems as well as transformative changes in adaptation and mitigation strategies. However, the potential existence of tipping points in socio-economic systems has remained underexplored, whereas they might be highly policy relevant. This paper describes characteristics of climate change induced socio-economic tipping points (SETPs) to guide future research on SETPS to inform climate policy. We review existing literature to create a tipping point typology and to derive the following SETP definition: a climate change induced, abrupt change of a socio-economic system, into a new, fundamentally different state. Through stakeholder consultation, we identify 22 candidate SETP examples with policy relevance for Europe. Three of these are described in higher detail to identify their tipping point characteristics (stable states, mechanisms and abrupt change): the collapse of winter sports tourism, farmland abandonment and sea-level rise-induced migration. We find that stakeholder perceptions play an important role in describing SETPs. The role of climate drivers is difficult to isolate from other drivers because of complex interplays with socio-economic factors. In some cases, the rate of change rather than the magnitude of change causes a tipping point. The clearest SETPs are found on small system scales. On a national to continental scale, SETPs are less obvious because they are difficult to separate from their associated economic substitution effects and policy response. Some proposed adaptation measures are so transformative that their implementations can be considered an SETP in terms of 'response to climate change'. Future research can focus on identification and impact analysis of tipping points using stylized models, on the exceedance of stakeholder-defined critical thresholds in the RCP/SSP space and on the macro-economic impacts of new system states.
Case-study - The transition of Belgium towards a low carbon society: A macroeconomic analysis fed by a participative approach
Energy Strategy Reviews , Volume 29, May 2020, 100463 - 2020
We describe a new approach for analyzing the socio-economic impacts of a low carbon transition. It consists in feeding a traditional macroeconomic model of a national economy, namely Belgium, with the results of a participative modelling exercise based on a prospective energy accounting model, the so-called Calculator. While contributing to overcoming important economic modelling barriers, this approach fosters stakeholders engagement and allows for extending the scope of the energy transition impact analysis.
Characterizing ambiguity attitudes using model uncertainty
Journal of Economic Behavior & Organization , March 19, 2020 - 2020
We report the results of an experiment eliciting individuals’ attitudes toward risk and model uncertainty. Using a joint elicitation procedure, we then precisely quantify the strength of individuals’ attitude toward ambiguity in the context of the smooth model and characterize its main properties. Our results provide empirical evidence of decreasing absolute ambiguity aversion (DAAA) and constant relative ambiguity aversion (CRAA). These results shed new light on the way ambiguity attitudes may affect important decisions, such as the choice of health insurance policies or the optimal investment strategy in the face of climate change.
Reducing stranded assets through early action in the Indian power sector
Environmental Research Letters , April 2020 - 2020
Cost-effective achievement of the Paris Agreement's long-term goals requires the unanimous phase-out of coal power generation by mid-century. However, continued investments in coal power plants will make this transition difficult. India is one of the major countries with significant under construction and planned increase in coal power capacity. To ascertain the likelihood and consequences of the continued expansion of coal power for India's future mitigation options, we use harmonised scenario results from national and global models along with projections from various government reports. Both these approaches estimate that coal capacity is expected to increase until 2030, along with rapid developments in wind and solar power. However, coal capacity stranding of the order of 133-237 GW needs to occur after 2030 if India were to pursue an ambitious climate policy in line with a well-below 2°C target. Earlier policy strengthening starting after 2020 can reduce stranded assets (14-159 GW) but brings with it political economy and renewable expansion challenges. We conclude that a policy limiting coal plants to those under construction combined with higher solar targets could be politically feasible, prevent significant stranded capacity, and allow higher mitigation ambition in the future.
Country-level social cost of carbon
Nature Climate Change , Volume 8, pages 895–900 - 2018
The social cost of carbon (SCC) is a commonly employed metric of the expected economic damages from carbon dioxide (CO2) emissions. Although useful in an optimal policy context, a world-level approach obscures the heterogeneous geography of climate damage and vast differences in country-level contributions to the global SCC, as well as climate and socio-economic uncertainties, which are larger at the regional level. Here we estimate country-level contributions to the SCC using recent climate model projections, empirical climate-driven economic damage estimations and socio-economic projections. Central specifications show high global SCC values (median, US$417 per tonne of CO2 (tCO2); 66% confidence intervals, US$177–805 per tCO2) and a country-level SCC that is unequally distributed. However, the relative ranking of countries is robust to different specifications: countries that incur large fractions of the global cost consistently include India, China, Saudi Arabia and the United States.
Comparing future patterns of energy system change in 2°C scenarios to expert projections
Global Environmental Change , Volume 50, 201–211 - 2018
Integrated assessment models (IAMs) are computer-based instruments used to assess the implications of human activity on the human and earth system. They are simultaneously also used to explore possible response strategies to climate change. As IAMs operate simplified representations of real-world processes within their model structures, they have been frequently criticised to insufficiently represent the opportunities and challenges in future energy systems over time. To test whether projections by IAMs diverge in systematic ways from projections made by technology experts we elicited expert opinion on prospective change for two indicators and compared these with the outcomes of IAM studies. We specifically focused on five (energy) technology families (solar, wind, biomass, nuclear, and carbon capture and storage or CCS) and compared the considered implications of the presence or absence of climate policy on the growth and diffusion of these technologies over the short (2030) to medium (2050) term. IAMs and experts were found to be in relatively high agreement on system change in a business-as-usual scenario, albeit with significant differences in the estimated magnitude of technology deployment over time. Under stringent climate policy assumptions, such as the internationally agreed upon objective to limit global mean temperature increase to no more than 2 °C, we found that the differences in estimated magnitudes became smaller for some technologies and larger for others. Compared to experts, IAM simulations projected a greater reliance on nuclear power and CCS to meet a 2 °C climate target. In contrast, experts projected a stronger growth in renewable energy technologies, particularly solar power. We close by discussing several factors that are considered influential to the alignment of the IAM and expert perspectives in this study
Modeling Uncertainty in the Integrated Assessment of Climate Change: A Multi-Model Comparison
Journal of the Association of Environmental and Resource Economists , Volume 5, Number 4, pp 791-826 - 2018
The economics of climate change involves a vast array of uncertainties, complicating our understanding of climate change. This study explores uncertainty in baseline trajectories using multiple integrated assessment models commonly used in climate policy development. The study examines model and parametric uncertainties for population, total factor productivity, and climate sensitivity. It estimates the probability distributions of key output variables, including CO2 concentrations, temperature, damages, and social cost of carbon (SCC). One key finding is that parametric uncertainty is more important than uncertainty in model structure. Our resulting distributions provide a useful input into climate policy discussions.
The Future Prospects of Energy Technologies: Insights from Expert Elicitations
Review of Environmental Economics and Policy , Volume 12, Issue 1, 1 February 2018, Pages 133–153 - 2018
Expert elicitation is a structured approach for obtaining judgments from experts about items of interest to decision makers. This method has been increasingly applied in the energy domain to collect information on the future cost, technical performance, and associated uncertainty of specific energy technologies. This article has two main objectives: (1) to introduce the basics of expert elicitations, including their design and implementation, highlighting their advantages and disadvantages and their potential to inform policymaking and energy system decisions; and (2) to discuss and compare the results of a subset of the most recent expert elicitations on energy technologies, with a focus on future cost trajectories and implied cost reduction rates. We argue that the data on future energy costs provided by expert elicitations allows for more transparent and robust analyses that incorporate technical uncertainty, which can then be used to support the design and assessment of energy and climate change mitigation policies.
Scenarios towards limiting global-mean temperature increase below 1.5°C
Nature Climate Change , Volume 8, 8, pages 325–332(2018) - 2018
The 2015 Paris Agreement calls for countries to pursue efforts to limit global-mean temperature rise to 1.5 °C. The transition pathways that can meet such a target have not, however, been extensively explored. Here we describe scenarios that limit end-of-century radiative forcing to 1.9 W m−2, and consequently restrict median warming in the year 2100 to below 1.5 °C. We use six integrated assessment models and a simple climate model, under different socio-economic, technological and resource assumptions from five Shared Socio-economic Pathways (SSPs). Some, but not all, SSPs are amenable to pathways to 1.5 °C. Successful 1.9 W m−2 scenarios are characterized by a rapid shift away from traditional fossil-fuel use towards large-scale low-carbon energy supplies, reduced energy use, and carbon-dioxide removal. However, 1.9 W m−2 scenarios could not be achieved in several models under SSPs with strong inequalities, high baseline fossil-fuel use, or scattered short-term climate policy. Further research can help policy-makers to understand the real-world implications of these scenarios.
Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals
Nature Energy , volume 3, pages 589–599 - 2018
Low-carbon investments are necessary for driving the energy system transformation that is called for by both the Paris Agreement and Sustainable Development Goals. Improving understanding of the scale and nature of these investments under diverging technology and policy futures is therefore of great importance to decision makers. Here, using six global modelling frameworks, we show that the pronounced reallocation of the investment portfolio required to transform the energy system will not be initiated by the current suite of countries’ Nationally Determined Contributions. Charting a course toward ‘well below 2 °C’ instead sees low-carbon investments overtaking fossil investments globally by around 2025 or before and growing thereafter. Pursuing the 1.5 °C target demands a marked upscaling in low-carbon capital beyond that of a 2 °C-consistent future. Actions consistent with an energy transformation would increase the costs of achieving the goals of energy access and food security, but reduce the costs of achieving air-quality goals.
Interaction of consumer preferences and climate policies in the global transition to low-carbon vehicles
Nature Energy , Volume 3, pages 664–673 - 2018
Burgeoning demands for mobility and private vehicle ownership undermine global efforts to reduce energy-related greenhouse gas emissions. Advanced vehicles powered by low-carbon sources of electricity or hydrogen offer an alternative to conventional fossil-fuelled technologies. Yet, despite ambitious pledges and investments by governments and automakers, it is by no means clear that these vehicles will ultimately reach mass-market consumers. Here, we develop state-of-the-art representations of consumer preferences in multiple global energy-economy models, specifically focusing on the non-financial preferences of individuals. We employ these enhanced model formulations to analyse the potential for a low-carbon vehicle revolution up to 2050. Our analysis shows that a diverse set of measures targeting vehicle buyers is necessary to drive widespread adoption of clean technologies. Carbon pricing alone is insufficient to bring low-carbon vehicles to the mass market, though it may have a supporting role in ensuring a decarbonized energy supply.
The influence of institutions, governance, and public opinion on the environment: Synthesized findings from applied econometrics studies
Energy Research & Social Science , Volume 43, September 2018, Pages 77-95 - 2018
We synthesize the empirical contributions from the existing applied economics literature examining the influence of institutions and governance on environmental policy, environmental performance, and green investment. The literature on the influence of populism and public opinion on environmental policy adoption is also reviewed in line with the special issue. First, the paper describes how the relationship between institutions, environmental performance and environmental policy have been conceptualized and operationalized in the literature and summarizes the main findings. The second part of the paper outlines avenues for future research with specific attention to the energy transition and climate change literature. With respect to the positivist worldview adopted by this paper, we highlight various opportunities for empirical work that have recently emerged with the growing availability of data in the field of green investments, climate, and energy policy. Expanding the current empirical literature towards these research topics is of both scientific and policy relevance and can provide important insights on the broader field of sustainability transition and sustainable development. Regarding the alternative, non-positivist worldviews, future research could explore ways to connect the richer approaches such as complex adaptive systems and socio-technical transition studies with applied econometric methods, as well as future-oriented studies.
Burden of climate change on malaria mortality
International Journal of Hygiene and Environmental Health , Volume 221, Issue 5, June 2018, Pages 782-791 - 2018
In 2016, an estimated 445,000 deaths and 216 million cases of malaria occurred worldwide, while 70% of the deaths occurred in children under five years old. Changes in climatic exposures such as temperature and precipitation make malaria one of the most climate sensitive outcomes. Using a global malaria mortality dataset for 105 countries between 1980 and 2010, we find a non-linear relationship between temperature and malaria mortality and estimate that the global optimal temperature threshold beyond which all-age malaria mortality increases is 20.8 °C, while in the case of child mortality; a significantly lower optimum temperature of 19.3° is estimated. Our results also suggest that this optimal temperature is 28.4 °C and 26.3 °C in Africa and Asia, respectively – the continents where malaria is most prevalent. Furthermore, we estimate that child mortality (ages 0–4) is likely to increase by up to 20% in some areas due to climate change by the end of the 21st century.
Supporting the UN SDGs transition: methodology for sustainability assessment and current worldwide ranking.
Economics: The Open-Access, Open-Assessment E-Journal , 12 (2018-10): 1–31 - 2018
This analysis lies in the stream of research related to the quantitative assessment of the Sustainable Development Goals (SDGs), adopted by the United Nations at the end of September 2015. We assemble a composite multi-dimensional index and a worldwide ranking of current sustainability. This makes it possible to assess the strengths and weaknesses of today’s socio-economic development, as well as environmental criticalities worldwide. The methodology goes through the following steps: screening of indicators capable of addressing the UN’s SDGs; data collection from relevant sources; organization into three pillars of sustainability (economy, society, and environment); normalization to a common metrics; aggregation of the 26 indicators into composite indices by pillars as well as in a multi-dimensional index. The final ranking includes 139 countries. Sweden, Norway and Switzerland are at the top of the ranking.
Bridging the gap: do fast reacting fossil technologies facilitate renewable energy diffusion?
Energy Policy , Volume 116, May 2018, Pages 242-256 - 2018
The diffusion of renewable energy in the power system implies high supply variability. Lacking economically viable storage options, renewable energy integration is possible thanks to the presence of modern mid-merit fossil-based technologies, which act as back-up capacity. This paper discusses the role of modern fossil-based power generation technologies in supporting renewable energy investments. We study the deployment of these two technologies conditional on all other drivers in 26 OECD countries between 1990 and 2013. We show that moving from the first to the third quartile of the distribution of modern fossil technologies is associated with an increase in yearly renewable energy investment of between 6 and 14 kW per thousand people, on average and ceteris paribus. This is a sizeable effect, considering that average yearly renewable capacity addition in our sample are around 12 kW per thousand people. These findings are robust to different econometric specifications, various definitions of modern fossil technologies and are stronger for wind, which is more intermittent and for which the mismatch between supply and demand is more marked. Our analysis points to the substantial indirect costs of renewable energy integration and highlights the complementarity of investments in different generation technologies for a successful decarbonization process.
Implications of various effort-sharing approaches for national carbon budgets and emission pathways
Climatic Change , February 2019, pp. 1-18 - 2019
The paper explores the national implications of different allocation rules to divide the remaining "carbon cake" for a climate-safe world. These rules, which share the effort to reduce emissions, require more effort from developed countries.
CMCC develops the interactive tool to explore the paper results at https://www.cdlinks.org/effort-sharing-vis
Internal and external barriers to energy efficiency: which role for policy interventions?
Energy Efficiency , June 2019, Volume 12, Issue 5, pp 1293–1311 - 2019
This paper reviews the empirical literature that describes the different barriers to pro-environmental consumer behavior. The paper considers behavior in two domains: energy curtailment, which represents routine, repetitive effort to decrease consumption on a day-to-day basis and investments, which are one time actions such as purchasing new energy efficiency technologies. The paper also reviews the existing literature on policies on energy use and investment in energy efficiency technologies to assess their effectiveness in achieving the desired objectives.
Looking under the hood: A comparison of techno-economic assumptions across national and global integrated assessment models
Energy , Volume 172, pages 1254-1267 - 2019
This paper compares technology representation and techno-economic parameters of 15 integrated assessment models. It highlights the structural differences in the representation of technologies and in the projection of the parameters, making them difficult to harmonize across models. This work contribute in making more transparent the use of models for policymaking.
A pathway design framework for national low greenhouse gas emission development strategies
Nature Climate Change , Volume 9, pages 261–268 - 2019
The Paris Agreement introduces long-term strategies as an instrument to inform progressively more ambitious emission reduction objectives, while holding development goals paramount in the context of national circumstances. In the lead up to the twenty-first Conference of the Parties, the Deep Decarbonization Pathways Project developed mid-century low-emission pathways for 16 countries, based on an innovative pathway design framework. In this Perspective, we describe this framework and show how it can support the development of sectorally and technologically detailed, policy-relevant and country-driven strategies consistent with the Paris Agreement climate goal. We also discuss how this framework can be used to engage stakeholder input and buy-in; design implementation policy packages; reveal necessary technological, financial and institutional enabling conditions; and support global stocktaking and increasing of ambition.
Analysing Future Change in the EU's Energy Innovation System
Energy Strategy Reviews , Volume 24, April 2019, Pages 279-299 - 2019
We develop a novel approach for analysing future storylines of EU`s energy innovation system change, suggesting that adaptive policy responding to rapidly changing innovation environments should play an important part of the EU's energy future.
Inequality and the Social Cost of Carbon
Journal of the Association of Environmental and Resource Economists , Vol. 6, No. 2: 29-59 - 2019
We present a novel way to disentangle inequality aversion over time from inequality aversion between regions in the computation of the social cost of carbon. Our approach nests a standard efficiency based estimate and an equity weighted estimate as special cases. We use two integrated assessment models (FUND and RICE) to present quantitative estimates of the social cost of carbon. Our results suggest that inequality considerations lead to higher (lower) social cost of carbon values in high (low) income regions relative to an efficiency based approach, but that the effect is less strong than found in previous studies that used equity weighting. Our central estimate is that the social cost of carbon increases roughly by a factor of two to three, and even more for higher degrees of inequality aversion, when our disentangled equity weighting approach is used.
A Multi-Model Assessment of Food Security Implications of Climate Change Mitigation
Nature Sustainability , Volume 2, No. 5 (May 13, 2019): 386–96 - 2019
Holding the global increase in temperature caused by climate change well below 2 °C above pre-industrial levels, the goal affirmed by the Paris Agreement, is a major societal challenge. Meanwhile, food security is a high-priority area in the UN Sustainable Development Goals, which could potentially be adversely affected by stringent climate mitigation. Here we show the potential negative trade-offs between food security and climate mitigation using a multi-model comparison exercise. We find that carelessly designed climate mitigation policies could increase the number of people at risk of hunger by 160 million in 2050. Avoiding these adverse side effects would entail a cost of about 0.18% of global gross domestic product in 2050. It should be noted that direct impacts of climate change on yields were not assessed and that the direct benefits from mitigation in terms of avoided yield losses could be substantial, further reducing the above cost. Although results vary across models and model implementations, the qualitative implications are robust and call for careful design of climate mitigation policies taking into account agriculture and land prices.
The role of methane in future climate strategies: Mitigation potentials and climate impacts
Climatic Change , May 2019, pp. 1-17 - 2019
Future CH4 emissions are expected to rise despite significant cost-effective emission reductions are projected at sources. Both, ambitious CO2 reduction measures and direct CH4 measures should happen to reduce emissions up to 74% in 2100. Agriculture CH4 emission, especially ruminant enteric fermentation, still have limited reduction potentials. Results have been produced by nine integrated assessment models within the 30th Energy Modeling Forum led by the Standford University.
NeatWork: A Tool for the Design of Gravity-Driven Water Distribution Systems for Poor Rural Communities
INFORMS Journal on Applied Analytics , Vol. 49, No. 2: 129–136 - 2019
Neatwork is a software to design water distribution network only driven by gravity. This is essential for poor communities living in remote rural areas. The design of the network is based on advanced optimization techniques in order to provide the best waster service with the minimum cost and the network usage can be tested through Mont-Carlo simulations. The approach has been applied successfully for more than 100 projects in Nicaragua led by the NGO Agua Para la Vida.
Taking some heat off the NDCs? The limited potential of additional short-lived climate forcers’ mitigation
Climatic Change , June 2019, pp 1–19 - 2019
Short-lived climate forcer cannot be use to reduce the risk to overshoot the 2C target from the Paris Agreement. Short-lived climate forcers have a significant effect on short term temperature and the rate of change but not on the maximum temperature change during the 21st century. These results have been produced by 8 integrated assessment models (including the WITCH model) within the 30th Energy Modeling Forum led by the Standford University.
Amplification of future energy demand growth due to climate change
Nature Communications , Volume 10, Article number: 2762 - 2019
Future energy demand is likely to increase due to climate change, but the magnitude depends on many interacting sources of uncertainty. We combine econometrically estimated responses of energy use to income, hot and cold days with future projections of spatial population and national income under five socioeconomic scenarios and temperature increases around 2050 for two emission scenarios simulated by 21 Earth System Models (ESMs). Here we show that, across 210 realizations of socioeconomic and climate scenarios, vigorous (moderate) warming increases global climate-exposed energy demand before adaptation around 2050 by 25–58% (11–27%), on top of a factor 1.7–2.8 increase above present-day due to socioeconomic developments. We find broad agreement among ESMs that energy demand rises by more than 25% in the tropics and southern regions of the USA, Europe and China. Socioeconomic scenarios vary widely in the number of people in low-income countries exposed to increases in energy demand.
Human Migration in the Era of Climate Change
RFF Working Papers Series , Working Paper 19-13 - 2019
Human mobility is one response to climatic stress and shocks. In this synthesis article, we review the recent literature on the effects of climate change on human mobility within various disciplines. We explore key features of the interplay between climate change and migration, distinguishing between fast onset and slow onset climatic events, while taking into consideration causes of heterogeneity in migratory responses. Moreover, we shed light on the underlying mechanisms behind the nexus as well as the interplay between different means of adaptation. Based on our review, we identify gaps in the literature and present some general policy recommendations and priorities for research on climate-induced migration.
An inter-model assessment of the role of direct air capture in deep mitigation pathways
Nature Communications , Volume 10, Article number: 3277 - 2019
This study shows the potential of Direct Air Carbon Capture and Storage (DACCS), a new technology for removing CO2 directly from the atmosphere, in helping to limit global temperature rise and lowering the costs of achieving the Paris objectives. However, the authors note that these technologies should be used as part of a portfolio of other mitigation solutions and would require major innovation to be feasible at scale. The paper has been co-authored by an international team of researchers from the Euro-Mediterranean Centre on Climate Change, RFF-CMCC European Institute on Economics and the Environment and Politecnico di Milano (Italy), Grantham Institute – Climate Change and the Environment at Imperial College London (United Kingdom) and the MaREI Centre at University College Cork (Ireland).
Sensitivity of projected long-term CO2 emissions across the Shared Socioeconomic Pathways
Nature Climate Change , Volume 7, pages113–117(2017) - 2017
Scenarios showing future greenhouse gas emissions are needed to estimate climate impacts and the mitigation efforts required for climate stabilization. Recently, the Shared Socioeconomic Pathways (SSPs) have been introduced to describe alternative social, economic and technical narratives, spanning a wide range of plausible futures in terms of challenges to mitigation and adaptation1. Thus far the key drivers of the uncertainty in emissions projections have not been robustly disentangled. Here we assess the sensitivities of future CO2 emissions to key drivers characterizing the SSPs. We use six state-of-the-art integrated assessment models with different structural characteristics, and study the impact of five families of parameters, related to population, income, energy efficiency, fossil fuel availability, and low-carbon energy technology development. A recently developed sensitivity analysis algorithm2 allows us to parsimoniously compute both the direct and interaction effects of each of these drivers on cumulative emissions. The study reveals that the SSP assumptions about energy intensity and economic growth are the most important determinants of future CO2 emissions from energy combustion, both with and without a climate policy. Interaction terms between parameters are shown to be important determinants of the total sensitivities.
Limited Emission Reductions from Fuel Subsidy Removal except in Energy-Exporting Regions
Nature , 554, 229–233 (2018) - 2018
Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewable energy. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders’ Summit) to phase out fossil fuel subsidies4,5 and many national governments are using today’s low oil prices as an opportunity to do so. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices10,11. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that removing fossil fuel subsidies would have an unexpectedly small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2–12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show that subsidy removal would result in the largest CO2 emission reductions in high-income oil- and gas-exporting regions, where the reductions would exceed the climate pledges of these regions and where subsidy removal would affect fewer people living below the poverty line than in lower-income regions.
Residual fossil CO2 emissions in 1.5-2°C pathways
Nature Climate Change , Volume 8, pages 626–633 - 2018
The Paris Agreement—which is aimed at holding global warming well below 2 °C while pursuing efforts to limit it below 1.5 °C—has initiated a bottom-up process of iteratively updating nationally determined contributions to reach these long-term goals. Achieving these goals implies a tight limit on cumulative net CO2 emissions, of which residual CO2 emissions from fossil fuels are the greatest impediment. Here, using an ensemble of seven integrated assessment models (IAMs), we explore the determinants of these residual emissions, focusing on sector-level contributions. Even when strengthened pre-2030 mitigation action is combined with very stringent long-term policies, cumulative residual CO2 emissions from fossil fuels remain at 850–1,150 GtCO2 during 2016–2100, despite carbon prices of US$130–420 per tCO2 by 2030. Thus, 640–950 GtCO2 removal is required for a likely chance of limiting end-of-century warming to 1.5 °C. In the absence of strengthened pre-2030 pledges, long-term CO2 commitments are increased by 160–330 GtCO2, further jeopardizing achievement of the 1.5 °C goal and increasing dependence on CO2 removal.
Editorial Overview: Slow Onset Events related to Climate Change
Current Opinion in Environmental Sustainability , 50: A1-A7 - 2021
This special issue of Current Opinion in Environmental Sustainability (COSUST) responds to an invitation from the United Nations Framework Convention on Climate Change (UNFCCC) Executive Committee of the Warsaw International Mechanism (WIM Excom) to bring together a collection of articles on environmental sustainability in relation to slow onset events. The Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC) identified sea level rise, increasing temperatures, ocean acidification, glacial retreat and related impacts, salinization, land and forest degradation, loss of biodiversity and desertification as slow onset events of particular concern ([1] decision 1/CP.16, December 2010 at COP16 in Cancun, Mexico). The articles review and synthesize literature which evaluate the nature of slow onset events and associated impacts and highlight emerging topics in the scientific literature in this regard. The special issue helps identify the gaps and challenges in understanding related to these types of events and their local, national, and regional impacts, and possible approaches to manage these. This collection of papers enhances the knowledge base and highlight potential approaches to assess and address the impacts and risks associated with slow onset events that can support the development and accessibility of tools, which inform national planning and policymaking processes. The reviews also help highlight gaps in knowledge and point to areas for future research.
Micro macro feedback links of agricultural water management: insights from a coupled iterative Positive Multi Attribute Utility Programming and Computable General Equilibrium model in a Mediterranean basin, Journal of Hydrology
Journal of Hydrology , vol. 569, pp 291 309 - 2019
Most water conservation policies will target agriculture, the largest human consumptive use and that concentrating the marginal (i.e. least productive) uses of the resource. Adaptation to irrigation rationing policies at the micro level will have an impact on agricultural outputs and propagate to the rest of the economic sectors at a regional and supra-regional (macro) scale. As the economy transitions towards new equilibrium commodity prices, the relevant prices for agriculture will change and this will in turn affect irrigators’ decisions. This paper proposes an iterative coupling between a decentralized, non-parametric Positive Multi-Attribute Utility Programming representation of irrigators and a regionally-calibrated Computable General Equilibrium model to assess interlinkages (i.e. two-way feedbacks) between the micro- and macro-economy. Results from an application to irrigation water charges in the Murcia Region in Spain show that the coupled micro–macro model yields lower abatement costs as compared to the stand-alone micro model.
Farm waters run deep: a coupled positive multi attribute utility programming and computable general equilibrium model to assess the economy wide impacts of water buyback
Agricultural Water Management , Volume 213, 1 March 2019, Pages 336-351 - 2019
Little is known about the economy-wide repercussions of water buyback, which may include relevant feedbacks on the output of economic sectors at a regional and supra-regional scale. Limited studies available rely on stand-alone Computable General Equilibrium (CGE) models that represent competition for water explicitly, but this approach presents significant data and methodological challenges in areas where mature water markets are not in place –the case of most regions worldwide. To bridge this gap, this paper couples a microeconomic Positive Multi-Attribute Utility Programming (PMAUP) model that elicits the value and price share to water with a macroeconomic, regionally-calibrated CGE model for Spain. Methods are illustrated with a case study in the Murcia Region in southeastern Spain. Economy-wide feedbacks amplify income losses in Murcia's agriculture from −20.5% in the PMAUP model up to −33% in the coupled PMAUP-CGE model. Compensations paid to irrigators enhance demand in the region, but supply contraction in agriculture and related sectors lead to overall GDP losses (up to −2.1%) in most scenarios. The supply gap is partially filled in by other Spanish regions, which experience a GDP gain through a substitution effect (up to +.034%). In all scenarios, aggregate GDP for Spain decreases (up to −.023%).
