Presidential Correspondence From the Editor

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Presidential Correspondence
Karine Nyborg, EAERE President
Dear EAERE Members,
Fall is here. Day by day, Oslo is getting darker and colder. Here’s something that has been cheering me up,
though: Your responses to the survey evaluating this summer’s EAERE Conference in Toulouse confirm my
subjective impression that people were very happy with the event. More than 70 percent of respondents
judge “overall content compared to other conferences” as “good” (48%) or “excellent” (23%); the
alternatives being “poor” (4%) and “average”(18%). People report to be satisfied with all types of sessions,
as well as the social events. It is also interesting to note that there is massive support for the current
conference format, including the full paper submission rule, the pre-assigned discussants, and a maximum of 500 oral
presentations.
Perhaps surprisingly, most participants even seem content with the conference fee (although there’s certainly a selection bias:
those most unhappy were, most likely, not there): Almost eighty percent found the fee “average”, “good” or “excellent”. In
informal conversations, I often hear people praise the particularly good social atmosphere of EAERE conferences, expressing
the view that this is at least partly due to a rather ambitious social programme being part of the event for everyone. While
complaints about the conference fees are also heard, it is my impression that most members accept a somewhat higher
conference fee than many other conferences as a necessary means to keep the good atmosphere (and the networking
opportunities that come with it).
Still, the fee might obviously be a problem for some. To address this, the EAERE Council has already taken measures to reduce
the conference cost. As a general rule, conference participants pay a levy to EAERE. In years 2015 and 2016, this levy will
temporarily be reduced by 50%. Whether the reduction can be continued in years to come, depends on EAERE’s future financial
situation - which will, in turn, largely depend on the number of members.
In fact, from 2015 on, we are implementing another important change: EAERE membership will then be a requirement for paper
submission to our annual conferences (a practice which is already adopted by the European Economic Association). This policy
is expected to bring advantages (primarily a more stable membership) as well as disadvantages, and will need to be evaluated
when we have gained experiences with it. Note that paper submission is usually possible in the end of the year preceding the
conference, making it possible to submit a paper based on the previous year’s membership registration. For PhD students and
individuals from developing countries, the reduced membership fee of 14 EUR applies; the Council does not expect this to
represent a major obstacle for these groups.
Recently, we also received the evaluation reports from participants of the 2013 EAERE-FEEM-VIU European Summer School. The
topic was Uncertainty, Innovation and Climate Change, and the school was coordinated by Erin Baker and Valentina Bosetti,
who were joined by David Budescu, William Nordhaus and Thomas Rutherford. 23 students attended, and judged from their
evaluation forms, the school was a huge success. EAERE’s part of this year’s summer school costs were covered by the project
ICARUS, an ERC Starting Grant funded by the European Commission with FEEM as the beneficiary and Valentina Bosetti as
principal investigator. Our sincere thanks to the sponsors, as well as to the school’s coordinators and faculty!
This is my last Newsletter as EAERE President. Serving in that position has been a true pleasure – not the least due the
competence, friendliness and sincere commitment of the EAERE Council members and EAERE Secretariat. Let me use this
opportunity to thank each of them in particular: Partha Dasgupta, Anil Markandya, Catarina Roseta-Palma, Matti Liski, Phoebe
Koundouri, Timo Goeschl, Monica Eberle, Irene Bellin, Policy Advisors Ger Klaassen and Herman Vollebergh, as well as our
Honorary President Frank Convery.
I hope to see all of you in Istanbul next summer. And to increase the chances of that: Please be warned that the deadline for
submissions is two weeks earlier than usual!!
With warm regards,
Karine Nyborg
University of Oslo
Norway
From the Editor
Phoebe Koundouri, EAERE Council Member and Newsletter Editor
Dear EAERE Friends and Colleagues,
Farewells are never easy, even when they are combined with exciting welcomes! For this Autumn
issue of our Newsletter, we have kept our traditional structure, but tried to populate it with
contributions from the outgoing members of EAERE Council.
Partha Dasgupta, EAERE Council outgoing Past President, leads the Newsletter’s Research Highlights
section with a reference to a fascinating article on The Nature of Economic Development and The
Economic Development of Nature using as backdrop two recent books on the Indian economy that are representative of ‘the
prevailing orthodoxy’, as Partha calls it, his study reveals that the entire architecture of contemporary development thinking is
stacked against nature. Partha concludes with the following recommendation: ‘These are still early days in the measurement of
the wealth of nations, but both the theory and the few empirical studies we now have at our disposal tell us that we should
substantially alter the way we interpret the economic progress’. This piece is followed by a reference to the Harward Honorary
Degree received by Partha, while in the Letters from the Regions section you can also find an interesting piece by Partha on
‘Getting India Wrong’.
The Letters from the Regions section has another three very interesting contributions. A piece by Ronan Lynons on "The Value of
Domestic Building Energy Efficiency-Evidence from Ireland”, a policy brief from the Grantham Research Institute on Climate
Change and the Environment of the London School of Economics, on flood insurance and the Water Bill in the UK House of
Commons written by Florence Crick, Sam Fankhauser, Swenja Surminski, Bob Ward, and a report by Maria Loureiro on the
PRESTIGE oil spill trial, in which she took part!
Catarina Roseta-Palma, EAERE Council outgoing Vice-President, deposits her personal reflections on the need for us,
environmental and resource economists, to expand our scope and learn from behavioral economics and even other social
sciences. Catarina’s insightful contribution in the Research Highlights section is based on her own research on water demand.
She concludes by recommending that: ‘As environmental and resource economists, we have a chance, and even, I would say, a
responsibility, to develop work that brings together different strands of knowledge to improve resource management policies and
environmental quality.’
Catarinas’ reflections are consistent with those by Rachel Croson, who gave an exciting plenary speech at EAERE 2013
Conference in Toulouse. Catarina reports back from this plenary session in the Feature section of the NL, which is devoted to
the 2013 EAERE conference in Toulouse. This section consists of reports from the local organizing team, the President’s forum,
keynote speeches, thematic sessions and policy sessions. All in all,fourteen different reports try to communicate the focus and
essence of EAERE Toulouse 2013. I hope that these writings, all from celebrated names in our field, prove enough to
communicate the quality and success of EAERE 20th Annual Conference, and inspire the organizers of the 2014 World
Congress in Istanbul (see related piece on the preparation of the World Council in the Institutional Highlights section of the
Newsletter).
The Research Highlights section also reflects on 2013 EAERE Conference in Toulouse, by including contributions from Bård
Harstad the Erik Kempe award receiver, John Tschirhart, the ERE best Paper Award receiver, and Gregory Smith, the best
EAERE Conference Poster Award receiver. In the same section you can also read Anil Markandya’s, EAERE President-Elect,
reflections on the 2012 ICCG Climate Think Tank Raking Award received by the BC3 that Anil directs. The section closes with
Isabella Alloisio's thoughts on the ICCG Think Tank Map project, launched in 2011 by the ICCG as an observatory aimed at
providing a complete overview of active worldwide think tanks in the field of climate change economics and policy. The PolicyRelated News from the European Commission section focuses on ‘EU Climate Policy beyond 2020’ and is the last contribution by
Ger Klaassen, as Policy Advisor of the EAERE Council. Ger’s contributions have been among the ‘most-read’ pieces of the NL
during the last three years and I want to deeply thank him for his ‘reliable’ support and his informative and laconic way of
communicating the Commission's complicated policies.
Although Matti Liski, the third outgoing EAERE council member, did not manage to send me a piece on his EAERE 2013 Toulouse
thematic session, the popularity of that session (Climate and the Macroeconomy) at the conference, speaks for itself regarding
the scientific appreciation that Matti enjoys in our field.
Following Karine, I want to warmly thank Partha, Catarina, Matti and Ger, for leading and guiding EAERE with their wisdom,
sharpness and personal charm. We have been privileged to learn from you and we know that you will always sincerely support
and lively participate in EAERE. At this point I should express our warmest welcome to the new EAERE Council members. No
introductions are needed: Lucas Bretschger (President Elect, contributing to the Feature section of the NL with a report on the
EAERE 2013 Conference on Thematic Session: Resource Use and Public Finance), Valentina Bosetti and Karen Pittel (Council
Members). Our warmest welcome also to Herman Vollebergh as Policy Advisor, we are looking forward to working with you.
As you can see, I send no goodbyes to Karine, our current President. Although Anil is taking over the presidency, Karine will still
be a leading Council Member as Past President. As a result we can still rely on her academic leadership and strength, and only
hope that we will be able to continue being as successful as during her presidency!
Last, but by no means least, and in addition to our traditional sections (Karine’s presidential correspondence, institutional
news and updates, job market news) the following NL contributions make essential reading: ERE report by Ian Bateman, EDE
Impact Factor by Tasos Xepapadeas, information on the AERE new journal, a report on 2013 EAERE-FEEM-VIU European
Summer School by Valentina Bosetti, and Aart de Zeeuw’s description of the new Summer School for researchers from
Developing Countries.
Finally, the recently established NL section on News from the European Commission Funded Research has attracted a lot of
interesting contributions: this issue includes reports from four different and very large interdisciplinary European Research
Projects that focus on Environmental and Natural Resource Management and have produced interesting socio-economic
analyses: PROBAPS, THESEUS, ENTRACTE. A fifth project report presents the methodological approach that has been developed
by ReSEES (www.aueb.gr/users/koundouri/resees/) leaded by Phoebe Koundouri, in order to assess the economic
sustainability of OpenAIRE FP7 project. This project builds the Open Access Infrastructure for Research in Europe, a very hot
and fast-developing issue that concerns all academic disciplines all over the world!
I believe that well-focused and quality Newsletter s have become important nowadays, due to the ever-increasing fast pace of
research-related information, production and diffusion. I sincerely thank you all for your lively participation in shaping up our
Newsletter. You make my editorial work stimulating and, I hope, the EAERE Newsletter informative and useful. Enjoy and keep
the good work up!
Phoebe Koundouri
Athens University of Economics & Business, Greece
London School of Economics, UK
Editorial Report from Environmental and Resource Economics (ERE), the official journal of EAERE
Ian Bateman, EAERE Editor-in-Chief
As we head towards the end of 2013 we can count this as a further very successful year for the
journal. Submissions passed the 500 per annum mark last year and look like them will exceed
that number by some way in the present year. This reflects a pretty impressive record of 11
years of continual growth in submissions (it might be longer than that; but that’s how far our
files go back!). People also read our papers – at least they download them – over 160,000 per
year at the last count. This popularity is also reflected in a good showing for the journal Impact
year at the last count. This popularity is also reflected in a good showing for the journal Impact
Factor which is at its highest ever level (see Figure 1) and compares well to competitor journals
(see Figure 2).
The EAERE Annual Conference in Toulouse gave us the opportunity to announce the annual award for the best paper published
in ERE over the past year. The winner for 2012 was:
John Tschirhart, “Biology as a Source of Non-convexities in Ecological Production Functions”, ERE, 51(2): 189-213
Four papers were awarded “Highly Commended” status as follows:
Martin Weitzman, “The Ramsey Discounting Formula for a Hidden-State Stochastic Growth Process”, ERE, 53(3): 309-321
Mara Thiene, Marco Boeri and Caspar G. Chorus “Random Regret Minimization: Exploration of a New Choice Model for
Environmental and Resource Economics”, ERE, 51(3): 413-429
Babatunde O. Abidoye and Joseph A. Herriges, “Model Uncertainty in Characterizing Recreation Demand”, ERE, 53(2):
251-277
Stephane Hess and Nesha Beharry-Borg, “Accounting for Latent Attitudes in Willingness-to-Pay Studies: The Case of
Coastal Water Quality Improvements in Tobago”, ERE, 52(1): 109-131
The Editorial Board wishes to thank Prof. Riccardo Scarpa who has retired after several years of excellent service. This and the
increased volume of submissions has necessitated an expansion of the Board and we are very pleased to announce that
Céline Nauges has joined us from the University of Queensland, Australia while from France we welcome Stefan Ambec from
the Toulouse School of Economics. Finally, proving that there is life after membership of the ERE Editorial Team, Daniel Rondeau
from the University of Victoria, Canada, rejoins us after several years of recuperation. All are extremely welcome.
We strongly encourage academics from across the field to submit their work to the journal and in closing I know I speak for the
entire Editorial Board when I express my unreserved thanks to the large team of Referee’s who support the journal. Without
your continued support the journal could not survive – thank you!
Ian Bateman
University of East Anglia
UK
EAERE Elections - New Council Members
EAERE members have recently elected three new members of the Association's Council:
Lucas Bretschger
Valentina Bosetti
Karen Pittel
EAERE would like to thank all the candidates for participating in the elections and wishes the new President-Elect and the new
council members every success. We would like to thank also all those members who took part in the elections.
Thanks to Outgoinig Council Members
Sir Partha Dasgupta
Matti Liski
Catarina RosetaPalma
Our warmest gratitude to Sir Partha Dasgupta, Matti Liski and Catarina Roseta-Palma for their insightful contribution and
commitment to the Association.
New Policy Advisor
Herman Vollebergh is the new EAERE Policy Advisor. EAERE expresses its warmest gratitute to the former
policy advisor, Ger Klassen, for the precious advices given to the Association, and welcomes Herman on
board.
5th World Congress of Environmental and Resource Economists - Updates
Ozgur Kayalica WCERE Local Organising Committee Chair
Dear EAERE members,
It is a great pleasure for us to invite you to participate in the 5th World Congress of
Environmental and Resource Economists (WCERE) which will take place between June 28 and July
2, 2014. This time, we invite you to come together in Istanbul, the unique World Heritage city.
What city could better provide the appropriate backdrop for a World Congress than one that straddles two continents, Europe
and Asia.
Over 1100 economists from over 40 countries attended the last World Congress in Montreal – and we anticipate an equal if not
greater number at Istanbul next year. We are very much looking forward to your high-quality papers in the Contributed and
Poster Sessions as well as proposals for Thematic and Policy Sessions from EAERE members.
Confirmed keynote speakers include Professors Robert H. Frank (Cornell), Eswaran Somanathan (Indian Statistical Institute),
and Matthew Kahn (UCLA Institute of the Environment).
A wealth of cultural highlights and an attractive choice of events in Istanbul await both the participants attending the 2014
World Congress, and those accompanying them. Built in 5th Century, 1001 Columns Cistern is waiting to host a WCERE 2014
Social Event with the culture of hundreds of years in the heart of historical peninsula. The Conference Dinner will be a
tremendous one in the heart of the Bosphorus where the two continents meet. Please visit the WCERE/2014 web site for
further details (www.wcere2014.org).
On behalf of ITU and the Local Organizing Committee, I would like to wish you the best on a successful Congress.
We are happy to have you in Turkey.
Yours truly
M.Özgür Kayalica
Istanbul Technical University
Turkey
Scholarships at WCERE/2014
We are proud to announce that EAERE makes available 10 grants of the value of €1500 each for participants to WCERE/2014.
Three of the above-mentioned grants will be assigned to participants in the pre-conference course on "Applied Methods
Related to Regime Shifts in Social-Ecological Systems" organised by the Beijer Institute. Other grants for the participation in the
course are made available by the Beijer Institute.
Details on eligibility and application process available at www.wcere2014.org/en/Grants.html
A Summer School for Researchers from Developing Countries
Aart de Zeeuw, Former EAERE President (1998-1999)
People may have noticed that courses were organized for researchers from developing countries just before
the World Congress of Environmental and Resource Economists in Montreal in 2010 and just before the
EAERE 19th Annual Conference in Prague in 2012. A new tradition seems to develop and it may be interesting
to learn about the background and the intentions.
EAERE started with the series of annual conferences in Venice in 1990 but it was felt that more was needed.
With the help of FEEM, an Autumn School was organized in Venice in 1991 for European PhD students and the
idea was that others would follow but unfortunately the whole thing collapsed. When I became president of
EAERE in 1998, I wanted to revive the idea and I was fortunate enough to find Ignazio Musu, the dean of Venice International
University, willing to offer the VIU facilities on the beautiful island of San Servolo.
We started the organization and my successor Alistair Ulph opened in 2000 the series of EAERE-FEEM-VIU European Summer
Schools that is still going strong.
The participants of these Summer Schools are carefully selected young researchers, mainly from Europe, who get lectures from
well-known professors on some topic and get feedback on their own research. Especially in the beginning, when environmental
economics was still a small field, this was important because many were quite isolated in their own institutions. Moreover, the
feedback from well-known professors in the field is usually very helpful.
A similar and even stronger need is felt in developing countries. The Beijer Institute of Ecological Economics in Stockholm
started a programme more than 15 years ago, with help from the MacArthur Foundation. Karl-Göran Mäler and Partha
Dasgupta, director and chair of the board of Beijer at the time, were the driving forces. Teaching and research workshops were
organized on location, with well-known professors from Europe and North-America. At this point, four regional networks exist
that organize bi-annual integrated workshops in their region: SANDEE in South Asia, EEPSEA in South-East Asia, LACEEP in
Latin America and CEEPA in Africa.
The intention is to connect research in developing countries to what is happening in developed parts of the world. A lot of good
research is done but some help is needed to get it across and some input is needed from new developments elsewhere. Also,
as Partha Dasgupta once said to me, the developing part of the world still has resources, so if environmental economics is
needed somewhere, it is in that part of the world!
The EAERE Annual Conference and World Congress have always been struggling to involve more researchers from developing
countries in their meetings. One problem is that papers do not survive the competition for acceptance because they are not
well presented or miss some new developments. Another problem is how to pay for travel in case of acceptance.
All these issues now seem to come together in this new initiative. When I was director of the Beijer Institute, it became clear to
me that the regional networks wanted to do something together and that they wanted to participate in the international
meetings. Jeff Vincent, Christina Leijonhufvud and I organized a two-day course, back to back with the World Congress in
Montreal in 2010. We carefully selected participants from all the regional networks. We were fortunate to have some of the
best lecturers: Partha Dasgupta, Scott Barrett, Jason Shogren and Eswaran Somanathan. Travel grants were provided by the
Canadian and Swedish Development Agencies.
The beauty of this set-up is that participants in the course can also participate in the conference, for little extra costs. They may
or may not have a paper accepted but they will learn in any case. Moreover, the organizers of the World Congress were happy
because it increased participation from the developing countries. The coordinators of SANDEE, EEPSEA, LACEEP and CEEPA met
in Montreal with the presidents of AERE end EAERE which boosted the idea of a world congress.
On behalf of the Beijer Institute, we organized another two-day course, back to back with the EAERE Annual Conference in
Prague in 2012. We were fortunate to have another group of excellent lecturers: Steve Polasky, Tasos Xepapadeas, AnneSophie Crépin and Reinette Biggs (ecologist). The same idea, the same enthusiasm. Only the finances become tighter. The
Swedish Development Agency was still supporting this event but we have to wait and see what the future will bring.
We are planning to do it again at the World Congress in Istanbul in 2014. The idea of a series of Summer Schools for
researchers from developing countries, back-to-back with large international meetings, is appealing. The Beijer Institute wants
to continue and the organizers of the World Congress are enthusiastic. This time the course will add the training of practical
skills to theory, at the request of the regional networks. The finances are not fully certain yet. EAERE and Beijer are providing a
number of travel grants for researchers from developing countries participating in the congress and the course, and we have
an application for support under review at the Canadian Development Agency. With all this enthusiasm, it should work out!
Aart de Zeeuw
Tilburg Sustainability Center
Tilburg University, The Netherlands
Beijer Fellow, Sweden
2013 EAERE-FEEM-VIU European Summer School on Uncertainty, Innovation and Climate Change
Valentina Bosetti, Bocconi University and Fondazione Eni Enrico
Mattei
The 2013 EAERE Summer School had, as a theme, climate
change policy with a focus on uncertainty. Uncertainty is
pervasive when dealing with a long-term problem, like that of
climate change.
It is a central issue when thinking about the problem itself,
when
collecting data, when formalising
relationships,
processes, and dynamics in the form of models, and when
producing results to be communicated to scholars, policy
makers, or the general public. Addressing this uncertainty is a
great challenge from an academic perspective, as the tools and
analyses that are being developed to address uncertainty are
sophisticated and at the frontier of research. It is, perhaps,
even more important and a greater challenge from a broader
perspective, as communicating the uncertainty inherent in
climate change to a lay audience is crucial, in order to
successfully move forward with solutions.
The topic chosen attracted many outstanding applicants, more
than ever in the past, and narrowing the selection down to 20 proved to be a very hard task.
The Summer School has been, first and foremost, an uplifting and joyful event. Of course, one might think of Venice in the
Summer with a full week of pleasant weather and infer that, indeed, that was the main reason for being there. But, it is
certainly only a minor part of the story.
The central element of the summer school’s success was the
group of students. They were motivated, mastering their field
and presenting original pieces of research, the large majority in
an incredibly engaging way. It has been refreshing and
stimulating to attend their short lectures, covering themes from
welfare theory and the accounting of uncertainty, to
uncertainty and integrated assessment modelling, or individual
risk perception and biases.
Whether it was the theme of the school, or mere luck, that
attracted so many good students, is not so easy to judge.
Whatever the reason, the outcome was reassuring on the
future status of this research field: many young and smart
researchers are on their way into it.
A second reason to rejoice, is that a large fraction (many more
than half) of these incredibly prepared PhD students and postdocs are women. Hearing them speak and watching them
deliver, it was possible to glimpse keynote speakers,
department heads and full professors of a not too distant
future. Possibly motivated by the quality of the students, the faculty has given their best. Lectures were bespoke, designed to
maximise interaction. The interested reader can view the lectures here.
Finally, nothing of all this would have happened, or at least not with the same mix of Swiss punctuality and Italian absence of
stress, without the loving care and professional capacities of Chiara Zanandrea, the Summer School secret ingredient.
Valentina Bosetti
Bocconi University
Fondazione Eni Enrico Mattei
Italy
Awards 2013
During the conference Awards Ceremony at the EAERE 20th Annual Conference, the winners of following awards were
announced:
Erik Kempe award in Environmental and Resource Economics - Bård Harstad
EAERE Award for Outstanding Publication in the Journal Environmental and Resource Economics - John Tschirhart
Best Poster Award at EAERE Annual Conference - Erik Brockwell and Gregory Smith
Further information regarding the Awards available at www.eaere.org/content/awards.
Outstandig Awards - Call for Nominations
EAERE invites nominations for the sixth edition of the EAERE Outstanding Achievement Awards, which recognise excellence in
achievement in two areas:
European Lifetime Achievement Award in Environmental Economics
European Practitioner Achievement Award in Applying Environmental Economics
European Lifetime Achievement Award in Environmental Economics
The Award recognises those who have devoted themselves productively and persistently to communicating and enriching our
endowment of knowledge in environmental economics. Those eligible are those who:
have already or are about to retire (It is accepted that for most nominees, the idea of 'retirement' is notional);
have been significantly involved in the profession in Europe , e.g. by working here, or contributing regularly to our annual
meetings and/or Summer School;
have made an outstanding and sustained contribution to the field, including some combination of scholarship,
institutional development and communication/dissemination.
European Practitioner Achievement Award in Applying Environmental Economics
The Award recognises Practitioners in the policy or business arena who have made signal contribution in the application of
economic ideas.
Those eligible are those who:
work or do substantive business in Europe
have demonstrated courage and skill in successfully achieving the implementation of environmental economics' ideas.
Nominations can be sent by filling in an online form at here for the Lifetime Achievement Award and here for the Practitioner
Achievement Award.
If you prefer, you can also simply send an email to [email protected] giving Award Category ('Lifetime Achievement Award' or
'Practitioner Award'), and your case for the nomination. A Nominating Committee comprised of Anil Markandya (chair), Gerardus
Klaassen, Karl-Goran Maler will evaluate the nominations.
A final decision will be taken by the EAERE Council. In case there will be nominees deserving the prize, the Award will be
conveyed by the President of EAERE to the winner(s) at the 5th World Congress of Environmental and Resource Economists, to
be held in Istanbul on June 29 - July 2, 2014. The deadline for sending nominations is November 30th, 2013.
We look forward to receiving your nominations for the EAERE Outstanding Awards!
Call for Individual and Institutional Memberships
EAERE Call for Individual and Institutioanl Memberships is open.
We encourage you to renew your membership and keep supporting the Association to further its aims. As per previous years,
EAERE is offering a rich portfolio of individual and collective benefits for members, making the return on a membership more
valuable than ever.
Information on Membership categories, eligibility and methods of payment available at www.eaere.org/content/memberships
EAERE New website
As you may already have noticed, EAERE’s new website was launched in early October.
We have completely redesigned the layout to strengthen simplicity and ease of use.
If you would like to submit contents (events, job opportunities, job market candidates’ profiles, books, educational
programmes, useful resources) for inclusion in the website, follow the instructions at the dedicated pages or send us a note at
[email protected]: the rules remain unchanged.
Members will be able to access the password-protected pages with the same password they received in the membership
confirmation e-mail.
The EAERE website displays a huge amount of information on the Association’s past and future initiatives: conferences,
awards, summer schools, benefits for members. We warmly encourage to explore it!
We truly hope you will enjoy exploring our new website, and please feel free to send us comments or suggestions you may
have.
have.
Reflections on EAERE/2013
David Alary, François Salanié, Nicolas Treich, LERNA and Toulouse School of Economics
The 20th Annual Conference of the European Association of Environmental and
Resource Economists (EAERE) was held in Toulouse, France, on June 26-29, 2013.
We were part of the organizing team within LERNA and the Toulouse School of
Economics, and here are a few topics that we would like to put forward.
A big conference represents a lot of work: the conference gathered around 750 participants from about 50 countries. From a
scientific viewpoint, this represents 1280 papers submitted and graded by 265 referees, and the allocation of 475 papers to
161 parallel sessions, 3 keynote lectures, 8 policy sessions, 6 thematic sessions, 2 pre-conference events, and finally 25
papers presented as posters. The members of the scientific committee (Fredrik Carlsson and Nicolas Treich) would like to
warmly thank the referees, and congratulate the orators and the prize winners.
Similarly, and on behalf of the local organizing committee David Alary would like to thank all those that participated in the
process – from the PhD students to numerous people assigned to a nearly infinite number of various tasks, and that often
provided their help for free – so that the budget eventually remained finite.
The Thematic Sessions were the main scientific novelty. These sessions offer an opportunity to present some original ideas or
“frontier” research questions to the community of environmental economists. After a call for proposal, 6 sessions were selected
from 35 projects proposed by researchers. Each researcher was in charge of choosing invited papers, and organized the
session as she/he wished. Needless to say, this innovation raised lots of questions (should we run these sessions in parallel?
Should they be considered as "excellence” sessions? How to balance delegation and a control by referees?); but they seem to
have been successful. For future events, one may want to advertise more broadly the call for proposal, outside the community
of environmental economists, so as to convince prominent scholars (perhaps in other fields) to come to the EAERE conference.
Attracting such scholars was a priority of the Scientific Committee.
For the Local Organizing Committee, the priority was on allowing networking – even though the schedule was dense! We had
to make lots of choices: for example we had no formal lunches, but prepared lunchboxes, so that people could meet as they
wish. Fortunately the weather was nearly ideal, and we hope that Toulouse was buzzing with scientific controversies until late
at night.
We recently read a summary of your reactions, from the questionnaire you were so numerous to return to the Association –
thank you for the feedback! We apologize for all the blatant mistakes you noticed –- and we appreciated the flattering
messages. To us this was a fantastic experiment, and we shall repeat it next year with the EEA-ESEM conference. Your
comments will be very useful to the next EAERE team in Istanbul, to which we simply say: Good luck – you’ll need it …
For more information, please visit the conference webpage: www.eaere2013.org/
David Alary, François Salanié, Nicolas Treich
LERNA and Toulouse School of Economics
France
Presidents' Forum: Environmental economics: a New Science of Pleasure?
Henk Folmer, Former EAERE President (1992-1993) and Honorary Member
Before EAERE, some twenty years ago, environmental economics was rather invisible in Europe, in spite of the
rapidly increasing number of environmental problems and the growing criticism of the environmental policy at
that time, notably standards and controls. Even more so, there were no `environmental economists’; there
were economists working on, inter alia, environmental problems. However, they were submerged in public,
regional and micro economics departments; environmental economics was a side job. It goes without saying
that there was little interaction among the ‘semi’ environmental economists, especially Europe wide. In this
environment, the EAERE initiative (see EAERE Newsletter, Autumn 2012) was timely and well received.
There was a rapid increase of membership, from Europe, the US and the rest of the world. Furthermore, EAERE
got its own journal, ERE. The association also started organizing an annual conference that has been attended by participants
from all over the world, and it is one of the co-organizers of the world conference.
In addition, it organizes an annual summer school and a job market. Finally, many of its members have strong links to policy
makers at the local, regional, national and international level as well as to business and ngo’s .
So, mission completed? The answer, of course, is no.
There are still many issues that need further analysis. Moreover, new problems keep emerging such as, recently, the
sustainability of environmental policy in a global recession and financial crises.
However, there is a more basic reason for the members of EAERE not to lean back and to plod along the path of past success.
Rather, there is an urgent need to reconsider the methodology and theoretical framework of environmental economics.
Although there has been a strong increase in behavioral economics since the early 1980s, environmental economics still is
neoclassical economics in the first place, in spite of the fact that the neoclassical paradigm has been heavily criticized for more
than half a century and many alternative paradigms have been proposed. The criticism was expressed in an imagination
inspiring fashion by the famous theoretician and mathematical economist Morishima (1984)as follows: “We have in our
discipline been led up the wrong path by the invisible hand of the demon, and because it takes both time and money to make
an engine, we are producing on a large scale “aeroplanes” which have no engine”. According to Sen (2008), Morishima’s
discontent was based on “…the economic theorists’ lack of knowledge about the empirical reality about which they theorize…
and…that this lack of knowledge about the empirical reality was clearly connected with a lack of interest in the world beyond
the deliberately simplified reality studied in economic theory”. Because of his discontent, Morishima started analyzing economic
problems from the perspective of anthropology, sociology, psychology and history. Moreover, he delved into empirics. As a
result, he claimed that he finally had started understanding economic reality. Recently, McFadden (2013) voiced a similar
criticism: ‘The challenge facing economic consumer theory is to utilize the disperate measurements and experimental methods
that have become available to synthesize a new behavioral science of pleasure that retains the quantitative, predictive
features of neoclassical theory in the economics settings where it works well, and extends these features into areas of
individual sensation of well-being and choice in the context of social network information and approval, so that the theory can
better predict the impact of novel economic policies on consumer well-being’.
The following lessons for environmental economics emerge from Morishima’s reform and McFadden’s challenge. First, rather
than assuming a utility maximizing consumer (or profit maximizing producer), as is frequently done in environmental economics,
than assuming a utility maximizing consumer (or profit maximizing producer), as is frequently done in environmental economics,
a test should be performed whether or not “… it works well …” in the situation at hand. Secondly, Morishima’s and McFadden’s
recommendations extend well beyond partly fixing up the neoclassical model when its assumption are rejected, as is typical in
behavioral economics. McFadden proposes “… a new behavioral science of pleasure…that …extends .. into areas of individual
sensation of well-being and choice in the context of social network information and approval” while Morishima recommended
analyzing economic problems by means of the social sister sciences. For environmental economics this would mean turning it
into environmental social science (Folmer and Johansson-Stenmann, 2012).
Even if Morishima’s and McFadden’s recommendations are not fully followed up, it is a prerequisite of sound economic analysis
to include systematic factors from the social sister sciences into environmental economic models. For example, Cottrell (2002)
shows that environmental attitudes explain 24 percent of total variance in people’s environmental behavior and Tang (2013)
finds that perception of water scarcity is the most important explanatory variable in a stochastic frontier analysis of irrigation
water usage by farmers in the Guangzhong Plain, China. It follows that ignoring systematic social science factors like trust,
attitude, perception, network, formal and informal norms, reputation, and expectation leads to underspecified models and
omitted variables and thus to biased and inconsistent estimators of the effects of the conventional economic variables.
Similar observations apply to producer theory applied in environmental economics. The standard model of a profit maximization
in a world of perfect information world is a model that in Krugman’s (2009) words is …”clad in impressive looking mathematics“
but, that, according to Krugman (2010) does not guarantee …” some assurance that the analysis is actually relevant’. A
relevant analysis considers a firm that is made up of several different organizational units that pursue diffuse, often conflicting
goals. It is embedded in a network and a socio-cultural-political environment with several broadly formulated goals and norms.
To sum up, twenty years ago, EAERE was urgently needed. EAERE has been successful in uniting environmental economists
worldwide and has facilitated basic, applied and policy oriented research. EAERE is still needed. However, in Morishima’s
terminology, its engines, environmental economics, need basic revision. If Morishima’s and Heckman’s suggestion will be
followed up, we’ll see the emergence of a new environmental social science, a behavioral science of pleasure.
Henk Folmer
University of Groningen
Netherlands
References
- Cottrell, S. P. (2002). Influence of sociodemographics and environmental attitudes on general responsible environmental
behavior among recreational boaters. Environment and Behavior, 35(3), 347-375.
- Folmer, H. and O. Johansson-Stenmann (2012) Does environmental economics produce aeroplanes without engines? On the
need for an environmental social science. Environmental and Resource Economics, 48(3), 337-361.
- Krugman, P. (2009) How did economists get it so wrong? New York Times, 20 September.
- Krugman, P. (2010) British fashion victims. International Herald Tribune, 23-24 October.
Keynote Lecture: The Early History of Environmental Economics, Agnar Sandmo
Agnar Sandmo, Department of Economics, Norwegian School of Economics
When Nicolas Treich, co-chairman of the scientific committee, asked me to give a keynote lecture to the
Toulouse Conference on “the history of thought in environmental economics” I was naturally very gratified. It
is always a pleasure to be able to talk about your own field of interest to a large audience; to be able to talk
about two of your fields at the same time is a double pleasure – almost a double dividend. However, I had to
give some thought to the more specific topic of my lecture. Environmental economics is a young field of
specialization in economics; a common view is that it emerged as a separate field in the 1960s. But the
research that has been published since that time still forms part of the standard references in our field, and a
history of thought might then easily turn into a survey of the current literature.
So I decided that I would have to go back in time and talk about “The early history of environmental economics.” Paradoxically,
this would involve talking about the history of environmental economics before it was born.
Is there such a history? In trying to trace it I searched the literature for two sets of discussions. On the one hand, I looked for
awareness in the work of the early economists of the effects of economic activity on the natural and social environment and of
the feedback from the environment to the conditions under which economic activity is carried out. On the other hand, I was
interested in early examples of the use of economic theory to analyze problems of environmental policy.
Awareness of the interaction between the economy and the environment is present in the work of many economists of the
past. The best known example among the classical economists is the work of Thomas Robert Malthus, whose Essay on the
Principle of Population (1798) emphasized the race between population, poverty and economic growth, explaining how
population is kept in check by a deterioration of living standards and increasing death rates. Other examples include the
Marquis de Condorcet who had argued in 1776 that both agriculture and manufacturing could cause air pollution that was a
danger to public health. Almost a hundred years later, William Stanley Jevons’ book The Coal Question (1865) advanced the
thesis that England’s economic supremacy in the world could collapse as a result of the gradual depletion of her coal fields. In
1890, Alfred Marshall was one of the first to warn of the excessive exploitation of fish resources in open access fisheries.
Examples of the use of economic theory to analyze environmental policy a re hard to find as far back in time as the 18th
century. Indeed, this branch of environmental economics depended crucially on the development of an economic theory that
could pinpoint the causes of market failure and identify the public policies that could make the market economy function more
efficiently. Such a theory started to develop at the end of the 19th and beginning of the 20th century through the partial
equilibrium analysis of Marshall and Pigou and the general equilibrium theories of Walras and Pareto. The simultaneous (and
far from incidental) development of welfare economics helped to illuminate the question of when the operation of the market
economy was in the public interest, an issue which had been of deep concern to Adam Smith (1776). Modern environmental
economists stand in heavy debt to these and other economists for their sophisticated analyses of environmental public goods
and externalities as causes of market failure as well as the analysis of taxes and regulations as instruments designed to
improve the performance of markets. Without the analytical tools that they developed, modern environmental economics would
be in poor shape.
This is an example of “the interaction of tools and problems in economics”, to use a phrase by Tjalling Koopmans (1957); new
theoretical approaches brought a new set of social problems within the reach of economic analysis. But we should add that
successful environmental policies not only depend on the analytical tools of environmental economists but also on the policy
instruments available to governments.
So the early history of environmental economics does exist. But why should we care about it? There are two reasons. One is
that to many of us it is intrinsically interesting as a part of the knowledge of our field and indeed as part of general intellectual
history. The other reason is that some knowledge of the history of thought may make us better economists. This is obviously
not because the economic analysis of past centuries is better in some absolute sense than that of our own time; it clearly is
not. But a study of its history makes us aware that economics in general and environmental economics in particular is in a
process of continuous development as a result of its practitioners’ efforts to improve it. In this evolutionary process our starting
point is always determined by the efforts of the past – by the successes as well as the failures of earlier economists. This
insight may make us more modest but possibly also more broad-minded and useful environmental economists.
Agnar Sandmo
Norwegian School of Economics
Norway
Keynote Lecture: On Sustainability and Social Welfare, Marc Fleurbaey
Ger Asheim, University of Oslo
Marc Fleurbaey's keynote lecture 'On Sustainability and Social Welfare' at this year’s EAERE conference in Toulouse
examined the definitions of sustainability and the link between sustainability and social welfare.
In his definition and analysis of sustainability, as presented in his lecture, Marc adopts a discrete time framework
with a finite time horizon. The discrete time framework nicely allows for separation of the possibilities for future
generations from the achievements of the current generation. The finite horizon eliminates from the analysis
complications of dubious practical relevance.
He defines the current welfare level to be sustainable if there is a feasible path where future welfare is
maintained at or above the current level.
By considering the maximal minimal (maximin) level of welfare that can be maintained, starting with the current generation and
starting with next generation, six different alternatives can be considered (not considering cases where welfare levels and
maximin levels are tied). Two are impossible, where the maximin level is increased from the current generation to the next,
while current welfare is higher than the current maximin level or even higher than the maximin level of the next period.
(Because then welfare could be maintained strictly above the current maximin level, which is a contraction.)
Two cases are sustainable, where the current welfare level is lower than the maximin level both currently and in the next
period. If the maximin level increases from the current generation to the next, then the sacrifice of the current generation
increases opportunities for future generations, while the opposite case, the current generation’s management is wasteful,
even though it does not contradict sustainability.
Two cases are unsustainable, where the maximin level decreases from the current generation to the next, and where current
welfare is higher than the maximin level of the next period or even higher than the maximin level of the current period. In the
latter of these cases, the reduction of the opportunities for future generations enables the current generation to enjoy a
welfare level above the level that is initially sustainable. In the latter case the current generation's management is wasteful, as
the opportunities for future generations are reduced even though current welfare does not exceed the level that is initially
sustainable.
The lecture contained a discussion of whether the maximin level can actually be interpreted as an indicator of the opportunities
of future generations - or whether current generations should care about the likely evolution of welfare in the future - and the
relationship of the analysis to the so-called genuine savings indicator. Furthermore, the lecture also included an analysis of
how a concept like 'ecological footprint' can be defined in this framework, and discussed how the definition of sustainability can
be integrated with a welfare analysis which is not necessarily based on the maximin criterion. Finally, several extensions were
briefly mentioned: Sustaining positive growth, multiple targets of sustainability, and sustainability under uncertainty.
In short, a rich and intriguing lecture on an important subject for environmental and resource economists.
Ger Asheim
University of Oslo
Norway
David Pearce Lecture: Using Behavioural Economics to Influence Environmental Decisions, Rachel
Croson
Catarina Roseta-Palma, EAERE Vice-President
The David Pearce Lecture at our annual conferences is meant to focus on the interface between economics
and policy. In this spirit, Rachel Croson presented a talk on the use of behavioral economics to influence
environmental decisions.
The basic insight from behavioral economics is that individuals aren’t always maximizers. This has been clear to
psychologists for some time, but economists typically responded with a number of well-known arguments. For
instance, the “as if” hypothesis states that what is going on in people’s minds is immaterial as long as they act
as though they are indeed picking their best option.
However, there is now a large body of data that shows the weakness of this hypothesis in many different
contexts, highlighting systematic deviations from the rational (optimizing) choice. A second response has been
to argue that individual biases are irrelevant as long as they average out in institutions such as the market. Yet some biases
persist as market anomalies.
A third line of argument questions the relevance of such human biases for economic theory given that: they are concentrated in
a few decision domains, the extent of deviations may be relatively small, and they not be frequent but rather concentrated in a
few agents making really bad decisions. The main counter argument, though, was initially that there is no better assumption to
explain people’s behavior, since decision-making models based on randomness would be pretty useless for clarification or
prediction.
A serious alternative arose with the development of prospect theory, which included an asymmetry between gains and losses
in utility, probability weighting functions, and an organized body of heuristics and biases. This added degrees of freedom to
economic models, although at first pieces were missing from the puzzle (for example self-control issues or social norms). Rachel
argued that if you think of a production possibility frontier of science, with model parsimony and accuracy on the axes,
Economics has focused most on the first while Psychology has preferred the latter.
After presenting some policy applications in the areas of finance and health, Rachel talked about decisions that have an
environmental impact. In particular, there is evidence that for energy and water conservation at the household level social
comparison is a much more effective behavior changer than price instruments (whose demand elasticity tends to be low).
Thus the summary evidence is that behavioral economics works in different domains, and that paying attention to choice
architecture may go a long way. Major challenges for policy include unintended consequences, a good example of which is
given by an experiment where people who were told that paper towels would be recycled used more of them; and negative
reactions by people if their choice set is perceived to be curtailed by interventions.
Rachel pointed out a few open questions that could be explored, such as the importance of identity to choices and the biases
within institutions. Finally, there were some questions from the audience on the potential of behavioral tools, long used by
marketers to shape consumption patterns in a seemingly ever-increasing trend, to have the opposite effect now, on
implications for welfare theory from aspects such as the definition of choice sets, and from the relevance of perceived
intentions of policies.
Catarina Roseta-Palma
University Institute of Lisbon
Portugal
Thematic Session: Designing contracts for REDD+
Bård Harstad, University of Oslo
Whether one is concerned with climate change, biodiversity or native populations, an important part of
the solution will be to avoid deforestation. So-called REDD-contracts stands for payments for “reduced
emissions from deforestation and forest degradation.” This formulation is a bit loose, since it is far from
clear how these payments should be structured: How much, to whom, when, and after which evidence
and for which conditions? The details are important here, and one of the motivations for this thematic
session was to illustrate exactly this.
The session included three papers. Charles F. Mason, from the University of Wyoming, presented his recent paper “Optimal
Contracts for Discouraging Deforestation with Risk Averse Agents.” The starting point of Mason’s research is a very natural and
reasonable one: Landowners may have private information regarding their “types” and willingness to sign and accept
contracts offered to them. In this paper, it is the landowner’s risk tolerance that is privately known. Rather than offering the
different (but seemingly similar) landowners the same contract, Mason showed that it is optimal to offer a larger menu of
contracts to the landowners. Depending on the landowner’s risk tolerance, the landowner will then select one of the contracts
included on the menu. Mason also derived what the menu of contracts should look like, although their details are too
complicated to be described here. Perhaps the most important lesson is that it is less expensive and thus important for the
contract-designer to offer a menu of contracts to the landowner rather than a harmonized one-size-fits-all type of contract.
Philippe Delacote, at INRA in France, next presented his joint paper with Gabriela Simonet: “Readiness and Avoided
deforestation policies: on the use of the REDD fund.” Also this paper departs from the possibility that information is incomplete
and the parties (the landowner as well as the contract designer) may be risk averse. Here, it is the measurement of actual
deforestation that is imprecisely observed, but the precision-level can be improved upon by investing sufficiently in monitoring
technology. What is the impact of such better technology? When the landowner and the contract-designer are risk averse,
they dislike uncertainty and a better monitoring technology makes it (more) likely that the two parties will agree on (larger)
effort and payment in reducing deforestation. More information is thus ambiguously good, but it is also costly and requires
resources which alternatively could have been used at paying directly for reduced deforestation. The paper by Delacote and
Simonet discusses this trade-off carefully and investigates how the total budget should optimally be allocated between the two
tasks of improving the monitoring technology and paying directly for reduced deforestation. Intuitively, the levels of risk
aversion will here be important.
Bård Harstad, at the University of Oslo, presented the last paper entitled “The Market for Conservation and Other Hostages.”
In contrast to the first two papers, this paper abstracts from incomplete information and instead studies a fundamental
problem associated with so-called “conservation goods” that arises in dynamic settings: If a contract-designer is expected to
offer a contract tomorrow, the landowner will conserve already today waiting for the future payment. As long as the landowner
is conserving, however, there is no reason to actually pay. This contradiction implies that there is no good equilibrium in pure
strategies where conservation will actually take place with certainty. Following this pessimistic result, the paper proceeds by
investigating reasonable (mixed-strategy) equilibria and by comparing rental or leasing arrangements to the sales contracts.
All in all, the three papers differ in several ways and they build on quite different assumptions. This illustrates that the set of
papers spans quite a large space and that there are room for many more papers on this important topic.
Bård Harstad
University of Oslo
Norway
Thematic Session: Energy, Risks and Regulations
Thomas P. Lyon, University of Michigan, and Shanti Gamper-Rabindran, University of Pittsburgh
The thematic session “Energy, Risks and Regulations” was organized by Thomas P. Lyon (University of Michigan) and Shanti
Gamper-Rabindran (University of Pittsburgh), and chaired by Peter Eggers (ETH Zurich).
Gamper-Rabindran presented work-in-progress with Arie Beresteanu (University of Pittsburgh) on inspections in the shale
industry, The rapid growth of shale gas industry in the US, along with concerns about potential adverse environmental impacts,
raises the question on how effective have inspections been in reducing violations of environmental regulations, both at the
inspected well pad and spillover effects on neighboring well pads or other well pads operated by the same firm. The paper
investigates this question using an author-assembled database for shale gas wells in Pennsylvania, United States.
Preliminary data was presented on the growth in the number of wells and production of shale gas, the location of wells in
relation to population density, sources of water supply (well water versus public water supply), distance to high value streams
and state forests and on inspections and violations over time. The propensity score matching method used estimate the impact
of prior inspections on violations was described.
of prior inspections on violations was described.
Ujjayant Chakvavorty (Tufts University) presented his paper, co-authored with Marie-Hélène Hubert and Linda Nøstbakken
(University of Alberta), on the impact of biofuel mandates on food prices. Their paper shows that demand-side effects - in the
form of population growth and income-driven preferences for meat and dairy products rather than cereals - may play as much
of a role in raising food prices as biofuel policy. Because of new land that can be brought under farming, the rise in food prices
is likely to be much smaller than predicted by other studies. However, biofuels may increase aggregate world carbon emissions,
due to leakage and conversion of new land for farming. In a second paper, written with Marie Helene Hubert and Beyza Ural
Marchand, which uses household food consumption data from India, he shows that even though biofuel mandates are
expected to create modest increases in food prices, they may create a large number of newly poor people. This is because food
is a significant part of the budget for a household below the poverty line.
Carolyn Fischer (Resources for the Future) presented her paper with Stephen Salant (U. of Michigan) on Limits to Limiting
Greenhouse Gases. A risk of clean energy policy that has been identified in the recent literature on the Green Paradox is that
fossil resource owners will respond to future shifts in demand by simply accelerating extraction-and emissions. This type of
carbon leakage is further exacerbated when significant portions of global fuel demand are not subject to carbon regulation.
Fischer and Salant distinguish between regulated and unregulated regions in a Hotelling-style model with different grades of
oil that are characterized by different costs, emission factors, and underground reserves. When the clean backstop
experiences cost-reducing technical change, even unregulated consumers may switch from fossil fuels to the backstop prior to
complete exhaustion, which makes cumulative emissions reductions possible. Since the most a regulating coalition can do is
eliminate its own demand, the limits to limiting greenhouse gases depend on the share of world demand that is unregulated
and the speed of technical change in the backstop. Hence, increasing the size of the regulated coalition and accelerating
backstop cost reductions are policy substitutes for achieving a target emissions reduction. Given the difficulties in securing
international cooperation on global warming, promoting technical change in clean energy sources may be the less costly
instrument for enhancing the effectiveness of subglobal carbon pricing.
Thomas P. Lyon, University of Michigan
Shanti Gamper-Rabindran, University of Pittsburgh
USA
Thematic Session: Equity and Climate Policy
Snorre Kverndokk, Frisch Centre, Oslo and Linda Nøstbakken, Norwegian School of Economics, Bergen
During the EAERE conference in Toulouse in June, we organized a thematic session on “Equity and Climate Policy”. There are
several reasons why we find this to be an important topic. While climate change generally has been recognized as a threat to
our future both by scientists and politicians, there is still an ongoing debate on what to do about it.
A major challenge is equity. Even if we all agree on the natural science basis for climate change and the costs to abate
greenhouse gas emissions, people may not agree on what the optimal emission reductions are. The reason is that optimal
emission reductions to a large degree depend on equity issues, which have not been fully explored by economists.
Greenhouse gas abatement not only affects the welfare distribution between present and future generations – since impacts
are felt in the future, while costs accrue today – but also the distribution within a generation, such as between rich and poor
countries.
We usually refer to these aspects as inter- and intragenerational distribution. While the first deals with how we distribute
burdens across generations, the second considers how we distribute the burden within a generation (present or future), such
as who would suffer from action (mitigation) or inaction. Inaction increases future damages and it is generally believed that the
developing world will be harder hit by these damages than industrialized countries.
In analytical work, we often assume that the two distributional issues are autonomous. However, choices that affect the
intergenerational distribution also affect the intragenerational distribution, and vice versa. As an example, consider increasing
the social discount rate. This will reduce actions today and increase future damages, thereby affecting intergenerational equity.
If the damages are relatively more severe in poor regions, these regions will suffer more than the rich in the future. Hence, the
discount rate also affects the intragenerational equity. Similarly, attempts to reduce global income inequality may induce higher
economic growth in poor countries, and thus increased greenhouse gas emissions. Through climate change this may, in turn,
reduce the welfare of future generations.
All three papers presented in the thematic session on equity are part of the project “Intergenerational and Intragenerational
Equity in Climate Policy,” which is partly funded by the Research Council of Norway. The first paper by Geir Asheim and
Stéphane Zuber uses rank-discounted utilitarianism as an equity criterion: Each generation is ranked based on their well-being
before discounting, giving equal treatment of each generation. This is applied to intergenerational equity, but also to
intragenerational equity criteria as the paper focus on individuals. The paper contributes to population ethics by proposing a
rank discounted critical-level generalized utilitarianism that avoids serious objections raised against other variable population
criteria. The second paper by Snorre Kverndokk, Linda Nøstbakken and Eric Nævdal asks the following questions: What would a
global climate treaty look like if people care about inter- and intragenerational equity? As the intergenerational criterion we use
social discounting, and we use aversion to inequality in consumption as the intragenerational one. If all countries agree on
these two criteria we would see an international treaty under which developing countries have higher future consumption
paths, while rich countries have lower consumption paths. This implies that the rich countries must take more responsibility for
emissions reductions, while developing countries are allowed to emit more to develop faster. Carbon leakage, as larger
emissions reductions in rich countries are offset by higher emissions in poor countries, would still be beneficial as it reduces
global inequality. Depending on the degree of inequality aversion, it may even be optimal to make no emissions reductions in
developing countries while these countries catch up in economic development. In this case, the full climate burden will rest on
the developed world.
The third paper by Johan Eyckmans, Samuel Fankhauser and Snorre Kverndokk uses the same equity criteria as the paper by
Kverndokk et al. above, but takes a developed world perspective as it studies the optimal transfers from rich to poor countries
based on the equity criteria. They find that the most effective instrument to promote adaptation and mitigation in the South is
a development transfer. In pure equity terms, development aid is a more effective instrument for achieving both
intergenerational- and intragenerational equity.
Snorre Kverndokk, Frisch Centre
Linda Nøstbakken, Norwegian School of Economics
Norway
Thematic Session: Resource Use and Public Finance
Thematic Session: Resource Use and Public Finance
Lucas Bretschger, ETH Zurich
How can resource exporting countries use resource revenues optimally to plan public expenditures? What are
resource importers’ optimum tax strategies when resources are essential and growth depends on capital
accumulation? The interface between resource economics and public finance is a theoretically demanding field
with many novel and fruitful policy applications. The thematic session at this year’s EAERE annual conference
was aimed at presenting fundamental implications of resource market dynamics on the behavior of
governments, households, and firms operating in open and growing economies. It was the aim to add to our
general understanding of theoretical relationships and to provide the ground for better evaluation
of national resource and tax policies. Thereby, the openness of the countries with respect to goods trade and
financial markets plays a role both for public finance and optimum resource use. In the same way, endogenous
growth dynamics have to be considered for the longer run.
Moreover, the optimum strategies of financing public goods over a long time period differ fundamentally between resource
importing and exporting countries. For resource exporters, several rules have been advocated to different countries in the past
but their usefulness has to be critically analyzed in terms of realistic model conditions. Resource importers use different
strategies, especially in view of the high rents resource extraction involves.
Three paper presentations contributed to various aspects of the research area. The contribution by Van der Ploeg and
Venables titled “Absorbing a windfall of foreign exchange: Dutch disease dynamics” provides compelling evidence that the
often-advocated permanent income rule is usually not the optimal response to a resource discovery. The reason is that we
have to observe absorptive capacity constraints and capital immobility. These restrictions delay necessary adjustment and
create short run ‘Dutch disease’ symptoms. Hence, optimal resource revenue management rather requires investing in the
domestic non-traded goods sector while accumulation of foreign assets allows accommodating optimal development paths.
In “Commodity Prices, Long-Run Growth and Fiscal Vulnerability” Ferraro and Peretto start from the observation that longlasting commodity price declines are often associated with abrupt tax revenue shortfalls in commodity-exporting countries.
Therefore, reliance on the tax base of the commodity-exporting sector makes the countries fiscally vulnerable to exogenous
variations in commodity prices. The authors study the short- and long-run implications of taxation using a Schumpeterian
endogenous growth model. They are able to show that countries' dynamic response to commodity price changes depends both
on the structure of the tax code and the government budget, i.e. the policy response necessary to balance the government
budget. Specifically, it turns out that tax changes affecting the equilibrium rate of return to cost-reducing activities have steadystate growth effects. Furthermore, the closed-form solution allows designing welfare-enhancing tax policies. In the third
contribution titled “Resource Taxes and Productivity Gaps under Asymmetric Trade” Bretschger and Valente explain that the
incentives of national governments to impose strategic taxes are crucially influenced by asymmetric trade structures; resourcerich countries subsidize resource use when they exhibit negative gaps in productivity growth while resource-poor countries tax
resource inflows to extract foreign rents. National governments thus have incentives to deviate both from laissez-faire and
efficient equilibria. The model predictions are supported by empirical evidence. All the contributions were well received by the
audience and the general discussion revealed some further applications and possible refinement.
Lucas Bretschger
ETH Zurich
Svitzerland
Policy Session: Economics of coastal and marine ecosystem services: The need for evidence-based
policy
Nick Hanley, University of Stirling
Recent publications such as the UK National Ecosystems Assessment and TEEB have emphasized the
importance of attaching economic values to changes in ecosystem service flows and biodiversity. However,
most work to date (conceptual and empirical) has been conducted in terrestrial environments. At the same
time, policy innovations in the EU – such as the Marine Strategy Framework Directive, and revisions to the
Bathing Waters Directive - have placed increasing demands on the evidence base for values associated with
marine and coastal ecosystems. This session held as part of the Toulouse meeting investigated the
implications of these recent policy changes for environmental valuation; investigated conceptual and empirical aspects of this
important valuation problem; and considered how policy-makers demands for information from the environmental economics
community can best be met.
The session was organised and chaired by Nick Hanley, as part of the research activities of the coastal zone forum within the
Marine Alliance Science and Technology (MASTS) research activity, funded over 7 years by the Scottish Funding Council (more
detail on MASTS can be found at www.masts.ac.uk). This pooling of marine research talent has a constituency of some 700
researchers with the management of resources consisting of over £66 million annually.
The session featured six speakers. These were:
1. Stephen Hynes (National University of Ireland, Galway): Challenges to ecosystem valuation of coastal waters from recent EU
policy changes.
2. Stale Navrud (Norwegian University of Life Sciences) and Niels Jobsvoigt (University of Aberdeen): In deep water –
Challenges in valuing deep sea biodiversity and ecosystem services.
3. Nick Hanley (University of Stirling, UK): valuing coastal water quality improvements: the effects of experience and type-ofuse.
4. Tara Hooper (Plymouth Marine Lab, UK): Use and non-use values of estuarine intertidal habitats.
5. Allan Provins (EFTEC consulting, London): The case for de-designation – implementation of the Revised Bathing Water
Directive
6. Tiziana Luisetti (CEFAS, England) Blue Carbon: measuring and valuing marine carbon storage and carbon fluxes.
If you’d like details of any of these papers, please contact the authors directly.
Nick Hanley
University of Stirling
UK
Policy Session: Looking for the double dividend: from theory to practice
Katheline Schubert, Paris School of Economics and University Paris 1
France has the lowest ratio of environmental tax to total taxes in the EU. In December 2012, The French
Government set up a green tax committee (le “Comité pour la Fiscalité Ecologique” : CFE) in order to move
towards a tax system protecting natural resources and limiting the distortive burden affecting economic
competitiveness. This policy event aimed at discussing the lessons that can be drawn from the first steps of this
Committee, and at learning from the experiences of other European countries (related by Thomas Sterner for
Sweden, and Frank Convery for Ireland).
The CFE is an independent and permanent committee, chaired by Christian de Perthuis and composed of 40
members representing the civil society, belonging to trade unions, industry, NGOs, consumers´ organizations, regional and
local authorities, the French Parliament and the European Parliament. Experts from the University, the Ministry of Economy and
Finance and the Ministry of Ecology provide technical support.
The issues the committee is currently tackling are related to the use of natural resources (biodiversity, water, land use), to
nuisances and pollution and to energy and climate. The policy session focused mainly on this last topic.
The introduction of a carbon tax has already failed twice in France. The project of ecotax of the Jospin government , extending
the General Tax on Polluting Activities to include the corporate use of intermediate energy, has been declared unconstitutional
by the Constitutional Council in March 2001, for 2 main reasons: the complicated structure of the tax contravenes the rule of
tax equality, and, since the purpose of the tax is to curb GHG emissions, it should not be applied to electricity industry, where
80% of generation is from nuclear or hydropower sources. Following the recommendations of the Rocard commission of July
2009, President Sarkozy announced in September 2009 a carbon tax of 17€/tCO2 covering all CO2 domestic sources except
sources covered by the EU-ETS, redistributed lump sum to households. It has been declared unconstitutional by the
Constitutional Council on 2 grounds: the exemptions vitiate the primary purpose of the tax, to combat carbon emissions; the
exemptions cause the tax to fall disproportionately on gasoline and heating oils and not on other carbon emissions, thereby
breaching the principle of tax equality.
In this context, and with the background of the fiscal consolidation debate, where so far the public deficit has been reduced by
increasing the tax burden, the Government has announced that there would be no additional taxes in 2014. Moreover, it has
decided to reduce by 20 Bn€ labor costs through tax rebates focused on low wages, and to finance in 2016 a minimum of 3 Bn€
of these tax rebates with new green taxes. The proposal of the president of the CFE in this context is the inclusion of a carbon
base in the existing energy taxes: this base would be introduced in 2014 at a level of 7€/tCO2, and the effects would be
neutralized in 2014 by reductions in the traditional base (except for natural gas consumption by households, which is currently
exempted). It would then increase linearly from 7€/tCO2 in 2014 to 20€ in 2020, with limited compensations for households
and a reduction of labor cost for firms. The proposal also includes an annual reduction of the gasoline/diesel oil tax gap (1€/l
pear year). Additional tax receipts would be of 0.3Bn€ in 2014, 1.1 Bn€ in 2015, 1.9 in 2016 and 5 in 2020.
The reactions of the CFE’s members to this proposal has been on the firms’ part, to ask for additional impact assessments
studies, and to stress that the promised tax rebates do not have to be financed with green taxes; on the NGO’s part, to
propose a more rapid increase of the tax after 2014, and compensations more in favour of households, on the members of
Parliament and of local governments’ part to insist on the competitiveness issues. In his budget proposals for 2014, the French
Government has submitted to the Parliament a reform of the energy taxes including a carbon base increasing over time, but
not the reduction of the gasoline/diesel oil tax gap.
Katheline Schubert
Paris School of Economics and University Paris 1
France
Policy Session: Equity and efficiency tradeoff in natural risk prevention policies
A. Mauroux, French Ministry of Ecology, Sustainable Development and Energy - CGDD
The trade-off between equity and efficiency objectives is a well known conundrum of policy making. European Union member
states may be facing it now as they are applying the Flood Directive (EC 2007/06) and designing their flood risk management
policy. If you were a policy maker in charge of natural risk management, would you rather give your financial support to
projects that secure the greatest risk reduction per unit of public money, or to options allowing that all your fellow citizens are
exposed to the same level of risk? If you prefer the first option, then you are economic efficiency defender, but you may
concentrate all the financial resources on a few area at the cost of vulnerable areas. On the contrary, if you prefer the second
option, then you are more of an equity lover, but you may finance less profitable projects.
During this policy session we had the great opportunity to hear policy makers from France and Flanders region in Belgium who
shared their experience with academic researchers from the social justice and economy of risks fields and discussed the
existence or not of operational efficiency and equity criteria in their national flood risk management policy.
Isabelle Leleu (French Ministry of Ecology, Sustainable Development and Energy) presented the main legal risk management
policies in France (Natural Risks prevention plans, Flood prevention action plans...) and the ongoing definition of the French
National Flood Risk Strategy, insisting on the subsidiarity based governance and the co-financing scheme between the State
and local authorities. Later during the session Céline Grislain-Letremy (CREST, University of Dauphine) analyzed the
(sometimes implicit) equity and efficiency objectives in the current French strategy. At the national level, the funding of the
natural risk prevention policy is based on national solidarity, thanks to a 12 % levy on the insurance premium against natural
catastrophe, which is compulsory and priced irrespectively of the risk exposure. Risk prevention plans are implemented all over
the country in risky areas so there is an objective of equity with respect to natural risk exposure. Cost efficiency is also a
concern since cost-benefit analysis are now among the criteria Flood prevention action plans have to meet to apply for national
subsidies.
Nevertheless those subsidies are supposed to be concentrated on nationally identified at risk areas but in practice they are
allocated on a “first come first served” basis. This lack of prioritization between projects and the weak equity criteria in this
modus operandi are undermining the equity objective.
Neel Devroede from the Flemish Environment Agency (Belgium) presented an innovating project conducted in Flanders.
Hydrological, statistical, hydraulic and damage models are combined to simulated risk scenarios (probabilities of flooding and
their consequences). Scenarios of flood risk management projects combining protection, prevention and/or preparedness
actions are then randomly generated. The results perfectly illustrated the trade-off between efficiency and equity objectives as
they show a decreasing relation between cost-effectiveness of the projects (measured by the Net Present Value) and the
social benefits (measured by the reduction in the number of persons at risk). Another take away message from this
presentation is that multi-actions projects (Prevention+Protection+Preparedness) tend to provide better results than stand
alone project (Prevention, Protection, etc.), both in terms of cost-efficiency and social benefits.
Colin Green (Flood Hazard Institute) made a provocative contribution to the debate on equity in natural risk management: in
the search for distributional justice (fair distribution of “goods” and “bads”), we have been barking at the wrong tree as we
should instead be looking for a procedural justice (fair decision-making process through which a fair distribution comes about).
Social justice is not a state but rather a dynamic so it sounds pretty ambitious to search for a redistribution rule which would
yield a unique outcome in all possible cases. In practice, collective decisions are being made by the stakeholders after
negotiations and are often out of the box solutions, which are not allowed in the traditional distributive justice framework. In
this decentralized context, the search for social justice should concern who should be able to use what forms of power for
what purposes in those negotiations (for example who has a claim to be a stakeholder? Do all stakeholders have equal
status? etc.). Instead of trying to identify the ‘optimum’ course of action to adopt, Colin Green suggested risk management
economists should help the stakeholders to decide what is the best available course of action to adopt.
Marc Fleurbaey (Princeton University) reminded us that given the object we were studying, floods, a third dimension need to be
added to the equity-efficiency analysis: risk. This being done, he questioned the adequacy of the utilitarian objective function
to properly evaluate the equity of a risk reduction project. The utilitarian objective function focuses on the total expected
damages, so it gives no clue on the distribution of damages across agents, nor on the ex ante risk distribution. A solution could
be to introduce an inequity aversion parameter in the utility function but it still an opened issue. If the loses are negatively
correlated between agents, the policy maker will then face a tension between aversion to social inequality in the distribution of
damages and risk aversion to natural catastrophes.
Policy Session: Applying: behavioural economics research to enhance the design of environmental
policy
Zachary Brown, OECD
Nick Johnstone and I - representing the OECD Environment Directorate - chaired a session on the potential applicability of
behavioural economics in aiding the design of instruments for environmental policy. A mix of academic experts and policy
practitioners in government comprised the panel, which fielded questions from the audience and chair. The empirical examples
discussed spanned a number of policy domains – from the potentially large role behavioural instruments can play in promoting
energy efficiency, to the seemingly innocuous but far-reaching nuances involved in communicating environmental risks to the
public, and finally the potential for discontinuous behavioural responses to environmental subsidies, responses which are
larger than those implied by the economic magnitude of the incentive.
A general sentiment emerging from the discussion was that there are promising opportunities for governments to take
advantage of a variety of newly (re)discovered economic instruments. Whether recognized as inventions from ‘behavioural
economics’ or simply a refinement of traditional economic theories, these instruments account for a greater diversity in
behavioural responses to incentives than is often portrayed in standard economic explanations of decisionmaking.
Zachary Brown
OECD
Policy Session: Decision-making under uncertainty and political economy constraints
Stephan Hallegatte, The World Bank
At the 2013 EAERE annual conference in Toulouse, a policy session was organized by the World Bank on
“Decision-making under uncertainty and political economy constraints”. The idea was to understand
why many policy reforms are not implemented, even though they are unambiguously positive according
to economic analysis. The aim was to derive lessons for policy analysis and academic research. The
session started with a preview of the next World Development Report, to be published in October 2013
and entitled “Risk and Opportunity: Managing Risk for Development”. The presentation by Stephane
Hallegatte (World Bank) proposed a typology of the obstacles to the implementation of cost-efficient risk management policies.
The report investigates and hierarchizes implementation obstacles, including financial resource constraints, behavioral and
cognitive failures, lack of infrastructure and public goods, externalities and coordination failures, and political economy issues.
Then, the session turned toward another reform that is supposed to yield large benefits: the removal of distortive fossil fuel
subsidies. Jehan Sauvage (OECD) presented a recent OECD publication: “Inventory of Estimated Budgetary Support and Tax
Expenditures for Fossil Fuels 2013.” He highlighted the complexity of support mechanisms benefitting fossil fuels in the OECD
context, adding that they can take many forms. He stressed the very diverse rationales that are proposed for maintaining
them, and the difficulty in evaluating their merits. The inventory is a critical tool to improve the transparency on fossil-fuel
subsidies, facilitate research, and help identify the most distortive or wasteful support measures.
Julie Rozenberg (CIRED) then looked at alternative solutions when first-best options are not available for political economy
reasons. Investigating climate change mitigation policies, she presented a paper where alternatives to a global carbon price
are explored. In particular, she looks at policies that affect carbon emissions from the newly installed capital only (and not the
existing capital). These alternative policies can lead to the same long-term situation if the climate change objective is not too
stringent. They are more costly in terms of discounted utility, but they shift mitigation costs in the future compared with the
first-best option, making them easier to implement.
Finally, Antony Millner (LSE) discussed another important implementation obstacle: the uncertainty that sometimes exist on
their costs and benefits: even when a policy is likely to be positive in welfare terms, the existence of uncertainty can lead to
deadlock and make consensus building very difficult. The presentation focused on decision-making methods that do not rely on
agreeing on subjective probabilities for the possible policy outcomes. There are in the economic literature a set of
methodologies – alternatives to the maximization of expected utility – that can cope with deep uncertainty. The follow-up
discussion focused on the challenges for the practical implementation of these methodologies.
The session highlighted the need to focus on practical obstacles to policy implementation, beyond their direct costs. It also
emphasized the existence of many methodologies that could be applied to policy analysis. The missing link on which more
research is needed is the piloting of these approaches in a real-world context, on specific projects or decisions.
Stephan Hallegatte
The World Bank
The Nature of Economic Development and The Economic Development of Nature
Sir Partha Dasgupta, EAERE Past-President
Dear Phoebe,
I am taking the liberty of sending you a paper I have recently completed, with the hope that members of
our community of scholars, especially EAERE members, will have access to it. You will find that the text
displays a sense of irritation on my part at the way growth and development economists continue to find
it possible to bypass environmental and resource economics in their work. They do that by refusing to
acknowledge that nature is a form of productive capital.
I have commented on this category error many times in past years, but last summer I was provoked into writing the paper I am
sending you by two recent books on the Indian economy that are representative of the prevailing orthodoxy.
The books brought home to me that the entire architecture of contemporary development thinking is stacked against nature. In
my paper I review and in part extend the literature that integrates development and environmental thinking. Environmental
and resource economists have reworked the economics of the household, and communities, and other non-market institutions;
reframed national accounting; reconstructed the theory of macro-economic development and public and trade policy; and
revised the theory of collective action. However, none of this has yet found expression in growth and development economics.
Economics continues to be the loser. Warm regards from cold Cambridge.
Sir Partha Dasgupta, FBA FRS
Frank Ramsey Professor Emeritus of Economics
University of Cambridge
UK
Full paper available here
Harward Honorary Degree to Sir Partha Dasgupta
Warmest congratulations to Sir Partha Dasgupta for the Honorary Degree received from Harvard University. Further information
available at harvardmagazine.com/2013/05/honorary-degree-recipients
Incentives for behavioral change
Catarina Roseta-Palma, EAERE Vice-President
Economists are used to thinking about incentives, and our education tends to focus particularly on monetary
incentives. In our work as environmental and resource economists we naturally take the same approach, as
we go about identifying market failures and designing incentives to try to correct them. I do believe, however,
that we should widen our scope, learning from behavioral economics and even other social sciences. In fact,
one of the plenary speakers at the EAERE Conference in Toulouse, Rachel Croson, also approached this topic,
as described elsewhere in this Newsletter. In this short piece, meant as a sort of farewell from the EAERE
Council, of which I was a privileged member for the last four years, I have written some personal reflections
based on recent work.
In my research group at ISCTE-IUL, one of the areas we have looked at is water demand. We started by applying traditional
methods of residential water demand estimation (see Monteiro and Roseta-Palma, 2011), which provided rather low estimates
for demand-price elasticity as is common in this sector. Consumers don’t react strongly to price. Meanwhile we noticed that
people (technically known as residential users) really don’t seem to pay that much attention to the unit price of water in itself.
Perhaps this is because tariff structures are so complex, with various forms of increasing blocks being applied in Portugal, or
because the price is low and overall expense in water is not a very significant part of income, or even because people don’t
explicitly choose how many m3 of water to use, at least not in the way we choose how many packets of rice or pasta to buy in
the supermarket. In a recent survey of 2386 Portuguese residential water users, we found that only 24% venture a guess of
their water consumption, and they significantly overestimate it, while only 7% provide an estimate of their unit water price.
Price conservation signals may appear to be more cost effective than non-price measures (Olmstead and Stavins, 2009) but
they may be lacking when scarcity is rife and large reductions in water consumption are required. Moreover, recent research on
resource conservation has highlighted that social norms may be a more powerful lever to change behavior than was previously
thought (see Ferraro and Price, 2013 for water and Allcott, 2011 for energy). In a forthcoming paper (Correia and RosetaPalma, forthcoming) we describe various topics where insights from behavioral economics could improve water management.
Many of those are applicable to energy management and perhaps to other consumption goods that have a strong
environmental impact. As environmental and resource economists, we have a chance, and even, I would say, a responsibility,
to develop work that brings together different strands of knowledge to improve resource management policies and
environmental quality.
Catarina Roseta-Palma
University Institute of Lisbon
Portugal
References
- Allcott, H., 2011. Social Norms and Energy Conservation. Journal of Public Economics,95, 1082-1095,
doi:10.1016/j.jpubeco.2011.03.003
- Correia, R. and Roseta-Palma,C., forthcoming, “Behavioural Economics in Water Management”, in Sustainable Consumption:
Multi-Dimensional Perspectives in Honour of Professor Sir Partha - Dasgupta, Ed. Dale Southerton and Alistair Ulph, Oxford
University Press
- Ferraro, P. and Price, M., 2013. Using nonpecuniary strategies to influence behavior: evidence from a large-scale field
experiment, Review of Economics and Statistics 95 (1), 64-73
- Monteiro, H. and Roseta-Palma, C., 2011. Pricing for scarcity? An efficiency analysis of increasing block tariffs. Water Resources
Research, 47(6), p.W06510, doi:10.1029/2010WR009200.
- Olmstead, S., and Stavins, R., 2009. Comparing price and nonprice approaches to urban water conservation, Water Resources
Research, 45, W04301, doi:10.1029/2008WR007227.
Erik Kempe Award 2013
Bård Harstad, University of Oslo
I am deeply honored to receive the Erik Kempe Award for 2013. The quality of research in environmental
economics is picking up and there have been very many excellent papers published the last years. The prize
also made me optimistic because it recognizes – and may draw further attention to – an under-studied type
of environmental policy: those targeting the supply-side. In this newsletter I have been invited to say a bit
more about my paper.
Before doing so, let me start by reminding you of the problems with “traditional” environmental policy.
Traditional environmental policies focus on regulating consu mers or emitters, whether through quotas, capand-trade systems or carbon taxes. Unfortunately, whenever some countries opt out of a global climate coalition, the result is
so-called “carbon leakage”.
That is, if the co-operating countries decide to cut back fossil fuel consumption, the world price declines and other nations can
afford to buy more. In addition, the nonparticipants extract the “wrong” types of fuel (those that are the cheapest to extract
rather than those that pollute the least), and they invest too little in “green” technology (renewable energy sources or energy
economizing) since they are facing a low fuel price when the climate coalition cuts back on its own consumption. Not
surprisingly, all these effects not only weaken any coalition’s impact on the climate; but also discourage participation in the
treaty in the first place.
Is there an alternative? Yes: Rather than regulating consumption, one can regulate supply – the quantity extracted from the
ground. But reduced domestic extraction raises the world fuel price and nonparticipants find it desirable to extract more. So,
there is carbon leakage on the supply-side, as well.
My paper explores the consequences of letting a climate coalition participate in the international market for fossil fuel deposits,
and shows that all the above-mentioned inefficiencies vanish and the “first-best” outcome is implemented.
To understand this, note that fuel deposits differ in how costly they are to extract. Deposits with high extraction costs are
barely profitable, and the owner is thus willing to sell the extraction rights for a low price. If a climate coalition purchases such
a deposit, without exploiting it, then global emission is reduced at a relatively small cost.
But even more important is the “side” effect: carbon leakage is reduced. If the world fuel price changes,nations outside the
coalition will not alter extraction levels much once the least profitable deposits have been sold to the coalition. So, if the
coalition then cuts back its own extraction, it need no longer fear other countries will raise their own by comparable quantities.
Consequently, the coalition’s most effective climate policy is to focus on reducing extraction. There will be no need to regulate
consumers or emitters in addition, so users will face the same price whether within the coalition or outside. This removes the
temptation for companies to move to countries with weaker regulation, which in turn reduces their clout when lobbying against
participation in a treaty. Finally, note that the world fuel price will be relatively high when the focus is on reducing extraction.
This will motivate even nonparticipating countries to economize on energy and to develop alternative energy sources.
I do think that this result is both important and encouraging. However, to isolate the effects I have relied on a number of
strong assumptions. For example, I have abstracted from search intensities, asymmetric information, the fear of renationalization, and much more. It is important to relax these assumptions. Climate change remains our biggest problem – with
no solution in sight – and it is crucial to investigate whether there are realistic alternatives to the traditional demand-side
approach. My hope is that the 2013 Erik Kempe Award will spur new and groundbreaking research investigating the promises
of a better and functional supply-side environmental policy.
Bård Harstad
University of Oslo
Norway
Award for Outstanding Publication in ERE
John Tschirhart, University of Wyoming
I am exceedingly grateful to the editors of Environmental and Resource Economics for selecting my article for
the 2012 Best Paper award. The paper so honored is an example of my work that attempts to integrate
ecology and economics for improved natural resource policies. The paper extends work based on a General
Equilibrium Ecosystem Model. GEEM admits more ecological detail than most other bioeconomic models. It is a
modified version of an economic CGE model in which industries are replaced by species, firms are replaced by
individual plants and animals, and individuals are assumed to behave as if they are optimizing net energy
intake. Demand and supply is replaced by predator-prey relations, and predators engage in intra and interspecies competition for prey. GEEM dynamics involve individuals converting their optimum net energies into offspring, a common
ecological notion, and not unlike firms entering or exiting markets depending on profits. As CGE models reveal insights that are
not forthcoming in partial-equilibrium analyses, the same can be said for GEEM and its advantage over single-species
bioeconomic models.
The genesis of GEEM dates back three decades. Tom Crocker and I, colleagues at Wyoming, would spend time in the
that surround our Laramie campus. While economists stroll down an urban corridor observing economic activities
human behavior, we observed ecological activities reflecting plant and animal behavior. We reckoned that actors
system were responding to incentives. It was a short leap to realizing that plant and animal behavior was close to
were spending our indoor time on - modeling economic behavior.
outdoors
reflecting
in either
what we
With EPA funding, we set out to formalize the analogies between economies and ecosystems. If we could describe ecological
processes using economic tools, and without abusing ecological principles, then integrating the two jointly-determined systems
might be agreeable to economists. Moreover, integration seemed critical as natural systems were under serious threat across
the planet. We realized that ecosystems provided humans with indispensable goods that were routinely taken for granted.
(Today, these goods are known as ecosystem services.) Initially, we drew upon species-level work by Hannon and our early
ideas resulted in publications in the Transactions Amer. Fish. Soc.(1987) and ERE (1992).
In the late 1990s I felt that our model was too macro oriented: the behavior needed to move from the species to the
individual. To model an ecosystem we should be thinking along the lines of general equilibrium with micro foundations. Actors
could be optimal foragers as done in ecology. This was fairly straightforward, but it lacked dynamics, a point underscored by
Rüdiger Pethig who was visiting Wyoming at the time and who subsequently pursued similar work with Thomas Eichner. I
managed to merge optimal foraging with species dynamics (J. Theoretical Biology 2000), a procedure mostly absent in the
ecology literature (see my Annual Rev. Res. Econ, 2009).
Since then the work has been extended and integrated with economics in a series of articles with Wyoming graduate students
and faculty, most often with my colleague David Finnoff. For example, in Resource and Energy Economics (2008) we combined
GEEM and a CGE model, yielding an integrated assessment model designed to measure the general-equilibrium effects of
fisheries policies in both the economy and ecosystem.
The Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) was established in April 2012 and currently
has 113 member nations. Its purpose is to assess the planet's biodiversity, its ecosystems and ecosystem services. Its role is
similar to the IPCC’s role in climate change research. Although GEEM predates the IPBES, its motivation has been to contribute
to this research.
John Tschirhart
University of Wyoming
USA
Best Poster Award at EAERE Annual Conference
Gregory Smith, The Centre for Social and Economic research on the Global Environment (CSERGE), University of East
Anglia
Receiving the award for the best poster at the EAERE conference in Toulouse was a fantastic honour as well as
being a big surprise. Not only was Toulouse my first EAERE conference, it was also my first international
conference of any kind! The research presented in my poster is close to being submitted to a journal, with a final
draft currently being prepared. The motivation for the paper comes from two common observations, the first is
that people value environmental goods but are uncertain about the precise amount, and the second is that
different contingent valuation elicitation methods lead to different outcomes.
The paper investigates the potential link between uncertain preferences and common elicitation anomalies. We show, through
the use of an innovative state-dependent estimator, that uncertain preferences, like certain preferences, are malleable and
can be shifted around by particular features of the elicitation procedure. It would therefore seem that uncertainty alone cannot
explain away common elicitation anomalies in contingent valuation.
I found the whole process of condensing down a significant piece of research into a few key messages to fit onto a poster to
be an extremely useful exercise. At the conference itself, I especially enjoyed the novel idea of the guided poster tours as each
presenter had the opportunity to communicate with a much larger group than would otherwise be possible.
My other research has focused largely on payments for ecosystem services. In particular, I have undertaken an experimental
and theoretical investigation into the potential for multiple-purchasers in the ecosystem services market. I also am planning
future work in modelling payments for ecosystem services markets with spatial decision constraints.
I am currently studying for a PhD at the University of East Anglia, under the excellent guidance of Prof Brett Day and Prof Ian
Bateman. The generous Springer book voucher is particularly useful to someone in the early stage of their career and has
enabled me to take step forward (albeit a very small one) in emulating the impressive wall of books seen in lecturer’s offices all
around the world.
Gregory Smith
University of East Anglia
UK
Reflections on the 2012 ICCG Climate Think Tank Ranking Award
Anil Markandya, EAERE President-Elect
It was a real pleasure and a surprise when we received the notice that BC3 had been awarded the 2012
ICCG Climate Think Tank Ranking award.
When I was appointed Scientific Director of the Centre in 2008 my aim was to create an institution that would
make an important contribution to climate change, with a particular focus on the socio economic dimensions of
the problem. We were given generous initial support from the Basque government but on the clear
understanding that we had to prove ourselves. At that stage I would never have dared to believe we would
be rated the top think tank in Europe within five years. During that time we have grown to a centre with
about 30 researchers and 5 support staff, working on various aspects of climate change.
Our programme is divided into four pillars: low carbon strategies to mitigate climate change, ecosystems services and climate
change, climate and health, and international dimensions of climate policy. We have several projects under each of these
programmes, partly supported by the European Union and other funding agencies. The publications record has grown steadily
and speaks for itself as the awarding committee has recognised.
As a small centre we are well aware that our contribution depends heavily of being part of the network of climate change, think
tanks and research centres throughout the world. Indeed we have strong relations with FEEM and CMCC in Italy but also with
more than forty other institutes worldwide and we see ourselves as part of a family and community with the common aim of
understanding and addressing the phenomenon of climate change.
In addition to high level publications we have also managed a successful summer school in San Sebastian on various aspects
of climate policy and we engage regularly with the media and local stakeholders interested in climate issues. A particularly well
received program has been the Training Caravan, where we go to local schools to talk about climate and the different ways
individuals can contribute to addressing its causes and consequences.
In the future we hope to build on the foundations that have been laid in these five years. In the face of the economic crises it
has been an increasing challenge to convince policy makers that climate change is an important issue that deserves attention.
In this context we need to show the links between climate policy and the goals of green growth and development. Much of our
focus is on doing precisely this.
Anil Markandya
Basque Center for Climate Change
Spain
2012 Climate Think Tank Ranking Award - Notification and Acceptance Speeches video available here
The ICCG Think Tank Map project: an Observatory of Worldwide Climate Think Tanks
Isabella Alloisio, ICCG Think Tank Map Coordinator, International Center for Climate Governance
The International Center for Climate Governance (ICCG) was founded in 2009 as a joint initiative of
Fondazione Eni Enrico Mattei (FEEM) and Fondazione Giorgio Cini. The ICCG, chaired by Professor Carlo
Carraro, is an internationally renowned center whose research activities focus on climate change economics
and policy. Located on the Island of San Giorgio Maggiore in Venice, ICCG gathers researchers in economics
and political sciences who explore the interdependencies between the economic, social, cultural, ethical, and
political aspects of climate economics and policy.
The Think Tank Map project, was launched in 2011 by the ICCG as an observatory aimed at providing a
complete overview of active worldwide think tanks in the field of climate change economics and policy. The
Think Tank Map is at present composed of 282 think tanks worldwide (Figure 1).
Figure 1: ICCG Think Tank Map
The Think Tank Map is not
only a showcase for every
organization working in the
field
of
climate
change
economics
and
policy
(entailing
these
specific
research
fields:
impacts,
adaptation,
renewable
energy & energy efficiency,
policy
and
institutions,
carbon finance, climate &
development,
sustainable
cities, forestry & land use,
water), but it is also a
catalyst for new cooperation
opportunities,
allowing
stakeholders,
researchers,
institutions, and the media
to be informed on all the
relevant activities, to find
new contacts, and to engage
in
mutually
beneficial
partnerships.
By collecting both scientific
and statistic data about
many different research institutions, the Think Tank Map observatory is the starting point for a series of in-depth studies about
the think tanks working in the field of climate change and their influence on policy makers. One of these outputs is “The 2012
ICCG Climate Think Tank Ranking. A Methodological Report” , which presents the methodology that led to the 2012 ICCG
Climate Think Tank Ranking, the first ranking on think conducting research in the field of climate change economics and policy.
A literature overview of other think tanks and university rankings is provided in the Methodological Report to confirm the unique
nature of the ICCG ranking. Indeed, up to today, rankings have been based mainly on opinion surveys (McGann - University of
Pennsylvania), or on bibliometric indicators (ARWU e HEEACT). However, the 2012 ICCG Climate Think Tank Ranking is based on
solid quantitative and analytical data, which are translated into both bibliometric and non-bibliometric indicators. Moreover, the
latter have been carefully selected and are based on objective and calibrated criteria according to the feedback provided by
experts within the field.
The 2012 ICCG Climate Think Tank Ranking is composed of a Global category and a European category. “Global” refers to think
tanks whose headquarters are based outside the EU, and “European” refers to those based in the EU. Global think tanks have
been assessed on a set of 5 indicators (events, authors in IPCC Reports, UNFCCC submissions, articles in peer-reviewed
journals, and non-peer reviewed publications) under two main pillars, “Activities” and “Publications”. European criteria
encompass two additional indicators related to the specific links that may exist between EU think tanks and the European
Union’s research & policy strategies, i.e. the number of EU funded projects conducted by a EU think tank, and the assessment
of the think tank participation in the EU consultation process.
A further distinction that has been taken into account in our analysis concerns the per capita productivity and the overall
productivity of think tanks, which led to two different rankings. In the first case, two Standardized Rankings were built, one for
the European think tanks and the other for Global ones, where all the activity outputs of a think tank in 2012 have been
standardized by the number of its researchers. In the second case, two Absolute Rankings were built, where all the activity
outputs produced by a think tank in 2012 were considered in absolute terms in both the European category and in the Global
one. Only the Standardized rankings have led to the winners of the 2012 ICCG Climate Think Tank Ranking, being in the
European category the Basque Centre for Climate Change (BC3), and in the Global category the Belfer Center for Science and
international Affairs, with its Environment and Natural Resources Program.
The next edition of the ranking, launched in October 2013, reserves some novelty both in the ranking categories and in the
structure of its nodes and indicators. Two different rankings will be built: one for the Best Global Climate Think Tanks, and the
other for the Best University Affiliated Think. Also, the 2013 ICCG Climate Think Tank ranking edition will present a new node on
Dissemination, by assessing different indicators: i.e., each Organization’s use of social networks (Facebook, Linkedin, Twitter),
their presence on the web, and their participation in carefully selected international climate and energy related conferences.
The ICCG Think Tank Map team strongly wishes and calls for a wide participation in the next 2013 ICCG Climate Think Tank
ranking!
Isabella Alloisio
International Center for Climate Governance, Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change
Italy
http://www.thinktankmap.org/ - Contact email: [email protected]
EU Climate Policy Beyond 2020
Herman Vollebergh EAERE Policy Advisor, Ger Klaassen, former EAERE Policy Advisor
The European Commission's Work Programme for 2013 contains an initiative "New climate & energy framework" for the period
up to 2030. This should provide a long-term perspective on how the EU moves from its 2020 targets to a low-carbon economy
through a comprehensive framework. The framework has the following objectives:
- to meet the 80-95% GHG emission reduction objective in 2050 compared to 2050
- to foster long term competitiveness, security of supply and sustainability
- to provide a long-term perspective for investments until 2030
In March 2013 the Commission published a green paper "A 2030 framework for climate and energy policies". This session
discussed the objectives, quantitative targets and role of different instruments such as the EU emission trading scheme and
issues raised in the Commission Green Paper. Under the eloquent chairmanship of Frank Convery the European Commission
(represented by Ger Klaassen) kicked of the meeting with an overview of the Green paper (see http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0169:FIN:EN:PDF).
He explained that long investment cycles require regulatory certainty which creates demand and spurs innovation and would
allow the EU to engage actively in the international negotiations. The question is which targets we need and what is the most
appropriate GHG target for 2030. The second question is how we meet these targets while fostering competiveness and taking
into account differences in ability to pay for the costs. This was followed by a contribution of Claudio Marcantonini (European
University Institute, Florence), Chris Böhringer (University of Oldenburg, Oldenburg) and Herman Vollebergh (Netherlands
Environmental Assessment Agency PBL, The Hague).
Marcantonini wondered if renewable energy incentives are really efficient climate instruments. His empirical research showed
that support for solar energy through renewable incentives has been thus far a very expensive way of inducing CO2 emissions
reduction in Italy, Spain and Germany (with implicit costs ranging from €539 to €972 per ton CO2 abated).
Supporting wind energy has been less expensive in these countries especially for Germany. Böhringer showed that green or
white targets might either be redundant or costly and country specific carbon taxes are also not helping efficiency. Carbon
prices combined with border tariffs and rebates (based on carbon content) might indeed help some energy intensive sectors
but harm others. The impacts of border taxes also depend on who is in the coalition and whether the non-coalition countries
retaliate by increasing their tariffs. In the latter case border taxes could lower welfare for the coalition compared to setting
unilateral border taxes. Vollebergh stressed that economists should find the right balance between simplification and proper
policy advice. The proper policy mix should address all externalities and market failures (and not only climate).
This requires different environmental policies. Issues are resource availability and strategic reserves (shale gas), differences in
local (climate) policies, energy market imbalances (natural monopolies; network industry) as well as the need to make strategic
choices in international specialization (green R&D) bearing in mind the existence of diffusion externalities. Some welfare losses
are likely to be unavoidable when managing n-th best problems that interact through different channels.
Ger Klaassen
European Commission, DGCLIMA, Belgium
Herman Vollebergh
Erasmus University, PBL Netherlands Environmental Assessment Agency and University of Tilburg
Netherlands
PROBAPS - Protection of the Baltic Sea: Benefits, Costs and Policy Instruments
Anni Huhtala, Government Institute for Economic Research, VATT
The results of a large-scale international research project "Protection of the Baltic Sea: Benefits, Costs and
Policy Instruments", PROBAPS, were presented at the European Parliament in September 2013. The project
on marine modelling, valuation and cost-benefit analysis was initially inspired by the Stern Review on climate
change. Despite the enthusiasm for an internationally coordinated effort to study the state of the Baltic Sea,
an obvious obstacle in the very beginning was that there was a lack of research funding. Ultimately, the
funding problems were solved and the extensive research program was carried out by a “BalticSTERN”
network of researchers.
Evidently, the timing was right for the project. The state of the marine environment had drawn increasing attention throughout
the world. Several governing frameworks had been put in place to promote marine protection such as the Water Framework
Directive (WFD) and the Marine Strategy Framework Directive (MSFD) at the European Union level. Therefore, there was both
political will and need for evidence-based policy-making regarding the eutrophication of the Baltic Sea.
Eutrophication provided an interesting case for a cost-benefit analysis due to its policy-relevance and visibility to the general
public. A challenge was that the Baltic Sea is one of the world’s largest semi-enclosed bodies of brackish water shared by nine
countries: Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland, Russia and Sweden, with the adult population in
these countries totalling over 230 million people.
In fall 2008, Environmental Economics Group at MTT Agrifood Research Finland received funding for a pre-study from a Finnish
Advisory Board for Sectoral Research. In Sweden, a proposal for a large-scale international research program, aiming at an
ecological-economic assessment of the Baltic Sea as a system was prepared by Enveco Ltd and hosted by the Beijer Institute
of Ecological Economics at the Royal Swedish Academy of Sciences. Moreover, the Swedish Government instructed the Swedish
Environmental Protection Agency to compile a synthesis of Economic Marine Information, focusing on the economic implications
of human impacts on the Baltic Sea and Skagerak. After these initiatives, there was a network of economists from all nine
countries coordinating efforts to carry out research in a network of BalticSTERN. A secretariat was set up at the Stockholm
Resilience Center of Stockholm University to take care of communication to stakeholders and coordination of fund raising. A
scientific advisory board as well as a network of representatives from national Ministries of the Environment from the Baltic Sea
countries were established.
The research program aimed at collection of comparable information on the use and non-use benefits delivered by
eutrophication reduction across the whole Baltic Sea area, to be used subsequently in a cost-benefit analysis. To connect the
benefit estimates rigorously to associated ecological conditions, the change in eutrophication was illustrated in a valuation
study by using predictions of a dynamic long-term marine model of nutrient concentrations and two spatially-specific
biogeochemical models of the Baltic Sea. Predictions from these models were converted into the verbal descriptions and
eutrophication maps presented to respondents of the valuation study. Water quality was described by environmental and
ecological characteristics associated with different levels of eutrophication. Finally, catchment, marine and economic models
covering the entire Baltic Sea region were combined to weigh the costs of nutrient abatement and the benefits of improved
water quality and solve for the socially optimal level of water protection.
Now the project is in a dissemination phase. It provides information on the welfare impacts of marine protection that can be
utilized in the planning, implementation and evaluation of international policies such as WFD and MSFD, but also when
appraising national water policies. In addition to the European Parliament, the results have been presented to HELCOM and
recognized in the HELCOM Copenhagen Ministerial Declaration in October 2013.
Anni Huhtala
Government Institute for Economic Research VATT
Finland
THESEUS - Innovative technologies for safer European coasts in a changing climate,
Science-Policy Interface event
THESEUS (Innovative technologies for safer European coasts in a changing climate) is the largest Integrated
Project within coastal risk assessment and mitigation funded by the European Commission (6,530,000 €) and
consists of 31 partner institutes.
The project will develop during the next four years a systematic approach to deliver both a low-risk coast for
human use and healthy coastal habitats for evolving coastal zones subjected to multiple factors. (Project
Website: www.theseusproject.eu/) THESEUS final conference held 18 October 2013 at the Royal Belgian
Institute of Natural Sciences Event Webpage: www.theseusproject.eu/finalconference/home
Event Abstract Responding to coastal disasters and enhancing resilience to coastal erosion and flooding needs a holistic,
participatory and inter-disciplinary approach where science is embedded in the social, cultural and economic context in which
coastal communities live. THESEUS developed such a systematic approach to delivering both a low-risk coast for human use
and healthy habitats for evolving coastal zones subject to multiple change factors. THESEUS adopted two main cross-cutting
solutions which are a) the use of case studies, and b) the development of unified tools, i.e. a book of guidelines and a Decision
Support System.
Innovation and best practices in coastal engineering
The conventional coastal protection measures can be divided in hard structures and beach nourishment. The latter- often called
a soft measure- is an intervention in which sand or gravel is placed on the beach or in the near-shore zone. Hard structures
are sea dikes, revetments, breakwaters and artificial reefs as well as groins. The THESEUS project studied the resistance of the
crest and rear side of grass covered sea dikes, as well as methods for upgrading conventional rubble mound coastal protection
structures, the use of artificial reefs as a wave dampening structure, and best practice for beach nourishment and application
of groins. The use of floating structures as coastal protection tools has not yet been widely used. THESEUS considered their
use as coastal protection tools by studying the reduction in wave heights landward of these devices.
Preserving and enhancing coastal ecosystems
Habitats which offer the greatest potential for coastal defence are mobile and consist mainly of unconsolidated particles.
Sediment management in dune systems, marshes, seagrass meadows and open coasts is therefore critical and requires a
holistic approach. Alongside appropriate management of natural habitats, it is clear that hard engineering interventions will
also be required in some locations. The work in THESEUS shows how adopting a systems perspective allows the process
understanding of habitats to be integrated with coastal engineering and social aspects of flooding to augment and increase
the options available to flood risk managers, and be compliant with the habitats directive.
The governance dimension
The way to approach the governance dimension of flood and erosion risk has been renovated by focusing on key assessment
and mitigation approaches. The project analysed risk perception in terms of paradigmatic tensions associated with conflicting
pertinence, normative and evidence claims. As such, THESEUS has allowed for the clear identification of norms as the main
source of varying perceptions regarding coastal risks. On the mitigation front THESEUS developed a simplified model of
insurance taking explicitly into account spill-over effects. This has allowed for a rethinking of the issues of scales and linkages,
allowing developments that go beyond the private/public dichotomy.
Decision making for a sustainable coast
Within the large scope of THESEUS, one of the main objectives was to design a tool to help decision makers in defining optimal
strategies to minimize risk in the short, medium and long term scenarios. The resulting software reproduces in a simplified way
the most relevant physical processes (coastal erosion and flooding) induced by waves and sea-levels taking into account
physical and non-physical drivers, such as climate change, subsidence, population growth and economic development.
ENTRACTE - Economic iNsTRuments to Achieve Climate Targets in Europe, 1st Newsletter
The ENTRACTE research project, funded by the 7th Framework Programme of the European
Union, assesses the EU's climate policy portfolio. In order to optimize the policy mix it is
crucial to provide a deep understanding of how climate policy instruments interact with each
other and with related policy instruments. Mainly, ENTRACTE looks at the European Union
Emissions trade System (EU ETS) taking into account its interaction with additional policy
instruments such as energy efficiency standards, renewable policies, carbon taxes, innovation policies and trade measures.
The direct link to the NL as PDF : http://entracte-project.eu/fileadmin/entracte/downloads/ENTRACTE_Newsletter_No1.pdf
Global IQ - Impact quantification of global changes, 2nd Newsletter
The objective of Global IQ is to provide significant advances in these two directions from the viewpoint of
the economist’s community. Economics of globalization is a prominent research topic in contemporary
economics. Economics of climate change is also an area of intense research since twenty years especially
in Europe.
2nd Newsletter available here
OpenAIRE - Open Access Infrastructure for Research in Europe, Workshop
OpenAIRE Consortium and Phoebe Koundouri
Open Access is the immediate, online, free availability of research outputs without
restrictions on use commonly imposed by publisher copyright agreements. Open Access
includes the outputs that scholars normally give away for free for publication; it includes
peer-reviewed journal articles, conference papers and datasets of various kinds. Why Open
Access? Here are some of the advantages of Open Access:
- Access can be greatly improved
Access to knowledge, information, and data is essential in higher education and research; and more generally, for sustained
progress in society. Improved access is the basis for the transfer of knowledge (teaching), knowledge generation (research),
and knowledge valorisation (civil society).
- Increased visibility and higher citation rates
Open Access articles are much more widely read than those which are not freely available on the Internet. Webwide availability
leads to increased use which, in turn, raises citation rates, a fact that has been empirically supported by several studies.
Depending on the field in question, Open Access articles achieve up to three times higher citation rates and they are cited
much sooner (cf. for example Lawrence: Free online availability substantially increases a paper's impact, or Harnad & Brody:
Comparing the Impact of Open Access (OA) vs. Non-OA Articles in the Same Journals).
- Free Access to information
Open Access content is freely available worldwide, thus enabling people from poorer countries to access and utilise scientific
knowledge and information which they would not otherwise be able to afford.
OpenAIRE aims to create an interconnected network of open repositories to provide a single access point to open access
publications in order to increase accessibility, use, and re-use of research papers. In addition, OpenAIRE links to research data
that underlies a publication. By offering the user the ability to link to a related dataset, OpenAIRE moves beyond the concept of
a traditional publication to a richer, more contextual type of information service that promotes the open sharing, discovery,
reuse, and validation of research.
OpenAIRE currently hosts a catalogue of over 6 million publications from over 400 data sources, 40.000 of them linked to
EC/FP7 projects. By gathering the outputs of particular funding streams, such as FP7, it can measure research output and
monitor funders’ open access policies. OpenAIRE is now expanding to host research results from other European funders.
The OpenAIRE portal supports a range of stakeholders and targets their needs:
• Informs scientists about the funding agencies requirements and how they can conform;
• Enables EC, funders, member states to monitor the impact of their policies easing reporting from coordinators to funders;
• Provides statistics for funders to measure research impact and resources to help researchers publish in open access;
• Offers services for project coordinators to generate lists of publications for reporting purposes;
• Aims to establish the infrastructure for researchers to support them in complying with the EC OA pilot and the ERC Guidelines
on Open Access;
• Aspires to provide an extensive European Helpdesk System to ensure localized help to researchers within their own context;
• Plans to provide a repository facility for researchers who do not have access to an institutional or discipline-specific
repository;
Leverages international connections and networks to contribute to common standards, data issues and interoperability on a
global level.
To search and browse open access articles, get usage statistics and funding measurements, and information on national open
access policies, visit our portal www.openaire.eu
OpenAIRE is currently carrying out two studies into these legal and sustainability issues. The legal study will put forward
recommendations as to applicable licenses that appropriately address scientific data in the context of OpenAIRE. This study will
also examine scope of the database protection right, different types of usage and where re-use infringement might lie. The
sustainability and business model for OpenAIRE study will examine the costs and maintenance of the elements of a permanent
infrastructure, identify the key stakeholders and will put forward a viable business model for OpenAIRE.
The OpenAIRE workshop on Legal and Sustainability Issues for Open Access Infrastructures carried out on 5 November, 2013,
Vilnius, Lithuania, intended to present preliminary results from these studies and broaden the discussion to involve other
stakeholders.
See:
Workshop Program
The sustainability and business model for OpenAIRE study: Presentation Slides and Video of the Presentation by Phoebe
Koundouri
OpenAIRE Consortium and Phoebe Koundouri
Impact Factor: Does it measure what we need?
Anastasios Xepapadeas, Former EAERE President (2006-2007)
The impact factor for a journal, which has long been used as a metric for science journals, has
entered the field of economics forcefully in recent decades. The websites of most economic
journals now display the journal’s impact factor, and many times potential contributors to a
journal will inquire about the impact factor before submitting a paper. The impact factor as a
concept is a valuable tool which can provide objective information about the visibility and
impact of the research published in a given journal and thus about the journal’s role in
promoting further research in the field. In practice, however, there are certain aspects of the
impact factor which could be refined to make it more valuable to the field of economics. One
specific example of this relates to the method of calculating the impact factor. A journal’s twoyear impact factor, the most commonly used measure, is calculated as follows.
For any given year t:
where IF is the impact factor, C is the number of citations and ? is the number of articles published by the journal. Thus a
published paper has a two-year window to obtain citations that will count in the two-year impact factor calculation.
This method of calculation introduces a bias against papers with a long-term impact. A paper which continues to receive
citations more than two years after its publication does not get credited with these citations in the two-year impact factor. This
time frame might be appropriate in sciences such as medicine, chemistry, or computer science - just to mention a few - in which
the turnover from submission to publication is fast and a paper tends to become ‘old’ relatively soon. In economics, however,
given the longer period that is often needed to bring a paper to publication, the references in a published paper might lose the
two-year window to be cited because it takes more than two years for the manuscript to be published. Furthermore, research
in economics does not necessarily progress in the same manner as research in the “hard sciences”; important contributions
tend to receive citations long after the two-year window. Thus economics journals might be better served by a metric that
takes into account citations after more than two years. It might then be better to focus on the five-year impact factor or the
h5-index introduced by Google Scholar1 or a completely different formula.
The time frame is just one concern; there are other important issues such as the volatility of the impact factor and the extent
to which one article can skew the impact factor and so on. For me, the question is not whether the impact factor is good or
bad, but rather how it can be adjusted to best reflect the particularities of the specific field in order to best measure the true
impact of research. This is not a situation where one size fits all.
A related point, on which I would like to comment, is the implicit role of the impact factor in establishing the credibility of a
journal. A journal must go through an application and verification process that ensures that it adheres to international
standards and conventions, before it is eligible to receive an impact factor. This validation process has assumed greater
importance in recent years with the explosion of “quasi scientific journals” on the Internet. Such journals can simply establish a
website and offer to publish manuscripts in return for publication fees, but without any serious review process. These journals
can range from the benign to the malicious; some of them create fake editorial boards using the names of established
scientists without their permission and then refuse to remove the names when requested to.
Publications by such rogue journals pose a potential threat to the integrity of published research. Nobody exists which is
authorized to regulate them, and it can be surprisingly difficult to differentiate between legitimate, peer-reviewed publications
and those without any recognized review process. Here too the impact factor has a role to play.
The h5-index is the h-index for articles published in the last 5 complete years. For 2013 it is the largest number h such that h
articles published in 2008-2012 have at least h citations each.
Anastasios Xepapadeas
Athens University of Economics and Business
Greece
Q&A Regarding the Launch of the Journal of the Association of Environmental and Resource
Economists (JAERE)
A Q&A on AERE new journal from AERE President Alan Krupnick and the journal transition team is available here. It
discusses the editorial team, submissions, schedules, availability and all the other information you need for
interacting with this journal.
French Association of Environmental and Resource Economists
Vincent Martinet, EAERE France Country Representative
The French environmental economists and their French-speaking colleagues took the opportunity of the
EAERE 21st Annual Conference to meet in Toulouse last June, for creating their own association. The French
Association of Environmental and Resource Economists – FAERE aims at bringing together researchers,
teachers, academics and all those engaged in research and / or expertise in environmental and natural
resources economics. FAERE also helps at promoting all kind of works in the field and takes steps and
CREE, etc.).
resources economics. FAERE also helps at promoting all kind of works in the field and takes steps and
actions to make the works of the Association members known by public and private institutions. It intends to
build strong relations with the different related scientific associations (AFSE, EAERE, and others like AERE,
FAERE will organize scientific workshops, conferences, summer schools and publish a Working Papers and Policy Papers Series.
Its membership is open to all persons involved or interested in environmental and resource economics, who share the
Association’s objectives, without any nationality or language restriction.
The establishment of FAERE is an answer to the need of organization and networking of the expanding community of French
and/or French-speaking environmental economists which has represented for a few years one of the largest national groups in
each EAERE and WCERE conferences. It intends to facilitate scientific exchanges with the policymakers as well as with the
private sector. The Association aims also at representing a large pool of experts in all fields of environmental economics who
can be solicited by the media when necessary.
Alain Ayong Le Kama was elected as President, and Mireille Chiroleu-Assouline, Charles Figuières and François Salanié as vicePresidents. Among the members of the Steering Committee, Vincent Martinet was appointed as the Association’s
representative at EAERE and Julien Daubanes was appointed as Delegate of the French researchers abroad. These mandates
convey the Association’s will of international openness, gathering about common goals and promotion of young researchers.
The main information medium of the Association will be its website : www.faere.fr. Surf without moderation !
Head of communication and public relations : Mireille Chiroleu-Assouline ([email protected])
Vincent Martinet
INRA – UMR Economie Publique – Paris-Grignon
France
Getting India Wrong
Sir Partha Dasgupta, EAERE Past-President
A central message of modern development economics is the importance of income growth. By this,
economists tend to mean growth in gross domestic product, or the market value of what a country
produces (including services). In theory, rising GDP creates employment and investment opportunities;
and as incomes grow, both citizens and government are increasingly able to set aside funds for the
things that make for a good life.
Download the full article here.
The Value of Domestic Building Energy Efficiency-Evidence from Ireland
Ronan Lyons, University of Oxford
The potential costs of climate change put into stark relief the lack of energy efficiency in residential dwellings
across the developed world. In that context, earlier this year the European Commission published a report
prepared by Bio Intelligence Service, IEEP and Ronan Lyons (then Balliol College Oxford, now Trinity College
Dublin) on the relationship between energy efficiency ratings and property market outcomes. The
background to the report was the EU’s Energy Performance of Buildings Directive (EPBD), which introduced in
2002 a framework for energy performance certification in Europe.
EU member states’ Energy Performance Certificates (EPCs) must make it possible for consumers to compare and assess energy
performance and must be accompanied by recommendations for cost-effective improvement options to raise the performance
and rating of the building. A revised EPBD in 2010 strengthened the role of Energy Performance Certificates (EPCs) by requiring
publication of dwelling-specific energy performance indicators at the time of advertising a building for sale or rental rather than
only at the time of signing a purchase agreement or rental contract.
By providing the information needed by prospective tenants and buyers and thus making energy efficiency investments more
attractive, EPCs should have an impact on capital and rental values in the housing market. The motivation for this study is to
explore whether there is a link between the energy performance of buildings as expressed by EPCs and their value, whether
rented or sold.
The report – available from the link at the end of this article – includes a review of the literature on the link between energy
performance certification and real estate values, as well as an assessment of EPC schemes across the EU Member States and
regions. The core of the study is the application of econometric techniques on a range of datasets for a number of EU markets,
including Austria (Vienna and Lower Austria), Belgium (Flanders, Wallonia and Brussels-Capital regions), France (Marseille and
Lille), Ireland and the UK (Oxford).
Where possible, results for both sales and rental sectors were presented and the methodology applied was a standard
hedonic price regression, where the price (sales or rental) of an individual property is explained as a function of a series of
attributes, such as size, number of bedrooms/bathrooms, location and energy efficiency.
The analysis of property transactions and listings from residential property markets in all five countries overwhelmingly points
to energy efficiency being rewarded by the market. The only market where a positive relationship between energy efficiency
and price was not found was Oxford (UK), an imprecise negative relationship that may result from either age as an omitted
variable or alternatively the small sample size available for analysis – work-in-progress research using a larger UK dataset
shows a positive relationship.
Figure 1. Effect of one-letter or equivalent improvement in EPC rating across European property markets (95%
confidence interval shown)
In other countries and regions, the effects of
energy efficiency are clear and positive. In
Austria,
the
effect
of
a
one-letter
improvement in energy efficiency is estimated
at 8% in the sales market and 4.4% in the
lettings market. There is also strong
evidence that the price effect is larger in
Vienna than in the surrounding (and less
urbanised) Lower Austria region. Similarly,
the analysis in Belgium shows a clear
relationship between a property’s energy
efficiency and its advertised price or rent. The
most detailed analysis was of the Flanders
market, which showed that a major
improvement in energy efficiency (100 CPEB
points) is associated with a 4.3% higher
price on average. The rental effect was 3.2%
–
smaller
but
still
statistically
and
economically significant.
Results for Wallonia and Brussels – based on smaller sample sizes – were in line with those for Flanders. A major improvement
in energy efficiency is associated with a 5.4% higher price in Wallonia and a 2.9% higher price in Brussels. In the rental market,
a similar improvement in energy efficiency is associated with a 1.5% higher rent in Wallonia and a 2.2% higher in Brussels. In
France, a strong positive relationship between energy efficiency and the price of a dwelling was found for Marseille. Each oneletter improvement in a property’s energy label is associated with a 4.3% higher price. This effect is driven by apartments, with
no statistically significant effect of energy rating on the price of a house. For Lille, a strong positive relationship between
energy rating and value exists but the effect is of a one-letter improvement on value is smaller than for Marseille (3.2%
compared to 4.3%). This runs counter to the intuition that energy efficiency would be rewarded more in regions with greater
dependence on energy for comfortable conditions of habitation. In the case of Lille, it is houses (4.7%) rather than apartments
(1.5%) that drive the relationship between energy efficiency and property values.
Finally, with Ireland there are again clear indications from the property market that energy efficiency is rewarded. The effect of
a one-letter improvement in energy efficiency is estimated at 2.8% in the sales market and 1.4% in the lettings market. Due to
the long-running nature of the Irish dataset, it is possible to examine the relationship over time. The effect in the sales market
fell between 2009 and 2011, but was as large in 2012 as it had been in 2009.
Greater availability of data will allow estimates for other markets and indeed more precise estimates for markets covered, but
already some implications are clear. For example, in all three countries for which both sales and rental data were available –
Austria, Belgium and Ireland – the rental premium was smaller than the sales price premium. This suggests that owners reap a
benefit that is additional to the on-going monthly benefits, i.e. reduced energy bills, which accrue to all occupiers including
tenants. A closer analysis of energy savings, cost of improvements and the sales and rent premiums could reveal how policy
can use market tools to drive energy efficiency across the EU.
For
more,
the
full
report
is
available
at:
http://ec.europa.eu/energy/efficiency/buildings/doc/20130619energy_performance_certificates_in_buildings.pdf
Ronan Lyons
University of Oxford
UK
Briefing note: Flood insurance and the Water Bill
Florence Crick, Sam Fankhauser, Swenja Surminski, Bob Ward, London School of Economics
Ahead of the second reading of the Water Bill in the House of Commons on Monday, 25th November, the
Grantham Research Institute, LSE, has prepared a short briefing note on the provision of flood insurance and
opportunities to enhance the Government's proposed Flood Re scheme.
Briefing Note Dowloadable here.
Contingent Valuation in the Spanish Prestige Oil Spill Court Case
Maria Loureiro, University of Santiago de Compostela
The sentence of the Prestige oil spill was made public on November 13th 2013, exactly on the day of the
eleventh anniversary of the catastrophe. The verdict was pronounced after a very long judicial investigation
process that took close to 10 years, and a trial that lasted for nine month, with more than 204 witnesses and
experts. This was the largest trial that has ever taken place in the Spanish court system.
An important actor in this trial was the prosecutor office, presenting a full report of the total economic damage
caused by the Prestige oil spill in Spain from 2002-2006, mounting to €4328 million. The report contained
estimates for cleaning costs as well as for the economic losses related to fisheries, shellfish, production, and
the tourist sectors, among others. In addition, an input-output analysis was included to compute other
related commercial losses. As a novelty, it also added the non-use value estimates published by Loureiro,
Loomis and Vazquez (2009) in Environmental and Resource Economics, so as to value the intangible environmental losses. This
was the first time in Spain claiming non-use values in an environmental accident, adding to the few cases in Europe where
judges allowed contingent valuation estimates into a trial process.
The verdict, however, does not acknowledge the existence of such relevant economic and environmental damages. It only
analyzed whether the accused (the captain of the tanker, the first official, and the former general director of Spanish marine
affairs) were guilty of negligence or wrongdoing. The four judges decided that none of the three accused were found guilty of
the oil spill. The captain of the tanker, however, was found guilty of disobedience of orders given by Spanish authorities;
although the jury did not find any relationship between his actions and the large environmental damages caused. Given the
nonexistence of responsible parties, then the damages were not debated by the verdict nor its potential compensation. This is
mainly because none of the accused parties is financially responsible to pay for them.
This sentence has been appealed by the Spanish government, the prosecutor office, and the citizens´platform Nunca Máis.
However, it may take up to 10 additional years for the Spanish Supreme Court to resolve the case. This implies an
extraordinary waiting time for victims and society as a whole, whereas environmental economics will keep in limbo until the
usefulness of our stated preference methods are also acknowledged by European courts.
Maria Loureiro,
University of Santiago de Compostela
Spain
Reference
Loureiro, M. L., J. B. Loomis, M.X. Vázquez, 2009. Economic Valuation of Environmental Damages due to the Prestige oil spill.
Environmental and Resource Economics, 44: 537-553.
30 November 2013
Deadline for Nominations for EAERE Outstanding Achievement Awards
15 December 2013
Deadline for expressions of interest for the organisation of EAERE 21st Annual Conference in 2016
20 January 2014 - 5 June 2014
Specialization PhD courses, University of Gothenburg
EAERE Supported Event
9 - 12 June 2014
Monte Verità Conference on Sustainable Resource Use and Economic Dynamics (SURED 2014)
EAERE Supported Event
27 - 28 June 2014
Applied Methods Related to Regime Shifts in Social-Ecological Systems, Short course held in conjunction with WCERE/2014
EAERE Supported Event
28 June 2 July 2014
5th World Congress of Environmental and Resource Economists, Istanbul, Turkey
6 - 12 July 2014
EAERE-FEEM-VIU European Summer School: "The Economics of Adaptation to Climate Change", Venice, Italy
24-27 June 2015
EAERE 21st Annual Conference, Helsinki, Finland
28 June - 4 July 2015
EAERE-FEEM-VIU European Summer School: "Environmental Regulation", Venice, Italy
The European Job Market for Environmental and Resource Economists aims to offer the two sides of the market - institutions
with open positions and candidates looking for a job - both a virtual and a physical place to meet and look for the best match.
Candidates, universities, public and private institutions, and corporations are invited to apply to participate in the Job Market.
EAERE Job Market is a great opportunity for both candidates and institutions, arrange an interview at the 5th World Congress
of Environmenta and Resource Economists
Visit the Candidates and the Open Positions pages.
Events, Books, Journals, Educational Programmes, Web Resources
Information on events, books, journals, educational programmes, useful links, policy resources, is available on the Association's
website.
website.
EAERE members are encouraged to post announcements of interest for the field.
It is sufficient to send an e-mail to [email protected] containing the information to be posted.
It is a great opportunity to let your news be known by a wide audience!
EAERE Institutional Members 2013
Public and private institutions are invited to support the Association to further its aims by joining EAERE as institutional
members.
Incomes from institutional membership fees are used exclusively and completely to further the aims of the Association. The
Association reserves to institutional members a rich portfolio of benefits and different membership options and prices. Spread
the word and invite other institutions to join us!
FULL INSTITUTIONAL MEMBERS
Basque Centre for Climate Change - BC3
Center for International Climate and Environmental Research - Oslo - CICERO
Cyprus University of Technology - CUT
European University Institute - Climate Policy Research Unit - EUI
Frisch Centre
Fondazione Eni Enrico Mattei- FEEM
Research Institute of Capital Formation, Development Bank of Japan Inc. - RICF DBJ
Statistics Norway, Research Department
Stockholm Resilience Centre
Toulouse School of Economics, Laboratoire d’Economie des Ressources Naturelles (LERNA)
TEN Center - Thematic Environmental Networks, Venice International University
The Beijer Institute of Ecological Economics
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Centre for Environmental and Resource Economics - CERE, Department of Economics, Umea University
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Department of Agrifood and Environmental Systems Management (DiGeSA), University of Catania
Department of Environmental and Business Economics, University of Southern Denmark - SDU
School of Agricultural & Resource Economics, Universtiy of Western Australia
The Grantham Research Institute on Climate Change and the Environment - GRI
Tilburg Sustainability Center
UMR AMURE (Brest University-ifremer)
University of Gothenburg, Department of Economics, Environmental Economics Unit
The Centre for Social and Economic research on the Global Environment (CSERGE), University of East Anglia
VU University Amsterdam, Institute for Environmental Studies - IVM
Wageningen University
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