Mitigation from a cross-sectoral perspective

Human institutions—ways of organizing activities—affect the resilience of the environment. Locally evolved institutional arrangements governed by stable communities and buffered from outside forces have sustained resources successfully for centuries, although they often fail when rapid change occurs. Ideal conditions for governance are increasingly rare. Critical problems, such as transboundary pollution, tropical deforestation, and climate change, are at larger scales and involve nonlocal influences. Promising strategies for addressing these problems include dialogue among interested parties, officials, and scientists; complex, redundant, and layered institutions; a mix of institutional types; and designs that facilitate experimentation, learning, and change.

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The Struggle to Govern the Commons

The talk with present the key results of the IPCC Working Group III 5th assessment report. Concluding four years of intense scientific collaboration by hundreds of authors from around the world, the report responds to the request of the world's governments for a comprehensive, objective and policy neutral assessment of the current scientific knowledge on mitigating climate change. The report has been extensively reviewed by experts and governments to ensure quality and comprehensiveness.

Climate change 2014 - Mitigation of climate change

The phrase financial contagion draws on a concept whose root meaning lies in the field of epidemiology. Like almost all metaphors, this one has the power to illuminate and to mislead. Its referent is the spread of financial distress from one firm, market, asset class, nation, or geographical region to others. But, contagion carries with it other burdens of meaning. First, to refer to contagion, instead of merely to an epidemic, is to implicitly assert that there is a mechanism of transmission from one infected victim to other potential victims. For example, bubonic plague and malaria may give rise to epidemics, but these diseases are not contagious, being transmitted by the bite of a flea and the sting of a mosquito, rather than being spread fromone infected party to another. By contrast, some epidemics may be the result of truly contagious diseases in which the disease spreads directly from one victim to another through the direct transmittal of a pathogen, such as is the case with tuberculosis and AIDS. Second, because a contagious disease spreads from one infected host to others by some mechanism, the key to understanding such a malady is to comprehend the method of transmission. Finally, by invoking a metaphor of illness, financial contagion implies an economic disorder, dislocation, or disease.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1799485_code17292.pdf?abstractid=1799485&mirid=3

What is Financial Contagion

MS ff ichael Porter and Claas van der Linde have written a paper that is interesting and, to us at least, somewhat astonishing. It is a defense of environmental regulation-indeed, an invitation to more stringent regulation-that makes essentially no reference to the social benefits of such regulation. This approach contrasts starkly with the methods that economists and other policy analysts have traditionally used when assessing environmental or other regulatory programs. The traditional approach consists of comparing the beneficial effects of regulation with the costs that must be borne to secure these benefits. For environmental regulation, the social benefits include the reductions in morbidity or premature mortality that can accompany cleaner air, the enhanced recreational opportunities that can result from water-quality improvements, the increased land values that might attend the cleanup of a hazardous waste site, the enhanced vitality of aquatic ecosystems that might follow reductions in agricultural pesticide use or any of the other potentially significant benefits associated with tighter standards. From this benefit-cost approach emerges the standard tradeoff discussed in virtually every economics textbook. Porter and van der Linde deny the validity of this approach to the analysis of environmental regulation, claiming it to be an artifact of what they see as a "static mindset." In their view, economists have failed to appreciate the capacity of

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.9.4.119

Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?

Title IV of the 1990 U.S. Clean Air Act Amendments offers firms facing high marginal costs for pollution abatement the chance to purchase the right to emit sulfur dioxide from firms with lower costs. In the long run such allowance trading may achieve substantial cost savings over an "enlightened" command and control program with a uniform emission-rate standard. But in the short run what has lowered costs is technical change and the fall in low-sulfur coal prices. Title IV of the 1990 U.S. Clean Air Act Amendments established a market for transferable sulfur dioxide emission allowances among electric utilities. The market offers firms facing high marginal costs for pollution abatement the opportunity to purchase the right to emit sulfur dioxide from firms with lower costs. It is expected to yield more cost savings than a command and control approach to environmental regulation. To evaluate the performance of the market for sulfur dioxide allowances, Carlson, Burtraw, Cropper, and Palmer use econometrically estimated marginal abatement cost functions for power plants affected by Title IV. They investigate whether the much-heralded fall in the cost of abating sulfur dioxide can be attributed to allowance trading. They find that for plants that use low-sulfur coal to reduce sulfur dioxide emissions, technical change and the fall in low-sulfur coal prices have lowered marginal abatement cost curves by more than half since 1985. And that is the main source of cost reductions rather than trading allowances per se. In the long run, allowance trading may achieve cost savings of $700 million to $800 million a year more than could be expected from an "enlightened" command and control program with a uniform emission-rate standard. But comparing potential cost savings in 1995 and 1996 with actual emissions costs suggests that most trading gains were unrealized in the first two years of the program. This paper-a product of Environment and Infrastructure, Development Research Group-is part of a larger effort in the group to examine the successes and failures of environmental regulation as a guide to formulating environmental policy. Maureen Cropper may be contacted at mcropper@worldbank.org

https://papers.ssrn.com/sol3/Delivery.cfm/371.pdf?abstractid=597216&mirid=1&type=2

Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?

Title IV of the 1990 Clean Air Act Amendments (CAAA) established a market for transferable sulfur dioxide (SO2) emission allowances among electric utilities. This market offers firms facing high marginal abatement costs the opportunity to purchase the right to emit SO2 from firms with lower costs, and this is expected to yield cost savings compared to a command‐and‐control approach to environmental regulation. This paper uses econometrically estimated marginal abatement cost functions for power plants affected by Title IV of the CAAA to evaluate the performance of the SO2 allowance market. Specifically, we investigate whether the much‐heralded fall in the cost of abating SO2, compared to original estimates, can be attributed to allowance trading. We demonstrate that, for plants that use low‐sulfur coal to reduce SO2 emissions, technical change and the fall in prices of low‐sulfur coal have lowered marginal abatement cost curves by over 50 percent since 1985. The flexibility to take advantage of these chan...

/pdf/sulfur-dioxide-control-by-electric-utilities-what-are-the-18w6kd2inh.pdf

Sulfur dioxide control by electric utilities : what are the gains from trade?

This paper employs analytical and numerical general equilibrium models to examine the costs of achieving pollution reductions under a range of environmental policy instruments in a second-best setting with pre-existing factor taxes. We compare the costs and overall efficiency impacts of emissions taxes, emissions quotas, fuels taxes, performance standards, and mandated technologies, and explore how costs change with the magnitude of pre-existing taxes and the extent of pollution abatement. We find that the presence of distortionary taxes raises the costs of pollution abatement under each instrument relative to its costs in a first-best world. This extra cost is an increasing function of the magnitude of pre-existing tax rates. For plausible values of pre-existing tax rates and other parameters, the cost increase for all policies is substantial (35 percent or more). The impact of pre-existing taxes is particularly large for non-auctioned emissions quotas: here the cost increase can be several hundred percent. Earlier work on instrument choice has emphasized the potential reduction in compliance cost achievable by converting fixed emissions quotas into tradable emissions permits. Our results indicate that the regulator's decision whether to auction or grandfather emissions rights can have equally important cost impacts. Similarly, the choice as to how to recycle revenues from environmentally motivated taxes (whether to return the revenues in lump-sum fashion or via cuts in marginal tax rates) can be as important to cost as the decision whether the tax takes the form of an emissions tax or fuel tax, particularly when modest emissions reductions are involved. In both first- and second-best settings, the cost differences across instruments depend importantly on the extent of pollution abatement under consideration. Total abatement costs differ markedly at low levels of abatement. Strikingly, for all instruments except the fuel tax these costs converge to the same value as abatement levels approach 100 percent.

Dallas Burtraw

Papers

Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?

Sulfur dioxide control by electric utilities : what are the gains from trade?

The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting

Cost-effectiveness of renewable electricity policies

Ancillary benefits of reduced air pollution in the US from moderate greenhouse gas mitigation policies in the electricity sector