Template-Type: ReDIF-Paper 1.0 Number: 2017.01 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-001.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.01 Title: The Benefits of Avoiding Cancer (or Dying from Cancer): Evidence from a Four-country Study Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: AREC, University of Maryland and FEEM Author-Name: Milan Šcasný Author-X-Name-First: Milan Author-X-Name-Last: Šcasný Author-WorkPlace-Name: Charles University Environment Center Abstract: We use stated-preference methods to estimate the cancer Value per Statistical Life (VSL) and Value per Statistical Case (VSCC) from a representative sample of 45-60-year olds in four countries in Europe. We ask respondents to report information about their willingness to pay for health risk reductions that are different from those used in earlier valuation work because they are comprised of two probabilities—that of getting cancer, and that of dying from it (conditional on getting it in the first place). The product of these two probabilities is the unconditional cancer mortality risk. Our hypothetical risk reductions also include two qualitative attributes—quality-of-life impacts and pain. The results show that respondents did appear to have an intuitive grasp of compound probabilities, and took into account each component of the unconditional cancer mortality risk when answering the valuation questions. We estimate the cancer VSL to be between € 1.9 and 5.7 million, depending on whether the (unconditional) mortality risk was reduced by lowering the chance of getting cancer, increasing the chance of surviving cancer, or both. The VSCC is estimated to be up to € 0.550 million euro, and its magnitude depends on the initial (conditional) cancer mortality and on the improvement in survival. We interpret these as “pure” mortality and cancer risk values, stripped of morbidity, pain or quality-of-life effects. The survey responses show that impacts on daily activities and pain have little or no effect on the WTP to reduce the adverse health risks. Keywords: Cancer Risk, Value of a Statistical Life, Value of a Statistical Case of Cancer, Mortality Risk Reduction, Stated Preferences Classification-JEL: I18, J17, K32, Q51 Creation-Date: 201701 Template-Type: ReDIF-Paper 1.0 Number: 2017.02 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-002.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.02 Title: Cost Uncertainty and Time Overruns in Public Procurement: a Scoring Auction for a Contract with Delay Penalties Author-Name: Cesare Dosi Author-X-Name-First: Cesare Author-X-Name-Last: Dosi Author-WorkPlace-Name: University of Padova and Centro di Ricerca Interuniversitario sull’Economia Pubblica (CRIEP) Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: University of Padova and Fondazione Eni Enrico Mattei (FEEM) Abstract: Drawing on the real-options theory we analyse bidding behaviour in a sealed-bid-first-score procurement auction where suppliers, facing variable production costs, must simultaneously report the contract price and the cost level at which they intend to perform the project. We show that this award mechanism is potentially able to maximize total welfare. Next we look at the time incentives required to ensure compliance with the promised optimal trigger value. We show that ex-post efficiency may call for delay penalties higher than the anticipated harm caused by time overruns, in so doing questioning the efficiency rationale of existing liquidated damages rules. Keywords: Public Procurement, Fixed-price Contracts, Real Options, Time Overruns, Scoring Auctions, Liquidated Damages Classification-JEL: C61, D44, D86, K12 Creation-Date: 201701 Template-Type: ReDIF-Paper 1.0 Number: 2017.03 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-003.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.03 Title: A Spatial Econometric Analysis of Land Use Efficiency in Large and Small Municipalities Author-Name: Gianni Guastella Author-X-Name-First: Gianni Author-X-Name-Last: Guastella Author-WorkPlace-Name: Università Cattolica and Fondazione Eni Enrico Mattei Author-Name: Stefano Pareglio Author-X-Name-First: Stefano Author-X-Name-Last: Pareglio Author-WorkPlace-Name: Università Cattolica and Fondazione Eni Enrico Mattei Author-Name: Paolo Sckokai Author-X-Name-First: Paolo Author-X-Name-Last: Sckokai Author-WorkPlace-Name: Università Cattolica Abstract: We estimate the relationship between urban spatial expansion and its socio-economic determinants in Lombardy, the most urbanised region of Italy (and one of the most urbanized of the European Union), at the municipality level. Test results suggest that this relationship varies significantly among municipalities of different size and findings support the hypothesis that larger ones are more efficient in managing land take. In particular, we find that the marginal land consumption per new household is inversely related to the size of the municipality and we link this evidence to the fact that, since more space is often available, small municipalities pay less institutional attention to the issue of land take and consequently internalise less the environmental externalities. This evidence calls for a reflection on the role of planning policies and the effectiveness of undifferentiated measures to contain land take, especially in the case of Italy, where the municipalities, more than 99% of which have less than 50,000 inhabitants, decide on land use transformations. Keywords: Land Take, City Size, Threshold Regression, Spatial Econometrics Classification-JEL: O18, Q15, R14 Creation-Date: 201701 Template-Type: ReDIF-Paper 1.0 Number: 2017.04 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-004.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.04 Title: The Social Contract in the MENA Region and the Energy Sector Reforms Author-Name: Sara Brzuszkiewicz Author-X-Name-First: Sara Author-X-Name-Last: Brzuszkiewicz Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: During the last few years and because of the low oil prices in particular, the increasing awareness of the unsustainability of subsidized systems led several MENA countries to take steps to lower subsidies, which have been part of the social contract for decades, especially as far as the energy sector is concerned. Nowadays, the need for reforms is compelling for more than one reason. Namely, the subsidized system distorts market trends, fosters inefficient use of resources, depresses foreign direct investment and fuels overconsumption, which is no longer sustainable, particularly as far as the population growth in most of the MENA countries is concerned. In this paper both the resource-abundant countries and the energy importing nations will be analyzed, in order to investigate similarities and differences between the two and to carry out an initial assessment of the reforms in two representative countries, namely Saudi Arabia, exporting country par excellence, and Egypt, which imports energy. Keywords: Energy Sector, Subsidies, Subsidy Reforms, MENA Region, Saudi Arabia, Egypt, Rentier State, Resource Curse Theories Classification-JEL: O1, O13 Creation-Date: 201701 Template-Type: ReDIF-Paper 1.0 Number: 2017.05 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-005.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.05 Title: The Swing Voter's Curse in Social Networks Author-Name: Berno Buechel Author-X-Name-First: Berno Author-X-Name-Last: Bueche Author-WorkPlace-Name: University of St. Gallen and Liechtenstein-Institute Author-Name: Lydia Mechtenberg Author-X-Name-First: Lydia Author-X-Name-Last: Mechtenberg Author-WorkPlace-Name: University of Hamburg Abstract: We study private communication in social networks prior to a majority vote on two alternative policies. Some (or all) agents receive a private imperfect signal about which policy is correct. They can, but need not, recommend a policy to their neighbors in the social network prior to the vote. We show theoretically and empirically that communication can undermine efficiency of the vote and hence reduce welfare in a common interest setting. Both efficiency and existence of fully informative equilibria in which vote recommendations are always truthfully given and followed hinge on the structure of the communication network. If some voters have distinctly larger audiences than others, their neighbors should not follow their vote recommendation; however, they may do so in equilibrium. We test the model in a lab experiment and strong support for the comparative-statics and, more generally, for the importance of the network structure for voting behavior. Keywords: Strategic Voting, Social Networks, Swing Voter's Curse, Information Aggregation Classification-JEL: D72, D83, D85, C91 Creation-Date: 201701 Template-Type: ReDIF-Paper 1.0 Number: 2017.06 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-006.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.06 Title: Statistical and Economic Evaluation of Time Series Models for Forecasting Arrivals at Call Centers Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: University of Milan Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and IEFE Bocconi Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: University of Milan-Bicocca and Fondazione Eni Enrico Mattei Abstract: Call centers' managers are interested in obtaining accurate forecasts of call arrivals because these are a key input in staffing and scheduling decisions. Therefore their ability to achieve an optimal balance between service quality and operating costs ultimately hinges on forecast accuracy. We present a strategy to model selection in call centers which is based on three pillars: (i) a flexible loss function; (ii) statistical evaluation of forecast accuracy; (iii) economic evaluation of forecast performance using money metrics. We implement fourteen time series models and seven forecast combination schemes on three series of call arrivals. We show that second moment modeling is important when forecasting call arrivals. From the point of view of a call center manager, our results indicate that outsourcing the development of a forecasting model is worth its cost, since the simple Seasonal Random Walk model is always outperformed by other, relatively more sophisticated, specifications. Keywords: ARIMA, Call Center Arrivals, Loss Function, Seasonality, Telecommunications Forecasting Classification-JEL: C22, C25, C53, D81, M15 Creation-Date: 201702 Template-Type: ReDIF-Paper 1.0 Number: 2017.07 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-007.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.07 Title: System Integration of Wind and Solar Power in Integrated Assessment Models: a Cross-model Evaluation of New Approaches Author-Name: Robert C. Pietzcker Author-X-Name-First: Robert C. Author-X-Name-Last: Pietzcker Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Author-Name: Falko Ueckerdt Author-X-Name-First: Falko Author-X-Name-Last: Ueckerdt Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Author-Name: Samuel Carrara Author-X-Name-First: Samuel Author-X-Name-Last: Carrara Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo sui Cambiamenti Climatici Author-Name: Harmen Sytze de Boer Author-X-Name-First: Harmen Sytze Author-X-Name-Last: de Boer Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency Author-Name: Jacques Després Author-X-Name-First: Jacques Author-X-Name-Last: Després Author-WorkPlace-Name: Université Grenoble Alpes Author-Name: Shinichiro Fujimori Author-X-Name-First: Shinichiro Author-X-Name-Last: Fujimori Author-WorkPlace-Name: National Institute for Environmental Studies Author-Name: Nils Johnson Author-X-Name-First: Nils Author-X-Name-Last: Johnson Author-WorkPlace-Name: International Institute for Applied Systems Analysis Author-Name: Alban Kitous Author-X-Name-First: Alban Author-X-Name-Last: Kitous Author-WorkPlace-Name: European Commission Joint Research Centre Author-Name: Yvonne Scholz Author-X-Name-First: Yvonne Author-X-Name-Last: Scholz Author-WorkPlace-Name: German Aerospace Center Author-Name: Patrick Sullivan Author-X-Name-First: Patrick Author-X-Name-Last: Sullivan Author-WorkPlace-Name: National Renewable Energy Laboratory Author-Name: Gunnar Luderer Author-X-Name-First: Gunnar Author-X-Name-Last: Luderer Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Abstract: Mitigation-Process Integrated Assessment Models (MP-IAMs) are used to analyze long-term transformation pathways of the energy system required to achieve stringent climate change mitigation targets. Due to their substantial temporal and spatial aggregation, IAMs cannot explicitly represent all detailed challenges of integrating the variable renewable energies (VRE) wind and solar in power systems, but rather rely on parameterized modeling approaches. In the ADVANCE project, six international modeling teams have developed new approaches to improve the representation of power sector dynamics and VRE integration in IAMs. In this study, we qualitatively and quantitatively evaluate the last years’ modeling progress and study the impact of VRE integration modeling on VRE deployment in IAM scenarios. For a comprehensive and transparent qualitative evaluation, we first develop a framework of 18 features of power sector dynamics and VRE integration. We then apply this framework to the newly-developed modeling approaches to derive a detailed map of strengths and limitations of the different approaches. For the quantitative evaluation, we compare the IAMs to the detailed hourly-resolution power sector model REMIX. We find that the new modeling approaches manage to represent a large number of features of the power sector, and the numerical results are in reasonable agreement with those derived from the detailed power sector model. Updating the power sector representation and the cost and resources of wind and solar substantially increased wind and solar shares across models: Under a carbon price of 30$/tCO2 in 2020 (increasing by 5% per year), the model-average cost-minimizing VRE share over the period 2050-2100 is 62% of electricity generation, 24%-points higher than with the old model version. Keywords: Integrated Assessment Models (IAM), Variable Renewable Energy (VRE), Wind and Solar Power, System Integration, Power Sector Model, Flexibility Options (Storage, Transmission Grid, Demand Response), Model Evaluation, Model Validation Classification-JEL: C6, C61, Q40, Q42, Q47, Q49 Creation-Date: 201702 Template-Type: ReDIF-Paper 1.0 Number: 2017.08 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-008.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.08 Title: Freight Futures: The Potential Impact of Road Freight on Climate Policy Author-Name: Samuel Carrara Author-X-Name-First: Samuel Author-X-Name-Last: Carrara Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC) Author-Name: Thomas Longden Author-X-Name-First: Thomas Author-X-Name-Last: Longden Author-WorkPlace-Name: University of Technology Sydney, Centre for Health Economics and Research Evaluation (CHERE) Abstract: This paper describes changes to the modelling of the transport sector in the WITCH (World Induced Technical Change Hybrid) model to incorporate road freight and account for the intensity of freight with respect to GDP. Modelling freight demand based on the intensity of freight with respect to GDP allows for a focus on the importance of road freight with respect to the cost-effective achievement of climate policy targets. These climate policy targets are explored using different GDP pathways between 2005 and 2100, which are sourced from the Shared Socioeconomic Pathways (SSPs) database. Our modelling shows that the decarbonisation of the freight sector tends to occur in the second part of the century and the sector decarbonises by a lower extent than the rest of the economy. Decarbonising road freight on a global scale remains a challenge even when notable progress in biofuels and electric vehicles has been accounted for. Keywords: Road Freight, Transport, Climate Mitigation, Integrated Assessment Models Classification-JEL: Q54, Q58, R41 Creation-Date: 201702 Template-Type: ReDIF-Paper 1.0 Number: 2017.09 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-009.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.09 Title: Temperature Anomalies, Radiative Forcing and ENSO Author-Name: Claudio Morana Author-X-Name-First: Claudio Author-X-Name-Last: Morana Author-WorkPlace-Name: Università di Milano Bicocca, CeRP-Collegio Carlo Alberto and Rimini Centre for Economic Analysis Author-Name: Giacomo Sbrana Author-X-Name-First: Giacomo Author-X-Name-Last: Sbrana Author-WorkPlace-Name: NEOMA Business School Abstract: The paper investigates the linkages between temperature anomalies, radiative forcing and ENSO. By means of a new flexible trend modeling approach, we uncover a nonlinear linkage between radiative forcing and global temperature anomalies. The nonlinear trend closely tracks the low frequency evolution in temperature anomalies, also accounting for the mid-end 1990s level switch, the 1998-2013 "warming hiatus" and the current steepening in trend temperatures. Radiative forcing is also found to account for trend dynamics in the Southern Oscillation Index (SOI), therefore providing support for the view that global warming might affect natural variability oscillations such as ENSO, and therefore enhance their disruptive effects. We also document the feature of time-varying volatility of temperature anomalies and SOI, which is well described by an IGARCH process. By means of a new dynamic conditional correlation model (SP-DCC), we finally document the presence of time-varying conditional correlations relating temperature anomalies across various zones and SOI. The correlation pattern is found to be consistent with the effects of ENSO events in the Tropics and their teleconnections. Keywords: Temperature Anomaly, Global Warming, Warming Hiatus, Radiative Forcing, ENSO, El Niño, Conditional Heteroskedasticity, Semiparametric Dynamic Conditional Correlation Model Classification-JEL: C32 Creation-Date: 201702 Template-Type: ReDIF-Paper 1.0 Number: 2017.10 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-010.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.10 Title: Wind, Storage, Interconnection and the Cost of Electricity Generation Author-Name: Valeria Di Cosmo Author-X-Name-First: Valeria Author-X-Name-Last: Di Cosmo Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Economic and Social Research Institute Author-Name: Laura Malaguzzi Valeri Author-X-Name-First: Laura Author-X-Name-Last: Malaguzzi Valeri Author-WorkPlace-Name: Economic and Social Research Institute Abstract: We evaluate how increasing wind generation affects wholesale electricity prices, balancing payments and the cost of subsidies using the Irish Single Electricity Market (SEM) as a test system, with hourly data from 1 January 2008 to 28 August 2012. We model the spot market using a system of seemingly unrelated regressions (SUR) where the regressions are the 24 hours of the day. Wind has a negative impact on the system marginal price, with every MWh increase in wind generation (equal to about 0.2% of the average wind generation in our sample) leading to a decrease of the system marginal price of €0.018/MWh, or about 0.3% of its average value. We use time series models to analyse the balancing market and show that wind generation increases balancing payments, as do the forecast errors of demand and wind. Every MWh of additional wind generation is associated with an increase in constraint payments of €3.2, or about 0.01%. Lack of storage increases the impact of wind on balancing payments whereas the lack of interconnection has no effect. Overall, wind decreases costs through its effect on the electricity price more than it increases constraint payments, even when storage is on outage. The effect of wind remains positive after including the cost of subsidies given to wind generation. Keywords: Wind Generation, Constraints, Storage, Interconnection, Subsidies Classification-JEL: L94, Q42 Creation-Date: 201702 Template-Type: ReDIF-Paper 1.0 Number: 2017.11 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-011.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.11 Title: Extending the Public Sector in the ICES Model with an Explicit Government Institution Author-Name: Elisa Delpiazzo Author-X-Name-First: Elisa Author-X-Name-Last: Delpiazzo Author-WorkPlace-Name: Centro Euro-Mediterraneo sui Cambiamenti Climatici Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo sui Cambiamenti Climatici Author-Name: Gabriele Standardi Author-X-Name-First: Gabriele Author-X-Name-Last: Standardi Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo sui Cambiamenti Climatici Abstract: This paper aims to present an extension of the ICES model to capture the public sector. Departing from a demand system mainly derived from the GTAP model, ICES-XPS model disentangles the private and the public actors. The paper reviews the changes in both the database and the model equations following the existing literature and considering the availability of data as well. The model is then tested with a series of simple experiments to highlight its contribution to economic analysis in which the public sector may play an important role. Finally, we show the flexibility in the closure rule of the public sector that allows addressing different policy research questions. Keywords: Computable General Equilibrium, Public Sector, Government Budget Classification-JEL: C68, D58, H60 Creation-Date: 201703 Template-Type: ReDIF-Paper 1.0 Number: 2017.12 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-012.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.12 Title: What Factors Affect the Competiveness of Power Generation Sector in China? An Analysis Based on Game Cross-efficiency Author-Name: Bai-Chen Xie Author-X-Name-First: Bai-Chen Author-X-Name-Last: Xie Author-WorkPlace-Name: College of Management and Economics and APEC Sustainable Energy Center, Tianjin University Author-Name: Jie Gao Author-X-Name-First: Jie Author-X-Name-Last: Gao Author-WorkPlace-Name: College of Management and Economics, Tianjin University Author-Name: Shuang Zhang Author-X-Name-First: Shuang Author-X-Name-Last: Zhang Author-WorkPlace-Name: College of Management and Economics and APEC Sustainable Energy Center, Tianjin University Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: College of Management and Economics and China Academy of Energy, Environmental and Industrial Economics, Tianjin University Abstract: China’s unbundling reform in 2002 aimed to introduce competitiveness into the power industry, especially the generation sector, to improve its operational efficiency. Meanwhile, great concern about a range of environmental problems and global climate change increasingly calls for saving energy and abating emissions. Thus, the ability to balance the reduction of carbon emissions with economic benefits may to a great extent determine the competitiveness of power generation sector. This study first adopts the game cross-efficiency approach to evaluate the environmental efficiency of the generation sectors in China’s 30 provinces. It then employs a system generalized method of moments model to explore the determinants of their performance while eliminating the associated endogeneity problem. The results of this first study combining the two methods indicate that efficiency gaps do exist among the regions even though overall efficiency has been improved. Despite the negative correlation between environmental efficiency and the thermal power ratio, the power mix should be adjusted gradually. The average firm size and capacity utilization rates are positive factors boosting the environmental efficiency. The incentive policies for clean energy development should be differentiated across regions according to their power mix and self-sufficiency ratio. Keywords: Game Cross-efficiency, Data Envelopment Analysis, Generalized Method of Moments, Power Industry, Environmental Efficiency, China Classification-JEL: Q54, Q55, Q58, Q43, Q48, O13, O44, R11 Creation-Date: 201703 Template-Type: ReDIF-Paper 1.0 Number: 2017.13 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-013.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.13 Title: A Simple Framework for Climate-Change Policy under Model Uncertainty Author-Name: Stergios Athanasoglou Author-X-Name-First: Stergios Author-X-Name-Last: Athanasoglou Author-WorkPlace-Name: University of Milan - Bicocca and CMCC Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Bocconi University and FEEM Author-Name: Laurent Drouet Author-X-Name-First: Laurent Author-X-Name-Last: Drouet Author-WorkPlace-Name: FEEM and CMCC Abstract: We propose a novel framework for the economic assessment of climate-change policy. Our main point of departure from existing work is the adoption of a "satisficing", as opposed to optimizing, modeling approach. Along these lines, we place primary emphasis on the extent to which different policies meet a set of goals at a specific future date instead of their performance vis-à-vis some intertemporal objective function. Consistent to the nature of climate-change policy making, our model takes explicit account of model uncertainty. To this end, the value function we propose is an analogue of the well-known success-probability criterion adapted to settings characterized by model uncertainty. We apply this decision criterion to probability distributions constructed by Drouet et al. (2015) linking carbon budgets to future consumption. The main result that emerges is the superiority of "medium" carbon budgets in line with a 3°C target (i.e., 2000-3000 GtCO2) in preventing large future consumption losses with high probability. Insights from computational geometry facilitate computations considerably, and allow for the efficient application of the model in high-dimensional settings. Keywords: Satisficing, Model Uncertainty, Climate Change, Computational Geometry Classification-JEL: C60, D81, Q42, Q48 Creation-Date: 201703 Template-Type: ReDIF-Paper 1.0 Number: 2017.14 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-014.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.14 Title: Welfare as Simple(x) Equity Equivalents Author-Name: Loïc Berger Author-X-Name-First: Loïc Author-X-Name-Last: Berger Author-WorkPlace-Name: IESEG School of Management and Fondazione Eni Enrico Mattei (FEEM) Author-Name: Johannes Emmerling Author-X-Name-First: Johannes Author-X-Name-Last: Emmerling Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC) Abstract: Inequity plays a fundamental role in the evaluation of social welfare in many dimensions. We revisit the concept of inequity, whether across states of world (uncertainty), across individuals (inequality) and across generations (intergenerational equity), using a common framework generalizing the discounted expected utilitarianism approach. We propose a general measure of welfare as equity equivalents and develop the corresponding inequity index. We then allow for different degrees of inequity aversion across the three dimensions to span a simplex of possible inequity preferences and relate it to the recent literature on this topic. We show that the ordering of aggregation across the different dimensions matters for welfare evaluations and that many welfare-theoretical approaches developed in the literature may be seen as special cases of this general framework. Keywords: Utilitarianism, Inequality, Inequity Aversion, Risk Aversion, Intertemporal Welfare, Discounting Classification-JEL: D60, D63, D30 Creation-Date: 201703 Template-Type: ReDIF-Paper 1.0 Number: 2017.15 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-015.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.15 Title: A Novel Approach to Estimating the Demand Value of Road Safety Author-Name: Christoph M. Rheinberger Author-X-Name-First: Christoph M. Author-X-Name-Last: Rheinberger Author-WorkPlace-Name: European Chemicals Agency (ECHA) Author-Name: Felix Schläpfer Author-X-Name-First: Felix Author-X-Name-Last: Schläpfer Author-WorkPlace-Name: Kalaidos University of Applied Sciences Author-Name: Michael Lobsiger Author-X-Name-First: Michael Author-X-Name-Last: Lobsiger Author-WorkPlace-Name: B,S,S. Economic Consultants Ltd. Abstract: We estimate the demand value of road safety improvements in Switzerland from survey data using a novel elicitation approach. Individuals’ responses to questions about how much public spending on road safety should be increased are combined with observations of income, tax rate, and road usage to estimate the economic value of a statistical accident avoided. Information obtained from a risk-risk tradeoff elicitation allows us to distinguish willingness-to-pay values for various degrees of accident severity. Our most comprehensive estimate of the value of a statistical accident avoided amounts to CHF 11.0 million ($11.6 million); the corresponding value per statistical life is close to CHF 4.2 million ($4.5 million). We explore the sensitivity of these estimates to anchoring and other framing effects and find that the popularity of specific road safety programs is influenced by both the availability of different choice options and the provision of partisan cues expressing political endorsement or opposition. Keywords: Road Safety, Value of Life, Public Goods Classification-JEL: H41, I38, J17 Creation-Date: 201703 Template-Type: ReDIF-Paper 1.0 Number: 2017.16 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-016.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.16 Title: Optimal Clean Energy R&D Investments Under Uncertainty Author-Name: Giacomo Marangoni Author-X-Name-First: Giacomo Author-X-Name-Last: Marangoni Author-WorkPlace-Name: FEEM, CMCC and Politecnico di Milano Author-Name: Gauthier De Maere Author-X-Name-First: Gauthier Author-X-Name-Last: De Maere Author-WorkPlace-Name: FEEM Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: FEEM, CMCC and Bocconi University Abstract: The availability of technology plays a major role in the feasibility and costs of climate policy. Nonetheless, technological change is highly uncertain and capital intensive, requiring risky efforts in research and development of clean energy technologies. In this paper, we introduce a two-track method that makes it possible to maintain the rich set of information produced by climate-economy models while introducing the dimension of uncertainty in innovation ef- forts, without succumbing to computation complexity. In particular, we solve the problem of an optimal R&D portfolio by employing Approximate Dynamic Programming, through multiple runs of an integrated assessment model (IAM) for the purpose of computing the value function, and expert elicitation data to quantify the relevant uncertainties. We exemplify the methodology with the problem of evaluating optimal near-term innovation investment portfolios in four key clean energy technologies (solar, biofuels, bioelectricity and personal electric vehicle batteries), taking into account the uncertainty surrounding the effectiveness of innovation to improve the performance of these technologies. We employ an IAM (WITCH) which has a fairly rich description of the energy technologies and experts’ beliefs on future costs for the above-mentioned technologies. Focusing on Europe and its short-term climate policy commitments, we find that batteries in personal transportation dominate the optimal public R&D portfolio. The resulting ranking across technologies is robust to changes in risk-aversion, R&D budget limitation and assump- tions on crowding out of other investments. These results suggest an important upscaling of R&D efforts compared to the recent past. Keywords: Energy, Innovation, Technological Change, Uncertainty, Climate Policy Classification-JEL: O30, O33, Q40, Q41, Q50, Q55 Creation-Date: 201704 Template-Type: ReDIF-Paper 1.0 Number: 2017.17 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-017.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.17 Title: Urban Distribution Centres and Competition among Logistics Providers: a Hotelling Approach Author-Name: Daniele Crotti Author-X-Name-First: Daniele Author-X-Name-Last: Crotti Author-WorkPlace-Name: University of Genoa Author-Name: Elena Maggi Author-X-Name-First: Elena Author-X-Name-Last: Maggi Author-WorkPlace-Name: University of Insubria Abstract: In recent years several European municipalities have paired market-based measures with urban distribution centres (UDC) in order to reduce CO2 emissions and make more sustainable urban freight ‡ows. However, UDCs may add reloading costs and extra delivery times which have relevant impact on both urban supply chains and the competition among traditional and UDC-based logistics service providers in terms of service quality and freight rates. By using a duopolistic Hotelling framework, we show that market-based measures and subsidies might be substitutes to enhance the demand for UDC-based providers but public funding can be reduced by improving the quality of UDC services. These results can enlarge the scope for investments in UDC value-adding services in order to decrease private crowding-out effects in the long run. Keywords: Urban Distribution Centre, City logistics, Sustainable Urban Transport Policy, Hotelling Spatial Competition Model, Market-Based Measures, Public Subsidy Classification-JEL: D43, H23, L13, Q58, R41, R48 Creation-Date: 201704 Template-Type: ReDIF-Paper 1.0 Number: 2017.18 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-018.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.18 Title: The French Nuclear Bet Author-Name: Quentin Perrier Author-X-Name-First: Quentin Author-X-Name-Last: Perrier Author-WorkPlace-Name: CIRED and ENGIE Abstract: Following the first oil crisis, France launched the world’s largest ever nuclear energy program, commissioning 58 new reactors. These reactors are now reaching 40 years of age, the end of their technological lifetime. This places France at an energy policy crossroads: should the reactors be retrofitted or should they be decommissioned? The cost-optimal decision depends on several factors going forward, in particular the expected costs of nuclear energy production, electricity demand levels and carbon prices, all of which are subject to significant uncertainty. To deal with these uncertainties, we apply the Robust Decision Making framework to determine which reactors should be retrofitted. We build an investment and dispatch optimization model, calibrated for France. Then we use it to study 27 retrofit strategies for all combinations of uncertain parameters, which amounts to nearly 3,000 runs. Our analysis produces two robust strategies, which involve shutting down between 7 and 14 of the 14 oldest reactors, while extending the lifetime of all remaining reactors. These strategies provide a hedge against the risks of unexpected increases in retrofit costs, low demand and low carbon price. Our robust strategies differ from the official French government scenarios on the timing and number of reactors suggested to be decommissioned. They provide a timely contribution to the current debate on the extension of lifetime of nuclear plants in France. Keywords: Power System, Nuclear Power, Uncertainty, Investment Optimization, Robust Decision Making Classification-JEL: D81, O13, Q40, Q48 Creation-Date: 201704 Template-Type: ReDIF-Paper 1.0 Number: 2017.19 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-019.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.19 Title: Sensitivity of Modeling Results to Technological and Regional Details: The Case of Italy’s Carbon Mitigation Policy Author-Name: Gabriele Standardi Author-X-Name-First: Gabriele Author-X-Name-Last: Standardi Author-WorkPlace-Name: FEEM and CMCC Author-Name: Yiyong Cai Author-X-Name-First: Yiyong Author-X-Name-Last: Cai Author-WorkPlace-Name: CSIRO and CAMA, Australian National University Author-Name: Sonia Yeh Author-X-Name-First: Sonia Author-X-Name-Last: Yeh Author-WorkPlace-Name: Chalmers University of Technology Abstract: Model differences in technological and geographical scales are common, but their contributions to uncertainties have not been systematically quantified in the climate policy literature. This paper carries out a systematic assessment on the sensitivity of Computable General Equilibrium models to technological and geographical scales in evaluating the economic impacts of carbon mitigation policies. Taking Italy as an example, we find that the estimation for carbon price and the economic cost of a de-carbonization pathway by means of a model with technological and regional details can be lower than a model without such details by up to 40%. Additionally, the effect of representing regional details appears to be far more important than the effect of representing the details of electricity technology in both the estimated carbon prices and the estimated economic impacts. Our results for Italy highlight the importance of modeling uncertainties of these two key assumptions, which should be appropriately acknowledged when applying CGE models for policy impact assessment. Our conclusions can be generalized to different countries and policy scenarios not in terms of absolute numbers but in terms of economic explanations. In particular, intra-national trade and the sub-national sectoral/technological specialization are important variables for understanding the economic dynamics behind these outcomes. Keywords: Computable General Equilibrium, Carbon Mitigation Policy, Sensitivity, Technology, Sub-national regions Classification-JEL: C68, Q5, Q55 Creation-Date: 201704 Template-Type: ReDIF-Paper 1.0 Number: 2017.20 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-020.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.20 Title: Export Tariffs Combined with Public Investments as a Forest Conservation Policy Instrument Author-Name: Gregor Schwerhoff Author-X-Name-First: Gregor Author-X-Name-Last: Schwerhoff Author-WorkPlace-Name: Mercator Research Institute on Global Commons and Climate Change (MCC) Author-Name: Johanna Wehkamp Author-X-Name-First: Johanna Author-X-Name-Last: Wehkamp Author-WorkPlace-Name: Mercator Research Institute on Global Commons and Climate Change (MCC) and Technical University of Berlin Abstract: The forest conservation policy instrument REDD+ (Reducing Emissions from Deforestation and Forest Degradation) is designed to compensate governments of tropical countries for their efforts to conserve forests. Food insecure countries that are specialized in agriculture and have weak institutions, are likely to face difficulties to enforce forest conservation. This article explores how far export tariffs on agricultural goods combined with public investments, could be used as a forest conservation policy mix in such contexts. We first show empirically that structural constraints to forest conservation policies are particularly pronounced in one third of countries where REDD+ programs are planned to be rolled out. We then develop a two sector competing land use model with a domestic food producing and an exporting agricultural sector. We show that it is possible to combine export tariffs with public investments such that deforestation decreases, while agricultural production levels and food prices remain constant. Keywords: Deforestation, REDD+, Export Tariffs, Public Investments, Two Sector Competing Land Use Model Classification-JEL: O24, Q17, Q23, Q24, Q56 Creation-Date: 201704 Template-Type: ReDIF-Paper 1.0 Number: 2017.21 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-021.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.21 Title: How Do Regional Interactions in Space Affect China’s Mitigation Targets and Economic Development? Author-Name: Wang Lu Author-X-Name-First: Wang Author-X-Name-Last: Lu Author-WorkPlace-Name: Beijing Institute of Technology Author-Name: Hao Yu Author-X-Name-First: Hao Author-X-Name-Last: Yu Author-WorkPlace-Name: Beijing Institute of Technology Author-Name: Wei Yi-Ming Author-X-Name-First: Wei Author-X-Name-Last: Yi-Ming Author-WorkPlace-Name: Beijing Institute of Technology Abstract: China is faced with the big challenge of maintaining a remarkable economic growth in an environmental friendly manner; that is why forecasting the turning point is of necessity. Traditional econometric approaches do not consider the spatial dependence that inevitably exists in the economic units, which probably risks misspecification and generating a biased estimation result. This paper firstly constructs Theil index to measure the intra-and inter regional inequality of CO2 emissions, we find that difference in emissions between regions is narrowed but gap within the Western China is sharply expanding. Then the Spatial Durbin model is employed to shape the relationship between mitigation and economic growth using the panel data of 29 provinces ranging from 1995 to 2011. Results show that the peak of per capita carbon dioxide emissions in China would be seen when GDP per capita reaches between $USD 21594 to 24737 (at 2000 constant price), much smaller when compared with the estimations of models which ignore the spatial dependence. This implies that territorial policy and industry transfer, on one hand would favor those underdeveloped regions with investment, technology and labors transfer; on the other hand enables developed regions more potential to mitigation, thus, chances are that China achieves the emissions peak of carbon dioxide earlier than conventional wisdom. Keywords: Mitigation, Economic growth, Spatial Interaction, Spatial Durbin Model Classification-JEL: C31, P48, Q54 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.22 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-022.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.22 Title: The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: University of Milan Author-Name: Paolo Castelnovo Author-X-Name-First: Paolo Author-X-Name-Last: Castelnovo Author-WorkPlace-Name: University of Milan Author-Name: Massimo Florio Author-X-Name-First: Massimo Author-X-Name-Last: Florio Author-WorkPlace-Name: University of Milan Abstract: Some regulatory reforms do not change just a specific signal that can be represented by a quantitative continuous variable, such as a tax rate, a price cap, or an emission threshold. The standard theory of reform in applied welfare economics (going back to contributions by e.g. Ramsey, Samuelson and Guesnerie) asks the question: What is the marginal effect on social welfare of changing a policy signal? However, reforms such as privatization, unbundling or liberalization of network industries are often described by ‘packages’ shifting a policy framework. It is increasingly frequent in the empirical evaluation of such reforms to use categorical variables, often in polytomous form, for instance describing unbundling steps (vertical integration, accounting, functional, legal, ownership separation) on a discrete numerical scale, such as those proposed by the OECD and other international bodies. We review recent econometric literature evaluating regulatory reforms using such variables (40 papers) and we discuss some methodological issues arising in this context. Keywords: Econometrics, Policy Evaluation, Network Industries, Reforms Classification-JEL: B41, C20, C54, D04, L98 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.23 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-023.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.23 Title: A Ricardian Analysis of the Impact of Climate Change on Italian Agriculture Author-Name: Martina Bozzola Author-X-Name-First: Martina Author-X-Name-Last: Bozzola Author-WorkPlace-Name: ETH Zurich Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Georgia Institute of Technology Author-Name: Robert Mendelsohn Author-X-Name-First: Robert Author-X-Name-Last: Mendelsohn Author-WorkPlace-Name: Yale University Author-Name: Fabian Capitanio Author-X-Name-First: Fabian Author-X-Name-Last: Capitanio Author-WorkPlace-Name: Università Federico II Napoli Abstract: This research investigates the potential impact of warming on Italian agriculture. Using a detailed dataset of 16,000 farms across Italy, the study examines likely warming impacts in different regions and for different sectors of Italian agriculture. The study finds that farm net revenues are very sensitive to seasonal changes in temperature and precipitation. Livestock and crop farms have different responses to climate as do rain-fed farms and irrigated farms. The overall results suggest mild consequences from marginal changes in climate but increasingly harmful effects from more severe climate scenarios. Keywords: Ricardian Analysis, Climate Change, Italian Agriculture, Regional Analysis, Panel Data Classification-JEL: Q54, Q51, Q15 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.24 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-024.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.24 Title: Willingness to Pay for Solar Panels and Smart Grids Author-Name: Tunç Durmaz Author-X-Name-First: Tunç Author-X-Name-Last: Durmaz Author-WorkPlace-Name: Department of Economics, Yildiz Technical University Author-Name: Aude Pommeret Author-X-Name-First: Aude Author-X-Name-Last: Pommeret Author-WorkPlace-Name: School of Energy and Environment, City University of Hong Kong Author-Name: Ian Ridley Author-X-Name-First: Ian Author-X-Name-Last: Ridley Author-WorkPlace-Name: School of Energy and Environment , City University of Hong Kong Abstract: It is expected that the renewable share of energy generation will rise considerably in the near future. The intermittent and uncertain nature of renewable energy (RE) calls for storage and grid management technologies that can allow for increased power system flexibility. To assist policy makers in designing public policies that incentivize RE generation and a flexible power system based on energy storage and demandside management, better knowledge as to the willingness to pay for the corresponding devices is required. In this paper, we appraise the willingness of a household (HH) to pay for a 1.9 kW peak photovoltaic (PV) system and smart grid devices, namely, a smart meter and a home storage battery. Results indicate that having access to a storage device is key for the HH decision to install a smart meter. We also find that it is beneficial for the HH to install the PV system regardless of the pricing scheme and the ownership of the battery pack. It is, nevertheless, barely desirable to install the battery pack regardless of the presence of the PV system; an outcome pointing to the fact that the high cost of storage is a drawback for the wider use of these systems. When storage is constrained in such a way that only the generated power can be stored, the willingness to install the battery pack reduces even further. The investment decisions made when legislation prohibits net-metering are also analyzed. Keywords: Renewable Energy, Intermittency, Distributed Generation, Smart Solutions, Energy Storage, Demand Response, Willingness to Pay Classification-JEL: D12, D24, D61, Q41, Q42 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.25 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-025.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.25 Title: An Analysis of Water Security under Climate Change Author-Name: Federica Cappelli Author-X-Name-First: Federica Author-X-Name-Last: Cappelli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: Water is a multidimensional issue, involving water availability, access to freshwater, spatial and temporal distribution of resources, competition among its uses, ecosystems conservation, climate-related disasters and risks and several other aspects. The water security approach manages such complexity and proposes a comprehensive view of human security in relation to the water-related issues. Consequently, the solutions developed in order to face this multi-faceted concept should reflect its thorough vision. The aim of the present work is to investigate the relationship between climate change and water security. Exploring such a relationship is truly important in order to help policy-makers in the development of adaptation and mitigation strategies. In the water context, this challenge is further complicated by the possible conflicts arising between climate and water policies. In order to carry out such an analysis, an indicator measuring water security, namely the Water Security Index, is created. In the present work, climate change is considered from four different perspectives but, as revealed by the econometric results, it always has a predominant (negative) effect on water security. Keywords: Water Security, Climate Change, Water Security Index, Econometrics, Maps Classification-JEL: Q25, Q53, Q54, O13 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.26 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-026.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.26 Title: The Myopic Stable Set for Social Environments Author-Name: Thomas Demuynck Author-X-Name-First: Thomas Author-X-Name-Last: Demuynck Author-WorkPlace-Name: Ecares, Université Libre de Bruxelles Author-Name: Jean-Jacques Herings Author-X-Name-First: Jean-Jacques Author-X-Name-Last: Herings Author-WorkPlace-Name: Department of Economics, Maastricht University Author-Name: Riccardo D. Saulle Author-X-Name-First: Riccardo D. Author-X-Name-Last: Saulle Author-WorkPlace-Name: Department of Economics, Maastricht University Author-Name: Christian Seel Author-X-Name-First: Christian Author-X-Name-Last: Seel Author-WorkPlace-Name: Department of Economics, Maastricht University Abstract: We introduce a new solution concept for models of coalition formation, called the myopic stable set. The myopic stable set is defined for a very general class of social environments and allows for an infinite state space. We show that the myopic stable set exists and is non-empty. Under minor continuity conditions, we also demonstrate uniqueness. Furthermore, the myopic stable set is a superset of the core and of the set of pure strategy Nash equilibria in noncooperative games. Additionally, the myopic stable set generalizes and unifies various results from more specific environments. In particular, the myopic stable set coincides with the coalition structure core in coalition function form games if the coalition structure core is non-empty; with the set of stable matchings in the standard one-to-one matching model; with the set of pairwise stable networks and closed cycles in models of network formation; and with the set of pure strategy Nash equilibria in finite supermodular games, finite potential games, and aggregative games. We illustrate the versatility of our concept by characterizing the myopic stable set in a model of Bertrand competition with asymmetric costs, for which the literature so far has not been able to fully characterize the set of all (mixed) Nash equilibria. Keywords: Social Environments, Group Formation, Stability, Nash Equilibrium Classification-JEL: C70,C71 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.27 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-027.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.27 Title: Mechanisms with Referrals: VCG Mechanisms and Multilevel Mechanisms Author-Name: Joosung Lee Author-X-Name-First: Joosung Author-X-Name-Last: Lee Author-WorkPlace-Name: Business School, University of Edinburgh Abstract: We study mechanisms for environments in which only some of the agents are directly connected to a mechanism designer and the other agents can participate in a mechanism only through the connected agents' referrals. In such environments, the mechanism designer and agents may have different interest in varying participants so that agents strategically manipulate their preference as well as their network connection to avoid competition or congestion; while the mechanism designer wants to elicit the agents' private information about both preferences and network connections. As a benchmark for an efficient mechanism, we re-define a VCG mechanism. It is incentive compatible and individually rational, but it generically runs a deficit as it requires too much compensation for referrals. Alternatively as a budget-surplus mechanism, we introduce a multilevel mechanism, in which each agent is compensated by the agents who would not be able to participate without her referrals. Under a multilevel mechanism, we show that fully referring one's acquaintances is a dominant strategy and agents have no incentive to under-report their preference if the social welfare is submodular. Keywords: Mechanism Design, Referral Program, Reward Scheme, VCG Mechanism, Multilevel Mechanism, Incentive Compatibility, Budget Feasibility Classification-JEL: D82, D71, C72 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.28 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-028.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.28 Title: Information Design In Coalition Formation Games Author-Name: Sareh Vosooghi Author-X-Name-First: Sareh Author-X-Name-Last: Vosooghi Author-WorkPlace-Name: University of Oxford Abstract: I examine a setting, where an information sender conducts research into a payoff-relevant state variable, and releases information to agents, who consider joining a coalition. The agents' actions can cause harm by contributing to a public bad. The sender, who has commitment power, by designing an information mechanism (a set of signals and a probability distribution over them), maximises his payoff, which depends on the action taken by the agents, and the state variable. I show that the coalition size, as a function of beliefs of agents, is an endogenous variable, induced by the information sender. The optimal information mechanism from the general set of public information mechanisms, in coalition formation games is derived. I also apply the results to International Environmental Agreements (IEAs), where a central authority, as an information sender, attempts to reduce the global level of greenhouse gases (GHG) by communication of information on social cost of GHG. Keywords: Coalition Formation, Learning, Information Persuasion, International Environmental Agreements Classification-JEL: D83, D70, C72, Q54 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.29 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-029-2.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.29 Title: Collusive Agreements in Vertically Differentiated Markets Author-Name: Marco A. Marini Author-X-Name-First: Marco A. Author-X-Name-Last: Marini Author-WorkPlace-Name: University of Rome La Sapienza Abstract: This paper introduces a number of game-theoretic tools to model collusive agreements among firms in vertically differentiated markets. I firstly review some classical literature on collusion between two firms producing goods of exogenous different qualities. I then extend the analysis to a n-firm vertically differentiated market to study the incentive to form either a whole market alliance or partial alliances made of subsets of consecutive firms in order to collude in prices. Within this framework I explore the price behaviour of groups of colluding firms and their incentive to either pruning or proliferating their products. It is shown that a selective pruning within the cartel always occurs. Moreover, by associating a partition function game to the n-firm vertically differentiated market, it can be shown that a sufficient condition for the cooperative (or coalitional) stability of the whole industry cartel is the equidistance of firms’ products along the quality spectrum. Without this property, and in presence of large quality differences, collusive agreements easily lose their stability. In addition, introducing a standard infinitely repeated-game approach, I show that an increase in the number of firms in the market may have contradictory effects on the incentive of firms to collude: it can make collusion easier for bottom and intermediate firms and harder for the top quality firm. Finally, by means of a three-firm example, I consider the case in which alliances can set endogenously qualities, prices and number of variants on sale. I show that, in every formed coalition, (i) market pruning dominates product proliferation and (ii) partial cartelisation always arises in equilibrium, with the bottom quality firm always belonging to the alliance. Keywords: Vertically Differentiated Market, Price Collusion, Product Pruning, Product Proliferation, Endogenous Qualities, Endogenous Alliance Formation, Coalition Structures, Grand Coalition, Coalition Stability, Core, Simultaneous and Sequential Game of Coalition Formation Classification-JEL: D42, D43, L1, L12, L13, L41 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.30 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-030-6.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.30 Title: Network Formation and Disruption - An Experiment - Are Efficient Networks too Complex? Author-Name: Sonja Brangewitz Author-X-Name-First: Sonja Author-X-Name-Last: Brangewitz Author-WorkPlace-Name: Paderborn University Author-Name: Behnud Mir Djawadi Author-X-Name-First: Behnud Mir Author-X-Name-Last: Djawadi Author-WorkPlace-Name: Paderborn University Author-Name: Angelika Endres Author-X-Name-First: Angelika Author-X-Name-Last: Endres Author-WorkPlace-Name: Paderborn University Author-Name: Britta Hoyer Author-X-Name-First: Britta Author-X-Name-Last: Hoyer Author-WorkPlace-Name: Paderborn University Abstract: We experimentally study the emergence of networks under a known external threat. To be more specific, we deal with the question if subjects in the role of a strategic Designer are able to form safe and efficient networks while facing a strategic Adversary who is going to attack their networks. This investigation relates theoretical predictions by Dziubinski and Goyal (2013) to actual observed behaviour. Varying the costs for protecting nodes, we designed and tested two treatments with different predictions for the equilibrium network. Furthermore, the influence of the subjects' farsightedness on their decision-making process was elicited and analysed. We find that while subjects are able to build safe networks in both treatments, equilibrium networks are only built in one of the two treatments. In the other treatment, predominantly safe networks are built but they are not efficient. Additionally, we find that farsightedness -as measured in our experiment- has no influence on whether subjects are able to build safe or efficient networks. Keywords: Networks Experiment, Network Design, Network Defence, Network Disruption Classification-JEL: D03, D85, C91 Creation-Date: 201706 Template-Type: ReDIF-Paper 1.0 Number: 2017.31 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-031.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.31 Title: Farsighted Stability with Heterogeneous Expectations Author-Name: Francis Bloch Author-X-Name-First: Francis Author-X-Name-Last: Bloch Author-WorkPlace-Name: Université Paris 1 and Paris School of Economics Author-Name: Anne van den Nouweland Author-X-Name-First: Anne Author-X-Name-Last: van den Nouweland Author-WorkPlace-Name: Department of Economics, University of Oregon Abstract: This paper analyzes farsighted stable sets when agents have heterogeneous expectations over the dominance paths. We consider expectation functions satisfying two properties of path-persistence and consistency. We show that farsighted stable sets with heterogeneous expectations always exist and that any singleton farsighted stable set with common expectations is a farsighted stable set with heterogeneous expectations. We characterize singleton farsighted stable sets with heterogeneous expectations in one-to-one matching models and voting models, and show that the relaxation of the hypothesis of common expectations greatly expands the set of states that can be supported as singleton farsighted stable sets. Keywords: Farsighted Stable Sets, Heterogeneous Expectations, One-to-one Matching, Voting, Effectivity Functions Classification-JEL: C71, D72, D74 Creation-Date: 201707 Template-Type: ReDIF-Paper 1.0 Number: 2017.32 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-032.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.32 Title: Warm-Glow Giving in Networks with Multiple Public Goods Author-Name: Lionel Richefort Author-X-Name-First: Lionel Author-X-Name-Last: Richefort Author-WorkPlace-Name: Université de Nantes, LEMNA Abstract: This paper explores a voluntary contribution game in the presence of warm-glow effects. There are many public goods and each public good benefits a different group of players. The structure of the game induces a bipartite network structure, where players are listed on one side and the public good groups they form are listed on the other side. The main result of the paper shows the existence and uniqueness of a Nash equilibrium. The unique Nash equilibrium is also shown to be locally asymptotically stable. Then the paper provides some comparative statics analysis regarding pure redistribution, taxation and subsidies. It appears that small redistributions of wealth may sometimes be neutral, but generally, the effects of redistributive policies depend on how public good groups are related in the contribution network structure. Keywords: Multiple Public Goods, Warm-glow Effects, Bipartite Contribution Structure, Nash Equilibrium, Comparative Statics Classification-JEL: C72, D64, H40 Creation-Date: 201707 Template-Type: ReDIF-Paper 1.0 Number: 2017.33 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-033.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.33 Title: Analysis of Public Subsidies to the Solar Energy Sector: Corruption and the Role of Institutions Author-Name: Fabio Moliterni Author-X-Name-First: Fabio Author-X-Name-Last: Moliterni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: This study investigates the connection between rent-seeking behaviour, corruption activity and quality of institutions to empirically evaluate the unexpected implications of an energy policy for criminal activity. The object of this research is a program of public subsidies introduced in Italy in 2005, which successfully boosted the solar energy sector but seems to have generated a growth of corruption activity, arisen from the opportunity of rent extraction. In particular, according to the main hypothesis of this research, bribery is expected to rise significantly where big photovoltaic plants are concentrated and administrative procedures are more complicated. To determine the causal effect of the subsidies on corruption, the study employs a Difference-in-Difference methodology on a sample of 76 Italian provinces and exploits solar radiation as exogenous variable to discriminate the profitability of investments and bribing. Results confirm that, in poor-institutions areas, the growth of the solar sector in sunniest provinces has gone hand in hand with increasing corruption. Results suggest that policy makers should pay additional attention to the potential distortions of public policies implying large rent opportunities, in areas where the weakness of institutional settings and the bureaucratic complexities encourage illegal behaviour. Keywords: Renewable Energy, Corruption, Public Subsidies, Legal Institutions Classification-JEL: O13, D73, P47, H23 Creation-Date: 201707 Template-Type: ReDIF-Paper 1.0 Number: 2017.34 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-034.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.34 Title: Matching with Myopic and Farsighted Players Author-Name: P. Jean-Jacques Herings Author-X-Name-First: P. Jean-Jacques Author-X-Name-Last: Herings Author-WorkPlace-Name: Department of Economics, Maastricht University Author-Name: Ana Mauleon Author-X-Name-First: Ana Author-X-Name-Last: Mauleon Author-WorkPlace-Name: CEREC, Saint-Louis University and CORE, University of Louvain Author-Name: Vincent Vannetelbosch Author-X-Name-First: Vincent Author-X-Name-Last: Vannetelbosch Author-WorkPlace-Name: CORE, University of Louvain and CEREC, Saint-Louis University Abstract: We study stable sets for marriage problems under the assumption that players can be both myopic and farsighted. We introduce the new notion of the myopic-farsighted stable set. For the special cases where all players are myopic and where all players are farsighted, our concept predicts the set of matchings in the core. When all men are myopic and the top choice of each man is a farsighted woman, we show that the singleton consisting of the woman-optimal stable matching is a myopic-farsighted stable set. The same result holds when all women are farsighted. Keywords: Marriage Problems, Stable Sets, Myopic and Farsighted Players Classification-JEL: C70, C78 Creation-Date: 201707 Template-Type: ReDIF-Paper 1.0 Number: 2017.35 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-035.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.35 Title: Tragedy of the Commons and Evolutionary Games in Social Networks: The Economics of Social Punishment Author-Name: Jorge Marco Author-X-Name-First: Jorge Author-X-Name-Last: Marco Author-WorkPlace-Name: University of Girona Author-Name: Renan Goetz Author-X-Name-First: Renan Author-X-Name-Last: Goetz Author-WorkPlace-Name: University of Girona Abstract: This study revisits the problem of the tragedy of the commons. Extracting agents participate in an evolutionary game in a complex social network and are subject to social pressure if they do not comply with the social norms. Social pressure depends on the dynamics of the resource, the network and the population of compliers. We analyze the influence the network structure has on the agents’ behavior and determine the economic value of the intangible good - social pressure. For a socially optimal management of the resource, an initially high share of compliers is necessary but is not sufficient. The analysis shows the extent to which the remaining level of the resource, the share of compliers and the size, density and local cohesiveness of the network contribute to overcoming the tragedy of the commons. The study suggests that the origin of the problem – shortsighted behavior - is also the starting point for a solution in the form of a one-time payment. A numerical analysis of a social network comprising 7500 agents and a realistic topological structure is performed using empirical data from the western La Mancha aquifer in Spain. Keywords: Tragedy of the Commons, Cooperation, Evolutionary Game, Social Network, Social Punishment Classification-JEL: C71, D85, Q25 Creation-Date: 201707 Template-Type: ReDIF-Paper 1.0 Number: 2017.36 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-036.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.36 Title: Environment, Health and Labor Market Author-Name: Xavier Pautrel Author-X-Name-First: Xavier Author-X-Name-Last: Pautrel Author-WorkPlace-Name: University of Angers (GRANEM)-TEPP Abstract: We re-examine the impact of environmental taxation on health and output, in the presence of labor market frictions. Our main findings are that matching process and wage bargaining introduce new channels of transmission of environmental taxation on the economy such that assuming perfect labor market leads to over-estimate the positive impact of environmental taxation on health. We also demonstrate that rising abatement expenditures as a way of tightening the environmental policy would be better for health than increasing environmental tax in the presence of market labor imperfections. Keywords: Environmental Policy, Health, Labor Market, Search, Unemployment Classification-JEL: I1, J2, J64, Q58 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.37 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-037.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.37 Title: The Effect of Increased Transmission and Storage in an Interconnected Europe: an Application to France and Ireland Author-Name: Valeria Di Cosmo Author-X-Name-First: Valeria Author-X-Name-Last: Di Cosmo Author-WorkPlace-Name: FEEM Author-Name: Sean Collins Author-X-Name-First: Sean Author-X-Name-Last: Collins Author-WorkPlace-Name: MaREI Centre, Environmental Research Institute, University College Cork Author-Name: Paul Deane Author-X-Name-First: Paul Author-X-Name-Last: Deane Author-WorkPlace-Name: MaREI Centre, Environmental Research Institute, University College Cork Abstract: A longstanding goal of the European Union (EU) is to promote efficient trading between price zones via electricity interconnection to achieve a single electricity market between the EU countries. This paper uses a power system model (PLEXOS-EU) to simulate one vision of the 2030 EU electricity market based on European Commission studies to determine the effects of a new interconnector between France and the Single Electricity Market of Ireland and Northern Ireland (SEM). We use the same tool to understand the effects of investment in storage, and the effects of the interaction between storage and additional interconnection. Our results show that both investments in interconnection and storage reduce wholesale electricity prices in France and Ireland as well as reduce net revenues of thermal generators in most scenarios in both countries. However, France is only marginally affected by the new interconnector. Renewable generators see a modest increase in net revenues. The project has the potential for a positive impact on welfare in Ireland if costs are shared between countries and remain below 45 million €/year for the scenarios examined. The owners of the new interconnector between France and SEM see increased net revenues in the scenarios without storage. When storage is included in the system, the new interconnector becomes less profitable. Keywords: Interconnection, Renewable Generation, Storage Classification-JEL: Q4, Q48 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.38 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-038.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.38 Title: Challenges and Opportunities for Integrated Modeling of Climate Engineering Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: FEEM, CMCC and Politecnico di Milano Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: FEEM, CMCC and Bocconi University Author-Name: Soheil Shayegh Author-X-Name-First: Soheil Author-X-Name-Last: Shayegh Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Laurent Drouet Author-X-Name-First: Laurent Author-X-Name-Last: Drouet Author-WorkPlace-Name: FEEM and CMCC Author-Name: Johannes Emmerling Author-X-Name-First: Johannes Author-X-Name-Last: Emmerling Author-WorkPlace-Name: FEEM and CMCC Author-Name: Sabine Fuss Author-X-Name-First: Sabine Author-X-Name-Last: Fuss Author-WorkPlace-Name: Mercator Research Institute on Global Commons and Climate Change Author-Name: Timo Goeschl Author-X-Name-First: Timo Author-X-Name-Last: Goeschl Author-WorkPlace-Name: University of Heidelberg Author-Name: Celine Guivarch Author-X-Name-First: Celine Author-X-Name-Last: Guivarch Author-WorkPlace-Name: CIRED Author-Name: Thomas S. Lontzek Author-X-Name-First: Thomas S. Author-X-Name-Last: Lontzek Author-WorkPlace-Name: RWTH Aachen University Author-Name: Vassiliki Manoussi Author-X-Name-First: Vassiliki Author-X-Name-Last: Monoussi Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Juan Moreno-Cruz Author-X-Name-First: Juan Author-X-Name-Last: Moreno-Cruz Author-WorkPlace-Name: School of Economics and Brook Byers Institute for Sustainability Studies, Georgia Institute of Technology Author-Name: Helene Muri Author-X-Name-First: Henene Author-X-Name-Last: Muri Author-WorkPlace-Name: University of Oslo Author-Name: Martin Quaas Author-X-Name-First: Martin Author-X-Name-Last: Quaas Author-WorkPlace-Name: Kiel University Author-Name: Wilfried Rickels Author-X-Name-First: Wilfried Author-X-Name-Last: Rickels Author-WorkPlace-Name: Kiel Institute for the World Economy Abstract: The Paris Agreement has set stringent temperature targets to limit global warming to 2°C above preindustrial level, with efforts to stay well below 2°C. At the same time, its bottom-up approach with voluntary national contributions makes the implementation of these ambitious targets particularly challenging. Climate engineering – both through carbon dioxide removal (CDR) and solar radiation management (SRM) – is currently discussed to potentially complement mitigation and adaptation. Results from integrated assessment models already suggest a significant role for some forms of climate engineering in achieving stringent climate objectives1. However, these estimates and their underlying assumptions are uncertain and currently heavily debated2–4. By reviewing the existing literature and reporting the views of experts, we identify research gaps and priorities for improving the integrated assessment of climate engineering. Results point to differentiated roles of CDR and SRM as complementary strategies to the traditional ones, as well as diverse challenges for an adequate representation in integrated assessment models. We identify potential synergies for model development which can help better represent mitigation and adaptation challenges, as well as climate engineering. Keywords: Climate Engineering, Paris Agreement, Carbon Dioxide Removal, Solar Radiation Management, Integrated Assessment Models Classification-JEL: Q5, Q55 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.39 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-039.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.39 Title: Calling for Nexus Thinking in Africa’s Energy Planning Author-Name: Lucia de Strasser Author-X-Name-First: Lucia Author-X-Name-Last: de Strasser Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: The simultaneous achievement of the sustainable development goals (SDGs) is, to say the least, challenging. In a situation of increasing and multiple demands over limited resources, pursuing each goal separately could lead to increased competition. The situation in Africa is particularly problematic, as the continent lags behind all others in terms of quality and quantity of infrastructure and counts the highest shares of population living in poverty and without access to food, safe water, and energy. At the same time, natural resources are under increasing pressure from population growth, environmental degradation, and climate change. Given the entity of the challenge, finding synergies and strengthening coordination across sectors will be crucial and the energy sector has an important role to play. As recognized in the Agenda 2030, the energy sector holds the key to many aspects of development, however no energy solution (albeit green or synergetic) should be casually labelled as a nexus solution. This could be deceiving also because of the ambiguities that surround the concept of nexus. In order to give concrete insights to policy makers, this paper proposes a pragmatic approach to the nexus that allows on one hand to detect areas where cooperation needs to be strengthened, on the other to explore the nexus potential of energy solutions. This is in line with a view of the nexus as a way of thinking, which can apply both at the level of policy making and in the actual implementation of projects. We will give three concrete examples to improve energy access at different levels: multipurpose hydropower for large-scale electricity production, solar pumps for irrigation in farms, and efficient cookstoves in households. These can catalyse much needed action in other areas (notably water supply, agriculture, and forestry) but realizing their potential requires stronger cooperation and coordination across sectors. Moreover, their successful implementation requires an honest and thorough assessment of the local context in terms of constraints as well as opportunities. Keywords: Africa, Energy Access, Nexus Approach, Resource Security, Environmental Sustainability, Water Management, Agriculture, SDGs Classification-JEL: O13, O55, Q49 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.40 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-040.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.40 Title: Can the Global Forest Sector Survive 11°C Warming? Author-Name: Alice Favero Author-X-Name-First: Alice Author-X-Name-Last: Favero Author-WorkPlace-Name: Georgia Institute of Technology Author-Name: Robert Mendelsohn Author-X-Name-First: Robert Author-X-Name-Last: Mendelsohn Author-WorkPlace-Name: Yale University Author-Name: Brent Sohngen Author-X-Name-First: Brent Author-X-Name-Last: Sohngen Author-WorkPlace-Name: Ohio State University Abstract: It is well known that the forestry sector is sensitive to climate change but most studies have examined impacts only through 2100 and warming of less than 4°C. This is the first timber analysis to consider possible climate change impacts out to 2250 and warming up to 11°C above 1900 levels. The results suggest that large productivity gains through 2190 lead to a continued expansion of the global timber supply. However, as carbon fertilization effects diminish and continued warming causes forestland to continue to shrink, warming above 8°C is predicted to become harmful to the forest sector. Keywords: Climate change, RCP 8.5, Forestry, Dynamic optimization, Timber market Classification-JEL: Q5, Q23 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.41 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-041.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.41 Title: Simulated vs. Empirical Weather Responsiveness of Crop Yields: U.S. Evidence and Implications for the Agricultural Impacts of Climate Change Author-Name: Malcolm N. Mistry Author-X-Name-First: Malcolm N. Author-X-Name-Last: Mistry Author-WorkPlace-Name: Università Ca' Foscari, FEEM and CMCC Author-Name: Ian Sue Wing Author-X-Name-First: Ian Author-X-Name-Last: Sue Wing Author-WorkPlace-Name: Boston University Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: FEEM and CMCC Abstract: Global gridded crop models (GGCMs) are the workhorse of assessments of the agricultural impacts of climate change. Yet the changes in crop yields projected by different models in response to the same meteorological forcing can differ substantially. Through an inter-method comparison, we provide a first glimpse into the origins and implications of this divergence—both among GGCMs and between GGCMs and historical observations. We examine yields of rainfed maize, wheat, and soybeans simulated by six GGCMs as part of the Inter-Sectoral Impact Model Intercomparison Project-Fast Track (ISIMIP-FT) exercise, comparing 1981-2004 hindcast yields over the coterminous United States (U.S.) against U.S. Dept. of Agriculture (USDA) time series for about 1,000 counties. Leveraging the empirical climate change impacts literature, we estimate reduced-form econometric models of crop yield responses to temperature and precipitation exposures for both GGCMs and observations. We find that up to 60% of the variance in both simulated and observed yields is attributable to weather variation. Majority of the GGCMs have difficulty reproducing the observed distribution of percentage yield anomalies, and exhibit aggregate responses that show yields to be more weather-sensitive than in the observational record over the predominant range of temperature and precipitation conditions. This disparity is largely attributable to heterogeneity in GGCMs’ responses, as opposed to uncertainty in historical weather forcings, and is responsible for widely divergent impacts of climate on future crop yields. Keywords: Climate Change Impacts, Crop Yields, Global Gridded Crop Models, ISI-MIP Classification-JEL: Q1, Q5 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.42 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-042.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.42 Title: Interval Based Composite Indicators Author-Name: Carlo Drago Author-X-Name-First: Carlo Author-X-Name-Last: Drago Author-WorkPlace-Name: Università degli Studi ”Niccolò Cusano” Abstract: Composite indicators are increasingly important in country comparisons and in policy making. At the same time, the robustness of the results obtained and in particular of the rankings and the conclusions obtained from the analysis it is usually accepted with doubts. In this sense our proposal is to use interval data in order to measure the uncertainty related to the different composite indicators based on the different assumptions used as input. In this sense where composite indicators can be considered as models, for this reason it could be necessary to assess the uncertainties related to the different choices in the construction. The uncertainty can be represented by the interval data. The intervals keep the information related to the initial value of the composite indicator, but at the same time give information on the range of the results. Keywords: Composite Indicators, Interval Data, Robustness, Sensitivity Analysis, Uncertainty Analysis Classification-JEL: C43, C81, C82 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.43 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-043.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.43 Title: Do Temperature Thresholds Threaten American Farmland? Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Georgia Institute of Technology Author-Name: Robert Mendelsohn Author-X-Name-First: Robert Author-X-Name-Last: Mendelsohn Author-WorkPlace-Name: Yale School of Forestry and Environmental Studies Abstract: Estimated Ricardian models have been criticized because they rely on mean temperatures and do not explicitly include extreme temperatures. This paper uses a cross sectional approach to compare a standard quadratic Ricardian model of mean temperature with a fully flexible daily temperature bin model of farmland values in the Eastern United States. The flexible bin model leads to smaller damages from warming than the quadratic mean specification, but the difference is not statistically significant. Although weather panel studies find high temperature events lead to large annual damage, high temperature events have no harmful effect on farmland values. The results are robust to alternative model specifications and data sets. Keywords: Agriculture, Climate Change, Weather, Crop Yields, Ricardian, Threshold Classification-JEL: Q1, Q5 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.44 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-044.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.44 Title: Burden of Climate Change on Malaria Mortality Author-Name: Shouro Dasgupta Author-X-Name-First: Shouro Author-X-Name-Last: Dasgupta Author-WorkPlace-Name: Università Ca’ Foscari, FEEM and CMCC Abstract: In 2015, an estimated 429,000 deaths and 212 million cases of malaria occurred worldwide, while 70% of the deaths occurred in children under five years old. Changes in climatic exposure such as temperature and precipitation makes malaria one of the most climate sensitive outcomes. Using a global malaria mortality dataset for 105 countries between 1980 and 2010, we estimate that the global optimal temperature maximizing all-age malaria mortality is 20.6, lower than previously predicted in the literature. While in the case of child mortality, a significantly lower optimum temperature of 19.3° is estimated. Our results also suggest that in Africa and Asia, the continents where malaria is most prevalent malaria, mortality is maximized at 28.4 and 26.3, respectively. Furthermore, we estimate that child mortality (ages 0-4) is likely to increase by up to 20 percent in some areas due to climate change by the end of the 21st century. Keywords: Climate change, Malaria, Vector borne disease, Temperature, Precipitation Classification-JEL: C10, C23, Q54, Q56 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.45 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-045.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.45 Title: Sustainability-oriented Business Model Innovation: Context and Drivers Author-Name: Fabio Moliterni Author-X-Name-First: Fabio Author-X-Name-Last: Moliterni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: This study outlines a systemic review of the social and economic transformations that have been inducing the business to reconsider its traditional strategies and innovate to become sustainable. In doing so, the study adopts an original approach, focusing on the evolution in the socio-economic context, imposed by globalisation first and by the Great Recession afterwards. Hence, the review covers a wide range of literature and subjects, including political science, sociology, economics, finance and strategic management. Departing from the contextual picture, the study identifies the main drivers of the innovation of the business models, from the adoption of voluntary standards to the acknowledgement of the need to lengthen strategic time horizons. What emerges from the review is that, if business’ primary concern was initially to safeguard its declining reputation under competitive pressure, it perceives sustainability today as a necessary condition to survive the deep transformation of the economy. Keywords: Societal Changes, Business Model Innovation, Voluntary Regulation, International Standards, Globalisation, Financial Crisis Classification-JEL: M14, M48, Q56, F53 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.46 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-046.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.46 Title: Actors, Decision-making, and Institutions in Quantitative System Modelling Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: FEEM and CMCC Author-Name: Shouro Dasgupta Author-X-Name-First: Shouro Author-X-Name-Last: Dasgupta Author-WorkPlace-Name: FEEM and CMCC Author-Name: Andries F. Hof Author-X-Name-First: Andries F. Author-X-Name-Last: Hof Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency and Utrecht University Author-Name: Mariësse A.E. van Sluisveld Author-X-Name-First: Mariësse A.E. Author-X-Name-Last: van Sluisveld Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency and Utrecht University Author-Name: Jonathan Köhler Author-X-Name-First: Jonathan Author-X-Name-Last: Köhler Author-WorkPlace-Name: ISI Fraunhofer Institute Author-Name: Benjamin Pfluger Author-X-Name-First: Benjamin Author-X-Name-Last: Pfluger Author-WorkPlace-Name: ISI Fraunhofer Institute Author-Name: Detlef P. van Vuuren Author-X-Name-First: Detlef P. Author-X-Name-Last: van Vuuren Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency and Utrecht University Abstract: Increasing the realism with respect to the representation of actors, decision-making, and institutions is critical to better understand the transition towards a low-carbon sustainable society since actors, decision-making, and institutions are the defining elements of transition pathways. In this paper, we explore how this can be done by conducting a model-based scenario analysis. The increasing focus on implementation and transition dynamics towards long-term objectives requires a better comprehension of what drives change and how those changes can be accelerated. We explore opportunities that arise from a deeper engagement of quantitative systems modeling with socio-technical transitions studies, initiative-based learning, and applied economics. We argue that a number of opportunities for enriching the realism in model-based scenario analysis can arise through model refinements oriented towards a more detailed approach in terms of actor heterogeneity, as well as through integration across different analytical and disciplinary approaches. Keywords: Modelling, Transition Pathways, Scenarios, Institutions, Governance Classification-JEL: C63, O10, P16, Q00, Q4, Q5 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.47 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-047.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.47 Title: Social Interaction and Technology Adoption: Experimental Evidence from Improved Cookstoves in Mali Author-Name: Jacopo Bonan Author-X-Name-First: Jacopo Author-X-Name-Last: Bonan Author-WorkPlace-Name: FEEM and CMCC Author-Name: Pietro Battiston Author-X-Name-First: Pietro Author-X-Name-Last: Battiston Author-WorkPlace-Name: Scuola Superiore Sant’Anna Author-Name: Jaimie Bleck Author-X-Name-First: Jaimie Author-X-Name-Last: Bleck Author-WorkPlace-Name: University of Notre Dame Author-Name: Philippe LeMay-Boucher Author-X-Name-First: Philippe Author-X-Name-Last: LeMay-Boucher Author-WorkPlace-Name: Heriot Watt University Author-Name: Stefano Pareglio Author-X-Name-First: Stefano Author-X-Name-Last: Pareglio Author-WorkPlace-Name: Università Cattolica del Sacro Cuore and FEEM Author-Name: Bassirou Sarr Author-X-Name-First: Bassirou Author-X-Name-Last: Sarr Author-WorkPlace-Name: Paris School of Economics Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Politecnico di Milano and FEEM Abstract: We investigate the role of social interaction in technology adoption by conducting a field experiment in neighborhoods of Bamako. We invited women to attend a training/marketing session, where information on a more efficient cooking stove was provided and the chance to purchase the product at market price was offered. We randomly provided an information nudge on a peer’s willingness to buy an improved cookstove. We find that women purchase and use the product more when they receive information on a peer who purchased (or previously owned) the product, particularly if she is viewed as respected. In general, we find positive direct and spillover effects of attending the session. We also investigate whether social interaction plays a role in technology diffusion. We find that women who participated in the session, but did not buy during the intervention, are more likely to adopt the product when more women living around them own it. We investigate the mechanisms and provide evidence supporting imitation effects, rather than social learning or constraint interaction. Keywords: Technology Adoption, Social Interaction, Cookstoves, Mali Classification-JEL: D03, M31, O13, O33 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.48 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-048.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.48 Title: Can the Paris Deal Boost SDGs Achievement? An Assessment of Climate Mitigation Co-benefits or Side-effects on Poverty and Inequality Author-Name: Lorenza Campagnolo Author-X-Name-First: Lorenza Author-X-Name-Last: Campagnolo Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Author-Name: Marinella Davide Author-X-Name-First: Marinella Author-X-Name-Last: Davide Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), Harvard University and Ca’ Foscari University Abstract: The paper analyses the synergies and trade-offs between emission reduction policies and sustainable development objectives. Specifically, it provides an ex-ante assessment that the impacts of the Nationally Determined Contributions (NDCs), submitted under the Paris Agreement, will have on the Sustainable Development Goals (SDGs) of poverty eradication (SDG1) and reduced income inequality (SDG10). By combining an empirical analysis with a modelling exercise, the paper estimates the future trends of poverty prevalence and inequality across countries in a reference scenario and under a climate mitigation policy with alternative revenue recycling schemes. Our results suggest that a full implementation of the emission reduction contributions, stated in the NDCs, is projected to slow down the effort to reduce poverty by 2030 (+2% of the population below the poverty line compared to the baseline scenario), especially in countries that have proposed relatively more stringent mitigation targets and suffer higher policy costs. Conversely, countries with a stringent mitigation policy experience a reduction of inequality compared to baseline scenario levels. If financial support for mitigation action in developing countries is provided through an international climate fund, the prevalence of poverty will be slightly reduced at the aggregate level (185,000fewer poor people with respect to the mitigation scenario), but the country-specific effect depends on the relative size of funds flowing to beneficiary countries and on their economic structure. Keywords: SDGs, Poverty, Inequality, CGE Model, Mitigation Policy, Paris Agreement Classification-JEL: C23, C68, Q56 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.49 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-049.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.49 Title: Climate Policy Commitment Devices Author-Name: Sebastian Dengler Author-X-Name-First: Sebastian Author-X-Name-Last: Dengler Author-WorkPlace-Name: Tilburg University Author-Name: Reyer Gerlagh Author-X-Name-First: Reyer Author-X-Name-Last: Gerlagh Author-WorkPlace-Name: Tilburg University and CREE - Oslo Centre for Research on Environmentally friendly Energy Author-Name: Stefan T. Trautmann Author-X-Name-First: Stefan T. Author-X-Name-Last: Trautmann Author-WorkPlace-Name: Tilburg University and University of Heidelberg Author-Name: Gijs van de Kuilen Author-X-Name-First: Gijs Author-X-Name-Last: van de Kuilen Author-WorkPlace-Name: Tilburg University Abstract: We develop a dynamic resource extraction game that mimics the global multi-generation planning problem for climate change and fossil fuel extraction. We implement the game under different conditions in the laboratory. Compared to a ‘libertarian’ baseline condition, we find that policy interventions that provide a costly commitment device or reduce climate threshold uncertainty reduce resource extraction. We also study two conditions to assess the underlying social preferences and the viability of ecological dictatorship. Our results suggest that climate-change policies that focus on investments that lock the economy into carbon-free energy sources provide an important commitment device in the intertemporal cooperation problem. Keywords: Climate Policy Instruments, Intertemporal Cooperation, Climate Game, Experiments Classification-JEL: C91, D62, D99, Q38,Q54 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.50 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-050.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.50 Title: Contagion in Stable Networks Author-Name: Spiros Bougheas Author-X-Name-First: Spiros Author-X-Name-Last: Bougheas Author-WorkPlace-Name: School of Economics, University of Nottingham Abstract: We study the formation of networks in environments where agents derive benefits from other agents directly linked to them but suffer losses through contagion when any agent on a path connected to them is hit by a shock. We first consider networks with undirected links (e.g. epidemics, underground resistance organizations, trade networks) where we find that stable networks are comprised of completely connected disjoint subnetworks. Then, we consider networks with directed links and we find that the completely connected network is stable, although, its exact structure, and thus contagion implications, is sensitive to parameter values for costs and benefits. Lastly, we introduce aggregate externalities (e.g. fire sales for the case of financial networks) and we find that stable networks can be asymmetric, connected but not completely connected, thus capturing the main features of inter-industry and financial networks. Keywords: Network Formation, Stability, Contagion Classification-JEL: C72, D85 Creation-Date: 201709 Template-Type: ReDIF-Paper 1.0 Number: 2017.51 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-051.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.51 Title: Linking Heterogeneous Climate Policies (Consistent with the Paris Agreement) Author-Name: Michael A. Mehling Author-X-Name-First: Michael A. Author-X-Name-Last: Mehling Author-WorkPlace-Name: Massachusetts Institute of Technology Author-Name: Gilbert E. Metcalf Author-X-Name-First: Gilbert E. Author-X-Name-Last: Metcalf Author-WorkPlace-Name: Tufts University Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: Harvard University Abstract: The Paris Agreement has achieved one of two key necessary conditions for ultimate success – a broad base of participation among the countries of the world. But another key necessary condition has yet to be achieved – adequate collective ambition of the individual nationally determined contributions. How can the climate negotiators provide a structure that will include incentives to increase ambition over time? An important part of the answer can be international linkage of regional, national, and subnational policies, that is, formal recognition of emission reductions undertaken in another jurisdiction for the purpose of meeting a Party’s own mitigation objectives. A central challenge is how to facilitate such linkage in the context of the very great heterogeneity that characterizes climate policies along five dimensions – type of policy instrument; level of government jurisdiction; status of that jurisdiction under the Paris Agreement; nature of the policy instrument’s target; and the nature along several dimensions of each Party’s Nationally Determined Contribution. We consider such heterogeneity among policies, and identify which linkages of various combinations of characteristics are feasible; of these, which are most promising; and what accounting mechanisms would make the operation of respective linkages consistent with the Paris Agreement. Keywords: Climate Policy, Paris Agreement, Nationally Determined Contributions Classification-JEL: Q5, Q56 Creation-Date: 201712 Template-Type: ReDIF-Paper 1.0 Number: 2017.52 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-052.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.52 Title: Ready for a Carbon Tax? An Explorative Analysis of University Students’ Preferences Author-Name: Lucia Rotaris Author-X-Name-First: Lucia Author-X-Name-Last: Rotaris Author-WorkPlace-Name: DEAMS, University of Trieste Abstract: Greenhouse gases emissions are inexorably rising worldwide and the frequency and disruptive power of extreme weather phenomena are dramatically increasing. Although command-and-control and regulation policies have been extensively used to mitigate climate change, more effective and potentially efficient policies are needed to curb the negative externalities produced by human activities. A carbon tax could make the case, but is seldom implemented due to its assumed political unpopularity. In order to estimate the acceptability and the willingness to pay (WTP) for a carbon tax, a contingent valuation experiment was administered in USA and in Italy to a sample of 150 university students. The research is innovative both for the topic chosen, since there are no studies testing the WTP for a carbon tax in the Italian context nor comparing it with the estimates obtained for other countries, and for the methodology used to estimate the WTP, making use of random parameters logit models to obtain individual specific estimates of the median WTP. The results show that the median WTP ranges between a minimum of $161 and a maximum of $242, and varies according to the purposes proposed for the tax revenue use, the respondents’ beliefs and knowledge about climate change, and some sociodemographic characteristics of the respondents (age, gender, and political affiliation). The students’ preferences seem to be quite similar when the nationality of the respondents is taken into account. Keywords: Carbon Tax, Willingness to Pay, University Students, Climate Change Classification-JEL: H31, Q580 Creation-Date: 201712 Template-Type: ReDIF-Paper 1.0 Number: 2017.53 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-053.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.53 Title: The Impact of Energy Prices on Employment and Environmental Performance: Evidence from French Manufacturing Establishments Author-Name: Giovanni Marin Author-X-Name-First: Giovanni Author-X-Name-Last: Marin Author-WorkPlace-Name: University of Urbino ‘Carlo Bo' and SEEDS Author-Name: Francesco Vona Author-X-Name-First: Francesco Author-X-Name-Last: Vona Author-WorkPlace-Name: OFCE-SciencesPo and SKEMA Business School Abstract: This paper evaluates the historical influence of energy prices on a series of measures of environmental and economic performance for a panel of French manufacturing establishments over the period 1997-2010. The focus on energy prices is motivated by the fact that changes in environmental and energy policies have been dominated by substantial reductions in discounts for large consumers, making the evaluation of each policy in isolation exceedingly difficult. To identify price effects, we construct a shift-share instrument that captures only the exogenous variation in establishment-specific energy prices. Our results highlight a trade-off between environmental and economic goals: although a 10 percent increase in energy prices brings about a 6 percent reduction in energy consumption and an 11 percent reduction in CO2 emissions, such an increase also has a modestly negative impact on employment (-2.6 percent) and very small impact on wages and productivity. The negative employment effects are mostly concentrated in energy-intensive and trade-exposed sectors. Simulating the effect of a carbon tax, we show that job losses for the most exposed sectors can be quite large. However, these effects are upper bounds and we show that they are significantly mitigated in multi-establishment firms by labor reallocation across establishments. Keywords: Energy Prices, Establishment Performance, Environmental and Energy Policy Classification-JEL: Q52, Q48, H23, D22 Creation-Date: 201712 Template-Type: ReDIF-Paper 1.0 Number: 2017.54 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-054.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.54 Title: The Role of Carbon Capture and Storage Electricity in Attaining 1.5 and 2°C Author-Name: Adriano Vinca Author-X-Name-First: Adriano Author-X-Name-Last: Vinca Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Author-Name: Marianna Rottoli Author-X-Name-First: Marianna Author-X-Name-Last: Rottoli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Author-Name: Giacomo Marangoni Author-X-Name-First: Giacomo Author-X-Name-Last: Marangoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Politecnico di Milano Abstract: The climate targets defined under the Paris agreement of limiting global temperature increase below 1.5 or 2°C require massive deployment of low-carbon options in the energy mix, which is currently dominated by fossil fuels. Scenarios suggest that Carbon Capture and Storage (CCS) might play a central role in this transformation, but CCS deployment is stagnating and doubts remain about its techno-economic feasibility. In this article, we carry out a throughout assessment of the role of CCS electricity for a variety of temperature targets, from 1.5 to above 4°C, with particular attention to the lower end of this range. We collect the latest data on CCS economic and technological future prospects to accurately represent several types of CCS plants in the WITCH energy-economy model, We capture uncertainties by means of extensive sensitivity analysis in parameters regarding plants technical aspects, as well as costs and technological progress. Our research suggests that stringent temperature scenarios constrain fossil fuel CCS based deployment, which is maximum for medium policy targets. On the other hand, Biomass CCS, along with renewables, increases with the temperature stringency. Moreover, the relative importance of cost and performance parameters change with the climate target. Cost uncertainty matters in less stringent policy cases, whereas performance matters for lower temperature targets. Keywords: Carbon Capture and Storage, Integrated Assessment Model, Climate Mitigation Policies, Electricity Sector, Low-carbon Technology Classification-JEL: O33, Q42, Q43, Q54 Creation-Date: 201712 Template-Type: ReDIF-Paper 1.0 Number: 2017.55 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-055.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.55 Title: To Go or not to Go: Migration Alleviates Climate Damages even for Those Who Stay Behind Author-Name: Soheil Shayegh Author-X-Name-First: Soheil Author-X-Name-Last: Shayegh Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Author-Name: Greg P. Casey Author-X-Name-First: Greg P. Author-X-Name-Last: Casey Author-WorkPlace-Name: Institute at Brown for Environment and Society, Brown University Abstract: We examine the effect of climate change on fertility rates and human capital accumulation in developing countries, focusing on the instrumental role of migration. In particular, we investigate how climate-induced migration in developing countries will affect those who do not migrate. Holding all else constant, climate shocks raise the return to acquiring skills, because skilled individuals compared to unskilled ones have greater opportunity to migrate after the shock. In response to this change in incentives, parents choose to invest more in education and have less children, a process known as the ‘quantity-quality’ trade-off. These effects partially offset the damages of climate change, even for those who do not migrate. Keywords: Migration, Climate Change, Fertility, Population, Wage, Quantity-quality Tradeoff Classification-JEL: F22 Creation-Date: 201712 Template-Type: ReDIF-Paper 1.0 Number: 2017.56 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-056.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.56 Title: Trade in Environmental Goods: Empirical Exploration of Direct and Indirect Effects on Pollution by Country’s Trade Status Author-Name: Natalia Zugravu-Soilita Author-X-Name-First: Natalia Author-X-Name-Last: Zugravu-Soilita Author-WorkPlace-Name: University of Versailles Saint-Quentin-en-Yvelines Abstract: Based on panel data covering 114 countries in the world, this study investigates the direct, indirect and total effects of trade flows in environmental goods (EG) on total CO2 and SO2 emissions. Our system-GMM estimations reveal positive direct scale – [between-industry] composition effects prevailing on the negative direct technique – [within-industry] composition effects (if any), as well as compensating the significant indirect technique effects channelled by the stringency of environmental regulations and per capita income. If the net importers of EGs (namely from the APEC54 and WTO26 lists) are recurrently found to face increased pollution (in particular CO2 emissions) due to direct scale-composition effects of trade in EGs, the EGs’ net exporters are more likely to see their local pollution to decrease, in particular thanks to income-induced effects. We show that the direct, indirect and total effects of trade in EGs depend on the country’s net trade status, the EGs’ classification and the pollutant considered. Keywords: Environmental Goods, Environmental Policy, Net Exporter, Net Importer, Pollution, Trade Classification-JEL: F13, F14, F18, Q53, Q56, Q58 Creation-Date: 201712 Template-Type: ReDIF-Paper 1.0 Number: 2017.57 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-057.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.57 Title: Optimal Carbon Dioxide Removal in Face of Ocean Carbon Sink Feedback Author-Name: Vassiliki Manoussi Author-X-Name-First: Vassiliki Author-X-Name-Last: Manoussi Author-WorkPlace-Name: FEEM and CMCC Author-Name: Soheil Shayegh Author-X-Name-First: Soheil Author-X-Name-Last: Shayegh Author-WorkPlace-Name: FEEM and CMCC Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: FEEM and Politecnico di Milano Abstract: Carbon dioxide removal (CDR) is a potentially important climate strategy for attaining low climate stabilization objectives. However, climate analysis has indicated a possible weakening of the ocean carbon sinks -the largest in the world- in relation to CDR deployment. Here, we provide an economic appraisal to assess the sensitivity of CDR and conventional abatement to CO2 outgassing from the oceans. We develop a theoretical framework to study the impact of the ocean-to-atmosphere transfer on the optimal mitigation strategies under different regimes that control the relationship between CO2 outgassing and the amount of CDR. We show that the optimal levels of emissions and CDR are correlated to the effectiveness of CDR expressed as a linear function of atmospheric concentrations. We incorporate this effect into an integrated assessment model of climate and economy (DICE model) and confirm the theoretical findings with numerical simulations. Further, we perform a sensitivity analysis to find the range of optimal abatement and CDR actions under different values of the CDR effectiveness coefficient. Keywords: Climate Change, Outgassing, Carbon Dioxide Removal, Integrated Assessment Model (DICE) Classification-JEL: Q53, Q54 Creation-Date: 201712 Template-Type: ReDIF-Paper 1.0 Number: 2017.58 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2017-058.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2017.58 Title: Quantifying Non-cooperative Climate Engineering Author-Name: Johannes Emmerling Author-X-Name-First: Johannes Author-X-Name-Last: Emmerling Author-WorkPlace-Name: FEEM and CMCC Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Politecnico di Milano, FEEM and CMCC Abstract: The mismatch between actions to combat climate change, which are based on voluntary national initiatives of limited effort, and the recognition of the importance of global warming is growing. Climate engineering via solar radiation management has been proposed as a possible complement to traditional climate policies. However, climate engineering entails specific risks, including its governance. Free driving, the possibility of unilateral climate engineering to the detriment of other nations, has been recently proposed as a potentially powerful additional externality to the traditional free riding one (Weitzman, 2015). This paper provides the first quantitative evaluation of the risks of free driving. Our results indicate that in a strategic setting there is significant over-provision (by almost an order of magnitude) of climate engineering above what is socially optimal, resulting in a sub-optimal global climate. Regions with high climate change impacts, most notably India and developing Asia, deploy climate engineering at the expenses of other regions. Keywords: Climate Engineering, Climate Governance, Free Driving, Climate Policy Classification-JEL: H41, Q54, Q58 Creation-Date: 201712