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Replication data for: Resource investments and the timing of tax deductions
No full textThis document describes the replication files for “Resource investments and the timing of tax deductions” by Lassi Ahlvik and Torfinn Harding for the Journal of the Association of Environmental and Resource Economists (JAERE)
Will of the living dead-The case for a backward-looking welfare function
Get PDFMany people have preferences over choices taking place after their lifetime. I show that a backwardlooking welfare function, keeping preferences of the dead alive, is Pareto-improving and can be sustained as a subgame-perfect equilibrium of the intergenerational game. (c) 2022 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).Peer reviewe
Economic decision making in salmon aquaculture : an analysis of the investment behavior for production licenses under the Norwegian traffic light system
Get PDFThe analysis of ‘The Economic Impacts of the Product Area Regulation’ by Pettersen Aubell
& Haugen Hamarsland (2018) indicated a discrepancy between the calculatory willingnessto-
pay for increased production capacity and the actually realized prices. This thesis will
explain this paradox and provide an unprecedented view into the economic decision making
of Norwegian salmon grow-out farmers in terms of long-term investment decisions (i.e.
purchase of additional production capacity) in order to reduce the gap between what
bioeconomic modeling suggests as ideal and actual decisions made.
The detailed analysis of the Norwegian salmon aquaculture industry shows that bioeconomic
modeling in aquaculture generally misses out on taking into consideration that parameters such
as market prices, production costs, production technology, and environmental conditions
change over time. This is anticipated by salmon grow-out farmers and included into their
investment decisions. The analysis identified four main future developments that support a
today’s investment into increased production capacity.
Firstly, breeding programs will advance out-of-season smolts and enable salmon grow-outfarmers
to release the fish flexibly all year round. This will reduce production and price cycles
and stabilize the market. Second, the sea lice problem is about to be solved by lumpfish
deployment. As soon as an own aquaculture is established for this species, salmon mortality
can be significantly decreased. Thirdly, the climate change will increase sea-water
temperatures which will improve growth conditions along the Norwegian coast, particularly
in northern Norwegian regions. Fourthly and lastly, market prices have increased substantially
in the last three years. As the market features an unsatisfied demand, prices are not expected
to decrease in the following years and lucrative production margins support positive
investment decisions for volume increases.
Innovative production technologies, i.e. land-based and offshore aquaculture, represent the
largest degree of uncertainty to future industry developments as their licensing is not wellelaborated,
yet. Currently running under development licenses, land-based and offshore
operations bear the greatest potential for growth and their future development, both
technologically and license-wise, should be carefully observed
The economic effects of the production area regulation : an empirical study of the norwegian aquaculture industry
Get PDFThe Norwegian aquaculture industry has grown and developed substantially since its mere
beginning in the 1970s (Nærings- og fiskeridepartementet, 2015; PwC, 2016b; Statistisk
sentralbyrå, 2018c). Governmental regulation of the industry has developed accordingly, with
shifting intentions from ensuring local ownership and jobs, to the newfound focus on
sustainability (Asche & Bjørndal, 2011; Nærings- og fiskeridepartementet, 2015; Schwach et
al., 2015).
The aim of this thesis is to estimate the economic effects of the recently implemented
Production Area Regulation on commercial fish farming companies. Existing bioeconomic
theory does not take into account the capacity constraints faced by the industry participants,
and we suggest such an extension to the theoretical models. The inclusion of capacity
constraints enables the calculation of changes in rotation length and the corresponding
willingness-to-pay for changes in capacity, which in turn can be used to evaluate the effects of
the regulation. A growth model and a price model are estimated based on the empirical data
obtained, which in turn are utilized in the calculation of the overall economic effects of the
regulation.
Our findings suggest that the introduction of capacity constraints leads to shorter rotation
lengths than what is optimal for Norwegian fish farmers. The average willingness-to-pay for 2
% increased capacity is 99.10 NOK/kg. Overall, the regulation will lead to an increase in profits
per production license of NOK 410 485. The variation between the production areas are large,
with changes in profits ranging from -6.2 million to almost 2.3 million per production license.
Assumptions about interest rate, mortality rate, number of fish, costs, prices and growth largely
influences the economic effects of the regulation.nhhma
Resource rent taxation in Norwegian salmon aquaculture : an economic analysis of resource rent taxation in Norwegian salmon aquaculture
Get PDFIn 2018 the Norwegian government decided that a special tax commission should look into
the possibilities to introduce a resource rent tax in the Norwegian aquaculture industry. In
November 2019 the commission delivered their report with the majority proposal being that
the government should introduce a periodized profit-based resource rent tax of 40 % calculated
from a new special tax base called net resource rent income. In May of 2020 the Ministry of
Finance discarded this proposal and instead proposed to introduce a production tax of 0,4 NOK
per kg of produced salmon.
The goal with this thesis is to research if there will be any changes in the economic behaviour
of the companies if one of the tax proposals are introduced. To determine if there are any
behavioural changes, I will create a bioeconomic optimization model that allows me to
investigate the optimal rotation time before and after the introduction of the two tax proposals.
My research suggests that both the proposed profit-based resource rent tax and the production
tax will distort the optimal rotation time. In both cases the rotation time lengthens which means
that it represents a decrease in the marginal value of continuing a rotation. The size of the
welfare loss was relatively small; 0,35 NOK for the profit-based resource rent tax and 146,75
NOK for the production tax. Although, if the production area regulations are included in the
calculations the companies will be forced to harvest the biomass before it has reached its
optimal size. I find that the optimal rotation time will stay at 18,08 months for production area
1-9 and 20,96 months for production area 10-13 regardless of which one of the tax proposals
that are introduced. In those cases, the introduction of the taxes will not change the economic
behaviour of the companies.nhhma
Viral diseases in salmonid aquaculture : quantifying economic losses associated with three viral diseases affecting norwegian salmonid aquaculture
Get PDFThe salmonid aquaculture industry has a unique level of commercialization and technological
development relative to other aquaculture industries. Even so, diseases and other biological
challenges are still a key concern for the industry, and limit the industry’s ability to grow. One of
the most important disease challenges are those presented by viral diseases. A lack of aggregated
estimates for economics losses associated with outbreaks of some viral diseases motivated the
definition of the problem researched in this thesis: “How large are the aggregated economic losses
associated with viral disease outbreaks in Norwegian salmonid aquaculture”. The required data is
at the time of writing only available for Norway.
The research problem was analyzed through a simulation model built on a partial budgeting
framework. The model’s framework was based on published literature within animal health
economics, and similar exercises. Costs related to outbreaks was divided into biological losses,
cost of prevention, -treatment, other extraordinary costs, and insurance payout. Actual reported
biomass- and feeding data from all Norwegian salmonid farming sites was utilized in the model, in
addition to both primary- and secondary sources for other model inputs. Based on available and
obtained data, outbreaks between 2012 and 2016 of Pancreas disease (PD), Infectious Salmon
Anemia (ISA) and Cardiomyopathy Syndrome (CMS) was included in the simulation model. The
study had full coverage of outbreaks in Norway for 2014 and 2015.
The simulations show that PD caused direct costs for Norwegian farmers in 2015 of 2366 – 2775
NOKm, ISA 873 – 936 NOKm and CMS 647 – 848 NOKm. The simulation results show that the
total aggregated direct costs associated with these viral disease outbreaks are an important source
of economic losses in Norwegian salmonid aquaculture. The combined simulated losses from the
three analyzed diseases are of a magnitude where they equate to four-fifths of previously published
estimates on the direct costs associated with salmon sea lice in Norway. The results vary by year,
but the study displays that particularly direct costs associated with PD are stable year-over-year.
The study further analyzes the implications of secondary infections with PD and CMS, and
explores and discuss time- and geographic differences between outbreaks of each disease. Finally,
the study analyze biological implications of outbreak using the production data.
The methodology applied in this thesis can be extended to cover more diseases and countries.nhhma
European climate policy and industrial relocation : an assessment of the ecological and managerial impact of the EU ETS on European manufacturing
Get PDFDo abatement costs from CO2 emissions affect a firm’s choice to relocate, by that creating
carbon leakage? The aim of this thesis is to investigate the accuracy and effectiveness of
climate policies in the European Union and thus to question the current allocation mechanism
for sectors that deemed to be exposed to carbon leakage. The relationship between abatement
costs and relocations risks is assessed by exploiting firm level data on relocations risk and
macro level data on CO2 emissions. Utilizing the fixed effects model approach, a negative
effect of abatement costs on relocation risks of those companies that cut CO2 emissions was
found. These finding implies that no evidence for carbon leakage could be drawn from the
results and confirms the results of previous research. Two fundamental areas were identified
that need to be understood and to be addressed in future research. First, the allocation
mechanism of certificates that is being used in the EU needs to be revised since companies are
facing an overallocation of certificates while having a low risk of relocation. Shrinking the
pool of allowanced available for free allocation would be one potential angle for a substantial
change. Secondly, by overcoming the information asymmetry between regulator and
regulated, other factors despite facing political restrictions and abatement costs must exist that
discourage decision-makers from relocating production facilities abroad. Other variables that
might impact the competitive position of sectors should be addressed in future research such
as energy costs, labor costs etc. This thesis emphasizes the need for re-opened a debate about
the measures to address carbon leakage in the future, including an expansion of options to
address this issue. One option could be, instead of overallocation sectors, to reflect upon how
best to enforce initiatives for the implementation of “greener” technologies in order to achieve
cost savings for companies while limiting CO2 emissions on the long run
The adverse effects of the Norwegian electric vehicle incentive scheme with emphasis on congestion and public funding
Get PDFNorway is one of the countries in the world with the highest market share of electric vehicles
per capita. Much of this is due to a comprehensive incentive scheme to facilitate the
purchase and use of electric vehicles. The purpose of the incentive scheme is to reduce
emissions, which is an externality of road traffic. However, road traffic also causes other
externalities, which the incentive scheme does not take into account.
The purpose of this thesis is to identify and estimate the adverse effects that arise with
increasing shares of electric vehicles. The adverse effects are associated with the
externalities that emerge from road traffic. In particular, this thesis emphasizes the adverse
effects of toll exemption for BEVs, which are related to congestion and public funding
Existing literature on the incentive scheme focuses on the importance and cost-effectiveness
of the incentives, and the characteristics of electric vehicle owners. Some discuss the
potential adverse effects of the incentives, but fail to provide evidence and take the whole
cost into account. Therefore, this thesis will try to empirically estimate how demand for
driving changes with higher numbers of electric vehicles, and discuss what externalities this
may cause.
The demand for driving is estimated through three different models using two data sets,
where the first model uses annual mileages per vehicle for all municipalities and the second
and third model use toll passages in the five largest cities in Norway. All three models
suggest that demand for driving increases with increasing shares of electric vehicles. This
thesis argues that because demand for driving increases, the externalities from road traffic
increase.nhhma
Deforestation in Brazil : an empirical evaluation on the effectiveness of the Soy Moratorium
Get PDFThis dissertation is designed to explore the lamentable destruction that is taking place in the Amazon rainforest and further conduct an analysis with the aim of evaluating if abiding the Soy Moratorium of 2006 had any impact in curbing deforestation during the post-period of inception, 2006. The SoyM is a voluntary agreement purposing to hinder the demolition of forests related to soy plantation; this contract solely applies to the Amazon biome and calls all companies operating in the supply chain of the soy commodity to cease trading soybean resourced from deforested areas effectively after July 24, 2006.
In order to discover the impact of the programme, we formulate a research question as follows, “did the Soy moratorium caused a reduction in deforestation in the Amazon biome?” That is to say, do companies that signed the policy truthfully adhere the principle and contribute in lessening deforestation? This question initiates the path to discover whether the Amazon biome experience less deforestation compared to neighbouring biomes following companies’ signage of the voluntary agreement.
We investigate the entire Amazon biome encompassing 177 municipalities and use 206 municipalities from the Cerrado biome as a control, which are located at the geographical border between the two biomes: a total of 383 municipalities. This paper covers a time span of 14 years, from 2003 to 2016, and therefore the longitudinal dataset contains 5362 observations for each variable of interest.
We employed a difference-in-differences approach, with both municipality and year fixed effect, to examine if the SoyM have generated a genuine causal effect in decreasing both soy and territorial deforestation in the Amazon biome. Applying mentioned strategic approach, we acquire two different results. First, a general broad approach, conducted on the assumption of the Cerrado biome as a control factor, produces an insignificant impact of the SoyM. Whereas, applying a more specific model, which also consider the role of signatory companies in a given municipality, the empirical results suggest that the SoyM had a significant causal effect in decreasing soy deforestation and territorial deforestation as well, in the Amazon biome
The value of adapting to climate change for Norwegian salmonid aquaculture : a scenario-based analysis
Get PDFThe Norwegian aquaculture industry accounts for 6.5 percent of total exports from
Norway. The United Nations projects that by 2030 the world population will grow
to 8.5 billion people. In order to maintain food security, the supply of fish is critical.
Ectotherms such as Atlantic Salmon is highly dependent on the temperature of its
surroundings. Hence, it is important to estimate what the effects of climate change
will have on the Norwegian aquaculture industry.
The aim of this master thesis is to analyze how changes in seasonal temperature
may affect the Norwegian salmonid aquaculture industry. The existing bioeconomic
theory does not consider that mortality rates for salmon is temperature dependent.
The inclusion of temperature dependent mortality rates enables a more
realistic estimation of how the projected changes in temperature due to climate
change will affect the profitability of the Norwegian aquaculture industry. Mortality
rates and price are estimated based on the empirical data obtained and used to
adjust the growth model estimated by Lorentzen and Hannesson (2006) analyzing
data from a controlled experiment executed by feed producers for the aquaculture
industry. By analyzing different scenarios for changes to the seasonal seawater temperatures
in Norway, I will estimate the value of adapting the decision variables to
the changes.
My findings suggest that within the range of projected changes the Norwegian
aquaculture industry will benefit from changes in seasonal temperature even without
it adapting to the changes. This is regardless of how temperatures are affected.
For increases in average temperature between 0.5 and 4 degrees Celsius the beneficial
effects ranges from 6.27 to 28.46 percent increase in the present value of all
future profits. For changes to the amplitude of temperature the beneficial effect
ranges from 1.34 to 8.63 percent, and for changes to both amplitude and average
the effect ranges from 7.44 to 23.36 percent.
By adapting to the changes, the beneficial effects of the projected changes is even
higher. The best adaptation to the scenario based changes to temperature is dependent
on how the temperature changes. The best response to increases in average
temperature is to shorten the rotation time, which yields additional values ranging
from 1.17 percent to 11.90 percent of the current value of the aquaculture industry
for adapting to the projected changes. The best response to increase in amplitude
is to start the rotation earlier, whilst the best response to increase in both amplitude
and average is to shorten rotation and to start the rotation later.nhhma
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