1,721,323 research outputs found
Perspectives on the Economics of the Environment in the Shadow of Coronavirus: The European Green Deal, Sustainability, Carbon Neutrality and COVID‐19
No full textNo abstract, position pape
Dynamic Games with Nature: Designing Policy under Ambiguity
No full textEnvironmental and resource economics is permeated by economic
and environmental uncertainties. The expected utility
framework founded by von Neumann and Morgenstern and
later extended to subjective probability by Savage is the
traditional framework for dealing with risk in economics.
Frank Knight suggested the need to distinguish between
risk and uncertainty for situations where there is ignorance
or not enough information to assign probabilities — objective
or subjective — to events. Knightian uncertainty, or
ambiguity, is an appropriate framework for studying environmental
management issues, given the complexities and
the multiple sources of underlying uncertainties. Decisionmaking
under ambiguity has been based on the maxmin
expected utility. Robust control, by using maxmin rules and
by introducing a fictitious adversarial agent referred to as
Nature, provides policies under ambiguity. In robust rules
the lower bounds to the rule’s performance are determined
by Nature, and management can be regarded as a game
between the regulator and Nature. The regulator maximizes
her/his objective, while Nature “tries” to minimize the regulator’s
objective. The outcome of this game determines
regulation under ambiguity. This paper presents methods for studying environmental and resource management issues
and designing robust policies under ambiguity or Knightian
uncertainty and ambiguity aversion. In particular, robust
control methods are applied to a differential game associated
with a problem of international pollution control. Optimal
robust feedback rules and state variable paths are derived.
The differential game framework is also extended to recently
developed deterministic robust control methods which allow
direct comparisons between cooperative and noncooperative
outcomes
ENERGY BALANCE CLIMATE MODELS, DAMAGE RESERVOIRS, AND THE TIME PROFILE OF CLIMATE CHANGE POLICY
No full textIn particular, we differentiate between two types of damages from climate
change, traditional gradually increasing damages and a damage reservoir type, where
the latter represents a finite source of economic damage associated with the movement
of the ice line. Damage reservoirs in the context of climate change can be regarded as
sources of damage that eventually will cease to exist when the source of the damage has
been depleted.We identify ice caps and permafrost as typical damage reservoirs, where
the state of the reservoir is connected to the latitudinal position of the ice line
Pollution Control: When, and How, to be Precautious
Full text linkThe precautionary principle (PP) applied to environmental policy stipulates that, in the presence of physical uncertainty, society must take robust preventive action to guard against worst-case outcomes. It follows that the higher the degree of uncertainty, the more aggressive this preventive action should be. This normative maxim is explored in the case of a stylized dynamic model of pollution control under Knightian uncertainty. At time 0 a decision-maker makes a one-time investment in damage-control technology and subsequently decides on a desirable dynamic emissions policy. Adopting the robust control framework of Hansen and Sargent [10], we investigate optimal damage-control and mitigation policies. We show that optimal investment in damage control is always increasing in the degree of uncertainty, thus confirming the conventional PP wisdom. Optimal mitigation decisions, however, need not always comport with the PP and we provide analytical conditions that sway the relationship one way or the other. This result is interesting when contrasted to a model with fixed damage-control technology, in which it can be easily shown that a PP vis-a-vis mitigation unambiguously holds. We conduct a set of numerical experiments to determine the sensitivity of our results to specific functional forms of damage-control cost. We find that when the cost of damage-control technology is low enough, damage-control investment and mitigation may act as substitutes and a PP with respect to the latter can be unambiguously irrational.Risk, Ambiguity, Robust Control, Precautionary Principle, Pollution Control
Optimal Control and Spatial Heterogeneity: Pattern Formation in Economic-Ecological Models
Full text linkThis paper extends Turing analysis to standard recursive optimal control frameworks in economics and applies it to dynamic bioeconomic problems where the interaction of coupled economic and ecological dynamics under optimal control over space creates (or destroys) spatial heterogeneity. We show how our approach reduces the analysis to a tractable extension of linearization methods applied to the spatial analog of the well known costate/state dynamics. We explicitly show the existence of a non-empty Turing space of diffusive instability by developing a linear-quadratic approximation of the original non-linear problem. We apply our method to a bioeconomic problem, but the method has more general economic applications where spatial considerations and pattern formation are important. We believe that the extension of Turing analysis and the theory associated with the dispersion relationship to recursive infinite horizon optimal control settings is new.Spatial analysis, Pattern formation, Turing mechanism, Turing space, Pontryagin’s principle, Bioeconomics
Dynamic Contingent Valuation and Choice Modelling for Ecosystem Services
Full text linkNon market valuation and bio economic modelling are combined in a dynamic model of ecosystem services. A mathematical proof demonstrates that the imputed price of natural capital contains all non market values and that scarcity rent is the total value of ecosystem services. A dynamic demand system, including characteristics is derived. New methods are developed for dynamic welfare analysis and both revealed and stated preference methods are proposed for estimating the price of natural capital. Estimation is simple if we avoid surveying consumers who degrade the ecosystem and instead consult owners who accrue the scarcity rent and conserve for the future.Non market valuation, ecosystem services, Lancaster demand, welfare analysis, analytical solutions, Demand and Price Analysis, Environmental Economics and Policy, Research Methods/ Statistical Methods, Q57, Q51, Q56,
- …
