1,720,987 research outputs found
Optimal pricing of car use in a small city : A case study of Uppsala
No full textStudies of cities that have successfully shifted demand from cars to more sustainable modes suggest that coordinated packages of mutually reinforcing policy instruments are needed. Congestion charges and parking fees can be important parts of such packages. This paper examines the introduction of welfare-optimal congestion charges and parking fees in a model calibrated to Uppsala, a small city in Sweden. These effects are modeled with a simple transport demand model for the welfare optimization of parking fees, congestion charges, and public transport provision. The results suggest that welfare-optimal congestion charges in Uppsala are as high as EUR 2.8 in peak hours and EUR 1.4 in off-peak hours. A rough cost–benefit analysis shows that the introduction of congestion charges in Uppsala is welfare improving if the operating costs of congestion charges are proportional to city population size. In the main scenarios, optimal congestion charges and parking fees reduce the number of car trips by 10% and 7%, respectively. The model can be used to assess when it is worthwhile to introduce congestion pricing. © 2021 The Author
Discounting transport infrastructure investments
No full textThe main aim of the study is to advice the Swedish national guidelines on cost-benefit analysis (CBA) of transport infrastructure investments, ASEK about the appropriate set of discount-rates (currently 3.5% for all investments). To this end, first a literature review with a theoretical focus along with some new perspectives are provided. Second the conclusions are applied to Swedish infrastructure transport CBA, using the current proposition of a new HSR line as a case. Based on empirical research concerning parameter values new discount rates are estimated, and sensitivity analysis performed. The best estimate of the social discount rate in the present study, for land transport infrastructure investment in Sweden, is about 5.1%
Household production and the Elasticity of Marginal Utility of Consumption
No full textChetty (2006) developed a new method of estimating the Elasticity of Marginal Utility of Consumption (EMUC) from observed work time responses to wage changes and derived an upper bound of 2 for this parameter. Here I show that the omission of household production in Chetty’s model may lead to bias, and perform a numerical sensitivity analysis of Chetty’s results in this respect. I develop a new model that includes household production from which I derive new, unbiased EMUC formulas. I offer empirical estimates based on current evidence of the included parameters, suggesting a lower bound for EMUC of about 0.9
Avoiding path dependence of distributional weights : Lessons from climate change economic assessment
No full text In some cost benefit analysis (CBA) applications, such as those used for the valuation of climate change damage, distributional weights are used to account for diminishing utility of marginal income. This is usually done by means of intra-temporal distributional weights, which are combined with discounting to account for inter-temporal equity and efficiency. Here, I show that this approach might introduce some inconsistencies in terms of path dependence. In short, this inconsistency means that regional economic growth is double counted. This is because income weighting is performed both through the discount rate and through the distributional weights such that growth shows up twice in the weighting process. Using the PAGE2002 model, it is found that the inconsistency problem in the original model erases the influence of distributional weights on the social cost of carbon dioxide (SCCO2) compared to a standard CBA approach. The alternative approaches proposed here yield about 20 %–40 % higher values of SCCO2 than the old approach. While this has been briefly commented on in previous work, it has not yet been more thoroughly analyzed nor communicated to the broader community of climate policy and economic analysts who are not deeply interested in the specifications of the climate impact assessment models.Revised 2016</p
Household production and the Elasticity of Marginal Utility of Consumption [Elektronisk resurs]
No full textChetty (2006) developed a new method of estimating the Elasticity of Marginal Utility of Consumption (EMUC) from observed work time responses to wage changes and derived an upper bound of 2 for this parameter. Here I show that the omission of household production in Chetty’s model may lead to bias, and perform a numerical sensitivity analysis of Chetty’s results in this respect. I develop a new model that includes household production from which I derive new, unbiased EMUC formulas. I offer empirical estimates based on current evidence of the included parameters, suggesting a lower bound for EMUC of about 0.9.</p
Temporal Aspects of the Social Cost of Greenhouse Gases [Elektronisk resurs]
No full textThe purpose of this study is to investigate the temporal aspects of the social cost of greenhouse gases (GHGs). I am particularly interested in the interaction between time of emissions, discounting, and type of GHG (where different GHGs have different atmospheric lifetimes). I show graphically how the social costs of GHGs depend on different parameter values and how the global damage potential for methane and sulfur hexafluoride evolves over time. I find that that the calculation period ultimately should be modeled to be consistent with the discount rate and that the “global-warming potential” concept is unsuitable for calculating of the social cost of GHGs other than carbon dioxide.</p
Does uncertainty make cost-benefit analyses pointless?
No full textCost-benefit analysis (CBA) is widely used in public decision making on infrastructure investments. However, the demand forecasts, cost estimates, benefit valuations and effect assessments that are conducted as part of CBAs are all subject to various degrees of uncertainty. The question is to what extent CBAs, given such uncertainties, are still useful as a way to prioritize between infrastructure investments, or put differently, how robust the policy conclusions of CBA are with respect to uncertainties. Using simulations based on real data on national infrastructure plans in Sweden and Norway, we study how investment selection and total realized benefits change when decisions are based on CBA assessments subject to several different types of uncertainty. Our results indicate that realized benefits and investment selection are surprisingly insensitive to all studied types of uncertainty, even for high levels of uncertainty. The two types of uncertainty that affect results the most are uncertainties about investment cost and transport demand. Reducing uncertainty can still be worthwhile, however, because of the huge amounts of money at stake: a 10% reduction in general uncertainty can increase the realized benefits of a national infrastructure investment plan by nearly 100 million euro (assuming that decisions are based on the CBAs). We conclude that, despite the many types of uncertainties, CBA is able to fairly consistently separate the wheat from the chaff and hence contribute to substantially improved infrastructure decisions
The welfare-maximizing discount rate in a small open economy
No full textThe controversy about what approach is best for calculating the social discount rate for public investments is both long standing and heated. Two main approaches are the social time preference and the social opportunity cost approaches. Complicating issues are tax wedges, the question of whether public investments crowd out current private consumption or private saving, and the possibility of myopic behavior among individuals. This study uses a model that takes these issues into account to derive the discount rate that optimizes welfare in a small open economy. The result is that even if individuals have behavioral preferences differing from the normative preferences of the social planner and even if tax wedges exist, the optimal discount rate is the pre-tax market return on capital, as long as individuals are forward looking and consistent in their behavioral preferences, and their choices are not constrained by, for example, liquidity restrictions.Diskontering i en liten öppen ekonom
Temporal Aspects of the Social Cost of Greenhouse Gases
No full textThe purpose of this study is to investigate the temporal aspects of the social cost of greenhouse gases (GHGs). I am particularly interested in the interaction between time of emissions, discounting, and type of GHG (where different GHGs have different atmospheric lifetimes). I show graphically how the social costs of GHGs depend on different parameter values and how the global damage potential for methane and sulfur hexafluoride evolves over time. I find that that the calculation period ultimately should be modeled to be consistent with the discount rate and that the “global-warming potential” concept is unsuitable for calculating of the social cost of GHGs other than carbon dioxide.Revised 2016</p
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