Documents Bretschger, Lucas 6 results

"The world economy is affecting ecosystems in a way that puts future living standards at risk. Important issues include global warming, fading resource stocks, scarce water supplies, and decreasing biodiversity. It is broadly ac-accepted that the future of our planet should be one of our major concerns. But when it comes to concrete policies, most clearly those related to climate change, grave difficulties arise. This may come as a surprise. In fact, it should not be surprising. Forward-looking and green policies have always proved to be demanding and controversial. At the global scale, national policy difficulties are only compounded. There is not sufficient consensus across the different countries. World society is not very dynamic in problem solving. Rather, it is graying and inertial, cultivating conservative views and institutions. Economic interests and political perceptions diverge widely across countries. While the potentials offered by green technologies are huge, institutions have not yet adapted to meet the challenges. The political debate lacks sufficient focus; it includes very diverse opinions and notions on admittedly complex issues. It is true that the most prominent sustainability policy, climate policy, combines the most difficult and complex conditions for policy making in a single subject. Correction of a big market failure, international consensus building, long-run planning, major uncertainties, huge equity concerns, and very heterogeneous country interests are ingredients that would bedevil any political decision. On the bright side, concepts such as “green economy” and “sustainable development” have prominently entered the political debate, documenting the rising number of bridges between economy and ecology. Re-source-efficient technologies are increasingly being developed and applied. Yet, while everyone would highly welcome political solutions to the climate problem, accepting their consequences is much less widely embraced. These include significant reductions in natural resource use, especially with fossil fuels. They also entail acknowledging responsibility for past emissions and obligations to other countries and future generations. Consistent sustainability policies require a framework and an institutional setting that has yet to be built and globally implemented. Such a framework would end-able policymakers exploiting the huge potentials for greening the economy. Many scientific and applied contributions on sustainability have al-ready been published. But the majority of the advocated policies have not been implemented; major problems such as global warming have not yet been properly addressed. It appears that sustainability policies are not attracting sufficient political support. By pointing to the profound problems inherent in policy making in this area, this book explains why this is the case. It also provides the elements needed to increase general understanding and to find political consensus. Compared to the much broader scientific contributions on sustainability, some authored by large numbers of international researchers in different disciplines, the present book takes a more modest approach. It draws on selected research results to explain the most important sustainability is-sues from the point of view of economics. The book points at central underlying problems and misperceptions with the aim of increasing ambitions and rationality in political decision making. It reflects the high complexity of reaching sustainable development, which will require the contribution of social sciences involving many different perspectives. The book uses neither formal models nor mathematical equations. These can be found in the underlying original academic works cited in the references. The approach follows that of the famous economist Alfred Mar-shall, who advised using formal analysis until the results were fully de-rived but then to “burn” the mathematics, translate the conclusions into normal language, and illustrate them by “examples that are important in real life.” In following this procedure, this book aims to make the economic approach to sustainability attractive for a broader audience and a useful input to policy making."

"We study the eects of greenhouse gas emissions on optimum growth and climate policy by using an endogenous growth model with polluting non-renewable resources. Climate change harms the capital stock. Our main contribution is to introduce and extensively explore the naturally determined time lag between greenhouse gas emission and the damages due to climate change, which proves to be crucial for the transition of the economy towards its steady state. The social optimum and the optimal abatement policies are fully characterized. The inclusion of a green technology delays optimal resource extraction.The optimal tax rate on emissions is proportional to output. Poor understanding of the emissions diffusion process leads to suboptimal carbon taxes and suboptimal growth and resource extraction."

"Climate physics predicts that the intensity of natural disasters will increase in the future due to climate change. One of the biggest challenges for economic modeling is the inherent uncertainty of climate events, which crucially aects consumption, investment,and abatement decisions. We present a stochastic model of a growing economy where natural disasters are multiple and random, with damages driven by the economy's polluting activity. We provide a closed-form solution and show that the optimal path is characterized by a constant growth rate of consumption and the capital stock untila shock arrives, triggering a downward jump in both variables. Optimum mitigation policy consists of spending a constant fraction of output on emissions abatement. This fraction is an increasing function of the arrival rate, polluting intensity of output, and the damage intensity of emissions. A sharp response of the optimum growth rate and the abatement share to changes in the arrival rate and the damage intensity justies more stringent climate policies as compared to the expectation-based scenario. We subsequently extend the baseline model by adding climate-induced uctuations around the growth trend and stock-pollution eects, demonstrating robustness of our results. In a quantitative assessment of our model we show that the optimal abatement expenditure at the global level may represent 0.9% of output, which is equivalent to a tax of $71 per ton carbon."

"Economic and ecological systems are closely interlinked at a global and a regional level, offering a broad variety of challenging research topics in environmental and resource economics. The successful identi?cation of key questions for current and future research supports development of novel theories, empirical applications, and appropriate policy designs. It allows establishing a future- oriented research agenda whose ultimate goal is an efficient, equitable, and sustainable use of natural resources. The paper aims to identify fundamental topics, current trends, and major research gaps to motivate further development of academic work in the field."

"Economic and ecological systems are closely interlinked at a global and a regional level, offering a broad variety of important research topics in environmental and resource economics. The successful identification of key challenges for current and future research supports development of novel theories, empirical applications, and appropriate policy designs. It allows establishing a future-oriented research agenda whose ultimate goal is an efficient, equitable, and sustainable use of natural resources. Based on a normative foundation, the paper aims to identify fundamental topics, current trends, and major research gaps to motivate further development of academic work in the field."

"The belief that stringent climate policies are very costly is widespread among political decision-makers and the public. The cost argument is often used by governments as a motivation for sluggish policy making. However, such judgements ignore the economic benefits of policy changes and implicitly build on a misguided decomposition of environmental impact into separate population, income, and technology effects. The paper shows that this method predicts policy-induced income losses that are systematically and significantly biased. I extend the decomposition analysis by introducing input substitution, which drastically lowers policy costs. By additionally incorporating a production approach, causal relationships between the drivers of resource use, and a framework for endogenous technology development I develop a new structural equation to assess climate policy effects. For a given decarbonization path, I calculate the projected income development at the global and country level. The use of the structural approach instead of agnostic decomposition suggests that the costs of a stringent climate policy are much lower than normally expected, which supports deep decarbonization."