sustainability as a fair bequest an evaluation challenge abstract in contrast to conventional approaches the conceptualisation of sustainability as fair bequest makes it possible to consider a finite time horizon valuation is necessary to determine whether the bequest package that is passed on from one generation to the next is fair acknowledging the merits as well as the limitations of economic price theory this paper differentiates between three classes of valuables the essential the useful and the unique it is argued that a fair bequest package should contain items from each of the classes because the three classes are incommensurable fairness of the bequest cannot be expressed by a single figure like a non declining total value of the package we then discuss which methods are appropriate for describing a bequest package with respect to its fairness

strong sustainability critical natural capital and the capability approach this article is an attempt to conceptually improve the notion of strong sustainability by creating a rapprochement between its core concept critical natural capital and the capability approach we first demonstrate that the capability approach constitutes a relevant framework for analysing the multiple links between human well being and critical natural capital second we demonstrate that the rapprochement between critical natural capital and the capability approach can form both the normative basis and the informational basis for a deliberative approach to human development which embraces a strong sustainability perspective this conceptual rapprochement as illustrated in our case study opens up avenues of research towards the practical implementation of human development projects from a strong sustainability perspective

uncertainty across volatility regimes we propose a nonrecursive identification scheme for uncertainty shocks that exploits breaks in the volatility of macroeconomic variables and is novel in the literature on uncertainty this approach allows us to simultaneously address two major questions in the empirical literature is uncertainty a cause or effect of decline in economic activity does the relationship between uncertainty and economic activity change across macroeconomic regimes results based on a small scale vector autoregression with us monthly data suggest that i uncertainty is an exogenous source of decline of economic activity and ii the effects of uncertainty shocks amplify in periods of economic and financial turmoil

the evolving impact of global region specific and country specific uncertainty we develop a dynamic factor model with time varying parameters and stochastic volatility estimate it using a large panel of macroeconomic and financial data for 22 countries and decompose the vari

intertemporal equilibria and exhaustible resources an overlapping generations approach abstract this paper presents a general equilibrium model of an abstract intertemporal economy with overlapping generations production possibilities and capital investment under the constraint of a nonreproducible natural resource the model provides for institutionally mandated asset transfers between successive generations under the assumption that each generation has perfect foresight concerning future prices and economic conditions competitive exchange supports a multiplicity of pareto efficient equilibria that correspond to particular asset transfer regimes the achievement of a desirable distribution of welfare between present and future generations requires that the asset transfer regime be chosen according to a social welfare function or explicit distributional criterion economic efficiency per se is insufficient to ensure social optimality these results have important implications for resource planning in the real world where policy makers and the public at large are often highly concerned over the potential impacts of current resource utilization on the welfare of future generations

persistence of economic uncertainty a comprehensive analysis one of the most heavily researched and cited issue in applied economics is the relationship of uncertainty indices with the financial and macroeconomic variables while the statistical features of

critical natural capital a socio cultural perspective abstract critical natural capital cnc is commonly defined as that part of the natural environment which performs important and irreplaceable functions so far the challenge to determine the criticality of natural capital nc has mainly been taken up by the natural sciences and the critical functions of nature mainly associated with its life support and ecological services little attention has been paid to the socio cultural functions of nc and to their values for the health and well being of human societies the aim of this paper is to encourage a more complete accounting of the critical functions of nc and its associated values by highlighting the importance of the information functions health recreation amenity education heritage etc for the quality and sustainability of human life it is argued that despite their immaterial and often intangible nature these functions provide many socio economic benefits which might be assessed through both qualitative and quantitative valuation methodologies integration of ecology sociology and economics is essential to operationalize the concept of cnc as a tool for more balanced environmental planning and decision making

a framework for the practical application of the concepts of critical natural capital and strong sustainability this paper develops a methodology for identifying that natural capital called critical natural capital cnc the maintenance of which is essential for environmental sustainability by consideration of the characteristics of natural capital of the environmental functions that these characteristics enable natural capital to perform and of the importance of these functions to humans and the biosphere it shows how sustainability standards in respect of these environmental functions may be derived the difference between the current situation and these standards is termed the sustainability gap the methodology that emerges from bringing these ideas together into a single analytical framework enables policy makers to identify the extent of current unsustainability the principal causes of it the elements and processes of natural capital the cnc which need to be maintained or restored to close the sustainability gap and the costs of so doing the framework should therefore be of use in identifying priorities and policies for moving towards environmental sustainability

measuring uncertainty and its impact on the economy we propose a new framework for measuring uncertainty and its effects on the economy based on a large var model with errors whose stochastic volatility is driven by two common unobservable factors representing aggregate macroeconomic and financial uncertainty the uncertainty measures can also influence the levels of the variables so that contrary to most existing measures ours reflect changes in both the conditional mean and volatility of the variables and their impact on the economy can be assessed within the same framework moreover identification of the uncertainty shocks is simplified with respect to standard var based analysis in line with the favar approach and with heteroskedasticity based identification finally the model which is also applicable in other contexts is estimated with a new bayesian algorithm which is computationally efficient and allows for jointly modeling many variables while previous var models with stochastic volatility could only handle a handful of variables empirically we apply the method to estimate uncertainty and its effects using us data finding that there is indeed substantial commonality in uncertainty sizable effects of uncertainty on key macroeconomic and financial variables with responses in line with economic theory

the impact of uncertainty shocks under measurement error a proxy svar approach a growing literature considers the impact of uncertainty using svar models that include proxies for uncertainty shocks as endogenous variables in this paper we consider the impact of measurement error in these proxies on the estimated impulse responses we show via a monte carlo experiment that measurement error can result in attenuation bias in impulse responses in contrast the proxy svar that uses the uncertainty shock proxy as an instrument does not suffer from this bias applying this latter method to the bloom 2009 data set results in impulse responses to uncertainty shocks that are larger in magnitude and more persistent than those obtained from a recursive svar

evaluating renewable portfolio standards and carbon cap scenarios in the u s electric sector this report examines the impact of renewable portfolio standards rps and cap and trade policy options on the u s electricity sector the analysis uses the national renewable energy laboratory s regional energy deployment system reeds model that simulates the least cost expansion of electricity generation capacity and transmission in the u s to examine the impact of a variety of emissions caps and rps scenarios both individually and combined the generation mix carbon emissions and electricity price are examined for various policy combinations simulated in the modeling

reviving manufacturing with a federal cogeneration policy abstract improving the energy economics of manufacturing is essential to revitalizing the industrial base of advanced economies this paper evaluates ex ante a federal policy option aimed at promoting industrial cogeneration the production of heat and electricity in a single energy efficient process detailed analysis using the national energy modeling system nems and spreadsheet calculations suggest that industrial cogeneration could meet 18 of u s electricity requirements by 2035 compared with its current 8 9 market share substituting less efficient utility scale power plants with cogeneration systems would produce numerous economic and environmental benefits but would also create an assortment of losers and winners multiple perspectives to benefit cost analysis are therefore valuable our results indicate that the federal cogeneration policy would be highly favorable to manufacturers and the public sector cutting energy bills generating billions of dollars in electricity sales making producers more competitive and reducing pollution most traditional utilities on the other hand would lose revenues unless their rate recovery procedures are adjusted to prevent the loss of profits due to customer owned generation and the erosion of utility sales from a public policy perspective deadweight losses would be introduced by market distorting federal incentives ranging annually from 30 to 150 million but these losses are much smaller than the estimated net social benefits of the federal cogeneration policy

the international effects of global financial uncertainty shocks abstract in this paper we study the impact of sudden rises in global financial uncertainty on small open economies to this end we extract a global factor from the realised volatilities of about 1000 risky asset returns from around the world we then analyse how shocks to this factor affect economic activity in 44 advanced and emerging small open economies by estimating local projections in a panel regression framework we find that shocks increasing global financial uncertainty have adverse consequences on output trade and unemployment while their impact on nominal variables is more heterogeneous across countries furthermore the effects are more severe in countries with a higher degree of trade or financial openness higher levels of vulnerabilities weaker institutions or during economic downturns

will policies to promote renewable electricity generation be effective evidence from panel stationarity and unit root tests for 115 countries abstract this study examines whether policies to promote renewable electricity generation are likely to be effective by applying panel unit root and stationarity tests to time series data on renewable electricity generation for 115 countries over the period 1980 2008 we find that for the panel as a whole and almost three quarters of the individual countries renewable electricity generation is characterized by a unit root this result implies that policies to promote renewable electricity generation such as renewable portfolio standards which result in annual increases in renewable energy and as such which represent permanent positive shocks to the long run growth path of renewable electricity generation will be more effective in increasing renewable electricity generation than policies with a pre specified time horizon

towards an ecological economics of sustainability abstract persistent disagreement both as to the interpretation to be given to sustainability and as to the relation between ecological and economic sustainability has hindered the development of an ecological economics of sustainable resource use this paper identifies the main concepts of sustainability deriving from the two disciplines in order to explore the difference implied by an ecological approach to the problem it is argued that present economic and ecological approaches are largely disjoint and that they address basically different phenomena by combining the efficiency requirements of what is usually thought of as economic sustainability with the stability requirements of an ecological approach it is shown that an intertemporally efficient allocation of resources that satisfies the conditions for constant levels of consumption is not necessary to assure ecological sustainability ecological sustainability requires that the allocation of economic resources should not result in the instability of the economy environment system as a whole

the art of long term thinking a bridge between sustainability science and politics abstract policy makers are dependent upon scientific knowledge however scientific results cannot be applied straightforwardly in practical decision making we deploy kant s term power of judgment the human capacity to apply general insights to specific contingent situations to show that this problem is systematic rather than coincidental decision making requires the power of judgment to make use of scientific knowledge power of judgment in turns can be supported by heuristics against this background we focus on sustainability politics and outline a heuristic for framing and analyzing sustainability problems because time is a key factor in relation to sustainability we distinguish three distinct concepts of time and argue that the economic concepts of stocks and institutions can be used to foster power of judgment with respect to these time concepts based on these concepts the heuristic serves to bridge the gap between scientific knowledge and practical decision making in sustainability politics

valuing unfamiliar and complex environmental goods a comparison of valuation workshops and internet panel surveys with videos abstract we compare two discrete choice experiments eliciting willingness to pay wtp for increased cold water coral protection in norway using valuation workshops and an internet panel survey with videos the video presentation provides the same visual presentation of information about the good and valuation task as in the valuation workshop in doing so we are the first to compare these survey modes the two survey modes perform equally well with respect to sampling but the internet survey gives significantly lower wtp estimates we identify a large number of status quo sq choosers in the internet survey that partly explain this result furthermore respondents who speed through the survey questionnaire and believe the survey to be inconsequential are more likely to be sq choosers while an internet survey is a fast and cost effective way of obtaining a representative population sample the potential biases in the valuation of complex and unknown environmental goods outlined here should be carefully addressed in future internet panel surveys

federal policies for renewable electricity impacts and interactions abstract three types of policies that are prominent in the federal debate over addressing greenhouse gas emissions in the united states are a cap and trade program ctp on emissions a renewable portfolio standard rps for electricity production and tax credits for renewable electricity producers each of these policies would have different consequences and combinations of these policies could induce interactions yielding a whole that is not the sum of its parts this paper utilizes the haiku electricity market model to evaluate the economic and technology outcomes climate benefits and cost effectiveness of three such policies and all possible combinations of the policies a central finding is that the carbon dioxide co2 emissions reductions from ctp can be significantly greater than those from the other policies even for similar levels of renewable electricity production since of the three policies ctp is the only one that distinguishes electricity generated by coal and natural gas it follows that ctp is the most cost effective among these approaches at reducing co2 emissions an alternative compliance payment mechanism in an rps program could substantially affect renewables penetration and the electricity price effects of the policies hinge partly on the regulatory structure of electricity markets which varies across the country

does economic policy uncertainty in the u s influence stock markets in china and india time frequency evidence this paper uses continuous and discrete wavelet tools to evaluate the dynamic correlation and causality between the u s economic policy uncertainty epu and stock markets in china and india from

time varying business volatility and the price setting of firms abstract does time varying business uncertainty volatility affect the price setting of firms and in what way we estimate from the micro data of the german ifo business climate survey the impact of idiosyncratic volatility on the extensive margin of firm level price setting behavior heightened uncertainty increases the probability of a price change suggesting that for price setting the volatility effect dominates the wait and see effect in a second step we use structural vector autoregressions to estimate the effects of uncertainty on the intensive pricing margin higher uncertainty leads to an increase in price dispersion and to larger price adjustments

exogenous uncertainty and the identification of structural vector autoregressions with external instruments we provide necessary and sufficient conditions for the identification of structural vector autoregressions svars with external instruments considering the case in which r instruments are used to identify g structural shocks of interest r g 1 novel frequentist estimation methods are discussed by considering both a partial shocks identification strategy where only g structural shocks are of interest and are instrumented and in a full shocks identification strategy where despite g structural shocks are instrumented all n structural shocks of the system can be identified under certain conditions the suggested approach is applied to empirically investigate whether financial and macroeconomic uncertainty can be approximated as exogenous drivers of u s real economic activity or rather as endogenous responses to first moment shocks or both we analyze whether the dynamic causal effects of non uncertainty shocks on macroeconomic and financial uncertainty are signicant in the period after the global financial crisis

incommensurability and monetary valuation at the very heart of environmental cost benefit analysis cba is the claim that benefits and costs can be expressed in terms of money and hence made comparable in particular cba puts all benefits and costs on a cardinal monetary scale it assumes monetary commensurability a significant literature in ethics and political philosophy has arisen which doubts this assumption but has so far had little impact on the theory or practice of cba in light of this the paper assesses the defense of monetary commensurability offered by cost benefit analysts and the wider economics literature

myths and facts about electricity in the u s south this paper identifies six myths about clean electricity in the southern u s these myths are either propagated by the public at large shared within the environmental advocacy culture or spread imperceptibly between policymakers using a widely accepted energy economic modeling tool we expose these myths as half truths and the kind of conventional wisdom that constrains productive debate in so doing we identify new starting points for energy policy development climate change activists may be surprised to learn that it will take more than a national renewable electricity standard or supportive energy efficiency policies to retire coal plants low cost fossil generation enthusiasts may be surprised to learn that clean generation can save consumers money even while meeting most demand growth over the next 20 years this work surfaces the myths concealed in public perceptions and illustrates the positions of various stakeholders in this large u s region

are we consuming too much this paper articulates and applies frameworks for examining whether consumption is excessive we consider two criteria for the possible excessiveness or insufficiency of current consumption one is an intertemporal utility maximization criterion actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility the other is a sustainability criterion which requires that current consumption be consistent with non declining living standards over time we extend previous theoretical approaches by offering a formula for the sustainability criterion that accounts for population growth and technological change in applying this formula we find that some poor regions of the world are failing to meet the sustainability criterion in these regions genuine wealth per capita is falling as investments in human and manufactured capital are not sufficient to offset the depletion of natural capital

a new approach to identifying the real effects of uncertainty shocks this article introduces the use of the sign restrictions methodology to identify uncertainty shocks we apply our methodology to a class of vector autoregression models with stochastic volatility t

energy efficiency as a resource in state portfolio standards lessons for more expansive policies abstract in this paper state electricity portfolio standards in the u s are analyzed to examine how energy efficiency is being created as a particular kind of resource through this type of climate change governance such policies can incentivize energy efficiency by requiring or encouraging electricity providers to meet a certain percentage of their demand through energy efficiency measures north carolina s portfolio standard is used as an in depth case study to identify factors that are then compared across all 36 states that include energy efficiency as part of a portfolio requirement or goal the main finding of this study is that state portfolio standards tend to emphasize demand side energy efficiency or energy efficiency on the customer s side of the electricity meter and only rarely incentivize a full range of both demand side and supply side efficiency changes as a result the amount of energy efficiency and climate change mitigation benefits that are likely to result from this type of portfolio standard policy tool are limited from this analysis lessons are drawn out for crafting stronger portfolio standards that incentivize a wider range of efficiency changes across electricity networks

fragility and the effect of international uncertainty shocks abstract when economic systems are fragile even modest shocks for example a shock to international capital movements can have strong negative effects on key macroeconomic fundamentals this paper proposes a large scale bayesian vector autoregression with factor stochastic volatility to investigate the macroeconomic consequences of international uncertainty shocks in g7 countries and shows that uncertainty increases fragility the factor structure enables us to identify an international uncertainty shock by assuming that it is the joint volatility process that determines the dynamics of the variance covariance matrix of the common factors to allow for first and second moment shocks we moreover assume that the uncertainty factor enters the var equation as an additional regressor our findings suggest that an international uncertainty shock has negative effects across all economies and variables under consideration leading to strong declines in output prices exports interest rates and equity prices the precise degree of fragility varies across countries a simple correlation exercise suggests that structural differences may be partially responsible for the observed differences