the reformed eu ets intertemporal emission trading with restricted banking abstract with the increase of the linear reduction factor the implementation of the market stability reserve and the introduction of the cancellation mechanism the eu ets changed fundamentally we develop a discrete time model of the intertemporal allowance market that accurately depicts these reforms assuming that prices develop with the hotelling rule as long as the aggregated bank is non empty a sensitivity analysis ensures the robustness of the model results regarding its input parameters the accurate modelling of the eu ets allows for a decomposition of the effects of the individual amendments and the evaluation of their cost effectiveness the market stability reserve shifts emissions to the future but is allowance preserving a one time cancellation reduces the overall emission cap increasing allowance prices in the long run but does not significantly impact the emission and price path in the short run the increased linear reduction factor leads with 9 billion cancelled allowances to a stronger reduction than the cancellation mechanism and is therefore the main price driver of the reform

comparing policies to confront permit over allocation abstract instability in cap and trade markets particularly with respect to permit price collapses has been an area of concern for regulators to that end several policies including hybrid price quantity mechanisms and the newly introduced market stability reserve msr systems have been introduced and even implemented in some cases i develop a stochastic dynamic model of a cap and trade system parameterized to values relevant to the european union s emission trading system eu ets to analyze the performance of these policies aimed at adding stability to the system or at least at reducing perceived over allocations of permits results suggest that adaptive allocation mechanisms such as a price collar or msr can reduce permit over allocations and permit price volatility in a more cost effective manner than simply reducing scheduled permit allocations however it is also found that the performance of these adaptive allocation policies and in particular the msr are greatly affected by assumed discount rates and policy parameters

how can market mechanisms for forest environmental services help the poor preliminary lessons from latin america summary market mechanisms for forest environmental services are a new approach for conservation but there is also an increasing interest in the derived developmental benefits of these mechanisms we first propose a conceptual framework for future research on the livelihood impacts of environmental service markets we then review eight latin american case studies on carbon sequestration and watershed protection market initiatives finding positive local income effects in most cases more land tenure security and socioinstitutional strengthening in some cases but some negative effects also we recommend pro poor policy measures such as reducing smallholders transaction costs and removing inappropriate access restrictions

carbon tax or emissions trading an analysis of economic and political feasibility of policy mechanisms for greenhouse gas emissions reduction in the mexican power sector this study provides a comparative assessment of carbon pricing instruments for the mexican electricity sector contrasting a carbon tax with an emissions trading scheme ets the assessment is per

reprint of price and quantity collars for stabilizing emission allowance prices laboratory experiments on the eu ets market stability reserve abstract we report on laboratory experiments with financially motivated participants comparing alternative proposals for managing the time path of emission allowance prices in the face of random firm specific and market level structural shocks market outcome measures such as social surplus and price variability are improved by the use of a price collar auction reserve price and soft price cap comparable performance enhancements are not observed with the implementation of a quantity collar that adjusts auction quantities in response to privately held inventories of unused allowances in some specifications the quantity collar performed worse than no stabilization policy at all the experiment implemented a specific set of structural elements and extrapolation to other settings should be done with caution nevertheless an examination of the observed behavioral patterns and deviations from optimal behavior suggests that a price collar has an important although perhaps not exclusive role to play in constructing an effective market stability policy

dynamic supply adjustment and banking under uncertainty in an emission trading scheme the market stability reserve abstract we study the impact of a supply management mechanism smm similar to the market stability reserve proposed in 2015 which preserve the overall emissions cap and we comment on the recent cap changing amendments we provide an analytical description of the conditions under which an smm alters the emissions abatement paths affecting the expected length of the banking period and its variability while abatement strategies of risk neutral firms solely depend on the former for risk averse firms changes in the latter would lead to higher risk premia accelerated depletion of the bank and consequently further reduction of abatement and allowance prices cancellation of part of the reserve could partially outweigh the effect on risk premia sustaining allowance prices

policy options to improve the effectiveness of the eu emissions trading system a multi criteria analysis abstract this paper considers several policy options which have been proposed to improve the functioning of the ets these options require an intervention either on the ets cap 30 target set aside carbon central bank long term target or on the carbon price european and national price floor we analyse the impact of each policy on the ets carbon price and emissions a multi criteria evaluation method is applied to compare the policy options against a plurality of environmental economic and procedural criteria we find that the final ranking depends on the goals to be achieved i e the relative weights attributed to the criteria when policymakers want mainly to support the carbon price both in the short and long run while improving ets flexibility and harmonization the ccb and the eu price floor are respectively ranked as first and second best options as the preference for environmental and implementation goals gradually increases the position of the eu price floor and ccb options tend to invert the 30 target should be adopted when reducing emissions is the priority goal while a national price floor is the worst option in this case nevertheless self interested states looking for a relatively quick feasible solution may find it optimal

institutional ownership of stock and dimensions of corporate social performance an empirical examination collectively institutions own an increasing proportion of outstanding corporate equities as an emergent force in shaping corporate america the linkages between institutional ownership and corporate social performance csp require empirical examination not only do corporate policy makers need to know those areas where social performance may lure or inhibit capital infusions lawmakers also need a better understanding of the social forces guiding corporate policy as anticipated this study found a positive relationship between the amount of institutional ownership of corporate stock and a company s social responsiveness as measured by the representation of women on its board of directors however no statistically significant relationship with social responsibility as measured by charitable giving was found the exemplar of social issues management compliance with the sullivan principles showed an unexpected negative relationship with the level of institutional ownership

designing payments for environmental services in theory and practice an overview of the issues abstract payments for environmental services pes have attracted increasing interest as a mechanism to translate external non market values of the environment into real financial incentives for local actors to provide environmental services es in this introductory paper we set the stage for the rest of this special issue of ecological economics by reviewing the main issues arising in pes design and implementation and discussing these in the light of environmental economics we start with a discussion of pes definition and scope we proceed to review some of the principal dimensions and design characteristics of pes programs and then analyze how pes compares to alternative policy instruments finally we examine in detail two important aspects of pes programs their effectiveness and their distributional implications pes is not a silver bullet that can be used to address any environmental problem but a tool tailored to address a specific set of problems those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers pes is based on the beneficiary pays rather than the polluter pays principle and as such is attractive in settings where es providers are poor marginalized landholders or powerful groups of actors an important distinction within pes is between user financed pes in which the buyers are the users of the es and government financed pes in which the buyers are others typically the government acting on behalf of es users in practice pes programs differ in the type and scale of es demand the payment source the type of activity paid for the performance measure used as well as the payment mode and amount the effectiveness and efficiency of pes depends crucially on program design

higher price lower costs minimum prices in the eu emissions trading scheme this paper examines the introduction of a price floor in an emissions trading system ets when some emissions are regulated outside of the ets we theoretically characterize the conditions under which a price floor enhances welfare using a numerical simulation model of the european union we find that moderate minimum prices in the eu ets can reduce the costs of eu climate policy by up to thirty percent we also find that due to tax interaction effects the optimal minimum price in the eu ets should be about four times higher than the average marginal abatement cost in non ets sectors this article is protected by copyright all rights reserved

eu climate policy up to 2020 an economic impact assessment in its fight against climate change the eu is committed to reducing its overall greenhouse gas emissions to at least 20 below 1990 levels by 2020 to meet this commitment the eu builds on segmented market regulation with an eu wide cap and trade system for emissions from energy intensive installations ets sectors and additional measures by each eu member state covering emission sources outside the cap and trade system the non ets sector furthermore the eu has launched additional policy measures such as renewable energy subsidies in order to promote compliance with the climate policy target basic economic reasoning suggests that emission market segmentation and overlapping regulation can create substantial excess costs if we focus only on the climate policy target in this paper we evaluate the economic impacts of eu climate policy based on numerical simulations with a computable general equilibrium model of international trade and energy use our results highlight the importance of initial market distortions and imperfections as well as alternative baseline projections for the appropriate assessment of eu compliance cost

blue carbon knowledge gaps critical issues and novel approaches blue carbon the carbon stored and sequestered in mangrove forests seagrass meadows and tidal salt marshes is considered a cost effective means to achieve positive climate change mitigation and adaptation outcomes blue carbon is therefore of considerable interest to the scientific and policy communities and is frequently discussed in relation to carbon markets and climate finance opportunities this paper identifies peer reviewed and gray literature documents that discuss blue carbon in the context of finance and market mechanisms the document set is analyzed both quantitatively and qualitatively and the principal scientific economic regulatory social and management issues that emerge are discussed the study reveals that 1 the blue carbon literature is dominated by technical and policy commentary with a dearth of research into practical social considerations and a stark absence of private sector perspectives 2 there is confusion over the nature and role of important concepts including private and public sector finance and instruments and 3 understanding of the important issues of investment priorities and risk considerations is also limited this paper therefore identifies gaps in the blue carbon literature clarifies critical concepts and issues and proposes novel pathways for blue carbon research and project development

overlapping efforts in the eu emissions trading system abstract according to the phase iv 2021 2030 rules of the eu ets the total amount of emission permits allocated to firms is not fixed but endogenous this implies that a national climate policy that overlaps with the ets can have an impact on total aggregate emissions roughly speaking if firms increase their holdings of emission permits the total amount of permits allocated is reduced this paper analytically investigates how an overlapping national policy affects the aggregate bank of emission permits if marginal abatement costs are not too convex national climate policies increase banking and thus tend to reduce overall emissions

assessing the implementation of the market stability reserve abstract in october 2015 the european parliament has established a market stability reserve msr in the phase 4 of the eu ets as part of the 2030 framework for climate policies in this paper we model the eu ets in presence of the market stability reserve msr as it is defined by that decision and investigate the impact that such a measure has in terms of permits price output production and banking strategies to do so we build an inter temporal model in which polluting firms competing in an homogeneous good market are price takers in a permits market and face an uncertain demand our main finding is that the msr succeeds in increasing the permits price correcting an excess supply and conversely decreasing it in case of excess demand however when the output demand is stochastic the msr may alter the arbitrage conditions that determine permits prices in some cases which depend on the extend of the demand variation unintended effects on the price pattern appear this in turns may adversely affect welfare

does more stringent environmental regulation induce or reduce technology adoption when the rate of technology adoption is inverted u shaped abstract we show that for a broad class of technologies the relationship between policy stringency and the rate of technology adoption is inverted u shaped this happens when the marginal abatement cost mac curves of conventional and new technologies intersect which invariably occurs when emissions are proportional to output and technological progress reduces emissions per output this outcome does not result from policy failure on the contrary in social optimum the relationship between the slope of the marginal damage curve and the rate of technology adoption is also inverted u shaped under more general conditions these curves can look even more complicated e g such as inverted w shaped

the economics of pollution permit banking in the context of title iv of the 1990 clean air act amendments abstract this paper presents a model of the collective emission permit banking behavior of electricity generating units affected by title iv of the clean air act amendments of 1990 a rigorous treatment of the constraint that pollution permits cannot be borrowed from future allocations is introduced this approach enables an analysis of the impact of future changes in electricity demand regulations and technologies on the present permit price and emissions level the effect of uncertainty on the banking behavior is also explored

a model of intertemporal emission trading banking and borrowing abstract this paper provides a general treatment of emission trading banking and borrowing in an intertemporal continuous time model using optimal control theory the decentralized behavior of firms is shown to lead to the least cost solution attainable under joint cost minimization explicit solutions for the time paths of emissions and permit prices are derived when firms are allowed to both bank and borrow and when firms are only allowed to bank emission permits the policy implications of emission banking and borrowing are discussed

emissions trading systems with cap adjustments abstract emissions trading systems etss with fixed caps lack provisions to address systematic imbalances in the supply and demand of permits due to changes in the state of the regulated economy we propose a mechanism which adjusts the allocation of permits based on the current bank of permits the mechanism spans the spectrum between a pure quantity instrument and a pure price instrument we solve the firms emissions control problem and obtain an explicit dependency between the key policy stringency parameter the adjustment rate and the firms abatement and trading strategies we present an analytical tool for selecting the optimal adjustment rate under both risk neutrality and risk aversion which provides an analytical basis for the regulator s choice of a responsive ets policy

direct conservation payments in the brazilian amazon scope and equity implications abstract this article looks into the scope and equity implications of applying payments for environmental services pes as a redd implementation mechanism in the brazilian amazon we establish a set of economic and institutional preconditions for pes to become a feasible and cost effective conservation mechanism we proceed with a macro scale spatial analysis and overlay of opportunity costs deforestation patterns carbon services and land tenure in order to assess where these conditions hold we then screen how the benefits of potential pes schemes might be distributed across different socioeconomic groups of service providers in different land tenure categories our economic quantitative analysis though sensitive to documented assumptions suggests that under current carbon prices the economic preconditions are in place to pay for avoided deforestation in over half of threatened forests over the next decade unfortunately the same optimism does not apply to institutional preconditions land grabbing insecure tenure overlapping claims and lacking information on private tenure constitute real medium term impediments to pes if payments were to accrue to current landholders regardless of current tenure insecurities large landowners who account for about 80 of all deforestation would reap the highest benefits though per capita benefits other tenure categories are also high schemes that closely align payments with opportunity costs are preferable for cost effectiveness and not necessarily more inequitable in outcomes essentially pes systems cannot substitute command and control measures the former depend on the latter for basic governance systems to secure effective rights of exclusion which land stewards essentially need in order to become reliable service providers

an institutional analysis of payments for environmental services abstract in this paper the characteristics and functioning of pes is analyzed from an institutional perspective while in theory pes is seen as a market solution to environmental problems as an alternative to state hierarchical and community governance a review of a large amount of case studies shows that pes in practice depends rather fundamentally on state and or community engagement hence pes are foremost a reconfiguration of the roles of public bodies and communities becoming core intermediaries or buyers first to establish pes rights to the land that delivers the environmental service must be clarified this demands public action second transacting over environmental amenities is very costly creating markets for environmental services depends therefore crucially on state and community facilitation hence buyers are often public agencies high transaction costs also influence price setting payments do not follow the market format as intermediaries frequently are setting the price with users often being unaware even of the fact that they pay finally the distinction between payments as incentives and as fair compensations is emphasized while payments may strengthen community relations and simplify action for environmental care they may also introduce a purely instrumental logic and in some cases worsen the environmental status by crowding out environmental virtues for the future greater awareness of these dynamics is warranted

emissions trading electricity restructuring and investment in pollution abatement this paper analyzes an emissions trading program that was introduced to reduce smog causing pollution from large stationary sources using variation in state level electricity industry restructuring activity i identify the effect of economic regulation on pollution permit market outcomes there are two main findings first deregulated plants in restructured electricity markets were less likely to adopt more capital intensive environmental compliance options as compared to regulated or publicly owned plants second as a consequence of heterogeneity in electricity market regulations a larger share of the permitted pollution is being emitted in states where air quality problems tend to be more severe jel l51 l94 l98 q53 q58 when the us federal government first began regulating major sources of air pollution in the 1960s the conventional approach to meeting air quality standards involved establishing maxi mum emissions rates or technology based standards for regulated stationary sources however economists have long maintained that an emissions permit market could more efficiently coor dinate pollution abatement activities provided a series of assumptions are met over the past few decades market based cap and trade cat approaches to regulating emissions from industrial point sources have become a centerpiece of environmental regulation in the united states in the theoretical first best permit market equilibrium the total social cost of meeting an emis sions cap is minimized each firm chooses a level of pollution abatement such that its marginal cost of reducing pollution is set equal to the social marginal benefit from emissions reduction in practice preexisting distortions in product markets that are subject to cat regulation may interfere with the emissions permit market s ability to operate efficiently this paper studies the effects of electricity market regulation on permit market outcomes in the context of a major us emissions trading program the nox budget program the recent wave of electricity industry restructuring in the united states has resulted in significant interstate variation in economic regulation consequently facilities in the same cat program face very different economic regu lation and investment incentives in their respective electricity markets whereas rate base regu lated plants are guaranteed to earn a rate of return on prudent investments in pollution abatement equipment deregulated plants operating in restructured electricity markets are offered no such

endogenizing the cap in a cap and trade system assessing the agreement on eu ets phase 4 in early 2018 a reform of the world s largest functioning greenhouse gas emissions cap and trade system the eu emissions trading system ets was formally approved the reform changed the main principles of the system by endogenizing the emissions cap we show that the emissions cap is now affected by the allowance demand and is therefore no longer set directly by eu policymakers as a consequence national policies that reduce allowance demand can now reduce long run cumulative emissions which is not possible in a standard cap and trade system using a newly developed dynamic model of the eu ets we show that policies that reduce allowance demand can have substantial effects on cumulative emissions after the reform model simulations also suggest that the reform reduces long run cumulative emissions and to a lesser extent reduces emissions in the short run even so the reform has a small short run impact on the currently large allowance surplus

voluntary emission trading potential of turkey abstract climate change is likely to cause serious market failures and carbon trading as a market instrument can help correct its negative impacts the global carbon markets established to combat climate change include regulatory and voluntary markets turkey cannot utilise regulatory carbon markets under the kyoto protocol as a result of her unique position in the unfccc some offsetting projects in turkey have benefitted only voluntary emission trading for the reduction of ghg emissions due to on going climate change negotiation under the unfccc it seems that turkey will not use the current regulatory carbon markets thus turkey should promote the use of and participation in voluntary carbon markets in this article emission reduction potential via energy efficiency renewable energy and solid waste management and corresponding offsetting of credits with their estimated prices is investigated for the period between 2013 and 2020 the emission reduction potential for energy efficiency renewable energy and solid waste management projects are estimated at 403 312 and 356 million tons of co 2 equivalent emissions respectively totalling 1 071 million tons of co 2 equivalent the total revenue of the carbon certificates are estimated in the range of 19 775 33 386 million us dollars for the same period

soft and hard price collars in a cap and trade system a comparative analysis we use a stochastic dynamic framework to compare price collars price ceilings and floors in a cap and trade system with uncertainty in the level of baseline emissions and costs we consider soft collars which provide limited volume of additional emission allowances a reserve at the price ceiling and hard collars which provide an unlimited supply of additional allowances thereby preventing allowance prices from exceeding the price ceiling conversely allowances are removed from the market if prices fall to the floor we find that increasing the size of the reserve strictly lowers expected net present values of compliance costs however there is a diminishing effect as the allowance reserve is expanded most of the expected cost savings are achieved with a modest reserve consequently a rather limited soft price collar could provide considerable assurance about cost while preventing the possibility that emissions could spiral out of control

can payments for environmental services help reduce poverty an exploration of the issues and the evidence to date from latin america summary this paper examines the main ways in which payments for environmental services pes might affect poverty pes may reduce poverty mainly by making payments to poor natural resource managers in upper watersheds the extent of the impact depends on how many pes participants are in fact poor on the poors ability to participate and on the amounts paid although pes programs are not designed for poverty reduction there can be important synergies when program design is well thought out and local conditions are favorable possible adverse effects can occur where property rights are insecure or if pes programs encourage less labor intensive practices 2004 elsevier ltd all rights reserved

on backstops and boomerangs environmental r d under technological uncertainty abstract in areas such as climate change the recent economic literature has been emphasizing and addressing the pervasive presence of uncertainty this paper considers a new and salient form of uncertainty namely uncertainty regarding the environmental characteristics of green innovations here rd ii a decreasing probability of finding a backstop leads to the toleration of higher pollution levels slower rd iii learning about the probability of a backstop is driven by failures only and leads to decreasing research incentives and iv small to moderate delays in the resolution of technological uncertainty do not affect the optimal policy

poor household participation in payments for environmental services lessons from the silvopastoral project in quindio colombia as the use of payments for environmental services pes approaches in developing countries has grown concern has arisen over the ability of poorer households to participate this paper uses data from a pes project implemented in quindio colombia to examine the extent to which poorer households that are eligible to participate are in fact able to do so the project provides a strong test of the ability of poorer households to participate in a pes program as it required participants to make substantial and complex land use changes the results show that poorer households are in fact able to participate at levels that are broadly similar to those of better off households moreover their participation was not limited to the simpler least expensive options transaction costs may be greater obstacles to the participation of poorer households than household specific constraints

business cycles and emission trading with banking abstract we propose an emission cap adjustment policy for an emission trading system ets that allows banking of allowances for later use and faces business cycle uncertainty the forward looking banking decisions cause a commitment problem with respect to regulator s next period allowance supply decision we tackle the commitment problem by focusing on the markov equilibrium of the policy the equilibrium policy has a surprisingly simple structure combining features from both price and quantity instruments the regulator s ability to choose a new cap for each period does not render banking obsolete but on the contrary makes banking an integral part of the equilibrium policy using data from the eu ets to calibrate the model we solve the markov equilibrium policy for the case of carbon emissions regulation and compare markov policies with and without the possibility to bank allowances a counterfactual analysis of the eu ets during the period of 2009 2013 shows that the optimal markov policy would have led to a steadier allowance price level and a stricter emission regulation than what was actually observed in the eu ets

a carbon price floor in the reformed eu ets design matters abstract despite the reform of the european emissions trading system eu ets discussions about complementing it with a carbon price floor cpf are ongoing this paper analyzes the effect of a european cpf in the reformed eu ets using a hotelling model of the eu ets amended by the market stability reserve msr and the cancellation mechanism two cpf designs are compared 1 a buyback program and 2 a top up tax the buyback program sets a minimum price for the allowances from the implementation year onwards after the announcement firms anticipate the cpf which immediately increases the carbon price to the discounted cpf level therefore firms emit less and bank more allowances leading to more intake into the msr and more cancellation of allowances the top up tax imposes a tax on emissions which enhances the market price of allowances to the cpf level from the implementation year onwards firms increase their short run emissions in anticipation of the upcoming tax only after the implementation year firms start to lower their emissions thus the effect on aggregate cancellation is ambiguous despite being equivalent in a static setting the design choice for the cpf matters in a dynamic context such as the eu ets

carbon sequestration and farm income in west africa identifying best management practices for smallholder agricultural systems in northern ghana abstract the interest in agricultural soils as global storage of carbon has increased in recent years along with the prospect of farmers participation in payment schemes under the clean development mechanism of the kyoto protocol thus a better understanding of agricultural practices that can increase soil carbon and enhance the livelihoods of farmers is necessary particularly in smallholder farming systems of west africa this study evaluates different crop management strategies both by their capacity to sequester carbon in agricultural soils and by their contribution to household income a case study in wa upper west region of ghana is used to test 48 different cropping strategies by means of a crop simulation model and a household level multiple criteria optimisation model each cropping strategy is evaluated after a 20 year simulation period by its capacity to accrue carbon in the soil by its economic performance at the plot level and by its contribution to the farm income with and without carbon payments a set of best management practices that concomitantly increase soil carbon and farm income are identified and classified by their cost of investment

do renewable energy policies reduce carbon emissions on caps and inter industry leakage abstract in a parsimonious two sector general equilibrium model we challenge the widely held tenet that within a cap and trade system renewable energy policies have no effect on carbon emissions if the cap does not capture all sectors we demonstrate that variations of a renewable energy subsidy change aggregate carbon emissions through an inter industry leakage effect we decompose this effect into intuitively intelligible components that depend in natural ways on measurable elasticity parameters raising the subsidy always reduces emissions if funded by a lump sum tax reinforcing recent findings that tightening environmental regulation can cause negative leakage however if the subsidy is funded by a levy on electricity it can increase emissions these results provide a valuable basis for an informed design of renewable energy policies and an accurate assessment of their effectiveness we highlight how a state of the art statistic used by governments to gauge such effectiveness virtual emission reductions is biased because inter industrial leakage effects are not captured

a cap and trade commitment policy with allowance banking we examine the planner s dynamic regulation problem in an emission trading system ets with allowance banking the planner sets the emissions cap for the next period after the current period allowance market has cleared but before knowing the next period s abatement cost realization this creates a time consistency problem when banking is possible we examine two policies to overcome the consistency problem a commitment solution and the markov perfect solution we show that the endogenous price floor generated by the banking demand becomes an integral feature of the two policies hence they can be best described as hybrid policies that combine elements from emissions taxes and tradable allowances this reveals new welfare implications that have an influence on instrument choice in the traditional prices versus quantities setup we compare the expected welfare outcomes of four different policy instruments the commitment policy the markov policy a pigouvian tax and a no banking ets we show that allowing banking can yield welfare gains compared to tax and quantity regulation with or without commitment

carbon markets 15 years after kyoto lessons learned new challenges abstract carbon markets are substantial and they are expanding there are many lessons from market experiences over the past eight years there should be fewer free allowances better management of market sensitive information and a recognition that trading systems require adjustments that have consequences for market participants and market confidence moreover the emerging market architecture features separate emissions trading systems serving distinct jurisdictions and a variety of other types of policies exist alongside the carbon markets this situation is in sharp contrast to the top down integrated global trading architecture envisioned 15 years ago by the designers of the kyoto protocol and raises a suite of new questions in this new architecture jurisdictions with emissions trading have to decide how whether and when to link with one another stakeholders and policymakers must confront how to measure the comparability of efforts among markets as well as relative to a variety of other polic

moral and conceptual issues in investment and finance an overview as director of the second east carolina university conference in applied philosophy it is my pleasure to introduce this fine collection of papers on moral and conceptual issues in investment and finance the essays address a wide range of topics south african disinvestment the professional responsibil ities of accountants decision theoretic problems for fiduciaries and the rights of employees in corporate takeovers to cite just a few examples consequently any attempt to somehow summarize or tie together all this material would be either extremely super ficial or far exceed the available space instead in what follows i try to supplement the papers first by offering some general observations about our con ference topic and secondly by identifying what seem to me to be some of the fertile areas for further research the title of our conference was meant to em phasize two points first although a number of philosophers and business scholars now study a field commonly called business ethics a more natural and general description of their interests might be philosophical issues in business the study of the particularly abstract foundational or normative aspects of business thus while topics such as the rights of employees or the social obligations of corporations are of course part of the philosophical study of business so are non normative or less explicitly normative questions such as whether and in what sense corporations are persons the extent to

the economic effects of climate change greenhouse gas emissions are fundamental both to the world s energy system and to its food production the production of co2 the predominant gas implicated in climate change is intrinsic to fossil fuel combustion specifically thermal energy is generated by breaking the chemical bonds in the carbohydrates oil coal and natural gas and oxidizing the components to co2 and h2o one cannot have cheap energy without carbon dioxide emissions similarly methane ch4 emissions an important greenhouse gas in its own right are necessary to prevent the build up of hydrogen in anaerobic digestion and decomposition one cannot have beef mutton dairy or rice without methane emissions climate change is the mother of all externalities larger more complex and more uncertain than any other environmental problem the sources of greenhouse gas emissions are more diffuse than any other environmental problem every company every farm every household emits some greenhouse gases the effects are similarly pervasive weather affects agriculture energy use health and many aspects of nature which in turn affects everything and everyone the causes and consequences of climate change are very diverse and those in low income countries who contribute least to climate change are most vulnerable to its effects climate change is also a long term problem some greenhouse gases have an atmospheric life time measured in tens of thousands of years the quantities of emissions involved are enormous in 2000 carbon dioxide emissions alone and excluding land use change were 24 billion metric tons of carbon dioxide tco2

rushing the impatient allowance reserves and the time profile of low carbon investments postponing the issue date of allowances in a cap and trade scheme by e g a reserve mechanism impacts the time profile of low carbon investments if the postponement constrains intertemporal arbitrage short term investments increase but long term investments are deterred this effect aggravates the shortage of long term investments at least partially attributed to firms impatience the cancellation of allowances agreed for phase iv of the eu ets is suitable to counteract the negative effects of cap neutral postponement on long term investments by making the reserve redundant all effects crucially depend on how firms form expectations about future allowance prices

banking and borrowing in the eu ets a review of economic modelling current provisions and prospects for future design this article deals with the issue of banking and borrowing in the context of the european union emissions trading scheme eu ets by attempting to provide a policy oriented unifying theoretical framework after describing the main features of the eu ets the core part of the article consists of variations of an inter temporal continuous time optimization model additional elements include flexibility measures currently discussed and proposed in other emissions trading systems usa australia which include the use of safety valves minimum price auctioning or offsets from domestic or international projects

participation in the world s first clean development mechanism forest project the role of property rights social capital and contractual rules abstract clean development mechanism cdm forest projects are perceived as an attractive way to both help mitigate climate change and transfer income to rural poor however to engender participation of small scale producers a cdm forest project must offer sufficient incentives while minimizing their costs of participation all the while respecting the need for additionality property rights social capital and contractual rules are critical in the success of cdm forest projects in this paper we ask what factors affect participation in the world s first cdm project established in guangxi province china using village level surveys we find that although the project facilitates participation through carbon pooling and a share holding system much of the project land remains unforested we find that the primary reasons for the unforested regions are constrained contractual rules property rights allocation disputes and low levels of social capital in some villages

reconciling theory and practice an alternative conceptual framework for understanding payments for environmental services article i nfo this article provides an alternative and novel theoretical approach to the conceptualization and analysis of payments for environmental services pes we devote special emphasis to institutional and political economy issues which have been somewhat neglected in the literature on pes we argue that the coasean and pure market approach dominating the conceptualization of pes in the literature cannot be easily generalized and implemented in practice by contrast taking into account complexities related to uncertainty distributional issues social embeddedness and power relations permits acknowledging the variety of contexts and institutional settings in which pes operate the alternative approach presented in this introductory article to the special section may be more appealing to pes practitioners since while avoiding restrictive and prescriptive standpoints it allows some key sources of complexities they usually deal with on the ground to be more easily understood

carbon and livelihoods in post kyoto assessing voluntary carbon markets 1 introductionthe rst kyoto commitment period ends in 2012 with no clearconsensus regarding post kyoto governance there is nonethelessan increased recognition that efforts to adapt to climate change areas important as mitigation strategies world bank 2010 adaptationobjectivesbuildonlong termeffortstorelatemorefullyclimatechangemitigation embodied by the establishment of carbon markets to theenhancement of adaptive capacity and sustainable development smitand pilifosova 2003 ideally carbon marketscan contribute toadapta tion and mitigation objectives by reducing greenhouse gas emissionswhile also contributing to sustainable development outcomes a win win agenda that is explicitly represented in the dual goals of theclean development mechanism cdm milder et al 2010 estimatethat25to50 million low income landstewardscouldbene tfromcar bon markets alone by 2030 especially if carbon projects invest in liveli hood enhancing practices despite the rapid growth of carbon offsets over the past decade sustainable development objectives for the developing world are lag ging boydet al 2009 olsen 2007 sutterandparreno 2007 toun derstand the dynamics at play i relate mitigation actions driven byland based carbon projects to livelihood outcomes in the developingworld i focus speci cally on voluntary carbon markets vcms situating them within the wider carbon governance system i e cdm because these markets have been at the forefront of newdevelopments in carbon governance facilitating for instance theadvent of reduced emissions for deforestation and degradation redd mechanisms while carbon markets have the potential tofoster pro poor growth and environmental conservation in practicelinking carbon markets to livelihoods is greatly constrained by thecomplexity of socio economic political and environmental conditionson the ground as well as dif culty in building trust and linkages acrossscales 2 voluntary carbon market within the wider regulatory contextof carbon nancethe kyoto protocol 1997 was instrumental to the developmentof global carbon nance mechanisms including regulatory frame works such as the cdm and parallel voluntary markets these mar kets support the trade of carbon offsets to reduce sequester oravoid the emission of greenhouse gases globally despite their rapidgrowth during the past 7 years carbon markets have slowed downdue to their vulnerability to global economic crises as well as abroader uncertainty relating to the fate of the kyoto agreementpost 2012 linacre et al 2011 peters stanley et al 2011 whilethe total value of global carbonstabilized around 142 billion the pri mary cdm decreased by 50 since 2009 for a total value of 1 5 billion less than 2005 when the kyoto protocol was rst implemented linacre et al 2011 9 given these uncertainties lessons learnedfrom the voluntary carbon will be extremely valuable to assess howcarbon markets may evolve vcms are considerably smaller than regulatory frameworks with0 1 of the value and 0 02 of the volume of the global carbon market peters stanley et al 2011 11 yet their impact on the trajectory ofcarbon markets is not negligible in opposition to a declining cdm 131 2 mtco2e were traded in 2010 for an overall value of 424 millionusd 34 more than 2009 and even exceeding historic trends 45 ofthese credits were land based and 29 were related to the burgeon ing redd carbon market peters stanley et al 2011 11 the volumeof vcms even exceeded that of the primary cdm in 2010 fig 1 the cdm was developed to reach a twofold agenda reduce ghgemissions by facilitating the trade of carbon offsets between industri alized countries that rati ed the kyoto protocol and the developingworld while simultaneously contributing to sustainable developmentin the host countries while in theory synergies exist between thetwo objectives in practice there are trade offs between cost ef cient mitigation and sustainable development goals which resultlimited sustainable development outcomes boyd et al 2009 olsen 2007 sutter and parreno 2007 sustainable development efforts

what ails the european union s emissions trading system abstract the european union has adopted economists idea of curbing carbon emissions by establishing markets where bankable emissions allowances can be traded implicit in proofs that cap and trade minimizes the expected discounted cost of capping emissions however is that the regulator not intervene once the market is established otherwise market participants encounter uncertainties beyond what a social planner faces this paper discusses the equilibrium that results when private agents bank tradable allowances in the face of ongoing risk of future regulatory intervention and shows that the cap will be achieved at unnecessarily high cost even if no regulatory intervention actually occurs evidence that such risks are currently distorting eu ets comes from the depressed current spot price from the findings of schopp and neuhoff 2014 that speculators require multiples of the riskless rate of interest to bank permits and from the sensitivity of prices to votes and announcements about proposed future regulatory changes

procrastinating reform the impact of the market stability reserve on the eu ets abstract we study the impact of the market stability reserve msr on price and emission paths of the eu ets from 2019 onwards the msr will adjust the number of allowances auctioned as a function of the size of the surplus i e in times of a large surplus it shifts the issue date of allowances into the future in a perfectly competitive allowance market the msr only affects price and emission paths if the baseline equilibrium becomes unfeasible if the msr is binding prices increase in the short run but drop in the medium run relative to the baseline the msr increases price variability if uncertainty over future allowance demand is resolved while there is a surplus the long run cap is unaffected by both the msr and overlapping climate policies this contrasts the eu s objectives of improving the resilience of the eu ets and increasing synergies with overlapping climate policies

eu ets emissions under the cancellation mechanism effects of national measures abstract beginning in 2023 allowances held in the market stability reserve of the eu ets above the number of allowances auctioned the previous year will be cancelled in this paper we analyse the consequences of this new cancellation mechanism using numerical analysis we show that additional national abatement measures now have the potential to reduce total eu ets emissions a key insight is that for this to happen domestic emission reductions must occur early how early depends crucially on how the future demand for allowances evolve to facilitate an understanding of the rather complex system the reformed eu ets constitutes we present a series of extensions to the analysis to show how the results are affected by for example future emission levels technological development optimising agents and speculative trading in allowances