environmental regulation and u s economic growth in this article we quantify the costs of pollution controls by reporting the results of simulations of the growth of the u s economy with and without regulation for this purpose we have constructed a detailed model of the economy that includes the determinants of long term growth we have also analyzed the interaction between industries in order to capture the full repercussions of environmental regulations however we have not attempted to assess the benefits resulting from a cleaner environment we find that pollution abatement has emerged as a major claimant on the resources of the u s economy the cost of emission controls is more than 10 of the total cost of government purchases of goods and services

on the practical limits to substitution abstract this paper considers the arguments for weak vs strong sustainability the weak sustainability position held by many mainstream neoclassical economists such as solow and weitzman is that almost all kinds of natural capital can be substituted by man made capital the contrary position known as strong sustainability holds that many of the most fundamental services provided by nature cannot be replaced by services produced by humans or man made systems the paper discusses the limits of substitution from a physical point of view it concludes that while there is considerable scope for substitution in some domains the limits to substitutability in the medium term at least are real and important in effect the paper supports the strong sustainability position

ramsey discounting of ecosystem services most ecosystem services which are essential for human well being are globally declining while the production of consumption goods measured by gdp is still growing to adequately account for this opposite development in public cost benefit analyses it has been proposed based on a two goods extension of the ramsey growth model to apply good specific discount rates for manufactured consumption goods and for ecosystem services using empirical data for ten ecosystem services across five countries and the world at large we estimated the difference between the discount rates for ecosystem services and for manufactured consumption goods in a conservative estimate we found that ecosystem services in all countries should be discounted at rates that are significantly lower than the ones for manufactured consumption goods on global average ecosystem services should be discounted at a rate that is 0 9 pm 0 3 points lower than the one for manufactured consumption goods the difference is larger in less developed countries and smaller in more developed countries this result supports and substantiates the suggestion that public cost benefit analyses should use country specific dual discount rates one for manufactured consumption goods and one for ecosystem services

sustainability limited substitutability and non constant social discount rates abstract the paper shows how limited substitutability in consumption between different classes of goods affects the magnitude and time development of social discount rates it decomposes the discount rates into an absolute growth and a relative growth or substitutability effect the paper relates between good and intertemporal substitutability to the notions of weak and strong sustainability it analyzes under which circumstances low as opposed to high between good substitutability increases the weights given to long run environmental services

a probit latent variable model of nutrition information and dietary fiber intake nutrition information and intake data for a sample of u s household meal planners are used to estimate the effects of fiber specific information on dietary fiber intake the information variables are measured using survey questions on fiber content of foods attitude toward consuming fiber rich foods and awareness of fiber health links the evidence confirms the influence of nutrition information on fiber intake household income meal planner age smoking status vegetarian status race and ethnicity are major determinants of both information and intake education exerts a sizable intake effect by enhancing the information level direct and indirect effects of exogenous variables are reported

on welfare frameworks and catastrophic climate risks recent theoretical work in the economics of climate change has suggested that climate policy is highly sensitive to fat tailed risks of catastrophic outcomes weitzman 2009 68 such risks are suggested to be an inevitable consequence of scientific uncertainty about the effects of increased greenhouse gas concentrations on climate criticisms of this controversial result fall into three categories the first suggests that it may be irrelevant to cost benefit analysis of climate policy the second challenges the fat tails assumption and the third questions the behavior of the utility function assumed in the result this paper analyses these critiques and suggests that those in the first two categories have formal validity but that they apply only to the restricted setup of the original result which may be extended to address their concerns they are thus ultimately unconvincing critiques in the third category are shown to be robust however they open up new ethical and empirical challenges for climate economics that have thus far been neglected how should we value catastrophes as a society i demonstrate that applying results from social choice to this problem can lead to counterintuitive results in which society values catastrophes as infinitely bad even though each individual s utility function is bounded finally i suggest that the welfare functions traditionally used in climate economics are ill equipped to deal with climate catastrophes in which population size changes drawing on recent work in population ethics i propose an alternative welfare framework with normatively desirable properties which has the effect of dampening the contribution of catastrophes to welfare

the effect of income and food programs on dietary quality a seemingly unrelated regression analysis with error components this article employs new food guide pyramid servings data to measure how food intake is affected by income and two food programs the analysis uses a maximum likelihood estimator that combines the seemingly unrelated regression and one way error component models to account for two types of intrahousehold correlations participation in the food stamp program is associated with higher intake of meats added sugars and total fats participation in the special supplemental nutrition program for women infants and children is associated with lower intake of added sugars

health behavior health knowledge and schooling the positive correlation between schooling and good health is well documented one explanation is that schooling helps people choose healthier life styles by improving their knowledge of the relationship between health behaviors and health outcomes that is schooling improves the household s allocative efficiency in producing health this empirical study uses direct measures of health knowledge to test this explanation part of the relationship between schooling and the consumption of cigarettes alcohol and exercise is explained by differences in health knowledge however most of schooling s effects on health behavior remain after differences in knowledge are controlled for

willingness to accept willingness to pay and the income effect abstract the gap between willingness to pay wtp and willingness to accept wta has previously been studied by searching for evidence of substitutability the neoclassical hypothesis or status quo bias testing for neoclassical versus psychological theories of preferences we study the gap differently asking whether the observed pairs of wta and wtp are consistent with neoclassical preferences we use sugden s alternatives to the neoclassical theory of choice in i bateman k g willis eds valuing environmental preferences theory and practice of the contingent valuation method in the us eu and developing countries oxford university press oxford pp 152 180 chapter 6 result showing that the effect of income on wtp can be approximated from information on the ratio wta wtp drawing inferences from a meta analysis of 201 wta wtp ratios we conclude that the data are not consistent with neoclassical preferences

consumer demand for nutrition versus taste in four major food categories this study addresses the trade off between nutrition and taste in expenditure on breakfast cereal milk bread and soft drinks within each category products have similar cost and convenience but have markedly different flavor and nutritional content using annual expenditure data for a large sample of households participating in the acnielsen homescan system we regress a measure of healthiness on household demographics and market prices and find that households with college educated heads and higher incomes made significantly healthier choices in all four categories these effects are puzzling in that the nutritional differences between products were well known to consumers and there are no cost or convenience differences between them the presence of children was associated with less healthy choices especially for cereal and bread while older households made healthier choices in all categories except milk

demand for durable and nondurable goods environmental policy and consumer welfare if a tax on energy affects the demand for a nondurable good the stock of a durable good and the proportion of the energy consumption per unit of service of the durable good an integrated approach for investigating consumer demand for durables and nondurables is required the purpose of this paper is to employ the concept of a variable expenditure function with quasi fixed durable goods as arguments in order to derive a demand system for nondurable goods in prices of the nondurables in the stocks of durables and in variable expenditure from the envelope condition desired stocks of durables can be calculated and investment demand for durables can be determined for an application we choose a variable expenditure function based on the almost ideal demand specification and evaluate alternative environmental policy measures using the equivalent variation for comparing the welfare effects

environmental inequality and economic valuation i study how the economic value of a heterogeneously distributed environmental public good depends on how the endowment with this good and income are distributed i find that the effect of environmental inequality on the societal willingness to pay wtp for the environmental good is determined both by its substitutability and by the correlation of its provision with income specifically environmental inequality decreases societal wtp for substitutes but this effect is reversed if the environmental good is a complement or distributed strongly in favour of richer households moreover i show that richer households living in places where environmental good endowment is high increases decreases societal wtp if and only if the environmental good is a substitute for complement to consumption goods i propose novel adjustment factors for structural benefit transfer to control for differences in the spatial distribution of environmental goods using forest preservation in poland as an empirical example i find that societal wtp is up to 4 higher for equal access to forests and up to 8 higher for an equal distribution of both income and access to forests

discounting in the presence of scarce ecosystem services abstract the discount rate for cost benefit analysis has to take account of future scarcity of ecosystem services in consumption and production previous literature focuses on the first aspect and shows the importance of the relative price effect for given growth rates of consumption and ecosystem services this paper focuses on intermediate ecosystem services in production and shows that for limited substitutability and a low growth rate of these ecosystem services the growth rate of consumption and thus the discount rate declines towards a low value using a ramsey growth model the paper distinguishes three cases if ecosystem services can be easily substituted the discount rate converges to the usual value in the long term secondly if ecosystem services can be easily substituted in production but not in consumption the relative price effect is important finally and most interestingly if ecosystem services cannot be easily substituted in production the discount rate declines towards a low value and the relative price effect is less important another part of the previous literature has shown that a declining discount rate is the result of introducing several forms of uncertainty but this paper reaches that conclusion from an endogenous effect on the growth rate of the economy

the effect of subsistence on collapse and institutional adaptation in population resource societies abstract we extend the brander taylor model of population and resource development in an isolated society by adding a resource subsistence requirement to people s preferences this improves plausibility amplifies population overshoot and collapse and can destabilize the steady state and allows for complete cessation of non harvesting activities in line with archaeological evidence for many societies we then use bifurcation techniques to give a global analysis of four types of institutional adaptation an ad valorem resource tax and quotas on total resource harvest total harvest effort and per capita effort in all cases we find that a higher subsistence requirement makes it harder or often impossible for adaptation to avoid overshoot and collapse

limits to substitution between ecosystem services and manufactured goods and implications for social discounting this paper examines implications of limits to substitution for estimating substitutability between ecosystem services and manufactured goods and for social discounting based on a model that accounts for a subsistence requirement in the consumption of ecosystem services we provide empirical evidence on substitution elasticities we find an initial mean elasticity of substitution of two which declines over time towards complementarity we subsequently extend the theory of dual discounting by introducing a subsistence requirement the relative price of ecosystem services is non constant and grows without bound as the consumption of ecosystem services declines towards the subsistence level an application suggests that the initial discount rate for ecosystem services is more than a percentage point lower as compared to manufactured goods this difference increases by a further half percentage point over a 300 year time horizon the results underscore the importance of considering limited substitutability in long term public project appraisal

the derivation of discount rates with an augmented measure of income abstract most developed economies invest in public goods such as national defense education infrastructure and the environment discount rates used to evaluate such projects should reflect the rate of return on the current mix of investment opportunities rates derived from the productivity of private capital neglect returns beyond the market boundary the present paper derives discount rates using an augmented measure of national income inclusive of non market goods in an empirical application focusing on air pollution and climate damages in the united states economy the paper reports that the difference between augmented and market discount rates averages 0 3 percentage points from 1999 to 2014

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

is the income elasticity of environmental improvements less than one we estimated the income elasticity of environmental improvements for a number of european data sets the value of this parameter is consistently found to be less than one with few exceptions our findings are compared with state of the art contingent valuation studies from other countries we also compared our findings with those reported in the literature on charitable donations and corporate donations these studies show a similar pattern donations decrease as a percentage of income as income increases

cost prices and partially fixed factor proportions in energy substitution abstract the objective of this paper is to propose a new approach which combines the approaches to neoclassical substitutability and fixed factor proportions this is done by separating the quantity of an input in a committed part linked to the other inputs and in an uncommitted part which is free for substitution on the cost side this implies that the effective price of an input consists of the own price and of weighted prices of the other inputs where the weights determine the order of magnitude of linkage of the other inputs to one unit of this input a cost function with these cost prices as arguments has been employed and elasticities of prices and substitution have been estimated with u s data originally used by berndt and wood

general equilibrium effects of environmental policy a cge modeling approach estimation of emission control cost functions is often carried out in a partial equilibrium framework i e under the assumption that emission control measures have negligible effects on input and output prices in this paper a computable general equilibrium model is used for simulation of the impact on factor prices and resource allocation of reductions of so infx sup no infx su and co2 emissions thus the model includes markets for tradable emission permits and the equilibrium prices of permits reflect the marginal costs of emission control the results suggest that major emission reductions are likely to have general equilibrium effects and thus that emission control cost functions that fail to take these effects into account may give a distorted picture of the economic impact of emission control

income treatment effects in contingent valuation the case of the swedish predator policy this paper provides case study evidence on two relevant issues in estimating the relationship between wtp and income using contingent valuation 1 the choice of income measure and 2 the modelling choice addressing these issues a sensitivity analysis is performed on a dataset concerning implementation of the swedish predator policy the results show that the estimated income elasticity of wtp varies between 0 12 and 0 40 for the models estimated the main conclusion drawn from the analysis is that controlling for the number of adults in the household is important for finding a significant income effect when the household income measure is used besides this finding the empirical analysis finds little support for the hypothesis that the choice of income measure and modelling assumptions significantly influence the overall model fit

intergenerational discounting with intragenerational inequality in consumption and the environment it is now established that the consumption discount rate is determined by the growth of consumption multiplied by the elasticity of marginal utility but distributive concerns are rarely reflected in the literature assuming a social welfare function with inequality aversion we consider a consumption discount rate that can be decomposed into the growth effect and the intragenerational distribution effect the framework is then extended to include population change and inequality in the environment as an amenity in a utility with constant elasticity of substitution numerical examples illustrate that distributional effects turn non negligibly negative that may reduce consumption discount rate by 1 3 for plausible parameters once distribution is adjusted for both population and the environment

the control of co2 emissions and its economic impact an age model for a german state since it is believed that co2 is responsible for 55 of the greenhouse effect a co2 levy is now under consideration in several countries for an assessment of the macroeconomic implications of an integrated energy and environmental policy we employ an applied general equilibrium model age since all sectors of an economy and all private households contribute to co2 emission our model is a temporary equilibrium model with capacity extension under adjustment costs and with abatement activities for so2 and nox emissions

the concept and measurement of subsistence a survey of the literature abstract subsistence is a widely used concept but most of the time its precise meaning is not property stated this study attempts to provide an appropriate exposition of the concept by examining the manner in which it is used and the role it plays in different theoretical analyses and policy formulations it has been shown that contrary to the conventional notion of a minimum standard of physical needs only subsistence is an absolute minimum standard of physical and mental survival and productive efficiency the lowest standard of social desirability is given by the needs of physical and mental survival in addition to these the standard of subsistence includes the needs of physical and mental efficiency for productive living in the society the attainment of a certain minimum of physical mental and social magnitudes provides the standard of subsistence commodities or their characteristics are the needs of this standard income by providing the command over these needs affords an individual the capability to attain it hence income is used to characterize subsistence three different methods of subsistence determination have been identified the most commonly used methods the social and the scientific ones are found to be arbitrary the determination of subsistence from the analysis of the agents declaration or behavior seems to be a better method while the declaration or expenditure based studies suffer from various limitations studies based on the behavior of income earning offer a better direction

contingent valuation a new perspective after several decades of academic research on the contingent valuation cv method a consistent behavioral explanation of hypothetical bias is still lacking based on evidence from economics economic psychology and the political sciences i propose an explanation that is based on two simple working hypotheses about respondent behaviour in contingent valuation surveys the first hypothesis is that survey respondents are unable to form consistent preferences about unfamiliar goods unless the choice context offers reliable informative cues that can be rationally exploited in simplified heuristics the second hypothesis is that the probability and impact of strategic responses in dichotomous choice questions about public goods depends on the extent to which the presented hypothetical costs differ from the actual costs the literature on hypothetical bias is revisited in the light of these behavioral hypotheses i find that the hypotheses are generally supported by the empirical data moreover the hypotheses are able to explain several important empirical phenomena that previous research has not been able to explain in particular they solve the puzzle that pre election polls but not cv surveys are able to predict actual referendum outcomes and they explain why income effects on willingness to pay are lower in cv responses than in actual votes if confirmed by further studies the hypotheses will have important implications for future research and practice first the hypothetical costs presented in the dichotomous choice question should to be close enough to the actual costs to be credible to all respondents this can be achieved by specifying the costs as a percentage rather than absolute change in taxes second the respondents should be given the option to answer based on information about the positions of large parties and interest groups with known political orientation rather than based on the raw policy information theory and evidence suggest that this new survey paradigm largely eliminates the fundamental problems of the conventional stated preference methods

willingness to pay for improved air quality in sweden the aim of the paper is to quantify individual willingness to pay measures of improved air quality in sweden by using the contingent valuation method cvm such measures are important for policy makers when deciding about public investments and policy instruments in order to regulate environmental impacts e g from road transportation and industry the mean willingness to pay wtp for a 50 reduction of harmful substances where the respondents live and work was about 2000 sek year which is of the same order of magnitude as earlier stated preference studies in nordic countries most parameters in the econometric analysis had the expected sign wtp was increasing in income wealth and education it was larger for men members of environmental organizations people living in big cities which are on average more polluted and people who own their house or apartment it was lower for retired people however the additional wtp for people in big cities although significantly higher than for other people

environmental goods and the distribution of income the paper presents a theoretical investigation of the distributional impacts of environmental commodities it introduces an appropriate framework defines concepts for measuring benefits and examines the determinants of benefit incidence within this setup its emphasis is on methodology and on recognizing the relevant economic variables and information it turns out that in an equal preference model the magnitude of the income elasticity of marginal willingness to pay for an environmental good is the crucial variable determining progressivity it is related to a number of other elasticities which are more easily accessible to an empirical estimation

social security longevity and moral hazard abstract recently several authors have argued that social security can have positive effects on savings and welfare when individuals possess hidden information about their longevity that is when there is adverse selection in annuity markets this paper considers the related problem of the effects of social security when individuals can take hidden actions to affect their longevity that is when there is moral hazard in annuity markets in contrast to the adverse selection models we show that social security never raises welfare in a pure moral hazard economy as well social security may either increase or reduce longevity depending on the characteristics of the health related goods consumed it is suggested that a complete analysis of social security needs to consider both adverse selection and moral hazard

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

energy taxes in the netherlands what are the dividends in this paper the environmental and economic effects of the introduction of a unilateral energy tax in the netherlands are analysed using an applied general equilibrium age model the effects of a small user energy tax and a general energy tax are compared while taking into account different tax recycling mechanisms the model contains a great level of detail with respect to emissions and environmental indicators greenhouse effect acidification eutrophication and waste which is helpful for assessing environmental quality the results show that the introduction of a small environmental tax reform not only improves the environment but also raises non environmental welfare which is due to an improvement of the efficiency of the tax structure

progression under the benefit approach to the theory of taxation abstract the implications for progression of the benefit approach to the theory of taxation are studied in this paper it is concluded that the case for progression rests on the degree of substitutability between public and private goods

old age longevity and mortality contingent claims this paper analyzes the savings and longevity impacts of mortality contingent claims defined here as income measures such as annuities and life insurance under which earned income is contingent on the length of one s life the postwar increase in mandatory annuity and life insurance programs as well as the rapid increase in the life expectancy of older ages motivates a better understanding of the incentive effects that mortality contingent claims have on longevity related behavior we claim that these incentives in often alter the standard conclusions obtained about old age support when mortality is treated exogenously in particular we argue that annuities involve moral hazard effects that increase longevity and among other things introduce a positive interaction between public programs for health care and income support for the elderly programs that have grown enormously in developed countries

elasticities of demand and willingness to pay for environmental services in sweden are environmental services luxuriesor necessities are low income groupsrelatively more willing to pay forenvironmental improvements than high incomegroups the discussion on the shape of theenvironmental kuznets curve and environmentaljustice call for analyses that approach thesequestions following a survey based approachfor modelling the demand for public goods thispaper provides estimates of income and priceelasticities of demand for reduced marineeutrophication effects in the case of thebaltic sea using data from five swedishcontingent valuation studies point estimatesindicate that reduced marine eutrophicationeffects can be classified as a necessity and anordinary and price elastic service confidenceintervals show however that the classificationas a necessity is not statisticallysignificant income elasticities of willingnessto pay not to be confused with incomeelasticities of demand are estimated for abroad range of environmental services insweden a basic finding is that income tends toinfluence willingness to pay positively andsignificantly the elasticity estimates are inmost cases greater than zero but less thanunity indicating that the benefits ofenvironmental improvements tend to beregressively distributed in a cost benefitanalysis of a project suggesting environmentalimprovements distributional concerns thereforecall for an introduction of weights or at leasta sensitivity analysis of how weighting wouldchange decisions about the project s socialprofitability

sustainability of an economy relying on two reproducible assets evaluating the sustainability of a society requires a system of shadow or accounting values derived from the sustainability objective as a first step toward the derivation of such shadow values for a maximin objective this paper studies an economy composed of two reproducible assets each producing one of two consumption goods the effect of the substitutability between goods in utility is studied by postulating in turn neoclassical diminishing marginal substitutability perfect substitutability and perfect complementarity the degree of substitutability has strong effects on the maximin solution affecting the regularity or non regularity of the program and on the accounting values this has important consequences for the computation of genuine savings and the sustainability prospects of future generations

income inequality and willingness to pay for environmental public goods we study how the distribution of income among members of society and income inequality in particular affects social willingness to pay wtp for environmental public goods we find that social wtp for environmental goods decreases increases with income inequality if and only if environmental goods and manufactured goods are substitutes complements we derive adjustment factors for benefit transfer to control for differences in income distributions between a study site and a policy site for illustration we quantify how social wtp for environmental public goods depends on the respective income distributions for empirical case studies in sweden and the world at large we find that the adjustment for income inequality can be substantial

can china afford to commit itself an emissions cap an economic and political analysis as the world s second largest carbon emitter china has long been criticised as a free rider enjoying benefits from other countries efforts to abate greenhouse gas emissions but not taking due responsibilities of its own china has been singled out as one of the major targets at the subsequent negotiations after the kyoto curtain had fallen by analysing the historical contributions of inter fuel switching energy conservation economic growth and population expansion to china s co2 emissions during the period 1980 1997 this article first demonstrates that the above criticism cannot hold its ground next we analyse what the economic effects would be if china s carbon emissions in 2010 were cut by 20 and 30 respectively relative to the baseline we found that china s gnp losses under the two less restrictive carbon limits are in the same range as the often reported estimates for industrialised countries under very restrictive carbon limits then the article envisions some efforts and commitments that could be expected from china until its per capita income catches up with the level of middle developed countries by emphasising the win win strategies these efforts and commitments could be unlikely to severely jeopardise china s economic development and at the same time would give the country more leverage at the post kyoto climate change negotiations finally the article is concluded with the argument that combating global climate change is in china s interest it will be beneficial to a more sustainable development of the chinese economy as well as to the global climate

the effect of emission taxes and abatement subsidies on market structure abstract emission taxes and abatement subsidies are considered to be efficient measures for environment protection the purpose of this paper is to quantify their effects on industry output firm output and on the number of firms in the industry three types of market structure are under discussion perfect competition oligopoly and a dominant firm with a competitive fringe it turns out that emission taxes and abatement subsidies affect the structure of the polluting industry in opposite ways while the effects on industry s emissions are similar in direction but different

are ecosystem services replaceable by technology this paper assesses the evidence for and against the view that the processes that deliver ecosystem services are so fundamental within ecosystems that neither the services themselves nor the goods that they deliver to humans could be replaced technologically i consider cases where the natural processes have been replaced and also the probably more common and usually less invasive cases where they have been enhanced by technological interventions supporting services are probably least amenable to technology with the major exception of nutrient cycling which has been extensively replaced by the use of chemical fertilizers final services offer more examples of actual or potential replacement including the highly controversial example of geoengineering for climate regulation finally there are numerous examples of replacement technologies for environmental goods especially in the case of energy fossil and many renewable fuels fibres artificial fibres and biochemicals industrial pharmaceuticals the full economic costs of replacement technologies have rarely been explored and in some cases it appears that the replacement is more expensive than the natural service enhancement technologies in contrast supplement the output of ecosystem services and are probably in most cases more benign the doubts about true costs and the fact that many supporting and final services seem either irreplaceable or only replaceable at huge cost adds to the need to protect them

the transferability of benefit transfer contingent valuation of water quality improvements in costa rica abstract identical contingent valuation studies of willingness to pay wtp for improvements in coastal water quality were conducted in the town of jaco and city of puntarenas on the pacific coast of costa rica several common hypotheses for benefit transfer reliability were tested for the transfer of wtp estimates between the two communities as well as between districts within puntarenas this study finds no basis for the claim that the reliability of benefit transfer increases with proximity between the study site where wtp estimates are taken from and the policy site estimates are transferred to the claim that transfer of wtp adjusted by the benefit function outperforms transfers of unadjusted or simple income adjusted wtp is rejected for this particular study results also show that census type socio economic site characteristics are necessary but not sufficient to explain site specific differences in wtp the trade offs in designing valid and reliable benefit transfer studies with transferable results are discussed

sustainable development and resilience in ecosystems two new important developments in environmental and resource economics is presented non convex dynamics of ecosystems and wealth as an indicator of sustainable development non convex dynamics imply existence of resilience that is the robustness of systems to withstand exogenous perturbations resilience can be regarded as an insurance against flips of the system into different basins of stability sustainable development according to the bruntland report is the provision of productive resources to future generations to make it possible for them to live as well as the present generation thus the value of changes in productive assets is therefore an index of whether an economy is on a sustainable path or not resilience can be regarded as one such productive asset and the paper discusses how one can define the value of this asset

long term substitutability between environmental and man made goods abstract substitutability between environmental and man made goods plays a major role in the sustainability debate the notion of substitutability covers a continuous spectrum with perfect substitutability at one end and poor substitutability at the other in this paper it is shown that if economic growth sustains a sharp distinction emerges between perfect and poor substitutability without any intermediate interpretation of substitutability if poor substitutability prevails environmental resources will eventually constitute the major part of total consumption value we relate our results to baumol s disease and assess the implications of this phenomenon for the compensation of environmental losses

on modeling and interpreting the economics of catastrophic climate change with climate change as prototype example this paper analyzes the implications of structural uncertainty for the economics of low probability high impact catastrophes even when updated by bayesian learning uncertain structural parameters induce a critical tail fattening of posterior predictive distributions such fattened tails have strong im plications for situations like climate change where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages this paper shows that the economic consequences of fat tailed structural uncertainty along with unsureness about high temperature damages can readily outweigh the effects of discounting in climate change policy analysis

limits to substitution and irreversibility in production and consumption a neoclassical interpretation of ecological economics abstract there are many methodological approaches within ecological economics one of the principal modes of analysis is a modified version of the standard neoclassical model this paper examines the parallels which emerge between the ideas of some ecological economists concerning production and the ideas of others concerning consumption when these ideas are interpreted in the neoclassical paradigm it is well known that ecological economics is characterized by arguments concerning limits to substitution between inputs energy natural capital etc vs manufactured capital labor etc in production and the implications these have for sustainability however various authors have also expressed concerns regarding limits to substitution in consumption either between environmental assets and other goods or between basic needs commodities and other goods though the specific reasons for non substitution are different in the production and consumption cases the underlying theme is that individual commodities and other inputs have unique physical or other properties which make them poor substitutes ideas about irreversibility in production and economic development are also prominent in ecological economics likewise many authors have argued for similar irreversibilities in consumption behavior in analogy to the term technological change i coin the term preferential change to describe these phenomena the linking themes in this case are that the economy environment system is evolutionary in character and that external effects intended and unintended consequences of actions or processes imposed on other parties or resources are all pervasive

carbon taxes with exemptions in an open economy a general equilibrium analysis of the german tax initiative abstract sectoral exemptions from environmental regulation are applied in many countries to avoid adverse adjustment effects in specific industries the problem with exemptions is that they can make environmental policy more costly our paper analyzes the welfare costs of exemptions in environmental policy together with the issue of unilateral carbon taxes in an open economy several countries within the eu have introduced or contemplated unilateral taxes to reduce anthropogenic co2emissions taxes which are unilaterally imposed in an open economy can have significant impacts on production and employment of energy and export intensive industries to save jobs by maintaining international competitiveness most co2taxation schemes include exemptions for energy and export intensive industries as a compromise between environmental objectives and employment in these sectors this paper shows that such compromises are costly as the tax base narrows the dead weight loss increases our calculations illustrate this point in the framework of a static general equilibrium model for west germany calibrated to 1990 data we evaluate the excess costs of exemptions as a means of saving jobs in specific industries relative to an alternative instrument a uniform carbon tax cum wage subsidy which achieves an identical level of national emissions and employment at a fraction of the cost

choices and the value of natural capital sustainability requires maintaining opportunities for future generations so they can meet their needs opportunities are passed to future generations through a set of capital assets nature provides an important class of these assets but markets seldom reveal the marginal value of natural capital rather the marginal social worth or asset price must be imputed based on intertemporal exchange in the context of assessing whether intertemporal allocation rules lead to sustainable development appropriate asset prices must be based on the actual allocations and trade offs society makes therefore measuring economic programmes that enable the measurement of asset prices is an important empirical task we review the theory of measuring natural capital asset prices and discuss the key elements of measuring economic programmes that enable the measurement of natural capital asset prices we place the measurement of economic programmes and natural capital asset prices in the context of wealth based sustainability metrics