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result(s) for
"van den Bergh, Jeroen C. J. M"
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Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences
Established environmental policy theory is based on the assumption of homo economicus. This means that people are seen as fully rational and acting in a self-regarding manner. In line with this, economics emphasizes efficient policy solutions and the associated advantages of price incentives. Behavioral economics offers alternative, more realistic views on individual behavior. In this paper we investigate opportunities to integrate bounded rationality and other-regarding preferences into environmental policy theory to arrive at recommendations for more effective policies. For this purpose, we will address decisions made under risk and uncertainty, intertemporal choice, decision heuristics, other-regarding preferences, heterogeneity, evolutionary selection of behaviors, and the role of happiness. Three aspects of environmental policy are considered in detail, namely sustainable consumption, environmental valuation and policy design. We pay special attention to the role of non-pecuniary, informative instruments and illustrate the implications for climate policy.
Journal Article
Evolutionary models in economics: a survey of methods and building blocks
This paper assesses methods and components of formal evolutionary-economic modelling. Methods are broadly classified into evolutionary game theory and selection dynamics, evolutionary computation and multi-agent models, each with relevant subcategories. The components or building blocks are organized into diversity, innovation, selection, bounded rationality, diffusion, path dependency and lock-in, coevolution, multilevel and group selection, and mechanisms of growth. The number of alternatives that has been proposed for each category is vast, making it difficult to comprehend the variety of assumptions and formalizations underlying existing evolutionary-economic models. Our survey aims to clarify for each model component the choice range, formal expressions, associated assumptions, and possible techniques for formalization. Our study is unique in that it provides more information about the formal details of specific model components and is considerably more inclusive than earlier reviews.
Journal Article
Cost of Mediterranean Sea Warming and Acidification: A Choice Experiment Among Scuba Divers at Medes Islands, Spain
A choice experiment is undertaken to elicit preferences of scuba divers in the Marine Protected Area of Medes Islands (Spain). This is the first non-market valuation study of a typical Mediterranean habitat, the Coralligenous, which is characterized by high biodiversity, geomorphologic complexity and iconic species like gorgonians. This habitat is not only very attractive for scuba diving, but is also threatened by climate change and ocean acidification, which is our motivation for undertaking this valuation study. Choice attributes include the number of divers on a diving trip, underwater landscape, presence of jellyfish species, expected state of gorgonians, and price of a dive. Results of multinomial and random parameter logit models indicate a decrease in the attractiveness of Coralligenous areas for scuba diving as a result of both environmental pressures. Estimates of welfare values show that the local extinction of gorgonians had the highest negative effect on utility equivalent to a cost of €60 per dive, followed by abundance of stinging jellyfish with a cost of €26 per dive. Choice probabilities for the selection of different dive experiences indicate the highest rejection rates for the combined sea warming and acidification scenarios.
Journal Article
Energy Conservation More Effective With Rebound Policy
This article sketches the problem of indirect energy use effects, also known as rebound, of energy conservation. There is widespread support for energy conservation, especially when it is voluntary, as this seems a cheap way to realize environmental and energy-climate goals. However, this overlooks the phenomenon of rebound. The topic of energy rebound has mainly attracted attention from energy analysts, but has been surprisingly neglected in environmental economics, even though economists generally are concerned with indirect or economy-wide impacts of technical change and policies. This paper presents definitions and interpretations of energy and environmental rebound, as well as four fundamental reasons for the existence of the rebound phenomenon. It further offers the most complete list of rebound pathways or mechanisms available in the literature. In addition, it discusses empirical estimates of rebound and addresses the implications of uncertainties and difficulties in assessing rebound. Suggestions are offered for strategies and public policies to contain rebound. It is advised that rebound evaluation is an essential part of environmental policy and project assessments. As opposed to earlier studies, this paper stresses the relevance of the distinction between energy conservation resulting from autonomous demand changes and from efficiency improvements in technology/equipment. In addition, it argues that rebound is especially relevant for developing countries.
Journal Article
MONETARY VALUATION OF INSURANCE AGAINST FLOOD RISK UNDER CLIMATE CHANGE
Climate change is projected to increase the risk of natural disasters, such as floods and storms, in certain regions. This is likely to raise the demand for natural disaster insurance. We present a stated preference survey using choice modeling with mixed logit estimation methods in order to examine the effects of climate change and the availability of government compensation on the demand for flood insurance by Dutch homeowners. Currently, no private insurance against flood damage is offered in the Netherlands. The results indicate that there are opportunities for the development of a flood insurance market.
Journal Article
Pricing instruments in environmental and climate policy when polluters are boundedly rational
The use of pricing instruments in environmental policy has been argued to have certain advantages, notably related to static and dynamic efficiency as well as effectiveness due to economy-wide scope. This paper adopts a broad perspective to provide a complete set of arguments in favour of price-based instruments in environmental policy, illustrated for climate policy. Pricing instruments are still not used to their full potential. The reason is that there is still considerable unfounded scepticism, including by researchers in the social environmental sciences, about their functioning and performance. Different disciplines express distinct and partly inconsistent ideas on the desirability of pricing instruments. An important recent criticism is that traditional economic arguments for pricing instruments are based on rational agents and are inconsistent with findings of behavioural economics. We examine this argument by assessing how instruments behave under various realistic behavioural assumptions in line with bounded rationality and other-regarding behaviour. We find that the case is strengthened for cap-and-trade versus environmental taxation. We also discuss additional instruments to effectively counter environmental and climate challenges under bounded rationality and social interactions.
Journal Article
Specifications of Social Welfare in Economic Studies of Climate Policy: Overview of Criteria and Related Policy Insights
An important assumption in economic studies of climate policy is the social welfare function. This paper shows that applying distinct decision or social welfare criteria can result in different optimal policies of climate control, notably if climate change impacts are uncertain. First, decision criteria in current climate-economic studies are reviewed. Next, the most important alternatives are discussed, including their (mathematical) formalization and incorporation in economy-climate models. Most of these alternative criteria suggest more stringent climate policies to be optimal than the standard discounted utilitarianism approach. However, several important welfare criteria have not or hardly seen any application in the economic analysis of climate policy. We conclude that there is clear need for systematic research on this theme, for which the current review provides a solid basis.
Journal Article
ABM-IAM: optimal climate policy under bounded rationality and multiple inequalities
Despite considerable concern about potentially inequitable effects of climate policy, models fall short in assessing their implications for policy design. To address this issue, we develop an agent-based climate-economy model, ABM-IAM, as a disaggregated, behavioural approach to integrated climate assessment. It describes networks of heterogeneous consumers, banks, power plants and firms, and is calibrated on patterns of growth and carbon dioxide emissions generated by the DICE model of Nordhaus. Whereas the latter assumes full employment and abstains from a financial sector and inequality considerations, our approach relaxes these restrictions to obtain a more reliable assessment of climate policy impacts. We show that inequalities in labour and capital income serve as essential but overlooked links between climate-change damages and optimal climate policy. Our result show that lower inequalities of labour income increase the social cost of carbon (SCC), while the impact of capital income inequalities on the SCC depends on the share of population receiving capital rents.
Journal Article
Did COVID-19 help or harm the climate? Modeling long-run emissions under climate and stimulus policies
We propose a model of global energy competition, GLO-COV, to shed light on the long-run effects of COVID-19. It accounts for the joint impact of lockdown, economic stimulus programs, and climate policy on CO
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emissions. The model also captures the role of “peak oil.” It incorporates evolutionary self-reinforcing dynamics, which allows for addressing path dependence and lock-in. The model is empirically calibrated on historical energy demand, economic growth, emission intensity, and factors specific to COVID-19. The resulting long-term assessment complements previous studies that focus on the short-term effects of the pandemic. We find that without countervailing climate policy, COVID-19 increases long-run emissions. With a carbon tax already in place, COVID-19 leads to lower emissions than scenarios without the pandemic or without policy. On their own, climate and stimulus policies increase the variability of, and thus uncertainty about, emissions, while their combination reduces variability. A further advantage of combining stimulus and carbon taxation is that it creates strong synergy, resulting in maximal reduction of long-term emissions.
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