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Metadata only record Within the last thirty years in the West African Sahel, farmers have started to implement agroenvironmental practices which have allowed them to improve the soil quality and increase crop yields. Using two examples of land rehabilitation in Africa, this paper examines the technical and institutional innovations and their impacts on the ability to meet food demand for the growing population. Agroenvironmental techniques incorporate trees into the agricultural landscape, which improves water retention in the soil, increases the supply of nutrients, reduces wind erosion, and provides other marketable tree products. This large-scale effort has created income opportunities for farmers, benefited women, and increased food supply for many African families.

Metadata only record Within the last thirty years in the West African Sahel, farmers have started to implement agroenvironmental practices which have allowed them to improve the soil quality and increase crop yields. Using two examples of land rehabilitation in Africa, this paper examines the technical and institutional innovations and their impacts on the ability to meet food demand for the growing population. Agroenvironmental techniques incorporate trees into the agricultural landscape, which improves water retention in the soil, increases the supply of nutrients, reduces wind erosion, and provides other marketable tree products. This large-scale effort has created income opportunities for farmers, benefited women, and increased food supply for many African families.

I derive and test predictions from the classic Mussa and Rosen (1978) second-degree price discrimination model using data from the United States clothes washer market. I find evidence consistent with price discrimination in the market response to energy efficiency policy changes. Concurrent with the effective dates of both the new 2004 and 2007 federal minimum efficiency and ENERGY STAR standards, within-model clothes washer prices dropped on average. The heterogeneous pattern of price reduction across market segments, and adjustments in the menu of products, were consistent with predictions from the price-discrimination model, and not with a perfectly competitive market.

I derive and test predictions from the classic Mussa and Rosen (1978) second-degree price discrimination model using data from the United States clothes washer market. I find evidence consistent with price discrimination in the market response to energy efficiency policy changes. Concurrent with the effective dates of both the new 2004 and 2007 federal minimum efficiency and ENERGY STAR standards, within-model clothes washer prices dropped on average. The heterogeneous pattern of price reduction across market segments, and adjustments in the menu of products, were consistent with predictions from the price-discrimination model, and not with a perfectly competitive market.

Climate change is one of the preeminent policy issues of our day, and the social cost of carbon (SCC) is one of the foremost tools for determining the socially optimal policy response. The SCC is estimated using Integrated Assessment Models (IAMs), of which Nordhaus’ DICE is the oldest and one of the best respected. These numerical models capture the various steps in the climate and economic processes that translate a marginal unit of CO2 emissions into economic damage. While accuracy at each of these steps is necessary to precisely estimate the SCC, correct calibrating the climate damage function, which translates a temperature change into a percentage change in GDP, is critical. Calibration of the damage function determines which climate damages are included and excluded from the cost of carbon. Traditionally, Nordhaus calibrated the DICE damage function using a global damage estimate calculated by aggregating a series of region-sector specific damage estimates (Nordhaus and Boyer, 2000; Nordhaus, 2008). However, in DICE-2013, Nordhaus moved to calibrating the DICE damage function using a meta-analysis at the global scale (Nordhaus and Sztorc, 2013). This paper critiques this meta-analysis approach as it is currently applied and re-estimates the DICE-2013 damage function using up-to-date meta-analysis techniques to more accurately reflect climate damages and the uncertainty underlying them. This paper finds that DICE-2013 damage function significantly under-estimates climate damages by a factor of two to three. This is a working paper.

Climate change is one of the preeminent policy issues of our day, and the social cost of carbon (SCC) is one of the foremost tools for determining the socially optimal policy response. The SCC is estimated using Integrated Assessment Models (IAMs), of which Nordhaus’ DICE is the oldest and one of the best respected. These numerical models capture the various steps in the climate and economic processes that translate a marginal unit of CO2 emissions into economic damage. While accuracy at each of these steps is necessary to precisely estimate the SCC, correct calibrating the climate damage function, which translates a temperature change into a percentage change in GDP, is critical. Calibration of the damage function determines which climate damages are included and excluded from the cost of carbon. Traditionally, Nordhaus calibrated the DICE damage function using a global damage estimate calculated by aggregating a series of region-sector specific damage estimates (Nordhaus and Boyer, 2000; Nordhaus, 2008). However, in DICE-2013, Nordhaus moved to calibrating the DICE damage function using a meta-analysis at the global scale (Nordhaus and Sztorc, 2013). This paper critiques this meta-analysis approach as it is currently applied and re-estimates the DICE-2013 damage function using up-to-date meta-analysis techniques to more accurately reflect climate damages and the uncertainty underlying them. This paper finds that DICE-2013 damage function significantly under-estimates climate damages by a factor of two to three. This is a working paper.

Successful cap and trade programs for SO2 and NOx in the US allocate allowances to large emitters based on a historic base line for a period of up to thirty years. National Allocation Plans in Europe allocate CO2 allowances in an iterative approach first for a three then for a five-year period. The potential updating of the base line creates perverse incentives for operation and investment. Some allowances are also reserved for new entrants further distorting the scheme. We use analytic models and numeric simulations for the UK power sector to illustrate and quantify how these effects contribute to an inflation of the allowance price while reducing utilisation and investment in efficient technologies. The inflated allowance prices are likely to increase the European allowance budget and emissions, e.g. through the Linking Directive. As a result opportunity costs of emitting CO2 are reduced relative to an efficient cap and trade program.

Successful cap and trade programs for SO2 and NOx in the US allocate allowances to large emitters based on a historic base line for a period of up to thirty years. National Allocation Plans in Europe allocate CO2 allowances in an iterative approach first for a three then for a five-year period. The potential updating of the base line creates perverse incentives for operation and investment. Some allowances are also reserved for new entrants further distorting the scheme. We use analytic models and numeric simulations for the UK power sector to illustrate and quantify how these effects contribute to an inflation of the allowance price while reducing utilisation and investment in efficient technologies. The inflated allowance prices are likely to increase the European allowance budget and emissions, e.g. through the Linking Directive. As a result opportunity costs of emitting CO2 are reduced relative to an efficient cap and trade program.

This paper provides an overview of the economics of biofuels. It starts by describing the remarkable growth of the biofuel industry over the last decade, with emphasis on developments in the United States, Brazil and the European Union, and it identifies the driving role played by some critical policies. After a brief discussion of the motivations that are commonly argued in favor of biofuels and biofuel policies, the paper presents an assessment of the impacts of biofuels from the economics perspective. In particular, the paper explains the basic analytics of biofuel mandates, reviews several existing studies that have estimated the economic impacts of biofuels, presents some insights from a specific model, and outlines an appraisal of biofuel policies and the environmental impacts of biofuels. The paper concludes with an examination of several open issues and the future prospects of biofuels. Bio-based and Applied Economics, Vol 1 No 3 (2012): Towards a Sustainable Bio-economy: economic issues and policy challenges