Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Doctoral Program in Climate Change and Sustainable Development Policies Doctoral Program and Advanced Degree in Sustainable Energy Systems Doctoral Program in Mechanical Engineering Doctoral Program in Environmental Engineering Ecological Economics Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Multisector Optimal Growth • m-dimensional consumption bundle, including everything that influences well-being. – Includes all non-market commodities, e.g, produced at home, environmental services, … • n-dimensional capital vector: – Includes man-made capital, natural resources, human capital (education and knowledge) and foreign capital. Time is included as a capital, to depict technological progress in production. • Attainable production possibilities C(t ),I(t ) S (K(t ), t ) • The model max U (C (t ))e t dt s.t. c 0 dK I dt C(t ),I(t ) S (K(t ), t ) Criteria for Sustainability, Pezzey (2004) EDE • An economy is sustainable at time t if and only if the representative agent’s current utility does not exceed the maximum level of utility which can be sustained forever from t onwards. • One-sided sustainability test: dY QI 0 or 0 dt un-sustainable development. • Multisector results in real terms. – Real Net Income, – Genuine Saving, Y PC QI QI – Consumption dY R dW RQ I dt dt Variation in Real Net Income Variation in Welfare Investment Welfare Relationships • Both Genuine Savings and Green NNI are related to future consumption. • These relationships can be used to empirically check the theory. • If genuine saving is negative (or green NNI deacreases) then current consumption will decrease in the future. Small Open Economy • Include – stocks of commercial forests, – welfare costs of air emissions, • The capital stocks are K : ( K , K f ,S) : – Domestic man-made capital, dK I CFC dt – Net foreign capital held privately or by the government, dK f rK f X M QR (R X R M ) dt – Stock of commercial natural resources • Production dS G(S) R d R X dt I F ( K , R d R M ) M X C a f (R d R X ,S) r – interest rate Small Open Economy • Households’ utility function U (C) : U (C ,E) depends on material consumption rate and (negatively) on the flow of emissions • The vector of emissions E( F ( ),a) depends on production and abatement expenditure. • Maximize welfare subject to the above relations and having as controls consumption, C (t ) , all forms of extraction, Rd (t ), R X (t ), RM (t ) , abatement expenditure a(t ) and trade balance M (t ) X (t ) . • Conventional (SNA) NNI: NNI : C K K f R • Green Net National Income: Y NNI (Q fR ) S e E Qt • Genuine Saving (Adjusted Net Saving): Q K Q NNI C (Q f R ) S Qt t R Small Open Economy – Table of symbols C (t ) K Consumption rate at time t Man-made capital, Kf U () Utility E() Rate of emissions of air pollutants e F () a Ri , i d , X , M MX Marginal cost of abatement = Marginal damage cost Production function Abatement expenditure Extraction of natural resources for domestic use, exports and from imports. Imports - Exports r Constant nominal interest rate S Stock of resources R Constant real interest rate QR Resource price f (R d R X ,S) fR Net foreign capital Cost of extraction of resource Marginal cost of abatement Small Open Economy • Starting from conventional SNA aggregates: – Deduct the damage from flow pollution emissions, e E – Deduct (add) the value of rents from resource depletion (or R not), (Q f R ) S 140000 120000 100000 GNI CFC Million € 80000 Air emissions Forest Depl. 60000 Tech. Progress GNNI 40000 Pot GNNI GNNI, T=100 20000 0 1990 -20000 1995 2000 2005 Social costs vs Marginal abatement Constant MDC • Models point to measure emissions at the – Marginal cost of abatement (MCA), or – Marginal social cost (MSC) = Marginal benefit of abatement (MBA), a.k.a. Marginal Damage Costs (MDC) • Measurement away from the optimum – c, over-polluting (assumed current state) => a is upper bound – d, under-polluting => b is lower bound GNNI and GS in Portugal – Air Emissions • How to value a unit of emissions? – Marginal benefit of avoided emission, – Marginal cost of emission (MDC), or – Marginal abatement costs? • Marginal cost of emission per emitted pollutant [€2000/ton]: [€2000/t] SO2 NH3 NOx VOC PM2,5 Best 6872 7399 2040 1150 44000 Low High 3472 9972 3699 10999 1140 3040 450 1550 22000 64000 GNNI and GS in Portugal – Air Emissions 70 60 SO2 % of total cost 50 NH3 40 NOx VOC 30 PM 2,5 20 10 0 1990 1995 2000 2005 GNNI and GS in Portugal – Forests • National Forest Inventory 2005/06 1400 1200 Conifers Eucalyptus 10^3 ha 1000 800 600 400 200 • Average Volumes: 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 [m3/ha] 95/98 05/06 Conifers 88.5 82.5 Eucalyptus 55 55 GNNI and GS in Portugal – Forests 100 Coniferous Eucalyptus 50 million € 0 1990 1995 2000 2005 -50 -100 -150 -200 The depreciation of commercial forests in Portugal is on average 10% of the contribution of forestry to national product (around 4%). GS in Portugal 40000 35000 30000 GS, no Qt 25000 Million € GS 20000 GS, T=100 15000 Potential GS 10000 5000 0 -5000 1990 1995 2000 2005 • Without the value of time – Decreasing tendency throughout the period -10000 and negative GS after 2002. • With the value of time – Decreasing tendency until 2001, but GS are always positive. Sustainability Message • In 1993, SO2 costs of emissions, which represent around 30% of total emission costs, decreased substantially. Increases welfare but does not counteract the loss of production. What’s Missing? • • • • • • • The depletion of water resources. The depletion of biodiversity. Depletion of stocks of fish. Inclusion of the value of ecosystem services. Soil quality. Distributional issues (intragenerational concerns). ...