Springer Science and Business Media LLC

We explore the relationship between willingness to pay (WTP) for climate change mitigation and distributional preferences, by which we mean individuals’ opinions about who should be responsible for climate change prevention and whether the share of climate change impacts borne by the poor is a cause for concern. We use 1,770 responses to an online stated preference survey. The domestic costs in our survey’s policy choice scenarios are expressed as a set of randomized shares across four different payment vehicles, and the international cost shares are randomized across four groups of countries. We also elicit respondents’ perceptions of the likely regressivity of climate change impacts under a policy of business-as-usual. WTP is higher when larger cost shares are borne by parties deemed to bear a greater responsibility for mitigation, and when respondents believe (and care) that the impacts of climate change may be borne disproportionately by the world’s poor. That WTP for an environmental policy depends on the distributional consequences of the policy is an unsettling result: efficiency assessments are typically assumed to be separate from equity considerations in most benefit-cost analyses.

The shadow price of carbon dioxide is the value of the external damage caused by an emission. A shadow price model for calculating the present value of the external damage of a carbon dioxide emission is derived explicitly. Sixteen experts provided subjective high, low and most likely parameter estimates because correct values for the eight model parameters are uncertain. The estimation procedure retains parameter uncertainty while generating the main result, which is a distribution of shadow price estimates. Major assumptions made in the estimation identify the basis for the results. Of the eight model parameters, the discount rate dominates the determination of the shadow price. For comparison, expert estimates of the shadow price itself provide a second distribution of shadow price estimates.

This paper analyzes differences in firms’ responsiveness to PROPER, Indonesia’s public disclosure program for industrial pollution control. The overall effectiveness of this program at achieving emissions reductions and its low regulatory costs have earned it a good reputation around the world. PROPER had no deterrents or incentives other than those that arose indirectly from publicly disclosing information about the environmental performances of firms. We analyzed plant-level data to relate short- and longer-term environmental responses to facility characteristics. The results revealed that foreign-owned firms were consistently more likely to respond to the environmental rating scheme, compared to private domestic firms. This is a clear and important insight with consequences for a number of issues, such as understanding the pollution haven debate. Also, firms located in densely populated regions, particularly in Java, responded more positively to the public disclosure of PROPER ratings. The main observed effect was however given by the initial level of environmental performance of firms. Those firms that had bad environmental performance records felt pressure to improve, but if the initial abatement steps had already been taken, the incentives to improve further appeared to diminish.

Most existing literature focuses on the benefits of establishing basic drinking water access for unserved populations, the extensive water supply margin. In contrast, this article examines the intensive margin—the benefits of improving water service to under-served households, a growing population in developing country cities. We use contingent valuation to estimate willingness to pay (WTP) for improved piped water quality and reductions in supply interruptions among a sample of 193 households in Lahore, Pakistan. The distribution of WTP is described using parametric and non-parametric models. Results indicate that households in Lahore are willing to pay about $7.50 to $9 per month for piped water supply that is clean and drinkable directly from the tap—comparable to the monthly cost of in-home water treatment, and about three to four times the average monthly water bill for sample households using piped water. Estimates of WTP for reducing supply interruptions are both smaller and more difficult to interpret, since a significant fraction of the estimated WTP distribution for supply improvements is negative. All of our WTP estimates are well below 4% of monthly household income, the World Bank’s benchmark upper bound for affordable water service.

Stated preference analyses often impose strong assumptions regarding spatial welfare distributions that can influence the validity of welfare analysis and aggregation. These include spatial homogeneity and continuous distance decay. Global assumptions such as these are increasingly questioned by non-economics disciplines in favor of approaches that allow for local patchiness. Drawing from this literature, this article proposes methods to identify and evaluate hot spots in stated preference welfare estimates using local indicators of spatial association. Methods are illustrated using geocoded choice experiment data addressing river restoration. Results suggest the presence of statistically significant, non-continuous patterns overlooked by current approaches.

This paper examines the distribution of climate change impacts across the sixteen Agro-Ecological Zones (AEZs) of Africa. We combine net revenue from livestock and crops and regress total net revenue on a set of climate, soil, and socio-economic variables with and without country fixed effects. Although African crop net revenue is very sensitive to climate change, combined livestock and crop net revenue is more climate resilient. With the hot and dry CCC climate scenario, average damage estimates reach 27% by 2100, but with the mild and wet PCM scenario, African farmers will benefit. The analysis of AEZs implies that the effects of climate change will be quite different across Africa. For example, currently productive areas such as dry/moist savannah are more vulnerable to climate change while currently less productive agricultural zones such as humid forest or sub-humid AEZs become more productive in the future.

This research estimates the impact of climate on European agriculture using a continental scale Ricardian analysis. Climate, soil, geography and regional socio-economic variables are matched with farm level data from 41,030 farms across Western Europe. We demonstrate that a median quantile regression outperforms OLS given farm level data. The results suggest that European farms are slightly more sensitive to warming than American farms with impacts from $$+$$ 5 to $$-$$ 32 % by 2100 depending on the climate scenario. Farms in Southern Europe are predicted to be particularly sensitive, suffering losses of $$-$$ 5 to $$-$$ 9 % per degree Celsius.

It is well known that the optimal pollution tax in a competitive industry is equal to the marginal damage inflicted by the pollution. It has also been shown that the optimal pollution tax on a monopoly is less than the marginal damage. In this paper, I derive the optimal pollution tax for a Cournot duopoly. If firms have different production costs, the optimal tax rate may exceed the marginal damage. This is so because the tax may be an effective instrument for allocating production from the less to the more efficient firm. It is also shown that, if one firm has a positive most preferred pollution tax, the sum of consumer and producer surpluses will be declining in the tax at this level.