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Abstract: This paper estimates the effects of humidity and temperature on mortality rates in the United States (c. 1973–2002) in order to provide an insight into the potential health impacts of climate change. I find that humidity, like temperature, is an important determinant of mortality. Coupled with Hadley CM3 climate-change predictions, I project that mortality rates are likely to change little on the aggregate for the United States. However, distributional impacts matter: mortality rates are likely to decline in cold and dry areas, but increase in hot and humid areas. Further, accounting for humidity has important implications for evaluating these distributional effects. [Copyright &y& Elsevier]

This paper investigates the relationship between climate change and income inequality, recognizing that the economic impacts of climate change are not uniform across different levels of income within and across countries. Using methods from the existing literature on climate and economic growth, we analyze the economic impact of rising temperatures by within-country income decile. Our findings suggest that climate change disproportionately affects the poorer segments of the population within countries, even after accounting for a country's ability to adapt to climate impacts, while richer households suffer lower damages. In the reference scenario without additional climate action (3.6°C warming), we estimate that climate impacts could lead to an increase in the Gini index by up to six percentage points, notably in Sub-Saharan Africa. We project impacts to 2100 through the RICE50+ model and estimate the income elasticity of impacts within countries. Our estimates indicate that climate change damages are regressive, with an income elasticity of damages of 0.6 under our preferred specification. On the other hand, climate benefits are approximately distribution-neutral or slightly progressive. [ABSTRACT FROM AUTHOR]

This paper examines the effects of extreme temperatures on mortality rates, using random year-to-year variation in temperature based on county-level panel data from China. The analysis finds a robust, U-shaped relationship between temperature and mortality rates, indicating that extremely cold or hot temperatures lead to excess deaths. The heat-related (cold-related) effect is 3.5 times (3.2 times) as large as previous findings that used U.S. data, and it is especially large for the elderly population, mainly due to excess deaths caused by cardiovascular diseases. Applying these results to climate change predictions from Hadley Centre Global Environmental Model shows that by 2061–2080 the annual mortality rate is likely to increase by 14.2% if global greenhouse gas emissions continue to rise throughout the 21st century, the estimated health cost of which is around 0.98 trillion Chinese Yuan per year. The paper also explores households' adaptation behaviors to extreme temperatures. It finds that although urban households adaptively increase energy consumption when they are exposed to cold temperatures and purchase more air conditioners on hot and cold days, rural households are unresponsive to temperature fluctuations. This finding implies that rural people may be more resource constrained and suffer more when extreme temperatures occur. [ABSTRACT FROM AUTHOR]

This paper examines how temperature affects worker productivity beyond the usual "on average" analysis, with a particular focus on distributional impacts of the increasing heat incidence across high- and low-productivity areas. Using a recentered influence function regression approach, we estimate unconditional reduced-form effects of a location shift in the temperature distribution—consistent with climate change trends—on the labor productivity distribution across counties in the contiguous U.S. We find that labor productivity is largely insensitive to changes in the frequency of cool-to-moderate maximum daily temperatures. However, as temperatures shift above 2 4 ∘ C , the effects on productivity turn increasingly negative, albeit with their magnitudes attenuating as a county's productivity rank rises. While highly productive locations in the top 5% are not adversely impacted even by the hottest temperatures, permanently increasing the incidence of ≥ 3 6 ∘ C temperatures just by a day lowers productivity at the bottom vigintile by a nontrivial 0.22% per year, an equivalent of 10.5 hours of work by a minimum-wage worker. As temperatures continue to rise, not only does worker productivity worsen on average, but the cross-county dispersion therein widens too. Given existing climate forecasts, we predict that future extreme temperatures would further deepen worker productivity inequality. [ABSTRACT FROM AUTHOR]

This paper analyzes the effects of partial cooperation on the breadth and depth of climate agreements in dynamic games in which countries emit, invest in green technology, decide to participate in a climate coalition and participants negotiate the contract duration. When choosing emissions reductions (pledges), coalition countries apply Harstad's (2023a) pledge-and-review bargaining and partially cooperate. We distinguish between stock-independent and stock-dependent investment costs. It is shown that narrow-but-deep agreements may be welfare superior to broad-but-shallow agreements for signatories. In addition, if the degree of partial cooperation is sufficiently high, broad-and-deep agreements and even first best can be achieved. [ABSTRACT FROM AUTHOR]

Using quarterly temperature and employment data between 1990 and 2021, this paper uncovers nuanced evidence on the impact of seasonal temperature within US counties: higher winter temperature increases private sector employment growth while higher summer temperature decreases it. The impacts of higher temperature in milder seasons, fall and spring, are statistically insignificant. Moreover, the negative impact of higher summer temperature persists while the positive impact of higher temperature in the winter is more short-lived. The negative effects of a hotter summer are pervasive and persistent in many sectors: most significantly in "Construction" and "Leisure and Hospitality" but also in "Trade, Transport, and Utilities" and "Financial Activities". In contrast, the positive effects of a warmer winter are less pervasive. The employment effect of a hotter summer has been more severe in recent decades. [ABSTRACT FROM AUTHOR]

Currently, cap-and-trade programs are a cornerstone of many countries' climate change policies and proposals. This paper investigates the economic and environmental effects of different climate change policy designs in a general equilibrium setting with heterogeneous firms and monopolistic competition. The analysis predicts that the cap on emissions perfectly defines the environmental quality but has no effect on firms' profits, or decisions to enter or exit the market. In contrast, increasing the share of free allocations of emission allowances, as opposed to auctions, has no effect on environmental quality but reallocates resources among firms toward the most productive ones which has an impact on firms' entry and exit decisions, the mass of firms, and the composition of the market. Firm heterogeneity magnifies these economic effects of changes in the initial allocation of allowances. The paper provides a decomposition of the change in aggregate emissions which takes account of the changes at sector level, across the firms within a sector, and at the firm level. [ABSTRACT FROM AUTHOR]

There is a lack of evidence regarding how natural resource markets have responded to recent increases in climate-induced extreme events like wildfire. Wildfire can affect the economic value of forests by directly damaging the existing tree stock and by altering landowner risk expectations of future wildfire arrival. This paper uses parcel data over a seventeen-year period to estimate the effects of large wildfires and drought stress on market prices for private timberland across the three Pacific states of the western U.S. In addition to estimating the land price impacts of wildfires on parcels that were directly burned, we identify changes in risk expectations by estimating the impacts from wildfires that burned in close proximity rather than directly on timberland that was sold in the land market. Results indicate that recent increases in large wildfires and drought stress over the past two decades have lowered the economic value of timberland by approximately 10%, or about $11.2 billion in damages across the three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. Results provide evidence on the costs of climate-induced extreme events on natural capital that have already occurred. • Climate-induced extreme events, such as drought stress and large wildfires, negatively affect the economic value of timberland in the Pacific states. • Wildfires lower timberland values through two avenues: direct damage to the existing forest stock and neighboring fires that alter landowners' expectations of fire arrival. • As a result of recent increases in drought stress and large wildfires, the economic value of timberland has been reduced by approximately 10%, or about $11.2 billion in damages across three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. [ABSTRACT FROM AUTHOR]

This paper proposes a simple two-step estimation method (C limate A daptive R esponse E stimation - CARE) to estimate sectoral climate damage functions, which account for long-run adaptation. The paper applies this method in the context of residential electricity and natural gas demand for the world's fifth largest economy — California. The advantage of the proposed method is that it only requires detailed information on intensive margin behavior, yet does not require explicit knowledge of the extensive margin response (e.g., technology adoption). Using almost two billion energy bills, we estimate spatially highly disaggregated intensive margin temperature response functions using daily variation in weather. In a second step, we explain variation in the slopes of the dose response functions across space as a function of summer climate. Using 18 climate models, we simulate future demand by letting households vary consumption along the intensive and extensive margins. We show that failing to account for extensive margin adjustment in electricity demand leads to a significant underestimate of the future impacts on electricity consumption. We further show that reductions in natural gas demand more than offset any climate-driven increases in electricity consumption in this context. [ABSTRACT FROM AUTHOR]

We introduce nine papers on sustainable resource dynamics. In addition, we provide analytical results on the effect of stochastic damages on optimal economic growth, the effects of habits and loss aversion on the cost-benefit discount rate, and the effect of a carbon budget and carbon capture and storage (CCS) on optimal investment in technical change. [ABSTRACT FROM AUTHOR]

Abstract Weather anomalies have a range of adverse contemporaneous impacts on health and socio-economic outcomes. This paper tests if temperature anomalies around the time of birth can have long-term impacts on individuals' economic productivity. Using unique data sets on historical weather and earnings, place and date of birth of all 1.5 million formal employees in Ecuador, we find that individuals who have experienced in-utero temperatures that are 1 °C above average are less educated and earn about 0.7% less as adults. Results are robust to alternative specifications and falsification tests and suggest that warming may have already caused adverse long-term economic impacts. [ABSTRACT FROM AUTHOR]

Abstract The provision of many ecosystem services depends on the spatial pattern of land use across multiple landowners. Even holding land use constant, ecosystem service provision may change through time due to climate change. This paper develops an auction mechanism that implements an optimal solution for providing ecosystem services through time with multiple landowners who have private information about the net benefits of alternative uses of their land. Under the auction, each landowner has a dominant strategy to truthfully reveal their private information. With this information a regulator can then implement the optimal landscape pattern, which maximizes the present value of net benefits derived from the landscape, following the rules of the auction mechanism. The auction can be designed as a subsidy auction that pays landowners to conserve or a tax auction where landowners pay for the right to develop. Our mechanism optimizes social adaptation of ecosystem management to climate change. [ABSTRACT FROM AUTHOR]

Abstract In a general equilibrium model with two periods and a finite fossil resource, I analyze the non-cooperative climate policies of symmetric countries that are in competition for mobile factors of production (capital and fossil energy). The paper shows that countries that want to slow down climate change but are also concerned about tax revenues from mobile tax bases have a rationale to supplement environmental taxes on fossil fuels with source-based capital taxes (or subsidies). More specifically, countries find it beneficial to subsidize capital in period one and tax it in period two. The first-period subsidy on capital facilitates a higher environmental tax by counteracting its adverse effects, and increases national and global welfare in equilibrium. By contrast, the capital tax in period two induces inter- and intratemporal distortions that lead to lower welfare. The rate of resource extraction is inefficiently high in equilibrium, no matter which tax portfolio is at the governments' disposal. Furthermore, unintended ('Green Paradox') effects of demand-side policies are shown to arise even in general equilibrium with factor mobility. Finally, factor mobility does not necessarily lead to a higher rate of extraction and lower welfare compared to autarky. [ABSTRACT FROM AUTHOR]

Abstract We perform two tests that estimate the mass of the upper tail of the distribution of aggregate US tropical cyclone damages. Both tests reject the hypothesis that the distribution of damages is thin tailed at the 95% confidence level, even after correcting for inflation and growth in population and per capita income. Our point estimates of the shape parameter of the damage distribution indicate that the distribution has finite mean, but infinite variance. In the second part of the paper, we develop a microfoundations model of insurance and storm size that generates a fat tail in aggregate tropical cyclone damages. The distribution of the number of properties within a random geographical area that lies in the path of a tropical cyclone is shown to drive fat tailed storm damages, and we confirm that the distribution of coastal city population is fat tailed in the US. We show empirically and theoretically that other random variation, such as the distribution of storm strength and the distribution of damages across individual properties, does not generate a fat tail. We consider policy options such as climate change abatement, policies which encourage adaptation, reducing subsidies for coastal development, and disaster relief policies, which distort insurance markets. Such policies can reduce the thickness of the tail, but do not affect the shape parameter or the existence of the fat tail. [ABSTRACT FROM AUTHOR]

Abstract: Recent research suggests that social cost-benefit analysis should be conducted with a declining discount rate. For instance Newell and Pizer [Discounting the distant future: how much do uncertain rates increase valuations? J. Environ. Econ. Manage. 46 (2003) 52–71] show that the US certainty-equivalent discount rate declines through time, using a simple autoregressive model of US interest rates. This paper extends that line of research, estimating both autoregressive and regime-switching models of real interest rates to determine certainty-equivalent discount rates in Australia, Canada, Germany and the UK. It is found that the regime-switching model is a better model of past interest rate behavior for all four countries. This model tends to produce a more rapid decline in certainty-equivalent discount rates. The paper provides applications to the economics of climate change and nuclear power. [Copyright &y& Elsevier]

Abstract: This paper addresses the subject of self-enforcing international environmental agreements (IEAs). The standard model of IEAs is adapted to include uncertainty in environmental costs and benefits, as well as learning about these costs and benefits. The paper investigates the extent to which the size of the coalition changes as a result of learning and systematic uncertainty (also known as model uncertainty). Results are that systematic uncertainty by itself decreases the size of an IEA. Learning has the further effect of either increasing or decreasing the size of an IEA, depending on parameters of the problem. [Copyright &y& Elsevier]

Abstract: The paper is concerned with the case whereby the distribution of a firm''s productivity shocks changes without the knowledge of the firm. Over time the firm learns about the nature and extent of the change in the distribution of the shock and adjusts, incurring adjustment costs in the process. The long-run loss in profits due to the shift in the distribution we term the equilibrium response. The transitory loss in profits, incurred while the firm is learning about the distribution shift, is termed the adjustment cost. The theory is then applied to the problem of measuring adjustment costs in the face of imperfectly observed climate change in agriculture. The empirical part of the paper involves estimating a restricted profit function for agricultural land in a five-state region of the Midwest US as a function of prices, land characteristics, actual weather realizations and expected weather. We then simulate the effect of an unobserved climate shock, where learning about the climate shock is by observing the weather and updating prior knowledge using Bayes Rule. We find adjustment costs to climate change are 1.4% of annual land rents. [Copyright &y& Elsevier]

This paper studies the impacts of renewable energy support policies on energy prices, fossil fuel supply and thus carbon emissions from fossil fuels. Such supports are climate friendly if the renewables are already competitive against fossil fuels. But if the renewables are not yet competitive, the climate change impacts are often ambiguous and are sensitive to capacity constraints of renewables production and to the fossil fuel market structure. If the renewables do not have capacity constraints, then the subsidies are subject to the Green Paradox under perfect competition, but might be climate friendly under monopoly. Supports for capacity constrained renewables under perfect competition lead to more current fossil fuel supply but delay fossil fuel exhaustion time, and these effects are reversed under monopoly. Our results highlight the importance of considering the long-term effects on fossil fuel supply as well as capacity constraints and market power in designing renewable energy policies and evaluating their carbon footprints. [ABSTRACT FROM AUTHOR]

Tropical deforestation in Brazil is a major source of greenhouse gas emissions that contribute to climate change. Brazil has taken several steps to reduce emissions associated with deforestation including the development of policies to promote and reward cattle ranching intensification. Intensification practices are hypothesized to reduce the conversion of tropical forests while simultaneously increasing the productivity of ranching on current pasture lands. This paper assesses the impact of intensification on the demand for productive land. A theoretical model of land use, which considers the degree of intensification in the estimation of the derived demand for pasture, is tested with data from small-scale landowners who operate dairy farms and calving operations in the greater Ouro Preto do Oeste region of Rondônia. Results suggest different trajectories for beef and dairy production. The intensification of cattle production exhibits a nonlinear relationship with the demand for productive land: first as farms become more intensive the demand for newly cleared land increases, but then decreases with further intensification. The results are different for dairy intensification, which is found to be correlated with reduced deforestation. Findings suggest that the reliance on policies that promote intensification can be a risky way of achieving climate change objectives. [ABSTRACT FROM AUTHOR]

This paper uses detailed production data from a half million Chinese manufacturing plants over 1998–2007 to estimate the effects of temperature on firm-level total factor productivity (TFP), factor inputs, and output. We detect an inverted U-shaped relationship between temperature and TFP and show that it primarily drives the temperature-output effect. Both labor- and capital- intensive firms exhibit sensitivity to high temperatures. By mid 21st century, if no additional adaptation were to occur, we project that climate change will reduce Chinese manufacturing output annually by 12%, equivalent to a loss of $39.5 billion in 2007 dollars. This implies substantial local and global economic consequences as the Chinese manufacturing sector produces 32% of national GDP and supplies 12% of global exports. [ABSTRACT FROM AUTHOR]

How does climate-change mitigation affect the aggregate consumption risk borne by future generations? In other words, what is the ‘climate beta’? In this paper we argue using a combination of theory and integrated assessment modelling that the climate beta is positive and close to unity for maturities of up to about one hundred years. This is because the positive effect on the climate beta of uncertainty about exogenous, emissions-neutral technological progress overwhelms the negative effect on the climate beta of uncertainty about the carbon-climate-response, particularly the climate sensitivity, and the damage intensity of warming. Mitigating climate change therefore has no insurance value to hedge the aggregate consumption risk borne by future generations. On the contrary, it increases that risk, which justifies a relatively high discount rate on the expected benefits of emissions reductions. However, the stream of undiscounted expected benefits is also increasing in the climate beta, and this dominates the discounting effect so that overall the net present value of carbon emissions abatement is increasing in the climate beta. [ABSTRACT FROM AUTHOR]

Ricardian analyses of farmland values have become a cornerstone of the literature valuing the impacts of climate change on agriculture. However, concerns about the lack of a formal econometric strategy to deal with omitted farmland characteristics have raised doubts about the identification of such impacts. This paper proposes an original method for estimating Ricardian models with plot fixed effects to control for confounding omitted variables. Specifically, we use plot-level repeat-sales French data from 1996 to 2019 to investigate how differences in farmland prices between two sale dates are explained by differences in climate evolutions. We show that our repeat-Ricardian estimates suggest greater benefits of climate change than those found with standard Ricardian analyses. In particular, our repeat-Ricardian estimates indicate that warmer summers benefit French agriculture, in complete opposition to our pooled Ricardian estimates or to the remainder of the literature. Our repeat-Ricardian results are robust to several specifications, climate length-definitions and sub-samples. We provide elements suggesting that the repeat-Ricardian analysis is better able to capture crop-switching towards high-value crops requiring particular soil conditions (e.g. vineyards). Our repeat-Ricardian analysis also indicates greater benefits of climate change compared to those estimated with short-term weather-based approaches, shedding new lights on previous inconsistent findings from the literature. [ABSTRACT FROM AUTHOR]

This paper analyzes the relationship between temperature, mortality, and adaptation opportunities in a tropical country. Such countries host almost 40% of the world's population and face inherently different environmental, demographic, and socio-economic conditions than their counterparts in temperate areas. Using detailed data from all Colombian municipalities, I show that anomalously hot or cold days increase mortality even at narrow temperature ranges, which are characteristic of the tropics. An additional day with a mean temperature above 27 °C (80.6 ∘ F) increases mortality rates by approximately 0.24 deaths per 100,000, equivalent to 0.7% of monthly death rates. Unlike temperate locations, I find that deaths attributed to infectious diseases and respiratory illnesses drive this relationship in the hot part of the distribution, mainly affecting children aged 0–9. These findings uncover new factors and populations at risk and imply that the average person who dies after a hot temperature shock loses approximately 30 years of life. I also provide evidence that access to health care and quality of services could mediate between temperature and mortality. [ABSTRACT FROM AUTHOR]

This paper empirically estimates the economic impacts of a large-scale public investment in natural infrastructure aimed at adapting to climate change and increasing coastal resilience. I utilize temporal and spatial variation in investment in dunes to provide a hedonic property value estimate of the economic benefits. I identify the net effect of treatment utilizing the doubly robust Oaxaca-Blinder estimator and show that coastal housing price increases attributable to constructed dunes are approximately 3.6%. A decomposition of the average impact suggests that the policy intervention generates ancillary costs related to impaired ocean views and privacy concerns that partially offset large protection benefits. [ABSTRACT FROM AUTHOR]

Climate change shifts the distributions of a set of climatic variables, including temperature, precipitation, humidity, wind speed, sunshine duration, and evaporation. This paper explores the importance of those additional climatic variables other than temperature and precipitation. Using the county-level agricultural data from 1980 to 2010 in China, we find that those additional climatic variables, especially humidity and wind speed, are critical for crop growth. Therefore, omitting those variables is likely to bias the predicted impacts of climate change on crop yields. In particular, omitting humidity tends to overpredict the cost of climate change on crop yields, while ignoring wind speed is likely to underpredict the effect. Our preferred specification indicates that climate change is likely to decrease the yields of rice, wheat, and corn in China by 36.25%, 18.26%, and 45.10%, respectively, by the end of this century. [ABSTRACT FROM AUTHOR]

This paper examines climate-change benefit-cost analysis in the presence of scientific uncertainty in the form of ambiguity. The specific issue addressed is the robustness of benefit-cost analyses of climate-change policy alternatives to relaxation of Savage's original axioms. Two alternatives to subjective expected utility (SEU) are considered: maximin expected utility (MEU) and incomplete expected utility (IEU). Among other results, it is demonstrated that polar opposite recommendations can emerge in an ambiguous decision setting even if all agree on Society's rate of time preference, Society's risk attitudes, the degree of ambiguity faced, and the scientific primitives. We show that, for a simple numerical simulation of our model, an MEU decision maker favors policies which immediately tackle climate change while an IEU decision prefers “business as usual”.“Each agency shall assess the costs and benefits of the intended regulation, and recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its cost.” Executive Order 12866 of the US President. [ABSTRACT FROM AUTHOR]

Although previous studies have examined the association between temperature exposure and pregnancy losses (mainly focusing on the risk of stillbirth), causal estimates are still missing. The literature also lacks projections on the impacts of climate change. Using Hungarian administrative data spanning 1984 to 2018, this paper estimates the effect of temperature on the weekly spontaneous pregnancy loss rate. We show that, compared to a mild temperature, heat causes a substantial increase in the risk of pregnancy loss, whereas cold temperatures slightly decrease it. These impacts are not due to near-term displacement of some pregnancy losses but represent changes in the pregnancy outcomes. Combining the estimated effects with outputs of thirty climate models implies that climate change will increase the spontaneous pregnancy loss rate in the 21st century. The risk of pregnancy loss will be especially elevated during summer. [ABSTRACT FROM AUTHOR]

While there is considerable interest in understanding the climate–migration relationship, particularly in the context of concerns about global climatic change, little is known about its underlying mechanisms. In the paper, we combine a rich panel data on annual bilateral international migration flows with an extensive data on climate variability across the countries to investigate in-depth the climate–migration link. We find a positive and statistically significant relationship between temperature and international outmigration only in the most agriculture-dependent countries, consistent with the widely documented adverse impact of temperature on agricultural productivity. Further, the temperature–migration relationship is nonlinear and resembles the nonlinear temperature–yield relationship. In addition, migration flows to current major destinations are especially temperature-sensitive. Policies to address issues related to climate-induced international migration would be more efficient if focused on the agriculture-dependent countries and especially people in those countries whose livelihoods depend on agriculture. [ABSTRACT FROM AUTHOR]

Policy makers search for strategies to promote resilience and mitigate the effects of future climatic shocks. In this paper, we assess whether small regular cash transfers strengthen poor households' ability to mitigate the welfare effects of drought shocks. We analyze mechanisms through which cash transfers contribute to resilience, including savings, asset accumulation as well as income smoothing in agriculture and off-farm activities. We combine household survey data collected as part of a randomized control trial in rural Niger with satellite data used to identify exogenous rainfall shocks. The results show that cash transfers increase household consumption by about 10 percent on average. Importantly, this increase is mostly concentrated among households affected by drought shocks, for whom welfare impacts are larger than transfer amounts due to households' enhanced ability to protect earnings in agriculture and off-farm businesses when shocks occur. The results suggest that multi-year cash transfer programs can foster poor households' resilience by facilitating savings and income smoothing. [ABSTRACT FROM AUTHOR]

Extreme heat shocks are increasingly linked to poor economic and health outcomes. This paper constructs hour-degree bins of temperature exposure to assess the effects of extreme heat on early child nutrition, a health outcome correlated with educational attainment and income in adulthood. Linking 15 rounds of repeated cross-section data from five West African countries to geo-coded weather data, we find that extreme heat exposure increases the prevalence of both chronic and acute malnutrition. We find that a 2 °C rise in temperature will increase the prevalence of stunting by 7.4 percentage points, reversing the progress made on improving nutrition during our study period. [ABSTRACT FROM AUTHOR]

This paper studies a social planner who chooses countries' carbon prices so as to maximize global welfare. Product markets are characterized by firm heterogeneity, market power, and international trade. Because of the market-power distortion, the planner's optimal policy is second-best. The main insight is that optimal carbon prices may be highly asymmetric: zero in some countries and above the social cost of carbon in countries with relatively dirty production. This result obtains even though a uniform global carbon price is always successful at reducing countries' emissions. Competition policy that mitigates market power may enable stronger climate action. [ABSTRACT FROM AUTHOR]

Scientific evidence reveals that renewable resource stock dynamics are subject to uncertainty due to changes in environmental conditions. Despite its critical impacts on management, little is known about the effects of such uncertainty on the formation of regional fisheries management organizations (RFMOs). In this paper, we design a dynamic stock recruitment framework to examine this issue in a common pool setting. We find that stock growth uncertainty critically affects equilibrium behaviors under both open loop membership and dynamic membership. For instance, we delineate conditions under which uncertainty induces full non-cooperation in equilibrium. Strategic behaviors may also shift equilibrium outcomes from full non-cooperation under deterministic conditions to full cooperation under uncertainty when countries anticipate a small environmental variability. Moreover, strategic interactions to extract the resource stock may lead to higher individual payoffs under uncertainty. We also outline the differences in equilibrium responses of membership, harvest, and payoff to mean preserving spreads under both open loop membership and dynamic membership. [ABSTRACT FROM AUTHOR]

How do innovators respond to the shock of a natural disaster? Do natural disasters spur technical innovations that can reduce the risk of future hazards? This paper examines the impact of three types of natural disasters—floods, droughts and earthquakes—on the innovation of their respective mitigation technologies. Using patent and disaster data, our study is the first to empirically examine adaptation responses across multiple sectors at the country level. Considering the potential endogeneity of disaster damages, we use meteorological and geophysical data to create hazard intensity measures as instrumental variables. Overall, we show that natural disasters lead to more risk-mitigating innovations, while the degree of influence varies across different types of disasters and technologies. [ABSTRACT FROM AUTHOR]

Global warming and the carbon cycle are a dynamic system with positive feedbacks. Fossil fuels are exhaustible resources. These two facts mean that innovation in clean energy technology, rather than mitigating global warming, can lead to a permanently higher temperature path. This paper explores the impact of innovation in the simplest model linking the economic theory of exhaustible resources with positive feedback dynamics in the carbon cycle. [ABSTRACT FROM AUTHOR]

Abstract: This paper estimates the impact of climate change on the prevalence of criminal activity in the United States. The analysis is based on a 30-year panel of monthly crime and weather data for 2997 US counties. I identify the effect of weather on monthly crime by using a semi-parametric bin estimator and controlling for state-by-month and county-by-year fixed effects. The results show that temperature has a strong positive effect on criminal behavior, with little evidence of lagged impacts. Between 2010 and 2099, climate change will cause an additional 22,000 murders, 180,000 cases of rape, 1.2 million aggravated assaults, 2.3 million simple assaults, 260,000 robberies, 1.3 million burglaries, 2.2 million cases of larceny, and 580,000 cases of vehicle theft in the United States. [Copyright &y& Elsevier]

Abstract: In this paper, we develop a model of international trade and climate change in which emission discharges arising from production have a feedback effect on national production sectors by impacting upon effective factor endowments. With this context, the objectives are, first, to provide a general characterization of Pareto-efficient climate and trade policies and, second, to examine the possibility – starting from non-Pareto-efficient equilibria – for Pareto-improving environmental policies. We provide conditions under which several particular reforms of carbon taxes are welfare improving. [Copyright &y& Elsevier]

Abstract: This paper explores the characteristics of 238 patents on 90 inventions contributed by major multinational innovators to the “Eco-Patent Commons”, which provides royalty-free access to third parties to patented innovations on green technologies. We compare the pledged patents to other patents in the same technologies or held by the same multinationals to investigate the motives of the contributing firms as well as the potential for such commons to encourage innovation and diffusion of climate change related technologies. We find pledged patents to protect environmentally friendly technologies and to be of similar value as the average patent in a pledging firm's patent portfolio but of lower value than other patents in their class. Our analysis of the impact of the patent commons on diffusion of patented technologies suggests that making patents accessible royalty-free did not result in any significant increase in diffusion as measured by citing patents. This study, therefore, indirectly provides evidence on the role of patents in the development and diffusion of green technologies. [Copyright &y& Elsevier]

Abstract: Adaptation to exogenous change occurs on both intensive and extensive margins. Whether and how one accounts for human adaptation directly affects estimates of the economic consequences of environmental change, estimates that are both critical in informing policy decisions and notoriously difficult to value. This paper introduces and applies an analytical framework for placing an economic value on adaptation. We explore the issue first in a stylized model that facilitates making concrete generalizations about the kinds of adaptations that generate high or low economic value. We then test the soundness of our insights by incorporating learning and adaptive decision-making into a structural dynamic forestry model where climate change is imposed exogenously and agents respond optimally. Using downscaled climate projections integrated with site- and species-specific timber productivity data, we estimate the economic value of adaptation to climate change within the California timber industry. We find on the intensive margin, changing the rotation intervals will yield a low value of adaptation, but on the extensive margin, replanting more suitable tree species can yield significant value. [Copyright &y& Elsevier]

Abstract: 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. [Copyright &y& Elsevier]

Abstract: We integrate new challenges to thinking about resource markets and sustainable resource use policies in a general framework. The challenges, emerging from six papers that JEEM publishes in a special issue, are (i) demand uncertainty and stockpiling, (ii) international trade and resource dependence, (iii) deforestation, and (iv) intertemporal effects of climate change policies (“Green Paradox”). We discuss new insights and results on these issues by fitting them into the Hotelling model of non-renewable resource depletion. [Copyright &y& Elsevier]

Abstract: Empirical evaluation of policies to mitigate climate change has been largely confined to the application of discounted utilitarianism (DU). DU is controversial, both due to the conditions through which it is justified and due to its consequences for climate policies, where the discounting of future utility gains from present abatement efforts makes it harder for such measures to justify their present costs. In this paper, we propose sustainable discounted utilitarianism (SDU) as an alternative principle for evaluation of climate policy. Unlike undiscounted utilitarianism, which always assigns zero relative weight to present utility, SDU is an axiomatically based criterion, which departs from DU by assigning zero weight to present utility if and only if the present is better off than the future. Using the DICE integrated assessment model to run risk analysis, we show that it is possible for the future to be worse off than the present along a ‘business as usual’ development path. Consequently SDU and DU differ, and willingness to pay for emissions reductions is (sometimes significantly) higher under SDU than under DU. Under SDU, stringent schedules of emissions reductions increase social welfare, even for a relatively high utility discount rate. [Copyright &y& Elsevier]

Abstract: This paper provides new evidence on the relationship between management practices and firm performance. We interviewed managers of 190 randomly selected manufacturing plants in the UK and matched their responses with official business microdata. We find that climate friendly management practices are associated with lower energy intensity and higher productivity. Firms that adopt more such practices also conduct more climate friendly R&D which will sustain future growth in energy efficiency. Our findings are akin to the “energy efficiency paradox” and highlight the linkages between particular management practices and firm-level energy efficiency. We also find a strong empirical link between climate friendly management practices and organizational structure. Firms are more likely to adopt such practices if climate change issues are managed by the environmental or energy manager, and if this manager is close to the CEO. Adoption is less likely when the CEO is in charge of climate change issues. [Copyright &y& Elsevier]

Abstract: This paper provides evidence of market power in the transportation of ethanol used in reformulated gasoline and alternative transportation fuels. I estimate a reduced form model for railroad route-level prices. My identification strategy instruments for railroad entry, controls for selection and explicitly models capacity constraints. A detailed understanding of this industry is important because U.S. environmental policies seek to substantially expand ethanol use. Evidence of market power may alter the types of policies pursued by lawmakers. I find that ethanol shipment prices are lower for more competitive routes. I also find evidence that railroads price discriminate based on environmental regulation at route destinations. Monopolist prices for shipments to carbon monoxide non-attainment areas are 3% higher than shipments to other destinations. This price premium falls sharply with increased competition. This suggests a perverse result where environmental regulation increases the price of a clean input. [Copyright &y& Elsevier]

Abstract: The Clean Development Mechanism (CDM) allows industrialized countries to comply with the Kyoto Protocol by using carbon offsets from developing countries. There are two puzzles within this carbon market: additionality (the proposed activity would not have occurred in its absence) and co-benefits (the project has other environmental benefits besides climate mitigation). This paper proposes an econometric approach to evaluate the CDM effect on sulfur dioxide emission reductions and assess its additionality indirectly. Our empirical model is applied to China''s emissions at the prefecture level. We found that the CDM does not have a statistically significant effect in lowering sulfur dioxide emissions. This result casts doubt on additionality of these CDM activities, that is, they would have happened anyway. [Copyright &y& Elsevier]

Abstract: In this paper, we show that the potential for endogenous technological change in alternative energy sources may alter the behaviour of resource-owning firms. When technological progress in an alternative energy source can occur through learning-by-doing, resource owners face competing incentives to extract rents from the resource and to prevent expansion of the new technology. We show that in such a context, it is not necessarily the case that scarcity-driven higher traditional energy prices over time will induce alternative energy supply as resources are exhausted. Rather, we show that as we increase the learning potential in the substitute technology, lower equilibrium energy prices prevail and there may be increased resource extraction and greenhouse gas emissions. We show that the effectiveness and the incidence of emissions reduction policies may be altered by increased potential for technological change. Our results suggest that treating finite resource rents as endogenous consequences of both technological progress and policy changes will be important for the accurate assessment of climate change policy. [Copyright &y& Elsevier]

Abstract: This paper examines the relationship between climate change awareness and household behavior by testing whether Al Gore''s documentary An Inconvenient Truth caused an increase in the purchase of voluntary carbon offsets. I find that in the two months following the film''s release, zip codes within a 10-mile radius of a zip code where the film was shown experienced a 50 percent relative increase in the purchase of voluntary carbon offsets. During other times, offset purchasing patterns for zip codes inside the 10-mile radius were similar to the patterns of zip codes outside the 10-mile radius. There is, however, little evidence that individuals who purchased an offset due to the film purchased them again a year later. [Copyright &y& Elsevier]

Abstract: It is widely recognized that the economics of distant-future events, like climate change, is critically dependent upon the choice of a discount rate. Unfortunately, it is unclear how to discount distant-future events when the future discount rate itself is unknown. In previous work, an analytically-tractable approach called “gamma discounting” was proposed, which gave a declining discount rate schedule as a simple closed-form function of time. This paper extends the previous gamma approach by using a Ramsey optimal growth model, combined with uncertainty about future productivity, in order to “risk adjust” all probabilities by marginal utility weights. Some basic numerical examples are given, which suggest that the overall effect of risk-adjusted gamma discounting on lowering distant-future discount rates may be significant. The driving force is a “fear factor” from risk aversion to permanent productivity shocks representing catastrophic future states of the world. [Copyright &y& Elsevier]

Abstract: In an attempt to achieve the positive externalities from a more knowledge-intensive economy, many developing countries have emphasized improvements in their science and technology (S&T) capabilities. China, in particular, has been experiencing an acceleration in its R&D intensity, causing many to wonder whether China is undergoing an S&T takeoff. In this paper, we simulate the effects of an S&T takeoff using a model of China that incorporates econometric estimates from 1500 industrial enterprises in China. We find that an S&T takeoff will lead to lower goods prices overall, but a larger drop in energy prices due to the energy-saving bias of R&D. The outcome is higher capital investment and economic growth; a substitution of energy for other factors of production; and greater energy consumption by households. Our findings underscore the importance of considering the economy-wide implications of a technology policy, recognizing that better technology does not necessarily imply a cleaner environment. [Copyright &y& Elsevier]

Decreasing greenhouse gas emissions from electricity generation is crucial to tackle climate change. Empirically, however, little is known about the effectiveness of existing economic instruments in the power sector. This paper examines the impact of the UK Carbon Price Support (CPS), a carbon tax implemented in the UK power sector in 2013. Relative to a synthetic control unit built from other European countries, I find that emissions from the UK power sector declined by 20 to 26 percent per year on average between 2013 and 2017. The tax operated via three mechanisms: a decrease in emissions at the intensive margin; the closure of some high-emission plants at the extensive margin; and a higher probability of closure for plants already at risk due to European air quality regulations. [ABSTRACT FROM AUTHOR]

As the frequency and severity of wildfires escalates in many regions, the study of fire-resilient forestry practices becomes crucial. While forest owners may employ several silvicultural practices to mitigate fire damage, the analytical study of optimal forest management has been reduced to the effects of fire on optimal rotation only. The fundamental result of this literature date back to the early 1980s and has remained virtually uncontested since then. This paper develops an infinite rotation cycle forest model in which landowners optimally choose rotation age, volume, and timing of partial harvesting in the presence of fire risk. We show that this setting fundamentally changes earlier results. In particular, more frequent fires imply beginning commercial thinning sooner but not necessarily shortening the rotation age. Two numerical applications highlight the empirical relevance of our findings. [ABSTRACT FROM AUTHOR]