Economic tools to promote transparency and comparability in the Paris Agreement

The Paris Agreement culminates a six-year transition towards an international climate policy architecture based on parties submitting national pledges every five years1. An important policy task will be to assess and compare these contributions2, 3. We use four integrated assessment models to produce metrics of Paris Agreement pledges, and show differentiated effort across countries: wealthier countries pledge to undertake greater emission reductions with higher costs. The pledges fall in the lower end of the distributions of the social cost of carbon and the cost-minimizing path to limiting warming to 2 °C, suggesting insufficient global ambition in light of leaders’ climate goals. Countries’ marginal abatement costs vary by two orders of magnitude, illustrating that large efficiency gains are available through joint mitigation efforts and/or carbon price coordination. Marginal costs rise almost proportionally with income, but full policy costs reveal more complex regional patterns due to terms of trade effects

A low energy demand scenario for meeting the 1.5 °C target and sustainable development goals without negative emission technologies

Scenarios that limit global warming to 1.5 °C describe major transformations in energy supply and ever-rising energy demand. Here, we provide a contrasting perspective by developing a narrative of future change based on observable trends that results in low energy demand. We describe and quantify changes in activity levels and energy intensity in the global North and global South for all major energy services. We project that global final energy demand by 2050 reduces to 245 EJ, around 40% lower than today, despite rises in population, income and activity. Using an integrated assessment modelling framework, we show how changes in the quantity and type of energy services drive structural change in intermediate and upstream supply sectors (energy and land use). Down-sizing the global energy system dramatically improves the feasibility of a low-carbon supply-side transformation. Our scenario meets the 1.5 °C climate target as well as many sustainable development goals, without relying on negative emission technologies

Impure Public Goods and Technological Interdependencies

Impure public goods represent an important group of goods. Almost every public good exerts not only effects which are public to all but also effects which are private to the producer of this good. What is often omitted in the analysis of impure public goods is the fact that – regularly – these private effects can also be generated independently of the public good. In our analysis we focus on the effects alternative technologies – independently generating the private effects of the public good – may have on the provision of impure public goods. After the investigation in an analytical impure public good model, we numerically simulate the effects of alternative technologies in a parameterized model for climate policy in Germany

Aandacht voor veiligheid

De komende decennia worden er tussen de 500.000 en 1.500.000 woningen gebouwd waarvan een groot deel in laag Nederland. Deze studie laat zien dat door deze woningen overstromingsbestendig te bouwen schadereductie mogelijk is. Het schaderisico wordt dan nog eens een factor 2 minder als naast een Business as Usual variant nieuwbouwwoningen worden opgehoogd tot +5 m NAP. De kosten van opgehoogde nieuwbouwhuizen zijn hoger en variëren tussen de 0,4 en 1.7 miljard euro/jaar, hetgeen overeenkomt met 0,1-0,5% van het BNP. Dijkversterking levert de hoogste reductie op in het schaderisico bij de gehanteerde scenario’s. Gevolgbeperkende maatregelen in de ruimtelijk ordening als additionele oplossingsrichting zijn echter goed mogelijk als er ook een economische perspectief is bijvoorbeeld door middel van multifunctioneel ruimtegebruik

A Bargaining Game Analysis of International Climate Negotiations

Climate negotiations under the United Nations Framework Convention on Climate Change have so far failed to achieve a robust international agreement to reduce greenhouse gas emissions. Game theory has been used to investigate possible climate negotiation solutions and strategies for accomplishing them. Negotiations have been primarily modelled as public goods games such as the Prisoner’s Dilemma, though coordination games or games of conflict have also been used. Many of these models have solutions, in the form of equilibria, corresponding to possible positive outcomes—that is, agreements with the requisite emissions reduction commitments. Other work on large-scale social dilemmas suggests that it should be possible to resolve the climate problem. It therefore seems that equilibrium selection may be a barrier to successful negotiations. Here we use an N-player bargaining game in an agent-based model with learning dynamics to examine the past failures of and future prospects for a robust international climate agreement. The model suggests reasons why the desirable solutions identified in previous game-theoretic models have not yet been accomplished in practice and what mechanisms might be used to achieve these solutions

A Weak Bargaining Set for Contract Choice Problems

In this paper, we consider the problem of choosing a set of multi-party contracts, where each coalition of agents has a non-empty finite set of feasible contracts to choose from. We call such problems, contract choice problems. The main result of this paper states that every contract choice problem has a non-empty weak bargaining set. The need for such a solution concept which is considerably weaker than the core arises, since it is well known that even for very simple contract choice problems, the core may be empty. We also show by means of an example that the bargaining set due to Mas-Colell (1989), as well as a weaker version of it, may be empty for contract choice problems, thereby implying that the weakening we suggest is in some ways tigh

Analysis and Evaluation of Ecosystem Resilience: An Economic Perspective

This paper focuses on the analyses and evaluation of resilience anchored in an economic perspective. Resilience, as well as most of the benefits provided by ecosystems, is not priced on current markets. However, this does not mean that resilience is of no value for humans. On the contrary, the interest of using an economic perspective, and the respective scientific methodology, will be put forward in terms of resilience relevance for ecosystems life and functioning, and its impact on human welfare. The economic perspective is anchored in an anthropocentric analysis meaning that resilience is evaluated in terms of provision of natural capital benefits. These, in turn, are interpreted as an insurance against the risk of ecosystem malfunctioning and the consequent interruption of the provision of goods and services to humans. For this analysis, we make use of a conceptual framework so as to identify and describe the different value components of resilience. Finally, we present an illustration that tackles the economic analysis and discussion of resilience benefits in the context of the Venice Lagoon

The Risk and Policy Space for Loss and Damage: Integrating Notions of Distributive and Compensatory Justice with Comprehensive Climate Risk Management

The Warsaw Loss and Damage Mechanism holds high appeal for complementing actions on climate change adaptation and mitigation, and for delivering needed support for tackling intolerable climate related-risks that will neither be addressed by mitigation nor by adaptation. Yet, negotiations under the UNFCCC are caught between demands for climate justice, understood as compensation, for increases in extreme and slow-onset event risk, and the reluctance of other parties to consider Loss and Damage outside of an adaptation framework. Working towards a jointly acceptable position we suggest an actionable way forward for the deliberations may be based on aligning comprehensive climate risk analytics with distributive and compensatory justice considerations. Our proposed framework involves in a short-medium term, needs-based perspective support for climate risk management beyond countries ability to absorb risk. In a medium-longer term, liability-based perspective we particularly suggest to consider liabilities attributable to anthropogenic climate change and associated impacts. We develop the framework based on principles of need and liability, and identify the policy space for Loss and Damage as composed of curative and transformative measures. Transformative measures, such as managed retreat, have already received attention in discussions on comprehensive climate risk management. Curative action is less clearly defined, and more contested. Among others, support for a climate displacement facility could qualify here. For both sets of measures, risk financing (such as ‘climate insurance’) emerges as an entry point for further policy action, as it holds potential for both risk management as well as compensation functions. To quantify the Loss and Damage space for specific countries, we suggest as one option to build on a risk layering approach that segments risk and risk interventions according to risk tolerance. An application to fiscal risks in Bangladesh and at the global scale provides an estimate of countries’ financial support needs for dealing with intolerable layers of flood risk. With many aspects of Loss and Damage being of immaterial nature, we finally suggest that our broad risk and justice approach in principle can also see application to issues such as migration and preservation of cultural heritage