Limits to Substitution between Ecosystem Services and Manufactured Goods and Implications for Social Discounting

Drupp, Moritz A.

doi:10.2139/ssrn.2568368

Cited by 16 publications

(30 citation statements)

References 61 publications

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“…49 [1.13, 1.33, 1.23] σ F Standard values for extractive sectors used in GTAP 50 [0.1, 1, 0.2] σ T Standard values for extractive sectors used in GTAP 50 [0.1, 1, 0.2] Drawn from estimates of substitutability derived from ref. 51 [1.5, 2.1, 1.8] σ A Ref. 26 [1.1, 1.24, 1.14] σ P Literature suggests high complementarity, see e.g., 52 [0.05, 0.3, 0.2] Assumed based on reading of the literature [0.25, 0.75, 0.5] Ref.…”

Section: Methodsmentioning

confidence: 99%

Carbon pricing and planetary boundaries

et al. 2020

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Human activities are threatening to push the Earth system beyond its planetary boundaries, risking catastrophic and irreversible global environmental change. Action is urgently needed, yet well-intentioned policies designed to reduce pressure on a single boundary can lead, through economic linkages, to aggravation of other pressures. In particular, the potential policy spillovers from an increase in the global carbon price onto other critical Earth system processes has received little attention to date. To this end, we explore the global environmental effects of pricing carbon, beyond its effect on carbon emissions. We find that the case for carbon pricing globally becomes even stronger in a multi-boundary world, since it can ameliorate many other planetary pressures. It does however exacerbate certain planetary pressures, largely by stimulating additional biofuel production. When carbon pricing is allied with a biofuel policy, however, it can alleviate all planetary pressures.

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Section: Methodsmentioning

confidence: 99%

Carbon pricing and planetary boundaries

et al. 2020

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“…How biodiversity and natural capital should be measured, which societal, political and economic values underlie different measures and valuation and how ecological and economical tradeoffs should be dealt with are big challenges left for future research. In order to address these issues, not only do we need to develop appropriate assessment methods, but we also need to disclose the theoretical basics of this assessment and which trade-offs go hand in hand with different assessments (Brei et al 2020;Antoci et al 2019;Drupp 2018). Completely new issues for the valuation of biodiversity and natural capital arise with the development of new technologies.…”

Section: Deep Decarbonization and Climate Neutralitymentioning

confidence: 99%

“… 2020 ; Antoci et al. 2019 ; Drupp 2018 ). Completely new issues for the valuation of biodiversity and natural capital arise with the development of new technologies.…”

Section: Twenty Challengesmentioning

confidence: 99%

Twenty Key Challenges in Environmental and Resource Economics

Bretschger

Pittel

2020

Environ Resource Econ

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Economic and ecological systems are closely interlinked at a global and a regional level, offering a broad variety of important research topics in environmental and resource economics. The successful identification of key challenges for current and future research supports development of novel theories, empirical applications, and appropriate policy designs. It allows establishing a future-oriented research agenda whose ultimate goal is an efficient, equitable, and sustainable use of natural resources. Based on a normative foundation, the paper aims to identify fundamental topics, current trends, and major research gaps to motivate further development of academic work in the field.

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“…Empirical work suggests that the discount rate for ecosystem services is about 1%-point smaller than that for consumption (e.g. Drupp, 2018). Zhu et al (2019) use a Ramsey growth framework with different growth rates for the economy and ecosystem services, so that valuation of environmental benefits relative to consumption goods changes over time and relative prices are not constant over time.…”

Section: Dual Discount Rates Relative Scarcity and The Endowment Effectmentioning

confidence: 99%

Discounting and Climate Policy

Ploeg

2020

Oxford Research Encyclopedia of Economics and Finance

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The social rate of discount is a crucial driver of the social cost of carbon (SCC), that is, the expected present discounted value of marginal damages resulting from emitting one ton of carbon today. Policy makers should set carbon prices to the SCC using a carbon tax or a competitive permits market. The social discount rate is lower and the SCC higher if policy makers are more patient and if future generations are less affluent and policy makers care about intergenerational inequality. Uncertainty about the future rate of growth of the economy and emissions and the risk of macroeconomic disasters (tail risks) also depress the social discount rate and boost the SCC provided intergenerational inequality aversion is high. Various reasons (e.g., autocorrelation in the economic growth rate or the idea that a decreasing certainty-equivalent discount rate results from a discount rate with a distribution that is constant over time) are discussed for why the social discount rate is likely to decline over time. A declining social discount rate also emerges if account is taken from the relative price effects resulting from different growth rates for ecosystem services and of labor in efficiency units. The market-based asset pricing approach to carbon pricing is contrasted with a more ethical approach to policy making. Some suggestions for further research are offered.

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Limits to Substitution between Ecosystem Services and Manufactured Goods and Implications for Social Discounting

Cited by 16 publications

References 61 publications

Carbon pricing and planetary boundaries

Carbon pricing and planetary boundaries

Twenty Key Challenges in Environmental and Resource Economics

Discounting and Climate Policy

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