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envecon 2024

envecon 2024 took place on Friday, 8th March, 2024 at the Royal Society, London.

 

The conference brought environmental economists and multidisciplinary researchers together with practitioners and decision-makers in academia, consultancy, policy, business, and the third sector.

 

For the first time, the conference was CPD accredited by CIWEM.

The keynote is available to watch for free. All other recordings of the conference (and every conference and webinar since 2021) are available to UKNEE members.

Watch the Keynote 

Key Messages from Climate Science for Economists
Prof Emily Shuckburgh OBE, Director of Cambridge Zero

Professor Emily Shuckburg OBE is a world-leading climate scientist and science communicator. She is also Professor of Environmental Data Science at the Department of Computer Science and Technology and leads the UKRI Centre for Doctoral Training on the Application of AI to the study of Environmental Risks (AI4ER).

She is a Fellow of Darwin College, a Fellow of the Cambridge Institute for Sustainability Leadership, an Associate Fellow of the Centre for Science and Policy, a Fellow of the British Antarctic Survey and a Fellow of the Royal Meteorological Society.

Session 1: Influencing Behaviours Through Policy
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Household behaviour and energy use: empirical evidence and policy implications

Katherine Hassett, OECD

Governments can support households in making more sustainable energy choices by addressing structural, financial, and psychological barriers. This presentation focuses on results from the third round of the OECD Survey on Environmental Policies and Individual Behaviour Change (EPIC) on households’ energy-related decisions in nine countries. It summarises reported uptake of low-emissions energy technologies, engagement in energy conservation, and support for energy-related policies. Results will also be presented for ongoing work to profile households according to their energy conservation behaviour and investment in low-emissions energy technologies, identify the determinants of conservation and investment decisions, and estimate willingness-to-pay for renewable electricity. The findings indicate a number of ways in which governments can support households in making more sustainable energy-related choices.

Perverse incentives in CCUS Policy Design

Joseph Stemmler, University of Oxford

The Inflation Reduction Act amends Internal Revenue Code Section 45Q by enhancing subsidies for US firms to technologically sequester carbon. This paper analytically studies the effects of this subsidy on net emissions, considering its impact on input choice, output, and sequestration compared to a carbon tax. A carbon tax unambiguously reduces produced emissions and increases sequestration. While a sequestration subsidy increases firm sequestration, it also amplifies emitted carbon. If the rise in produced emissions exceeds the increase in sequestration, the subsidy leads to an increase in net emissions. Numerical simulations explore implications for eligible industries, providing insights into potential consequences of current policy design.

Induced innovation, inventors, and the energy transition

Eugenie Dugoua, LSE

We study how individual inventors respond to incentives to work on “clean” electricity technologies. Using natural gas price variation, we estimate output and entry elasticities of inventors and measure the medium-term impacts of a price increase mirroring the social cost of carbon. We find that the induced clean innovation response primarily comes from existing clean inventors. New inventors are less responsive on the margin than their average contribution to clean energy patenting would indicate. Our findings highlight the potential importance of policies that increase the supply of clean inventors who are focused on mitigating climate change.

Session 2: Distributional Impacts of Policy
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The impact of climate on Indian households’ living costs 

Robert Elliott, University of Birmingham

Exploiting the geographical variation in climate across India and the availability of district-level household expenditure data, we estimate the impact of climate on Indian households’ living costs. To accomplish this we use an approach more frequently employed to calculate demographic equivalence scales. We find that whereas higher precipitation decreases living costs, heating and cooling degree days, as well as relative humidity, increase them. Based on these findings we further compute climate equivalence scales for otherwise identical households located in major cities in India.

Which households bear the highest costs of climate policy?

Leonard Missbach, Mercator Research Institute

Climate policy affects different people differently – with important implications for public acceptability of policy reforms. Here, I present novel evidence about the distributional effects of climate policy for 87 countries. Building on a novel micro-level dataset and machine learning methods, I distil country-specific household characteristics that determine differences in households’ additional costs. My findings demonstrate that heterogeneity in affluence is often an insufficient predictor for heterogeneous costs of climate policy and that more granular household-level information can be meaningful. Findings from this study can help to design more efficient, equitable and thus politically viable climate policy design.

Young people are particularly vulnerable to humid heat: evidence from Mexico

Andrew Wilson, Columbia University

Recent studies have found that heat-related mortality is the largest component of future damage from climate change and that heat-related mortality is concentrated among the elderly. In this study, we show that when accounting for humidity, heat-related mortality is instead concentrated among young people, especially children under five and young working-age adults. We estimate historical and projected mortality across age groups in Mexico. Historically, we find that the overall number of deaths attributed to heat exposure is 11% higher when accounting for humidity. In Mexico by the end of the century in a current policies emissions scenario, we project that age-dependent vulnerability to humid heat results in a 42% increase in temperature-related deaths among under-35-year-olds and a 25% decrease among those 35 and older.

Policies to reduce carbon leakage: insight from a meta-analysis

Mengxi Xie, KU Leuven

Over the past few decades, a substantial literature has examined the effectiveness of different policy instruments in addressing carbon leakage. This paper conducts a meta-regression analysis on 416 estimates of the leakage ratio coded from 39 economic studies dating from 2004 to 2022, quantifying the impact on carbon leakage induced by different climate policies. The results confirm the significant effect of both anti-leakage policies within and across the border of a carbon policy region. It further sheds light on future avenues for research and policy design which could benefit from involving more politically feasible options and a broader range of countries.

Session 3: Multidisciplinary Perspectives for a Sustainable Marine Environment
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In collaboration with the the SMMR Pyramids of Life project, this session will link fisheries operations, ecological modelling, consumer preferences and policy scenarios to highlight practical sustainability solutions and discuss the usefulness of research approaches for decision makers from public and private sectors. Short papers will contribute to the discussion: 

Understanding the complexity of measuring the “maximum sustainable yield” principle

Jon Pitchford, University of York

Understanding consumer preferences for sustainable seafood consumption

Ellen McHarg, University of East Anglia

How evidence can feed policy decision making

Bryce Stewart, University of York

A panel discussion will follow these presentations, moderated by Dr Silvia Ferrini. Contributors will join from the Marine Maritime Organization, Marine Conservation Society, and the National Federation of Fishermen’s Organisations:

Dr Aisling Lannin

Head of Scientific Evidence and Evaluation,

Marine Management Organisation

Jack Clarke

Seafood Engagement Manager, 

Marine Conservation Society

Mike Roach

Deputy CEO, 

National Federation of Fishermen's Organisations

Session 4: Financing Nature and Climate Solution
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Maximising biodiversity gains in woodland creation schemes

Katherine Simpson, University of Glasgow

Despite a century-long increase in UK woodland cover, species decline and uncertainties about the biodiversity impact of newly planted woodlands necessitate targeted, evidence-based policies to support woodland creation. Understanding the spatial relationship between economic incentives (e.g., agricultural rents) and ecological benefits (e.g., woodland bird abundance) is crucial. Our work explores these dynamics, comparing payment for actions with a novel "payment for modelled results" agri-environment scheme in two case studies. Positive spatial correlation between agricultural rents and ecological benefits highlights the need to target “expensive parcels” for woodland creation. The study emphasizes understanding landowners' economic decision-making for incentive-based policies that maximize conservation efforts in ecologically beneficial sites.

A tree planters’ dilemma: decisionmakers must look beyond land use change scenarios to avoid damaging afforestation outcomes

Christopher Lee, University of Exeter

Inherent uncertainty in Land Use Change (LUC) has largely been ignored in the design of historic climate change adaptation and mitigation schemes. Instead, scenario analysis has been the mainstay, evaluating LUC outcomes for a narrow or isolated set of potential futures. Here we show that such approaches are dangerously simplistic; to the extent that some LUC designs, which present favourably in a scenario-analysis approach, risk worse outcomes than if we simply do nothing. Focusing on afforestation across Great Britain, we show that explicitly considering uncertainty in LUC design is crucial to avoid bad outcomes, and deliver the most cost-effective results

Appeal of carbon offsets: which project characteristics are valued on the voluntary carbon market?

Tara L’Horty, Universite de Lorraine, AgroParis Tech

To shed light on the opaque dynamics of the worldwide voluntary carbon market, this study investigates transaction efficiency in relation to buyer preferences and aims to discern the aspects of carbon offset projects that appeal to buyers. Addressing the current data scarcity, an "indicator of appeal" was developed and explored as an alternative proxy to price. Through an econometric approach, this indicator is compared in regards to project characteristics such as carbon offset program, scope, size, specifications of provenance and resulting actual emission reduction. These characteristics reflect the tremendous heterogeneity of carbon credits traded on the market.

Session 5: Changes and Challenges for Policy and Investment
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Aligning Biodiversity Metrics with Public Preferences for Environmental Policy

Professor Ben Groom, Dragon Capital in Biodiversity Economics, LEEP, University of Exeter

Our understanding of the welfare implications associated with the biodiversity metrics currently implemented for appraisals of public policies and financial disclosures remains limited. This study employs a discrete choice experiment that explores which metrics of biodiversity existence values are perceived to be the most important. Results show the general public derives the largest value from the biodiversity attributes of species richness, extinction probability, and distinctiveness. We find this largely aligns with the preferences of experts in the fields of conservation science and ecology, as well as those in the financial sector. However, many of these biodiversity attributes are not reflected in commonly used metrics. We conduct a UK wide assessment using the NEV suite of models that shows the welfare benefits associated with following public and expert preferences for biodiversity are considerably higher, and spatial allocations dramatically different, compared to pursuing standard metrics such as Mean Species Abundance (MSA), Species Habitat Index (SHI), or even species richness.

Worker flows in the green transition

Markus Janser, IAB, Federal Employment Services

Using a text-mining approach to task descriptions of occupations together with worker-level administrative data, we explore the growth in the greenness of employment which amounted to 35% between 2012 and 2022. We first demonstrate that the general greening of occupations (“within effect”) accounts for two thirds of the overall greening of employment, whereas shifting occupational employment shares (“between effect”) account for the remainder. Second, we show which occupations contribute most to the within-effect. Third, we provide evidence which worker flows are mainly responsible for the between effect, and which socio-demographic groups drive these labour-market transitions.

Do energy efficiency obligations decrease residential energy use? Evidence from France

Guillaume Wald, CERNA, Paris

The French Energy Efficiency Obligation scheme (EEOs) requires energy suppliers to subsidize energy renovation. It plays a leading role as certified investments represented around EUR 4 billion in 2023. The policy stems from Directive 2012/27/EU on energy efficiency, which sets an annual energy use reduction target of 1.5% for the residential, tertiary, industrial and agriculture sectors. However, I estimate that the policy decreased residential energy use by less than .85% each year over 2017-19. This deceiving result is driven by a 49% energy performance gap: engineering projections used to calibrate obligations are twice as big as observed energy savings.

Leveraging machine learning to understand environmental tax opposition in different regions and periods

Johannes Brehm, RWI Leibniz-Institute for Economic Research

High environmental taxes continue to face global opposition. This study identifies the key factors influencing opposition in 28 countries over the previous decade. Our findings vary across regions and periods, but individual values and environmental evaluations generally outweigh demographic characteristics. In high-income countries, concerns about environmental issues and prioritizing jobs and prices emerge as influential, gaining prominence over the previous decade. In emerging economies, an individual's lack of commitment to pro-environmental behavior is the most important predictor. Policymakers can use these insights to tailor and effectively communicate environmental tax increases, for instance, by emphasizing job creation.

Posters

The Economic Benefits of Nature-based Solutions for Climate Risk: A Meta-Analysis

Guillermo Garcia, Vrije Universiteit Amsterdam

The rise in climate risks emphasizes the need for investing in adaptation alternatives. Nature-Based Solutions (NBS) provide significant environmental, economic, and social benefits, yet these are often undervalued in policy decisions. This study quantifies NBS's economic value through a meta-analysis, revealing higher willingness-to-pay for visible benefits like recreation, compared to less perceptible in the short-term ones such as air quality. A value transfer function, derived from the meta-regression results from over 60 peer-reviewed studies, can be used by policymakers, alongside risk-reduction analysis, to mainstream NBS investing.

The Long-Term Impact of Climate Change on Growth: Evidence from Chinese Provinces

Dr Meng Tong, University of Chester

This paper estimates the long-term impact of climate change on province level GDP per

capita for China. Using climate econometric techniques We find that temperature deviations

from historical norms has a negative impact on GDP per capita but also impacted different

sectors in different ways. In other results we find a degree of region heterogeneity such that

hotter regions experience greater damage from increasing temperatures. There is evidence

that China adapts to climate change through changes in the number of employees, wages

and trade openness.

The impact of behavioural factors on households’ willingness to pay for microgeneration heating technologies - An empirical analysis of household preferences.

Kalila Mackenzie, Durham University Business School

The decarbonisation of the UK’s heating is fundamental to the achievement of Net Zero by 2050, which will be driven by households’ decisions to adopt low-carbon heating systems. This research makes use of a choice experiment to capture UK households’ willingness to pay for geothermal district heating, hydrogen boilers, air source heat pumps and solar electric boilers. The attributes determined within the choice experiment include the investment cost and monthly cost, the replacement period (in years), carbon dioxide (CO2) emissions and job creation attributed to the heating technology. The model will look to incorporate key behavioural factors that are pertinent to households’ decisions to invest in a low-carbon heating system, including energy literacy, government policies, community involvement, identity and heritage, environmental behaviour and beliefs and sources of information.

Scientific Committee

Each year, the envecon agenda is shaped by the invaluable input of our dedicated scientific committee. We thank them for their contributions, both to this process and to the field. 

This year, the envecon Scientific Committee consisted of:

  • Dr Paolo Agnolucci, Senior Lecturer, Bartlett School of Environment, Energy, & Resources, University College London

  • Professor Ian Bateman OBE, Professor of Environmental Economics, University of Exeter; Director of the Land, Environment, Economics, and Policy Institute (LEEP); Director of NetZeroPlus

  • Dr Diane Burgess, Principle Agricultural Economist, Agri-food and Biosciences Institute Northern Ireland (AFBINI)

  • Professor Mike Christie, Professor of Environmental and Ecological Economics, Aberystwyth University Business School

  • Dr Eugenie Dugoua, Assistant Professor in Environmental Economics, London School of Economics and Political Science (LSE)

  • Dr Marian Dumas, Assistant Professorial Research Fellow, Grantham Research Institute

  • Dr Silvia Ferrini, Senior Research Fellow, University of East Anglia and the Centre for Social and Economic Research on the Global Environment (CSERGE)

  • Professor Ben Groom, Dragon Capital Chair in Biodiversity Economics, University of Exeter

  • Professor Nicholas Hanley, Chair in Environmental and One Health Economics, University of Glasgow

  • Dr Yiannis Kountouris, Lecturer in Economics and the Environment, Centre for Environmental Policy, Imperial College London

  • Ece Özdemiroğlu FRSA, Co-Founder and CEO of Economics for the Environment Consultancy (eftec)

  • Professor Daniel Rigby, Professor of Economics, University of Manchester

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