Karen Fisher-Vanden

Trust and Communication: Mechanisms for Increasing Farmers’ Participation in Water Quality Trading

Trust and communication barriers have contributed significantly to the lethargic performance of many point-nonpoint source water quality trading programs—farmers are often reluctant to participate despite direct financial incentives—yet the literature lacks a comprehensive investigation of how the social context affects trading outcomes. We draw on social embeddedness theory to analyze three mechanisms of communicating with farmers and conduct a case study analysis of 12 water quality trading programs. We find that employing trustworthy third parties or embedded ties may reduce farmers’ reluctance to participate, although the most effective mechanism ultimately depends on local conditions and program objectives. (JEL Q53)

Invisible water, visible impact: groundwater use and Indian agriculture under climate change

India is one of the world’s largest food producers, making the sustainability of its agricultural system of global significance. Groundwater irrigation underpins India’s agriculture, currently boosting crop production by enough to feed 170 million people. Groundwater overexploitation has led to drastic declines in groundwater levels, threatening to push this vital resource out of reach for millions of small-scale farmers who are the backbone of India’s food security. Historically, losing access to groundwater has decreased agricultural production and increased poverty. We take a multidisciplinary approach to assess climate change challenges facing India’s agricultural system, and to assess the effectiveness of large-scale water infrastructure projects designed to meet these challenges. We find that even in areas that experience climate change induced precipitation increases, expansion of irrigated agriculture will require increasing amounts of unsustainable groundwater. The large proposed national river linking project has limited capacity to alleviate groundwater stress. Thus, without intervention, poverty and food insecurity in rural India is likely to worsen.

Factors Influencing Energy Intensity in Four Chinese Industries

In this paper, we investigate the determinants of decline in energy intensity in four Chinese industries - pulp and paper, cement, iron and steel, and aluminum. This paper attempts to answer the following key question: For the purpose of promoting energy efficiency, do prices, technology, enterprise restructuring and other policy-related instruments affect various sectors uniformly so as to justify uniform industrial energy conservation policies, or do different industries respond significantly differently so as to require policies that are tailored to each sector separately? In this paper, we examine this question using data for Chinas most energy-intensive large and medium-size enterprises over the period 1999-2004. Our results suggest that in all four industries rising energy costs are a significant contributor to the decline in energy intensity over our period of study. Chinas industrial policies encouraging consolidations and scale economies also seem to have contributed to reductions in energy intensity in these four industries.

Modeling climate change feedbacks and adaptation responses: recent approaches and shortcomings

This paper offers a critical review of modeling practice in the field of integrated assessment of climate change and ways forward. Past efforts in integrated assessment have concentrated on developing baseline trajectories of emissions and mitigation scenario analyses. A key missing component in Integrated Assessment Models (IAMs) is the representation of climate impacts and adaptation responses. In this paper, we identify key biases that are introduced when climate impacts and adaptation responses are omitted from the analysis and review the state of modeling studies that attempt to capture these feedbacks. A common problem in these IAM studies is the lack of connection with empirical studies. We therefore also review the state of the empirical work on climate impacts and identify ways that this connection could be improved.

A New Approach to Water Quality Trading: Applying Lessons from the Acid Rain Program to the Lower Boise River Watershed

Water quality trading is receiving great interest as a potential tool for achieving a watersheds water quality goals at less cost. It appeals to both regulators and watershed stakeholders as a voluntary, businesslike approach attracting a category of sources to the table that regulators have been unable to control using traditional enforcement tools—nonpoint sources. Nonpoint source pollution is a major source of the water quality problems still needing to be addressed in watersheds throughout the United States. Following the remarkable success of the Acid Rain Programs sulfur dioxide emissions trading system, however, expectations have been raised for all pollution trading systems. To date, water quality trading projects across the US have failed to deliver on those expectations because of the predominance of the “offset” trading model in their program design, which is characterized by significant costs in both time and resources to support trades. In this article, we argue that, although critical differences exist between water quality trading and the “cap and trade” model of the Acid Rain Program, water quality trading programs should consider incorporating certain key design elements that have contributed to the Acid Rain Programs success. We describe Idahos Lower Boise River water quality trading framework as an example of how this can be done.

Management structure and technology diffusion in Chinese state-owned enterprises

Abstract This paper identifies factors that can explain the variation in the diffusion of continuous casting technology among Chinese steel firms during the period 1985–1995. Potential factors affecting firm-level diffusion of continuous casting technology are tested econometrically using data from 75 Chinese steel firms. The results suggest that institutional factors, such as management structure, have had a significant influence on a firms rate of diffusion. In particular, the results show that although centrally managed firms are typically the first to acquire a new technology, complete integration of the technology into the production process occurs more rapidly in firms that are locally managed. Furthermore, the results suggest that certain market factors are important in a locally managed firms decision to convert, but seem to have played a lesser role in centrally managed firms. These results imply that although centrally managed firms have better access to new technologies due to their close ties to the central government, locally managed firms may possess a greater incentive to improve production efficiency through the incorporation of new technology.

Confronting the challenge of integrated assessment of climate adaptation: a conceptual framework

Key limitations of integrated assessment models (IAMs) are their highly stylized and aggregated representation of climate damages and associated economic responses, as well as the omission of specific investments related to climate change adaptation. This paper proposes a framework for modeling climate impacts and adaptation that clarifies the relevant research issues and provides a template for making improvements. We identify five desirable characteristics of an ideal integrated assessment modeling platform, which we elaborate into a conceptual model that distinguishes three different classes of adaptation-related activities. Based on these elements we specify an impacts- and adaptation-centric IAM, whose optimality conditions are used to highlight the types of functional relationships necessary for realistic representations of adaptation-related decisions, the specific mechanisms by which these responses can be incorporated into IAMs, and the ways in which the inclusion of adaptation is likely to affect the simulations’ results.

Inaction and climate stabilization uncertainties lead to severe economic risks

Climate stabilization efforts must integrate the actions of many socio-economic sectors to be successful in meeting climate stabilization goals, such as limiting atmospheric carbon dioxide (CO2) concentration to be less than double the pre-industrial levels. Estimates of the costs and benefits of stabilization policies are often informed by Integrated Assessment Models (IAMs) of the climate and the economy. These IAMs are highly non-linear with many parameters that abstract globally integrated characteristics of environmental and socio-economic systems. Diagnostic analyses of IAMs can aid in identifying the interdependencies and parametric controls of modeled stabilization policies. Here we report a comprehensive variance-based sensitivity analysis of a doubled-CO2 stabilization policy scenario generated by the globally-aggregated Dynamic Integrated model of Climate and the Economy (DICE). We find that neglecting uncertainties considerably underestimates damage and mitigation costs associated with a doubled-CO2 stabilization goal. More than ninety percent of the states-of-the-world (SOWs) sampled in our analysis exceed the damages and abatement costs calculated for the reference case neglecting uncertainties (1.2 trillion 2005 USD, with worst case costs exceeding

Coal’s medium-run future under atmospheric greenhouse gas stabilization

60 trillion). We attribute the variance in these costs to uncertainties in the model parameters relating to climate sensitivity, global participation in abatement, and the cost of lower emission energy sources.

Energy in China: Understanding Past Trends and Future Directions

We assess the future of coal under alternative climate stabilization regimes, investigating how the quantity and location of future coal production, trade and use depends upon five factors: the supply-side constraint of resource depletion, diversification and deepening of international trade, economic growth, trends in energy intensity, and the availability of coal-fired carbon-free electric generation technology (IGCC-CCS). Using the Phoenix computable general equilibrium model of the world economy, we find that coal is sensitive to demand-side assumptions about economic growth and energy-saving structural or technological change. In a 550 ppm stabilization emission tax scenario, the gobal coal industry initially declines sharply and then rebounds, in 2050 reaching roughly the same size as it is today—but only if IGCC-CCS is available by 2020. Under alternative stabilization regimes, IGCC-CCS penetration is a key influence on production and imports in major coal regions, where it interacts with extraction costs driven by the rate of depletion relative to trade partners.