Katarina Elofsson

Cost-Effective Nutrient Reductions to the Baltic Sea

Due to eutrophication caused by heavy loads of nitrogen and phosphorus, the biological conditions of the Baltic Sea have been disturbed: large sea bottom areas without any biological life, low stocks of cods, and toxic blue green algaes. It is recognized that the nitrogen and phosphorus loads to the Baltic Sea must be reduced by 50% in order to restore the sea. The main purpose of this paper is to calculate cost effective nitrogen and phosphorus reductions to the Baltic Sea from the nine countries surrounding the Baltic Sea. The results show a significant difference in minimum costs of decreasing nitrogen and phosphorus loads to the Sea: approximately 12 000 millions of SEK per year and 3 000 millions of SEK respectively for reductions by 50%. It is also shown that a change from a policy of cost-effective nutrient reductions to a policy where each country reduces the nutrient loads by 50% increase total costs for both nitrogen and phosphorus reductions by about 300%. The results are, however, sensitive to several of the underlying assumptions and should therefore be interpreted with much caution.

The Costs of Meeting the Environmental Objectives for the Baltic Sea: A Review of the Literature

The environmental targets of the recently agreed Baltic Sea Action Plan (BSAP) targets are likely associated with a considerable cost, which motivates a search for low-cost policies. The following review shows there is a substantial literature on cost-efficient nutrient reduction strategies, including suggestions regarding low-cost abatement, but actual policies at international and national scale tend to be considerably more expensive due to lack of instruments that ensure a cost-efficient allocation of abatement across countries and sectors. Economic research on the costs of reducing hazardous substances and oil spill damages in the Baltic Sea is not available, but lessons from the international literature suggest that resources could be used more efficiently if appropriate analysis is undertaken. Common to these pollution problems is the need to ensure that all countries in the region are provided with positive incentives to implement international agreements.

Cost effective reductions in the agricultural load of nitrogen to the Baltic Sea

The Baltic Sea is a mutual resource of nine countries, with different economic and political systems. It is well known that the state of the natural resource base has been degraded in many areas within the Baltic region, and this has negatively affected the Baltic Sea. Inherent properties of the Baltic Sea, including a relatively small mean depth and narrow, shallow connections to the North Sea, make the Baltic Sea particularly vulnerable to anthropogenic influences and eutrophication is one of the major environmental problems. One important reason for eutrophication is the increase in the total loads of nutrients. Since the turn of the century nitrogen loads have increased by about four times and the phosphorus load by eight times. Present estimates indicate that the total nitrogen supply to the Baltic Sea including the Kattegat is about 1 300 000 tons N (cf. Table 1) per year, although there is a large uncertainty about the accuracy of available data on loads from different countries and sources.

An Empirical Analysis of Hunting Lease Pricing and Value of Game in Sweden

Game species generate considerable benefits to society in terms of hunting values, tourism, and maintenance of ecosystem balance. This paper seeks to estimate hunting values for multiple hunted species by disentangling the role of wildlife harvesting opportunities from other factors that affect hunting lease prices. We examine the determinants of hunting lease prices in Sweden using both spatial and nonspatial econometric techniques. Our analysis confirms considerable hunting values for fallow deer and wild boar. Also, the study reveals the presence of spatial spillovers in lease prices, implying that landowners have little scope for exerting monopoly power on the hunting lease market. (JEL Q23, Q26)

Cost-efficient climate policies for interdependent carbon pools

Abstract The purpose of this paper is to investigate cost-effective climate policy instruments for bioenergy and timber, adapted to the impacts on interdependent forest carbon pools, and applied in the EU climate policy to 2050. We develop a discrete time dynamic model including forest carbon pools in biomass, soil, and products, as well as fossil fuel consumption. The analytical results show that the optimal taxes on forest products depend on the growth in the respective carbon pool. The application to the EU 2050 climate policy for emission trading shows that total costs for target achievement can be reduced by 33 percent if all carbon pools are included, and the carbon tax on fossil fuel can be reduced by 50 percent. Optimal taxes on forest products differ among countries and over time depending on the potential for increased carbon sequestration over the planning period.

A Study of Climate Change and Cost Effective Mitigation of the Baltic Sea Eutrophication

Eutrophication of coastal marine waters is globally considered to be a serious environmental problem [1, 2]. The Baltic Sea is the world’s largest brackish-sea and damages from eutrophication have been documented since the early 1960s by a large number of different studies [e.g. 3, 4]. In response to eutrophication of the sea the riparian states formed the administrative body HELCOM in charge of policies for improving the Baltic Sea and entered ministerial agreements on nutrient reduction in 1988 and 2007. Although nutrient reductions have been made, the 50 percent reduction agreed upon in 1988 has been far from reached and the ecological status of the sea continues to deteriorate. In order to reach the ecological goal of “clear water”, which is one main objective of the 2007 treaty, large reductions of both phosphorous and nitrogen are necessary. The cost of these nutrient reductions can be substantial, not the least since many low cost abatement options have already been implemented. In this respect it is important to evaluate if and how future nutrient loads will change and how this will affect costs for achieving stipulated targets.

Economics of wildlife management—an overview

This study makes an explorative overview on two main research topics in economics of wildlife management: determination of population sizes and policy design. The results point out a large and comprehensive research on each of these issues, in particular on the estimation of values and costs of wildlife, where this information is necessary for the determination of population size. A drawback is that most of the value and cost studies do not relate their estimates to wildlife population size, which limits their usability for efficient policy design. Most valuation studies estimate the recreational value of hunting, which can range between 13 and 545 USD/hunting day (in 2013 prices), and two thirds of the included studies have been applied to wildlife in the USA. A majority of the studies on the costs of wildlife management calculate losses from carnivore predation on livestock and ungulate damage to crops, while a few consider dispersal of diseases and the cost of traffic collisions. Unlike valuation studies, several of the cost estimates apply to wildlife in developing and emerging economies. With respect to policy design the literature, which is mainly theoretical, suggests economic incentives for conflict resolution, where those suffering from wildlife damages are compensated for their losses. However, there are some issues which remain to be addressed by economists: relating costs and benefits to wildlife populations; estimating values and costs of wildlife in developing countries; evaluating wildlife policies in practice; addressing implications of uncertainty in population size, costs, and benefits for policy design; and estimating transaction costs for implementation and enforcement of wildlife policies.

The revealed preferences of Baltic Sea governments: Goals, policy instruments, and implementation of nutrient abatement measures

Nitrogen and phosphorus loads are considered a major reason for the eutrophication of the Baltic Sea. Until now, most of the abatement has been made at point sources while the implementation of policies for nonpoint sources has not led to equally large reductions in emissions. The purpose of this study is to investigate the determinants of how nutrient abatement measures are implemented by countries in the agricultural sector of the Baltic Sea region. We investigate how goal setting, policy instrument choice, and the level of implementation is determined by characteristics of the abatement measure as well as socio-economic characteristics of the country where it is implemented. Econometric analysis of a cross-sectional data set suggests that income, institutional capacity, and economies of scope in abatement and enforcement are important determinants of policies developed and their implementation.

Optimal Strategies for Inland and Coastal Water Monitoring

Despite the recognition of the eutrophication problem, Baltic-wide environmental targets for nutrient pollution reductions have not been met. Possible factors include inefficiency of environmental policy, and a lack of coordination between environmental policy and policies in other fields like agriculture and energy. The former requires improvements in the design of environmental policy while the latter calls for better coordination of different policies. This chapter reviews studies evaluating nutrient policies in the region, with a focus on economic and cross-disciplinary studies that carry out ex post evaluations of policy instruments. It also investigates optimal monitoring and abatement strategies where both upstream and downstream water quality pose a potential problem, looking at how monitoring and abatement costs, and the regulators’ degree of risk aversion, affect the choice of monitoring strategy.