Laure B. de Preux

Industry compensation under relocation risk: a firm-level analysis of the EU Emissions Trading Scheme

When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize this fundamental economic logic and apply it to analyzing compensation rules proposed under the EU Emissions Trading Scheme, where emission permits are allocated free of charge to carbon intensive and trade exposed industries. We show that this practice results in substantial overcompensation for given carbon leakage risk. Efficient permit allocation reduces the aggregate risk of job loss by more than half without increasing aggregate compensation.

The Impact of a Carbon Tax on Manufacturing: Evidence from Microdata

We estimate the impact of a carbon tax on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the full tax and plants that paid only 20% of the tax. Exploiting exogenous variation in eligibility for the tax discount, we find that the carbon tax had a strong negative impact on energy intensity and electricity use. There is no evidence of an adverse impact on employment, revenue or plant exit.

Anticipatory ex ante moral hazard and the effect of medicare on prevention

This paper extends the ex ante moral hazard model to allow healthy lifestyles to reduce the probability of illness in future periods, so that current preventive behaviour may be affected by anticipated changes in future insurance coverage. In the United States, Medicare is offered to almost all the population at the age of 65. We use nine waves of the US Health and Retirement Study to compare lifestyles before and after 65 of those insured and not insured pre 65. The double-robust approach, which combines propensity score and regression, is used to compare trends in lifestyle (physical activity, smoking, drinking) of the two groups before and after receiving Medicare, using both difference-in-differences and difference-in-differences-in-differences. There is no clear effect of the receipt of Medicare or its anticipation on alcohol consumption nor smoking behaviour, but the previously uninsured do reduce physical activity just before receiving Medicare.

Estimating the costs of air pollution to the National Health Service and social care: An assessment and forecast up to 2035

Background Air pollution damages health by promoting the onset of some non-communicable diseases (NCDs), putting additional strain on the National Health Service (NHS) and social care. This study quantifies the total health and related NHS and social care cost burden due to fine particulate matter (PM2.5) and nitrogen dioxide (NO2) in England. Method and findings Air pollutant concentration surfaces from land use regression models and cost data from hospital admissions data and a literature review were fed into a microsimulation model, that was run from 2015 to 2035. Different scenarios were modelled: (1) baseline ‘no change’ scenario; (2) individuals’ pollutant exposure is reduced to natural (non-anthropogenic) levels to compute the disease cases attributable to PM2.5 and NO2; (3) PM2.5 and NO2 concentrations reduced by 1 μg/m3; and (4) NO2 annual European Union limit values reached (40 μg/m3). For the 18 years after baseline, the total cumulative cost to the NHS and social care is estimated at £5.37 billion for PM2.5 and NO2 combined, rising to £18.57 billion when costs for diseases for which there is less robust evidence are included. These costs are due to the cumulative incidence of air-pollution-related NCDs, such as 348,878 coronary heart disease cases estimated to be attributable to PM2.5 and 573,363 diabetes cases estimated to be attributable to NO2 by 2035. Findings from modelling studies are limited by the conceptual model, assumptions, and the availability and quality of input data. Conclusions Approximately 2.5 million cases of NCDs attributable to air pollution are predicted by 2035 if PM2.5 and NO2 stay at current levels, making air pollution an important public health priority. In future work, the modelling framework should be updated to include multi-pollutant exposure–response functions, as well as to disaggregate results by socioeconomic status.

Beyond financial efficiency to support environmental sustainability in economic evaluations

ABSTRACT The healthcare sector is one of the largest polluters in the UK, accounting for 25% of total emissions of carbon dioxide of the public sector. Ironically, it is the healthcare sector itself that is primarily affected by any deterioration in the environment affecting individuals’ health and their demand for healthcare. Therefore, the healthcare sector is a direct beneficiary of its own steps towards sustainability and is more and more viewed as the one who should lead the change. In this article, we first review the concepts of financial and environmental sustainability. Second, we discuss the existing evidence of sustainable changes within this sector. Third, we propose a simple adaptation of the classic cost-effectiveness analysis to incorporate carbon footprinting to account for these external costs. We illustrate our method using the case of in-centre versus home haemodialysis. We conclude that home dialysis is always a preferable alternative to in-centre treatment based on a cost-effectiveness analysis. Finally, we discuss the limitations of our approach and the future research agenda.