Mark Sanctuary

Three necessary conditions for establishing effective Sustainable Development Goals in the Anthropocene

The purpose of the United Nations-guided process to establish Sustainable Development Goals is to galvanize governments and civil society to rise to the interlinked environmental, societal, and economic challenges we face in the Anthropocene. We argue that the process of setting Sustainable Development Goals should take three key aspects into consideration. First, it should embrace an integrated social-ecological system perspective and acknowledge the key dynamics that such systems entail, including the role of ecosystems in sustaining human wellbeing, multiple cross-scale interactions, and uncertain thresholds. Second, the process needs to address trade-offs between the ambition of goals and the feasibility in reaching them, recognizing biophysical, social, and political constraints. Third, the goal-setting exercise and the management of goal implementation need to be guided by existing knowledge about the principles, dynamics, and constraints of social change processes at all scales, from the individual to the global. Combining these three aspects will increase the chances of establishing and achieving effective Sustainable Development Goals.

Border Carbon Adjustments

Views on the use of Border Carbon Adjustment (BCA) diverge but the strategic implications figure prominently in the debate. In this paper I examine how BCA policy design affects government incentives to regulate emissions and trade in a strategic setting. In particular, the paper examines if, and how, the importer can use BCA to induce a tightening of unilateral climate policy at home and abroad. Using a standard one-sector, two-country partial equilibrium model with climate damages from emissions, I examine BCA in a game where the emission taxes of the importer and exporter are chosen endogenously. I show that the impact of a BCA is not necessarily the adoption of more stringent climate policy. The outcome is determined by the extent trade is restricted by the BCA, the level at which trade partners set their respective emission taxes, and the effectiveness of the BCA in addressing both foreign and homes leakage. The paper also identifies the difference between a BCA and a carbon tariff in terms of their ability to leverage climate policy in a strategic setting.

The Effect of Retail Distribution on Sales of Alcoholic Beverages

We use monthly sales of all wines, beer, and spirits sold between 2006 and 2011 by Sweden’s retail monopoly on alcohol to estimate the causal effect of retail distribution on market share by volume at the product level. Products are defined at the level of the stock-keeping unit. Two institutional features are key to identifying the causal effect: First, the monopolist uses four levels of retail distribution; a change in retail distribution is therefore associated with a discrete shift in the number of stores that carry a product in a given month. Second, the retailer is legally bound and monitored by the European Union to ensure that it acts in a non-discriminatory manner with all its suppliers. These features allow us to rule out many possible confounding factors in estimating the effect of distribution on sales volume. We find large and statistically significant effects from changes in retail distribution on market share by volume across all levels of retail distribution. The associated volume elastici...

Trade Liberalization, Transboundary Pollution, and Market Size

This paper uses a monopolistic competitive framework to study the impact of trade liberalization on local and global emissions. We focus on the interplay of asymmetric emission taxes and the home market effect and show how a large-market advantage can counterbalance a high emission tax, so that trade liberalization leads firms to move to the large high-tax economy. Global emissions decrease when trade is liberalized in this case. We then simulate the model with endogenous taxes. The larger country, which has the advantage of the home market effect, will be able to set a higher Nash emission tax than its smaller trade partner yet still maintain its manufacturing base. As a result, a pollution haven will typically not arise in this case as trade is liberalized. However, global emissions increase as a result of international tax competition, which underscores the importance of international cooperation as trade becomes freer.

Border carbon adjustments and unilateral incentives to regulate the climate

It is suggested that trade measures should be used to induce exporters to adopt more ambitious climate policy and reduce global emissions. However, a tariff and the exporters emission tax are likely substitutes, which would undermine the rationale for these trade measures. This paper examines incentives to regulate the climate under border carbon adjustment (BCA), defined as an import duty of a magnitude determined by the difference in emission taxes between trade partners. Unlike a tariff, a BCA can induce the exporter to adopt a higher tax, suggesting that the BCA and tariff are not equally effective at targeting global emission levels and that the features of the border measure matter in assessing the effectiveness of trade policy in targeting global emissions.

Does Stated Purchasing Behavior Predict Actual Behavior

This paper studies the extent to which the stated behavior of a household predicts the same household’s actual shopping choices with respect to products that carry Environmental and Ethical (EE) labels. The analysis uses three years of household panel data on retail coffee purchases in Sweden. A central feature of the data is that households submit a questionnaire annually, indicating whether they try as much as possible to buy EE-labeled products. Consumers are indeed more likely to buy EE-labeled products if they say they do, and less likely to if they say they don’t. However, even the strongest self-declared EE-label consumers primarily purchase conventional coffee. Based on shopping choices in the field, these same consumers would be willing to pay premiums for EE-label coffee that are significantly higher than the implicit price for these labels. The results indicate that the narrow range of organic and Fairtrade coffee is an important explanation for the divergence between stated and actual behavior.