Robert Mendelsohn

MERGE. A model for evaluating regional and global effects of GHG reduction policies

Abstract MERGE provides a framework for thinking about climate change management proposals. The model is designed to be sufficiently flexible to be used to explore alternative views on a wide range of contentious issues, eg costs, damages, valuation and discounting. We begin with a description of the models individual components and show how they fit together. We then provide an initial application to illustrate how the framework can be used in the assessment of alternative policy options. Given the level of uncertainty which pervades the climate debate, it would be unrealistic to expect cost-benefit analysis to lead to consensus on a bottom line — at least any time soon. Rather, models such as MERGE should be viewed as research tools capable of providing insights into which aspects of the debate may be most important. In this way, they can help focus the discussion and identify the areas where additional research may have the highest pay-off.

The distributional impact of climate change on rich and poor countries

This paper examines the impact of climate change on rich and poor countries across the world. We measure two indices of the relative impact of climate across countries, impact per capita, and impact per GDP. These measures sum market impacts across the climate-sensitive economic sectors of each country. Both indices reveal that climate change will have serious distributional impact across countries, grouped by income per capita. We predict that poor countries will suffer the bulk of the damages from climate change. Although adaptation, wealth, and technology may influence distributional consequences across countries, we argue that the primary reason that poor countries are so vulnerable is their location. Countries in the low latitudes start with very high temperatures. Further warming pushes these countries ever further away from optimal temperatures for climate-sensitive economic sectors.

Country-specific market impacts of climate change.

We develop a new climate-impact model, theGlobal Impact Model (GIM), which combines futurescenarios, detailed spatial simulations by generalcirculation models (GCMs), sectoral features,climate-response functions, and adaptation to generatecountry-specific impacts by market sector. Estimatesare made for three future scenarios, two GCMs, andtwo climate-response functions – a reduced-form modeland a cross-sectional model. Combining empiricallybased response functions, sectoral data by country,and careful climate forecasts gives analysts a morepowerful tool for estimating market impacts. GIMpredicts that country specific results vary, implyingthat research in this area is likely to bepolicy-relevant.

An Optimal Control Model of Forest Carbon Sequestration

This study develops an optimal control model of carbon sequestration and energy abatement to explore the potential role of forests in greenhouse gas mitigation. The article shows that if carbon accumulates in the atmosphere, the rental price for carbon sequestration should rise over time. From an empirical model, we find that carbon sequestration is costly, but that landowners can sequester substantial amounts of carbon in forests mainly by increasing forestland and lengthening rotations. Forest sequestration is predicted to account for about one-third of total carbon abatement. Tropical forests store over two-thirds of this added carbon. Copyright 2003, Oxford University Press.

Efficient Adaptation to Climate Change

Firms and individuals will likelyengage in substantial private adaptation with respectto climate change in such sectors as farming, energy,timber, and recreation because it is in their interestto do so. The shared benefit nature of jointadaptation, however, will cause individuals tounderprovide joint adaptation in such areas as watercontrol, sea walls, and ecological management. Governments need to start thinking about jointadaptation, being careful to design efficientresponses which treat climate change problems as theyarise.

A Theoretical Foundation for Count Data Models

The paper develops a theoretical foundation for using count data models in travel cost analysis. Two micro models are developed: a restricted choice model and a repeated discrete choice model. We show that both models lead to identical welfare measures.

The choice of functional forms for hedonic price equations: Comment

Abstract Rosen [13], Freeman [4], Halvorsen and Pollakowski [6], and others have stressed that economic theory does not suggest an appropriate functional form for hedonic price functions. 1 It consequently is reasonable to try several functional forms and utilize the multiple regression equation with the best performance. In this spirit, Halvorsen and Pollakowski [6] recommend using the Box-Cox flexible functional form for hedonic analysis and measuring best performance with a goodness of fit test. The Box-Cox methodology has also been adapted in hedonic studies by Goodman [5], Linneman [10], Blomquist and Worley [1], and Eberts and Gronberg [3]. 2 The Box-Cox is particularly suited for testing functional forms because many familiar forms such as semilog, log linear, and translog are subsets of the flexible Box-Cox permitting nested hypothesis testing. In this note, we illustrate that the formal hypothesis testing advantage of the Box-Cox functional form is purchased at the expense of other important goals. The goal of most hedonic studies is to estimate the prices of the characteristics, to measure the response to changes in the prices, and/or to predict future expenditures. Using a best fit criterion to choose functional forms does not necessarily lead to more accurate estimates of characteristic prices. In fact, the large number of coefficients estimated with the Box-Cox functional form reduces the accuracy of any single coefficient which could lead to poorer estimates of specific prices. Second, because any negative number raised to a noninteger real power is imaginary, the traditional Box-Cox functional form is not suited to any data set containing negative numbers. Third, the Box-Cox functional form may be inappropriate for prediction. Since the mean predicted value of the untransformed dependent variable need not equal the mean of the sample upon which it is estimated, the predicted untransformed variable (housing value) will be biased. The predicted untransformed dependent variable may also be imaginary. Fourth, the nonlinear transformation results in complex estimates of slopes and elasticities which are often too cumbersome to use properly. We discuss each of these drawbacks and quantify them when possible in the remainder of this note.

Forest Management, Conservation, and Global Timber Markets

This article develops a global timber market model which captures how timber supply reacts to future predicted increases in the demand for timber. Higher future demand is expected to increase prices, increase investments in regeneration, increase establishment of plantations, and expand output. Dynamic market responses imply a greater reliance on plantations in productive regions, allowing large areas of natural forest in low-valued regions to remain largely intact. Sensitivity analysis suggests that price, harvest, and management are most sensitive to the rate of demand increase, the interest rate, the cost of plantations, and access costs of natural forests. Two forest conservation strategies are examined which predict the system-wide implications of forest conservation in Europe and North America. The policies indicate that whereas set asides can induce net conservation, harvests increase elsewhere, particularly in natural forests. Copyright 1999, Oxford University Press.

A Ricardian Analysis of the Impact of Climate Change on African Cropland

This study examines the impact of climate change on cropland in Africa. It is based on a survey of more than 9,000 farmers in 11 countries: Burkina Faso, Cameroon, Egypt, Ethiopia, Ghana, Kenya, Niger, Senegal, South Africa, Zambia, and Zimbabwe. The study uses a Ricardian cross-sectional approach in which net revenue is regressed on climate, water flow, soil, and economic variables. The results show that net revenues fall as precipitation falls or as temperatures warm across all the surveyed farms. In addition to examining all farms together, the study examined dryland and irrigated farms separately. Dryland farms are especially climate sensitive. Irrigated farms have a positive immediate response to warming because they are located in relatively cool parts of Africa. The study also examined some simple climate scenarios to see how Africa would respond to climate change. These uniform scenarios assume that only one aspect of climate changes and the change is uniform across all of Africa. In addition, the study examined three climate change scenarios from Atmospheric Oceanic General Circulation Models. These scenarios predicted changes in climate in each country over time. Not all countries are equally vulnerable to climate change. First, the climate scenarios predict different temperature and precipitation changes in each country. Second, it is also important whether a country is already hot and dry. Third, the extent to which farms are irrigated is also important.

The impact of climate change on the United States economy

1. Introduction Robert Mendelsohn, Joel B. Smith and James E. Neumann 2. The economic effects of climate change on US agriculture Richard M. Adams, Bruce A. McCarl, Kathleen Segerson, Cynthia Rosenzweig, Kelly J. Bryant, Bruce L. Dixon, Richard Conner, Robert E. Evenson and Dennis Ojima 3. The impact of climate variation on US agriculture Robert Mendelsohn, William Nordhaus, and Daigee Shaw 4. Climate change and agriculture: the role of farmer adaptation Kathleen Segerson and Bruce L. Dixon 5. The US timber market impacts of climate change Brent L. Sohngen and Robert Mendelsohn 6. Economic effects of climate change on US water resources Brian Hurd, Mac Callaway, Joel Smith and Paul Kirshen 7. The economic damage induced by sea-level rise in the US Gary Yohe, James E. Neumann and Patrick Marshall 8. The impact of global warming on US energy expenditures Wendy N. Morrison and Robert Mendelsohn 9. The economic impact of climate change on the US commercial fishing industry Marla Markowski, Angelique Knapp, James E. Neumann and John Gates 10. The impact of climate change on outdoor recreation Robert Mendelsohnm and Marla Markowski 11. Estimated effects of climate change on selected outdoor recreation activities in the US John Loomis and John Crespi 12. Synthesis and conclusions Robert Mendelsohn and James E. Neumann.