Stephan Schott

Optimal ozone reduction policy design using adjoint-based NOx marginal damage information

Despite substantial reductions in nitrogen oxide (NOx) emissions in the United States, the success of emission control programs in optimal ozone reduction is disputable because they do not consider the spatial and temporal differences in health and environmental damages caused by NOx emissions. This shortcoming in the current U.S. NOx control policy is explored, and various methodologies for identifying optimal NOx emission control strategies are evaluated. The proposed approach combines an optimization platform with an adjoint (or backward) sensitivity analysis model and is able to examine the environmental performance of the current cap-and-trade policy and two damage-based emissions-differentiated policies. Using the proposed methodology, a 2007 case study of 218 U.S. electricity generation units participating in the NOx trading program is examined. The results indicate that inclusion of damage information can significantly enhance public health performance of an economic instrument. The net benefit under the policy that minimizes the social cost (i.e., health costs plus abatement costs) is six times larger than that of an exchange rate cap-and-trade policy.

Diminishing Returns or Compounding Benefits of Air Pollution Control? The Case of NOx and Ozone

UNLABELLED A common measure used in air quality benefit-cost assessment is marginal benefit (MB), or the monetized societal benefit of reducing 1 ton of emissions. Traditional depictions of MB for criteria air pollutants are such that each additional ton of emission reduction incurs less benefit than the previous ton. Using adjoint sensitivity analysis in a state-of-the-art air quality model, we estimate MBs for NOx emitted from mobile and point sources, characterized based on the estimated ozone-related premature mortality in the U.S. POPULATION Our findings indicate that nation-wide emission reductions in the U.S. significantly increase NOx MBs for all sources, without exception. We estimate that MBs for NOx emitted from mobile sources increase by 1.5 and 2.5 times, on average, for 40% and 80% reductions in anthropogenic emissions across the U.S. Our results indicate a strictly concave damage function and compounding benefits of progressively lower levels of NOx emissions, providing economic incentive for higher levels of abatement than were previously advisible. These findings suggest that the traditional perception of a convex damage function and decreasing MB with abatement may not hold true for secondary pollutants such as O3.

Improving NOx Cap-and-Trade System with Adjoint-Based Emission Exchange Rates

Cap-and-trade programs have proven to be effective instruments for achieving environmental goals while incurring minimum cost. The nature of the pollutant, however, affects the design of these programs. NO(x), an ozone precursor, is a nonuniformly mixed pollutant with a short atmospheric lifetime. NO(x) cap-and-trade programs in the U.S. are successful in reducing total NO(x) emissions but may result in suboptimal environmental performance because location-specific ozone formation potentials are neglected. In this paper, the current NO(x) cap-and-trade system is contrasted to a hypothetical NO(x) trading policy with sensitivity-based exchange rates. Location-specific exchange rates, calculated through adjoint sensitivity analysis, are combined with constrained optimization for prediction of NO(x) emissions trading behavior and post-trade ozone concentrations. The current and proposed policies are examined in a case study for 218 coal-fired power plants that participated in the NO(x) Budget Trading Program in 2007. We find that better environmental performance at negligibly higher system-wide abatement cost can be achieved through inclusion of emission exchange rates. Exposure-based exchange rates result in better environmental performance than those based on concentrations.

The Optimal Selection and Harvest of Multiple Cohorts

The single cohort model shows that we delay the harvest of a cohort beyond the age at which the cohorts growth rate equals the discount rate when harvesting costs are proportional to the harvest rate (Clark 1990). With more than one cohort, one needs to determine if cohorts of various age classes should be harvested at the same time and rate or selectively at different times and harvest rates. This paper establishes that knife-edge selectivity can be optimal in some cases, but is dominated by selective harvesting when either harvesting is costless, gear congestion costs are relatively large, or it is feasible and desirable to harvest older cohorts at a larger harvest rate than younger cohorts. It is furthermore shown that in most cases it is optimal to harvest fish at an earlier age than the single cohort model predicts, but it might even be optimal to harvest fish that grow faster than the discount rate. In some cases, it may be optimal to utilize two gears to harvest two cohorts, even if gears have different operating costs.

Effort Provision and Communication in Teams Competing over the Commons

Schott et al. (2007) have shown that the “tragedy of the commons” can be overcome when individuals share their output equally in groups of optimal size and there is no communication. In this paper we investigate the impact of introducing communication in groups that may or may not be linked to output sharing groups. Communication reduces shirking, increases aggregate effort and reduces aggregate rents, but only when communication groups and output-sharing groups are linked. The effect is stronger for fixed groups (partners treatment) than for randomly reassigned groups (strangers treatment). Performance is not distinguishable from the no-communication treatments when communication is permitted but subjects share output within groups different from the groups within which they communicate. Communication also tends to enhance the negative effect of the partnered group assignment on the equality of individual payoffs. We use detailed content analysis to evaluate the impact of communication messages on behavior across treatments.

Towards a sustainable future for Nunavik

The predominantly Inuit Arctic region of Nunavik in the Province of Quebec, Canada, currently needs to address major challenges and opportunities. The region needs to develop more employment and wealth creation opportunities without sacrificing the vital land-based subsistence sector that provides food security, sustains cultural identity and provides social and economic stability. A decision about a new direction needs to be taken soon as major mining projects are developing at a rapid pace. In this paper we first assess existing socioeconomic and living conditions data to evaluate the state of social well-being in the region. In addition we report and analyse information from an economic forum in Kuujjuaq, Nunavik in April 2010. The purpose of the forum was to provide an opportunity for regional and local stakeholders to obtain information on specific economic opportunities for Nunavik and to discuss their merit for the communities. Based on our data evaluation and the outcomes at the forum we identify a possible sustainable development feedback envisioning process and discuss possible sustainable development directions for Nunavik.

Targeted NOx Emissions Control for Improved Environmental Performance

Nitrogen oxides (NOx) are the main ozone precursors, and NOx control programs in the US have led to substantial reductions in emissions. However, it is unknown whether these programs have optimally reduced ozone concentrations. Current control programs do not account for spatial and temporal specificities of NOx emissions. In this paper, this shortcoming in traditional trading systems is addressed and a methodology for identifying optimal NOx emission control strategies is developed. The proposed method combines an optimization platform with an adjoint (or backward) sensitivity model. Using the proposed method, a 2007 case study of 218 US power plants is examined. The results indicate that differentiating between emissions can significantly enhance environmental performance.

Do the Number of Appropriators from the Commons Matter in Controlled Laboratory Environments

Many controlled laboratory experiments have shown non-binding communication among appropriators from a common pool to be an effective way to reduce over-appropriation from the commons. The controlled laboratory environments have tended to be environments with fewer than 10 participants. Recent work by Buckley et al. (2017) found that non-binding communication is not successful in reducing appropriation effort in a controlled laboratory environment with 12 participants. A conjecture was that there might be a difference between 12 participants and 8 participants (the typical number used by Ostrom et al. 1994 in their seminal work and used in many subsequent studies by others). This paper presents an environment that utilizes the CPR setting identical to that used by Buckley et al. (2017) reduces the number of appropriators from 12 to 8. Eight sessions (4 with and 4 without non-binding communication) are run using the Buckley et al. (2017) environment with 8 participants. The results suggest that the number of participants may not be an important factor in driving the differences between the impact that non-binding communication has on the Buckley et al. (2017) and Ostrom et al. (1994) environments. Alternate conjectures are presented to account for the differences.

Political and Fiscal Limitations of Inuit Self-Determination in the Canadian Arctic

Our chapter examines the political and fiscal factors of collective capabilities for self-determination in three Inuit-dominated areas in Canada with active self-government regimes: the relatively new territory of Nunavut, the region of Nunavik (in Quebec) and the region of Nunatsiavut (in Newfoundland and Labrador). We derive and measure important political and fiscal indicators identified by the literature (institutional independence, representation, local capacity and fiscal ability) that are based on the most recent information from the three regions. Our analysis indicates that most Inuit governments are still quite financially dependent and constrained. In terms of institutional independence, and representation, Nunavik lags behind the other regions due to a fragmented governance system with three separate regional public administration bodies that receive funding through provincial parent departments. In terms of local capacity, as measured by the proportion of Aboriginal people with university degree, the three regions lie well below Canadian and provincial averages. Nunatsiavut has significantly higher education levels than other Inuit regions; however, the percentage of Aboriginal people with university degrees is also higher in Newfoundland and Labrador than in Quebec and in Canada.

A Temporal NOx Emissions Trading System: Case Study of US Power Plants

Despite the significant NOx reduction in the past decade, ozone concentrations in the eastern US are in violation of the National Ambient Air Quality Standard (NAAQS). This is because the location- and time-specific effects of NOx emissions on ozone formation have not been taken into consideration under cap-and-trade programs where polluters trade their emission quotas on a one-to-one basis. To account for such effects, a cap-and-trade program can be reformed by inclusion of exchange rates set by the regulator on an hourly basis. We examine the performance of such a reformed cap-and-trade program using a case study of US power plants. Our results indicate that shifting emissions from high-damage hours to low-damage hours can significantly improve the performance of the system.