Environmental Valuation & Cost-Benefit News

Any successful program of action on climate change must support two objectives—stabilizing atmospheric greenhouse gases (GHGs) and maintaining economic growth. Reconciling these two objectives means that “carbon productivity,” the amount of GDP produced per ton of carbon and other greenhouse gas emissions must increase by ten times over the coming decades.

This is a central finding of The carbon productivity challenge: Curbing climate change and sustaining economic growth, a new report by the McKinsey Global Institute and McKinsey’s Climate Change Special Initiative. The report was presented and discussed at the GLOBE International G8+5 Climate Change Dialogue, as well as the GLOBE International CEO Dialogue, both in Tokyo, Japan, June 27-29. GLOBE International is an organization of legislators from around the world who are working on climate issues.

To meet commonly discussed abatement paths, carbon productivity must increase from approximately $740 GDP per ton of CO2e (carbon dioxide equivalents, a common measure of greenhouse gases) today to $7,300 GDP per ton of CO2e by 2050—a tenfold increase, the report finds. This is comparable in magnitude to the labour productivity increases of the Industrial Revolution.

However, the “carbon revolution” must be achieved in one-third of the time that economic transformation took in the Industrial Revolution if we are to maintain current levels of economic growth while keeping CO2e levels below 500 parts per million by volume (ppmv) and stabilizing long-term at 450 pppmv, a level that many experts believe is the maximum that can be allowed without significant irreversible risks to the climate.

The macroeconomic costs of this carbon revolution are likely to be manageable, being in the order of 0.6–1.4 percent of global GDP by 2030. To put this figure in perspective, if one were to view this spending as a form of insurance against potential damage due to climate change; it might be relevant to compare it to global spending on insurance, which was 3.3 percent of GDP in 2005. Borrowing could potentially finance many of the costs, thereby effectively limiting the impact on near-term GDP growth. In fact, depending on how new low-carbon infrastructure is financed; the transition to a low-carbon economy may increase annual GDP growth in many countries.

If there is no increase our carbon productivity, the consequences will be stark, the report suggests. Meeting commonly discussed abatement target would require a per-person carbon budget of 6 kilograms of CO2e per day. If one had to live on such a carbon budget with today’s low levels of carbon productivity, one would be forced to choose between a 40 kilometre car ride, a day of air conditioning, buying two new T-shirts (without driving to the shop), or eating two meals. So without a major boost in carbon productivity, stabilizing greenhouse-gas emissions would require a major drop in lifestyle for developed countries and would hinder economic development in low income countries.

The microeconomic changes needed to increase carbon productivity at the levels required will not occur without the active leadership and collaboration of governments and businesses globally. The report underscores the need for new policies, regulatory frameworks, and institutions focused on four areas: creating market-based incentives to innovate and raise carbon productivity; addressing market failures that prevent abatement opportunities from being captured profitably; resolving issues of allocation and fairness, in particular between the developed and developing worlds and between industry sectors; and accelerating progress to avoid missing critical emissions targets.

It will be essential to identify and capture the lowest-cost abatement opportunities in the economy. Analysis of McKinsey’s global cost curve, a map of the world’s abatement opportunities ranked from lowest-cost to highest-cost options, identifies five areas for action to drive the necessary microeconomic changes: 1.) capturing available opportunities to increase energy efficiency in a cost-effective way; 2.) de-carbonizing energy sources; 3.) accelerating the development and deployment of new low-carbon technologies; 4.) changing the behaviours of businesses and consumers; and 5.) preserving and expanding the world’s carbon sinks, most notably its forests.

The carbon productivity challenge: Curbing climate change and sustaining economic growth, can be downloaded free of charge at: www.mckinsey.com/mgi

The World Bank www.WorldBank.org
http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21822676~menuPK:34463~pagePK:34370~piPK:34424~theSitePK:4607,00.html

Abstract: Due to economic and population growth farmland and to a lesser extend other undeveloped areas are under pressure in the urban-rural fringe in British Columbia, Canada. The objectives of this paper are to determine if residential property values near Victoria, BC include open-space premiums for farmland, parks or golf courses, and to determine if using assessed values instead of market prices of the property result in the same findings. Geerte Cotteleer, Tracy Stobbe and G. Cornelis van Kooten estimate a Seemingly Unrelated Regression (SUR) model with two hedonic pricing equations, one with actual market values as the dependent variable and one with assessed property values, and compare the resulting estimates of shadow prices for open space amenities. Furthermore, the authors take account of spatial autocorrelation and combine Method of Moment estimates of the spatial parameters in both equations.

Keywords: Hedonic pricing models, spatial dependence, assessed property values and open space.

by Geerte Cotteleer 1, Tracy Stobbe 2 and G. Cornelis van Kooten 3
1. Agricultural Economics and Rural Policy Group, Department of Social Sciences, Wageningen University and Research Centre
2. School of Business, Trinity Western University
3. Department of Economics, University of Victoria

University of Victoria; Department of Economics; REPA Resource Economics & Policy Analysis Research Group; PO Box 1700 STN CSC Victoria, BC V8W 2Y2 CANADA; Telephone: 250.472.4415, Fax: 250.721.6214; www.vkooten.net/repa
Working Paper 2008-06
http://web.uvic.ca/~kooten/REPA/WorkingPaper2008-06.pdf

Federal policymakers’ reluctance to enact a comprehensive climate change policy during the past decade has coincided with increased awareness of the inevitability and severity of the problems from global climate change. Thus, it is no surprise that piecemeal, sub-federal policies have garnered considerable support. Bolstered by the political science literature on the promise of incrementalism and democratic experimentalism, many proponents of climate change action favor incremental steps in the hope that they will improve the environment or at least serve as a basis for more comprehensive policies. Against this hopeful view, we explain why ad hoc responses to climate change may well be no better than, and possibly will be worse than, no action at all. Incremental climate change policies can give rise to predictable and nontrivial problems, such as non-effect, leakage, climate side effects, other side effects, lock-in, and lulling. Such problems not only can undermine the interim policies themselves but also may delay the adoption of a more comprehensive climate change policy. We present an upstream cap-and-trade policy as one such comprehensive alternative, showing how it would prove less susceptible to the kinds of policy failures that afflict incremental policies. Only by resisting the pressures to act immediately, and investing the necessary time and resources to craft a comprehensive solution, will environmental policymakers be able to guard against the perils that afflict ad hoc policymaking.

by Cary Coglianese and Jocelyn D'Ambrosio
The AEI Center for Regulatory and Market Studies, The "Reg-Markets Center" www.reg-markets.org
The Center was founded by Bob Hahn in 2008 as the successor to the AEI-Brookings Joint Center. A primary aim of the Reg-Markets Center is to gain a deeper understanding of how markets, laws and regulation contribute to economic well-being. The Center will be an independent voice in policy debates.
Working Paper 08-17; June, 2008
http://www.reg-markets.org/admin/authorpdfs/page.php?id=1468

Abstract: Conventional economic load dispatch problem uses deterministic models, which are however not able to reflect some real situations in practical applications since certain inaccurate and uncertain factors are normally involved in system operations. Stochastic models are more suited to be used for investigating some of the power dispatch problems. In this paper, both deterministic and stochastic models are first formulated, and then an improved particle swarm optimization (PSO) method is developed to deal with the economic load dispatch while simultaneously considering the environmental impact. Comparative studies are carried out to examine the effectiveness of the proposed approach. First, a comparison is made between the proposed PSO approach and other approaches including weighted aggregation and evolutionary optimization. Then, based on the proposed PSO, the impacts of different problem formulations including stochastic and deterministic models on power dispatch results are investigated and analyzed.

Keywords: Stochastic economic emission load dispatch; Multi-objective optimization; Particle swarm optimization; Stochastic search and optimization

by Lingfeng Wang and Chanan Singh; both of Department of Electrical and Computer Engineering, Texas A&M University, College Station, TX 77843, United States

Electric Power Systems Research via Elsevier Science Direct www.ScienceDirect.com
Volume 78, Issue 8; August, 2008; Pages 1466-1476
http://dx.doi.org/10.1016/j.epsr.2008.01.012

A major settlement involving federal and state regulators and the City of Shelton, Conn. will lead to improvements in the operation and maintenance of the City’s wastewater collection system and treatment plant, preventing discharge of untreated sewage to the Housatonic River.

The agreement is between the U.S. Environmental Protection Agency, the U.S. Department of Justice, the Connecticut Department of Environmental Protection, the Connecticut Attorney General’s Office, and the City of Shelton, Connecticut.

Under terms of the settlement, the City eliminated its “wastewater treatment plant bypass” and agreed to implement a comprehensive, system-wide plan to ensure that overflows of raw sewage associated with insufficient wastewater collection system capacity are eliminated by July 30, 2010. Discharges of untreated sanitary sewage to waters of the United States violate the federal Clean Water Act and state environmental laws. The City will also pay a fine of $142,000. The fine will be split equally between the United States and the State of Connecticut.

"EPA is committed to taking action to bring aging sewer systems into compliance with the Clean Water Act," said Robert W. Varney, regional administrator for EPA’s New England office. "This settlement will significantly improve water quality in the lower Housatonic River, helping to protect public health and the environment from the risks posed by sewer overflows."

Historically, the City’s collection system was combined, handling both sanitary sewage and storm water during periods of wet weather. During the 1980's, the City separated much of the collection system and eliminated designated combined sewer overflow outfalls. However, the City maintained a wastewater treatment bypass to the Housatonic River from a manhole immediately prior to the headworks of the City’s wastewater treatment plant. The City’s National Pollutant Discharge Elimination System (NPDES) permit does not authorize discharges from any location other than the wastewater treatment plant’s outfall, which discharges treated wastewater to the Housatonic River.

Connecticut Attorney General Richard Blumenthal said, "Shelton's agreement is a victory for clean water and public health, halting sewage spills that have polluted the Housatonic River. This agreement means cleaner water, more fish and other wildlife and more people enjoying this scenic waterway."

Connecticut Dept. of Environmental Protection Commissioner Gina McCarthy said, "This case focuses our attention on the need for all levels of government to work together to protect water bodies and the public health. People expect that in this day and age, we will not have overflows of untreated raw sewage into one of this state's waterways. It is the responsibility of public officials at all levels of government to prevent this from occurring by seeking proper solutions to the management of storm water and sanitary sewer discharges."

Reports provided by the City indicated that millions of gallons of untreated sewage were discharged to the Housatonic River since 2000 – especially during wet-weather periods. Shelton recently completed the expansion of its undersized wastewater treatment plant, pursuant to an administrative order from the CT DEP in 2002, and as of July 2007, the City certified to EPA that it had sealed the bypass outfall.

Properly designed, operated and maintained sanitary sewer systems collect and convey sewage to a wastewater treatment facility prior to discharge. However, discharges of raw sewage from municipal sanitary sewers can occur.

These types of discharges, called sanitary sewer overflows (SSOs), have a variety of causes, including insufficient conveyance and treatment capacity that occurs, in part, due to clean water that infiltrates into collection systems through defects in the system or clean water that is improperly discharged directly to wastewater collection systems through cross connections with storm sewers and by individual homeowners through sump pumps, roof leaders or down spouts, yard and foundation drains.

SSOs also occur due to the improper discharge of fats, oils and grease to the collection system, debris deposits and root intrusion associated with improper system operation and maintenance, electrical and mechanical failures and vandalism. The untreated sewage from these overflows can contaminate our waters, causing serious water quality problems. Raw sewage discharges can carry bacteria, viruses, and other organisms that can cause life threatening ailments such as cholera, dysentery, infections, hepatitis, and severe gastroenteritis.

Because Connecticut law allows for “penalties” to be used to fund environmental projects, the State’s half of the penalty ($71,000) will be paid into a fund to be used to pay for environmentally beneficial projects.

More information:
- The Settlement Agreement (usdoj.gov/enrd/Consent_Decrees.html )
- EPA's enforcement of the Clean Water Act in New England (epa.gov/region1/enforcement/water)
- EPA’s storm water program in New England (epa.gov/region1/npdes/stormwater)

U.S. Environmental Protection Agency (EPA) www.EPA.gov
http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/577455f3f73c8eeb8525746d005fbb57!OpenDocument
Press Release dated June 19, 2008

Abstract:
Solid oxide fuel cell (SOFC) has an electrolyte that is solid and works at a temperature range of View the MathML source; it can use a wide range of fuels and the relatively high operating temperature makes it possible for internal reforming with high-quality heat by-product for cogeneration.

In this paper, Ettore Bompard, Roberto Napoli, Bo Wan and Gianmichele Orsello address quantitatively the problem with reference to a 5 kW SOFC power system for residential use. The goal of the paper is to provide an analysis of possible scenarios that will make SOFC applications feasible from an economic point of view. In this respect the authors provide a sensitivity analysis of some common financial metrics to key input parameters, the improvements in electrical efficiency, changes in regulatory policy and changes in the market energy prices. The economic feasibility of different scenarios is evaluated and compared resorting to the usual metrics in financial analysis.

Keywords: Fuel cell economics; SOFC; NPV; IRR

by Ettore Bompard 1, Roberto Napoli 1, Bo Wan 1 and Gianmichele Orsello 2
1. Politecnico di Torino, C.s Duca degli Abruzzi 24, I-10129 Torino, Italy
2. TurboCare SpA, C.s Romania 661, Torino, Italy

International Journal of Hydrogen Energy via Elsevier Science Direct www.ScienceDirect.com
Volume 33, Issue 12; June, 2008; Pages 3243-3247
Special Issue: 2nd World Congress of Young Scientists on Hydrogen Energy Systems
http://dx.doi.org/10.1016/j.ijhydene.2008.04.017

Abstract: This analysis of the fishers' compliance with regulations in Lake Victoria, Tanzania, gives support to the traditional economics-of-crime model and shows that the extension of the basic deterrence model can lead to a richer model with substantially higher explanatory power. It focused on mesh-size regulation to explore potential reasons for following the rules (or not), such as being moral and doing the right thing; obeying the rules due to peer pressure from other fishers; perceiving the regulation as legitimate; and perceiving that they (the fishers) have been involved in the regulation process.

by Razack B Lokina
Resources For the Future (RFF) www.RFF.org
RFF Discussion Paper EfD 08-14; June, 2008
http://www.rff.org/Publications/Pages/PublicationDetails.aspx?PublicationID=20396