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Governments are catching up with economic theory and practice by increasingly integrating ecosystem service values into national planning processes, including benefit-cost analyses of public policies. Such analyses require information not only about today’s benefits from ecosystem services but also on how benefits change over time. We address a key limitation of existing policy guidance, which assumes that benefits from ecosystem services remain unchanged. We provide a practical rule that is grounded in economic theory and evidence-based as a guideline for how benefits change over time: They rise as societies get richer and even more so when ecosystem services are declining. Our proposal will correct a substantial downward bias in currently used estimates of future ecosystem service values. This will help governments to reflect the importance of ecosystems more accurately in benefit-cost analyses and policy decisions they inform.

info:eu-repo/semantics/published

Data for reproducing Figures of the manuscript Trends in tropical forest loss and the social value of emission reductions by Thomas Knoke et al. Full data sets and spreadsheets are available via 10.5281/zenodo.8016364, Data for reproducing Figures of the manuscript Trends in tropical forest loss and the social value of emission reductions by Thomas Knoke et al. Full data sets and spreadsheets are available via 10.5281/zenodo.8016364

Lemoine and Rudik (2017) argues that it is efficient to delay reducing carbon emissions, due to supposed inertia in the climate system's response to emissions. This conclusion rests upon misunderstanding the relevant earth system modeling: there is no substantial lag between CO2 emissions and warming. Applying a representation of the earth system that captures the range of responses seen in complex earth system models invalidates the original article's implications for climate policy. The least-cost policy path that limits warming to 2°C implies that the carbon price starts high and increases at the interest rate. It cannot rely on climate inertia to delay reducing and allow greater cumulative emissions.

Having its roots in the financial system, the world economic downturn at stake since 2008 has revealed the importance of capital requirements for banks. Reinhart and Rogoff (2009) have shown that financial crises have substantial economic impact, reducing the GDP of 10% or more, with a non- neglecting part being permanent. This highlights the importance of a stable financial market for the entire economy. As a consequence, the new Basel III agreements have substantially increased capital requirement, which has generated important debates on the cost of raising capital for banks. In particular, banking associations have argued that this new regulation would increase funding costs for banks and therefore increase the cost of bank-credits. However these arguments generally focus on short-term feedbacks, whereas in order to define an adequate legislation and prevent new crises, a long-term perspective is essential. Using a large worldwide database of 98 banks over a period of 25 years, we have tested the Modigliani and Miller theorem, which states the neutrality of capital structure on the value of the bank - and hence on the weighted average cost of capital.1 Our main results reveal that financial market tends to underprice leverage risk compared to M&M predictions. Leveraging increases market value of banks making rational the shareholders’ decision of opting for very high leverage.2 We also show that the gain of leverage is much higher during the crisis period (after 2007) than during the preceding more stable period (1990-2006). This gain is also higher for systemically important banks, which are very likely to be bailed out by the government in case of distress. We argue that the underpriced transfer of risk from banks’ shareholders to governments is the most convincing theoretical argument explaining this departure from M&M theorem. The three other possible explanations - tax advantages, agency costs between managers and shareholders, and role of completing financ