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One of the most pressing issues when making decisions over long-term environmental problems is deciding on an appropriate discount rate. This can be a highly technical discussion. While some argue in favour of market rates, which usually tend to be high, others support the use of near-zero rates to ensure that both current and future generations are properly accounted for. This paper presents an alternative approach to determining the discount rate for environmental assets in the case of land-use planning - the Equivalency Principle (EP) - based on the normative proposition that the social value of protected natural land should be at least the same as the market price of an adjacent land with similar environmental characteristics that has been granted permission for development. The paper first provides a theoretical overview of the approach, followed by an application of the EP at the land plot level across 11 European countries. Based on the EP, pure rates of social time preference that would equate natural and development land values within each administrative unit have been calculated. The findings show that the application of the EP usually results in discount rates that are lower-than-market rates and that are geographically differentiated. This implies discount rates that account for preferences of the society where the land or natural resource is located, with results ranging between 0% and 11%, with an average rate of 1% across study sites. • The Equivalency Principle tends to result in lower discount rates than market rates. • Rates based on the EP were estimated for 11 European countries. • Results support the premise of geographically differentiated discount rates. • Results show rates ranging from 0% to 11% across all European countries. • An average discount rate of 1% across study sites was estimated. [ABSTRACT FROM AUTHOR]

This paper examines how the existing fleet in the shipping industry can be adapted to the new emission regulations through the two main techniques that currently exist: (a) the use of low-sulphur marine diesels; and (b) the installation of scrubbers. A method is presented here for drawing up an economic assessment of both these techniques under uncertainty. It enables the best option to be selected at any given time taking into account fuel prices (spot and futures), scrubber installation costs, the time that the vessel operates in an Emission Control Area (ECA) and the remaining useful lifetime of the vessel. The paper also considers the possibility of an unexpected change from a non-ECA navigation area to an ECA. The assessment is carried out in a manner consistent with marine diesel and crude oil spot and futures market quotes. Our results show the net present value of investing in the installation of scrubbers and investing in changing fuel types for different assumptions on how vessels are operated. We also analyse increases in fuel consumption and CO 2 emissions as a consequence of using scrubbers and how they affects the financial analysis if such incremental emissions must be paid under a CO 2 pricing mechanism. [ABSTRACT FROM AUTHOR]

Due to climate change, energy dependence and other energy-related issues, most developed countries are attempting to reduce fossil-fuel use in the transport sector. Accordingly, there are several instruments that have been in place for many years, such as mandatory design standards, taxes on fuels, car purchase and ownership, and energy efficiency labels. Yet it is still not clear whether consumers value energy efficiency as a characteristic of vehicles. In this paper we use the European labelling system for light vehicles, which classifies automobiles according to their relative fuel consumption levels, as a novel, alternative indicator for energy efficiency. Moreover, we use a unique database that incorporates official commercial prices along with prices obtained through ‘mystery shopping’ at a selection of Spanish car retailers. We apply the hedonic price method to this database to estimate the price functions for vehicles and thereby obtain the marginal price of vehicles rated highly in terms of energy efficiency. Our results show that vehicles labelled A and B are sold at prices 3 to 5.9 percent higher than those with similar characteristics but lower energy-efficiency labels. [ABSTRACT FROM AUTHOR]

Abstract: In this paper we evaluate two alternative CCS technologies at a coal-fired power plant from an investor's point of view. The first technology uses CO2 for enhanced oil recovery (EOR) paired with storage in deep saline formations (DSF) and the second merely stores CO2 in DSF. The paper updates and improves on an earlier publication by Tzimas et al. (2005). For projects of this type there are many sources of risk, three of which stand out: the price of electricity, the price of oil and the price of carbon allowances. In this paper we develop a general stochastic model that can be adapted to other projects such as enhanced gas recovery (EGR) or industrial plants that use CO2 for either EOR or EGR with CCS. The model is calibrated with UK data and applied to help understand the conditions that generate the incentives needed for early investments in these technologies. Additionally, we analyse the risks of these investments. Investments with EOR and secondary DSF storage can only be profitable (NPV > 0) when there is a high long-term equilibrium price for oil of more than $56.38/barrel. When the investment decision can be made at any time, i.e. there is an option value, then the trigger value for optimal investment is significantly higher. [Copyright &y& Elsevier]

This paper analyses both the attributes of carsharing transport modes (station-based and free-floating) and their relationship with other transport modes. Users' and stakeholders' perspectives are synthesized from in-depth interviews in Spain. The elicitation of the comparative advantages of the two carsharing modes with respect to public transport and private vehicles helps identifying factors such as availability of parking, road pricing and convenience that drive the complementary and substitution property of carsharing with other transport modes. Interviews show the limited complementarity of carsharing with public transport, as well as the limited substitutability with private vehicles. Potential policy instruments to make carsharing coexist with public transport are discussed. • This study highlights the limited complementarity and substitution of carsharing with public transport and private vehicles. • The study is based on in-depth interviews with users and stakeholders of free-floating and station-based carsharing. • Convenience in use and economic factors play an important role in motivating carsharing use. • Being considered affordable and cheap, carsharing incurs in the risk of competing with public transport. • Parking and road pricing and policies connecting carsharing and public transport are necessary to improve complementarity. [ABSTRACT FROM AUTHOR]

Soil protection and sustainable land management practices for croplands are usually considered to be cost-effective. However, to date little economic information has emerged about these techniques and there is no comprehensive economic appraisal to effectively help guide investment decisions. This review proposes a new multidisciplinary approach for an economic assessment of soil protection practices at the farm level at selected European sites. It draws together and integrates economic data on a selection of measures based on information related to climate change, soil degradation and biodiversity research that are rarely investigated jointly. Out of the studies reviewed, quantitative and qualitative data from 26 scientific papers and technical reports were gathered into a database. For the quantitative data analysis, 14 of those studies were used. The main results show that most practices may not pass the cost/benefit test and that their benefits are not, as is often assumed, systematically higher than their costs. Specific quantitative results are not definitive but we find that estimation methods may have unintended consequences. They may well lead to ineffective investment decisions unless more holistic and multidisciplinary approaches to soil protection are taken. Unlabelled Image • Costs and benefits of soil protection practices are presented and analysed. • Benefits of these practices do not exceed costs under all circumstances. • "System" practices are usually beneficial while vegetated buffer strips are not. • Data is not definitive but show more positive results in Germany compared to the UK. • A multidisciplinary approach to costs and benefits of these practices is necessary. [ABSTRACT FROM AUTHOR]

Many cities around the world are undertaking adaptation planning processes in contexts of considerable uncertainty due to climate risks. However, new evidence suggests that current adaptation policies are failing to fully incorporate risk-related information and knowledge. Understanding how policies account for current and future risks becomes crucial to assess whether they will effectively contribute to reduce vulnerability and increase resilience. Exploiting the synergies between the well-established discipline of disaster risk reduction and climate adaptation may be an interesting option. In this paper we develop an Adaptation-Risk Policy Alignment (ARPA) framework to assess whether (and how) climate change adaptation policies integrate risk knowledge and information. ARPA displays a set of risk-based metrics that we test in four early adapters cities: Copenhagen, Durban, Quito and Vancouver. These cities are considered pioneer cities in the design and implementation of adaptation plans and have the potential to show the full applicability of ARPA. The framework is easy to apply and allows to systematically assess whether and how policies appropriately account for major risks and properly integrate risk management into the policy-making process. We propose that the framework can be used for self-evaluation and learning as well as in large-scale adaptation tracking exercises. • Adaptation tracking has focused largely on the progress of the adaptation process. • There is also a need to understand if adaptation is being effective in increasing resilience. • Risk-based approaches to climate change adaptation could be useful in this context. • We developed a framework to analyse the alignment between adaptation policies and risk. • The framework has been applied to 4 frontrunner cities: Copenhagen, Durban, Quito and Vancouver. [ABSTRACT FROM AUTHOR]

The high degree of uncertainty associated with the extent of future sea-level rise stems primarily from the potential mass loss of the Greenland and Antarctica ice-sheets. We explore the impact of this uncertainty on economic damage due to sea-level rise for 136 major coastal cities. We compare the probability distribution for damage under the assumption of no adaptation for two relative sea-level projections: the RCP 8.5 scenario from the IPCC Fifth Assessment Report and a High-end scenario that incorporates expert opinion on additional ice-sheet melting. We use the 50th and 95th percentiles to estimate expected damage and one risk measure, the Expected Shortfall ES (95%), which represents the impact of low-probability, high-damage coastal flood risk (above the 95th percentile). Aggregate expected damage by 2050 under RCP 8.5 is US$1,600 billion, while the aggregate risk measure ES(95%) is almost twice as much as the average damage at US$3,082 billion. Under the High-end scenario, ES(95%) figures in Guangzhou and New Orleans by 2050 are twice as high as the expected damage. The city of Guangzhou leads the ranking under both scenarios, followed by Mumbai and New Orleans. Our results suggest that it is critical to incorporate the possibility of High-end scenarios into coastal adaptation planning for future sea-level rise, especially for risk-averse decision-making. • We use RCP8.5 and a High-end scenario accounting for additional ice-sheet melting. • We calculate future local sea-level rise distributions for 136 coastal megacities. • By 2070, these two sea-level rise scenarios differ in ~80 cm at the upper tail. • We calculate futures expected (average) damages and two financial risk measures. • The city of Guangzhou always leads the ranking, followed by Mumbai and New Orleans. [ABSTRACT FROM AUTHOR]

Investment decisions in adaptation are usually made under significant uncertainty due to climate change and socio-economic trends. In this study, we propose three ways to incorporate climate and socio-economic uncertainty into the assessment of an adaptation infrastructure designed to cope with flood-risk in the city of Bilbao. First, we use stochastic modelling to estimate the present value of expected damage over a time period, considering that extreme events may increase in the future. Second, we develop an additional calculation that incorporates two risk measures used in financial economics: Value-at-Risk and Expected Shortfall, the latter being a less common but better risk indicator. Third, we illustrate a case of Real Options Analysis (ROA) in which a binomial tree is used to study whether the best decision at present is to invest now or to delay the investment decision. [ABSTRACT FROM AUTHOR]

The cement sector is highly intensive in CO 2 emissions and is the second biggest industrial sector in terms of emissions after the electricity generation sector. It emits CO 2 from the combustion of fossil fuels, the calcination process and, indirectly, from electricity consumption. The ambitious climate change policy in the EU means that carbon prices and fuel prices are two very important sources of uncertainty that may affect the competitiveness of the sector. This paper focuses on understanding the risk associated with the future price of European Union Emission Trading System allowances. This is done by modelling a stochastic process with parameters calculated using market prices. Risks are valued with the Expected Shortfall and Value at Risk measures over the lifetime of a plant using MonteCarlo simulation: two well-known risk measures in financial economics. Risks are greater and returns lower in the wet process than in the dry one. The paper includes a sensitivity analysis of the effects arising from changes in the prices of allowances as a consequence of a hypothetical drastic change in climate policy, including jumps, withdrawing of free emission allowances and changes in future carbon prices. In this case impacts will also be higher in the wet process. Finally, the paper illustrates the optimal conditions for retrofitting a wet cement plant to convert it to a dry cement plant under uncertainty of the price of carbon allowances. This is done using Real Options Analysis. The trigger price is €114 million for a plant with remaining lifetime of 25 years and a production of one million tonnes. [ABSTRACT FROM AUTHOR]