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Data Papers on Environmental indicators

The Creation of the Asian Infrastructure and Investment Bank: America’s Loss and China’s Gain
Stuart P.M. Mackintosh, World Economics, September 2016
The Global Financial Crisis (GFC) pulled institutions together diplomatically and economically. It clarified options and failures of the past and hastened coordinated reforms. But the GFC also starkly illuminated another geopolitical dynamic: Deals struck in extremis must be adhered to after parties leave the negotiating table. Failure to do so can cause embarrassment, recriminations, and unintended consequences with long-term implications that run counter to the original aims and objectives of U.S. policymakers and reformers. This sequence of events played out with the long holdup of agreed International Monetary Fund voice and vote reforms, and the birth of the Asian Infrastructure and Investment Bank, which hastened the rise of China while weakening the role of the Bretton Woods institutions.
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How to Reduce Carbon Emissions Equitably
Masud Ally & Wilfred Beckerman, World Economics, March 2014
So far international negotiations designed to reduce carbon emissions have come up against the clash of views as to the equitable way of sharing out the ‘burden’ among countries. In this article we show that the main criteria that have been discussed, including ‘historical responsibility’, ability to pay, demographic and ‘needs’, are all subject to statistical difficulties as well as ethical objections, particularly the historical responsibility criterion. Any equitable compromise between the different possible criteria needs to take account of these obstacles to their being made operational.
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Do Current Assessments Underestimate Future Damages From Climate Change?
Stéphane Hallegatte, World Economics, September 2007
While the economic debate on climate policy focuses on discounting, we do not know yet what to discount. The potential (non-discounted) socio-economic cost of climate change, indeed, is still unknown. Only a few studies have tried to estimate socio-economic costs of climate change. Most of them concluded that, for a warming of a few degrees, damages will be limited to a few percent of GDP. All these studies, however, have disregarded important mechanisms and have only considered the cost of a stabilized new climate. This article claims that the climate change issue should instead be framed in terms of the adaptation of socio-economic systems to a changing climate. Doing so, it calls for the taking into account of (1) the interaction between the uncertainty on future climate and the inertia of important economic sectors; (2) the short-term economic constraints that will be key in the response to climate shocks. Finally, the impacts of climate change cannot be estimated assuming that societies will always be able to manage in a perfect way the subsequent change in risks, as past experiences demonstrate our poor ability to do so. These mechanisms suggest that the uncertainty on future climate change damages is even larger than is usually acknowledged, and calls for additional research on climate change impacts.
Ethics of the Discount Rate in the Stern Review on the Economics of Climate Change
Wilfred Beckerman & Cameron Hepburn, World Economics, March 2007
Any comparison of the costs and benefits of climate change is dominated by the chosen discount rate. But, although the Stern Review emphasises the ethical nature of the parameters entering into its choice of a relatively low discount rate, its discussion of the ‘pure time preference’ parameter is unbalanced. In particular, no consideration is given to the role of ‘agent-relative ethics’, which (i) has a wellestablished philosophical pedigree going back to David Hume; (ii) is likely to correspond closely to world-wide public attitudes towards intergenerational welfare; and (iii) would entail discounting a unit of welfare accruing to future generations compared to an equal unit accruing to people alive today at a positive rate. The authors also discuss the other ethical parameter upon which the discount rate depends, namely the elasticity of marginal utility with respect to consumption. In the conventional model, this simultaneously reflects different aspects of inequality aversion as well as risk aversion, which complicates its interpretation. Finally, they discuss the divergence between market rates of discount and the low rate chosen in the Review, and the limitations—on the one hand—on the normative significance of market rates, as well as the danger—on the other hand—of relying on rates chosen by elites or philosopher kings.
A Review of the Stern Review
Richard S. J. Tol & Gary W. Yohe, World Economics, December 2006
The Stern Review on the Economics of Climate Change was published on 30 October 2006. In this article Richard Tol and Gary Yohe, while agreeing with some of the Review’s conclusions, disagree with some other points raised in the Review and they address six issues in particular: First, the Stern Review does not present new estimates of either the impacts of climate change or the costs of greenhouse gas emission reduction. Rather, the Stern Review reviews existing material. It is therefore surprising that the Stern Review produced numbers that are so far outside the range of the previous published literature. Second, the high valuation of climate change impacts reported in the Review can be explained by a very low discount rate, risk that is double-counted, and vulnerability that is assumed to be constant over very long periods of time (two or more centuries). The latter two sources of exaggeration are products of substandard analysis. The use of a very low discount rate is debatable. Third, the low estimates for the cost of climate change policy can be explained by the Review’s truncating time horizon over which they are calculated, omitting the economic repercussions of dearer energy, and ignoring the capital invested in the energy sector. The first assumption is simply wrong, especially since the very low discount rates puts enormous weight on the other side of the calculus on impacts that might be felt after the year 2050. The latter two are misleading. Fourth, the cost and benefit estimates reported in the Stern Review do not match its policy conclusions. If the impacts of climate change are as dramatic as the Stern Review suggests, and if the costs of emission reduction are as small as reported, then a concentration target that is far more stringent than the one recommended in the Review should have been proposed. The Review, in fact, does not conduct a proper optimization exercise. Fifth, a strong case for emission reduction even in the near term can nonetheless be made without relying on suspect valuations and inappropriate summing across the multiple sources of climate risk. A corollary of this observation is that doing nothing in the short term is not advisable even on economic grounds. Sixth, alarmism supported by dubious economics born of the Stern Review may further polarize the climate policy debate. It will certainly allow opponents of near-term climate policy to focus the world’s attention on the estimation errors and away from its more important messages: that climate risks are approaching more quickly than previously anticipated, that some sort of policy response will be required to diminish the likelihoods of the most serious of those risks, and that beginning now can be justified by economic arguments anchored on more reliable analysis. These six points are discussed in separate sections before the authors reach their conclusion.
Valuing the Future: Recent advances in social discounting
David Pearce, Ben Groom, Cameron Hepburn & Phoebe Koundouri, World Economics, June 2003
One of the most controversial areas of economics is the practice of discounting: attaching a lower weight to future costs and benefits than present costs and benefits. Discounting appears to offend notions of sustainable development and the interests of future generations. Recent advances in the theory of discounting hold out strong hope that the ‘tyranny of discounting’ can be avoided through the use of time varying discount rates (TVDRs). This paper reviews the recent rationales for TVDRs and applies the results to issues such as nuclear power and global warming control.
Wealth as a Criterion for Sustainable Development
Partha Dasgupta & Karl-Göran Mäler, World Economics, September 2001
In this article the authors define sustainable development as an economic programme along which social well-being does not decline over time. It can be shown that the requirement is equivalent to the maintenance of a comprehensive measure of wealth, where an economy’s wealth is defined to be the social worth of its entire array of capital assets, including natural capital. Using data published by the World Bank on the world’s poorest regions, countries which would be regarded as having performed well if judged on the basis of such indices as GNP per head or the Human Development Index are found to have grown poorer, a few alarmingly so.
Reply to Professor Zimmermann
Giles Atkinson, World Economics, September 2000
Giles Atkinson replies to Professor Zimmermann’s "A Multi-coloured GDP -or No New GDP at All?"[World Economics, Vol 1 No 3 July-September 2000]
A Multi-coloured GDP -or No New GDP at All?
Horst Zimmermann, World Economics, September 2000
This is a reply to Giles Atkinson’s article ‘Re-thinking Economic Progress’ that appeared in the first issue of World Economics (Vol. 1, No. 1, January – March 2000). Atkinson discussed proposals for the construction of ‘green’ alternatives to Gross Domestic Product (GDP). In the same issue, Amanda Rowlatt in her article ‘Extending the UK National Accounts’, discussed the role of ‘satellite accounts’, including measures of effects on the environment. Professor Zimmermann’s contention is that the concept of a ‘green GDP’ would lead to a one-sided measure which cannot be used for the many purposes for which normal GDP as a comprehensive measure can be used. A GDP corrected for depletion of environmental stocks would have to be supplemented by one corrected for changes in human capital, another one dealing with health capital, etc. Completing the set leads to the older concept of Net Economic Welfare or something similar. Only this would again be a comprehensive measure and could replace GDP.
Re-thinking Economic Progress
Giles Atkinson, World Economics, March 2000
Most national governments have pledged a commitment to sustainable development. The transformation of these pledges into policy is a formidable challenge. Of particular interest are proposals for the construction of green alternatives to Gross Domestic Product (GDP), which it is hoped will provide policy-makers with a consistent and summary signal of "true" trends in the economy both now and into the future. This paper reviews the green accounting debate over the past decade. the author argues that, while initial expectations have, at times, been overstated, there are encouraging signs for policy-makers attempting to make sense of their commitments to sustainable development. One such indication is the increasing emphasis on improved measures of saving, providing a better link between actions in the present and their implications for the future.


Extending the UK National Accounts: What can be done?
Amanda Rowlatt, World Economics, March 2000
The national accounts measure economic activity. The UK is developing "satellite accounts" which use the framework of the national accounts but aim to quantify other aspects of living standards. This article starts by comparing satellite accounts with the use of indicators to measure the quality of life. It then reports on progress with the UK environmental accounts, and with the household accounts, which measure the productive unpaid work done in the home. It concludes with a discussion of the scope for developing a wider range of satellite accounts for the UK.