Modeling endogenous learning and imperfect competition effects in climate change economics

In this two-part paper we evaluate the effect of “endogenizing” technological learning and strategic behavior of agents in economic models used to assess climate change policies. In the first part we show the potential impact of R&D policies or demonstration and deployment (D&D) programs in the context of stringent stabilization scenarios. In the second part we show how game-theoretic methods can be implemented in climate change economic models to take into account three types of strategic interactions: (i) the market power of the countries benefiting from very low abatement costs on international markets for CO₂ emissions, (ii) the strategic behavior of governments in the domestic allocation of CO₂ emissions quotas, and (iii) the non-cooperative behavior of countries and regions in the burden sharing of CO₂ concentration stabilization. The two topics of endogenous learning and game-theoretic approach to economic modeling are two manifestations of the need to take into account the strategic behavior of agents in the evaluation of climate change policies. In the first case an R&D policy or a demonstration and deployment (D&D) program are put in place in order to attain a cost reduction through the learning effect; in the second case the agents (countries) reply optimally to the actions decided by the other agents by exploiting their strategic advantages. Simulations based on integrated assessment models illustrate the approaches. These studies have been conducted under the Swiss NCCR-Climate program.     

Developments in oxidation of the (Mg,Fe)SiO3 pyroxene series and use of thermogravimetry as a quantitative analytical method

Interest in the pyroxenes has increased since the realization that their alteration products could carry a stable remnant magnetization which is possibly related to the earth's magnetic field and would therefore be of great geophysical importance.In the present work, the oxidation of artificial samples of the (Mg,Fe)SiO₃ pyroxene series was studied thermogravimetrically at the constant oxygen pressure of air and temperatures up to 1350°C. The resulting alteration products were determined after complete oxidation by a specific technique which is here reported as a new quantitative analytical method. This method could be applied to many other silicate groups, provided that iron is the only transitional element. Using natural samples, the accurate measure of the ratio $\text{Fe}{}^{\mathrm{3+}}\text{Fe}{}^{\mathrm{2+}}$ provides a basis for a possible quantitative magnetic analytical method and for a geothermometer. Factors affecting the results, i.e., (a) the volatiles and (b) the contamination of transitional elements other than iron, were recognized but could be eliminated by using specific techniques.A large region of metastable solid solution of hematite (Fe₂O₃) in the spinel phase was found. The resulting oxides, after complete oxidation and precipitation of the Fe₂O₃ phase from the metastable spinel phase, were studied by thermogravimetric analysis and X-ray diffraction.     

A Baseline Study on Benthic Species Distribution in Two Neighbouring Gulfs, With and Without Access to Bottom Trawling

Abstract. An extensive survey of the benthic fauna was carried out at two neighbouring regions of the Aegean Sea, one normally trawled and the other closed to trawlers. Benthic samples were collected from seven areas located away from land-based sources. The faunistic analysis showed that species diversity and abundance was higher in the trawled area compared with the untrawled area, a fact which was attributed to the difference in sediment characteristics between the two areas. A degree of disturbance detected in the trawled area was evidenced by an increase in the number of polychaetes at the expense of other benthic groups and an abundance of some opportunistic species. This could possibly be related to trawling activities. as no other causes of disturbance were found in either area.     

Economics of climate policy and collective decision making

This paper explores the reasons why economic instruments of climate change are reluctantly applied and stresses the need for interdisciplinary research linking economic theory and empirical testing to deliberative political procedures. It is divided in three parts. The first one recalls the main issues in implementing Cost-Benefit Analysis such as information problems, uncertainties, discounting the future and irreversibilities. The second part shows how these issues can be treated in integrated assessment and techno-economic models and presents a case study, which shows that

• The chosen scenario tends to stabilize atmospheric CO₂ concentration at around 550 ppm in the long run.
• Exclusion of possibility to trade CO₂ emission permits under a cap regime would increase the cost of emission abatement for OECD countries.
• Combining different flexibility instruments might lead to significant gains in the overall cost of climate policy.

The third part presents results of a survey conducted among the main economic and environmental associations in Switzerland. The survey reveals conflicting views on economic instruments. It shows how the social acceptability of these instruments can be improved in taking explicitly into account these opposing views of special interest groups. Therefore, policy scenarios should be selected in combining techno-economic models with empirical studies about their political and normative context.     

The coupling of optimal economic growth and climate dynamics

In this paper, we study optimal economic growth programs coupled with climate change dynamics. The study is based on models derived from MERGE, a well established integrated assessment model (IAM). We discuss first the introduction in MERGE of a set of “tolerable window” constraints which limit both the temperature change and the rate of temperature change. These constraints, obtained from ensemble simulations performed with the Bern 2.5-D climate model, allow us to identity a domain intended to preserve the Atlantic thermohaline circulation. Next, we report on experiments where a two-way coupling is realized between the economic module of MERGE and an intermediate complexity “3-D-” climate model (C-GOLDSTEIN) which computes the changes in climate and mean temperature. The coupling is achieved through the implementation of an advanced “oracle based optimization technique” which permits the integration of information coming from the climate model during the search for the optimal economic growth path. Both cost-effectiveness and cost-benefit analysis modes are explored with this combined “meta-model” which we refer to as GOLDMERGE. Some perspectives on future implementations of these approaches in the context of “collaborative” or “community” integrated assessment modules are derived from the comparison of the different approaches.