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2008 Climate Economics Seminars
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The first few events are posted below. Our offices are located in the EPA West Building (1301 Constitution Ave., NW, Washington, DC, corner of 14th St. and Constitution Ave.).
NOTE to non-EPA attendees: EPA Security requires that ALL non-EPA (federal and non-federal) visitors have a contact name and phone number in order to enter EPA West. If you are not an EPA employee and would like to attend the seminar, send an e-mail to PASURKA.CARL@EPA.GOV at least two business days prior to the seminar. If you have questions, contact Carl Pasurka (202-566-2275). If you have questions on the day of the seminar, contact Carl Pasurka at 571-276-5028 (cell phone). Carl recommends that non-EPA attendees bring their cell phones and his cell phone number in case problems arise the day of the seminar.
A teleconference connection (only audio) can be established for these seminars. If you are interested, send Carl Pasurka an e-mail message by COB of the preceding Friday.
June 17, 2008 (2 pm), Room 4144, EPA West
Where Does Energy R&D Come From? A First Look at Crowding Out from Environmentally-Friendly R&D
David C. Popp (Syracuse University)
Recent efforts to endogenize technological change in climate policy models demonstrate the importance of accounting for the opportunity cost of climate R&D investments. Because the social returns to R&D investments are typically higher than the social returns to other types of investment, any new climate mitigation R&D that comes at the expense of other R&D investment may dampen the overall gains from induced technological change. Unfortunately, there has been little empirical work to guide modelers as to the potential magnitude of such crowding out effects. This paper is a first attempt to address this question. In it, Richard Newell and I consider the private opportunity costs of climate R&D, asking whether an increase in climate R&D represents new R&D spending, or whether some (or all) of the additional climate R&D comes at the expense of other R&D.
April 15, 2008 (2:30 pm). Room 4144, EPA West
The Shape of Things to Come: Why is Climate Sensitivity So Unpredictable (and Who Cares Anyway)?
Gerard Roe (University of Washington)
Underlying all the benefit estimates of global climate change control are the climate's sensitivity to GHG increases; this presentation will explore what is currently known about this critical factor.
What kind of information from the climate science community is the most useful for policy makers, and which uncertainties matter most? Constraining climate sensitivity - the long-term increase in global mean temperature expected from the doubling of atmospheric carbon dioxide - has been one of the main benchmark goals of climate science. I will review the various disagreements over what future progress might be anticipated, as well as the debate about the extent to which reducing climate sensitivity even matters for any practical decisions on climate policy.
Uncertainties in projections of future climate change have not lessened substantially in past decades. Both models and observations yield broad probability distributions for climate sensitivity, with small but finite probabilities of very large increases. We show that the shape of these probability distributions is an inevitable and general consequence of the nature of the climate system. Further, we show that the breadth of the distribution and, in particular, the probability of large temperature increases are relatively insensitive to decreases in uncertainties associated with the underlying climate processes.
March 5, 2008 (1 pm). Room 4144, EPA West
Incorporating Price Effects into Lifecycle Analysis
Mark Delucchi (Institute of Transportation Studies, U.C. Davis)
Professor Delucchi's talk (download the presentation slides here) argued that no existing models of lifecycle carbon dioxide-equivalent greenhouse-gas (LC-CO2E-GHG) emissions from transportation fuels account for the interaction of policy, the production of new fuels, prices, production and consumption, and finally GHG emissions. In the real world, the production of biomass and biofuels and the substitution of biofuels for petroleum will affect the prices of a wide range of commodities, from gasoline and coal to fertilizer and steel. A change in the price of a commodity will affect the production and consumption of that commodity, of course, but also will affect the price and hence production and consumption of substitutes for and complements of the commodity, products derived from the commodity, and inputs used to make the commodity. So, for example, an increase in use of biofuels in the U. S. can lead to an increase in the use of home heating oil, via the effect of biofuel substitution for gasoline on oil prices. The increase in heating oil will be partly a substitution of oil for other sources of heat, and partly a net increase in heating. Both of these affect GHG emissions and climate change. A general equilibrium model of the world economy, including government sectors, is needed to trace out all of the relevant economic effects of a particular biofuel policy or assumed market outcome.
There are at least four different ways to combine life-cycle analysis (LCA) and general-equilibrium analysis: build a combined model from scratch; connect an existing LCA and an existing general equilibrium model in a meta-modeling framework; add technological detail, input-output linkages, and emission factors to an equilibrium model; or add price-production-GHG relationships to an LCA model. The focus of this talk will mainly be on the last alternative.
Working Paper related to seminar:
Delucchi, Mark A. (2005) Incorporating the Effect of Price Changes on CO2-Equivalent Emissions From Alternative-Fuel Lifecycles: Scoping the Issues. ITS-Davis.October 2005. Publication No. UCD-ITS-RR-05-19.
http://www.its.ucdavis.edu/publications/2005/UCD-ITS-RR-05-19.pdf
February 12, 2008 (1 pm). Room 4144, EPA West
Estimating the Effect of Climate Change on Crop Yields and Farmland Values: The Importance of Extreme Temperatures
Wolfram Schlenker (Columbia University)
Prof. Schlenker summarized (download the presentation slides here) a paper written with Anthony Fisher, Michael Hanemann, and Michael Roberts. The paper pairs a panel of yearly crop yields in the United States with a fine-scale weather data set that incorporates the whole distribution of temperatures between the minimum and maximum within each day and across all days in the growing season. Yields increase in temperature until about 29°C for corn, 30°C for soybeans, and 32°C for cotton, but temperatures above these thresholds become very harmful. The slope of the decline above the optimum is significantly steeper than the incline below it. This has strong implications for global warming which is predicted to increase the frequency of temperatures above the critical threshold that are harmful for yields. Area-weighted average yields given current growing regions are predicted to decrease by 31-43% under the slowest warming scenario and 67-79% under the most rapid warming scenario by the end of the century. There is limited potential for adaptation within a crop species as the same nonlinear and asymmetric relationship is found if we look only at the time series or cross-section, and the latter should pick up how farmers adapt to warmer climates.
A cross-sectional analysis of farmland values that accounts for an even wider set of adaptation possibilities gives comparable, robust impacts. Mean impacts range from a 27 decrease under the slow warming scenario to a 69 decrease under the fast warming scenario by the end of the century. The increased frequency of very hot temperatures is again responsible for the largest share of the predicted impacts.
January 22, 2007 (2 pm), Room 4144, EPA West
Intergeneratonal Discounting
William Pizer (Resources for the Future)
Dr. Pizer discussed (download the presentation slides here) the challenges of discounting benefits and costs of policies that occur over multiple generations. He is a recognized expert in the economics of energy and climate change. His remarks on intergenerational discounting focused on his 2003 analysis with Richard Newell of incorporating uncertainty about discount rates on estimates of the benefits of reducing greenhouse gases. This article, the abstract of which is provided below, was awarded the Petry Research Prize for the economics of Climate Change by the Association of Environmental and Resource Economists.
Article related to January 22 seminar:
Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?
Richard G. Newell and William A. Pizer
Journal of Environmental Economics and Management, Vol. 46, No. 1 (July, 2003), pp. 52-71.
Paper abstract:
The authors demonstrate that when the future path of the discount rate is uncertain and highly correlated, the distant future should be discounted at significantly lower rates than suggested by the current rate. They then use two centuries of US interest rate data to quantify this effect. Using both random walk and mean-reverting models, we compute the ‘‘certainty-equivalent rate’’ that summarizes the effect of uncertainty and measures the appropriate forward rate of discount in the future. Under the random walk model they find that the certainty-equivalent rate falls continuously from 4% to 2% after 100 years, 1% after 200 years, and 0.5% after 300 years. At horizons of 400 years, the discounted value increases by a factor of over 40,000 relative to conventional discounting. Applied to climate change mitigation, they find that incorporating discount rate uncertainty almost doubles the expected present value of mitigation benefits.
Thank you for supporting the NCEE Climate Economics Seminar Series. See the Climate Economics Seminars schedule for additional 2008 seminars.