CCB: Economic and policy aspectsMarch 2002

Ekko van Ierland

Environmental Economics and

Natural Resources Group

Wageningen University and Research Centre

• Socio-economic aspects of climate change

• Analysis of socio-economic causes of changes in landuse

• Cost-effectiveness studies at national and international level

• Integrated assessment modellen: Rains Asia; MERGE;

DICE model

• Analysis of policy instruments and options

• Interactions between various pollutants: GHG, acidification,

ozone

Marginal emission reduction costs, source: Kram, 1993.

Where are we now?• Integrated modelling (RICE, MERGE,IMAGE)

• Stakeholder: COOL /NOP impact project

• Started:– Risk and uncertainty analysis– Stability of International Environmental Agreement

• Lacking: economics and policy analysis of sequestration, landuse, water systems and interactions

* Shift from climate change to global change

* Stronger focus on interactions and their effects

* Costs of emission reduction vs sequestration?

* Technological progress and the implications?

* Multi/interdisciplinary approaches......but also monodisciplinary in-depth research

New challenges: the context

Carbon fluxes of a forest

CO2

NPP6±2

Litter3±1

Wood3±1

NEP5±1

Mineralisation

1.4±0.7

Harvest

1.5±0.9

Soil C flux

LitterWood

managed forest

Products

O layerA horizon

MRTyears

<1-31-250mean: 80

15-20

14-5270-170

Fluxes in t C ha-1 yr -1

New challenges ILanduse

• Mitigation options through landuse: cost and benefits

• Land use modelling:

climate, food, energy, nature, biodiversity

• Economic aspects of carbon sequestration: transaction costs, risk and uncertainty

New challenges IIRivers and coastal management

• Changes in climate, landuse and watermanagement

• Ecohydrological processes (scaling and remote sensing): economic analysis

• Socio-economic analysis for wetlands, river basins and coastal zones

Interrelations between environmental policies

Agriculture

NH3

N2O

CH4 Acidification

Eutrophication

Global Warming

Transport

Energy

Industry

NOx

SO2

CO2

NH3

N2O

CH4

NOx

SO2

CO2

End

-of-

pip

e ab

ate

me

nt t

echn

olog

ies

Results: abatement cost

0

5

10

15

GOT NMR GOT&NMR1 GOT&NMR2

abat

emen

t cos

t (bi

llion

Euro

per

yea

r)

New Challenges IIIIntegrated assessment

Available: Integrated Climate Change Models

MERGE; DICE; FUND; IMAGE

New questions:

• Interactions with other topics: acidification; nature conservation; biodiversity

• How to deal with risk: learning, irreversibilities, probabilities of damage?

New challenges IV: After 2010?

• What has to come after 2010?

• How to get developing countries involved?

• Who are loosers, who are winners?(See VI on IEAs)

Methods: Case studies;Scenario studies;Damage studies

New challenges V: RiskRisk and uncertainty analysis:

• How to integrate in decision making?

• How do stakeholders perceive risks?

• How to develop hedging strategies?

• What is actually precautionary principle?

Methods: Dynamic risk modelling

Stakeholder analysis

• Montreal protocol (CFCs, Ozone depletion)

• Gothenburg Protocol (Acidification)

• Kyoto protocol

• RIO Convention on biodiversity

International environmental agreements

New challenges VI: IEAs• Stability of international environmental

agreements

• Coalition formation (open membership)

• Internal stability/ external stability

• How to distribute the gains of cooperation?

• How to avoid members leaving the coalition?

Methods: APPLIED GAME THEORYCost benefit analyses