Environment

Eli P Fenichel, Matthew Kotchen, Ethan T Addicott, 20 August 2017

How the future is discounted in cost-benefit analyses is a contested issue, with economists disagreeing on whether approaches to discounting should be prescriptive or descriptive. This column presents a new way to model individuals’ discounting based on a demographic approach. The advantages of a purely mortality-based approach are transparency, an empirical basis, and broad data availability.

Daron Acemoğlu, Ufuk Akcigit, Douglas Hanley, William Kerr, 05 July 2017

Substantial headway has been made in the transition to clean technology, but recent political developments threaten this progress. This column examines the transition process using a microeconomic model of competition in production and innovation between clean and dirty technologies. The results suggest that production taxes can deal with dirty emission externalities, while research subsidies are sufficient to redirect innovation towards clean technologies. However, delaying intervention will drastically slow down the overall transition.

Kostadis Papaioannou, Ewout Frankema, 15 June 2017

Tropical Asia has historically hosted larger and denser agricultural civilisations than tropical Africa. Using colonial-era rainfall and population data, this column explores the role of climatological conditions in the development of dense rural populations in the two regions. Rainfall shocks were both more frequent and severe in Africa than in Asia, lending support to the argument that ecological barriers to agricultural intensification were more challenging in tropical Africa than elsewhere.

Amyra Asamoah, Emine Hanedar, Baoping Shang, 12 June 2017

Despite a growing consensus in favour of reform of costly and environmentally damaging energy price subsidies, many countries remain resistant. This column takes stock of recent developments using an updated energy price database. Environmental concerns seem to be playing a larger role in driving reform, but most reforming countries are found to have been facing large fiscal imbalances. These countries may need additional, deeper measures for the reforms to last.

Hiroyasu Inoue, Yasuyuki Todo, 25 April 2017

Natural disasters have enormous economic consequences, with the 2011 Great East Japan Earthquake providing a particularly stark recent example. This column uses supply chain data for more than one million Japanese firms to explore how negative shocks from natural disasters propagate through firm networks. Shocks are found to propagate very quickly, due in large part to certain ‘hub’ firms that have a high number of supply chain partners. Production substitution is the key to slowing the propagation.

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