Environment

Hans Koster, Martijn Dröes, 20 September 2020

Countries that invest in renewable energy production face frequent opposition from local homeowners. Using a detailed housing transactions dataset covering the whole of the Netherlands since 1985, this column compares the overall impact that wind turbines and solar farms have on housing prices. It finds that tall wind turbines (over 150 metres) have a negative effect, and solar farms generate losses as well (2-3% for homeowners within a 1km orbit). This evidence should be factored into finding the optimal allocation of renewable energy production facilities. 

Franziska Funke, David Klenert, 17 August 2020

COVID-19 and climate change share a marked similarity: the worst damage is only averted when society commits to decisive and early action in the face of a seemingly abstract threat. There are good reasons to believe climate change will be even harder to defeat, even though – or precisely because – there is more time to confront it. This column argues that the current pandemic is an exceptional opportunity to understand where the real challenges lie for progression on climate action – in garnering political will and public support. It provides key policy suggestions for the next wave of climate action. 

Aniruddh Mohan, Akshay Thyagarajan, Nicholas Muller, 31 July 2020

The nexus of economic development and environmental impact is at the core of current policy debates. This is often captured by an ‘environmental Kuznets curve’, an inverted-U shaped relationship between income and pollution levels. This column argues that, in contrast to conventional approaches, sustainability analysis should focus on the monetary damages of pollution, rather than the physical tonnage of emissions. It highlights a large divergence in the Kuznets curves based on these two approaches. In addition, it proposes a measure of GDP growth which adjusts for monetary pollution damages.

Mathias Reynaert, 26 July 2020

In 2009, the EU adopted one of the world’s most demanding emission standards for its automobile market, requiring automakers to reduce emissions by 18%. This column discusses the different strategies firms can adopt to comply with these requirements and analyses their respective welfare effects. Using data from the Netherlands, it finds a growing divergence between on-road fuel consumption and laboratory results since the new policy, suggesting strategic ‘gaming’ by automakers. The political environment, the enforcement of the policy, and strategic decisions by firms are crucial to evaluating the welfare consequences of the emission standard. 

Alexandre Garel, Arthur Petit-Romec, 21 July 2020

The COVID-19 pandemic has brought uncertainty over the future of climate actions. This column studies the cross-section of stock returns during the COVID-19 shock to capture investors’ views and expectations about environmental issues. Firms with responsible strategies on environmental and climate issues are found to have had better stock returns between 20 February and 20 March 2020. Hence, the COVID-19 shock did not distract investors’ attention away from environmental issues but rather led investors to reward environmental responsibility to a larger extent.

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