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- ItemOptimal carbon taxation and horizontal equity: A welfare-theoretic approach with application to German household data(Amsterdam : Elsevier, 2022) Hänsel, Martin C.; Franks, Max; Kalkuhl, Matthias; Edenhofer, OttmarWe develop a model of optimal taxation and redistribution under an ambitious climate target. We take into account vertical income differences, but also explicitly capture horizontal equity concerns by considering heterogeneous energy efficiencies. By deriving first- and second-best rules for policy instruments including carbon and labor taxes, transfers and energy subsidies, we investigate analytically how vertical and horizontal inequality is considered in the welfare maximizing tax structure. We calibrate the model to German household data and a 30 percent emission reduction goal and show that redistribution of carbon tax revenues via household-specific transfers is the first-best policy. Under plausible assumptions on inequality aversion, transfers to energy-intensive households should be about five times higher than transfers to energy-efficient households. Equal per-capita transfers do not require to observe households’ efficiency type, but increase equity-weighted mitigation costs by around 5 percent compared to the first-best. Mitigation costs increase by less, if the government can implement a uniform clean energy subsidy or household-specific tax-subsidy schemes on energy consumption and labor income that target heterogeneous energy efficiencies. Horizontal equity concerns may therefore constitute a new second-best rationale for clean energy policies or differentiated energy taxes.
- ItemThe impact of climate conditions on economic production. Evidence from a global panel of regions(Amsterdam [u.a.] : Elsevier, 2020) Kalkuhl, Matthias; Wenz, LeonieWe present a novel data set of subnational economic output, Gross Regional Product (GRP), for more than 1500 regions in 77 countries that allows us to empirically estimate historic climate impacts at different time scales. Employing annual panel models, long-difference regressions and cross-sectional regressions, we identify effects on productivity levels and productivity growth. We do not find evidence for permanent growth rate impacts but we find robust evidence that temperature affects productivity levels considerably. An increase in global mean surface temperature by about 3.5°C until the end of the century would reduce global output by 7–14% in 2100, with even higher damages in tropical and poor regions. Updating the DICE damage function with our estimates suggests that the social cost of carbon from temperature-induced productivity losses is on the order of 73–142$/tCO2 in 2020, rising to 92–181$/tCO2 in 2030. These numbers exclude non-market damages and damages from extreme weather events or sea-level rise. © 2020 The Authors
- ItemPigou in the 21st Century: a tribute on the occasion of the 100th anniversary of the publication of The Economics of Welfare(New York, NY : Springer Science + Business Media B.V., 2021) Edenhofer, Ottmar; Franks, Max; Kalkuhl, MatthiasThe year 2020 marks the centennial of the publication of Arthur Cecil Pigou’s magnum opus The Economics of Welfare. Pigou’s pricing principles have had an enduring influence on the academic debate, with a widespread consensus having emerged among economists that Pigouvian taxes or subsidies are theoretically desirable, but politically infeasible. In this article, we revisit Pigou’s contribution and argue that this consensus is somewhat spurious, particularly in two ways: (1) Economists are too quick to ignore the theoretical problems and subtleties that Pigouvian pricing still faces; (2) The wholesale skepticism concerning the political viability of Pigouvian pricing is at odds with its recent practical achievements. These two points are made by, first, outlining the theoretical and political challenges that include uncertainty about the social cost of carbon, the unclear relationship between the cost–benefit and cost-effectiveness approaches, distributional concerns, fragmented ministerial responsibilities, an unstable tax base, commitment problems, lack of acceptance and trust between government and citizens as well as incomplete international cooperation. Secondly, we discuss the recent political success of Pigouvian pricing, as evidenced by the German government’s 2019 climate policy reform and the EU’s Green Deal. We conclude by presenting a research agenda for addressing the remaining barriers that need to be overcome to make Pigouvian pricing a common political practice.
- ItemTeleconnected food supply shocks(Bristol : IOP Publishing, 2016) Bren d'Amour, Christopher; Wenz, Leonie; Kalkuhl, Matthias; Steckel, Jan Christoph; Creutzig, FelixThe 2008–2010 food crisis might have been a harbinger of fundamental climate-induced food crises with geopolitical implications. Heat-wave-induced yield losses in Russia and resulting export restrictions led to increases in market prices for wheat across the Middle East, likely contributing to the Arab Spring. With ongoing climate change, temperatures and temperature variability will rise, leading to higher uncertainty in yields for major nutritional crops. Here we investigate which countries are most vulnerable to teleconnected supply-shocks, i.e. where diets strongly rely on the import of wheat, maize, or rice, and where a large share of the population is living in poverty. We find that the Middle East is most sensitive to teleconnected supply shocks in wheat, Central America to supply shocks in maize, and Western Africa to supply shocks in rice. Weighing with poverty levels, Sub-Saharan Africa is most affected. Altogether, a simultaneous 10% reduction in exports of wheat, rice, and maize would reduce caloric intake of 55 million people living in poverty by about 5%. Export bans in major producing regions would put up to 200 million people below the poverty line at risk, 90% of which live in Sub-Saharan Africa. Our results suggest that a region-specific combination of national increases in agricultural productivity and diversification of trade partners and diets can effectively decrease future food security risks.
- ItemAssessing human and environmental pressures of global land-use change 2000-2010(Cambridge : Cambridge Univ. Press, 2019) Creutzig, Felix; Bren d'Amour, Christopher; Weddige, Ulf; Fuss, Sabine; Beringer, Tim; Gläser, Anne; Kalkuhl, Matthias; Steckel, Jan Christoph; Radebach, Alexander; Edenhofer, OttmarGlobal land is turning into an increasingly scarce resource. We here present a comprehensive assessment of co-occuring land-use change from 2000 until 2010, compiling existing spatially explicit data sources for different land uses, and building on a rich literature addressing specific land-use changes in all world regions. This review systematically categorizes patterns of land use, including regional urbanization and agricultural expansion but also globally telecoupled land-use change for all world regions. Managing land-use change patterns across the globe requires global governance. Here we present a comprehensive assessment of the extent and density of multiple drivers and impacts of land-use change. We combine and reanalyze spatially explicit data of global land-use change between 2000 and 2010 for population, livestock, cropland, terrestrial carbon and biodiversity. We find pervasive pressure on biodiversity but varying patterns of gross land-use changes across world regions. Our findings enable a classification of land-use patterns into three types. The 'consumers' type, displayed in Europe and North America, features high land footprints, reduced direct human pressures due to intensification of agriculture, and increased reliance on imports, enabling a partial recovery of terrestrial carbon and reducing pressure on biodiversity. In the 'producer' type, most clearly epitomized by Latin America, telecoupled land-use links drive biodiversity and carbon loss. In the 'mover' type, we find strong direct domestic pressures, but with a wide variety of outcomes, ranging from a concurrent expansion of population, livestock and croplands in Sub-Saharan Africa at the cost of natural habitats to strong pressure on cropland by urbanization in Eastern Asia. In addition, anthropogenic climate change has already left a distinct footprint on global land-use change. Our data- and literature-based assessment reveals region-specific opportunities for managing global land-use change. © 2019 The Author(s).