The increased concern for sustainable development in recent years has spurred renewed interest in the concept of economic income. In this paper, we attempt to provide a modern version of the concept defined by Fisher, Lindahl and Hicks based on a multi-sector optimal growth model. In paricular, we show that the the linearized Hamiltonian as a comprehensive net national product measure is indeed the return to capital when the linearization is conducted with respected to the right variables. This is in line with the conjecture by Solow in his keynote speech at the 40th anniversary of the Resources for the Future.
This paper is concerned with the cost efficiency in achieving the Swedish national air quality objectives under uncertainty. To realize an ecologically sustainable society, the parliament has approved a set of interim and long-term pollution reduction targets. However, there are considerable quantification uncertainties on the effectiveness of the proposed pollution reduction measures. In this paper, we develop a multivariate stochastic control framework to deal with the cost efficiency problem with multiple pollutants. Based on the cost and technological data collected by several national authorities, we explore the implications of alternative probabilistic constraints. It is found that a composite probabilistic constraint induces considerably lower abatement cost than separable probabilistic restrictions. The trend is reinforced by the presence of positive correlations between reductions in the multiple pollutants.
This paper shows how contingent valuation studies can produce relevant information for public nature conservation decisions. The study analyses the preferences of Finnish households for a nature conservation programme, Natura 2000 Network, by applying a dichotomous choice referendum model of the contingent valuation survey. In order to study the influence of attitudes and beliefs on a choice between the status quo and the new conservation project, an attitude-behaviour framework is applied. Beliefs concerning the outcomes of the nature conservation policy and evaluations of their importance describe how attitudes towards the programme are formed. The choices in the referendum are explained using a logit regression model and are found to be a function of attitude and socio-economic variables. The probability of a person supporting the proposed conservation level depends significantly on the income, age and background (urban-rural) of the respondent. The estimated model of choice behaviour is used to calculate the average willingness to pay for the Natura 2000 Network, which is also compared to the costs of the conservation programme.
This paper is concerned with the modern theory of social cost-benefit analysis in a dynamic economy. The theory emphasizes the role of a comprehensive, forward-looking, dynamic welfare index within the period of the project rather than that of a project's long-term consequences. However, what constitutes such a welfare index remains controversial in the recent literature. In this paper, we attempt to shed light on the issue by deriving three equivalent cost-benefit rules for evaluating a small project. In particular, we show that the direct change in net national product (NNP) qualifies as a convenient welfare index without involving any other induced side effects. The project evaluation criterion thus becomes the present discounted value of the direct changes in NNP over the project period. We also illustrate the application of this theory in a few stylized examples.
In this paper we investigate the importance of exposure calculations for the health cost estimation of traffic emissions with the impact pathway approach. We focus on particles and the effect they have on chronic mortality since this have been shown to impose the largest costs to society. Up to now particles have been treated as a homogeneous type of pollutant though research in recent years indicates that in an urban area there is at least three different kinds of particles that are likely to impose impacts on the population exposed. The problem is that the harmfulness and the dispersion differ between different particles. This, together with population density, will make the exposure to particles vary between different areas and hence the cost. In this paper, we develop a model for exposure and cost calculations. With simulations we also investigate the importance on costs of various assumptions used in exposure calculations. The implication of our findings is that the current limit values based on PM10 do not target the emissions that give rise to the largest cost. The current limit values may result in reduction measures that have a small impact on the total cost of the emissions from traffic.