Category: EEcon

Zayane writes*

At the sight of this picture, you probably recall those long and uncomfortable hours you spent on the road trying to get to your destination. Maybe you still hear the horns of cars vainly attempting to exit? Can you still smell the fuel in the air?

Much of our hope for a transition of the transport sector to a less-greenhouse-gas (GHG) emitting sector rests on trains.

The transport sector accounts for no less than a quarter of total GHG emissions in Europe, 71.7% of which is attributable to road transport. Rail emits 3.5 times less GHG emissions than road transport and thus is a promising alternative.

Over the past 20 years, the EU has tried to increase the market share of rail transport without much success. The shares of the three inland transport modes remained roughly constant [pdf] between 1996 and 2016. Road transport still dominates, accounting for 75,3% of total inland freight transport in tonnes per kilometer in 2018, followed by rail (18,7%) and waterways (6.0%).

The EU has set a target of reducing GHG emissions from the transport sector by 60% by 2050. Achieving this target requires that 30% of long distance (over 300km) road freight shift to rail by 2030.

According to Islam and his colleagues, we need to double rails’ market share compared to its present levels if we want to reach the target set by the EU. Concretely, this means trains would carry 3-4 times current volumes.

Rail could turn towards LDHV (low density and high value) to increase its market share. According to recent estimates for a representative trans-European transport corridor, LDHV freight transport represents 16.5% of the total freight transport market. Currently, however, transport of LDHV freight is covered by road because rail is not competitive in terms of reliability and flexibility. A modal shift from road to rail in this market segment could highly reduce GHG emissions.

Improving transshipment technologies to enable faster and more flexible intermodal load transfer of containers of all sizes and weights is a promising avenue for making freight rail transport a more reliable alternative to road transport.

The Covid-19 pandemic has raised prices for air transport, slowed road transport, and increased transit times for air and sea freight. As a consequence, rail freight transport gained in reliability, economic viability, and competitiveness.

For example, the Eurnex [pdf], long-distance trans-Eurasian rail lines have suffered less from the changes the crisis has imposed on the supply chain than other modes of transport.

The operators who shifted capacity [pdf] from transport by sea to intra-European transport during the pandemic may adopt rail after the pandemic. Hence, the pandemic has shown how to restructure the transport network.

Bottom line: Rail freight transport is a promising avenue for reducing GHG emissions from the transport sector. However, the modal shift from road to rail has not yet been achieved because rail is not yet competitive with road transport due to a lack of reliability and flexibility. The covid-19 pandemic could facilitate this modal shift.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Rosita writes*

In 2018, 29% of Austria’s total primary energy supply was covered by renewables, with the largest share coming from bioenergy and hydropower (IEA, 2020). Renewables also cover 77% of the electricity generation in the country, in comparison to the transport sector, which has only one-tenth of its supply delivered by green sources (IEA, 2020). To achieve its 2040 carbon neutrality target, Austria would need to accelerate its decarbonization efforts across all energy sectors, with transport remaining a big challenge, due to the large scale infrastructural requirements and present technological lock-in (IEA, 2020; Klitkou, 2015). Green hydrogen has entered the Austrian market as a climate-neutral energy carrier, whose scaled-up production may play a crucial role in the decarbonization of hard-to-abate sectors such as transportation and the transition to a more secure energy supply (EIA).

In 2019, Austria’s transportation sector emitted 22 million tons of CO2 equivalent greenhouse gases, or 30% of the nation’s total (Climate Action in Austria, n.d.; Austria: Annual, 2021). Nevertheless, the country’s fossil fuel consumption has been going through a gradual decline since 1976, which reflected the Austrian government’s plans to facilitate the use of massive-scale renewable energy sources in the country, using hydro-energy within the electricity sector (Stocker, 2011). The transport sector has been lagging behind in introducing renewable energy sources on a massive scale, one of the reasons being the nature of the sector, which makes direct electrification difficult to implement (IRENA, 2021). Green hydrogen can provide a solution to this problem, as it can facilitate the existing natural gas infrastructure to transport and store wind and solar power that has been converted into hydrogen via electrolysis (EIA, 2020).

Green hydrogen is mainly produced from the electrolysis of water (IRENA, 2021). Unlike the more widely used grey hydrogen, which is primarily produced from fossil raw materials, green hydrogen is derived from renewable energy sources (EIA, 2020). Small scale initiatives that use hydrogen as the main energy source have already been running in Austria, giving an example of how the country has the capacity to facilitate larger-scale projects using green hydrogen (EIA, 2020). UpHy I&II is the best example that has taken place in recent years (EIA, 2020). It presents a cooperative project between Austria’s leading energy companies, OMV and VERBUND, and it aims at providing clean fuel for the Vienna region’s public bus system (EIA, 2020). Having more large-scale projects like UpHy I&II can provide the necessary infrastructure in the country to upscale hydrogen production.

Bottom line: Hydrogen, if provided on a large scale, can replace fossil fuels and thereby reduce CO2 emissions. Hydrogen has advantages over conventional fuels for heavier vehicles (in terms of fueling time). With the right infrastructure and economies of scale, hydrogen can increase Austria’s use of clean energy (Beltman, 2020).

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Maksim writes*

Visitors to Amsterdam see a cute cycling paradise that they assume can only exist there. They do not believe cycling would be possible in their home cities. But what if I told you that Amsterdam also had a “car problem”?

Let’s look at the benefits of taking cars off the streets, starting with a photo showing how minds can shift and urban space be transformed:

How did Amsterdam undergo such a radical change?

In short, post-WW2, European economies were booming, consumerism and modernist ideas lived in citizens’ minds, and urban designers saw cars as essential to the city of the future [pdf]. Those minds changed as the dangers of cars grew obvious. Roughly 400 children were killed in 1971 [pdf] resulted in mass protests. The oil crisis of 1973 raised questions of car dependence. The Dutch government responded by heavily subsidising cycling infrastructure.

Cycling and walking brings numerous benefits. The photo above illustrates five benefits from lower congestion (I will not comment on the priceless** value of children’s lives):

1. Lower air pollution
2. Less noise pollution
3. Lower risk of injury from cars
4. Fewer cars and parking means more space for pedestrians and cyclists
5. Redesigned roads add mobility options without preventing driving

I won’t consider the potential for replacing asphalt with greenery, but it’s also useful.

Bottom line: Redesigning streets away from cars raises the standard of living, accessibility, and environmental sustainability.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** DZ notes: In practice, economists do put a value on life, as “priceless” can lead to unhelpful results (e.g., lock children up to protect them from risks).

Hanna writes*

The weather is getting colder and Christmas is right around the corner. Some of us may be staying home, but others are booking flights to various holiday destinations — skiing in the Alps or beaches in Mexico or Hawaii.

What most of us don’t account for when booking these amazing trips is the damage we are doing to the environment. Specifically the large amounts of CO2 that get put into the atmosphere with each and every flight. Nowadays with the advancement in technology we are able to calculate an individual’s carbon emissions for a flight. Airlines then provide a possibility to “offset” (pay) for those emissions. Depending on the distance of the flight, offsets cost $2-60. This money then goes to different environmental schemes. Many focus on preserving forests via REDD+ (Reducing Emissions from Deforestation and forest Degradation) programs.

Recent studies show REDD+ projects in Brazil’s Amazon have not been as effective as claimed: there was no significant evidence of reduced forest loss. The International Civil Aviation Organization has approved ineffective REDD+ projects such as these.

Offsets can also be misleading because an individual’s payments do not directly offset emissions. It takes years for a tree to grow and absorb CO2 at full capacity. Another issue arises if (when) global warming leads to more forest fires — resulting in releases rather than storage of carbon.

Carbon offsetting projects paint aviation and airlines in green, which can help them compete, increase sales, and strengthen customer and employee loyalty. But perhaps airlines are using these projects as “smart marketing”  rather than helping the environment or focussing on the real issue: reducing aviation emissions.

Bottom line: We should not automatically believe that we are helping the environment when paying for offsets. Instead, we should research individual airline projects for evidence of effectiveness — or maybe just not fly.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Tom writes*

Everyone buckle up while I take you along on my dad’s daily commute to work. Before you ask yourself why you have to care about the travels of some middle aged man that you have never met, let me explain.

Passenger cars drove 100 billion kilometres in the Netherlands in 2020, emitting 5.3 billion kilogrammes of carbon. Emissions of passenger cars could be decreased if people like my dad switched to public transport. I will use him as an example to show that time, comfort, and prices play a deciding role in the choice of transportation for commuters.

So, back to my dad.

My dad works for an insurance company in Eindhoven, which is 143 km from his house. Five days a week he drives 1.5 hours each way in his trusted Renault Mégane. The car uses diesel fuel and has a mileage of 5.6 litre per 100 km. Which, after a quick calculation, means that he uses 16 litres of diesel per day. This will be important once we start comparing prices. However, for now I would like to highlight that his car emits 118-129 grams of carbon per km [pdf]. Taking an average of that and multiplying it by the amount of kilometres he drives, we find out that his car alone emits 35.3 kilograms of carbon each day.

My dad cares about the environment, and is reasonably up to date about climate change consequences. So why does he keep using his car when he has the possibility to take the carbon-neutral train to get to work?

For this, he gave me three reasons: time, comfort, and money.

To get from his house to his work would take around 3 hours by public transport, depending on the time of day and available trains and busses. This is “such a waste of time” compared to his 1.5-2 hour commute. Public transport requires 20 minutes of walking and a lot of waiting.

“What if it rains?”

I did not have a counterargument to a man who has to give presentations and talk to clients all day. He also enjoys air conditioning in summer and heated seats in winter.

Then, as foreshadowed, we come to money. Getting to work (with a regular OV-chipcard) would cost a whopping €28, or €56 per day. Since diesel costs 1.67 euros per litre, his 16 litres of consumption adds up to €27 per day, only half of the cost of public transport. My dad is not willing to pay that difference.

Bottom line: Cars emit carbon and add to air pollution. Public transport is often suggested as a solution, but it’s not always the substitute we need it to be. The example of my dad has shown the mindset of a regular commuter, and how they are often not willing to give up their time, comfort, and money to decrease their CO2 emissions.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Ami writes*

Seafood is popular globally. It is delicious, nutritious, and supports workers in numerous coastal communities. But overfishing threatens aquatic ecosystems and biodiversity.

Industrial fishing occurs across 55% of the oceans, an area four times the land area used for agriculture. Industrial fishing results in wasteful bycatch; trawling and longline fishing harm marine ecosystems and bioproductivity. Only 67% of fisheries are sustainable [pdf], and the Mediterranean fisheries are under the most pressure [pdf]. It is projected that the entire seafood ecosystem will collapse by 2048.

Japan is particularly dependent on fisheries. Japan was the second-largest importer of fish in 2017, after the United States. In 2007, Japan was also the fifth-highest producer of fish products in the world, and paid the largest subsidies for high-seas fishing. North-East Asian people depend on marine resources. China, Japan, South Korea, Taiwan and Spain are responsible for 85% of high-seas fishing.

Japan has imported most of its seafood from China since 1998. This relates to the illegal fishing problem. Every now and then, illegally fished fish species have entered the Japanese markets. ‘Illegal, unreported, and unregulated’ (IUU) fishing is difficult to monitor or control, leading to detrimental humanitarian and environmental impacts. In Japan only five fisheries are sustainable enough to be Marine Stewardship Certified.

Subsidies that encourage overfishing have increased despite resistance by conservationists. Captive breeding attempts to offset overfishing. Captive breeding for bluefin tuna in Japan aims to replace stocks that have fallen by 96% since 1960. But captive breeding is costly and ineffective (low survival rates). It also reduces genetic diversity [pdf], for example, with Atlantic salmon.

While this marine resource depletion continues, it could result in similar consequences seen with the Amazon forest, i.e., where nations ask for (or offer) funds to reduce overfishing. Even if funds are provided, they need to be complemented by policies that prevent other countries from taking the resources instead.

High demand, difficulties in monitoring and control, and climate change  will continue to harm fisheries. Fifty euro sushi menus may become the new normal for future generations.

Bottom Line: Marine resources have been depleted and marine biodiversity is in serious decline. Industrial overfishing in North-East Asian countries, difficult monitoring, and inadequate policies could result in a fish-free future.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Eva writes*

In June 2019, the Dutch government set the goal of having as much of a circular agricultural system as possible by 2030. European Union regulations state that objectives of organic agriculture include that distribution channels should be kept short, and that one should aim for a local approach. This means that closing the agricultural cycle should happen at the most local level possible [pdf]. With the current division of agricultural practices in the Netherlands, however, that will be a challenge.

To take an example, farmers in the region of West Zeeuws-Vlaanderen lack local supplies of manure. Therefore, a gap in the nutrient cycle appears: the rate of nutrients taken from the soil is higher than the rate of nutrients returned to this soil. Currently, farmers in the region close the gap with chemical fertilizers and manure imported from Noord-Brabant.

Because chemical fertilizers harm the environment, organic farmers try to  minimize the use of chemical fertilizers, meaning greater imports of manure from Brabant. However, the cattle farmers in Brabant often import their cattle feed from far away (Africa, Asia, and the Americas). How sustainable is this organic farming?

This example shows why it is so important to close the local cycle when we want organic agriculture to actually be a more sustainable option. The issue is that, with current practices, an unclosed local nutrient cycle is unavoidable. That is because of one consistent factor taking nutrients out of the cycle: human consumption. By consuming, we take nutrients out of the cycle, which end up in by-products: food waste, by-products of food processing and, well, our fecal matter. These nutrients are never returned to the soil, which is why manure needs to be imported to fill the gap. However, importing means that there will always be a gap somewhere in the world. Local solutions are needed!

The first steps towards a minimized gap in the local cycle should be the prevention of food waste. This still does not completely close the cycle: full recycling of all by-products is needed, including human excreta. Currently, human fecal matter is still seen as something we would rather dispose of. Nevertheless, seeing that a fully organic agricultural system with locally closed cycles is the goal for 2030, its recycling might be unavoidable. Other options include using legumes for nitrogen fixation. Nitrogen, however, is the only main nutrient that is present in the atmosphere: a fixation process cannot be applied for other main nutrients, like phosphorus and potassium. Therefore, it might become very difficult to find alternatives for all nutrients.

That is why it will probably be beneficial to consider the option of using human fecal matter. Current research shows that there are still some issues with emissions during storage and after spreading, and that human excreta contain contaminants of concern that need to be filtered out first: the development of a proper management system and additional research is clearly necessary. With the ‘local approach’ goal and the unavoidable gap caused by human consumption in mind, however, I would argue that investment in this research is definitely worth it.

Bottom line: By not recycling all by-products of human consumption, there will always be an unavoidable gap in the nutrient cycle. With organic farming being focused on a local circular approach, a way must be found to close this gap locally. Of the many possible strategies, the most obvious one is using our poop!

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Edde writes*

A high consumption of meat – and animal-based products in general – is a common practice all over the world [pdf] and over the past decades, global meat production has been rising. Whereas it is generally recommended for a person to eat not more than 70 grams a day, individuals in countries such as for example Argentina and Luxembourg consumed in 2013 on average 293.8 and 270 grams a day, respectively.

Understanding what induces meat consumption is important, as high meat consumption can negatively affect the long-term well-being of our ecosystems (a “market failure”).

Many factors influence meat consumption. These include, but are not limited to, an individual’s living situation, social identity, knowledge and skills, and one’s cultural and political norms and values. Although these factors determine to a certain extent why people consume meat, it is not always clear whether this is really a voluntary choice, or a choice encouraged by economic incentives.

Except for the factors above associated with individual dietary choices, a look at meat consumption from a national level can show how  “market dynamics” can increase meat consumption.

Meat producers respond to meat consumption. Economically speaking, the choice to consume meat can be seen as a vote to produce meat, which can explain record global meat production (see figure below). Higher consumption spurs investment in production (and subsequently sunk costs in capital and machinery) in the meat industry, which makes it easier to increase economies of scale, thereby making meat cheaper and meat alternatives relatively more expensive. Following the law of demand, a lower meat price – ceteris paribus – will lead to a higher quantity demanded. Furthermore, this will also likely reduce demand for substitute goods, such as more-sustainable meat alternatives. Consequently, this can engender a rather path-dependent process in which more meat is consumed and produced, thereby encouraging less-sustainable meat eating.

On the other hand, sustainable eating can also reflect incentives rather than choices. Considering that meat can be too expensive or not accessible, populations may be (financially/economically) incentivized to consume little meat. This may be better for animal welfare and ecosystems, yet it does not guarantee a more prosperous and equitable society. In poor countries, consumption of protein is low, yet it would be better for health and well-being (and thus economic prosperity) if these populations included more protein – such as meat – in their diet.

Therefore, when talking about meat consumption and sustainability through an economic lens, it is important to consider the impact of consumer choices on our environment as well as underlying mechanisms affecting those choices. To improve the long-term well-being of our ecosystems and economies, national and global economic policies need to consider all the factors encouraging (and discouraging) meat consumption.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Frank writes*

A flight from Eindhoven to Berlin: 50 euros.
The extra revenue for Berlin’s economy: 300 euros.
Climate change caused by the plane’s emissions [pdf]: 5 euros.
That picture of you, with the Brandenburger Tor: priceless.

Or is it?

Direct emissions from aviation are responsible for roughly 3% of the total carbon dioxide emissions in the European Union. Compared to other forms of public transport [pdf], air travel is one of the most carbon intensive methods of movement. Meanwhile, according to the International Civil Aviation Organization, the number of flights and the total emissions by the industry are only projected to grow in the near future.

In the light of climate change, this has led some to oppose flying, such as flight shaming. According to a survey by the European Investment Bank, a majority of EU citizens favor a ban on short-distance flights. Dutch politicians prefer a European tax on flying, which will result in higher prices that will reduce demand for flights.

European tax legislation is notoriously hard to pass, requiring unanimous approval by all 28 members. Therefore, the Netherlands are planning to introduce a national flight tax. However, a national flight tax introduces its own unique downsides, with the main concerns regarding capital flight (pun intended) from the aviation and tourism industries.

Academics like William Nordhaus, recipient of the 2018 Nobel Memorial Prize in Economic Sciences, argue that we must not “[burn] down the village to save it”. They assert that while the impacts from climate change may be grave, we should also consider the impacts of those measures which we take against it, which can impact the same groups as climate change. According to research by TU Delft, CO2 reductions may not be as large as some proponents boast, but economic damage might also be smaller than opponents fear.

Bottom line: We should not blindly pick one option, but rationally weigh the range of alternatives which we can choose from. This brings about a whole other range of concerns regarding sensitivity to assumptions and decisions on parameters like discount rates, but these fall outside the scope of this blogpost. We may choose to face the full cost of flying to Berlin, and potentially stay home instead, or we may choose a selfie with the Brandenburger Tor. But choose, we must.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Marina writes*

One of the more important actors in the carbon cycle of the world are phytoplankton. Thinking on a global scale, two big carbon sinks stand out. Namely, vegetation and the oceans. Phytoplankton are responsible for most of the transfer of carbon dioxide from the atmosphere and into the oceans, via photosynthesis that produces half the oxygen on Earth.

Phytoplankton also form the foundation of many aquatic food webs. They are food for zooplankton, crustaceans, small sharks, whales and other big fish and mammals indirectly Unfortunately, phytoplankton are disappearing. Research shows that there is a 40 percent reduction in the global phytoplankton population since the 1950s. The rise in global sea temperatures is thought of as the main driver of decline. But much more research is needed to understand the reductions of these populations.

Whales, similarly, act their part in the carbon cycle. This is also referred to as the ‘biological pump’, or the ‘whale pump’. This process removes carbon and nitrogen from the sunlit zone of the sea and sends those elements downwards through a downward flux of aggregates, feces, and vertical migration on invertebrates and fish. Whales, in the process of foraging deep in the oceans and coming up for air to breathe, release nitrogenous nutrients through their urea (pee) and fecal plumes (poo). That process means more nutrients for primary producers such as phytoplankton. Additionally, when whales die, they sink to the bottom of the ocean, taking all that accumulated carbon with them. The whale carcasses also act as a host to a variety of species, such as snails, mollusks and bacteria that live on the bottom of the ocean.

This nutrient cycling has important implications for policy makers, as healthy whale populations can potentially slow or stabilize the decline of phytoplankton and other species. The real-world implications of slow but irreversible ecosystem changes are difficult to predict. Thus, humans should be extra cautious about the ways in which they interact with their environment.

Bottom line: The example of human impacts on whale and phytoplankton populations shows that we do not fully understand the complexities of ecosystems and our impacts on them.

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* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).