Category: EEcon

Mario writes*

Nineteenth century lithographs show the beginning of urban pollution in London. The coal driving the industrial revolution was wrapping the British capital in a thick smog. Since then, the number of cities with polluted air has increased on all continents. Urban areas suffer pollution from their concentration of people and factories.

Air pollution harms quality of life and health. Reducing pollution and its effects have been the focus of urban policies almost everywhere around the world, especially in China, whose major cities are the ones that suffered the most from this problem on a world scale. Nonetheless, reducing the levels of pollution emitted by factories has not solved the problem. Although modern factories are much cleaner than Victorian-era ones, zero-polluting cities are today impossible. Residual pollution will continue to affect the health of inhabitants, and this will continue to cause social and economic losses (Brunekreef and Holgate, 2002).

As Adedokun (2013) argued, trees cannot “solve” this problem since they are too few to sequester carbon emissions or counteract pollution. Cities and industrial areas have abundant concrete and asphalt, so these surfaces need to sequester carbon.

What if the concrete of our buildings and roads could sequester the pollution from nearby cars? What if buildings and factories could trap pollution more effectively than trees?

Such “carbonation” could — according to Haselbach and Thomle (2014) — mean that concrete exposed to pollution could sequester its carbon. But that sequestration needs to be compared to the environmental and economical costs of producing such carbon-sequestrating concrete in the first place, as the net impact could be negative for the environment, especially if “green cement” is used as an excuse to build more (Dwarakanath Ravikumar, 2021). That said, Andersson (2019) claims there is a potential to modify existing concrete buildings so they can sequester carbon. Clearly, there are still questions to resolve.

Bottom-line: The challenge posed by climate change requires us to find all possible ways to save ourselves. Carbon-sequestrating concrete has potential, but its viability remains uncertain.

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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 :).

Stella writes*

Steel is the most important material in the world for engineering and construction. It is employed in almost every area of our life, including automobiles and construction equipment, refrigerators and washing machines, cargo ships, and surgical scalpels. Accordingly, the industry also emits 7% of the world’s total CO2 emissions. In Sweden, steel production accounts for over 10% of the country’s CO2 emissions.

According to the Prime Minister of Sweden, Stefan Löfven, Sweden’s ambition is to become the first fossil-free nation in the world. Cutting 7% of the country’s CO2 emissions would be a crucial step in the right direction. Thus, three Swedish businesses; LKAB, SSAB, and Vattenfall, have joined forces to develop the world’s first fossil-free steel. The initiative is called HYBRIT (Hydrogen Breakthrough Ironmaking Technology) and the plan is to be able to produce entirely fossil-free steel in a demonstration facility by 2026 and on an industrial scale by 2035. The pilot project produced fossil-free steel in August this year.

Traditional steel-making uses blast furnaces to add coking coal to the iron ore, which in turn releases CO2. The new process would add hydrogen from renewable sources to the already fossil-free iron ore in a so-called direct reduction process that emits only water vapor. But this transition will require immense amounts of hydrogen and renewable energy for production.

HYBRIT will use renewable electricity from wind, water, and solar to extract hydrogen from water via electrolysis . Electrolysis requires large quantities of reliable electricity, which creates challenges. Vattenfall asserts that more fossil-free electricity is produced than consumed in Sweden but the energy is not evenly distributed in the country. A short term goal is therefore to invest in distribution grids that can bring fossil-free electricity where it’s needed. In the long-term, more renewable electricity needs to be found.

Another factor is hydrogen storage, which would allow hydrogen to be produced when electricity is abundant and used when the electricity system is strained. To ensure a steady supply of fossil-free hydrogen, it is critical to be able to store it safely and efficiently.

Bottom line: Fossil-free steel is possible, but transitioning from carbon to green hydrogen for producing fossil-free steel on an industrial scale necessitates changes to business models and upgrades to infrastructure. Research at the intersections of technology, infrastructure, markets, and society can help identify the policies needed for conversion.

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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 :).

Eduardo writes*

Two crucial issues in the Netherlands are deeply intertwined. On the one hand, nitrogen deposition levels are being contested by environmentalists and the European Court of Justice for threatening ecological quality (Economist, 2019). On the other hand, there is a huge housing shortage associated with rising prices, the lack of free space, tourism, and the nitrogen crisis (Lalor, 2021). Although nitrogen deposition in the Netherlands is mainly associated with ammonia emissions from intensive livestock farming, the housing sector is the second-highest domestic contributor (Rijksoverheid, 2019).

Aware of these issues, I went a few days ago to the housing crisis protest here in The Hague, and I noticed that the leading group in front of the march was the GreenLeft party followed by some members of the D66 and Bij1 parties. I thought to myself, isn’t that contradictory in some way? Measures within the nitrogen law passed in 2019 – and supported by D66 and GreenLeft – included cutting livestock herds by half and restricting construction emissions. is the nitrogen law perpetuating the housing crisis? D66 argues that livestock reductions will leave more “space” for the construction sector (Sawbridge, 2019).

When we look at the specific measures aimed at tackling the nitrogen crisis there is no evidence for quick ways to reduce emissions or ameliorate the housing crisis. The Dutch government is instead focussing on buying-out farms to reduce emissions (Flach, 2021). These buy-out programs involve the expropriation or voluntary sale of farms near nitrogen-sensitive areas (Boztas, 2021). In this way, farmers are paid an amount to relocate (or shut down) their farm and agree to a limit of nitrogen emissions from livestock. Simultaneously, the natural areas that are freed up are used for nature restoration and developments (Rijksoverheid, 2020).

These buy-out programs seem to offer an innovative solution to both the nitrogen and housing crisis. Farmers are paid and ecosystems at risk are protected. At the same time, the reduction in nitrogen from livestock production allows space for more houses to be built. Nevertheless, these measures face limitations. Buy-out programs may induce farmers to move to cities, increasing the demand for housing. Moreover, leaving more space for housing construction will only lead to increased emissions of both nitrogen and CO2. A reduction of livestock production may reduce exports and shrink markets for dairy, pig, and poultry, leaving animal-product consumers worse off.

It is necessary to estimate the benefits and costs of these measures. Are the environmental benefits from buy-out programs sufficient to cover its costs and potential impacts on housing? An “environmental equivalent” approach (calculating the environmental value of buy-out programs) can provide useful information (Schmitz, 2012).

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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 :).

Marthe writes*

It is time for agricultural reform in the Netherlands. Biodiversity is declining at alarming rates, and the predicted increase of extreme weather calls for a more resilient production system.

Since the second agricultural revolution that began in 18th century England, scientific knowledge has moved farms toward monocultures (the same crop is grown on the same land). Without crop rotation, soil fertility decreases, and years of these practices have resulted in less nutritious, less tasty food.

Furthermore, monoculture is causing soil depletion and it is one of the main sources of nitrogen emissions. Too much nitrogen has a negative effect on nature and biodiversity (the richness of species in nature). It also acidifies soil, reducing concentrations of minerals such as calcium and magnesium that trees and other plants depend upon to live. Plants that prefer nutrient-poor soil, such as flowering herbs, which are important for meadow birds and insects are also disappearing due to this acidification. According to TNO, Dutch emissions of nitrogen per hectare are the highest in Europe, almost four times the average value. The Dutch agricultural sector is responsible for 45% of nitrogen emissions. Over 72% of the Dutch nature reserves are getting too much nitrogen.

Agroforestry could be the solution. A ‘food forest’ is a vital ecosystem designed by humans following the example of a natural forest with the aim of producing food. A richly varied food forest increases biodiversity, enhances soil health, and can curb GHG emissions of CO2, CH4, and N2O. Through the incorporation of trees within farms, the development of soil organic matter and nutrients is promoted. Tree cover also increases microbial activity and decreases erosion.

It’s unclear if these small-scale projects can be scaled out to the rest of the Netherlands, but there’s no doubt that we need to reform our agricultural practices.

Bottom line: The current food production system is depleting the soil, decreasing biodiversity, making our food less nutritious, and overall an unsustainable practice (in all senses of the word). Agroforestry could be the solution to all of these problems, but it’s unclear if it could completely replace the current production system.

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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 :).

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 :).