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Cost-Benefit Analysis of climate policy and long term public investments
Swedish National Road and Transport Research Institute, Society, environment and transport, Transport economics, TEK.ORCID iD: 0000-0002-4209-1997
2016 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This compilation dissertation consists of four essays with the common theme of welfare analysis of long-term public investments. The first two essays focus on analysis of climate change mitigation, i.e., the social cost of carbon dioxide. The third essay focuses on cost-benefit analysis (CBA) of transport investment projects, while the last essay takes a broader perspective on welfare analysis.

Place, publisher, year, edition, pages
Örebro: Örebro university , 2016. , 33 p.
Series
, Örebro Studies in Economics, ISSN 1651-8896 ; 32
Keyword [en]
Cost benefit analysis, Investment, Climate change, Transport infrastructure
National Category
Economics
Research subject
SAB, Qa Economics and finance
Identifiers
URN: urn:nbn:se:vti:diva-10843ISBN: 978-91-7529-127-7OAI: oai:DiVA.org:vti-10843DiVA: diva2:952374
Opponent
Supervisors
Available from: 2016-08-19 Created: 2016-08-12 Last updated: 2016-09-05Bibliographically approved
List of papers
1. Avoiding path dependence of distributional weights: Lessons from climate change economic assessment
Open this publication in new window or tab >>Avoiding path dependence of distributional weights: Lessons from climate change economic assessment
2012 (English)Report (Other academic)
Abstract [en]

 In some cost benefit analysis (CBA) applications, such as those used for the valuation of climate change damage, distributional weights are used to account for diminishing utility of marginal income. This is usually done by means of intra-temporal distributional weights, which are combined with discounting to account for inter-temporal equity and efficiency. Here, I show that this approach might introduce some inconsistencies in terms of path dependence. In short, this inconsistency means that regional economic growth is double counted. This is because income weighting is performed both through the discount rate and through the distributional weights such that growth shows up twice in the weighting process. Using the PAGE2002 model, it is found that the inconsistency problem in the original model erases the influence of distributional weights on the social cost of carbon dioxide (SCCO2) compared to a standard CBA approach. The alternative approaches proposed here yield about 20 %–40 % higher values of SCCO2 than the old approach. While this has been briefly commented on in previous work, it has not yet been more thoroughly analyzed nor communicated to the broader community of climate policy and economic analysts who are not deeply interested in the specifications of the climate impact assessment models.

Place, publisher, year, edition, pages
Örebro: , 2012. 20 p.
Series
CTS Working Paper
Keyword
Economics, Climate change, Cost benefit analysis, Distribution (gen)
National Category
Economics
Research subject
SAB, Qb Managerial economics
Identifiers
urn:nbn:se:vti:diva-10840 (URN)
Note

Revised 2016

Available from: 2016-08-12 Created: 2016-08-12 Last updated: 2016-08-19Bibliographically approved
2. Temporal Aspects of the Social Cost of Greenhouse Gases
Open this publication in new window or tab >>Temporal Aspects of the Social Cost of Greenhouse Gases
2012 (English)Report (Other academic)
Abstract [en]

The purpose of this study is to investigate the temporal aspects of the social cost of greenhouse gases (GHGs). I am particularly interested in the interaction between time of emissions, discounting, and type of GHG (where different GHGs have different atmospheric lifetimes). I show graphically how the social costs of GHGs depend on different parameter values and how the global damage potential for methane and sulfur hexafluoride evolves over time. I find that that the calculation period ultimately should be modeled to be consistent with the discount rate and that the “global-warming potential” concept is unsuitable for calculating of the social cost of GHGs other than carbon dioxide.

Place, publisher, year, edition, pages
Örebro: , 2012. 14 p.
Series
CTS Working Paper, 2012:3
Keyword
Greenhouse gas, Cost benefit analysis, Emission, Cost, Time, Calculation
National Category
Economics
Research subject
SAB, Qa Economics and finance
Identifiers
urn:nbn:se:vti:diva-10839 (URN)
Note

Revised 2016

Available from: 2016-08-12 Created: 2016-08-12 Last updated: 2016-08-19Bibliographically approved
3. Does uncertainty make cost-benefit analyses pointless?
Open this publication in new window or tab >>Does uncertainty make cost-benefit analyses pointless?
2016 (English)Report (Other academic)
Abstract [en]

Cost-benefit analysis (CBA) is widely used in public decision making on infrastructure investments. However, the demand forecasts, cost estimates, benefit valuations and effect assessments that are conducted as part of CBAs are all subject to various degrees of uncertainty. The question is to what extent CBAs, given such uncertainties, are still useful as a way to prioritize between infrastructure investments, or put differently, how robust the policy conclusions of CBA are with respect to uncertainties. Using simulations based on real data on national infrastructure plans in Sweden and Norway, we study how investment selection and total realized benefits change when decisions are based on CBA assessments subject to several different types of uncertainty. Our results indicate that realized benefits and investment selection are surprisingly insensitive to all studied types of uncertainty, even for high levels of uncertainty. The two types of uncertainty that affect results the most are uncertainties about investment cost and transport demand. Reducing uncertainty can still be worthwhile, however, because of the huge amounts of money at stake: a 10% reduction in general uncertainty can increase the realized benefits of a national infrastructure investment plan by nearly 100 million euro (assuming that decisions are based on the CBAs). We conclude that, despite the many types of uncertainties, CBA is able to fairly consistently separate the wheat from the chaff and hence contribute to substantially improved infrastructure decisions.

Place, publisher, year, edition, pages
Stockholm: , 2016. 18 p.
Keyword
Cost benefit analysis, Transport infrastructure, Investment, Decision process
National Category
Economics
Research subject
SAB, Qa Economics and finance
Identifiers
urn:nbn:se:vti:diva-10841 (URN)
External cooperation:
Available from: 2016-08-12 Created: 2016-08-12 Last updated: 2016-09-05Bibliographically approved
4. Household production and the Elasticity of Marginal Utility of Consumption
Open this publication in new window or tab >>Household production and the Elasticity of Marginal Utility of Consumption
2016 (English)Report (Other academic)
Abstract [en]

Chetty (2006) developed a new method of estimating the Elasticity of Marginal Utility of Consumption (EMUC) from observed work time responses to wage changes and derived an upper bound of 2 for this parameter. Here I show that the omission of household production in Chetty’s model may lead to bias, and perform a numerical sensitivity analysis of Chetty’s results in this respect. I develop a new model that includes household production from which I derive new, unbiased EMUC formulas. I offer empirical estimates based on current evidence of the included parameters, suggesting a lower bound for EMUC of about 0.9.

Place, publisher, year, edition, pages
Stockholm: , 2016. 38 p.
Series
CTS Working Paper, 2016:10
Keyword
Economics, Household, Production, Mathematical model
National Category
Economics
Research subject
SAB, Qa Economics and finance
Identifiers
urn:nbn:se:vti:diva-10842 (URN)
Available from: 2016-08-12 Created: 2016-08-12 Last updated: 2016-08-19Bibliographically approved

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