| 1. |
- Kriström, Bengt, et al.
(författare)
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On the social opportunity cost of unemployment
- 2022
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Ingår i: Journal of Economic Policy Reform. - : Informa UK Limited. - 1748-7870 .- 1748-7889. ; 25, s. 229-239
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Tidskriftsartikel (refereegranskat)abstract
- The handling of unemployment is a central issue in cost-benefit analysis. Typically, the shadow price of employing an unemployed is derived by considering a marginal change in the employment constraint faced by an unemployed or rather an underemployed. In contrast, in this paper, we consider the discrete shift from unemployment to (full) employment. The result provides guidance how to estimate the social cost of recruiting otherwise unemployed to a project. It is shown that the social cost is overestimated by using the private reservation wage. The common practice of adding different cost items is shown to be flawed.
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| 2. |
- Kriström, Bengt, et al.
(författare)
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Paying a Premium for "Green Steel": Paying for an Illusion?
- 2022
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Ingår i: Journal of Benefit-Cost Analysis. - : Cambridge University Press (CUP). - 2152-2812 .- 2194-5888. ; 13, s. 383-393
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Tidskriftsartikel (refereegranskat)abstract
- The iron and steel industry generates around 10 % of global greenhouse gas emissions. The bulk of the emissions originates from the iron ore reduction. In this reduction, coal is used as a reagent. Steelmakers could switch to hydrogen-based direct reduction using hydrogen instead of coal as a reagent to reduce iron ore to pig iron. This would eliminate the CO2 emissions from the equivalent process in a traditional blast furnace. However, the process requires massive amounts of electricity. This paper looks at the economics of such a switch to "green steel." We assess a marginal increase in the production of a hypothetical green steelmaker. We also undertake an investment appraisal of a green plant, based on an ongoing installation in Northern Sweden, but also briefly consider a possible/planned investment in the US. This appraisal is complemented by computing the survival function for the net present value in a systematic sensitivity analysis. It seems highly unlikely that a green steel plant can be socially profitable. If the green plant displaces conventional steel produced within the European Union's cap-and-trade system for greenhouse gases, total emissions remain more or less unaffected; permits and emissions are simply reshuffled. Hence, if end-users of green steel pay a premium, they might pay for an illusion.
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| 3. |
- Johansson, Per-Olov
(författare)
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On the Evaluation of Large Projects in Closed and Open Economies
- 2021
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Ingår i: Journal of Transport, Economics and Policy. - : University of Bath, School of Management. - 1754-5951 .- 0022-5258. ; 55:3, s. 220-236
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Tidskriftsartikel (refereegranskat)abstract
- This paper introduces two ways of evaluating a large project. One approach 'collapses' the economy-wide effects into a single market (but a term reflecting any market distortions must be added). The other approach allocates gains and losses to various stakeholders. They provide the same overall result, but trying to capture the effects in a single market comes at a previously ignored cost in empirical evaluations. The paper demonstrates that the closed economy result generalises to an open economy under flexible exchange rates. As a by-product, the paper shows how to calculate the deadweight loss of taxation for a large project.
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| 4. |
- Johansson, Per-Olov, et al.
(författare)
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Swapping forests to preserve valuable sites: A sketch of a framework for economic evaluation
- 2021
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Ingår i: Journal of Forest Economics. - : Now Publishers Inc.. - 1104-6899 .- 1618-1530. ; 36:3, s. 183-200
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Tidskriftsartikel (refereegranskat)abstract
- In 2012 the Swedish Environmental Protection Agency was provided with 100,000 ha of productive forest land. The Agency swapped the land to obtain conservation-worthy forests, and these were turned into natural reserves. Conservation without reference to both benefits and cost typically results in inefficient solutions. In this paper we discuss how to select the forest stands to preserve in a cost-effective manner. We also discuss how to design a cost-benefit analysis of the swapping program. We provide several new results regarding the economics of preservation, when land swaps is a viable instrument.
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| 5. |
- Johansson, Per-Olov
(författare)
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The 2018 reform of EU ETS: consequences for project appraisal
- 2021
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Ingår i: Journal of Environmental Economics and Policy. - : Routledge. - 2160-6552 .- 2160-6544. ; 10:2, s. 214-221
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Tidskriftsartikel (refereegranskat)abstract
- The European Union's Emissions Trading System used to be a cap-and-trade scheme with a fixed supply of permits. However, a recent reform of the system 'punctures the waterbed' by making the supply of permits endogenous.The current paper discusses how to handle permits in economic evaluations such as cost-benefit analysis. It derives general equilibrium rules for schemes with a fixed cap as well as schemes with an endogenous cap.The paper also derives a cost-benefit rule to use when an exogenous reduction in emissions causes an induced intertemporal change in the supply of permits, what is termed a (positive or negative) permit multiplier, under an endogenous cap. For example, an induced reduction in emissions is associated with climate-related benefits but comes at a cost as production is displaced when the number of available permits decreases. The permit multiplier implies that emissions within the EU ETS are valued differently from emissions occurring elsewhere even under an endogenous cap.A further novel result is that an endogenous cap could increase the social profitability of abatement efforts. By replacing purchases of permits, abatement could cause a reduction in the endogenous supply of permits and hence emissions.
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| 6. |
- Johansson, Per-Olov, et al.
(författare)
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Why rational agents report zero or negative WTPs in valuation experiments
- 2021
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Ingår i: Journal of Environmental Economics and Policy. - : Informa UK Limited. - 2160-6544 .- 2160-6552. ; 10, s. 22-27
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Tidskriftsartikel (refereegranskat)abstract
- In surveys of the willingness-to-pay for different policies, typically there are responses that are classified as protest responses. Such responses appear to defy efforts to address the issue through best practice in the design and testing of survey instruments. The general impression from the literature is that the predominant approach to identifying and handling outliers, including protest responses, is by econometric techniques. In contrast, in this paper we focus on a simple theoretical model of agents equipped with well-behaved (textbook) preferences. The model is used to identify one type of responses that, at first glance, might be characterized as protest responses or possibly as scenario rejection. The novel explanation of the, in fact, perfectly rational behaviour relates to the total tax burden faced by a respondent. A possibly provocative finding is that the agent is searching for the constrained optimum while the survey-designer, intentionally or unintentionally, is trying to induce/convince the agent to value a second-best option. In particular, we don’t have to turn to behavioural economics, i.e. question rational choice theory, to arrive at a plausible theoretical explanation of what could be taken for protest responses.
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| 7. |
- Kriström, Bengt, et al.
(författare)
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On Misrepresentation of Altruistic Preferences in Discrete-Choice Experiments
- 2021
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Ingår i: Journal of Agricultural and Resource Economics. - 1068-5502 .- 2327-8285. ; 46, s. 126-133
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Tidskriftsartikel (refereegranskat)abstract
- The purpose of this note is to address a problem faced in using stated preference methods to estimate willingness to pay (WTP) for a project. The considered problem occurs under pure altruism. Even though an agent is equipped with well-behaved preferences, a conventional closed-ended (binary) valuation question may induce her to overrate or underrate her true WTP. On the other hand, an open-ended valuation format seemingly provides a correct answer, but such a format fails to be incentive compatible.
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| 8. |
- Kriström, Bengt, et al.
(författare)
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The infinitely worried forest owner key biotopes and forest certification in a Faustmann model
- 2020
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Ingår i: Journal of Forest Economics. - : Now Publishers. - 1104-6899 .- 1618-1530. ; 35, s. 69-73
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Tidskriftsartikel (refereegranskat)abstract
- In this note, we consider a case when a forestry property may lose its market value through "political risk", illustrated here by it being classified as containing a key biotope. If a key biotope is found on a forest property in Sweden, the wood is almost impossible to sell. We show how the Faustmann formula is modified in this case and identify a "balance sheet" effect and a shortened rotation period. The theory seems to have some empirical support, given observed changes in bank lending contracts and alleged changes in forester's behavior to reduce the "political risk".
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