Doctoral Program and Advanced Degree in Sustainable Energy Systems
Doctoral Program in Mechanical Engineering
Doctoral Program in Environmental Engineering
Ecological Economics
Lecture 14
Tiago Domingos
Assistant Professor
Environment and Energy Section
Department of Mechanical Engineering
Intrinsic vs. Existence Value
•
•
•
•
Choice and knowledge
Compensation
Risk vs. Certainty
Economic vs. Intrinsic value
Problems - Welfare
1. The social decision rule is not complete, unless for
any social decision everyone agrees on the best
choice.
2. ...
3. It does not make a difference whether it is convex or
not.
One person get alls the resource, and it should be the
person who obtains the highest utility from having all
the resource.
Sustainable Development
Discussion Question 1
• Sustainability can then only occur if the stock of
natural capital is increasing.
Sustainable Development
Discussion Question 2
• A possible synthesis between strong sustainability and
weak sustainability is stating that natural capital items
have prices that go to infinity as their quantity reaches
a critical value.
Sustainable Development
Problem 1
a) ...
b) GDP increases by 3 M$.
– Note that there are no additional effects, since this has to be
simultaneously an increase in added value and final demand.
c) A priori, there is no decrease in bequest value, because
the extraction costs will always have to be met.
d) Note that the 2 M$ obtained can be invested in
production capital.
Bem-estar e Sustentabilidade
em Economias Dinâmicas
Contabilidade Verde para Portugal: 1992 – 2004
Rui Pedro Matias Gama Mota
Orientador: Manuel Victor Moreira Martins
Co-orientador: Tiago Morais Delgado Domingos
Sumário
1.
Enquadramento
2.
Objectivos
3.
Métodos
4.
Resultados
5.
Conclusões
1. Enquadramento

Necessidade de indicador agregado de:



Agregados das contas nacionais não incluem:




Bem-estar;
Sustentabilidade.
bens e serviços ambientais, lazer, (des)amenidades;
depreciação dos recursos naturais (stocks), e.g., solo, água,
pescas;
...
Necessidade de desenvolvimento
fundamentados na teoria económica.
de
indicadores
2. Objectivos

Objectivos gerais:


Introduzir em Portugal o debate sobre indicadores
de bem-estar e de sustentabilidade no contexto da
contabilidade nacional.
Objectivos específicos:

Estimar o Produto Interno Líquido Verde (GNDP) e
a Poupança Genuína (GS) para Portugal.
3. Métodos: Modelo de Crescimento Óptimo Multisectorial

Objectivo:

Dinâmica:

Possibilidades de produção:
3. Métodos: Relações Obtidas do Modelo

Medição do bem-estar:



Bem-estar:
Sugere que será possível estimar bem-estar (“forward
looking”) usando informação sobre o presente.
Valor dos investimentos líquidos:

Alterações no bem-estar igualam “valor” dos
investimentos líquidos.
3. Métodos: Relações em Preços Reais

Produto Interno Líquido Verde (GNDP):

Poupança Genuína (GS):


Variações do GNDP são proporcionais a variações de
bem-estar.
Poupança (investimento) líquida negativa indica
3. Métodos: Teste em Preços Reais

Desenvolvimento que proporcione utilidade não
decrescente ao longo do tempo.

Teste de sustentabilidade:
Desenvolvimento não

sustentável
3. Métodos: Modificação do Modelo Geral

Utilidade:
Capital manufacturado:

Capital natural:

;
4. Resultados: Alterações à Contabilidade Nacional

Alterações à contabilidade nacional:



Efeitos no bem-estar das emissões atmosféricas
de 8 poluentes (fluxo);
Depreciação da floresta comercial (Pinhal Bravo
e Eucaliptal).
Não contabilizado:



Depreciação de outros recursos (minérios, stock
piscícola, solo, água);
Valor do progresso tecnológico;
Valor de serviços dos ecossistemas, ...
4. Resultados: Poluição Atmosférica

Custo marginal da poluição por poluente
emitido [€2000/ton]:
4. Resultados: Custo da Poluição Atmosférica
45
CO2
CH4
40
N2O
SO2
Cost of Emissions [% Total]
35
CO
NOx
30
VOC
PM10
25
20
15
10
5
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Custo associado a poluentes com efeito de estufa (CO2, CH4,
N2O) é inferior ao custo associado a outros poluentes (SO2, NOx,
PM10).
4. Resultados: Custo da Poluição Atmosférica
Comparação dos conjuntos de preços
estimados: estimativas alta, baixa e melhor.
25
Best
Low
High
20
Cost of Emissions [% GDP]

15
10
5
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
4. Resultados: Floresta Comercial
Inventário Florestal Nacional 2005/06
(DGRF)
1400
Conifers
1200
Eucalyptus
1000
10^3 ha

800
600
400
200
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
[m3/ha]
95/98
05/06
Pinheiro Bravo
88.5
82.5
Eucalipto
55
55
4. Resultados: Depreciação por Espécie
200
Coniferous
100
Eucalyptus
0
million €
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-100
-200
-300
-400

Depreciação da floresta comercial portuguesa a partir de
1999.
4. Resultados: GNDP e suas Componentes
GNDP = GDP – CFC – eE + Depreciação da
Floresta
140000
120000
100000
80000
million €

NNP
Pollution
60000
Forest Depl.
40000
gNNP
GDP
20000
0
1991
-20000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
4. Resultados: Poupança Genuína
14000
12000
GS4
10000
GS2
million €
8000
GS1
GS3
6000
4000
2000
0
-2000
-4000
-6000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
4. Resultados: Teste à Teoria
5000
200
Change gNNP
Interest on GS
150
3000
100
2000
50
1000
GS million €
Change gNNP million €
4000
0
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
-1000
-2000

-50
-100
Variação do GNDP é consideravelmente superior ao juro da
poupança genuína.
4. Resultados: Análise de Sensibilidade,

Alteração
Média [%]
Melhor valor
[%]
–
2.91
27
eE baixa
2.42
13
eE alta
6.7
63
R=6%
8.74
82
Investimento em
Educação
7.4
41
Sensibilidade alta à taxa de juro e a alterações de interpretação
entre despesas de consumo ou investimento em capital.
5. Conclusões

Como uma primeira abordagem à contabilidade nacional verde em Portugal
incluíram-se os danos das emissões atmosféricas de poluentes, e a depreciação
da floresta comercial para Portugal.

Os termos incluídos contabilizam cerca de 6-10% do PIL português, sendo:


Poluição atmosférica: 6 – 8%;
Depreciação de florestas de pinheiro bravo e eucalipto: -0.7 a 0.4 %.

Verifica-se uma tendência decrescente da poupança genuína no período 19922004 tornado-se negativa no início do século XXI, sugerindo desenvolvimento
não sustentável.

Foram estimadas para Portugal variações no PIL Verde e a Poupança Genuína,
confirmando um desajuste entre teoria e realidade.
An indicator of GHG responsibility
João Rodrigues
Tiago Domingos
François Schneider
Stefan Giljum
I. Introduction
GHG responsibility
GHG (or greenhouse gas) emissions – Quantity of GHG
(measured in ton CO2-equivalent) emitted yearly by an agent
(country or region).
Different Indicators of GHG emissions exist: e.g., emissions
physically occurring within the boundaries of the country,
emissions required to produce consumption within the country.
Here we choose a “fair” indicator – GHG responsibility – as the one
that verifies a set of specified properties.
III. Properties
Motivation
1. Normalization – The sum of all responsibilities should equal
all direct emissions.
2. Monotonicity – A decrease in responsibility and an increase
in total emissions should not be allowed.
3. Additivity – The responsibility of two countries should be
the sum of their individual responsibilities.
4. Strict accounting of indirect effects – Direct emissions
should not considered.
5. Economic causality – Direct emissions should be allocated
to economic flows, in proportion to their share of total inputs or
outputs.
6. Symmetry – Upstream and downstream indirect effects
should be equally accounted for.
III. Properties
Formalization
• Additivity: k = k’ + k’’; Uk = Uk’ + Uk’’.
• Normalization: UN = WN
• (STRICT) Accounting indirect effects: Uk = Uk({vij},{v’ij}).
v
j
ij
 wi   j v ji
• Economic causality:
• Monotonicity:
 v'
vij  mi zij
i
ij
 w j  iv' ji
v 'ij  m' j zij
U k
0
wi
• Symmetry: U same if all vij and v’ji are interchanged.
NOTATION: N is world, v (v’) is upstream (downstream) carbon emission of
an economic flow; m (m’) is upstream (downstream) carbon intensity of a
sector.
III. Properties
Sketch of the proof
• From accounting of indirect effects and economic causality,
{vij}, {v’ij} are uniquely determined – the upstream and and
downstream GHG emission of economic flow ij.
• Additivity imposes that Uk is a weighted sum of {vij}, {v’ij} for some
set of flows {ij}.
• Monotonicity and additivity together impose that intersectorial flows
cannot be considered.
Lemma:
U k
0
wi
implies
U k
0
vij
U k
0
v'ij
• Symmetry and normalization determine the coefficients, ensuring...
IV. Conclusions
Computation
… that GHG responsibility exists and is unique.


1
v  v'

i i 0 i 0 i
2
for all sectors i that compose country k.
Uk 
vi 0  mi zi 0 and
M = (I - A)-1B
and
v'0i  m'i z0i .
M’=BT(I – A’),
where A and A’ are respectively the Leontieff and the Ghosh matrices.
Revised Syllabus I
• Scale (ecology), distribution (ethics), efficiency (economics),
constraints (thermodynamics)
• Ecological vs. Environmental and Natural Resource
Economics
• Formal analogy
– Microeconomics and thermodynamics
– Biophysical valuation
– Industrial ecology, industrial metabolism
• Substantive integration
– Thermodynamics and ecology: DEB
– Thermodynamics and economics: Ayres
• Epistemology and sociology of science
• Ethics and welfare
• Static vs. intertemporal optimisation
– Lagrangian multipliers
– Maximum principle
Revised Syllabus II
• Microeconomics
–
–
–
–
–
Review of consumer theory
Review of producer theory
Review of market structures
Game theory
Evolutionary and institutional economics
• Pollution economics; pollution control instruments
Market Equilibria and Externalities
MSC
MPC
Social
optimum
Market
equilibrium
MPB
y
Revised Syllabus III
• Ecological and economic networks
–
–
–
–
Life Cycle Analysis
Input-Output Analysis
Computable General Equilibrium Models
Indicators of environmental responsibility
• Economic valuation methods
• Intertemporal choice and uncertainty
– Uncertainty
– Discount rate
– Cost-benefit analysis;
Revised Syllabus IV
• Sustainable development
– Weak vs. strong sustainability
– Economic growth theory
• Neoclassical and endogenous
• Ayres
– Economic theory of sustainable development
– Biophysical and other indicators of sustainable development
•
•
•
•
Index of Sustainable Economic Welfare
Ecological Footprint
Human Appropriation of Net Primary Production
EcoIndicator95, EcoIndicator99
– Environmental Kuznets hypothesis
Detailed Syllabus I
• Static optimisation problems
– Consumer optimisation
– Producer optimisation
– Interior vs. corner solutions
• Consumer theory
–
–
–
–
–
Properties of preference relations
Indifference curves
Utility functions
Demand curves (consumer and consumers)
Elasticities
• Producer theory
– Returns to scale
– Fixed vs. variable costs; short-run vs. long-run
– Supply curves (firm and industry)
Detailed Syllabus II
• Market Equilibria
– Essentially applications to pollution economics
• Pollution Economics
– Market equilibria vs. social optima
– Calculations of changes in surpluses and externalities
– Effects of applying taxes or subsidies
• Economic Valuation
– Willingness to Pay, Willingness to Accept, Surplus
– Components of Total Economic Value
– Basic ideas on economic valuation methods
• Discount Rate and Uncertainty
–
–
–
–
–
Components of the discount rate
Elasticity of marginal utility
Properties of expected utility
Discount rate vs. inflation
Nominal vs. real prices
Detailed Syllabus III
• Ethics and Welfare
– Individual choice vs. social choice and their properties
– Kant vs. utilitarianism vs. Rawls vs. libertarianism
• Sustainable Development
– Discussion of different definitions of sustainable development
– Weak vs. strong sustainability
– Natural vs. manufactured capital
• National and Input-Output Accounting
– Final demand, intermediate demand, valued added (factor
payments), primary inputs (or factors of production)
– Input-output algebra
– Direct vs. indirect requirements
– National accounting conventions
– Limitations of GDP
– Nominal/current price GDP vs. real/constant price GDP
– Purchasing power parity