Changes In Economic Welfare Research Articles

Turtle Economic Value: The non-use value of marine turtles in the Asia-Pacific region

Marine turtle species in the Asia-Pacific region face loss of habitat, population decline and serious risk of extinction. Understanding the associated loss in human welfare can motivate conservation finance, policy reforms and other actions to protect and restore marine turtle populations. This paper estimates non-use values for marine turtles in the Asia-Pacific region using a large-sample (n = 7765) global household survey. The survey focused on six countries in the region (China, Fiji, Indonesia, Malaysia, the Philippines and Vietnam) but received responses from over 80 countries in total. A discrete choice experiment was used to elicit willingness-to-pay (WTP) for marine turtles, defined in terms of population trends (increasing, stable or declining) and species diversity (avoided extinctions). We find that a high proportion of households (82%) expressed a positive WTP for turtle conservation, and that the donation amounts are substantial. The median WTP for ensuring stable marine turtle populations, adjusted for demographic differences between the survey sample and the general population, is estimated at US $79 per household per year. A scenario analysis is used to estimate the economic welfare changes that would result from policy inaction (in which turtle populations continue to decline and two species become extinct) versus strong policy action (resulting in increasing turtle populations and no extinctions). The welfare loss that results from not acting is estimated to be US $40 billion per year, whereas the potential welfare gain from taking policy action to conserve, manage and protect marine turtles is estimated at US $55 billion per year. These results present a strong economic justification for governments across the region to align their environmental policies and budgets with Asia-Pacific peoples' stated WTP for turtle conservation.

Implications for Economic Sustainability of Food Systems from Reductions in Household Food Waste: The Case of the Australian Apple Industry

Households are among the greatest contributors to food waste generation, particularly in fresh fruit and vegetables. From a policy perspective, reductions in household food waste are generally perceived to generate positive outcomes; however, the economic impacts are transmitted throughout the food value chain. In this paper, an Equilibrium Displacement Model (EDM) of the Australian apple industry is used to demonstrate the potential changes in economic welfare among apple industry participants from a reduction in household demand for food waste. Overall, there is an industry loss of economic surplus with apple growers, wholesalers, processors, and retailers who are adversely impacted. Domestic consumers potentially gain from increased food security at lower prices; however, the direction and magnitude of the change in consumer welfare are ambiguous and dependent on the treatment of consumer surplus on food waste in economic surplus calculations. This ambiguity likely has implications for current policies to combat food waste. The distributional impacts of changes in economic welfare among industry stakeholders emphasise the need for a collaborative approach to the food waste problem.

Estimation of the potential economic welfare to be gained by the South African Customs Union from trade facilitation

Background: Trade facilitation is important for the South African Customs Union (SACU) countries because the expansion of international trade is a priority to enhance their economic growth. Unfortunately, the high trade compliance costs facing importers and exporters operating in SACU are in conflict with this objective.Aim: This article aims to quantify the annual economic welfare gains that the member countries of SACU could realise from reforms that would reduce the documentary and border compliance time and costs.Methods: We use a partial equilibrium welfare economics framework of up-to-date sets of general equilibrium estimates of the import demand and the export supply elasticity in a country. The impact on the volume of trade flow and economic welfare is quantified to reduce documentary and border compliance time and trade compliance costs.Results: The economic welfare changes from reducing the documentary and border compliance time and costs for imports and exports would be between US$2.2 billion and US$3.7 billion (2018 prices), or between 0.54% and 0.90% of GDP of the SACU countries. The economic welfare gains from reducing the excess administrative costs in imports and exports of SACU members would be between US$2.2 billion and US$3.7 billion (2018 prices), or between 0.54% and 0.90% of the GDP of the SACU.Conclusion: The most important reforms needed to realise these cost savings include a single window administrative structure. In this case, both customs, health, welfare, and controls, as well as the payment of all duties, taxes, and licenses are handled by a single administrative office. Failure to move fast regarding such changes would have a negative impact on the well-being of SACU members.

GLOBAL MARKET AND ECONOMIC WELFARE IMPLICATIONS OF CHANGES IN AGRICULTURAL YIELDS DUE TO CLIMATE CHANGE

The economic welfare effects of climate change on global agriculture will be mediated by several complex biophysical and economic processes. For a given emissions scenario, these include: (1) the response of the climate system to anthropogenic forcing, (2) the response of crop yields to climate system and carbon dioxide changes, given baseline improvements in crop yields, (3) the response of agricultural markets to crop yield changes, and (4) the economic welfare implications of such market responses. In this paper, we use information about the first two processes from available climate-crop model comparison studies to analyze implications for the third and fourth processes. Applying the range of crop yield changes in a Global Integrated Assessment Model (GCAM) highlights several important economic relationships. First, we find a consistent relationship between global cropland area and yield change that is approximately orthogonal to the relationship between regional cropland area and yield change. Second, we find that the change in economic welfare, expressed as total surplus change per unit economic output, peaks during the 21st century. Third, we find that, at the global level, changes in yield affect both producer surplus and consumer surplus. Specifically, surplus changes to producers and consumers are always opposite in sign, although which economic actors gain or lose varies with the sign of yield change for any given commodity. Taken together, these results contribute to a growing body of research on climate-induced changes on agriculture by highlighting several economic relationships that are robust to differences in the underlying biophysical responses.

Market Impacts of Reducing the Prevalence of Bovine Respiratory Disease in United States Beef Cattle Feedlots.

Bovine respiratory disease (BRD) is a common endemic disease among North American feedlot cattle. BRD can lead to significant economic losses for individual beef cattle feedlot producers through mortality and morbidity. With promising new management and technology research that could reduce BRD prevalence, this study evaluates the potential impacts of a reduction of BRD in the US beef cattle feedlot sector. Using a multi-market, multi-commodity partial equilibrium economic model of the US agricultural industry, we evaluate the market impacts of reduced BRD to producers from various livestock, meat, and feedstuffs industries. We find that as morbidity and mortality is reduced, beef cattle producers experience losses due to increased supplies (lower beef cattle prices) and increased demand for feedstuff (higher feedstuff prices). Beef cattle processors see gains as the price of beef cattle is lower, whereas feedstuff producers gain from higher feedstuff prices. Producers in the allied industries (pork, lamb, poultry, and eggs) see a small reduction in returns as consumers substitute with less expensive beef products. Consumers see gains in welfare as the increase in beef cattle supply results in lower beef prices. These lower beef prices more than offset the small increases in pork, lamb, poultry, and egg prices. Overall, the potential economic welfare change due to management and technologies that reduce BRD is a net gain for the US society as a whole.

An Analysis of Interaction Effects of China–South Korea and China– Australia FTAs and the Expanding TPP

Abstract On 5 October 2015, the Trans-Pacific Partnership Agreement (TPP) led by the U.S. was signed. Already, 12 countries1 have joined the agreement, but China has not. Thus, lots of research has focused on the negative effect of the TPP on China’s foreign trade. On the other hand, China is moving forward in its own efforts to establish bilateral free trade agreements (FTAs) and free trade zones. In June 2015, China-South Korea and China-Australia signed bilateral FTAs which went into effect in December 2015. Several questions were raised: Since South Korea and Australia are the major trade partners in the Pacific area and the bilateral FTAs will be effective before the TPP, will these FTAs’ positive effects on China’s foreign trade offset some of the negative effects of the TPP? If China and the U.S. adopted a competitive trade policy, which countries would benefit? If China and the U.S. adopted a cooperative trade policy, how would the trade value and economic welfare change? This paper simulates and analyses the mutual effects of China-South Korea and China-Australia FTAs and the enlarging TPP using the computable general equilibrium model. The major conclusions drawn suggest that China-South Korea and China-Australia FTAs will significantly offset the TPP’s negative effect on China’s foreign trade. If China is not included, the U.S. economic benefit from the TPP will be limited. The economic welfare for a country like Australia, which joined both the bilateral FTA and the TPP, will be increased the most. In the long run, China joining the TPP would be the most beneficial decision for its national interest. However, if the TPP cannot be approved by the US congress, the U.S.’s economic indicators and export would be decreasing sharply. China’s economy and export will benefit from FTAs.

On imperfect competition with occasionally binding cash-in-advance constraints

We provide a theoretical demonstration of the link between imperfect competition and the cash-in-advance constraint, not previously considered in the literature. In a general equilibrium framework, we show that imperfect competition affects the proportion of times that the cash-in-advance constraint binds. As the market becomes more competitive it is certainly no less likely that the cash-in-advance constraint will bind. Therefore, economic welfare changes not only because of the direct effect of the change in the distribution of aggregate consumption but also because of the indirect effect of the cash-in-advance constraint. Other implications are also demonstrated.

De-industrialization Not Decline: A New Meta-narrative for Post-war British History

Much of the economic and other historiography of post-war Britain is shaped by the perceived failure of Britain to consistently match the growth rates of GDP experienced in other rich countries. These declinist narratives are commonly coupled to tendentious and ideologically driven analyses of economic, social and political developments. This article seeks to displace this declinist narrative by one focussing upon de-industrialization and its consequences. The argument is that de-industrialization, beginning in the 1950s, brought about such a range of profound changes, that it provides the best underpinning narrative for understanding late twentieth-century Britain. After suggesting why ‘growth’ and ‘decline’ are not the best terms for understanding this period, the article sets out the case for seeing the employment changes brought about by de-industrialization as crucial to many changes in economic welfare. De-industrialization not only increased wage inequalities and job insecurity, but also re-shaped the social security system and the pattern of public employment. In addition, de-industrialization has seriously compromised the aim of neo-liberalism to free the labour market from the influence of government.

Public Policy Induced Changes in Employment: Valuation Issues for Benefit-Cost Analysis

We explore the economic welfare effects of direct and indirect government-induced changes in employment under varying market conditions. We begin with a discussion of those policy-induced employment changes that seamlessly reshuffle workers among jobs in an efficient (i.e., full-employment, full-information) economy; generally such changes create few, if any, net changes in economic welfare not captured in changes in wage bills. We then turn to the effects of policy-induced employment changes in economies with two market distortions: (1) inflexible wages set by law or custom that result in involuntary unemployment during periods of deficient aggregate demand, and (2) illiquidity resulting from imperfect capital markets that prevent people from borrowing against future earnings. Induced employment changes in these circumstances impose real net social costs or generate real net social benefits beyond changes in the wage bill. We also assess the likely magnitude of the social opportunity cost of labor in the case of involuntary unemployment and imperfect liquidity, and address how the welfare effects of such employment changes should be valued. Based on currently available empirical research, we develop estimates of the opportunity costs of hiring or releasing an employee during periods of high unemployment with and without other market distortions. In contrast to conventional benefit-cost analysis practice, which treats releasing workers as having a negative opportunity cost, we estimate an opportunity cost for firing that is positive and equal to about 73% of pre-firing compensation, primarily because of the “scarring effect” of unemployment. Also in contrast to conventional practice, we estimate an opportunity cost for hiring an unemployed worker that is less than the worker’s opportunity cost of time.

Estimating economic effects of changes in climate and water availability

Social, economic, and environmental systems can be vulnerable to disruptions in water supplies that are likely to accompany future climate changes. Coupled with the challenges of tightening environmental regulations, population growth, economic development and fiscal constraints water supply systems are being pushed beyond the limits of their design and capacity for maintenance. In this paper we briefly review key economic concepts, various economic measures and metrics, and methods to estimate the economic effects on water resources from water supply changes that could accompany climate change. We survey some of the recent empirical literature that focuses on estimates developed for U.S. watersheds at both national and regional scales. Reported estimates of potential damage and loss associated with climate and water supply changes that we observe are significant, though often the metrics vary and make valid and consistent direct cross-comparisons difficult. Whether in terms of changes in GDP or in terms of estimated changes in economic welfare based on associated changes in economic costs and benefits, both national and regional estimates suggest that governments and organizations incorporate prudent steps to assess vulnerabilities to plausible future water supply and demand scenarios and develop responsive adaptation strategies.

The cost of climate policy in the United States

We re-evaluate prospects for US economic growth and the likely costs of advanced technologies given recent developments, and then apply the MIT Emissions Prediction and Policy Analysis (EPPA) model to evaluate three core GHG policy scenarios for the US that cap emissions at different levels. The three policy scenarios involve allowance allocations that through 2050 are: (1) constant at present emissions levels, (2) linearly reduced to 50% below present, (3) linearly reduce emissions to 80% below present. The cumulative allowance allocations over the horizon of the policy are 287, 203 and 167 Gt of CO 2 equivalent, respectively. We compare the results to previous analysis of these same policy scenarios to evaluate how the changed growth and technology prospects affect the results. We focus on 203 and 167 Gt scenarios because current proposals envision deep cuts in emissions from present. The 167 Gt scenario is closest to proposals currently being considered by Congress and supported by the US Administration however we do not attempt to model specific details of actual proposals. We test results to alternative assumptions about program coverage and banking behavior. Measured in terms of changes in economic welfare, the economic cost of 203 and 167 Gt cases is in the range of 2 to 3% by 2050, with CO 2 prices between $48 and $67 in 2015 rising to between $190 and $266 by 2050. Implementation details matter: when an idealized economy-wide cap-and-trade is replaced by coverage omitting some sectors, or if the credibility of long-term target is weak (limiting banking behavior) prices and welfare costs change substantially.

Multipliers, Markups, and Mobility Rents: In Defense of ‘Chain Models’ in Urban and Regional Analysis

Social scientists have long used ‘chain’ metaphors, yet their methodological justification remains somewhat hazy. This paper offers a rationale for using chains to measure changes in economic welfare in urban and regional contexts. In contrast to the Marshallian surplus, which well describes situations in which price changes generate rents in a single market, chains are especially useful in markets where changes lead to the transmission of demand or supply through a series of markets characterized by sticky prices and markups. This argument is illustrated by reference to chain-driven analyses of local production, labor, and housing markets. The institutional structures that underpin chain models are stressed.

A note on national income in a dynamic economy

We review the properties of the static measure of changes in economic welfare, national income, in a dynamic economy. It is possible to establish attractive welfare properties by rather simple arguments, and this can be estimated from current data. Its welfare properties are preferable to those of net national product and comparable to those of the state valuation function.

General equilibrium effects of a supply side GHG mitigation option under the Clean Development Mechanism

The Clean Development Mechanism (CDM) under the Kyoto Protocol to the United Nations Framework Convention on Climate Change is considered a key instrument to encourage developing countries’ participation in the mitigation of global climate change. Reduction of greenhouse gas (GHG) emissions through the energy supply and demand side activities are the main options to be implemented under the CDM. This paper analyses the general equilibrium effects of a supply side GHG mitigation option—the substitution of thermal power with hydropower—in Thailand under the CDM. A static multi-sector general equilibrium model has been developed for the purpose of this study. The key finding of the study is that the substitution of electricity generation from thermal power plants with that from hydropower plants would increase economic welfare in Thailand. The supply side option would, however, adversely affect the gross domestic product (GDP) and the trade balance. The percentage changes in economic welfare, GDP and trade balance increase with the level of substitution and the price of certified emission reduction (CER) units.

A Note on National Income in a Dynamic Economy

We review the properties of the conventional static measure of changes in economic welfare, national income, in a dynamic economy. We show that it is possible to establish attractive welfare properties by rather simple arguments and that this variable can be estimated from current data. Its welfare properties are identical to those of the static measure: a small change is a potential Pareto improvement if and only if it leads to an increase in this variable. This gives national income welfare properties that are much preferable to those of net national product.

Multiple-use management of forest recreation sites: a spatially explicit choice experiment

This study examined visitors’ preferences for forest management at five adjacent municipal recreation sites in Finland, using a spatially explicit choice experiment. The study design accounted for changes in scenery and biodiversity indices in the forest environment resulting from forest management practices. Respondents were asked to choose their preferred management option from alternative management regimes for the sites. The options were characterized by different levels of attributes, which included site-specific species richness levels and forest scenery, costs of management, and indicators of species richness levels over the system of recreation sites. Results show that visitors have a strong preference for the preservation of species richness and for scenic beauty. However, when there is a trade-off between these benefits, visitors chose their favourite scenery at their favourite recreation site and prefer management options, which preserve biodiversity at the other sites in the recreation system. The study shows how modelling the sites as independent units of the forest management regime permit policy-relevant conclusions to be drawn regarding the specialisation and zoning of multiple-use objectives. The approach also allows for the development of hypothetical management scenarios and estimation of respective economic welfare changes for visitors from these scenarios.

Measurement of Changes in Economic Welfare in India: 1970–2001

This paper provides time series estimates of measures of economic welfare, inequality, decile class specific true cost of living index and poverty measures based on 20 rounds of National Sample Survey data for the period 1970–2001. It has estimated piece-wise Linear Expenditure System (LES) for very poor, moderately poor, non-poor low and non-poor high expenditure groups for rural as well as urban areas. Money metric utility for deciles are derived from the money metric utility function and social welfare index is constructed by aggregating metric utility of the deciles. Using social welfare index as well as real per capita consumption, the paper analyses the changes in economic welfare over the three decades. Using conventional measures, the paper analyses the changes in poverty and inequality during 1970–2001. The paper also provides estimates of the welfare effects of commodity prices.

CLIMATIC CHANGE AND U.S. WATER RESOURCES: FROM MODELED WATERSHED IMPACTS TO NATIONAL ESTIMATES1

ABSTRACT: Water is potentially one of the most affected resources as climate changes. Though knowledge and understanding has steadily evolved about the nature and extent of many of the physical effects of possible climate change on water resources, much less is known about the economic responses and impacts that may emerge. Methods and results are presented that examine and quantify many of the important economic consequences of possible climate change on U.S. water resources. At the core of the assessment is the simulation of multiple climate change scenarios in economic models of four watersheds. These Water Allocation and Impact Models (Water‐AIM) simulate the effects of modeled runoff changes under various climate change scenarios on the spatial and temporal dimensions of water use, supply, and storage and on the magnitude and distribution of economic consequences. One of the key aspects and contributions of this approach is the capability of capturing economic response and adaptation behavior of water users to changes in water scarcity. By reflecting changes in the relative scarcity (and value) of water, users respond by changing their patterns of water use, intertemporal storage in reservoirs, and changes in the pricing of water. The estimates of economic welfare change that emerge from the Water‐AIM models are considered lower‐bound estimates owing to the conservative nature of the model formulation and key assumptions. The results from the Water‐AIM models form the basis for extrapolating impacts to the national level. Differences in the impacts across the regional models are carried through to the national assessment by matching the modeled basins with basins with similar geographical, climatic, and water use characteristics that have not been modeled and by using hydro‐logic data across all U.S. water resources regions. The results from the national analysis show that impacts are borne to a great extent by nonconsumptive users that depend on river flows, which rise and fall with precipitation, and by agricultural users, primarily in the western United States, that use a large share of available water in relatively low‐valued uses. Water used for municipal and industrial purposes is largely spared from reduced availability because of its relatively high marginal value. In some cases water quality concerns rise, and additional investments may be required to continue to meet established guidelines.

Potential economic benefits to the Australian wool industry from improving pastures in the hill country of eastern New South Wales

Large areas of undeveloped pastures in non-arable hill country in eastern New South Wales could be improved by aerial methods. The potential economic benefits of pasture improving a portion of the hill country area were evaluated in terms of the economic welfare changes in the Australian wool industry. Hill country wool producers and international wool consumers would derive nearly all of the benefits from this process. Other Australian and international wool producers would lose economic welfare because of the reduced price from increased regional wool production. For conservative anticipated levels of pasture improvement adoption, the overall benefits to the Australian wool industry had 15-year mean present values of between $30.2 million and $122.1 million, depending on whether the introduced pasture was predominantly perennial grass or legume based. The value of this analysis is that it provides improved economic information for planning investment in new pasture technologies in the Australian livestock industries.

Simulated epidemiological and economic effects of measures to reduce piglet supply during a classical swine fever epidemic in the Netherlands

The effects of additional measures adopted during a classical swine fever (CSF) epidemic to reduce piglet supply, namely, an insemination ban, abortion of sows and killing of young piglets, are studied using a stochastic, spatial, dynamic epidemiological simulation model of the pig sector in The Netherlands. The piglet supply derived from the epidemiological model is used as input for a sector-level market and trade model that simulates the pig market in The Netherlands. Changes in the economic welfare of different stakeholders are measured, as is the net welfare effect for the economy in The Netherlands. Sensitivity analysis is performed on parameters such as destruction capacity constraints and the duration of the high-risk period. Additional measures to reduce piglet supply are found to have no epidemiological impact, but they do involve larger economic welfare changes for stakeholders and a larger net welfare loss for the economy in The Netherlands. These findings do not support the use of the additional measures. Moreover, sensitivity analysis shows that such measures do not solve the problem of a shortage in rendering capacities.