Efficiency Of Policy Instruments Research Articles

How does wood mobilization depend on marketing decisions? A country comparison based on choice experiments

There is no one-size-fits-all policy instrument to enhance wood mobilization. The success of implementing such policy measures can vary among countries and regions depending on the specific structural and institutional conditions as well as on behavioural aspects of the particular public and private decision makers. Forestry has a huge potential to contribute to a sustainable bio-economy by providing wood as a renewable resource. Making wood available to meet the future demand is one of the goals of forest policy and private initiatives. Understanding the market behaviour of forest owners and managers is important to identify effective and efficient policy instruments that enhance wood provisioning. We conducted a choice experiment at two study sites in south-eastern Germany (Upper Bavaria and Lower Franconia) and two in north-eastern Switzerland (Grisons and Aargau) to elicit foresters’ preferences for different supply channels, contract lengths, wood prices and duration of business relations. Our study site comparison identified regional differences and particularities, which should be taken into account when promoting wood mobilization. The success of policy instruments, such as the promotion of bundling organizations and long-term contracts, can vary depending on the specific structural and institutional conditions, like existing marketing channels, as well as on behavioural aspects of the particular public and private decision makers.

Behavioural Economics and Public Support for Carbon Pricing: A Revenue Recycling Scheme to Address the Political Economy of Carbon Taxation

Even though carbon pricing is widely accepted as the most efficient policy instrument for climate change mitigation, it has been severely held back by a lack of public support. Building on research in behavioural sciences, we propose a revenue recycling scheme that aims to foster public support for carbon taxes. The scheme has two main strengths: (i) it may allow the implementatin of carbon taxes with higher tax rates than those currently prevailing in most jurisdictions; (ii) it relies on a number of accessible technologies, and thus it can be implemented in a wide variety of settings, both in urban and rural areas of developing and developed countries.

‘No taxation without hypothecation’: towards an improved understanding of the acceptability of an environmental tax reform

ABSTRACTAlthough it is widely acknowledged that taxation is a powerful instrument for combating environmental problems, environmental taxation is still underused. Public acceptability of regulatory taxes appears to be low, to the extent that a trade-off between the acceptability and the efficiency of policy instruments can be observed. This paper examines the determinants and conditions for public support and willingness to pay for environmental taxation, based on survey data of 1308 citizens. The results show that education and environmental awareness are determinants for support, and that initial low support can be significantly improved by earmarking the tax revenues to the environment. Other ways of revenue recycling, such as an environmental tax reform, can be ranked based on acceptability. We call this ranking the ‘Ladder of Acceptability of Revenue Recycling Options’ (LARRO). Well-chosen design options for the environmental tax reform can further improve its acceptability.

Monetary Rules without Romance

How much independence should the monetary authority retain in a rules-based regime? The conventional wisdom holds that while the political system - particularly in a democratic society - should determine the overarching goal of monetary policy, the central bank should remain free to select whichever levers it deems most appropriate for achieving the goal. This paper evaluates whether instrument independence is consistent with the goals of a rules-based regime by examining the monetary and macroeconomic effects of allowing the monetary authority discretion over the choice of control procedures when its objectives are at odds with the public interest. I argue that while a benevolent monetary authority would always select the most efficient policy instrument, i.e., the instrument consistent with achieving its stated objective, an opportunistic one may intentionally choose instruments that obscure its objectives, thereby undermining the purpose of monetary rules.

Willingness to pay for improved irrigation water supply reliability: An approach based on probability density functions

In irrigated agricultural systems, a major source of uncertainty relates to water supply, as it significantly affects farm income. This paper investigates farmers’ utility changes associated with shifts in the probability density function of water supply leading to a higher water supply reliability (higher mean and lower variance in annual water allotments). A choice experiment relying on a mean-variance approach is applied to the case study of an irrigation district of the Guadalquivir River Basin (southern Spain). To our knowledge, this is the first study using parameters of these probability density functions of water supply as choice experiment attributes to value water supply reliability. Results show that there are different types of farmers according to their willingness to pay (WTP) for improvements in water supply reliability, with some willing to pay nothing (47.8%) while others have a relatively low (28.0%) or high (24.2%) WTP. A range of factors influencing farmers’ preferences toward water supply reliability are revealed, with those related to risk exposure to water availability being of special importance. The results can be used to assist the design of more efficient policy instruments to improve water supply reliability in Mediterranean and semi-arid climate regions.

Theory of Distortions and Welfare as the Backbone of the WTO: If We Lose the Form, Do We Lose the Essence?

The Project asks us to work on the presumption that the WTO is at the crossroads and may either survive after significant reforms or cease to exist. This concept paper does not examine the specific challenges that the WTO is currently facing or the various reform proposals. Instead, the paper revisits the underlying rationale for the need for the/a multilateral trading system and underscores the significance of the “Theory of Distortions and Welfare” to the proper functioning of the WTO or its successor. The paper submits that regardless of the fate of the WTO, anti-protectionism, collective rule-making and judicial interpretation and enforcement will remain at the core of international trade regulation. The fundamental function of the/a multilateral trading system will continue to be disciplining the choice of trade policies and policy instruments. As the backbone of the system, the “Theory of Distortions and Welfare” provides an effective mechanism for encouraging the use of economically efficient policy instruments without impairing governments’ capacity to pursue chosen non-protectionist policy objectives.

Do Job Creation Schemes Improve the Social Integration and Well-Being of the Long-Term Unemployed?

In this paper we analyze the effects of a German job creation scheme (JCS) on the social integration and well-being of long-term unemployed individuals. Using linked survey and administrative data for participants and a group of matched non-participants, we find significant positive effects of being employed within this program. They are larger for individuals with health impairments and above-average duration of welfare dependence. The program effects decline over time, which cannot be explained by decreasing levels of well-being and social integration of the participants. Instead, this decrease is driven by a rising share of controls who find a job and catch up to similar outcome levels as program participants. Overall, our results suggest that JCSs can be an efficient labor market policy instrument to improve the quality of life of the long-term unemployed.

Effectiveness of deposit-refund systems for household waste in the Netherlands: Applying a partial equilibrium model

Deposit-refund schemes (DRS) are basically a combination of two instruments: a tax on the purchase of a certain product, and a subsidy on the separate collection of the same product in its after-use stage. They can be efficient policy instruments to encourage reuse and recycling. However, empirical studies on impact of DRS systems on recycling rates are hardly done. In this paper, we applied the Fullerton-Wu model, a partial equilibrium model, to simulate the impact of introducing mandatory DRS for small electric appliances and batteries in the Netherlands. For small electric appliances, a deposit-refund rate of €5 to €15 per appliance would lead to an increase in the recycling rate (recycled appliances as a percentage of total amount of appliances disposed of) from 60.7% to 64.7% and 76.4% respectively. For batteries, a DRS would increase the recycling rate from 86.9% to between 87.2 and 89.2% depending on the deposit tax level ranging from €5 to €20 per kg and the price elasticities assumed (low and high). Obviously, the performance of DRS in terms of additional recycling is stronger in cases where current recycling rates are relatively low. Moreover, the pre-existence of an infrastructure for separate collection would make small white goods an interesting candidate for this instrument.

Energy sufficiency policy for residential electricity use and per-capita dwelling size

Energy sufficiency has recently gained increasing attention as a way to limit and reduce total energy consumption of households and overall. This paper presents both the partly new methods and the results of a comprehensive analysis of a micro- and meso-level energy sufficiency policy package to make electricity use in the home more sufficient and reduce at least the growth in per-capita dwelling size. The objective is to find out how policy can support households and their members, as individuals or as caregivers, but also manufacturers and local authorities in practicing energy sufficiency. This analysis needed an adapted and partly new set of methods we developed. Energy sufficiency does not only face barriers like energy efficiency, but also potential restrictions for certain household members or characteristics, and sometimes, preconditions have to be met to make more energy-sufficient routines and practices possible. All of this was analysed in detail to derive recommendations for which policy instruments need to be combined to an effective policy package for energy sufficiency. Energy efficiency and energy sufficiency should not be seen as opposed to each other but work in the same direction—saving energy. Therefore, some energy sufficiency policy instruments may be the same as for energy efficiency, such as energy pricing policies. Some may simply adapt technology-specific energy efficiency policy instruments. Examples include progressive appliance efficiency standards, standards based on absolute consumption, or providing energy advice. However, sufficiency may also require new policy approaches. They may range from promotion of completely different services for food and clothes cleaning, to instruments for limiting average dwelling floor area per person, or to a cap-and-trade system for the total electricity sales of a supplier to its customers, instead of an energy efficiency obligation.

Kazakhstan's Energy Efficiency Policy Via Dea Approaches

In modern conditions of managing important task is to increase energy efficiency and energy efficiency as one of the priorities of economic policy. The purpose of this paper is to develop a theoretical and methodological approaches and practical recommendations aimed at the implementation of evaluation and monitoring of energy efficiency policy instruments. Methods of research are analysis and mathematical modeling. Implementation of the system of energy efficiency indicators will increase the efficiency of the proposed measures; compare the current status in various sectors to global peers. In this article we used the method of data analysis - Data Envelopment Analysis (DEA) to estimate the effectiveness of energy efficiency indicators in comparison with those of other countries. DEA technique allows a comparative analysis of energy efficiency indicators, which is based on a comparison of the values of the individual groups of indicators with each other. However, the use of this technique in a Kazakhstan limited lack of statistical information of many indicators and series of the dynamics of the existing indicators.

Exploring the impacts of a low-carbon policy instrument: A case of carbon tax on transportation in China

The rapid growth of energy consumption and CO2 emission in transportation has brought great challenges to China’s energy demand and environmental issues. Carbon tax, considered as an efficient low-carbon policy instrument, can effectively reduce the use of fossil fuels and improve energy efficiency. This study aims to explore the impacts of a transportation carbon tax on transport sectors, macroeconomy and social welfare by developing a computable general equilibrium (CGE) model. Meanwhile, to achieve fiscal revenue neutrality, two schemes are employed for revenue recycling. One is that all of the carbon tax revenue is recycled to subsidize households through lump-sum transfer; the other one is that carbon tax revenue is used to reduce the income tax of households and enterprises. The simulation results show that the appropriate carbon tax rate is 50 Chinese Yuan (RMB)/ton-CO2. At this level of taxation, energy demand and carbon reduction have fewer negative impacts on the macro-economy and transport sectors. We also find that the appropriate carbon tax rates among different transport sectors and different energy categories are different. The appropriate carbon tax rates for airlines, railway, urban transport and water transport are same (50 RMB/ton-CO2), while the appropriate carbon tax rate for road transport sector is 60 RMB/ton-CO2. The recycling of carbon tax revenue to households and enterprises should be implemented to realize the “weak double dividend” effect of the carbon tax.

Managing the distributional effects of energy taxes and subsidy removal in Latin America and the Caribbean

Energy subsidies have been criticized due to their economic inefficiency and promotion of wasteful usage of energy and associated carbon emissions. Conversely, environmental taxes are advocated as efficient policy instruments. But removing subsidies and taxing energy can be politically challenging because vulnerable households rely on low energy prices. This study analyzes the impact of energy price hikes on different income groups using an energy-extended input-output approach. Our results show that higher-income groups benefit more from low energy prices than low-income groups when tracing both direct and indirect (supply chain) effects of energy price variations. Energy subsidies are a very expensive option to transfer income to poor households. For example, in Latin America and the Caribbean, using energy subsidies would cost about $12 to transfer $1 of income to households in the poorest quintile. Recycling a small fraction of fiscal revenues from energy subsidy removal or energy taxation could be sufficient to compensate vulnerable households from the effects of price hikes. Cash transfers to poor households and targeted subsidies for public transportation or food are the most effective measures to compensate households for welfare loss.

Consumers’ Preferences and Derived Willingness-to-Pay for Water Supply Safety Improvement: The Analysis of Pricing and Incentive Strategies

With increasing water supply accidents and higher water demand, urban water supply safety (WSS) remains a crucial public policy issue in developing countries. The purpose of this paper is to investigate consumers’ willingness-to-pay (WTP) and their preferences to improve WSS in China, to support governments in water regulation policy design and water providers in investment-decisions. A discrete choice experiment method with the consideration of not only attributes of WSS but also attitudinal and demographic variables have been adopted to assess consumers’ WTP and preferences for WSS improvement. The results show that Chinese urban residents are willing to pay a significantly higher price for improved WSS. Demonstrated marginal mean WTP for the change of the attributes range from 0.18 RMB/m3 (0.03 USD/m3) (1 RMB was around 0.154 USD in 2016) for decreased water supply interruption to 2.33 Yuan RMB/m3 (0.35 USD/m3) for improved drinking water quality. Investments in water processing facilities and water distribution networks should come first. Cross-subsidy concerning different developing districts is the most efficient policy instrument. The study contributes to the recent literature not only by introducing attitudinal variables in choice experiment survey in water supply field, but also by revealing the correlation of choice modeling applications in WSS improvement programs.

A Policy Mix for Resource Efficiency in the EU: Key Instruments, Challenges and Research Needs

Against the background of an often wasteful use of natural resources, the European Union has made resource efficiency a top policy priority. Policy formulation is, however, at a very early stage in many Member States, with often vague notions of what resource efficiency means, characterised by fragmented instruments and overlapping competencies. This paper develops a conceptual framework for defining, assessing and developing resource efficiency policy mixes. It argues that a mix of policies and instruments is best suited to overcoming the complex challenges of the 21st Century. Such a mix addresses multiple resource domains at a strategic, high level and contains interacting instruments targeting multiple actors, levels of governance and sectors and life-cycle stages of resource use. This paper looks at criteria for effective resource efficiency policy instruments, presents both an indicative policy mix across 9 policy domains and case studies (on environmental harmful subsidies, supply chain efficiency in food systems and product-service systems) and identifies key challenges to overcome trade-offs in instrument design, maximise synergies, reduce conflicts, promote coherence, coordinate activities and move from theory to practice. Research needs are discussed regarding who shall devise, implement, and coordinate such a policy mix, considering negotiating power, timing and complexity.

German and Norwegian policy approach to residential buildings’ energy efficiency—a comparative assessment

Buildings in private and domestic use are responsible for about 30% of the global greenhouse gas emissions attributable mainly to their need for heating and cooling energy. This corresponds to about 40% of the global final energy consumption. Therefore, a viable implementation of building energy efficiency policies is inevitable to realize a transformation of the energy system to mitigate climate change. Within the building sector lies a huge potential for emission reduction consisting in the renovation of the existing building stock and climate-friendly building guidelines applicable to new constructions, both adapting CO2-neutral technology solutions. However, as there are several different pathways leading to a decarbonized energy system, there is always the question which political and technological solutions are most efficient, effective, and feasible. This paper aims to analyze building efficiency policy measures and instruments and the related technological solutions in two front-runner countries of the energy transition, possessing different structural conditions: Germany and Norway. We hence apply a comparative approach which allows us to present and assess the policies in place. The paper answers three research questions: (1) Which policies prevail in Germany and Norway to foster the deployment of energy efficient and decarbonized solutions for residential buildings? (2) How do these policies respond to country-specific barriers to the energy transition in the building sector, and (3) What effects do they have on the actual implementation of technological and societal solutions? This research provides a new insight to the highly relevant topic of energy efficiency in buildings in the context of international Intended Nationally Determined Contribution benchmarking and discusses some unsolved trade-offs in the translation of the global climate governance into the national building sector.

Technology Parks in Poland As an Element of Public Proinnovation Policy—Selected Results from Empirical Research

AbstractNowadays, regional pro-innovation policy concentrates on the creation of endogenous economic resources that are intended to become the main driving force for regional economic growth. In current economic conditions, this resource refers primarily to the paradigm of the knowledge economy. Hence the crucial importance of regional policy is to support the development of innovative enterprises. At the same time, a prerequisite for the more dynamic development of innovative enterprises, and thus the development of the region, is to implement efficient pro-innovation policy instruments. Therefore the main research aim of this paper is to define how the technology parks in Poland, as a regional tool of the public pro-innovation policy, could stimulate innovations as well as competitiveness of SME. The article will be based mostly on the empirical approach, presenting selected results of the nationwide research project financed by the National Science Centre of Poland. The obtained initial empirical data suggest that technology parks in Poland expand highly-specialized services for their tenant enterprises to a very limited extent and focus on basic and routine aspects of their operations (rental, day-to-day administration of premises and equipment etc). In effect, the technology parks in Poland have played so far a very limited role in practice as a stimulus of innovativeness of SME. The study used the method of systemic analysis and also the empirical method (PAPI) for primary data collections.

Should SMEs pursue public procurement to improve innovative performance?

While public procurement is an efficient demand-side policy instrument, resource constraints impede small and medium-sized enterprises from accessing innovation procurement contracts. As a remedy, inter-organizational networks are seen as a means to extend SMEs’ resources. This paper examines the relationship between inter-organizational networks and SMEs’ innovative performance. It investigates how this relationship is mediated by the public or private sector customer's demand for new or significantly improved products. We find that networks involving other firms are associated with SMEs’ innovative performance, and that this is mediated by both customer types. Furthermore, the public procurement of innovations is associated with greater returns in the case of the new products or services. For significantly improved products or services, networks involving other firms may improve performance when the demand originates from private sector customers. Our results suggest that SMEs should emphasize networks with other firms rather than public or private research and development actors when they develop new products for the public sector. These innovations can be further developed, providing opportunities for further leverage in private sector markets.

Learning Economics and Attitudes to Market Solutions to Environmental Problems

Climate change challenges governments to reduce emissions, and to gain support for such actions from their citizens. This can be in the form of taxation or legislation, or other forms of government interventions. In previous research, several instruments have been developed to capture attitudes towards the roles of markets and governments in the economy. Some of these instruments have assumed that respondents will have the same attitude towards the role of markets and governments, regardless of the context (e.g., welfare, environment, health) or the form of government intervention (law, taxation, subsidy, spending etc.). However, these studies have not examined attitudes towards, or belief in, the efficacy of government intervention in markets, through microeconomic policies on taxation (e.g., duties levied on particular products) or subsidies. This paper reports on the results of taking such a specific focus, that is, investigating economics students’ knowledge of, and attitudes towards, government interventions in markets, specifically addressing the problem of climate change. We make use of unique, two-wave longitudinal data from Swedish university students. The data were collected during their initial semester at the university. The first data collection was performed at the beginning of the semester, August/September 2014, and the second wave of data collection was performed in December/January 2014/2015, at the end of the semester. We were able to match 414 students between the first and second survey. The results show that students of economics change their policy attitudes and become more knowledgeable in economics. After one semester, they are more likely to think of economic instruments/incentives (taxes and subsidies) as good and efficient policy instruments, and less likely to think that other instruments (regulation and information) are good and efficient policy instruments. However, further analyses show that knowledgeable students do not have different attitudes toward environmental policy instruments, compared to students who do not answer the questions correctly. Hence, there seems to be some other factor affecting students in economics during their first semester, that changes their attitudes towards environmental policy instruments.

Auctioning Risky Conservation Contracts

Conservation auctions have the potential to increase the efficiency of payments to farmers to adopt conservation-friendly management practices by fostering competition among them. The literature considers bidders that have complete information about the costs of adoption and optimal bidding behavior reflects this information advantage. Farmers seek information rents and bids decrease when risk aversion increases because farmers are more averse to losing the auction. We contribute to the literature by allowing for cost risk. Our paper shows that farmers must balance the risk of losing the auction (thus foregoing information rent) with the risk of submitting a bid that is not high enough to pay the costs of adopting conservation practices (thus incurring losses). We design an experiment to trade off these two risks and examine how risk aversion affects bidding behavior when participants face different sources and levels of risk. Our experiment contributes to a small literature on experimental auctions with risky product valuations. We find that participants decrease their bids as risk aversion increases, even in auctions with cost risk, suggesting that the risk of losing the auction dominates. These findings uncover new challenges for the practical implementation of conservation auctions as an efficient policy instrument.

A bi-level model for GHG emission charge based on a continuous distribution of travelers’ value of time (VOT)

Transportation is an important source of greenhouse gas (GHG) emissions. In this paper, we develop a bi-level model for GHG emission charge based on continuous distribution of the value of time (VOT) for travelers. In the bi-level model framework, a policy maker (as the leader) seeks an optimal emission charge scheme, with tolls differentiated across travel modes (e.g., bus, motorcycles, and cars), to achieve a given GHG reduction target by shifting the proportions of travelers taking different modes. In response, travelers (as followers) will adjust their travel modes to minimize their total travel cost. The resulting mode shift, hence the outcome of the emission charge policy, depends on travelers’ VOT distribution. For the solution of the bi-level model, we integrate a differential evolution algorithm for the upper level and the “all or nothing” traffic assignment for the lower level. Numerical results from our analysis suggest important policy implications: (1) in setting the optimal GHG emission charge scheme for the design of transportation GHG emission reduction targets, policy makers need to be equipped with rigorous understanding of travelers’ VOT distribution and the tradeoffs between emission reduction and system efficiency; and (2) the optimal emission charge scheme in a city depends significantly on the average value of travelers’ VOT distribution—the optimal emission charge can be designed and implemented in consistency with rational travel flows. Further sensitivity analysis considering various GHG reduction targets and different VOT distributions indicate that plausible emission toll schemes that encourage travelers to choose greener transportation modes can be explored as an efficient policy instrument for both transportation network performance improvement and GHG reduction.