Internalization Of External Costs Research Articles

Research on Impact of Equity Costs and Environmental Costs on Supply-Side Classified Water Pricing

The classified water pricing system is an effective measure for promoting the rational utilization of water resources under market mechanisms. Studying the water prices of three different types of water sources, including reservoir water, river water, and wastewater treatment plant effluent, is the basis for promoting the use of reclaimed water. However, there remains a spectrum of viewpoints on how to establish a pricing mechanism for reclaimed water at present. This study primarily focuses on the multi-level quality-separated water supply system in Yiwu City, China. It analyzes the limitations of the current water pricing formation mechanism and the externality of integrating reclaimed water into the unified allocation of multiple water sources. Based on the principles of full-cost water pricing and externality theory, a supply-side classified water pricing permit cost and pricing calculation model, covering the entire process of the social water cycle, is proposed. It focuses on the analysis of the impact of equity costs and environmental costs on supply-side classified water pricing. The Shapley value method is used for the technology of cost allocation among stakeholders to reasonably distribute the calculated water pricing of reclaimed water. The price of reclaimed water varies depending on the user type, with residential users paying 2.93 CNY/t, industrial users 4.00 CNY/t, and government allocations at 8.52 CNY/t. Compared with the classified water prices of various stakeholders on the user side of reservoir water, reclaimed water has a significant price advantage. This research demonstrates that the supply-side classified water pricing model, which includes a permit cost and pricing calculation framework, can encourage the supply of higher-quality water at corresponding higher prices, while also providing the internalization of external costs. Furthermore, the Shapley value method of cost allocation can realize the fair burden of stakeholders on the calculated water price and maintain the competitive advantage of reclaimed water prices.

Internalization of External Cost in the Geothermal Power Generation on Social Welfare Maximization

Internalization of External Cost in the Geothermal Power Generation on Social Welfare Maximization

Environmental implications and hidden costs of artisanal spirulina (Arthrospira platensis) production and consumption

This study aims to assess for the first time the environmental interactions of artisanal spirulina production and consumption, addressing a holistic approach by including the nutritional properties within the assessment and an economic analysis. To do so, life cycle assessment is conducted defining the system boundaries from cradle to consumer and two functional units: mass-based (1 kg of product) and nutrient-based (Spanish Nutrient Rich (super)Food 9.2 score). Afterwards, the monetization of the environmental impacts using the ‘eco-cost’ method and the internalization of externalities to estimate the real cost of spirulina is performed. The purely environmental analysis identifies cultivation as the main hotspot of the product system, reporting a total average carbon footprint of 3.5 kg CO2 eq./kg, while together with the nutritional model, it reveals the potential of spirulina supplements by reducing the impacts as consequence of its rich nutritional profile. In monetary terms, the internalization of external costs linked to the impacts are trivial compared to the selling price of spirulina; only 3.6€ per kg of spirulina should be invested to avoid the negative effects of its production, while its market price sums up to 217€/kg. This value falls drastically by including the nutritional index in the evaluation, as well as varies significantly when modifying the monetization method, which constitutes a constraint at the same time that a challenge for future studies.

Internalization of External Cost in the Thermal Power Generation on Social Welfare Maximization

For decades, Kenya has incorporated thermal power technology into its grid to generate electrical energy using fossil fuels such as petroleum, natural gas, and coal. The burning of fossil fuels has become a major source of air pollutants and is associated with several undesirable side effects on the environment and human health. However, the impact of pollutants on environmental sustainability and public welfare has yet to be evaluated. Therefore, the purpose of this study is to evaluate the external cost of electricity generated by thermal power plants in Kenya. Both survey data and secondary data were used. The analysis was conducted using externality valuation and welfare maximization approaches, and the research hypotheses were tested using a negative binomial regression model. The annual external cost ($/2022) was determined to be $ 1,333,904,970.76, with the following distribution: environmental at $ 993,488,336.26, Public health at $ 86,760,038.01, and socio-economic at $ 253,656,596.49. Equally, the thermal power generation marginal social cost ($/2022) was determined to be 1.22 $cents/kWh with the following distribution: Marginal Private Cost (MPC) at 0.01 $cents/kWh and Marginal External Cost (MEC) at 1.21 $cents/kWh. The established marginal social cost (MSC) (i.e. Σ MPC+MEC) was 1.22 ($cents/kWh). Thus, MSC is significantly greater than the established social marginal benefit (SMB) of 0.089 ($ cents/kWh); hence, we conclude that the burden of social welfare loss is highly significant, making thermal power a non-sustainable and economic energy source.

The more kilometers, the merrier? The rebound effect and its welfare implications in private mobility

Tighter fuel economy standards came into force in the EU in 2020. Such standards reduce the usage cost of cars, encouraging people to drive more, a reaction known as the rebound effect. Whether and how to prevent the rebound is an ongoing policy debate – since the rebound eliminates parts of the expected fuel savings – yet the economic analysis of the rebound welfare implications is very scarce. To fill this gap, first the direct rebound for private vehicles in Switzerland is estimated and is found to be between 30% and 40%. Second, the utility surplus from the extra kilometers is estimated for each household, at 7 cents per kilometer on average. This is half the external costs of driving in Switzerland (15 cents per km). This gap supports a rebound mitigation, for instance through an internalization of external costs with a tax on the distance driven.

A COMPREHENSIVE ANALYSIS OF EXTERNAL COSTS OF ACCIDENTS

A COMPREHENSIVE ANALYSIS OF EXTERNAL COSTS OF ACCIDENTS

Comparative assessment of competitiveness and external costs of electric car and car with internal combustion engine (on the example of Moscow)

Aim. To carry out a comparative evaluation of the competitiveness of electric car and car with internal combustion engine (ICE) of the middle price segment and their external costs on the example of Moscow.Tasks. To describe the methodology and estimate the total cost of ownership of an electric car “Moskvich 3e” and its gasoline counterpart “Moskvich 3”; calculate the external costs of an electric car and a gasoline-powered car related to greenhouse gas emissions and air pollutants; estimate the total cost for society.Methods. In order to compare the competitiveness of cars with different types of engines, the method of total cost of ownership was used; in the aspect of obtaining the total cost for society by economic evaluation of emissions, the external costs associated with climate change and air pollution were calculated.Results. Currently, the total cost of five-year ownership of electric car “Moskvich 3e” is higher in comparison with the car “Moskvich 3” practically by 461 thousand rubles, even taking into account the existing support measures in Moscow. The difference in external costs due to greenhouse gas emissions and air pollutants is about 68.3 thousand rubles. The electric car is more environmentally friendly and contributes less to climate change. The difference in the total cost of five-year ownership of an electric car “Moskvich 3e” and its gasoline analogue, taking into account the external costs (total cost for society) is 392 thousand rubles. This means that the internalization of external costs may slightly increase the competitiveness of the electric car.Conclusions. The study will allow potential buyers to assess the real affordability of vehicles of interest to them, in particular vehicles “Moskvich 3” and “Moskvich 3e”. The obtained results may serve as a basis for further development of support measures for electric motor vehicles in Moscow, for example, when calculating the amount of subsidy necessary to ensure the competitiveness of electric cars of the medium price segment.

Providing Sustainable Transport Infrastructure through Internalization of External Costs: A Case Study from South-Eastern European Countries

Providing Sustainable Transport Infrastructure through Internalization of External Costs: A Case Study from South-Eastern European Countries

Impact of external cost internalization on short sea shipping – The case of the Portugal-Northern Europe trade

Impact of external cost internalization on short sea shipping – The case of the Portugal-Northern Europe trade

Air pollutant emission calculation and shipping costs: The case of yacht transport between the North Sea and Mediterranean ports

This research aims to determine the optimal transport mode for yacht relocation on a selected shipping route by calculating and comparing air emissions of yacht transport as deck cargo on a cargo ship with those from conventional navigation. Based on the most recent findings, the main emission pollutant categories of CO2, SOx, NOx, PM10, and PM2.5 were estimated and compared between the two options. The cost-effectiveness criterion of selected transport modes was an auxiliary objective of this study. With the created mathematical modeling method application, considering the individual vessel specifications, performance, and route characteristics, the results evidenced higher external costs of a cargo ship transporting yachts onboard versus conventional yacht voyage on examined traffic route by 7.7 times. On the contrary, the economic implications showed higher yacht voyage costs by almost two times. With the possibility of exploiting the principle of economies of scale for a general cargo ship, the yacht transport on deck has the comparative advantage considering the total sum of external costs generated by the transport modes in this study. These results might have implications for creating policies on emission control and sustainable development of the shipping industry. They encourage a more restrictive policy considering the environmental transport activities impacts, including the requirement of the complete application of external cost internalization and the more rigorous and precise implementation of the "polluter pays" principle.

ECONOMIC VALUATION OF "BEEJAY BAKAU RESORT (BJBR)" MANGROVE FOREST TOURISM PROBOLINGGO AND IT IS IMPACT TO THE ENVIRONMENT TOWARDS SUSTAINABLE RESOURCE MANAGEMENT

Economic growth often occurs at the expense of the quality of natural resources and the environment because of the impact caused by economic activity. These impacts create external costs that the public and future generations must bear. Internalization of external costs must be enforced to prevent damage to natural resources and the environment (ex-ante strategy) or repair the damage that has occurred (ex-post strategy). Therefore, economic valuation is needed to provide important information regarding the value of ecosystems and the resulting economic benefits, especially for non-market environmental goods that have important policy implications and as an effort to achieve the Sustainable Development Goals (SDGs). This study aimed to analyze and estimate the economic value and identify the ecological, social and economic impacts at BeeJay Bakau Resort Probolinggo. Types of descriptive research with data collection methods include interviews, observations, documentation, and questionnaires. The sampling method used 2 methods: the accidental sampling technique for tourists by determining the number of samples using the linear time function formula so that a total sample of 84 respondents was obtained and the purposive sampling technique for stakeholders with a sample of 40 respondents. The results of the analysis show that the economic value generated is Rp. 584,347,909,947/year. The output of identification of ecological, economic and social impacts which includes three dimensions, namely the ecological, economic and social dimensions, each of which has 4 defined attributes, then it can be concluded that the ecological dimension has a high category, this is because the manager of the BeeJay Bakau Resort mangrove forest tourism carry out various efforts in development that involve both stakeholders and the surrounding community, especially in maintaining and committing to environmental sustainability.

Diagnostic, regenerative or fossil-free - exploring stakeholder perceptions of Swedish food system sustainability

In an analysis of food system sustainability challenges and solutions among Swedish food system actors using Q-methodology, five perspectives were identified. One of the main three perspectives placed the highest priority on reduced meat consumption, food waste, and climate impact in agriculture, but downplayed strategies highlighted in the national food strategy and social aspects, and can be interpreted as a diagnostic climate mitigation-oriented perspective that does not reflect current negotiated policy processes or ‘softer’ values of food. In an alternative regenerative perspective, industrialized large-scale farming and lack of internalization of external costs were regarded as the main problems, and diversity, soil health, and organic farming as the main solutions. Proponents of a third perspective regarded phasing out fossil fuels, increased profitability of companies, increased meat production, and self-sufficiency as high priorities. These contrasting views can be a major barrier to transforming the Swedish food system. However, a number of entry points for change (i.e. aspects highly important for some and neutral for others) were identified, including focusing on healthy diets and increased production of fruit and vegetables. Focusing on these can build trust among stakeholders before moving to discussions about the larger and more sensitive systemic changes needed.

Are EU environmental regulations consistent with the concept of internalisation of externalities – the case of Polish electricity sector

The article’s goal is to examine whether the existing EU environmental regulations implemented in the Polish electricity sector are consistent with the concept of internalisation of external costs. The tool used in the research is the partial equilibrium model of the mid-term development of the Polish power sector. There are two scenarios. The first ‘base’ scenario assumes gradual decarbonisation of the Polish energy sector. In the ‘int’ scenario, the structure of energy production results from the full internalisation of external costs. The structural changes in the ‘base’ scenario are a significant challenge. All coal-based technologies are being drastically phased out and will be replaced by RES and nuclear technologies. The climate policy leading to a gradual reduction of CO2 emissions in Poland makes sense, assuming much higher external costs of CO2 emissions (€65/Mg CO2 ) than those assumed in this study.

Developing user-centered measures to increase the share of multimodal freight transport

The European Commission has dedicated itself steadily to multimodal freight transport to reduce problems such as air pollution or congestion and to reach the goals set by the Paris Agreement. Despite the political efforts to promote multimodality, the majority of freight transport is still carried out by truck. The aim of this paper is to capture the reasons for the small share of multimodal transport and suggest measures to promote multimodal transport. To collect data, a multiple-case study was conducted involving ten logistics service providers. The barriers to multimodal freight transport are analyzed in a holistic manner using interpretive structural modeling. Overall, fifteen barriers are presented which are classified as demand-related barriers, shipment characteristics, infrastructural/supply-related barriers, organizational barriers and legal / political barriers. Based on that, a bottom-up approach involving the ten logistics service providers (LSPs) is used to develop user-centered policy measures for multimodal transport. The direct involvement of LSPs facilitates acceptance of the proposed measures. The internalization of external costs, efficient information provision and education/training/awareness raising are rated as high impact measures to promote multimodal transport.

The Impact of the Internalization of External Costs in the Competitiveness of Short Sea Shipping

This paper applies a methodology for computing external costs in an intermodal transport network that includes short sea shipping to explore the impact of external costs in its competitiveness. The network, which includes roads, freight railways, maritime and inland waterway connections, considers the specific characteristics of different transport alternatives and vehicle types, providing a fair comparison of the various modes. A case study focused on freight transportation between Northern Portugal and 75 destinations (NUTS2 regions) in north-western Europe is presented. The potential of different intermodal routes that include short sea shipping is assessed, including not only internal costs and times but also external costs per mode and unit of cargo. The impact of the different cost approaches in each country of transit is shown along with the progress that has been made in the integration of external costs, using the most recent EU estimates on marginal costs coverage ratios per country for freight transport modes. The results support the modal shift from road to sea in this corridor, providing means for modal comparison and for the development of short sea shipping’s image as a sustainable mode of transportation.

Comparison of External Costs of Diesel, LNG, and Electric Drive on a Ro-Ro Ferry Route

Following the sustainable transport policy, environmental criteria are becoming a competitive factor within the maritime shipping industry. The use of greener fuels in internal combustion engines, including electric drive, is a measure that can reduce external costs of transport. Alternative fuels in maritime transport, benefits, and potential attainable savings have been examined on the Kamenari–Lepatane ro-ro ferry route in the Bay of Kotor located in Montenegro. The results indicate higher total fuel cost savings by switching to LNG compared with electric power. However, the external costs of the latter are considerably lower, especially using renewable energy sources rather than fossil ones in the production process. The results obtained, relative to the magnitude and assumed complete internalization of external costs, justify the incentive to use the renewable sources as energy providers on the examined ro-ro ferry route. Environmental criteria should play a decisive role in assessing the overall benefit value, under the current trends and regulations of emissions reduction in maritime transport.

Modeling of Polish energy sector – tool specification and results

The focus of this study is to specify different visions of the Polish energy sector development. The first is a traditional model based on existing coal and lignite resources complemented more or less by alternative technologies (wind, biomass, PV and nuclear power). The second is deeper and faster decarbonization of the Polish energy sector. And third an alternative approach where the economic impact of air emissions is considered. Here, the optimization criterion is based on maximizing social welfare, defined as the sum of consumer and producer surplus less the negative externalities associated with energy production. The paper presents the methodology used to forecast the development of the Polish energy sector. Both the IED standards and RES limits for ‘baseline’, additional limit of CO2 in ‘CO2’ scenario and high external costs for an ‘effective’ scenario force substantial changes in the structure of energy production. The extensive use of solid fuels in system power plants should be reduced and replaced by RES sources and nuclear energy. It has been proven that, in the case of system power plants, IED standards and RES limits are as effective as potential internalization of external costs, but if the external costs of CO2 emissions are higher (€65/Mg for CO2). Post-combustion technologies are economically efficient, but the scale of these investments must be correlated with the expected path of decommissioning coal-based technologies. The model results confirm that, in an ‘effective’ scenario, old coal-fired small heating plants should be completely replaced by gas technologies, small-scale geothermal heat plants and PV farms. All of these measures could improve social welfare by 4% as compared to the ‘baseline’ scenario and 6% in case of ‘CO2’ scenario.

Life cycle greenhouse gas emission and cost analysis of prefabricated concrete building façade elements

AbstractBuildings are responsible for approximately 36% of carbon emissions in the European Union. Besides, gradual aging and a lack of adaptability and flexibility of buildings often lead to destructive interventions, resulting not only in higher costs but also in a large amount of construction and demolition waste (CDW). Recently, an innovative system (Ref. VEEP project) has been developed to recycle CDW for the manufacturing of energy‐efficient prefabricated concrete elements (PCE) for new building construction. By applying life cycle costing (LCC) and life cycle assessment (LCA), this study aimed to determine whether the use of VEEP PCE leads to lower carbon emission and lower associated costs over the life cycle of an exemplary four‐story residential building in the Netherlands than a business‐as‐usual (BAU) PCE scenario. This paper provides a case study on the alignment and/or integration of LCA and LCC in an independent and a combined manner (via monetization). This study examines how the internalization of carbon emission and discount rate will affect the final life cycle costs over a 40‐year life span. The simulation results show that the key to economic viability and environmental soundness of VEEP PCE is to reduce production cost and to optimize the thermal performance of the novel isolation material Aerogel; internalization of external cost monetarizes the environmental advantage thus slightly expands the cost advantage of low carbon options, but leads to larger uncertainty about the LCC result.

Discussion and Consideration on Key Issues of Coal Power Development in China

Coal power generation capacity has exceeded 1 billion kilowatts in China currently. As the ballast stone and stabilizer in the field of energy and power, coal power attracted more and more considerations today. A reasonable and scientific planning is important to power system security and efficiency, especially the coal power development path. The full-cycle coal power cost model used in the power expanding planning is proposed in this paper, in order to optimize the power capacity in the future. Based on this method, the peak capacity of coal power is evaluated firstly. Then the peak awareness and bottom line thinking principle are put forward based on the analysis above. Finally, the external cost internalization and flexibility transformation of coal power are discussed, which are the main issues in the coal power industry nowadays.

Optimal subsidies for rail containers: a bi-level programming solution

ABSTRACTHigh demand for containerized cargo and the low share of rail containers in China is causing heavy container truck traffic and pollution. Due to its social benefits, many provinces/municipalities provide subsidies for rail containers. These subsidies, aimed at reducing road traffic and emissions, may, however, have unexpected results if they are uncoordinated. Our objective is to illustrate the problem with uncoordinated subsidies and propose an optimal subsidy scheme. This study applies the minimum cost flow model to analyze three scenarios: no subsidy, the internalization of external costs, and uncoordinated subsidies. A bi-level programming model is developed to study the scenario of coordinated subsidies, where a hypothetical network planner minimizes the total subsidies for a given externality reduction target in the upper level and the cargo owners minimize total transportation cost in the lower level. A novel method is designed to transform the model into a simple four-step linear programming process. The model and solution method are then applied to containerized trade of Northeast Asia with Europe and that with northern Chinese inland cities. The coordinated subsidy scheme is found to use less in total subsidies, achieve better results than the uncoordinated one, and better total social welfare.