Significant Positive Externalities Research Articles

Does it reasonable to include grid-side energy storage costs in transmission and distribution tariffs? Benefit evaluation based on economic externality

Grid-side energy storage has become a crucial part of contemporary power systems as a result of the rapid expansion of renewable energy sources and the rising demand for grid stability. This study aims to investigate the rationality of incorporating grid-side energy storage costs into transmission and distribution (T&D) tariffs, evaluating this approach using economic externality theory. We first develop a comprehensive benefit evaluation framework based on economic externality theory considering system stability, renewable energy integration, end-user, and environmental impacts. Then, using the CPLEX solver, an operating model of grid-side energy storage is constructed with the goal of reducing substation load variations. Through a case study, it is found that grid-side energy storage has significant positive externality benefits, validating the rationale for including grid-side energy storage costs in T&D tariffs. Sensitivity analysis suggests that with cost reduction and market development, the proportion of grid-side energy storage included in the T&D tariff should gradually recede. As a result, this study offers important information about whether it is reasonable to include grid-side energy storage costs in T&D tariffs in China.

Do Subnational Fiscal Rules Reduce Public Investment? The Case of Fiscal Responsibility Laws in India

This article examines whether the adoption of deficit targets by subnational governments in India influenced the composition of public spending. Using dynamic panel estimations, this study finds that the adoption of fiscal responsibility laws (FRLs) by Indian states is correlated with improvements in their budget balances, but the same period also witnessed significant cuts in development spending. Furthermore, the states have reduced their capital expenditure and social sector spending after adopting FRLs, while the increases in tax and nontax revenues are insignificant. The subnational governments in developing countries that are adopting numerical deficit and debt targets should explore mechanisms to minimize the distortionary impacts of fiscal targets on the composition of subnational spending since reduced expenditure on development and capital projects may be counterproductive for fiscal sustainability in the long run as these expenditures tend to have significant positive externalities.

Gendered Impact of Financial Inclusion on Climate Change Adaptation among Rural Rice Farmers in Nepal

The present paper examines the gendered impact of financial inclusion on climate change adaptation among rural rice farmers across seven Nepalese districts through an odds-ratio-based binary logistic regression analysis. Primarily the study indicates that the availability of loans makes female farmers 7.6 times (significant) more likely to adopt climate change adaptation, whereas, in the case of male farmers, access to loans does not have a significant impact; and access to phone plays a significant role (odd ratio of 1.9) in encouraging female farmers to undertake climate change adaptation. Thus, from a policy perspective, there is need to increase loan availability to rural Nepalese female rice farmers to facilitate climate change adaptation. Specific schemes targeting this section need to be formulated and implemented. Moreover, mobile phone-based innovative applications could be used as a potent tool by banks for achieving financial inclusion along with significant associated positive externalities for the environment.

A machine learning approach to water quality forecasts and sensor network expansion: Case study in the Wabash River Basin, United States

AbstractMidwestern cities require forecasts of surface nitrate loads to bring additional treatment processes online or activate alternative water supplies. Concurrently, networks of nitrate monitoring stations are being deployed in river basins, co‐locating water quality observations with established stream gauges. However, tools to evaluate the future value of expanded networks to improve water quality forecasts remains challenging. Here, we construct a synthetic data set of stream discharge and nitrate for the Wabash River Basin—one of the United States’ most nutrient polluted basins—using the established Agro‐IBIS and THMB models. Synthetic data enables rapid, unbiased and low‐cost assessment of potential sensor placements to support management objectives, such as near‐term forecasting. Using the synthetic data, we established baseline 1‐day forecasts for surface water nitrate at 12 cities in the basin using support vector machine regression (SVMR; RMSE 0.48–3.3 ppm). Next, we used the SVMRs to evaluate the improvement in forecast performance associated with deployment of additional nitrate sensors. We identified the optimal sensor placement to improve forecasts at each city, and the relative value of sensors at each candidate location. Finally, we assessed the co‐benefit realized by other cities when a sensor is deployed to optimize a forecast at one city, finding significant positive externalities in all cases. Ultimately, our study explores the potential for machine learning to make near‐term predictions and critically evaluate the improvement realized by expanding a monitoring network. While we use nitrate pollution in the Wabash River Basin as a case study, this approach could be readily applied to any problem where the future value of sensors and network design are being evaluated.

Does digital economy development promote innovation efficiency? A spatial econometric approach for Chinese regions

ABSTRACT In the context of the rapid development of the digital economy, it’s an important topic how to play the role of digital technology in improving innovation efficiency. Employing the spatial econometric model with province-level panel data during 2006–2018, the article explores the impact of the development of the digital economy on innovation efficiency in China. The analysis unveils three major findings. First, the innovation efficiency has significant positive spatial externalities and the digital economy has significantly positive direct effects and spatial spillover effects on innovation efficiency, but the above effects are heterogeneous for different regions and innovation subjects. Second, the impact of digital economy development on innovation efficiency has characteristics of a certain degree of lag effect and continuity. Third, the threshold effect analysis reveals the non-linear characteristic of the increasing marginal effect of the digital economy on innovation efficiency. Altogether, the development of the digital economy has become an important driving force for promoting China’s innovation efficiency. The findings of this paper provide empirical evidence for understanding the relationship between the digital economy development and innovation efficiency, giving significant implications for the innovative development of developing countries.

Optimizing the Compensation Standard of Cultivated Land Protection Based on Ecosystem Services in the Hangzhou Bay Area, China

The significant positive externality of cultivated land ecosystem services leads to the low comparative benefit of cultivated land utilization and then causes practical problems such as the abandonment and non-agriculturalization of the cultivated land, which poses a threat to China’s food security. The existing protection system only focuses on the quantity requirement and food production service of cultivated land and ignores the multi-function of cultivated land as an ecosystem, resulting in insufficient incentives and poor effect. Therefore, it is necessary to optimize the protection’s economic compensation standard by adding the cultivated land’s ecosystem service value in order to comprehensively assess cultivated land resources and correct for externalities. Taking the area around Hangzhou Bay, where the contradiction between cultivated land protection and economic development is prominent, as an example, the values of six typical cultivated land ecosystem services in 2016 was constructed and calculated, including food production, carbon sequestration and oxygen production, water conservation, soil conservation, biodiversity maintenance, and cultural leisure. Combined with ecosystem services’ values and the quality index, we finally determined the new county-level compensation standard of cultivated land protection in the Hangzhou Bay area. The results show that the value of cultivated land ecosystem services present obvious regional disparities, meaning that there exist significant differences in the sustainable use capacity of cultivated land and the necessity of establishing grading compensation standards in the region. Finally, we analyze the rationality and innovation of the new compensation standard model as well as its role in the protection of cultivated land and look forward to promoting the sustainable use of cultivated land through these new incentives.

Industrial Policy and Promising Niches in Morocco. A Quantitative Analysis

Since 2000, Morocco has launched important institutional and economic reforms based on strategies to correct market failures in important sectors of the economy. These strategies have included tax exemptions and other financial incentives, facilitating access to land and simplifying administrative procedures, and launching major public infrastructure projects, all of which have combined to create a new investment dynamic in strategic sectors such as agriculture, industry, and energy. These efforts have affected many sectors: the Azur Vision 2020 plan for tourism, the Green Morocco Plan for agriculture, the Halieutis 2020 Plan for fishing, Maroc Plus Export for export, the Emergence Plan (2005) for industry followed by the National Pact for Industrial Emergence, 2009-2015 and the new Industrial Acceleration Plan, 2014-2020. For example, to support the new Industrial Acceleration Plan, the government has provided a grant, a financial support of about 2% of GDP over 6 years. The government has also offered ad hoc support to attract foreign investors in large private projects likely to generate significant positive externalities. One example is the project to set up a Renault Company plant in Tangiers, which aims to produce and export 400,000 cars per year (World Bank, 2017).This note highlights the industrial sectors that can offer the best potential for growth, attract private investors and contribute to the creation of decent jobs. It will also identify ways to accelerate investment in Morocco. These industrial investments may include purely private investments or those made with the support of international financial institutions. The note analyzes investment and sectoral integration opportunities using the input model (outputs and employment elasticity indicators), the evaluation of the industrial acceleration plan, and sets out the measures taken by the CVE to promote VSEs. Only one classic sector is selected is highlighted for their investment potential and their commitment to reform in the sectors. It is the food industry.The note follows the diagram below:1) An introduction to the economic, political and social frameworks, including key indicators 2) A sector analysis to identify one to three sectors that are likely to be the subject of accelerated investment and in which reforms will have a particularly high chance of improving the business and investment climate and having an impact on development. 3) A mapping of the most relevant initiatives, technical assistance, grants and loans, and investments by donors and other stakeholders, such as development finance institutions. In the selected sector(s).4) An analysis of the existing reform agenda in the respective sector(s) and the identification of areas where there is a high likelihood of effective cooperation to support the implementation of these reforms.

Towards a Principled Approach for Bailouts of COVID-Distressed Critical/Systemic Firms

In this essay, we propose a principled approach for government bailouts of critical/systemic firms who find themselves in COVID-19-induced financial distress. We also demonstrate why bankruptcy is the wrong tool to address the problems of these types of firms. The current pandemic threatens lives and livelihoods across the world. A key difference compared to previous market shocks is that lockdowns and related measures have, in certain instances, made it impossible for businesses to conduct their operations. This has resulted in a very specific type of distress, one that bankruptcy is not in the best position to address effectively. If there are no revenues, the design of bankruptcy laws makes them an inadequate tool – and the sheer volume of companies going through the process may put severe stress on the system. The difficulties that the vast majority of companies are encountering may be better solved using different tools: bailouts, bail-ins or a combination thereof, deployed by the government in wide-ranging statutory schemes. However, these schemes may not adequately address the issues of all companies; and the preservation of some of them – those that we refer to as critical/systemic – may be of such significant value to society that more intense assistance from the government is justified. We engage with the characteristics of firms that should be considered critical/systemic and the principles that should guide ad hoc rescues of those companies by the government. Firms are critical/systemic if their failure imposes significant negative externalities on the economy (or, conversely, their preservation generates significant positive externalities) or if they provide the public with an “infrastructure” not otherwise provided by the private sector. If firms are critical/systemic, the government should have the ability to bail them out, going beyond applicable statutory schemes and ensuring that the relevant externalities are considered when deciding whether to keep these companies as going concerns. Bankruptcy is a private process. It is not designed to vindicate such public considerations. Government bailouts, however, should be governed by principles, as any government intervention in the economy, and its associated efficiency and distributional effects must be considered with care. The guiding principles that we propose and elaborate on are (i) proportionality, (ii) efficiency, (iii) equity and (iv) transparency. The application of these principles should ensure that, if the government takes ownership of a private firm through an ad hoc bailout, this is a tool of last resort, and not more than temporary – and that the pre-distress investors properly contribute to the necessary measures.

Adaptive Reuse of Religious Heritage and Its Impact on House Prices

Due to social demographic change and secularization, religious heritage sites in Europe are on the verge of losing their original functions. While the adaptive reuse seems to be a proactive strategy to preserve the historical and cultural value embedded in religious heritage sites, little is known concerning its external impact. This paper aims to fill this gap by investigating the external effect of reusing religious heritage on surrounding house prices. Employing both the parametric and non-parametric difference-in-differences hedonic model on a sample of 42 projects of reusing religious heritage and a rich dataset of housing transactions in the Netherlands, we find significant positive externality of reusing religious heritage on local house prices. The external effects are heterogeneous across differentiated project size and monumental status. Larger religious heritage reuse projects and those listed as national monuments exert greater influence on surrounding house prices.

The status of women and its influence on children’s well‐being: Do geography, religion and income matter? A comparative study

AbstractMotivationIn most families around the world, women are children’s primary caregivers. An improvement in women’s status, besides being vital in its own right, has significant positive externalities since the welfare of children has consequences for long‐term economic growth and development.Research questionCould enabling women to have greater opportunities to be productive members of society have a positive relationship with child welfare?Approach and methodsWe examine the relationship between women’s and children’s well‐being for a group of developing countries. We first study this in the context of the overall sample, and then in various country groupings, based on per capita income, geography and religion. A descriptive comparative study and a regression analysis are conducted.Findings and conclusionsWe find that women’s enhanced well‐being is strongly related to improved child welfare. Although there is a wide variation in women’s well‐being within and across various income, geographic and religious groups, our results are robust across and within all groups.In the regression analysis, the only variable that is consistently significant in influencing outcomes for children is our measure of women’s well‐being. We cannot reach a clear conclusion regarding the influence of geography, religion and even gross domestic product per capita on child outcomes.Policy implicationsIt seems imperative for women’s empowerment to be a part of every development agenda; a priority in itself, rather than something that should trickle down with overall development. An improvement in women’s status, besides being vital in its own right, has significant positive externalities since children’s welfare has consequences for long‐term economic growth and development. In our study, it is the single most important factor with a definite impact on children’s welfare.

Who is the winner in an industry of innovation?

This paper offers insight as to why the average profitability of firms in categories characterized by innovation is high and a rationale for empirical evidence that firms with basic products in innovative categories often exhibit higher profitability than the leading innovator. The analysis is built on the simple fact that not all consumers in a market are willing to pay more for an innovation when it is introduced. Our model reflects price competition between an innovating firm that chooses an optimal level of innovation and a competitor that offers a basic product. The price equilibrium establishes that the innovator confers a significant positive externality on its competitor by innovating. This increases the profitability of both firms. Findings from our model demonstrate that the profitability of the innovator is affected by the cost of innovation, the fraction of consumers who are willing to pay more for the innovation and changes in the cost of producing the improved product. The model identifies market conditions that lead the non-innovating competitor to benefit as much or more than the innovator who invests to develop the innovation. We believe that these dynamics are pivotal in explaining high overall profitability in categories characterized by innovation. The analysis also provides important prescriptions for the management of firms in innovative categories.

The Positive-Externality of Property Right and the Property Right-Regulation: Take the Grain Production-Regulation of Land Use as an Example

Property right also has positive-externality. The beneficial object of positive-externality of property right is society rather than property owner. The private income of individual economic efforts is separated from social income. The positive-externality of property rights is subject to the use of property rights, economic and social development, and the people’s cognitive ability and cognitive level, and has the characteristics of time difference and historical dynamics. The significant Positive-Externalities of property rights are consistent with the public policy objectives. In order to maximize the realization of the public policy objectives and ensure the scale of production mode with significant Positive-Externalities, the government takes Suppressive-Regulation over related property rights and limits the use of related assets to specific categories or scopes. In order to ensure the level of investment in the production mode of property rights with significant positive-externality, the government adopts Incentive-Regulation over relevant property rights and grants certain economic incentives to the specific use of relevant assets. The positive-externality of property rights not only provides the root of legitimacy for both suppressive property rights regulation and incentive property rights regulation. A single Suppressive-Regulation of property rights may not effectively guarantee the sustainable reproduction of production mode with significant Positive-Externalities, which requires the coordination of incentive property rights regulation. Incentive-Regulation does not necessarily have the effect of promoting the sustainable expansion and reproduction of production mode with significant Positive-Externalities. Legal incentive property right regulations with sufficient benefits can effectively correct the market failure of production mode with significant positive-externality and promote the sustainable extended reproduction of production mode with significant Positive-Externalities. Property right regulation is a public policy tool serving the public policy objectives, but whether the public policy objectives can be achieved depends on the accuracy of the property right regulations, that is, Whether the definition of the object of control as property right Suppressive-Regulation and property right Incentive-Regulation is accurate, whether the regulating intensity is sufficient, and whether the regulating measures conform to the principle of modern rule of law, Neither too abstract nor too concrete.

Human capital and energy consumption: Evidence from OECD countries

We examine the effect of human capital on energy consumption for a panel of OECD economies over the period 1965–2014. Our preferred results, which account for cross-sectional dependence and structural breaks, suggest that a one standard deviation increase in human capital reduces aggregate energy consumption by 15.36%. When we distinguish between clean and dirty energy consumption, we find that human capital generates significant positive externalities for the environment. Specifically, we find that a one standard deviation increase in human capital is associated with a 17.33% decrease in dirty energy consumption and an 85.54% increase in clean energy consumption. Our findings reinforce the social benefits of investing in human capital and suggest a promising avenue for energy conservation without impeding economic growth.

Estimated Human Capital Externalities in an Endogenous Growth Framework

To better understand the quantitative implications of human capital externalities at the aggregate level, we estimate a two-sector endogenous growth model with knowledge spill-overs. To achieve this, we account for trend growth in a model consistent fashion and employ a Markov-chain Monte-Carlo (MCMC) algorithm to estimate the model's posterior parameter distributions. Using U.S. quarterly data from 1964-2017, we find significant positive externalities to aggregate human capital. Our analysis further shows that eliminating this market failure leads to sizeable increases in education-time, endogenous growth and aggregate welfare.

Measuring progress towards transport sustainability through indicators: Analysis and metrics of the main indicator initiatives

Transport is widely considered as a sector with significant positive and negative externalities affecting society, environment and economy. The fact of incorporating the main principles of sustainable development into transport planning is of prime importance. However, moving towards transport sustainability is a challenging task; it requires a paradigm shift as well as the constant monitoring and intensive evaluation of the current conditions through broadly accepted methodological tools such as indicators. In this context, the scope of the current research is to provide a complete picture of the approaches which aim at measuring progress towards transport sustainability as well as facilitating the development of new initiatives by highlighting the major trends. Consequently, a considerable number (78) of sustainable transport indicator initiatives were selected through an extensive literature review. Accordingly, descriptive statistics was used regarding the main features of the examined initiatives, while an analysis focused on the 2644 included indicators was subsequently implemented. The current research illustrates the linkages among the sustainability pillars and the selected objectives/themes. It also points out the great variability regarding the hierarchical structure, categorizes the considerable number of themes found in the literature into smaller groups, presents the most commonly used themes and indicators, and finally proposes an alternative categorization of weighting schemes concerning indexes. An attempt has been made so that this study can become a meaningful operational tool for researchers aiming at promoting the relevant research by contributing to the selection of the most suitable yet compatible and scientifically valid methods for each case.

Bike Sharing and the Economy, the Environment, and Health-Related Externalities

In recent years, bike-sharing has experienced rapid development; however, controversies about the externalities of bike-sharing programs have arisen as well. While bike-sharing programs have impacts on traffic, the environment, and public health, the social impacts, the management, and sustainable development of bike-sharing has also been of interest. The debate regards whether there are externalities, as well as whether and how such externalities can be determined. Based on the rapidly diffused bike-sharing in China, this paper quantitatively explores bike-sharing externalities. Specifically, this paper estimates the impacts of bike-sharing on the economy, energy use, the environment, and public health. The empirical results show that bike-sharing programs have significant positive externalities. The bike-sharing systems can provide urban residents with a convenient and time-saving travel mode. We find that the bike-sharing dramatically decreases traffic, reduces energy consumption, decreasing harmful gas emissions, improves public health generally, and promotes economic growth. This study contributes to a better comprehension of the externalities of bike-sharing and provides empirical evidence of the impacts of bike-sharing. Findings suggest that bike-sharing can play a critical role in the process of urban transportation development and provide information useful for urban transportation policies.

Recent trends in the productivity of the Italian trawl fishery: The importance of the socio-economic context and overexploitation

The aim of this paper is to highlight the productivity of Italian trawl fishery, one of the most important sector in the Italian fishing fleet. As shown in this study, three variables play a significant effect on Total Factor Productivity (TFP) in a given year: the actual number of fishing days, the average market prices of commercial species and the stock of physical capital. While the number of fishing days can have a negative impact on the TFP, a positive correlation occurs instead with the other two variables. It is also possible to observe a high variability in TFP among different regions of Italy, a finding that is to be expected given the dual nature of the Italian economy, characterized by a high level of discrepancy in prosperity between the North and the South. This lends support to the hypothesis that significant positive externalities may occur in a more dynamic business environment, one which is both open to innovation and increased international and social relations.

Choques externos y remesas internacionales en las regiones de Colombia

This paper assesses the effect of external shocks on household income from a regional perspective. External shocks are measured interacting economic growth in migrant-recipient countries and region-specific migration flows. Effects are estimated using difference-in-difference models in a sample of household surveys from 2007 to 2015. Results show that positive growth periods in migrant-recipient countries have positive effects on income in high-migration regions, which is largely explained by increasing remittances. Most gains come from labour income in households without remittances, which indicates that remittances generate significant positive externalities. Effects on health coverage, school attendance, and child labour tend to be smaller and vary by country.

Technological innovation and dispersion: Environmental benefits and the adoption of improved biomass cookstoves in Tigrai, northern Ethiopia

This paper empirically analyzes adoption and fuel savings efficiency of improved biomass cookstove technology using survey data from a cross-section of 200 farm households from the highlands of Tigrai, northern Ethiopia. Results indicate that these farm households are willing to adopt improved biomass cookstove innovations if this leads to economic savings. Moreover, results suggest significant positive environmental externalities. On a per household basis, we found that adopters collect about 70kg less wood and about 20kg less dung each month. The adoption of improved biomass cookstoves reduces harvest pressure on local forest stands: assuming an average of 120metric tons of biomass per ha, we find the potential reduction in deforestation amounts to some 1400ha per year – an important saving. Further, the reduced use of dung as a fuel has a positive impact on soil productivity in agriculture.

Towards sustainable sanitation management: Establishing the costs and willingness to pay for emptying and transporting sludge in rural districts with high rates of access to latrines.

MotivationProper management of fecal sludge has significant positive health and environmental externalities. Most research on managing onsite sanitation so far either simulates the costs of, or the welfare effects from, managing sludge in situ in pit latrines. Thus, designing management strategies for onsite rural sanitation is challenging, because the actual costs of transporting sludge for treatment, and sources for financing these transport costs, are not well understood.MethodsIn this paper we calculate the actual cost of sludge management from onsite latrines, and identify the contributions that latrine owners are willing to make to finance the costs. A spreadsheet-based model is used to identify a cost-effective transport option, and to calculate the cost per household. Then a double-bound contingent valuation method is used to elicit from pit-latrine owners their willingness-to-pay to have sludge transported away. This methodology is employed for the case of a rural subdistrict in Bangladesh called Bhaluka, a unit of administration at which sludge management services are being piloted by the Government of Bangladesh.ResultsThe typical sludge accumulation rate in Bhaluka is calculated at 0.11 liters/person/day and a typical latrine will need to be emptied approximately once every 3 to 4 years. The costs of emptying and transport are high; approximately USD 13 per emptying event (circa 14% of average monthly income); household contributions could cover around 47% of this cost. However, if costs were spread over time, the service would cost USD 4 per year per household, or USD 0.31 per month per household—comparable to current expenditures of rural households on telecommunications.ConclusionThis is one of few research papers that brings the costs of waste management together with financing of that cost, to provide evidence for an implementable solution. This framework can be used to identify cost effective sludge management options and private contributions towards that cost in other (context-specific) administrative areas where onsite sanitation is widespread.