IDEAS home Printed from https://ideas.repec.org/p/ags/mttfdp/160728.html

Spatially explicit bio-economic modelling for the Baltic Sea: Do the benefits of nutrient abatement outweigh the costs?

Author

Listed:
  • Hyytiainen, Kari
  • Ahlvik, Lassi
  • Ahtiainen, Heini
  • Artell, Janne
  • Dahlbo, Kim
  • Huhtala, Anni

Abstract

This paper develops and applies a spatially explicit bioeconomic model to study trans-boundary nutrient pollution of the Baltic Sea. We combine catchment, marine and economic models covering the entire Baltic Sea region to weigh the costs of nutrient abatement and the benefits of improved water quality and solve for the socially optimal level of water protection. The overall benefits of the Baltic Sea Action Plan, the present convention on nutrient abatement, clearly outweigh the costs. Nevertheless, the total cost could be almost halved if the mix of measures and the regional targets were planned in a spatially cost-effective manner and if the consequent reductions of nitrogen and phosphorus, the two nutrients causing eutrophication, were better balanced. Policy optimizations, however, suggest that the socially optimal level of nutrient abatement is somewhat lower than the more ambitious level envisaged by the convention. The welfare gains from cost sharing that makes the socially optimal level of nutrient abatement worthwhile for all littoral countries would be 100 million euros annually.

Suggested Citation

  • Hyytiainen, Kari & Ahlvik, Lassi & Ahtiainen, Heini & Artell, Janne & Dahlbo, Kim & Huhtala, Anni, 2013. "Spatially explicit bio-economic modelling for the Baltic Sea: Do the benefits of nutrient abatement outweigh the costs?," Discussion Papers 160728, MTT Agrifood Research Finland.
    • Handle: RePEc:ags:mttfdp:160728
    DOI: 10.22004/ag.econ.160728
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/160728/files/DP2013_2.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.160728?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Chen, Yong & Jayaprakash, Ciriyam & Irwin, Elena, 2012. "Threshold management in a coupled economic–ecological system," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 442-455.
    2. Robert S. Pindyck, 2013. "Climate Change Policy: What Do the Models Tell Us?," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 860-872, September.
    3. Ing-Marie Gren & Paul Jannke & Katarina Elofsson, 1997. "Cost-Effective Nutrient Reductions to the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(4), pages 341-362, December.
    4. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    5. Daron Acemoglu & James A. Robinson, 2013. "Economics versus Politics: Pitfalls of Policy Advice," Journal of Economic Perspectives, American Economic Association, vol. 27(2), pages 173-192, Spring.
    6. Elofsson, Katarina, 2003. "Cost-effective reductions of stochastic agricultural loads to the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 13-31, November.
    7. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, January.
    8. Batabyal, Amitrajeet A. & Kahn, James R. & O'Neill, Robert V., 2003. "On the scarcity value of ecosystem services," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 334-352, September.
    9. Massey, D. Matthew & Newbold, Stephen C. & Gentner, Brad, 2006. "Valuing water quality changes using a bioeconomic model of a coastal recreational fishery," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 482-500, July.
    10. Lassi Ahlvik & Yulia Pavlova, 2013. "A Strategic Analysis of Eutrophication Abatement in the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(3), pages 353-378, November.
    11. Nordhaus, William D., 1993. "Rolling the 'DICE': an optimal transition path for controlling greenhouse gases," Resource and Energy Economics, Elsevier, vol. 15(1), pages 27-50, March.
    12. William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kari Hyytiäinen & Lassi Ahlvik & Heini Ahtiainen & Janne Artell & Anni Huhtala & Kim Dahlbo, 2015. "Policy Goals for Improved Water Quality in the Baltic Sea: When do the Benefits Outweigh the Costs?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(2), pages 217-241, June.
    2. Weyant John, 2014. "Integrated assessment of climate change: state of the literature," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 377-409, December.
    3. Simon Dietz & Nicholas Stern, 2014. "Endogenous growth, convexity of damages and climate risk: how Nordhaus� framework supports deep cuts in carbon emissions," GRI Working Papers 159, Grantham Research Institute on Climate Change and the Environment.
    4. Yingying Lu & David I. Stern, 2016. "Substitutability and the Cost of Climate Mitigation Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 81-107, May.
    5. Andrea Rampa, 2020. "Climate change, catastrophes and Dismal Theorem: a critical review [Klimawandel, Katastrophen und das „Dismal Theorem“: eine kritische Überprüfung]," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 40(2), pages 113-136, October.
    6. Siegmeier, Jan & Mattauch, Linus & Franks, Max & Klenert, David & Schultes, Anselm & Edenhofer, Ottmar, "undated". "A Public Finance Perspective on Climate Policy: Six Interactions That May Enhance Welfare," Climate Change and Sustainable Development 202119, Fondazione Eni Enrico Mattei (FEEM).
    7. Marshall Burke & Melanie Craxton & Charles D. Kolstad & Chikara Onda, 2016. "Some Research Challenges In The Economics Of Climate Change," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 1-14, May.
    8. Ahlvik, Lassi & Hyytiäinen, Kari, 2015. "Value of adaptation in water protection — Economic impacts of uncertain climate change in the Baltic Sea," Ecological Economics, Elsevier, vol. 116(C), pages 231-240.
    9. Ralph Hippe, 2015. "Why did the knowledge transition occur in the West and not in the East? ICT and the role of governments in Europe, East Asia and the Muslim world," GRI Working Papers 180, Grantham Research Institute on Climate Change and the Environment.
    10. van den Bergh, J.C.J.M. & Botzen, W.J.W., 2015. "Monetary valuation of the social cost of CO2 emissions: A critical survey," Ecological Economics, Elsevier, vol. 114(C), pages 33-46.
    11. Elofsson, Katarina, 2014. "International knowledge diffusion and its impact on the cost-effective clean-up of the Baltic Sea," Working Paper Series 2014:06, Swedish University of Agricultural Sciences, Department Economics.
    12. Blair Fix, 2019. "The Aggregation Problem: Implications for Ecological and Biophysical Economics," Biophysical Economics and Resource Quality, Springer, vol. 4(1), pages 1-15, March.
    13. Christoph Hambel & Holger Kraft & Eduardo Schwartz, 2015. "Optimal Carbon Abatement in a Stochastic Equilibrium Model with Climate Change," NBER Working Papers 21044, National Bureau of Economic Research, Inc.
    14. Jean Charles Hourcade & Michel Aglietta & Baptiste Perrissin-Fabert, 2014. "Transition to a Low-Carbon society and sustainable economic recovery, a monetary-based financial device," Post-Print hal-01692593, HAL.
    15. John Creedy & Hemant Passi, 2018. "Public Sector Discount Rates: A Comparison of Alternative Approaches," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(1), pages 139-157, March.
    16. Peter von zur Muehlen, 2022. "Prices and Taxes in a Ramsey Climate Policy Model under Heterogeneous Beliefs and Ambiguity," Economies, MDPI, vol. 10(10), pages 1-56, October.
    17. Traeger, Christian, 2021. "ACE - Analytic Climate Economy," CEPR Discussion Papers 15968, C.E.P.R. Discussion Papers.
    18. Koji Tokimatsu & Louis Dupuy & Nick Hanley, 2019. "Using Genuine Savings for Climate Policy Evaluation with an Integrated Assessment Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 281-307, January.
    19. Lintunen, Jussi & Vilmi, Lauri, 2013. "On optimal emission control : Taxes, substitution and business cycles," Research Discussion Papers 24/2013, Bank of Finland.
    20. George Economides & Anastasio Xepapadeas, 2019. "The effects of climate change on a small open economy," CESifo Working Paper Series 7582, CESifo.

    More about this item

    Keywords

    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:mttfdp:160728. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/mttlgfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.