Environmental Valuation & Cost-Benefit News

Rural electrification can have many benefits-not only bringing lighting, but improving the quality of health care, spreading information and supporting productive enterprises. The extent of these benefits has been questioned, arguing that they may be insufficient to justify the investment costs. This book quantifies these benefits. It finds that the benefits can indeed be high, substantially outweighing the costs, and that consumer willingness to pay is generally sufficient to achieve financial sustainability. However, benefits could be increased further by providing smart subsidies to assist connections for poorer households, promote productive uses and further consumer education.

by The World Bank www.WorldBank.org
Published March 2008
Price: $ 25.00; English, 173 pages
ISBN: 0-8213-7367-5; ISBN-13: 978-0-8213-7367-5;
http://publications.worldbank.org/ecommerce/catalog/product?item_id=8002955

Abstract: Benefit–cost analysis is used extensively in the evaluation of social programs. Often, the success or failure of these programs is judged on the basis of whether the calculated net benefits to society are positive or negative. Almost all existing benefit–cost studies of social programs count entire increases in income accruing to participants in a social program as net benefits to society. However, economic theory implies that the conceptually appropriate measure of the impact of a government program on any group of individuals is the net change in their surplus (or economic rent), rather than the net change in their income. For example, if a social program causes increases in income by increasing work hours, then the lost nonmarket time that accompanies these increases has value that needs to be counted as a cost when assessing the merits of that program. In this paper, David H. Greenberg and Philip K. Robins develop a methodology for incorporating lost nonmarket time into benefit–cost analyses of social programs. They apply our methodology to the Self-Sufficiency Project (SSP), an experimental welfare-to-work program tested on a pilot basis in two provinces in Canada during the 1990s. Greenberg and Robins find that if losses in nonmarket time are ignored, SSP yields a substantial positive net benefit to society. However, if losses in nonmarket time are taken into account, the net societal benefits are greatly reduced, even becoming negative in certain instances. The authors conclude that future benefit–cost analyses of social programs must take effects on nonmarket time into account in order to give a more accurate picture of the net benefits of the program.

Keywords: Program evaluation; Benefit–cost analysis; Financial incentive programs; Labor supply analysis

by David H. Greenberg 1 and Philip K. Robins 2
1. University of Maryland, Baltimore County, 1000 Hilltop Circle, Baltimore, MD, 21045, United States; Tel.: +1 410 884 9620; fax: +1 410 455 1054
2. University of Miami, Department of Economics, P.O. Box 248126, Coral Gables, FL 33124, United States; Tel.: +1 305 284 5664; fax: +1 305 284 2985

Journal of Public Economics via Elsevier Science Direct www.ScienceDirect.com
Volume 92, Issues 3-4; April, 2008; Pages 766-794
http://dx.doi.org/10.1016/j.jpubeco.2007.09.011

Abstract: Research on climate change has intensified on a global scale as evidence on the costs of global warming continues to accumulate. Confronted with such evidence, the European Union set in late 2006 an ambitious target to reduce its greenhouse gas emissions, by 2020, to 20% below the level of 1990; and invited the rest of the developed economies and the developing world to take part with the Kyoto Protocol. Turkey is the only country that appears in the Annex-I list of the United Nations’ Rio Summit and yet an official target for CO2 emission reductions has still not been established. Thus, as part of its accession negotiations with the EU, Turkey will likely to face significant pressures to introduce its national plan on climate change along with specific emission targets and the associated abatement policies.

Given this motivation, Çağatay Telli, Ebru Voyvoda, and Erinç Yeldan utilize a computable general equilibrium model for Turkey to study the economic impacts of the intended policy scenarios of compliance with the Kyoto Protocol and they report on the general equilibrium effects of various possible environmental abatement policies in Turkey over the period 2006–2020. The model is in the Walrasian tradition with 10 production sectors and a government operating within an open macroeconomy environment. It accommodates flexible production functions, imperfect substitution in trade and open unemployment. We focus on CO2 emissions and distinguish various basic sources of gaseous pollution in the model. Their results suggest that the burden of imposing emission control targets and the implied abatement costs could be quite high, and that there is a need to finance the expanded abatement investments from scarce domestic resources. Policies for environmental abatement via carbon and/or increased energy taxes further suffer from very adverse employment effects. This suggests that a first-best policy would necessarily call for a simultaneous reduction on the existing tax burden on producers elsewhere together with introduction of environmental taxes.

Keywords: Environmental policy; General equilibrium; Climate change; Global warming

by Çağatay Telli 1, Ebru Voyvoda 2, and Erinç Yeldan 3 and 4
1. State Planning Organization, Turkey; Tel.: +90 312 210 2056
2. Department of Economics, Middle East Technical University, Turkey
3. Bilkent University, Turkey
4. University of Massachusetts, Amherst, United States

Journal of Policy Modeling via Elsevier Science Direct www.ScienceDirect.com
Volume 30, Issue 2; March-April, 2008; Pages 321-340
http://dx.doi.org/10.1016/j.jpolmod.2007.03.001