Increasing the cost-effectiveness of nutrient reduction targets using different spatial scales.

In this paper, we investigate the potential gains in cost-effectiveness from changing the spatial scale at which nutrient reduction targets are set for the Baltic Sea, with particular focus on nutrient loadings from agriculture. The costs of achieving loading reductions are compared across five levels of spatial scale, namely the entire Baltic Sea; the marine basin level; the country level; the watershed level; and the grid square level. A novel highly-disaggregated model, which represents decreases in agricultural profits, changes in root zone N concentrations and transport to the Baltic Sea is used. The model includes 14 Baltic Sea marine basins, 14 countries, 117 watersheds and 19,023 10-by-10 km grid squares. The main result which emerges is that there is a large variation in the total cost of the program depending on the spatial scale of targeting: for example, for a 40% reduction in loads, the costs of a Baltic Sea-wide target is nearly three times lower than targets set at the smallest level of spatial scale (grid square). These results have important implications for both domestic and international policy design for achieving water quality improvements where non-point pollution is a key stressor of water quality.

Economic and environmental effects of unilateral climate actions.

Unilateral climate policy can be detrimental to global climate protection. Our objective is to provide insight into such a policy, to quantify the risk of carbon leakage, and to investigate the effects related to potential anti-leakage measures. We analyze existing definitions of carbon leakage and propose an alternative, rigorous one, which is different in three respects. The definition is then tested using computable general equilibrium analysis of the global economy and decomposition analysis. We identify a list of parameters that affect not only the magnitude but also the sign of the carbon leakage rate. Manipulating elasticities of substitution suggests that carbon leakage can be either positive or negative. Computable general equilibrium models, which are widely applied, including by the European Commission in this area, should be transparent, and their assumptions call for careful validation. We find that emission limits are properly distributed between sectors covered by the European Union Emissions Trading System and other sectors for the first commitment period (ended in 2012) but not for the second one (ending in 2020), where the target for the non-trading sectors should be reduced relative to the target for the trading sectors in order to equlize marginal abatement costs.

Valuing the commons: An international study on the recreational benefits of the Baltic Sea.

The Baltic Sea provides benefits to all of the nine nations along its coastline, with some 85 million people living within the catchment area. Achieving improvements in water quality requires international cooperation. The likelihood of effective cooperation is known to depend on the distribution across countries of the benefits and costs of actions needed to improve water quality. In this paper, we estimate the benefits associated with recreational use of the Baltic Sea in current environmental conditions using a travel cost approach, based on data from a large, standardized survey of households in each of the 9 Baltic Sea states. Both the probability of engaging in recreation (participation) and the number of visits people make are modeled. A large variation in the number of trips and the extent of participation is found, along with large differences in current annual economic benefits from Baltic Sea recreation. The total annual recreation benefits are close to 15 billion EUR. Under a water quality improvement scenario, the proportional increases in benefits range from 7 to 18% of the current annual benefits across countries. Depending on how the costs of actions are distributed, this could imply difficulties in achieving more international cooperation to achieve such improvements.

Reduction of Baltic Sea nutrient inputs and allocation of abatement costs within the Baltic Sea catchment.

The Baltic Sea Action Plan (BSAP) requires tools to simulate effects and costs of various nutrient abatement strategies. Hierarchically connected databases and models of the entire catchment have been created to allow decision makers to view scenarios via the decision support system NEST. Increased intensity in agriculture in transient countries would result in increased nutrient loads to the Baltic Sea, particularly from Poland, the Baltic States, and Russia. Nutrient retentions are high, which means that the nutrient reduction goals of 135 000 tons N and 15 000 tons P, as formulated in the BSAP from 2007, correspond to a reduction in nutrient loadings to watersheds by 675 000 tons N and 158 000 tons P. A cost-minimization model was used to allocate nutrient reductions to measures and countries where the costs for reducing loads are low. The minimum annual cost to meet BSAP basin targets is estimated to 4.7 billion Euro.