Conference Agenda

We investigate the impact of an environmental award in a Betrand duopoly with green consumers considering a three stage game. First, the regulator designs the environmental contest. Second, firms choose their green investments and the contest winner is awarded. Third, firms compete in prices and consumption takes place. We illustrate that the award not only incentivizes green investments and thus reduces the environmental externalities. As consumers perceive the product of the awarded firm to be of superior quality, it also gives rise to vertical product differentiation. This induces market power and thus anticompetitive effects: rents shift from consumers to producers and consumer surplus may decrease.

This paper examines firms' incentives to simultaneously invest in cost-reducing and in green R&D (abatement). We show that firms only invest in cost-reducing R&D when both forms of investment do not exhibit economies of scope between them, but invest in both forms of R&D otherwise. This finding holds with and without regulation, and under monopoly and oligopoly markets. Our results identify that assuming firms invest in only one form of R&D, a traditional approach in the literature, gives rise to polluting firms facing emission fees that are too lax ("undertaxation"); a problem that is emphasized (ameliorated) if R&D investments exhibit economies (diseconomies) of scope. Finally, we show that models ignoring that firms potentially invest in multiple R&D's tend to underestimate firms' investment decisions, particularly when pollution is severe, the market is competitive, and economies of scope are large, potentially exacerbating undertaxation.

UK food production and consumption contribute for environmental degradation both domestically and overseas. Mitigation can be sought with recirculating aquaculture systems (RAS), a high-productivity technology recycling its own water, and with direct payments for afforestation. The cost-effectiveness of these two routes, as well as synergies and conflicts between them, are here assessed. For this, a computational model was built, extending positive mathematical programming with discrete optimization. We take advantage of unprecedented data from a transdisciplinary British project of RAS research and development, as well as from a wide range of financial and spatially-explicit information. Results revealed that RAS feasibility was restricted to 23% of Great Britain’s territory, where land quality is low. It increased to 27% with electricity coming from anaerobic digesters. A direct payment, if topped-up by environmental benefit rewards, was effective to foster woodland creation across the whole Great Britain, but diminished RAS feasibility by competing with it for farm resources. Despite this conflict, RAS diffusion and afforestation subsidisation, when conducted together rather than separated, achieved the best balance between maintaining food production and creating woodland. Conclusively, coupling intensified, water-recycling, aquaculture, with woodland subsidies, is a cost-effective way to promote conservation in the UK without exporting environmental degradation to developing countries.

We have developed a theoretical model to help simplify farmers' decisions regarding the adoption of organic agriculture. In our model, farmers make a choice to allocate their land between conventional agriculture and organic agriculture, under incomplete information about their payoff functions. In fact, there are two organic states: the good state that farmers can allocate the majority of land to organic agriculture; the low state that farmers need allocation a very amount of land to organic agriculture. We assume that farmers know each state’s probability. The model suggests that providing farmers with information is an essential tool to help them overcome their fears and promote the adoption of organic agriculture. However, our model focuses on the role of "informal leaders" who have access to information before other farmers. We suggest that these informal leaders can act as focal points to disseminate information across networks.

The paper addresses several issues for decarbonization of hard-to-abate industrial sectors: the need for experimentation to deploy disruptive technologies, the potential long-term benefits associated with demonstrator (pilot) plants, and the difficulties for designing relevant public policies. We show how a cost-benefit analysis at the sector level provides clues to solve these issues. We integrate knowledge spillovers from the pilot all through the industry, as well as the technical change from value-added cost components in adjacent activities. Altogether, such analysis gives the optimal trajectory for decarbonizing the sector. It also delivers the relevant abatement cost for the pilot, a key indicator of public policy. Applied to the large-scale high-quality container glass sector in France, we obtain an abatement cost of around 200€/tCO2 for the pilot deploying a decarbonized hybrid technology, while the standard analysis neglecting spillover would deliver an abatement cost higher than 400€/tCO2. We show that subsidizing the pilot associated with a commitment to transfer knowledge to follower plants is sufficient to decentralize the social optimum if an emissions tax internalizing the environmental cost is implemented. We believe that this approach could be applied in other hard-to-abate sectors to trigger an early deployment of disruptive innovations and facilitate designing of relevant public policies.

Renewable hydrogen (H2) and hydrogen-based fuels (e-fuels) could drive the energy transition across a wide range of sectors. The sequencing of hydrogen deployment among various demand sectors should be guided by a "merit-order" framework. In this paper, a methodology to construct a merit-order of hydrogen end-uses is proposed, highlighting trade-offs based on various criteria such as constraint on hydrogen supply, the social cost of carbon, the levelized cost of hydrogen, the availability of competing low-carbon technologies, the learning curves of technology, the energy efficiency and emission intensity factors. Notably, the merit order can reverse with social cost of carbon (SCC): low SCC drives H2 use in cost-effective sectors, while high SCC shifts it to emission-intensive sectors. Additionally, the gap between production costs and usage costs of H2 could justify its use in sectors with lower willingness to pay (WtP). Through the calibration of the model, it is shown that sectors without alternatives to hydrogen, such as chemicals, occupy the top positions in the merit order. The gap between optimal and actual allocation is highlighted, and policy implications in terms of support mechanisms are derived.

Around 1.3 billion tonnes of food waste are produced in the world, which are mainly disposed in landfills and incinerators, and are a significant source of greenhouse gas (GHG) emissions. While feeding animals with food waste may decrease such emissions, potential "rebound effect" remain unexplored. We used an integrated environmental-economic modelling framework to assess the impacts of upcycling food waste in China’s monogastric livestock production in a global context. We found that upcycling 54-100% of food waste as feed increased monogastric livestock production (25-37%) and average wage across the Chinese economy (0.18-0.22%), with negative indirect effects such as increased total agricultural land use (0.5-0.6%) and economy-wide emissions of acidification (3-6%) and eutrophication (0.5-0.8%) pollutants in China. Synergy effects from less food waste in landfills and incinerators, along with the contraction in non-food production, decreased Chinese economy-wide GHG emissions (0.5-0.9%). While feeding food waste strategies enhanced food availability (6-12 kcal capita-1 day-1) and affordability (0.38-0.49%) in China, it slightly reduced food availability (0.5-1.0 kcal capita-1 day-1) and increased affordability (0.18-0.22%) in its trading partners. Our results highlight the asymmetric impacts of feeding China’s monogastric livestock with food waste on food security and environment sustainability, urging complementary measures and policies to mitigate negative spillovers when promoting more circular food systems.