Conference Agenda

Climate change impacts human well-being not only through damages to market goods but also by affecting non-market goods such as environmental amenities. Previous analyses account for how climate change affects environmental goods as a direct source of well-being, but typically assume a homogeneous aggregate environmental good. This assumption neglects how heterogeneity within a stylized composite environmental good may drive environmental scarcity and its effect on climate policy evaluation. Here, we study how the dynamics of heterogeneous environmental goods impact relative price changes between market and non-market goods and the social cost of carbon (SCC) in a variant of Nordhaus' integrated assessment model DICE. We examine how relative price changes and climate policy outcomes critically depend on (i) the calibration strategy for climate damages on environmental goods, (ii) the management regime ranging from optimal policy to heterogeneous management and business as usual, and (iii) assumptions on the substitutability between market and non-market environmental goods as well as across environmental goods. We find that while limited substitutability between market and non-market goods remains a key driver of relative price changes and the SCC, limited substitutability across heterogeneous environmental goods has only a minor yet non-negligible effect on the SCC, the extent and direction of which varies along management regimes.

Carbon payments have been proposed as a means of incentivizing forest management that jointly optimizes timber production and carbon storage benefits. We analyze the impacts of forest payment schemes on forest biodiversity using a detailed forest sector model describing Finland’s forest resources, timber markets, and forest and energy industries. In the model, forest-owners’ heterogenous valuations of forest amenities affect their harvesting behavior and willingness to join a carbon payment scheme. We measure forest biodiversity using an ecosystem condition index based on habitat-specific structural components. Our results indicate that forest carbon payments have a small to moderate positive effect on forest ecosystem condition. The improvements in ecosystem condition result from longer rotations and greater volumes of broadleaved trees and dead wood, and are weaker on low productivity sites. Under a partial-coverage carbon payment scheme, impacts on ecosystem condition vary according to forest-owner type but are positive in aggregate. According to a sensitivity analysis, carbon payments enable the improvement of ecosystem condition even under relatively high product demand. Our results suggest that forest carbon payments are likely to have biodiversity co-benefits in boreal conditions, but halting biodiversity loss will require additional, biodiversity-targeted policies.

Land use alternations and climate change are shifting natural fire regimes, leading to prolonged and intensified fire seasons accompanied by widespread air pollution, with potentially important consequences for local wildlife. Combining data from the North American Breeding Bird Survey with high-resolution satellite imagery, we estimate the impact of wildfire-specific smoke pollution (PM2.5) on avian biodiversity in the contiguous United States (US) from 2008 to 2022. The panel fixed effects instrumental variable estimation results indicate a short-term adverse effect of PM2.5 on taxonomic and phylogenetic diversity metrics. More specifically, a standard deviation (sd) increase in wildfire-specific PM2.5 pollution reduces species richness, abundance, and phylogenetic diversity by about 0.1 sd, largely driven by observations in the Western US. For the most polluted transects the effect is up to 2-3 standard deviations. Importantly, the adverse effects on biodiversity metrics vary markedly across ecosystems. While the decrease in phylogenetic diversity is most pronounced in the Northwestern Forested Mountains, for the taxonomic metrics it is the Eastern Temperate Forests, the Northern Forests, and the North American Deserts which are driving the adverse effect of wildfire smoke. These findings underscore the need for targeted fire management and conservation strategies to mitigate biodiversity loss, especially in the face of increasing wildfire intensity and smoke exposure projected for many regions worldwide.

Despite the urgent need to preserve natural capital, little is known about the direct

benefits people receive from it. Reliable benefit estimates are required to incorporate

the complex values of natural capital in national capital accounting, cost-benefit anal-

yses, project appraisal, and international policy agreements. The study employs a

spatial-explicit choice experiment approach, which estimates benefits people receive

from changes in natural capital conditional on the current endowment in their places of

residence. Studying changes in protected areas and high nature value farmland across

Germany, we identify significant use and non-use values of natural capital stocks. We

find that the marginal values of natural capital are conditional on the spatial endow-

ment and on whether the type of natural capital is use or non-use related. The results

are easily transferable to other regions and contexts and allow trading off the benefits

and costs of restoring natural capital and biodiversity. Our findings enrich the discus-

sion on the loss of natural capital and biodiversity and can significantly contribute to

broader policy discussions in the context of the interlinked climate and biodiversity

crises.