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Cost-effective management of a eutrophicated sea in the presence of uncertain technological development and climate change

Gren, Ing-Marie and Lindqvist, Martin (2014). Cost-effective management of a eutrophicated sea in the presence of uncertain technological development and climate change. Uppsala: (NL, NJ) > Dept. of Economics, Sveriges lantbruksuniversitet. Working paper series / Swedish University of Agricultural Sciences, Department of Economics ; 2014:01
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Abstract

We analyse effects of uncertain climate change and technological development on cost-effective abatement of nitrogen and phosphorus for a eutrophied sea. A dynamic model is developed which accounts for differences in the sea’s adjustment to the loads of the two nutrients, uncertainty in climate change effects with probabilistic constraints on nutrient pool targets, and uncertain technological development in a mean-variance framework. The analytical results show that introduction of uncertainty increases abatement costs but that the effect on marginal abatement cost differ for the two types of uncertainty. Marginal abatement cost is increased by technological uncertainty but decreased by the reduction in the risk discount of climate change uncertainties. It is also shown that abatement along the optimal time path is delayed by the introduction of technological uncertainty, but made earlier when considering climate change uncertainty. An application to the eutrophied Baltic Sea indicates that climate change and technological development can reduce total abatement cost by 1/3, but also increase it considerably when uncertainty is included.

Authors/Creators:Gren, Ing-Marie and Lindqvist, Martin
Title:Cost-effective management of a eutrophicated sea in the presence of uncertain technological development and climate change
Series/Journal:Working paper series / Swedish University of Agricultural Sciences, Department of Economics (1401-4068)
Year of publishing :2014
Number:2014:01
Number of Pages:32
Place of Publication:Uppsala
Publisher:Department of Economics, Swedish University of Agricultural Sciences
ISSN:1401-4068
Language:English
Publication Type:Report
Full Text Status:Public
Agris subject categories.:E Economics, development, and rural sociology > E11 Land economics and policies
P Natural resources > P10 Water resources and management
Subjects:(A) Swedish standard research categories 2011 > 5 Social Sciences > 502 Economics and Business > Economics
Agrovoc terms:cost analysis, effciency, climatic change, nutrients, baltic sea, eutrophication
Keywords:Cost-effectiveness, Eutrophication, Climate change, Technological development, Uncertainty, Baltic Sea
URN:NBN:urn:nbn:se:slu:epsilon-e-1760
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-e-1760
ID Code:10981
Faculty:NL - Faculty of Natural Resources and Agricultural Sciences (until 2013)
Department:(NL, NJ) > Dept. of Economics
Deposited By: Ing-Marie Gren
Deposited On:20 Jan 2014 13:45
Metadata Last Modified:02 Dec 2014 11:04

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