Cost effectiveness of a combination of instruments for global warming: a quantitative approach for Spain

Climate change is an important environmental problem and one whose economic implications are many and varied. This paper starts with the presumption that mitigation of greenhouse gases is a necessary policy that has to be designed in a cost effective way. It is well known that market instruments are the best option for cost effectiveness. But the discussion regarding which of the various market instruments should be used, how they may interact and what combinations of policies should be implemented is still open and very lively. In this paper we propose a combination of instruments: the marketable emission permits already in place in Europe for major economic sectors and a CO(2) tax for economic sectors not included in the emissions permit scheme. The study uses an applied general equilibrium model for the Spanish economy to compute the results obtained with the new mix of instruments proposed. As the combination of the market for emission permits and the CO(2) tax admits different possibilities that depend on how the mitigation is distributed among the economic sectors, we concentrate on four possibilities: cost-effective, equalitarian, proportional to emissions, and proportional to output distributions. Other alternatives to the CO(2) tax are also analysed (tax on energy, on oil and on electricity). Our findings suggest that careful, well designed policies are needed as any deviation imposes significant additional costs that increase more than proportionally to the level of emissions reduction targeted by the EU.

Households WTP for the Reliability of Gas Supply

26 p.

Understanding Density in an Uneven City, Santiago de Chile: Implications for Social and Environmental Sustainability

Efforts to promote infill development and to raise densities are growing in many cities around the world as a way to encourage urban sustainability. However, in cities polarized along socio-economic lines, the benefits of densification are not so evident. The aim of this paper is to discuss some of the contradictions of densification in Santiago de Chile, a city characterized by socio-spatial disparities. To that end, we first use regression analysis to explain differences in density rates within the city. The regression analysis shows that dwelling density depends on the distance from the city center, socioeconomic conditions, and the availability of urban attributes in the area. After understanding the density profile, we discuss the implications for travel and the distribution of social infrastructures and the environmental services provided by green areas. While, at the metropolitan scale, densification may favor a more sustainable travel pattern, it should be achieved by balancing density rates and addressing spatial differences in the provision of social services and environmental amenities. We believe a metropolitan approach is essential to correct these spatial imbalances and to promote a more sustainable and socially cohesive growth pattern.