Is the environment a luxury? An empirical investigation using revealed preferences and household production

Martini, Chiara; Tiezzi, Silvia

doi:10.1016/j.reseneeco.2013.11.014

Cited by 24 publications

(19 citation statements)

References 42 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…As Pearce (2003) points out, with some exceptions the income elasticity of WTP for environmental quality is less than 1. Similar conclusions are drawn also from Jacobsen and Hanley (2009), while Martini and Tiezzi (2014) estimated income elasticities between 1.165 and 1.345, suggesting that as societies get richer they tend to value environmental quality more highly.…”

Section: Income Growthsupporting

confidence: 76%

Embedding Preference Uncertainty for Environmental Amenities in Climate Change Economic Assessments: A “Random” Step Forward

et al. 2019

View full text Add to dashboard Cite

While there is a considerable debate regarding the choice of proper discount rates for assessing climate change projects and policies, only a tiny body of literature emphasizes “what to discount”. Usually, climate change economic assessments rely on tools and methods that employ strong simplifications, assuming, among others, given and fixed preferences about the values of man-made and environmental goods. Aiming to fill a gap in the literature, this paper leaves aside the issue of discounting and focuses on the nature and impact of preference uncertainty on the economic estimates of future climate change damages on ecosystem non-market goods and services. To this end, a general random walk-based stochastic model is proposed, combining a number of parameters, e.g., the growth of income, depletion of environmental assets, the elasticity of income and demand, and the change in preferences towards the environment. The illustrative application of the model shows that the value of environmental losses is significantly affected by the change in preferences. By doing so, the model allows the analyst to visualize future paths of preference evolutions and to bring future values of damaged environmental assets realistically to the fore. If these elements are neglected when estimating climate change-related future damages to environmental goods and services, the results may be too narrow from a policy perspective.

show abstract

Section: Income Growthsupporting

confidence: 76%

Embedding Preference Uncertainty for Environmental Amenities in Climate Change Economic Assessments: A “Random” Step Forward

et al. 2019

View full text Add to dashboard Cite

show abstract

“…There is still a direct relationship between ξ and θ in this case (see Appendix A.1 for a derivation), yet this does not directly yield an estimate of the elasticity of substi-4 While choice experiments may constitute a suitable approach for estimating the elasticity of substitution, studies have so far not been designed for such purposes. The same is the case for revealed preference studies, with the exception of Martini and Tiezzi (2014), which we address below. Further indicative evidence might be derived from the WTA/WTP disparity (Hanemann 1991).…”

mentioning

confidence: 78%

“…For the smallest empirical estimate of the substitutability parameter (derived from Barton 2002), the relative price eect is only 0.35 percentage-points initially and rises to 0.52 percentage-points in 300 years. However, for the value derived from the revealed preference study on air quality improvement in Italy (Martini and Tiezzi 2014), the relative price eect is 2.89 percentage-points initially and rises up to 3.08 (4.31) percentage-points in 150 (300) years.…”

Section: Empirical Analysismentioning

confidence: 96%

Limits to Substitution between Ecosystem Services and Manufactured Goods and Implications for Social Discounting

Drupp

2015

SSRN Journal

View full text Add to dashboard Cite

This paper examines implications of limits to substitution for estimating substitutability between ecosystem services and manufactured goods and for social discounting. Based on a model that accounts for a subsistence requirement in the consumption of ecosystem services, we provide empirical evidence on substitution elasticities. We nd an initial mean elasticity of substitution of two, which declines over time towards complementarity. We subsequently extend the theory of dual discounting by introducing a subsistence requirement. The relative price of ecosystem services is non-constant and grows without bound as the consumption of ecosystem services declines towards the subsistence level. An application suggests that the initial discount rate for ecosystem services is more than a percentage-point lower as compared to manufactured goods. This dierence increases by a further half percentage-point over a 300-year time horizon. The results underscore the importance of considering limited substitutability in long-term public project appraisal. JEL-Classication: Q01, Q57, H43, D61, D90

show abstract

“…If income levels are easily proxied by the per capita GDP (at PPP),

ε

is not easy to estimate because it can vary not only from country to country, but also from individual to individual on the basis of personal preferences and income levels (Martini and Tiezzi ). In a recent handbook, Korzhenevych et al () assume

ε = 1,

although there is little empirical evidence for the fact that a change in the willingness to avoid ill health outcomes is exactly proportional to a change in income, as a unitary

ε

would imply.…”

Section: Methodsmentioning

confidence: 99%

Life Cycle Air Emissions External Costs Assessment for Comparing Electric and Traditional Passenger Cars

Girardi

Brambilla

Mela

2019

Integr Envir Assess & Manag

View full text Add to dashboard Cite

This study compares the environmental air emissions external costs of electric, gasoline, and diesel private passenger cars during their entire life cycle. The results provide the decision makers with a complementary and unconventional interpretation of the results of an ISO 14040–compliant life cycle assessment (LCA). Indeed, LCA results are often difficult to communicate and to be understood by the general public; on the other hand, an environmental external costs evaluation, where a single monetary value synthesizes the environmental impacts, can be easily understood, communicated to the broad public, and compared with taxes, incentives, and other economic tools. In the present study, we demonstrate that it is possible to carry out the application of a damage factor to the physical inventory flow. The application of this methodology to an Italian context leads to the conclusion that if we compare the 3 types of vehicles—electric, diesel, and gasoline—of an average midsize car (e.g., Volkswagen Golf), the electric version produces less external cost than the traditional internal combustion engine vehicles, considering both air pollution and climate change. The total life cycle air emissions externalities are 12.07 €/1000 km for the electric version, 21.30 €/1000 km for the gasoline vehicle, and 24.25 €/1000 km for the diesel vehicle. At the same time, the electric vehicle produces less external cost related to the air emissions considering both the entire life cycle and only the processes that occur in Italy. Integr Environ Assess Manag 2019;00:1–11. © 2019 The Authors. Integrated Environmental Assessment and Management published by Wiley Periodicals, Inc. on behalf of Society of Environmental Toxicology & Chemistry (SETAC)

show abstract

Is the environment a luxury? An empirical investigation using revealed preferences and household production

Cited by 24 publications

References 42 publications

Embedding Preference Uncertainty for Environmental Amenities in Climate Change Economic Assessments: A “Random” Step Forward

Embedding Preference Uncertainty for Environmental Amenities in Climate Change Economic Assessments: A “Random” Step Forward

Limits to Substitution between Ecosystem Services and Manufactured Goods and Implications for Social Discounting

Life Cycle Air Emissions External Costs Assessment for Comparing Electric and Traditional Passenger Cars

Contact Info

Product

Resources

About