Environmental Economics Group (EG)

The Environmental Economics Group (EG) was established to provide a platform for research and teaching in environmental economics.

The research of EG concentrates primarily on environmental economics. The members conduct both basic and applied research.

Current areas of research include:

• Environmental economics
• Economics of climate change
• Climate policy
• Sustainable development
• Circular economy
• Public finance
• The value of biodiversity
• Economic growth
• Cost-benefit analysis
• Energy economics

Carbon Taxes Crowd Out Climate Concern: Experimental Evidence From Sustainable Consumer Choices

Talk by Christina Gravert. 17 February, 2025, 13:00-14:00, CSS - room 26.2.21.

Abstract: We examine the impact of a carbon tax on consumer choices via a large-scale online randomized controlled trial. Higher taxes generally reduce the demand for high-carbon goods. Compared to an import tax, a carbon tax reduces demand when the tax is zero (i.e., announced but not levied) but shows relatively higher demand for high-carbon goods when a positive tax is introduced. This contradiction of basic price theory is entirely driven by climate-concerned consumers. Our findings suggest that carbon taxes can crowd out climate concerns, leading to important implications for policy.

Behavior and Welfare of Moral Consumers

Talk by Mogens Fosgerau. 3 March, 2025, 12:00-13:00, CSS, room 26.1.21b.

Does Axiological Longtermism Require Deontic Shorttermism?

Talk by Frikk Nesje. 17 March, 2025, 12:00-13:00, CSS - room 26.3.24.

Abstract: Weak longtermism can be robustly supported as non-declining well-being by an axiology based on consequentialist axioms of impartiality (i.e., anonymity) and sensitivity (i.e., Pareto) in productive societies. We argue that the interests of future generations when the present generation implement such development are most easily taken care of if altruism concerns only the immediate descendants of the same dynasty, as this minimizes the total weight on future generations. 

Carbon Pricing versus Green Finance

Talk by Lasse Heje Pedersen. 24 March, 2025, 13:00-14:00, CSS - room 26.1.21b.

Abstract: Economics recommends combating climate change with carbon pricing, but green finance - such as ESG investing and sustainable finance regulations - is becoming widespread. In a unified model, I show how to "translate" a carbon tax into green finance terms and present the following results. First, if carbon prices equal their social cost, green finance should not be used. Second, with too low carbon prices, green finance can implement the social optimum if and only if the cost of capital can be controlled and there are no stranded assets - but the calibrated cost-of-capital adjustments appear unattainable and stranded assets do exist. Third, I show how green finance depends on direct and indirect emissions.

New Trade Models, Same Old Emissions?

Talk by Joschka Wanner. 31 March, 2025, 13:00-14:00, CSS - room 26.2.21.

Abstract: This paper investigates the role of firm heterogeneity in environmentally extended new trade models, contrasting Eaton-Kortum and Melitz models to Armington and Krugman models. We show that when emissions per sales are constant across firms – a standard assumption in the literature – all four models predict identical emission responses. However, when emissions per quantity are constant across firms, this equivalence breaks. We propose a generalized framework that nests both assumptions. Calibrating the model with multiple industries and estimating the key elasticity between emission intensity and productivity using German firm-level data, we find that firm heterogeneity considerably raises emissions from trade liberalization.

Climate Change in the Classroom

Talk by Marcella Veronesi. 28 April, 2025, 13:00-14:00, CSS - room 26.1.21b. 

Abstract: Knowledge gaps and biased beliefs concerning both climate change and climate policy represent a major obstacle to the decarbonization process. Climate education may represent a scalable solution to address such biased beliefs. In the context of a nationwide reform of the secondary school curriculum in Italy, we built a course on climate change and climate policy and implemented a field experiment training thousands of teachers across some 2,800 schools on climate change and policy in a staggered fashion. At baseline and endline we collected survey data to examine starting knowledge, attitudes, behaviors, perceptions, and preferences and how such outcomes vary following exposure to climate education. Our study highlights important initial knowledge gaps and provides evidence on the ability of climate education to address biased beliefs at scale.

The Role of ESG-Related KPIs in Top Management Compensation

Talk by Ken Bechmann. 12 May, 2025, 13:00-14:00, CSS - room 26.1.21b.

One Fish, Two Fish: Market Design for Environmental Sustainability

Talk by Boris Vallée. 22 May, 2025, 13:00-14:00, CSS - room 26.1.21b.

Abstract: We study how the design of contractual rights to exploit natural resources affects biodiversity preservation, using quota rights in the Northern Atlantic Fishery as a laboratory. Our identification strategy exploits regulatory heterogeneity in the strength of commercial fishing quota rights and uses granular data on fishing vessels, catches, and species population. We find that stronger property rights are associated with a decrease in both fish populations and annual fish landings. These effects are especially pronounced for groundfish. This ecological impact appears to be driven by a change in the production function of commercial fishing when property rights are strong. Stronger property rights result in a higher intensity of large-scale trawling, a fishing technique known for its large and negative environmental externalities.

Environmental Regulation Informed by Biased Stakeholders

Talk by Jessica Coria. 26 May, 2025, 13:00-14:00, CSS - room 26.2.21. 

Abstract: Public consultations are widely used in regulatory processes, allowing stakeholders to present their viewpoints despite their inherent biases. Some stakeholders, such as firms, are known to be pro-business, while others, such as environmental NGOs, are pro-environment. We develop a framework to analyze how a regulator should process information provided by biased stakeholders. We distinguish between stakeholders whose biases are high and known and those whose biases are small but unknown, such as national authorities. We show that the regulator should follow the advice that runs counter to a stakeholder’s typical bias, i.e., to regulate if firms so advise, and not to regulate if environmental organizations so advise. Without such advice, she should prioritize the comments provided by stakeholders with smaller but unknown bias. Next, we contrast our theoretical results with the regulation of chemicals in the European Union. In line with our theory, we find that support for regulation has a strong and significant impact on the decision to regulate when the support comes from firms but not when it comes from NGOs and environmental agencies. We also find that national authorities have a stronger influence than other stakeholders in the regulation decision, both by the number of comments and the relative support.