A simple rule for the optimal global price of carbon is presented, which captures the geophysical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unburnable carbon and stranded fossil fuel reserves and a back-on-the-envelope expression are given for calculating these. It is also shown how one can derive the end of the carbon era and peak warming. This simple arithmetic for determining climate policy is meant to complement the simulations of large-scale integrated assessment model, and to give analytical understanding of the key determinants of climate policy. The simple rules perform very well in a full integrated assessment model. It is also shown how to take account of a 2 °C upper limit on global warming. Steady increases in energy efficiency do not affect the optimal price of carbon, but postpone the carbon-free era somewhat and if technical progress in renewables and economic growth are strong leads to substantially lower cumulative emissions and lower peak global warming.

We analyze the policy implications of aversion to Knightian uncertainty (ambiguity) about the possibility of tipping points. We demonstrate two channels through which uncertainty aversion affects optimal policy in the general setting. The first channel relates to the policy's effect on the probability of tipping, and the second channel to its differential impact in the pre- and post-tipping regimes. We then extend a recursive dynamic model of climate policy and tipping points to include uncertainty aversion. Numerically, aversion to Knightian uncertainty in the face of an ambiguous tipping point increases the optimal tax on carbon dioxide emissions, but only by a small amount.

The issues of global warming and climate change are a worldwide concern and the UK government has committed itself to major reductions in CO2 emissions, the most significant of the six greenhouse gases. Road transport currently accounts for about 22% of total UK emissions of CO2, and has been steadily rising. Therefore, initiatives are required to try and reduce the gas emissions in this sector. The aim of this research has been to develop a computer based vehicle routing model that calculates the overall amount of CO2 emitted from road journeys, as well as time and distance. The model has been used to examine a number of delivery strategies to assess how CO2 emissions vary. The aim has not been to produce new mathematical theories, but to produce an innovative basis for routing which will provide new information and knowledge about how CO2 emissions vary for different minimisation and congestion criteria. The approach used in this research brings together elements from transportation planning and environmental modelling combined with logistics based vehicle routing techniques. The model uses a digitised road network containing predicted traffic volumes, to which speed flow formulae are applied so that a good representation of speed can be generated on each of the roads. This means that the model is uniquely able to address the issue of congestion in the context of freight vehicle routing. It uses driving cycle data to apply variability to the generated speeds to reflect acceleration and deceleration so that fuel consumption, and therefore CO2, can be estimated. Integrated within the model are vehicle routing heuristics to enable routes to be produced which minimise the specified criterion of time, distance or CO2. The results produced by the model show that there is a potential to reduce CO2 emissions by about 5%. However, when other transport externalities are considered overall benefits are dependent on road traffic volumes.

The issues of global warming and climate change are a worldwide concern and the UK government has committed itself to major reductions in CO2 emissions, the most significant of the six greenhouse gases. Road transport currently accounts for about 22% of total UK emissions of CO2, and has been steadily rising. Therefore, initiatives are required to try and reduce the gas emissions in this sector. The aim of this research has been to develop a computer based vehicle routing model that calculates the overall amount of CO2 emitted from road journeys, as well as time and distance. The model has been used to examine a number of delivery strategies to assess how CO2 emissions vary. The aim has not been to produce new mathematical theories, but to produce an innovative basis for routing which will provide new information and knowledge about how CO2 emissions vary for different minimisation and congestion criteria. The approach used in this research brings together elements from transportation planning and environmental modelling combined with logistics based vehicle routing techniques. The model uses a digitised road network containing predicted traffic volumes, to which speed flow formulae are applied so that a good representation of speed can be generated on each of the roads. This means that the model is uniquely able to address the issue of congestion in the context of freight vehicle routing. It uses driving cycle data to apply variability to the generated speeds to reflect acceleration and deceleration so that fuel consumption, and therefore CO2, can be estimated. Integrated within the model are vehicle routing heuristics to enable routes to be produced which minimise the specified criterion of time, distance or CO2. The results produced by the model show that there is a potential to reduce CO2 emissions by about 5%. However, when other transport externalities are considered overall benefits are dependent on road traffic volumes.

This compilation dissertation consists of four essays with the common theme of welfare analysis of long-term public investments. The first two essays focus on analysis of climate change mitigation, i.e., the social cost of carbon dioxide. The third essay focuses on cost-benefit analysis (CBA) of transport investment projects, while the last essay takes a broader perspective on welfare analysis. Essay 1: The Temporal Aspects of the Social Cost of Greenhouse Gases. The purpose of Essay 1 is to investigate the temporal aspects of the social cost of greenhouse gases. I find that the calculation period should ultimately be modeled to be consistent with the discount rate and that the “global-warming potential” concept is unsuitable for calculation of the social cost of GHGs other than carbon dioxide. Essay 2: Avoiding path dependence of distributional weights: Lessons from climate change economic assessments. In Essay 2, I explore shortcomings in income weighting in evaluation of climate change policy. In short, in previous versions of two of the most important existing models, regional economic growth is double counted. The proposed alternative approaches yield about 20–40% higher values of SCCO2 than the old approach. Essay 3: Does uncertainty make cost-benefit analyses pointless? In Essay 3, the aim is to investigate to what extent CBA improves the selection decision of projects when uncertainties are taken into account, using a simulation-based approach on real data of infrastructure investments. The results indicate that, in line with previous literature, CBA is a rather robust tool and considerably increases the quality of decision making compared with a random selection mechanism, even when high levels of uncertainty are considered. Essay 4: Household Production and the Elasticity of Marginal Utility of Consumption. In Essay 4, I develop a new model to show that omission of household production in a previous model leads to bias when the elasticity of marginal utility of consumption, EMUC, is estimated. I further offer new, unbiased estimates based on current evidence of the included parameters, suggesting a lower bound of EMUC at about 0.9.

Climate change has become an important concern for most governments in the current day. The impact of global warming on economic productivity, human welfare and environmental sustainability is becoming increasingly apparent to most people on the planet, resulting in a rapid evolution of policy instruments which are capable of addressing the issue of climate change. The ultimate aim of these policy instruments is to influence corporate activity to environmentally sustainable behaviour. The two most common policy instruments to effect change to most environmentally sustainable behaviour is carbon taxation and cap-and-trade schemes. Linked to climate change and environmental sustainability is the concept of sustainable development which encompasses environmental sustainability, economic sustainability and social sustainability. These principles are formalized and made relevant for companies in the form of the triple bottom line. In South Africa, National Treasury implemented a carbon excise tax in 2010 for the motor vehicle manufacturing industry in response to the problem of global warming, and published a discussion document in support of their decision to implement carbon tax. The document highlighted reasons for the choice of carbon tax over other policy instruments such as cap-and-trade schemes and penalties. Even though the choice for carbon tax was assessed from an environmental perspective, the concept of sustainable development encompasses environmental, economic and social sustainability. The subject matter for the 1st article was to compare the two most widely used climate change instruments, known as cap-and-trade schemes and carbon tax, from the broader perspective of sustainable development. This included an analysis of the effects of both instruments on both greenhouse gases as well as economic indicators such as gross domestic product (GDP) and fiscal revenue. Linked to the implementation of any instrument designed to address carbon emissions is the concept of the social cost of carbon (SCC). The SCC is an estimate of the associated monetary cost of the damage cause by emitting one additional ton of carbon into the atmosphere. In a perfect world the SCC would be equal to, or lower than, the carbon tax price. National Treasury‟s carbon tax price has never been assessed from an economic perspective and in particular whether the price equates to the SCC from a feasibility viewpoint. The testing of the carbon tax price against the SCC from an economic perspective was the subject of the 2nd article, which then also evaluated the impact of carbon tax on motor vehicle manufacturer‟s production techniques and vehicle fuel efficiency. Under the assumption that the carbon tax price approximates the SCC it is arguable that companies are effectively paying for the damage cost to the environment in the form of the carbon excise tax implemented. If the argument holds true, then the corporate social investment expenditure may well be adjusted since corporate responsibilities to the environment have been partially addressed by the payment of carbon tax. The impact of carbon tax on CSI expenditure by motor vehicle manufacturers in South Africa was the subject of the 3rd article in the thesis. Furthermore, also linked to the implementation of carbon taxation for the motor vehicle industry is the financial and sustainability reporting of the motor vehicle manufacturers‟ tax in the sustainability report and financial statements. Since carbon tax was designed to promote behaviour toward a lower carbon footprint, evidence that such behaviour is being affected can be observed in a company‟s sustainability report, which specifies the company‟s planned path to carbon reduction in accordance with the disclosure standards set in the Global Reporting Initiative (GRI). In terms of financial accounting there is no specific International Financial Reporting Standard (IFRS) statement dealing with carbon tax, and the correct treatment thereof will have to be interpreted in accordance with existing accounting standards on revenue (IAS 18) and provisions (IAS 37). The subject matter of 4th article assessed motor vehicle manufacturers reporting compliance of carbon tax transactions in accordance with IFRS and the GRI. In summary, the implementation of carbon tax in South Africa is seen as a significant move in the fight against climate change. If the instrument is to be considered effective it must prove to be sustainable from an environmental, economic and social perspective. The effectiveness of the instrument can only be measured if it was accurately reported in the financial statements and sustainability reports in accordance with IFRS and the GRI. Furthermore, the instrument should not be seen as an opportunity by motor vehicle manufacturers to forego corporate responsibility to environment and thus should not impact CSI expenditure which is a significant part of the welfare contribution by South African businesses to the people of South Africa. / PhD (Tax), North-West University, Potchefstroom Campus, 2014

Climate change has become an important concern for most governments in the current day. The impact of global warming on economic productivity, human welfare and environmental sustainability is becoming increasingly apparent to most people on the planet, resulting in a rapid evolution of policy instruments which are capable of addressing the issue of climate change. The ultimate aim of these policy instruments is to influence corporate activity to environmentally sustainable behaviour. The two most common policy instruments to effect change to most environmentally sustainable behaviour is carbon taxation and cap-and-trade schemes. Linked to climate change and environmental sustainability is the concept of sustainable development which encompasses environmental sustainability, economic sustainability and social sustainability. These principles are formalized and made relevant for companies in the form of the triple bottom line. In South Africa, National Treasury implemented a carbon excise tax in 2010 for the motor vehicle manufacturing industry in response to the problem of global warming, and published a discussion document in support of their decision to implement carbon tax. The document highlighted reasons for the choice of carbon tax over other policy instruments such as cap-and-trade schemes and penalties. Even though the choice for carbon tax was assessed from an environmental perspective, the concept of sustainable development encompasses environmental, economic and social sustainability. The subject matter for the 1st article was to compare the two most widely used climate change instruments, known as cap-and-trade schemes and carbon tax, from the broader perspective of sustainable development. This included an analysis of the effects of both instruments on both greenhouse gases as well as economic indicators such as gross domestic product (GDP) and fiscal revenue. Linked to the implementation of any instrument designed to address carbon emissions is the concept of the social cost of carbon (SCC). The SCC is an estimate of the associated monetary cost of the damage cause by emitting one additional ton of carbon into the atmosphere. In a perfect world the SCC would be equal to, or lower than, the carbon tax price. National Treasury‟s carbon tax price has never been assessed from an economic perspective and in particular whether the price equates to the SCC from a feasibility viewpoint. The testing of the carbon tax price against the SCC from an economic perspective was the subject of the 2nd article, which then also evaluated the impact of carbon tax on motor vehicle manufacturer‟s production techniques and vehicle fuel efficiency. Under the assumption that the carbon tax price approximates the SCC it is arguable that companies are effectively paying for the damage cost to the environment in the form of the carbon excise tax implemented. If the argument holds true, then the corporate social investment expenditure may well be adjusted since corporate responsibilities to the environment have been partially addressed by the payment of carbon tax. The impact of carbon tax on CSI expenditure by motor vehicle manufacturers in South Africa was the subject of the 3rd article in the thesis. Furthermore, also linked to the implementation of carbon taxation for the motor vehicle industry is the financial and sustainability reporting of the motor vehicle manufacturers‟ tax in the sustainability report and financial statements. Since carbon tax was designed to promote behaviour toward a lower carbon footprint, evidence that such behaviour is being affected can be observed in a company‟s sustainability report, which specifies the company‟s planned path to carbon reduction in accordance with the disclosure standards set in the Global Reporting Initiative (GRI). In terms of financial accounting there is no specific International Financial Reporting Standard (IFRS) statement dealing with carbon tax, and the correct treatment thereof will have to be interpreted in accordance with existing accounting standards on revenue (IAS 18) and provisions (IAS 37). The subject matter of 4th article assessed motor vehicle manufacturers reporting compliance of carbon tax transactions in accordance with IFRS and the GRI. In summary, the implementation of carbon tax in South Africa is seen as a significant move in the fight against climate change. If the instrument is to be considered effective it must prove to be sustainable from an environmental, economic and social perspective. The effectiveness of the instrument can only be measured if it was accurately reported in the financial statements and sustainability reports in accordance with IFRS and the GRI. Furthermore, the instrument should not be seen as an opportunity by motor vehicle manufacturers to forego corporate responsibility to environment and thus should not impact CSI expenditure which is a significant part of the welfare contribution by South African businesses to the people of South Africa. / PhD (Tax), North-West University, Potchefstroom Campus, 2014

A simple rule for the optimal global price of carbon is presented, which captures the geo-physical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unburnable carbon and stranded fossil fuel reserves and a back-on-the-envelope expression are given for calculating these. It is also shown how one can derive the end of the carbon era and peak warming. This simple arithmetic for determining climate policy is meant to complement the simulations of large-scale integrated assessment model, and to give analytical understanding of the key determinants of climate policy. The simple rules perform very well in a full integrated assessment model. It is also shown how to take account of a 2 °C upper limit on global warming. Steady increases in the efficiency of labour do not affect the optimal price of carbon or the safe carbon budget, but do postpone the carbon-free era. / Series: Ecological Economic Papers

This dissertation thesis consists of six papers on macroeconomics, international economics, and energy economics. All the papers are tied together by the use of meta-regression analysis, which is essential for the derivation of robust policy-relevant conclusions from often conflicting results presented in the empirical literature. I use meta-analysis to quantitatively synthesize the reported research results on a given topic, correct the literature for publication selection bias, and filter out the effect of various misspecifications present in some primary studies. My results can be summarized as follows: 1) The elasticity of intertemporal substitution in consumption, a key input to all dynamic models in finance and macroeconomics, varies significantly across countries. The differences can be explained by the level of stock market participation, when countries with higher participation exhibit larger values of the elasticity; the mean reported elasticity is 0.5. 2) The effect of borders on international trade, which most authors find to be surprisingly large, can be explained away by innovations in methodology introduced in the last decade. When these innovations are taken into account jointly, the border effect disappears for developed countries, and is relatively small for developing countries. 3) When...

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