How do heat waves, cold waves, droughts, hail and tornadoes affect US agriculture?

A very first draft of a new paper on climate extremes available here. Still preliminary and incomplete.

Presented today at the ASSA meetings in San Francisco. Presentation available here.

Abstract:

We estimate the impact of extreme events on corn and soybeans yields, and on agricultural land values in the Eastern United States. We find the most harmful event is a severe drought but that cold waves, heat waves, and storms all reduce both corn and soybean yields. Over 80% of the damage from extreme events is caused by droughts and cold waves with heat waves causing only 6% of the damage. Including extreme events in a panel model of weather alters how temperature affects yields, making cold temperature more harmful and hot temperatures less harmful. Extreme events have no effect on farmland values probably because American farmers are buffered from extreme events by subsidized public crop insurance.

Keynote at final meeting of Global-IQ Project

The keynote presentation that I gave at the final meeting of the EU FP7 project Global-IQ is available here.

The objective of the GLOBAL IQ project was three-fold:

• to provide significant advances in the estimation of socio-economic impacts of global challenges – at Global, European and regional scale;
• to identify optimal adaptation strategies;
• to evaluate total costs and the optimal mix of adaptation and mitigation against global changes.

Led by Toulouse School of Economics, the Global IQ project involved eleven partners located in eight EU members states:

• Toulouse School of Economics (TSE) France
• Fondazione Eni Enrico Mattei (FEEM) Italy
• Internationales Institut für Angewandte Systemanalyse (IIASA) Austria
• Potsdam-Institut für Klimafolgenforschung (PIK) Germany
• University of Gothenburg (UGOT) Sweden
• Charles University in Prague (CUNI) Czech Republic
• Istituto di Studi per l’Integrazione dei Sistemi (ISIS) Italy
• London School of Economic (LSE) UK
• Graduate Institute of International Studies in Geneva (HEID) Switzerland
• Centre for Economic Policy Research (CEPR) UK

Do Temperature Thresholds Threaten American Farmland?

On January 4 I presented the paper titled "Do Temperature Thresholds Threaten American Farmland?" joint with Robert Mendelsohn at the ASSA meetings in Philadelphia.

The presentation is available here.

In short:

In this paper we use flexible functional forms to estimate the marginal effect of mean temperatures during 3-hour, daily and longer time intervals on land values. We use US Agricultural Census Data and detailed climate data obtained from the NARR model, a very large dataset that contains climatic data on 3-hour time intervals, at fine spatial resolution, from 1979 to present day. The paper finds no evidence of temperature threshold effects on land values and in the Eastern United States. The flexible functional forms suggest inverted-U shaped or almost constant marginal effects at different levels of temperature whether one is using average temperature over 3-hour, daily, continuous days or the growing season. We find instead evidence that land values in areas that are frequently affected by extreme heat waves reflect large expected productivity losses. Using annual yields and weather data we find evidence that both cold and high temperatures reduce corn, soybeans, and to a lesser extent, cotton yields. The downward sloping section of the relationship that relates temperature and yields is steeper than the upward sloping section but we do not find evidence of sudden discontinuities.

Presentation at COP 19 in Warsaw

On Thursday, November 21, I did a quick stop in Warsaw for the FEEM-CMCC-University of Venice side event at COP 19.

I gave a presentation for the general public on the benefits of adaptation, with a focus on the benefit for public finances. The presentation is available here.

The panel included:

Dr. Corrado Clini
General Director of Sustainable Development, Climate and Energy Directorate, Italian Ministry of Environment, Land and See

Prof. Carlo Carraro
President, Ca' Foscari University of Venice
Vice Chair, IPCC Working Group III
Director, Climate Change and Sustainable Development Programme, Fondazione Eni Enrico Mattei

Dr. Nancy Saich
Advisor on Climate & Environment, Projects Directorate, European Investment Bank

Dr. Serena Pontoglio
Research Programme Officer, Climate change and natural hazards unit, DG Research & Innovation, European Commission

Dr. Richard Klein
Senior Research Fellow, Theme Leader "Reducing Climate Risk", Stockholm Environment Institute

A new presentation of "Chaos-in, Chaos-out" at the SISC conference in Lecce

On September 23 I gave a presentation of my paper "Chaos in, chaos out? The effect of chaos in GCM scenarios on estimates of climate change impacts" at the First SISC conference in Lecce.

The presentation is available here in pdf format.

I am making progress towards a final draft. This presentation has new estimates of climate change impacts, with regional detail and bootstrap confidence intervals. It clearly shows that the impact of noise in the climate change scenarios is statistically significant for many General Circulation Models.

A final draft will be ready soon.

Here I copy a figure that compares 2011-2030 temperature anomaly (w.r.t. 1961-1990) differences between the A2 and the A1B SRES scenarios at global level. Dark blue means that the area is much colder in the A2 scenario, and viceversa if the area is red. This figure shows how almost identical emission trajectories can lead to very different climate change scenarios at local level.

(as I am taking differences, degrees celsius and degrees kelvin are identical)

High Resolution Climate Change Scenarios in IAMs: Chaos In, Chaos Out?

On July 9 I attended a workshop "Integrated Assessment of International Climate Change Policies" organized by Ifo in Munich.

I presented for the first time my work on climate change scenarios. Still very preliminary, but in progress.

The presentation is available here.

In brief:

GCMs incorporate deterministic chaos to reflect real-world chaotic dynamics of weather. This implies that small changes in external forcing can generate very different weather patterns, especially at local level. By using the Coupled Model Intercomparison Project phase 3 (CMIP3) multi-model dataset I show that small variations in Greenhouse Gas Emissions (GHG) and other forcing agents across the SRES scenarios generate substantial different climate scenarios in the US. By using a Ricardian model of climate change impacts on agriculture I show that the “noise” in the climate scenarios generates a “noisy” relationship between global GHG concentrations and local impacts. This implies that climate change scenarios from the CMIP3 dataset - used for the IPCC AR4 - should be used with caution. This problem might be limited by providing model ensemble runs that use same initial conditions but introduce small perturbations around the central exogenous forcing scenario.

Longer presentation of the degree days paper

On June 20 2013 I gave a longer presentation of the paper "How Does Temperature Affect Land Values in the US?" at FEEM in Venice.

We introduce degree hours that were not tested in the previous draft of the paper.

The presentation is available here. The paper is still a work in progress.

AERE meeting in Banff

On June 7 2013 I presented the ongoing work with Robert Mendelsohn and Shun Chonabayashi on the use of degree days to study how climate affects land values in the US at the AERE Summer meeting in Banff.

The presentation is available here.

The paper is still a work in progress and it may change. I copy the abstract here:

We test three functional forms that relate land values and temperatures in a Ricardian model of US agriculture for the East of the US: a quadratic relationship based on average seasonal temperature and precipitations, a non-linear relationship based on degree days and a flexible functional form in which average seasonal temperatures are interacted with dummies. Results obtained using growing season average temperature and degree days are not significantly different. We do not find evidence of a threshold if we include degree days above 34 °C. Cold degree days instead matter and should not be omitted. Models that use a quadratic specification of average temperatures perform better than models that use degree days. This is in line with the agronomic literature. Degree days should be used to estimate the duration of phenological events rather than yields. Estimates of uniform +2 °C and +4 °C warming indicate that warming is significantly harmful for agriculture in the East of the US. The use of a more flexible functional form reveals that the relationship between temperatures and land values is flatter than in the quadratic. Seasons, within and outside the growing season, significantly affect land values and allow separating beneficial and harmful effects of warming more effectively.

Trading Woody Biomass and Negative Emissions Under a Climate Mitigation Scenario

On October 1 Alice Favero presented our joint paper on trade of woody biomass at the conference "Power Generation and the Environment, Choices and Economic Trade-offs" organized by the University of Wyoming School of Energy Resources and the Center for Energy Economics and Public Policy at Jackson Hole, WY.

The link to the presentation here.
The link to the video here.

Favero, Alice and Emanuele Massetti. 2012. "Trading Woody Biomass and Negative Emissions Under a Climate Mitigation Scenario." Yale University and FEEM, mimeo.

Abstract:
Bio-energy has the potential to be a key mitigation option if combined with carbon capture and sequestration (BECCS) because it can generate electricity and absorb emissions at the same time. However, biomass is not distributed evenly across the globe and regions with a potentially high demand might be constrained by limited domestic supply. Therefore, climate mitigation policies might create an incentive to trade biomass internationally. This paper evaluates the potential of the trade of woody biomass under three carbon taxes which lead to a stabilization target of 4.6 W/m2, 3.8 W/ m2 and 3.3 W/ m2 radiative forcing by 2100 using the integrated assessment model WITCH. Results show that in all scenarios there is big incentive in trading biomass: more than 50% of biomass consumed globally is from the international market. Regions trade 16-52 EJ in 2050 and 52-84 EJ/yr in 2100. The value of biomass traded is equal to  US$ 1-9 Trillion in 2100. The effect of the biomass trade on the climate polices is significant: it offers an additional abatement of GHGs emissions of 150-340 GtCO2 for the same tax depending on the scenario. Finally, we simulate a cap-and-trade scheme with a stabilization target of 3.8 W/ m2 in 2100 in order to study the implications of biomass trade on the carbon market. We found that biomass trade has a downward effect of 30% on the price of permits by 2100 and reduces the policy cost by 11% for 2010-2050 and by 15% for 2010-2100.


The link to the program and other presentations here.


October 1, 2012
Session One: CCS Themes
The Cost of Power Generation with CCS vs. the Alternatives
Howard Herzog, Senior Research Engineer, Massachusetts Institute of Technology Energy Initiative

A Flexible Policy Mechanism to Incentivize "CCS-ready" Without Delaying Replacement of Old Coal-fired Power Plants
Dalia Patiño-Echeverri, Gendell Assistant Professor for Energy Systems and Public Policy, Duke University

The Challenges of CCS for an Operating Utility
Ron Harper, Retired CEO of Basin Electric and Cooperative

Keynote Address
A Practitioner's Guide to a Low-carbon Economy: Lessons From the UK

Samuel Fankhauser, Co-Director of the Grantham Research Institute on Climate Change and the Environment and Deputy Director of the Center for Climate Change Economics and Policy

Session Two: Policy
On Designing an Efficient CO2 Emissions Cap and Trade System
Scott Atkinson, Professor, University of Georgia Department of Economics

The Competitiveness Impacts of Climate Change Mitigation Policies
Joseph Aldy, Assistant Professor of Public Policy, Harvard Kennedy School

Environmental Policies on the Grid:  Findings from an Integrated Economic, Engineering, and Environmental Model
Daniel Shawhan, Assistant Professor, Department of Economics, Rensselaer Polytechnic Institute

Session Three: Regulation Analysis Themes
The Impact of CO2, NOx, and SO2 Regulation on Electricity Production
Rolf Fare, Department of Economics and Department of Agriculture and Resource Economics, Oregon State University

Costs and Emissions Reductions from Clean Air Act Regulation of Greenhouse Gases from Coal-Fired Power Plants
Joshua Linn, Fellow, Resources for the Future

Can a Unilateral Carbon Tax Reduce Emissions Elsewhere?
Don Fullerton, University of Illinois, Department of Finance

October 2, 2012
Session Four:  Alternative Resources
Trading Woody Biomass and Negative Emissions Under a Climate Mitigation Scenario
Alice Favero, Visiting Research Assistant, Yale School of Forestry & Environmental Studies

New Cost Estimates for Forest Carbon Sequestration in the United States
Andrew Plantinga, Professor, Department of Agricultural and Resource Economics, Oregon State University

Uranium and Nuclear Power: Past, Present and Future
Charles Mason, UW Department of Economics & Finance; H.A. True Chair in Petroleum and Natural Gas Economics

Session Five: Costs & Pricing
Pricing Carbon in the US: A Model-based Analysis of Power Sector Only Approaches
Adele Morris, Fellow and Policy Director for the Climate and Energy Economics Project, The Brookings Institute

Estimating the Value of Additional Wind and Transmission Capacity in the Rocky Mountain West
Robert Godby, Associate Professor, UW Department of Economics and Finance

Evaluating Climate Policy Portfolios in the Electricity Sector: The Role of Multiple Market Failures
Carolyn Fischer, Resources for Future

Analysis of the Bingaman Clean Energy Standard Proposal
Karen Palmer, Senior Fellow and Research Director, Resources for Future

Investments and Financial Flows Induced by Climate Mitigation Policies

On Monday November the 14th I presented the highlights of the paper "Investments and financial flows induced by climate mitigation polcies" at the International Business Green Economies Dialogue session at the OECD in Paris.

• We show that investments in the power sector increase in all but the moderate carbon tax scenarios, in the long term.

• Investments increase as the price of the carbon tax increases above 50$ per ton of CO2-eq.

• However the ratio of investments in the power sector to investments in all other sector does not increase with respect to the present level, with the only exception being the very high tax scenario.

• Investments in R&D increase about 4-fold in the high tax scenarios.

• Revenues from carbon taxes reach about 3 trillions $ in 2045 in the highest tax scenario. Revenues decline after 2050 because the tax base disappears.

• With the right signals markets can provide sufficient investments in the power sector.

• Governments should finance frontier research in new carbon-free technologies.

• Revenues from carbon taxes are large and can be used to reduce distortionary taxes or provide fundings to cover increased spending for pensions.

The presentation can be downloaded here.

An older version of the paper is here.

International Super-Grids Powered by Concentrated Solar Power

On February 16 2011 I had the chance to visit for the first time the EU Parliament in Strasbourg.

I was invited as a speaker at the workshop "Smart and Super Grids: vision for a European energy infrastructure", chaired by Mr. Vittorio Prodi, Member of the European Parliament and chair of the subgroup “Energy” of the European Parliament Intergroup “Climate Change, Biodiversity and Sustainable Development.”

I gave a presentation based on recent work on supergrids and concentrated solar power joint with Elena Ricci. You can dowload the presentation here.

This presentation complements the one I gave at a meeting hosted at the European Parliament in Brussels in early January 2011: link.

Ongoing Work Using Ricardian Approaches

On  February 9 2011 I was invited as a speaker to the OECD meeting "Climate Change, Agriculture, and Land Use: Matching modelling approaches to policy questions."

I gave a presentation that illustrates the work on panel methods to estimate climate change impacts on agriculture and recent work that uses all IPCC Fourth Assessment Report climate change scenarios to estimate climate change impacts in the USA.


Download the presentation here.

The intended outcome of the meeting was to have a clear idea of the policy questions OECD should be focusing on, and which models are appropriate to address such questions.

Invited speakers:

Sherman Robinson  - International Food policy Research Institute (IFPRI) and University of Sussex

The economics of climate change: appropriateness of partial and general equilibrium approaches

Thomas Berger (University of Hohenheim)

Insights for climate change policy  from agent-based modeling of land-use

Emanuele Massetti (Fondazione ENI Enrico Mattei –FEEM)

The economics of climate change impacts on agriculture: ongoing work using Ricardian approaches

Energy and Climate Change in China

On November the 30th I presented joint work with Carlo Carraro on energy and climate change issues in China at the workshop on China's Economy organized by the Bank of Italy.


Abtract

The paper examines future energy and emissions scenarios in China, presenting historical data and scenarios generated using the Integrated Assessment Model WITCH. A Business-as-Usual scenario is compared with four scenarios in which Greenhouse Gases emissions are taxed, at different levels. Key insights are provided to evaluate the Chinese pledge to reduce the emissions intensity of Gross Domestic Product by 40/45 percent in 2020 contained in the Copenhagen Accord. Marginal and total abatement costs are discussed using the OECD economies as a term of comparison. Cost estimates for different emissions reduction targets are used to assess the political feasibility of the 50 percent global reduction target set by the G8 and Major Economies Forum in July 2009.

C. Carraro and E. Massetti (2010). "Energy and Climate Change in China." Fondazione Eni Enrico Mattei, mimeo, December 2010.

Download the presentation