Working Papers

Working papers

Campiglio E., Dietz, S., Venmans F. (2022) Optimal climate policy as if the transition matters. Working paper of the National Bank of Belgium, Grantham and Cesifo. Presented at the National Bank of Belgium 2020, Royal Economics Society 2021, AERE 2021, EAERE 2021, IAEE 2021, CESifo 2023. R&R at the Review of Economic Studies.

Coppens, L., Dietz, S., Venmans, F. , (2023) The effect of technological change on optimal carbon price and emissions. Presented at AERE Miami 2022, IAEE Japan 2022, LSE Environmental Workshop 2022, EAERE Rimini 2022. Submitted to Journal of Environmental Economics and Management.

Coppens L., Venmans F. (2023) The welfare properties of climate targets. Grantham Working paper. Submitted to Ecological Economics.

Sato, M., Gostlow, G., Higham, K., Setzer, J., Venmans, F., (2023). Impact of climate litigation on firm value. Presented at LSE Grantham Workshop & EAERE Limassol 2023. R&R at Nature Sustainability.

Calel R., Dechezleprêtre A., Venmans F. (2023) Policing carbon markets. Grantham Working Paper. R&R at Climate Policy

Unpublished work in progress

Venmans, F., Atkinson, G. Measuring Wealth of Non-Renewable Capital. 

How should we value non-renewable resources and their depletion from a welfare perspective? This depends on the resource allocation mechanism, i.e. the future extraction path of these resources.  The most popular resource allocation mechanism assumes constant rents and constant extraction rates until exhaustion (Wei 2015, Hamilton and Ruta 2017, World bank). We propose 3 improvements on this allocation mechanism. First, to obtain a sustainable, i.e. non-declining welfare path, extraction needs to approach zero gradually. We show that an abrupt end of extraction will lead to reduction in welfare and consumption, even if all rents are reinvested in other types of capital. Second, the assumption of constant rents implies an inefficient allocation over time and leads to large arbitrage opportunities. Whenever extraction rates increase, the value of the stock increases substantially and past wealth estimates need to be updated. A welfare-maximizing allocation mechanism without arbitrage requires a rent increasing at the discount rate. We argue in favour of an allocation mechanisms assuming increasing rents, to make the value of stocks less sensitive to the timing of resources and to obtain depletion values that are close to market rents. Third, when measuring sustainability, the allocation plan can only depend on stocks. This excludes an exogenous exhaustion date, which creates a time-dependent allocation mechanism as in Hamilton & Ruta (2017).  When we correct for this time-dependence, Hamilton & Ruta’s depletion value equals the depletion value in Wei (2015).

Filewod, B., Groom, B., Venmans, F. The climate value of forest rotation lengthening.

Rotation lengthening in forests allows to increase forest carbon sinks, but under most circumstances, it will reduce the quantity of timber that is harvested. Given that timber is a low emission substitute for concrete, bricks, steel and plastic, there is a climate trade-off. The latter effect is not valued when rotation lengthening is credited as CO2 offsets. Also we estimate the effect of these offsets on non-credited forest managers.

Groom, B., Venmans, F. Discounting for hard scientists.

Many hard scientists dislike discounting and look for alternatives, such as the warming potential of greenhouse gases over a 100 year time horizon. We develop a few examples showing the advantages of discounting over these ad hoc alternatives. We also develop cases where the standard discounting model can be misleading.

Groom, B., André, L., Venmans, F. The value of a statistical species.

Similar to the value of a statistical life, the value of a statistical species expresses the money which on average would save a species from extinction for a given type of conservation action. This requires calibration of a extinction risk function and the spatial distribution of species’ habitats.

Dietz S., Seshadri A., Venmans F. 

The dynamics of cooling the earth with negative net emissions. We study to what extent the proportional relationship between cumulative emissions and warming holds under negative emissions. Do most models show higher or lower temperatures (positive or negative hysteresis)? What is the simplest model capturing the main effects of hysteresis?

Groom B., Venmans F. Non-linear welfare functions and pareto optimality.

We derive a discount formula for a non-linear, inequality-averse welfare function. This increases the inequality aversion in the discount rate for transfers between 2 different persons. A social planner will use a higher hurdle rate for an investment where the payer is different from the beneficiary. This leads to a violation of pareto optimality.