Challenges for a sustainable resource use: Uncertainty,trade, and climate policies

We integrate new challenges to thinking about resource markets and sustainable resource use policies in a general framework. The challenges, emerging from six papers that JEEM publishes in a special issue, are (i) demand uncertainty and stockpiling, (ii) international trade and resource dependence, (iii) deforestation, and (iv) intertemporal effects of climate change policies (“Green Paradox”). We discuss new insights and results on these issues by fitting them into the Hotelling model of non-renewable resource depletion.     

Voluntary corporate environmental initiatives and shareholder wealth

Researchers debate whether environmental investments reduce firm value or actually improve financial performance. We provide some compelling evidence on shareholder wealth effects of membership in voluntary environmental programs (VEPs). Companies announcing membership in EPA's Climate Leaders, a program targeting reductions in greenhouse gas emissions, experience significantly negative abnormal stock returns. The price decline is larger in firms with poor corporate governance structures, and for high market-to-book (i.e., high growth) firms. However, firms joining Ceres, a program involving more general environmental commitments, have insignificant announcement returns, as do portfolios of industry rivals. Overall, corporate commitments to reduce greenhouse gas emissions appear to conflict with firm value maximization. This has important implications for policies that rely on voluntary initiatives to address climate change. Further, we find that firms facing climate-related shareholder resolutions or firms with weak corporate governance standards – giving managers the discretion to make such voluntary environmentally responsible investment decisions – are more likely to join Climate Leaders; decisions that may result in lower firm value.     

Renewable electricity policies,heterogeneity, and cost effectiveness

Renewable electricity policies promote investment in renewable electricity generators and have become increasingly common around the world. Because of intermittency and the composition of other generators in the power system, the value of certain renewable – particularly wind and solar – varies across locations and technologies. This paper investigates the implications of this heterogeneity for the cost effectiveness of renewable electricity policies. A simple model of the power system shows that renewable electricity policies cause different investment mixes. Policies also differ according to their effect on electricity prices, and both factors cause the cost effectiveness to vary across policies. We use a detailed, long-run planning model that accounts for intermittency on an hourly basis to compare the cost effectiveness for a range of policies and alternative parameter assumptions. The differences in cost effectiveness are economically significant, where broader policies, such as an emissions price, outperform renewable electricity policies.     

Challenges for a sustainable resource use: Uncertainty,trade, and climate policies

We integrate new challenges to thinking about resource markets and sustainable resource use policies in a general framework. The challenges, emerging from six papers that JEEM publishes in a special issue, are (i) demand uncertainty and stockpiling, (ii) international trade and resource dependence, (iii) deforestation, and (iv) intertemporal effects of climate change policies (“Green Paradox”). We discuss new insights and results on these issues by fitting them into the Hotelling model of non-renewable resource depletion.     

Brown backstops versus the green paradox

Anticipated climate policies are ineffective when fossil fuel owners respond by shifting supply intertemporally (the green paradox). This mechanism relies crucially on the exhaustibility of fossil fuels. We analyze the effect of anticipated climate policies on emissions in a simple model with two fossil fuels: one scarce and dirty (e.g. oil), the other abundant and dirtier (e.g. coal). We derive conditions for a ‘green orthodox’: anticipated climate policies may reduce current emissions. The model can also be used to analyze spatial carbon leakage. Calibrations suggest that intertemporal carbon leakage (from 0% to 8%) is a relatively minor concern.     

Linking species- and ecosystem-level impacts of climate change in lakes with a complex and a minimal model

To study the interaction between species- and ecosystem-level impacts of climate change, we focus on the question of how climate-induced shifts in key species affect the positive feedback loops that lock shallow lakes either in a transparent, macrophyte-dominated state or, alternatively, in a turbid, phytoplankton-dominated state. We hypothesize that climate warming will weaken the resilience of the macrophyte-dominated clear state. For the turbid state, we hypothesize that climate warming and climate-induced eutrophication will increase the dominance of cyanobacteria. Climate change will also affect shallow lakes through a changing hydrology and through climate change-induced eutrophication. We study these phenomena using two models, the full ecosystem model PCLake and a minimal dynamic model of lake phosphorus dynamics. Quantitative predictions with the complex model show that changes in nutrient loading, hydraulic loading and climate warming can all lead to shifts in ecosystem state. The minimal model helped in interpreting the non-linear behaviour of the complex model. The main output parameters of interest for water quality managers are the critical nutrient loading at which the system will switch from clear to turbid and the much lower critical nutrient loading – due to hysteresis – at which the system switches back. Another important output parameter is the chlorophyll-a level in the turbid state. For each of these three output parameters we performed a sensitivity analysis to further understand the dynamics of the complex model PCLake. This analysis showed that our model results are most sensitive to changes in temperature-dependence of cyanobacteria, planktivorous fish and zooplankton. We argue that by combining models at various levels of complexity and looking at multiple aspects of climate changes simultaneously we can develop an integrated view of the potential impact of climate change on freshwater ecosystems.     

GIS assessment of coastal vulnerability to climate change and coastal adaption planning in Vietnam

Vietnam’s coastal zone provides a diverse range of natural resources and favourable conditions for social and economic development. However, its coastal ecosystems are highly vulnerable, due to several natural coastal hazards, over-exploitation and other human activities. In spite of diverse interventions, Vietnam’s coastal zone continues to experience significant damage from floods, erosion and typhoons. These hazards are being intensified by climate change and associated rising sea levels. This paper assesses the potential vulnerability of Vietnam’s coast to climate change and discusses possible adaptation policies and plan to reduce the impacts. GIS analysis was used for the assessment of coastal vulnerability. Related literature was reviewed to develop detailed understanding of coastal adaptation to climate change. Adaptation policies and plans were appraised to identify potential coastal adaptation policies and plans that could be adapted by Vietnam. It was identified that vulnerability of the coastal zone of Vietnam could not be attributed only to climatic factors, but also to the physical condition of the coastline. Much of Vietnam’s coastline, particularly, areas around the Red River delta and the Mekong River have elevations below 1 m. These coastlines are largely developed and serve as economic centres of the country, which makes the coast more vulnerable to climate change and the rising sea level. The paper concluded that a non-structural approach (coastal buffer zones, building houses on stilts, storm warning systems, growing of flood-resistant crops and elevated storm shelters with medicine and food storage) could be used by Vietnam to adapt her low-lying coastline around the two deltas to climate change as this strategy enables vulnerable areas to be occupied for longer before eventual retreat. However, for these policies to be successful, it should be planned, implemented well in advance, monitored and evaluated over time.     

Response of tree growth to a changing climate in boreal central Canada: A comparison of empirical,process-based,and hybrid modelling approaches

The impact of 2 × CO₂ driven climate change on radial growth of boreal tree species Pinus banksiana Lamb., Populus tremuloides Michx. and Picea mariana (Mill.) BSP growing in the Duck Mountain Provincial Forest of Manitoba (DMPF), Canada, is simulated using empirical and process-based model approaches. First, empirical relationships between growth and climate are developed. Stepwise multiple-regression models are conducted between tree-ring growth increments (TRGI) and monthly drought, precipitation and temperature series. Predictive skills are tested using a calibration–verification scheme. The established relationships are then transferred to climates driven by 1× and 2 × CO₂ scenarios using outputs from the Canadian second-generation coupled global climate model. Second, empirical results are contrasted with process-based projections of net primary productivity allocated to stem development (NPP_s). At the finest scale, a leaf-level model of photosynthesis is used to simulate canopy properties per species and their interaction with the variability in radiation, temperature and vapour pressure deficit. Then, a top-down plot-level model of forest productivity is used to simulate landscape-level productivity by capturing the between-stand variability in forest cover. Results show that the predicted TRGI from the empirical models account for up to 56.3% of the variance in the observed TRGI over the period 1912–1999. Under a 2 × CO₂ scenario, the predicted impact of climate change is a radial growth decline for all three species under study. However, projections obtained from the process-based model suggest that an increasing growing season length in a changing climate could counteract and potentially overwhelm the negative influence of increased drought stress. The divergence between TRGI and NPP_s simulations likely resulted, among others, from assumptions about soil water holding capacity and from calibration of variables affecting gross primary productivity. An attempt was therefore made to bridge the gap between the two modelling approaches by using physiological variables as TRGI predictors. Results obtained in this manner are similar to those obtained using climate variables, and suggest that the positive effect of increasing growing season length would be counteracted by increasing summer temperatures. Notwithstanding uncertainties in these simulations (CO₂ fertilization effect, feedback from disturbance regimes, phenology of species, and uncertainties in future CO₂ emissions), a decrease in forest productivity with climate change should be considered as a plausible scenario in sustainable forest management planning of the DMPF.     

Estimating soil carbon turnover using radiocarbon data: A case-study for European Russia

Turnover rates of soil carbon for 20 soil types typical for a 3.7 million km² area of European Russia were estimated based on ¹⁴C data. The rates are corrected for bomb radiocarbon which strongly affects the topsoil ¹⁴C balance. The approach is applied for carbon stored in the organic and mineral layers of the upper 1 m of the soil profile. The turnover rates of carbon in the upper 20 cm are relatively high for forest soils (0.16–0.78% year⁻¹), intermediate for tundra soils (0.25% year⁻¹), and low for grassland soils (0.02–0.08% year⁻¹) with the exception of southern Chernozems (0.32% year⁻¹). In the soil layer of 20–100 cm depth, the turnover rates were much lower for all soil types (0.01–0.06% year⁻¹) except for peat bog soils of the southern taiga (0.14% year⁻¹). Combined with a map of soil type distribution and a dataset of several hundred soil carbon profiles, the method provides annual fluxes for the slowest components of soil carbon assuming that the latter is in equilibrium with climate and vegetation cover. The estimated carbon flux from the soil is highest for forest soils (12–147 gC/(m² year)), intermediate for tundra soils (33 gC/(m² year)), and lowest for grassland soils (1–26 gC/(m² year)). The approach does not distinguish active and recalcitrant carbon fractions and this explains the low turnover rates in the top layer. Since changes in soil types will follow changes in climate and land cover, we suggest that pedogenesis is an important factor influencing the future dynamics of soil carbon fluxes. Up to now, both the effect of soil type changes and the clear evidence from ¹⁴C measurements that most soil organic carbon has a millennial time scale, are basically neglected in the global carbon cycle models used for projections of atmospheric CO₂ in 21st century and beyond.     

Fair trade as a strategy for international competitiveness

At the centre of the debate surrounding sustainable development is a recognition that companies can make a major contribution by being environmentally and socially responsible and that tools associated with these concepts can enhance the competitiveness and economic performance of the firm. In this paper we go further in arguing that in a world of globalisation it is equally important to look at issues of international trade.

In an examination of free trade we argue that it is neither fully consistent with sustainable development nor to the benefit of business. We point to a new imperative to develop sound sourcing, and equitable and fair trading relationships. We identify issues associated with fair trade (including issues of human rights, fair wages, sustainability reporting procedures and codes of conduct on ethics) and associated tools of analysis (guaranteed prices, codes of conduct and end price audits).

The paper argues that in a world of globalisation with greater transparency and information availability it will be important for companies to be clear about their policies on supply chain management and trade. Indeed, with the growth of an active and sophisticated civil society, it will be argued that policies associated with sound sourcing, equitable trade and fair trade could provide companies with a new competitive strategy based on ethical standards communicated to the consumer through a strategy of differentiation. We explore strategies for the integration of fair trade policies, strategies and standards, and the opportunities for new markets and niches that this presents. It is argued that the integration of fair trade into a business strategy can enhance competitiveness.     

The perpetual state of emergency that sacrifices protected areas in a changing climate

A modern challenge for conservation biology is to assess the consequences of policies that adhere to assumptions of stationarity (e.g., historic norms) in an era of global environmental change. Such policies may result in unexpected and surprising levels of mitigation given future climate‐change trajectories, especially as agriculture looks to protected areas to buffer against production losses during periods of environmental extremes. We assessed the potential impact of climate‐change scenarios on the rates at which grasslands enrolled in the Conservation Reserve Program (CRP) are authorized for emergency harvesting (i.e., biomass removal) for agricultural use, which can occur when precipitation for the previous 4 months is below 40% of the normal or historical mean precipitation for that 4‐month period. We developed and analyzed scenarios under the condition that policy will continue to operate under assumptions of stationarity, thereby authorizing emergency biomass harvesting solely as a function of precipitation departure from historic norms. Model projections showed the historical likelihood of authorizing emergency biomass harvesting in any given year in the northern Great Plains was 33.28% based on long‐term weather records. Emergency biomass harvesting became the norm (>50% of years) in the scenario that reflected continued increases in emissions and a decrease in growing‐season precipitation, and areas in the Great Plains with higher historical mean annual rainfall were disproportionately affected and were subject to a greater increase in emergency biomass removal. Emergency biomass harvesting decreased only in the scenario with rapid reductions in emissions. Our scenario‐impact analysis indicated that biomass from lands enrolled in the CRP would be used primarily as a buffer for agriculture in an era of climatic change unless policy guidelines are adapted or climate‐change projections significantly depart from the current consensus.     

Local‐Scale Dynamics and Local Drivers of Bushmeat Trade

Bushmeat management policies are often developed outside the communities in which they are to be implemented. These policies are also routinely designed to be applied uniformly across communities with little regard for variation in social or ecological conditions. We used fuzzy‐logic cognitive mapping, a form of participatory modeling, to compare the assumptions driving externally generated bushmeat management policies with perceptions of bushmeat trade dynamics collected from local community members who admitted to being recently engaged in bushmeat trading (e.g., hunters, sellers, consumers). Data were collected during 9 workshops in 4 Tanzanian villages bordering Serengeti National Park. Specifically, we evaluated 9 community‐generated models for the presence of the central factors that comprise and drive the bushmeat trade and whether or not models included the same core concepts, relationships, and logical chains of reasoning on which bushmeat conservation policies are commonly based. Across local communities, there was agreement about the most central factors important to understanding the bushmeat trade (e.g., animal recruitment, low income, and scarcity of food crops). These matched policy assumptions. However, the factors perceived to drive social‐ecological bushmeat trade dynamics were more diverse and varied considerably across communities (e.g., presence or absence of collaborative law enforcement, increasing human population, market demand, cultural preference). Sensitive conservation issues, such as the bushmeat trade, that require cooperation between communities and outside conservation organizations can benefit from participatory modeling approaches that make local‐scale dynamics and conservation policy assumptions explicit. Further, communities’ and conservation organizations’ perceptions need to be aligned. This can improve success by allowing context appropriate policies to be developed, monitored, and appropriately adapted as new evidence is generated. Dinámicas a Escala Local y Conductores Locales del Mercado de Carne de Caza     

Identifying management opportunities to combat climate,land, and marine threats across less climate exposed coral reefs

Conserving coral reefs is critical for maintaining marine biodiversity, protecting coastlines, and supporting livelihoods in many coastal communities. Climate change threatens coral reefs globally, but researchers have identified a portfolio of coral reefs (bioclimatic units [BCUs]) that are relatively less exposed to climate impacts and strongly connected to other coral reef systems. These reefs provide a proactive opportunity to secure a long-term future for coral reefs under climate change. To help guide local management efforts, we quantified marine cumulative human impact (CHI) from climate, marine, and land pressures (2013 and from 2008 to 2013) in BCUs and across countries tasked with BCU management. Additionally, we created a management index based on common management measures and policies for each pressure source (climate, marine, and land) to identify a country's intent and commitment to effectively manage these pressures. Twenty-two countries (79%) had increases in CHI from 2008 to 2013. Climate change pressures had the highest proportional contribution to CHI across all reefs and in all but one country (Singapore), but 18 BCUs (35%) and nine countries containing BCUs (32%) had relatively high land and marine impacts. There was a significant positive relationship between climate impact and the climate management index across countries (R² = 0.43, p = 0.02), potentially signifying that countries with greater climate impacts are more committed to managing them. However, this trend was driven by climate management intent in Fiji and Bangladesh. Our results can be used to guide future fine-scale analyses, national policies, and local management decisions, and our management indices reveal areas where management components can be improved. Cost-effectively managing local pressures (e.g., fishing and nutrients) in BCUs is essential for building a climate-ready future that benefits coral reefs and people.     

Simulation of NO and N2O emissions from a spruce forest during a freeze/thaw event using an N-flux submodel from the PnET-N-DNDC model integrated to CoupModel

The amount of nitrogen gases (N₂O, NO and N₂) emitted from forest soils depends on interactions between soil properties, climatic factors and soil management. To increase the understanding of nitrogen processes in soil ecosystems, two dynamic models, CoupModel (coupled heat and mass transfer model for soil–plant–atmosphere systems) and the denitrification–decomposition (DNDC) model were selected. Both are dynamic models with different submodels for soil, vegetation, hydrology and climate system. CoupModel has a higher degree of detail on soil physical and abiotic components, whereas the DNDC model contains details of microbiological processes involved in production of nitrogen gases. To improve the previous simple submodel of nitrogen emission in CoupModel, we included a submodel corresponding to the forest version of DNDC containing photosynthesis/evapotranspiration-nitrogen (PnET-N-DNDC model).     

Level of environmental threat posed by horticultural trade in Cactaceae

Ornamental horticulture has been identified as an important threat to plant biodiversity and is a major pathway for plant invasions worldwide. In this context, the family Cactaceae is particularly challenging because it is considered the fifth most threatened large taxonomic group in the world; several species are among the most widespread and damaging invasive species; and Cactaceae is one of the most popular horticultural plant groups. Based on the Convention on International Trade in Endangered Species of Wild Flora and Fauna and the 11 largest online auction sites selling cacti, we documented the international cactus trade. To provide an in‐depth look at the dynamics of the industry, we surveyed the businesses involved in the cactus trade in South Africa (a hotspot of cactus trade and invasions). We purchased seeds of every available species and used DNA barcoding to identify species to the genus level. Although <20% of this trade involved threatened species and <3% involved known invasive species, many species were identified by a common name. However, only 0.02% of the globally traded cacti were collected from wild populations. Despite a large commercial network, all South African imports (of which 15% and 1.5% were of species listed as threatened and invasive, respectively) came from the same source. With DNA barcoding, we identified 24% of the species to genus level. Based on our results, we believe that if trade restrictions are placed on the small proportion of cacti that are invasive and there is no major increase in harvesting of native populations, then the commercial trade in cactus poses a negligible environmental threat. However, there are currently no effective methods for easily identifying which cacti are traded, and both the illicit harvesting of cacti from the wild and the informal trade in invasive taxa pose on‐going conservation challenges.     

A thermodynamic model of freshwater Antarctic lake ice

Antarctic lakes with simple plankton ecosystems are believed to be sensitive biological indicators of climate change. Models of the physical environment, in particular the ice layer, support understanding of how the ecosystems respond to meteorological variables. This paper describes how data from a previously reported automatic measuring probe and meteorological data from Davis station were used to develop a detailed thermodynamic model of the ice layer on Crooked Lake, one of the largest and deepest freshwater lakes in Antarctica. The general model structure is similar to a previously reported model of sea ice but with modifications specific to the Antarctic freshwater lake case informed by the data. The model inputs are atmospheric variables as well as water temperature, ice albedo and the radiation extinction coefficient for the ice. Heat and radiation fluxes at the ice–air and ice–water boundaries are calculated using equations chosen for their suitability for the Antarctic. In the case of shortwave radiation, equations were fitted to data from the automatic probe. Using the heat fluxes to establish boundary conditions, and incorporating the known thermodynamic properties of ice, the temperature profile within the ice and the resulting growth and melt of the ice can be calculated. The model uses a largely mechanistic approach, with most equations taken from established thermodynamic theories or empirical studies and only one adjustable parameter related to the sensible heat flux from the water, which is not easily calculated from the available data. It was found to accurately reproduce ice temperature and ice thickness data for the year 2003, with r² = 0.89, n = 2005. Finally, the model was simplified to run with air temperature as the only input variable and was shown to perform well—this suggests that freshwater lake ice is affected more by air temperature than any other variable, and is therefore a useful indicator of climate change in its own right.     

Carbon leakage and capacity-based allocations: Is the EU right?

Competitiveness and carbon leakage are major concerns for the design of CO₂ emissions permits markets. In the absence of a global carbon tax and of border carbon adjustments, output-based allocation is a third-best solution and is actually implemented (Australia, California, New Zealand). The EU has followed a different route; free allowances are allocated to existing or new capacities in proportion to a benchmark, independent of actual production. This paper compares these two schemes in a formal setting and shows that the optimal one is in fact a combination of both schemes, or output-based allocation alone if uncertainty is limited. A key assumption of our analysis is that the short-term import pressure depends both on the existing capacities and the level of demand, which is typical in capital intensive and internationally traded sectors. A calibration of the model is used to discuss the EU scheme for the cement sector in the third phase of the EU-ETS (2013–2020). This allows for a quantification of various policies in terms of welfare, investment, production, company profits, public revenues and leakage.     

Economic Growth,Climate Change,Biodiversity Loss: Distributive Justice for the Global North and South

Abstract: Economic growth‐the increase in production and consumption of goods and services‐must be considered within its biophysical context. Economic growth is fueled by biophysical inputs and its outputs degrade ecological processes, such as the global climate system. Economic growth is currently the principal cause of increased climate change, and climate change is a primary mechanism of biodiversity loss. Therefore, economic growth is a prime catalyst of biodiversity loss. Because people desire economic growth for dissimilar reasons‐some for the increased accumulation of wealth, others for basic needs‐how we limit economic growth becomes an ethical problem. Principles of distributive justice can help construct an international climate‐change regime based on principles of equity. An equity‐based framework that caps economic growth in the most polluting economies will lessen human impact on biodiversity. When coupled with a cap‐and‐trade mechanism, the framework can also provide a powerful tool for redistribution of wealth. Such an equity‐based framework promises to be more inclusive and therefore more effective because it accounts for the disparate developmental conditions of the global north and south.     

Free Trade Is Green, Protectionism Is Not

Many writers argue that free trade will lead to environmental degradation. Most environmentally pernicious public policies, however, such as subsidies of timber extraction and ranching, are also trade protectionist policies. To the extent that free trade treaties, such as the General Agreement on Tariffs and Trade, do away with such trade protectionism, free trade instead could be viewed as a major pathway to environmental reform. Furthermore, trade liberalization is associated with urbanization and industrialization, both of which reduce population growth rates and the pressures of colonization. I suggest that we, as environmentalists, can ally ourselves with free traders.     

Current Practices and Future Opportunities for Policy on Climate Change and Invasive Species

Abstract:  Climate change and invasive species are often treated as important, but independent, issues. Nevertheless, they have strong connections: changes in climate and societal responses to climate change may exacerbate the impacts of invasive species, whereas invasive species may affect the magnitude, rate, and impact of climate change. We argue that the design and implementation of climate-change policy in the United States should specifically consider the implications for invasive species; conversely, invasive-species policy should address consequences for climate change. The development of such policies should be based on (1) characterization of interactions between invasive species and climate change, (2) identification of areas where climate-change policies could negatively affect invasive-species management, and (3) identification of areas where policies could benefit from synergies between climate change and invasive-species management.