TY - JOUR A1 - Šedová, Barbora A1 - Kalkuhl, Matthias T1 - Who are the climate migrants and where do they go? BT - Evidence from rural India JF - World development N2 - In this paper, we move from the large strand of research that looks at evidence of climate migration to the questions: who are the climate migrants? and where do they go? These questions are crucial to design policies that mitigate welfare losses of migration choices due to climate change. We study the direct and heterogeneous associations between weather extremes and migration in rural India. We combine ERAS reanalysis data with the India Human Development Survey household panel and conduct regression analyses by applying linear probability and multinomial logit models. This enables us to establish a causal relationship between temperature and precipitation anomalies and overall migration as well as migration by destination. We show that adverse weather shocks decrease rural-rural and international migration and push people into cities in different, presumably more prosperous states. A series of positive weather shocks, however, facilitates international migration and migration to cities within the same state. Further, our results indicate that in contrast to other migrants, climate migrants are likely to be from the lower end of the skill distribution and from households strongly dependent on agricultural production. We estimate that approximately 8% of all rural-urban moves between 2005 and 2012 can be attributed to weather. This figure might increase as a consequence of climate change. Thus, a key policy recommendation is to take steps to facilitate integration of less educated migrants into the urban labor market. KW - climate change KW - migration KW - household analysis KW - India KW - econometrics Y1 - 2020 U6 - https://doi.org/10.1016/j.worlddev.2019.104848 SN - 0305-750X SN - 1873-5991 VL - 129 PB - Elsevier Science CY - Amsterdam ER - TY - JOUR A1 - Wenz, Leonie A1 - Kalkuhl, Matthias A1 - Steckel, Jan Christoph A1 - Creutzig, Felix T1 - Teleconnected food supply shocks JF - Environmental research letters N2 - The 2008-2010 food crisis might have been a harbinger of fundamental climate-induced food crises with geopolitical implications. Heat-wave-induced yield losses in Russia and resulting export restrictions led to increases in market prices for wheat across the Middle East, likely contributing to the Arab Spring. With ongoing climate change, temperatures and temperature variability will rise, leading to higher uncertainty in yields for major nutritional crops. Here we investigate which countries are most vulnerable to teleconnected supply-shocks, i.e. where diets strongly rely on the import of wheat, maize, or rice, and where a large share of the population is living in poverty. We find that the Middle East is most sensitive to teleconnected supply shocks in wheat, Central America to supply shocks in maize, and Western Africa to supply shocks in rice. Weighing with poverty levels, Sub-Saharan Africa is most affected. Altogether, a simultaneous 10% reduction in exports of wheat, rice, and maize would reduce caloric intake of 55 million people living in poverty by about 5%. Export bans in major producing regions would put up to 200 million people below the poverty line at risk, 90% of which live in Sub-Saharan Africa. Our results suggest that a region-specific combination of national increases in agricultural productivity and diversification of trade partners and diets can effectively decrease future food security risks. KW - food security KW - trade shocks KW - vulnerability KW - climate change KW - teleconnections Y1 - 2016 U6 - https://doi.org/10.1088/1748-9326/11/3/035007 SN - 1748-9326 VL - 11 PB - IOP Publ. Ltd. CY - Bristol ER - TY - JOUR A1 - Wenz, Leonie A1 - Carr, Robert Devon A1 - Kögel, Noah A1 - Kotz, Maximilian A1 - Kalkuhl, Matthias T1 - DOSE - global data set of reported sub-national economic output JF - Scientific data N2 - Many phenomena of high relevance for economic development such as human capital, geography and climate vary considerably within countries as well as between them. Yet, global data sets of economic output are typically available at the national level only, thereby limiting the accuracy and precision of insights gained through empirical analyses. Recent work has used interpolation and downscaling to yield estimates of sub-national economic output at a global scale, but respective data sets based on official, reported values only are lacking. We here present DOSE — the MCC-PIK Database Of Sub-national Economic Output. DOSE contains harmonised data on reported economic output from 1,661 sub-national regions across 83 countries from 1960 to 2020. To avoid interpolation, values are assembled from numerous statistical agencies, yearbooks and the literature and harmonised for both aggregate and sectoral output. Moreover, we provide temporally- and spatially-consistent data for regional boundaries, enabling matching with geo-spatial data such as climate observations. DOSE provides the opportunity for detailed analyses of economic development at the subnational level, consistent with reported values. KW - economics KW - environmental health KW - geography Y1 - 2023 U6 - https://doi.org/10.1038/s41597-023-02323-8 SN - 2052-4463 VL - 10 IS - 1 SP - 1 EP - 17 PB - Nature Publishing Group CY - London ER - TY - JOUR A1 - Sureth, Michael A1 - Kalkuhl, Matthias A1 - Edenhofer, Ottmar A1 - Rockström, Johan T1 - A welfare economic approach to planetary boundaries JF - Jahrbücher für Nationalökonomie und Statistik N2 - The crises of both the climate and the biosphere are manifestations of the imbalance between human extractive, and polluting activities and the Earth’s regenerative capacity. Planetary boundaries define limits for biophysical systems and processes that regulate the stability and life support capacity of the Earth system, and thereby also define a safe operating space for humanity on Earth. Budgets associated to planetary boundaries can be understood as global commons: common pool resources that can be utilized within finite limits. Despite the analytical interpretation of planetary boundaries as global commons, the planetary boundaries framework is missing a thorough integration into economic theory. We aim to bridge the gap between welfare economic theory and planetary boundaries as derived in the natural sciences by presenting a unified theory of cost-benefit and cost-effectiveness analysis. Our pragmatic approach aims to overcome shortcomings of the practical applications of CEA and CBA to environmental problems of a planetary scale. To do so, we develop a model framework and explore decision paradigms that give guidance to setting limits on human activities. This conceptual framework is then applied to planetary boundaries. We conclude by using the realized insights to derive a research agenda that builds on the understanding of planetary boundaries as global commons. KW - cost-benefit analysis KW - cost-effectiveness analysis KW - global commons KW - planetary boundaries KW - precautionary principle KW - shadow price KW - uncertainty KW - welfare economics Y1 - 2023 U6 - https://doi.org/10.1515/jbnst-2022-0022 SN - 0021-4027 SN - 2366-049X VL - 243 IS - 5 SP - 477 EP - 542 PB - De Gruyter Oldenbourg CY - Berlin ER - TY - RPRT A1 - Steckel, Jan Christoph A1 - Missbach, Leonard A1 - Ohlendorf, Nils A1 - Feindt, Simon A1 - Kalkuhl, Matthias T1 - Effects of the energy price crisis on European households BT - socio-political challenges and policy options Y1 - 2022 UR - https://www.mcc-berlin.net/fileadmin/data/C18_MCC_Publications/2022_MCC_Effects_of_the_energy_price_crisis_on_European_households.pdf PB - Mercator Research Institute on Global Commons and Climate Change (MCC) gGmbH CY - Berlin ER - TY - JOUR A1 - Singhal, Puja A1 - Pahle, Michael A1 - Kalkuhl, Matthias A1 - Sommer, Stephan A1 - Levesque, Antoine A1 - Berneiser, Jessica T1 - Beyond good faith BT - why evidence-based policy is necessary to decarbonize buildings cost-effectively JF - SSRN eLibrary / Social Science Research Network N2 - The ambitious climate targets set by industrialized nations worldwide cannot be met without decarbonizing the building stock. Using Germany as a case study, this paper takes stock of the extensive set of energy efficiency policies that are already in place and clarifies that they have been designed “in good faith” but lack in overall effectiveness as well as cost-efficiency in achieving these climate targets. We map out the market failures and behavioural considerations that are potential reasons for why realized energy savings fall below expectations and why the household adoption of energy-efficient and low-carbon technologies has remained low. We highlight the pressing need for data and modern empirical research to develop targeted and cost-effective policies seeking to correct these market failures. To this end, we identify some key research questions and identify gaps in the data required for evidence-based policy. KW - energy efficiency KW - decarbonization KW - housing sector KW - heat demand KW - evidence-based policy Y1 - 2021 U6 - https://doi.org/10.2139/ssrn.3947800 SN - 1556-5068 PB - SSRN - Elsevier CY - Rochester, NY ER - TY - JOUR A1 - Sedova, Barbora A1 - Kalkuhl, Matthias A1 - Mendelsohn, Robert T1 - Distributional impacts of weather and climate in rural India JF - Economics of disasters and climate change N2 - Climate-related costs and benefits may not be evenly distributed across the population. We study distributional implications of seasonal weather and climate on within-country inequality in rural India. Utilizing a first difference approach, we find that the poor are more sensitive to weather variations than the non-poor. The poor respond more strongly to (seasonal) temperature changes: negatively in the (warm) spring season, more positively in the (cold) rabi season. Less precipitation is harmful to the poor in the monsoon kharif season and beneficial in the winter and spring seasons. We show that adverse weather aggravates inequality by reducing consumption of the poor farming households. Future global warming predicted under RCP8.5 is likely to exacerbate these effects, reducing consumption of poor farming households by one third until the year 2100. We also find inequality in consumption across seasons with higher consumption during the harvest and lower consumption during the sowing seasons. KW - climate change KW - weather KW - inequality KW - household analysis KW - India KW - econometrics Y1 - 2019 U6 - https://doi.org/10.1007/s41885-019-00051-1 SN - 2511-1280 SN - 2511-1299 VL - 4 IS - 1 SP - 5 EP - 44 PB - Springer CY - Cham ER - TY - JOUR A1 - Ramakrishnan, Anjali A1 - Kalkuhl, Matthias A1 - Ahmad, Sohail A1 - Creutzig, Felix T1 - Keeping up with the Patels BT - conspicuous consumption drives the adoption of cars and appliances in India JF - Energy research & social science N2 - End-users base their consumption decisions not only on available budget and direct use value, but also on their social environment. The underlying social dynamics are particularly important in the case of consumer goods that implicate high future energy demand and are, hence, also key for climate mitigation. This paper investigates the impact of social factors, with a focus on 'status perceptions', on car and appliance ownerships by urban India households. Using two rounds of the household-level data from the India Human Development Survey (IHDS, 2005 and 2012), we test for the impact of social factors in addition to economic, demographic, locational, and housing on ownership levels. Starting with factor analysis to categorise appliances by their latent characteristics, we then apply the bivariate ordered probit model to identify drivers of consumption among the urban households. We find that while income and household demographics are predominant drivers of car and appliance uptake, the household's perception of status, instrumented by a variable measuring expenditure on conspicuous consumption, emerges as a key social dimension influencing the uptake. The results indicate how households identify themselves in society influences their corresponding car and appliance consumption. A deeper understanding of status-based consumption is, therefore, essential to designing better demand-side solutions to low carbon consumption. KW - Residential energy demand KW - Perceived socioeconomic status KW - Social KW - drivers KW - Energy policy KW - Car ownership KW - Appliance diffusion Y1 - 2020 U6 - https://doi.org/10.1016/j.erss.2020.101742 SN - 2214-6296 SN - 2214-6326 VL - 70 PB - Elsevier CY - Amsterdam ER - TY - JOUR A1 - Piontek, Franziska A1 - Kalkuhl, Matthias A1 - Kriegler, Elmar A1 - Schultes, Anselm A1 - Leimbach, Marian A1 - Edenhofer, Ottmar A1 - Bauer, Nico T1 - Economic Growth Effects of Alternative Climate Change Impact Channels in Economic Modeling JF - Environmental & resource economics : the official journal of the European Association of Environmental and Resource Economists N2 - Despite increasing empirical evidence of strong links between climate and economic growth, there is no established model to describe the dynamics of how different types of climate shocks affect growth patterns. Here we present the first comprehensive, comparative analysis of the long-term dynamics of one-time, temporary climate shocks on production factors, and factor productivity, respectively, in a Ramsey-type growth model. Damages acting directly on production factors allow us to study dynamic effects on factor allocation, savings and economic growth. We find that the persistence of impacts on economic activity is smallest for climate shocks directly impacting output, and successively increases for direct damages on capital, loss of labor and productivity shocks, related to different responses in savings rates and factor-specific growth. Recurring shocks lead to large welfare effects and long-term growth effects, directly linked to the persistence of individual shocks. Endogenous savings and shock anticipation both have adaptive effects but do not eliminate differences between impact channels or significantly lower the dissipation time. Accounting for endogenous growth mechanisms increases the effects. We also find strong effects on income shares, important for distributional implications. This work fosters conceptual understanding of impact dynamics in growth models, opening options for links to empirics. KW - Climate change KW - Damages KW - Economic growth KW - Impact channels KW - Production factors KW - Persistence Y1 - 2018 U6 - https://doi.org/10.1007/s10640-018-00306-7 SN - 0924-6460 SN - 1573-1502 VL - 73 IS - 4 SP - 1357 EP - 1385 PB - Springer CY - Dordrecht ER - TY - GEN A1 - Otto, Christian A1 - Piontek, Franziska A1 - Kalkuhl, Matthias A1 - Frieler, Katja T1 - Event-based models to understand the scale of the impact of extremes T2 - Nature energy N2 - Climate change entails an intensification of extreme weather events that can potentially trigger socioeconomic and energy system disruptions. As we approach 1 degrees C of global warming we should start learning from historical extremes and explicitly incorporate such events in integrated climate-economy and energy systems models. KW - Climate-change impacts KW - Energy economics KW - Socioeconomic scenarios Y1 - 2020 U6 - https://doi.org/10.1038/s41560-020-0562-4 SN - 2058-7546 VL - 5 IS - 2 SP - 111 EP - 114 PB - Nature Publishing Group CY - London ER - TY - JOUR A1 - Montrone, Lorenzo A1 - Steckel, Jan Christoph A1 - Kalkuhl, Matthias T1 - The type of power capacity matters for economic development BT - evidence from a global panel JF - Resource and energy economics N2 - We examine the relationship between different types of power investments and regional economic dynamics. We construct a novel panel dataset combining data on regional GDP and power capacity additions for different technologies between 1960 and 2015, which covers 65% of the global power capacity that has been installed in this period. We use an event study design to identify the effect of power capacity addition on GDP per capita, exploiting the fact that the exact amount of power capacity coming online each year is determined by random construction delays. We find evidence that GDP per capita increases by 0.2% in the 6 years around the coming online of 100 MW coal-fired power capacity. We find similar effects for hydropower capacity, but not for any other type of power capacity. The positive effects are regionally bounded and stronger for projects on new sites (green-field). The magnitude of this effect might not be comparable to the total external costs of building new coal-fired power capacity, yet our results help to explain why policymakers favor coal investments for spurring regional growth. KW - Energy and development KW - Economic growth KW - Public infrastructure KW - Public investments KW - Electricity sector Y1 - 2022 U6 - https://doi.org/10.1016/j.reseneeco.2022.101313 SN - 0928-7655 VL - 69 PB - Elsevier CY - Amsterdam ER - TY - RPRT A1 - Lessmann, Kai A1 - Gruner, Friedemann A1 - Kalkuhl, Matthias A1 - Edenhofer, Ottmar T1 - Emissions Trading with Clean-up Certificates BT - Deterring Mitigation or Increasing Ambition? T2 - CEPA Discussion Papers N2 - We analyze how conventional emissions trading schemes (ETS) can be modified by introducing “clean-up certificates” to allow for a phase of net-negative emissions. Clean-up certificates bundle the permission to emit CO2 with the obligation for its removal. We show that demand for such certificates is determined by cost-saving technological progress, the discount rate and the length of the compliance period. Introducing extra clean-up certificates into an existing ETS reduces near-term carbon prices and mitigation efforts. In contrast, substituting ETS allowances with clean-up certificates reduces cumulative emissions without depressing carbon prices or mitigation in the near term. We calibrate our model to the EU ETS and identify reforms where simultaneously (i) ambition levels rise, (ii) climate damages fall, (iii) revenues from carbon prices rise and (iv) carbon prices and aggregate mitigation cost fall. For reducing climate damages, roughly half of the issued clean-up certificates should replace conventional ETS allowances. In the context of the EU ETS, a European Carbon Central Bank could manage the implementation of cleanup certificates and could serve as an enforcement mechanism. T3 - CEPA Discussion Papers - 79 KW - carbon removal KW - carbon pricing KW - net-negative emissions KW - carbon debt Y1 - 2024 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-641368 SN - 2628-653X IS - 79 ER - TY - JOUR A1 - Kozicka, Marta A1 - Weber, Regine A1 - Kalkuhl, Matthias T1 - Cash vs. in-kind transfers BT - the role of self-targeting in reforming the Indian food subsidy program JF - Food Security N2 - Historically, India has relied on subsidizing staple food as a major instrument in improving food security. Recently, however, cash transfers have entered the debate as an alternative, as they are associated with lower market distortions, leakages and fiscal costs. This study contributes to this debate by analyzing India’s Targeted Public Distribution System (TPDS). Our main objective was to explain the under-purchase, or low take-up, from the TPDS, which is typically attributed to ‘leakage’, i.e. the diversion of food grains from eligible consumers. We provide an alternative solution based on self-targeting; while poorer households increase their consumption from the TPDS, wealthier households restrain from consuming subsidized commodities. Using a large household dataset, we estimated that such a voluntary opt-out system, based on income, would save a minimum of 6.5% of grains released through the TPDS. Besides these demand-driven aspects, our analysis indicates that poor regions perform better at lowering the diversion of grains and that large targeting errors exist among female-led households. Finally, we find substantial regional price differences that would benefit the poor and rural population under a uniform cash-transfer system that does not correct for regional price levels. KW - Food security KW - Policies KW - India KW - Targeted public distribution system KW - Self-targeting KW - Cash transfers Y1 - 2019 U6 - https://doi.org/10.1007/s12571-019-00942-x SN - 1876-4517 SN - 1876-4525 VL - 11 IS - 4 SP - 915 EP - 927 PB - Springer CY - New York ER - TY - JOUR A1 - Kozicka, Marta A1 - Kalkuhl, Matthias A1 - Brockhaus, Jan T1 - Food Grain Policies in India and their Implications for Stocks and Fiscal Costs BT - a Dynamic Partial Equilibrium Analysis JF - Journal of Agricultural Economics N2 - We analyse current and possible future reforms of the Indian food policies for the most important staple grains, wheat and rice, within a two-commodity dynamic partial equilibrium model with stochastic shocks. The model is empirically grounded and reproduces past values well. It uses a new reduced-form approach to capture private storage dynamics. We evaluate the implementation of the National Food Security Act (NFSA) under several policy measures with the current regime as well as two scenarios with a regime change - implementation of cash transfers and deficiency payments. Implications for market fundamentals and fiscal costs are simulated in the medium term - until 2020/21. The NFSA puts a high pressure on fiscal costs and public stocks. Relying on imports with low support prices results in low fiscal costs and stable, but higher domestic and international prices, and a high risk of zero stocks. A policy strategy to manipulate procurement prices in order to maintain public stocks close to the norms leads to slightly higher fiscal costs with lower, but more volatile prices. The highest domestic price volatility occurs under a strategy which uses export bans in order to maintain sufficient public stocks. A cash-based regime can bring considerable savings and curb fiscal costs, particularly if targeted to the poor, and would leave sufficient stocks due to higher private stocks. KW - Fiscal costs KW - food grain policies KW - grain storage KW - India KW - NFSA KW - reforms Y1 - 2017 U6 - https://doi.org/10.1111/1477-9552.12176 SN - 0021-857X SN - 1477-9552 VL - 68 IS - 1 SP - 98 EP - 122 PB - Wiley-Blackwell CY - Hoboken ER - TY - JOUR A1 - Kotz, Maximilian A1 - Wenz, Leonie A1 - Stechemesser, Annika A1 - Kalkuhl, Matthias A1 - Levermann, Anders T1 - Day-to-day temperature variability reduces economic growth JF - Nature climate change N2 - Elevated annual average temperature has been found to impact macro-economic growth. However, various fundamental elements of the economy are affected by deviations of daily temperature from seasonal expectations which are not well reflected in annual averages. Here we show that increases in seasonally adjusted day-to-day temperature variability reduce macro-economic growth independent of and in addition to changes in annual average temperature. Combining observed day-to-day temperature variability with subnational economic data for 1,537 regions worldwide over 40 years in fixed-effects panel models, we find that an extra degree of variability results in a five percentage-point reduction in regional growth rates on average. The impact of day-to-day variability is modulated by seasonal temperature difference and income, resulting in highest vulnerability in low-latitude, low-income regions (12 percentage-point reduction). These findings illuminate a new, global-impact channel in the climate–economy relationship that demands a more comprehensive assessment in both climate and integrated assessment models. KW - Climate change KW - Climate-change impacts KW - Economics KW - Environmental economics KW - Environmental impact Y1 - 2021 U6 - https://doi.org/10.1038/s41558-020-00985-5 SN - 1758-678X SN - 1758-6798 VL - 11 IS - 4 SP - 319 EP - 325 PB - Nature Publishing Group CY - London ER - TY - JOUR A1 - Kornher, Lukas A1 - Kalkuhl, Matthias T1 - The gains of coordination - When does regional cooperation for food security make sense? JF - Global Food Security - AGRICULTURE POLICY ECONOMICS AND ENVIRONMENT N2 - With the onset of the global food crisis, the discussion about the use and misuse of agricultural market interventions regained academic attention. As a result of economies of scale, centralized policy implementation at the regional level has the potential to reduce the budgetary costs of policies. Borrowing from the literature on international unions and international policy coordination, we develop a conceptual framework to analyze when regional policy implementation makes sense. This is the case whenever spill-overs from centralization are large and policy preferences, driven by country-specific characteristics, are homogeneous. Subsequently, we examine the advantageousness of centralized policy implementation for the West African region regarding the most common food security policies. We show that centralization of trade policies and emergency food reserves is beneficial, while buffer stocks, safety net policies, and producer support policies should be implemented at the national level. KW - Food security KW - Regional cooperation KW - West Africa KW - International unions Y1 - 2019 U6 - https://doi.org/10.1016/j.gfs.2019.09.004 SN - 2211-9124 VL - 22 SP - 37 EP - 45 PB - Elsevier CY - Amsterdam ER - TY - RPRT A1 - Kellner, Maximilian A1 - Amberg, Maximilian A1 - Bergmann, Tobias A1 - Roolfs, Christina A1 - Kalkuhl, Matthias T1 - Entlastungspakete für Energiepreisanstiege BT - Auswirkungen und Nachbesserungsbedarf Y1 - 2022 UR - https://www.mcc-berlin.net/fileadmin/user_upload/Kalkuhl/2022_MCC_Entlastungspakete_fuer_Energiepreisanstiege_.pdf U6 - https://doi.org/10.5281/zenodo.6617130 PB - Mercator Research Institute on Global Commons and Climate Change (MCC) gGmbH CY - Berlin ER - TY - JOUR A1 - Kalkuhl, Matthias A1 - Wenz, Leonie T1 - The impact of climate conditions on economic production BT - evidence from a global panel of regions JF - Journal of Environmental Economics and Management N2 - We present a novel data set of subnational economic output, Gross Regional Product (GRP), for more than 1500 regions in 77 countries that allows us to empirically estimate historic climate impacts at different time scales. Employing annual panel models, long-difference regressions and cross-sectional regressions, we identify effects on productivity levels and productivity growth. We do not find evidence for permanent growth rate impacts but we find robust evidence that temperature affects productivity levels considerably. An increase in global mean surface temperature by about 3.5°C until the end of the century would reduce global output by 7–14% in 2100, with even higher damages in tropical and poor regions. Updating the DICE damage function with our estimates suggests that the social cost of carbon from temperature-induced productivity losses is on the order of 73–142$/tCO2 in 2020, rising to 92–181$/tCO2 in 2030. These numbers exclude non-market damages and damages from extreme weather events or sea-level rise. KW - climate change KW - climate damages KW - climate impacts KW - growth regression KW - global warming KW - panel regression KW - cross-sectional regression KW - damage KW - function KW - social costs of carbon Y1 - 2020 U6 - https://doi.org/10.1016/j.jeem.2020.102360 SN - 0095-0696 SN - 1096-0449 VL - 103 PB - Elsevier CY - San Diego ER - TY - GEN A1 - Kalkuhl, Matthias A1 - Steckel, Jan Christoph A1 - Montrone, Lorenzo A1 - Jakob, Michael A1 - Peters, Jörg A1 - Edenhofer, Ottmar T1 - Successful coal phase-out requires new models of development T2 - Nature Energy N2 - Different energy sources have different spillovers on economic development and industrialization. Pathways of economic development based on renewable energy sources might require additional policies to support industrial development. Y1 - 2019 U6 - https://doi.org/10.1038/s41560-019-0500-5 SN - 2058-7546 VL - 4 IS - 11 SP - 897 EP - 900 PB - Nature Publ. Group CY - London ER - TY - JOUR A1 - Kalkuhl, Matthias A1 - Steckel, Jan Christoph A1 - Edenhofer, Ottmar T1 - All or nothing BT - climate policy when assets can become stranded JF - Journal of environmental economics and management N2 - This paper develops a new perspective on stranded assets in climate policy using a partial equilibrium model of the energy sector. Political-economy related aspects are considered in the government's objective function. Lobbying power of firms or fiscal considerations by the government lead to time inconsistency: The government will deviate from a previously announced carbon tax which creates stranded assets. Under rational expectations, we show that a time-consistent policy outcome exists with either a zero carbon tax or a prohibitive carbon tax that leads to zero fossil investments - an "all-or-nothing" policy. Although stranded assets are crucial to such a bipolar outcome, they disappear again under time-consistent policy. Which of the two outcomes (all or nothing) prevails depends on the lobbying power of owners of fixed factors (land and fossil resources) but not on fiscal revenue considerations or on the lobbying power of renewable or fossil energy firms. KW - Climate policy KW - Optimal control KW - Political economy KW - Public finance KW - Credible policy KW - Time inconsistency Y1 - 2020 U6 - https://doi.org/10.1016/j.jeem.2019.01.012 SN - 0095-0696 SN - 1096-0449 VL - 100 PB - Elsevier CY - San Diego ER -