- Dynamic Systems and Control, Modelling and Simulation of Dynamical System, European climate policies, European climate and energy policies, EU ETS, Globalisation and Sustainable Development, and 2 moreEconomic growth and environmental degradation and Dynamic environmental models, game theoretical modelsedit
- Simone Borghesi is Director of the Florence School of Regulation - Climate (FSR Climate), at the European University ... moreSimone Borghesi is Director of the Florence School of Regulation - Climate (FSR Climate), at the European University Institute, Florence and Associate Professor at the University of Siena where he teaches Environmental Economics. He is also President of the Italian Association of Environmental and Resource Economists (IAERE) and Secretary General of the Policy Outreach Committee of the European Association of Environmental and Resource Economists (EAERE). He received a M.Sc. in Economics at University College London (1996) and a Ph.D. in Economics at the European University Institute (2001). He worked at the International Monetary Fund, Washington (1998), at the Fondazione ENI Enrico Mattei, Milan (1999) and as Assistant Professor at the University of Pescara (2004-2008). He has been visiting scholar at INRA – Institute National de la Recherche Agronomique, Grenoble (2013), at the Department of Land Economy of the University of Cambridge (2015) and at the Center of Economic Research of the ETH, Zurich (2016). He has published three books and more than 50 papers in peer reviewed international journals.edit
An environmental policy to foster virtuous behaviour does not automatically establish a social norm in a population; that is, the policy might not be socially acceptable or enforceable. Some agents feel compelled to abide by environmental... more
An environmental policy to foster virtuous behaviour does not automatically establish a social norm in a population; that is, the policy might not be socially acceptable or enforceable. Some agents feel compelled to abide by environmental social norms and embrace them, but others do not. Some might want to imitate their peers, while others might prefer not to conform and play the role of a maverick. In this model, we describe the heterogeneity of preferences by proposing a taxonomy of five possible agent types that enrich the traditional triplet presented in the literature. We then employ a random matching model to study how a social norm spreads within a population when its composition changes. Considering three relevant population compositions (scenarios), we show that what is most important for the successful diffusion of social norms is not whether, but why agents abide by it.
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Ensure open markets for clean technologies and products
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Research Interests: Economics, Environmental Economics, Economic Growth, Sustainable Development, Environment and natural resources conservation, and 12 moreApplied Economics, Socio Economics, Welfare, Environmental protection, Environmental degradation, Public health systems and services research, Happynes and Economics, Population and Environment, Negative Externalities, Self-protection choices, Growth Process, and evolutionary model
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The paper investigates the effectiveness of the progressive shift towards the auctioning system within the EU ETS and the practical difficulties that such a shift is encountering on its way. For this purpose, it first examines the... more
The paper investigates the effectiveness of the progressive shift towards the auctioning system within the EU ETS and the practical difficulties that such a shift is encountering on its way. For this purpose, it first examines the theoretical debate on the optimal allocation method underlying the ETS and describes the current allocation regime of the European Union Allowances, presenting the general rules as well as the special provisions to address specific sectors (e.g. aviation and electricity generation). Then it discusses the main problems that have been emerging so far in terms of:(i) possible carbon leakage arising in some of the ETS sectors, (ii) unsatisfactory results of the NER (New Entrant Reserve) program, (iii) intertemporal evolution of the auction price and corresponding revenues, and (iv) the much debated backloading proposal, that is the idea of temporarily halting and postponing further auctions due to the lack of permits’ demand. The comparison of the theoretical debate with the practical difficulties arising in real world applications, highlights that a long way is still to go to achieve an optimal allocation method.
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Research Interests: Economics, Development Economics, Economic Growth, Environmental Sustainability, Applied Economics, and 8 moreEnvironmental degradation, Evolutionary game theory and applications, Heterogeneous Agents, Environmental Impact, Environmental externalities, Environmental defensive expenditures, evolutionary model, and Stationary State
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This chapter investigates linking Emission Trading Schemes (ETSs) as a possible option to increase the effectiveness of the existing domestic or regional regimes and overcome the difficulties encountered in recent years by international... more
This chapter investigates linking Emission Trading Schemes (ETSs) as a possible option to increase the effectiveness of the existing domestic or regional regimes and overcome the difficulties encountered in recent years by international climate change negotiations. For this purpose, the drivers and different types of possible linking arrangements are analysed along with their pros and cons, and the “necessary and optional features” for a successful linking are proposed. Building on this analysis, the chapter proposes three selected options for linking ETSs, aiming at enlarging the scope of the existing domestic/regional regimes, ranging from multilateralism to bilateralism. Finally, particular attention is devoted to the proposal recently set forth by the World Bank of a system of “globally networked carbon markets”, which goes beyond the linking agreements planned, proposed and/or implemented so far.
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The European Emission Trading Scheme (EU ETS) is generally considered as the prototype system for the other ETSs that are rapidly spreading around the world. Building on the description of the features of the main ETSs examined in the... more
The European Emission Trading Scheme (EU ETS) is generally considered as the prototype system for the other ETSs that are rapidly spreading around the world. Building on the description of the features of the main ETSs examined in the previous chapters, the present chapter discusses the differences and similarities of the EU ETS with respect to the other main ETS and the emerging trends that these systems seem to share, comparing the different cap and trade regimes in order to identify the best practices and the desirable features that future ETS should have. As emerges from the comparative analysis performed in this chapter, although the followers share with the EU ETS some common flaws, they have also shown the capacity to innovate and possibly devise alternative ways to manage their own ETS regimes, which may in the long term jeopardise the EU leadership in the ETS context.
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Following the structure adopted in Chaps. 1, this chapter investigates the legal and economic features of three selected ETSs: the Californian Cap and Trade System, the RGGI (the Regional Greenhouse Gas Initiative, encompassing several... more
Following the structure adopted in Chaps. 1, this chapter investigates the legal and economic features of three selected ETSs: the Californian Cap and Trade System, the RGGI (the Regional Greenhouse Gas Initiative, encompassing several north-east and mid-Atlantic States of the USA) and the Quebec Cap and Trade System. While several other ETSs are developing or planned around the world, after the collapse of the Australian ETS project the two US-based ETSs and the Quebec ETS represent the main schemes currently in place among the followers of the EU ETS. The in-depth analysis of their design provides the basis for the comparative analysis between them and the EU ETS performed in the following chapter and for understanding the possibilities and options for linking ETSs in the future that is investigated in the final chapter.
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This chapter describes the main features, structures and scope of the European Emission Trading Scheme (EU ETS), which has played a leading role among the existing ETSs on greenhouse gases (GHG), being a sort of pioneer of the large-scale... more
This chapter describes the main features, structures and scope of the European Emission Trading Scheme (EU ETS), which has played a leading role among the existing ETSs on greenhouse gases (GHG), being a sort of pioneer of the large-scale domestic/regional ETSs around the world. Particular attention is devoted to the specific features underlying the legal and economic design of the systems, including the GHG being covered and the sectors involved, the allocation mechanisms, the evolution of the carbon pricing and the subsequent revisions of the EU ETS (e.g. the NER300 programme and the back-loading mechanism) that have been implemented to face some of the problems encountered so far.
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Research Interests: Environmental Engineering, Economics, Environmental Economics, Cleaner Production, GHG Emissions, and 8 moreManufacturing Engineering, Mediterranean Area, Industrial and Manufacturing Engineering, Greenhouse Gas, Interdisciplinary Engineering, Emissions Embodied In Trade, Consumption-based accounting, and consumption sociology
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Abstract Environmental problems are increasingly frequent, intensive and unpredictable. To protect from the observed environmental depletion, economic agents increasingly react by substituting previously free public environmental goods... more
Abstract Environmental problems are increasingly frequent, intensive and unpredictable. To protect from the observed environmental depletion, economic agents increasingly react by substituting previously free public environmental goods with costly private goods. This substitution mechanism, however, can contribute to enhance the indeterminacy of the possible consequences of mankind activity, further increasing the uncertainty on the future environmental trajectories. To investigate this issue, the paper proposes an intertemporal optimization problem in which agents derive utility from three goods: leisure, a public environmental good and/or private consumption that can be used as a substitute for the environment. The analysis shows that the economy may end up being trapped in the Pareto-dominated steady state and that both local and global indeterminacy may arise in the model. No indeterminacy, however, emerges if green technologies are used so that production has no negative effects on the environment.
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ABSTRACT The adoption and diffusion of environmental innovations (EIs) is crucial to greening the economy and achieving win–win environmental/economic gains. A large and increasing literature has focused on the levers underlying EIs that... more
ABSTRACT The adoption and diffusion of environmental innovations (EIs) is crucial to greening the economy and achieving win–win environmental/economic gains. A large and increasing literature has focused on the levers underlying EIs that are external to the firm, such as stakeholder and policy pressures. Little attention, however, has been devoted to the possible role of local spillovers of a sector/geographical nature as a factor that correlates with EIs and economic performances. A rich data set that covers the innovative activities and economic performances of firms in the Emilia-Romagna region in Italy, an area dense in manufacturing districts, is analysed. EIs’ drivers and effects on firms’ performance are investigated through a two-step procedure. First, we examine the relevance of spatial levers, namely, whether high rates of eco-innovators in a given local area induce the adoption of EIs in firms located in the same local area. The role of the ‘agglomeration lever’ turns out to be fairly local in nature: we find that spillovers are significantly inducing innovation within municipal boundaries. Second, we test whether EIs adoptions have significantly increased firms’ economic performances and find that some firms’ productivity performances are positively related to EI adoption.
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Questo lavoro esamina la politica energetica europea degli ultimi anni, evidenziandone le criticita emerse nel sistema dei permessi negoziabili e nella transizione verso le rinnovabili. Nonostante le difficolta incontrate nel recente... more
Questo lavoro esamina la politica energetica europea degli ultimi anni, evidenziandone le criticita emerse nel sistema dei permessi negoziabili e nella transizione verso le rinnovabili. Nonostante le difficolta incontrate nel recente passato a raggiungere gli obiettivi intermedi che si era proposta, l’Unione europea ha fissato obiettivi ancor piu ambiziosi per il futuro. Questa politica che innalza e pospone l'obiettivo da raggiungere puo creare, tuttavia, problemi di incoerenza temporale e credibilita delle politiche annunciate che, uniti a talune criticita del sistema dei permessi evidenziate nell’analisi, possono ostacolare la capacita dell’Unione di raggiungere gli obiettivi energetici prefissati.
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The European Emission Trading Scheme (EU ETS) is generally considered as the prototype system for the other ETSs that are rapidly spreading around the world. Building on the description of the features of the main ETSs examined in the... more
The European Emission Trading Scheme (EU ETS) is generally considered as the prototype system for the other ETSs that are rapidly spreading around the world. Building on the description of the features of the main ETSs examined in the previous chapters, the present chapter discusses the differences and similarities of the EU ETS with respect to the other main ETS and the emerging trends that these systems seem to share, comparing the different cap and trade regimes in order to identify the best practices and the desirable features that future ETS should have. As emerges from the comparative analysis performed in this chapter, although the followers share with the EU ETS some common flaws, they have also shown the capacity to innovate and possibly devise alternative ways to manage their own ETS regimes, which may in the long term jeopardise the EU leadership in the ETS context.
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Research Interests: Applied Mathematics, Economic Growth, Predator-Prey Interactions, Biodiversity, Environmental Sustainability, and 10 morePure Mathematics, Ecological Modelling, Nonlinear Analysis, Non Linear Dynamics, Environmental protection, Human Activity, Optimization Models, Ecological Dynamics, Ecological stability, and Environmental defensive expenditures
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Research Interests: Economics, Evolutionary Economics, Econometrics, Technological Innovation, Applied Economics, and 15 moreNumerical Simulation, Local governance, Repeated Games, Financial Instruments, Environmental protection, Oscillations, Population Growth, Evolutionary game theory and applications, Evolutionary Dynamics, Environmental quality, Economic Modelling, Poverty Trap, Sustainability, Limit Cycle, and Stationary State
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Research Interests: Evolutionary Economics, Public Administration, Tourism Management, Economic Theory, Environmental Management, and 12 moreEvolutionary Game Theory, Behavioral Economics, Technological Innovation, New Technology, Social Science Research Network, Environmental protection, Nash Equilibrium, Evolutionary game theory and applications, Evolutionary Dynamics, Environmental quality, Evolutionary, and Environmental bonds
Car use is an increasingly serious problem in many modern cities because of polluting emissions, noise, accidents and congestion. To examine this issue, this paper analyzes the individual choice between taking the car and using... more
Car use is an increasingly serious problem in many modern cities because of polluting emissions, noise, accidents and congestion. To examine this issue, this paper analyzes the individual choice between taking the car and using alternative transport modes (e.g. walking, cycling, taking the bus etc.) in the presence of cars’ negative impacts on alternative transport modes. Using a simple evolutionary model, we show the existence of suboptimal Nash equilibria characterized by the widespread use of cars and discuss the effects of simple transport policies that reduce cars’ negative impacts on alternative transport modes.
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The European Emission Trading Scheme (EU ETS) is generally considered as the prototype system for the other Emission Trading Schemes (ETSs) that are rapidly spreading around the world. To get a deeper understanding on the actual capacity... more
The European Emission Trading Scheme (EU ETS) is generally considered as the prototype system for the other Emission Trading Schemes (ETSs) that are rapidly spreading around the world. To get a deeper understanding on the actual capacity of the EU ETS to stand as a model for the other ETSs, the present paper discusses the differences and similarities of the EU ETS with respect to the other main ETSs and the emerging trends that these systems seem to share, comparing the different cap and trade regimes in order to identify the best practices and the desirable features that future ETSs should have. As emerges from the comparative analysis performed in this article, although the followers share some common flaws with the EU ETS, they have also shown the capacity to innovate and possibly devise alternative ways to manage their own ETS regimes, which may in the long term jeopardise the EU leadership in the ETSs context.
Carbon pricing is of crucial importance for decarbonisation and provides a solid economic framework for unifying the EU climate and energy policy strategy. The EU ETS is the main instrument for this purpose as it leads to a unique carbon... more
Carbon pricing is of crucial importance for decarbonisation and provides a solid economic framework for unifying the EU climate and energy policy strategy. The EU ETS is the main instrument for this purpose as it leads to a unique carbon price all over Europe. Given the difficulties it has encountered over the years, however, a set of additional ‘fragmented’ policies are also needed for decarbonisation. Among these, particular attention should be devoted to digitalisation as a promising tool that can radically innovate both the climate and the energy sectors in a more sustainable direction.
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This paper studies environmental corruption via a random matching evolutionary game be- tween a population of firms and a population of bureaucrats who have to decide whether to release a "green" license to the firms. A firm... more
This paper studies environmental corruption via a random matching evolutionary game be- tween a population of firms and a population of bureaucrats who have to decide whether to release a "green" license to the firms. A firm obtains the license if the bureaucrat checks that it complies with environmental regulations, otherwise it is sanctioned. The model assumes that there are two types of bureaucrats (honest and dishonest), two types of firms (com- pliant and non-compliant), and two possible crimes (corruption and extortion). Corruption occurs when a dishonest bureaucrat accepts a bribe from a non-compliant firm, while extor- tion occurs when a dishonest bureaucrat claims a bribe from a compliant firm. When there is no dominance of strategies, we show that there exist two bistable regimes, in which two attractive stationary states exist, and two regimes with an internal stable equilibrium, corre- sponding to the mixed strategy Nash equilibrium of the one-shot static game,...
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The sustainability of development has been studied, so far, almost exclusively in macroeconomic terms. The development of an economy in its usual macroeconomic sense, however, is sustainable only if the activity of most firms operating... more
The sustainability of development has been studied, so far, almost exclusively in macroeconomic terms. The development of an economy in its usual macroeconomic sense, however, is sustainable only if the activity of most firms operating within the economy is itself sustainable. It is thus not less important to study the microeconomic side of sustainability. Hence we introduce in this chapter the concept of “sustainable firm” in order to discuss under which conditions a company may survive healthily in the long term. To be as precise as possible we focus on the most important type of firm in industrialized countries: the corporation.
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Over the last few years water scarcity and pollution have been rapidly growing at both regional and global level. This has generated in many cases increasing intersectoral competition over the use of a limited amount of water resources.... more
Over the last few years water scarcity and pollution have been rapidly growing at both regional and global level. This has generated in many cases increasing intersectoral competition over the use of a limited amount of water resources. To examine the dynamics that such competition may generate in the economy, the present paper proposes a simple dynamic evolutionary model in which two sectors (A and B) compete for the use of water and studies the impact of water pricing on the dynamics of the two sectors in the presence of a population of interacting economic agents characterized by imitative behaviors. As it emerges from the model, when water is underpriced a self-enforcing process may be observed driving the economy towards a Pareto-dominated equilibrium. In such equilibrium the economy fully specializes in sector A, characterized by the highest negative impact on the water resource, at the expenses of sector B. The paper shows that a policy of fine tuning that increases water price through the endogenous water pricing mechanism examined in the model can inhibit the convergence of the economy to such an equilibrium point and can progressively shift the system towards the less water-consuming sector. Finally, assuming a Leontief production function and performing numerical simulations, it is shown how a change in water price can affect the dynamics of the model, and that the same results hold also in a more general, three-sector context.
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Abstract The paper offers sector-based qualitative evidence concerning the climate and energy policy effects on eco innovations in the EU. Through interviews with industry associations of Emission Trading Scheme (ETS) sectors, it analyses... more
Abstract The paper offers sector-based qualitative evidence concerning the climate and energy policy effects on eco innovations in the EU. Through interviews with industry associations of Emission Trading Scheme (ETS) sectors, it analyses the extent to which past innovation adoption dynamics were influenced by policy and regulatory levers, by looking at the single and interaction effects of policies. As could be expected from the neo-Schumpeterian theory on innovation, differences emerge across sectors. Policies appear to be relevant in some sectors, namely energy, coke and refinery, and paper, but energy costs considerations dominate over the potential effects of CO2 targeted policies. Overall, technological and organisational levels are both relevant: organisational innovations emerged as important in most sectors, often operating as a leading force in technological development. We expect this ‘complementarity’ to play a crucial role in the future path towards 2030 and 2050 aims, whose achievement is possible only by integrating technological, organisational and behavioural innovations.
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ABSTRACT a r t i c l e i n f o This paper examines the possible effects of external investment inflows on the development of local rural economies, taking into account two recurrent features of many developing countries: capital market... more
ABSTRACT a r t i c l e i n f o This paper examines the possible effects of external investment inflows on the development of local rural economies, taking into account two recurrent features of many developing countries: capital market segmenta-tion and environmental externalities. To investigate this issue, we examine a model with two sectors: the " local sector " and the " external sector ". Physical capital accumulation in the latter sector is driven by foreign direct investments, while in the former sector it follows a Solow-type accumulation mechanism. We assume that the production activity of the external sector damages the environment while the local sector relies on natural resources. In this context, we give the conditions under which capital inflows can promote diversification of host economy while improving welfare of local populations. If these conditions are not satisfied, external investments fuel a welfare reducing process (for the local community) and a self-enforcing growth of the external sector at the expense of the local one.
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Research Interests: Economics, Environmental Economics, Economic Growth, Sustainable Development, Environment and natural resources conservation, and 11 moreApplied Economics, Socio Economics, Environmental protection, Environmental degradation, Public health systems and services research, Happynes and Economics, Population and Environment, Negative Externalities, Self-protection choices, Growth Process, and evolutionary model
We study the driving forces behind the adoption of environmental innovations (EI) in the Italian economy over 2006-2008 through empirical analyses of the new wave of Community Innovation Survey data that covered EI in different contexts.... more
We study the driving forces behind the adoption of environmental innovations (EI) in the Italian economy over 2006-2008 through empirical analyses of the new wave of Community Innovation Survey data that covered EI in different contexts. Given the shortage of studies on the innovation effects of ETS at micro econometric level, we investigate whether the first phase of EU ETS has exerted some effects on EI. We then include in a typical probit innovation function some policy stringency indicators for the ETS sectors, to verify whether the likelihood of adopting EI is stimulated among other factors by the ETS lever. We test a wide and comprehensive set of potential drivers, including internal factors (R&D), external factors (cooperation, networking) and, mostly important, the dynamic incentives to innovation possibly provided by the ETS implementation. Estimates show that external forces and complementarity with other management practices are particularly relevant to increase the adopt...