The role of analytical economics in environmental policy evaluation: interaction of waste and energy policies

2012 EEEN Forum / Evaluation

Maarten Dubois, KU Leuven

The EEEN forum has the objective to advance the evaluation of environmental policies.  As resources become ever more scarce, policy needs well-integrated decisions that take into account side effects on all domains. Environmental economy has an important role to play in policy evaluation. Rather than focusing on single technologies or specific environmental effects, analytical models have a heli­copter view on the full welfare impact. Through a focus on efficiency, environmental economics offers a methodology to balance environmental benefits and private invest­ment costs of policies. As waste and energy policies are managed by different administrative bodies, instruments are not inte­grated. This presentation analyses, based on an analytical model, the side effects of taxation and subsidies in both domains. The theoretical approach is illustrated with the question whether high calorific waste should be treated in industrial installations to substitute primary fuel (co-incineration) or in conventional waste incinerators.  Different energy and waste policy instruments interact in this issue. A second empirical illustration discusses the reasons and effects of integrating waste incin­erators in the EU carbon emissions trading system. In both illustrations, taxes and subsidies have a direct impact on company behaviour and environmental impacts.

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