This paper describes so-called city growth agreements and city environmental agreements in Norway and Sweden, respectively. We do case studies of two regions in Norway and two cities in Sweden. While the general aim of the agreements is similar in the two countries, namely for the central government to influence municipal infrastructure building in a more environmentally sustainable direction, the agreements differ in many respects. While the Norwegian agreements consist of several projects concerning the construction of roads and railroads, and infrastructure for public transport, pedestrians, and cycling, the Swedish agreements only concern one (type of) project at a time. Moreover, Norway emphasizes city planning more; even though the building of new housing is important also in Sweden, location and densification are less so. The Swedish projects are municipality driven, while the Norwegian system is based on reciprocal negotiations between the municipalities, the county, and the state. The Norwegian model fits better into a theoretical fiscal federalism-based framework than the Swedish one, with the state internalizing spatial spillovers arising from infrastructure projects. In Sweden, the agreements are better to be seen as means for institutionalized lobbying by municipalities.
This paper describes so-called city growth agreements and city environmental agreements in Norway and Sweden, respectively. We do case studies of two regions in Norway and two cities in Sweden. While the general aim of the agreements is similar in the two countries, namely for the central government to influence municipal infrastructure building in a more environmentally sustainable direction, the agreements differ in many respects. While the Norwegian agreements consist of several projects concerning the construction of roads and railroads, and infrastructure for public transport, pedestrians, and cycling, the Swedish agreements only concern one (type of) project at a time. Moreover, Norway emphasizes city planning more; even though the building of new housing is important also in Sweden, location and densification are less so. The Swedish projects are municipality driven, while the Norwegian system is based on reciprocal negotiations between the municipalities, the county, and the state. The Norwegian model fits better into a theoretical fiscal federalism-based framework than the Swedish one, with the state internalizing spatial spillovers arising from infrastructure projects. In Sweden, the agreements are better to be seen as means for institutionalized lobbying by municipalities.
European Union's (EU) energy legislation from 2009 is still being implemented in the Member States. We study analytically the Renewable Energy Directive and the Fuel Quality Directive's provisions for the transport sector. The former Directive imposes a biofuel mandate and allows double counting of some biofuels. The latter Directive imposes a Low Carbon Fuel Standard (LCFS). We show that either the biofuel mandate or the LCFS is redundant. Double counting makes the biofuel mandate easier to fulfil but also depresses the price of biofuels. Production of the doubly counted biofuels increases nevertheless and production of the single-counted biofuels falls. Given the type of technical change studied, double counting spurs technical development of the doubly counted biofuels. The LCFS directs support towards those biofuels with lowest life-cycle carbon emissions. The redundant policy instrument, the biofuel mandate or the LCFS, only creates costs but no benefits and should be abolished. Double counting makes the biofuel mandate non-cost-efficient and should be reconsidered.
We model and test the representativeness of environmental policy-making, as implied by cost-benefit analysis (CBA) results, in governmental agencies assuming that individual civil servants maximize their personal utility. Education may also influence civil servants' behavior. The biologists in our sample have the highest valuation of environmental quality. We suspect that their training does not teach them about societal welfare maximization and that they consequently do not adjust their policy recommendation to CBA results, while the economists, who learn about welfare economics, do. The empirical results indicate that the economists adjust their private valuation of the environment by a factor giving a sufficient weight to the CBA results to make their average choice a cost-efficient one. Even the economists in our sample chose on average a policy that is costlier than the cost-efficient one yet clearly less expensive than the policy chosen by the biologists and social scientists.
We study the effect of uncertainty about the greenhouse gas emissions arising from the production of biofuels on trade policy, in the presence of lobby groups and two policy instruments, trade policy and biofuels mandates. We show that in the presence of biofuels mandates it would be optimal from a societal point of view to lower the trade tariff on biofuels when the emissions from their production are shown to be 'high' as compared to when they are believed to be 'low'. If the government is susceptible to lobbying, the tariff may be raised instead. We further show that at subsequent time periods, the biofuels sector's marginal lobbying effort will not fall compared to previous periods, and that consequently, its political contribution also does not fall. Finally we show how policy may be path dependent, i.e., that earlier tariff rates in part determine future tariff rates if the government is susceptible to lobbying and given that the domestic price of biofuels does not fall. The model can, e.g., shed light on why the EU does not lower the tariffs on Brazilian ethanol in the face of new information. Older version : http://swopec.hhs.se/vtiwps/abs/vtiwps2011_001.htm
Production and use of biofuels, both for electricity and heat generation and for transportation, has grown over the past years. There are many reasons for this, among other climate change, energy security, high fossil fuel prices and rural development goals. Production of most types of biofuels requires land, however, thus competing for land both with agriculture and with forestry. For instance, Hyytiäinen et al. (2008) find for Finland that the production of biofuels (reed canary grass) is the most profitable use of arable land (compared to growing oats or pine trees), although only in the proximity of (at most 40 km from) a thermal power station. Lankoski and Ollikainen (2008), in turn find that production of reed canary grass in Finland, when the alternative is oats, is socially optimal even 100 km away from the power plant. In the tropics, not only fallow or unused agricultural land is used for biofuel production but also rainforest land has been converted, for instance, to palm oil plantations. This development is largely driven by policy measures, for instance, by the European Union's (EU) 20-20-20 target (a reduction of at least 20% in greenhouse gas emissions, and a 20% share of renewable energies in the EU's energy consumption by 2020), set by the European Council in March 2007.
Abstract We explore the changes in central government administration due to European Union (EU) membership and its consequences for policy outcomes and economic efficiency in Finland and Sweden. Both countries became members of the EU in 1995. Upon joining the union, member states are expected to adopt common legislation and are encouraged to develop similar rule-making procedures. The actual implementation of EU directives varies considerably between member states, however. This is also the case for Finland and Sweden. Despite the two Nordic countries for historical reasons having had similar government systems, upon becoming members of the EU, they started to diverge. Using a model of delegation and comparing the more centralized Finnish system with the decentralized institutional setup in Sweden, we show that the Swedish approach leads to a stricter than optimal environmental policy, which in turn makes EU policy non-optimal from a global point of view, ceteris paribus. We also provide empirical support for our findings in the form of some example cases. We focus on environmental policy since this is an area that has been high on the EU agenda.
The choice of transport infrastructure projects to include in the National Transport Infrastructure Plans in Sweden is often said to be motivated by the weighing of cost against social benefits. Examining the projects that are included in the Plans, it is clear, however, that not all projects have positive net present values, and are therefore more costly to build than the benefits they create. This paper studies alternative models that might explain the choice of projects. Two political economy models, the district demand and the swing voter with lobbying, are tested, and a model that accounts for the spatial distribution of the projects, as well as the possibility that priorities are based on welfare concerns, is estimated. No support is found for the political economy models. What explains investment volume is the existence of CBA results for a project, which may indicate that welfare benefits have an impact, as do the spatial spillovers from a project's benefits and lobbying, especially by the municipalities concerned.
Many countries have begun to require benefit-cost analysis as a way of informing key regulatory decisions. However, its actual use seem to be limited, especially in the area of environmental, health, and safety regulation. Reasons for this seem to be lack of knowledge and experience among decision makers and that established quality objectives prevent the use of this type of analysis and deliberation. We present the results from an experiment designed to investigate choice behavior in a public sector context. Students with different academic majors were asked to act as decision makers. There were two choice situations: one in a municipality deciding on an action plan and one in a government agency having to propose a national limit value. In both settings, the outcome that would pass a benefit-cost test would not achieve a natural state of the environment, hence a social dilemma choice situation. We find that a majority of the respondents prefer outcomes that can be considered environmental "optimum" but that there is a difference depending on academic major. The choice context also influences the response behavior and so does the information about an international standard. The latter increases the likelihood to accept alternatives that imply higher costs.
Many countries have begun to require benefit-cost analysis as a way of informing key regulatory decisions. However, its actual use seem to be limited, especially in the area of environmental, health, and safety regulation. Reasons for this seem to be lack of knowledge and experience among decision makers and that established quality objectives prevent the use of this type of analysis and deliberation. We present the results from an experiment designed to investigate choice behavior in a public sector context. Students with different academic majors were asked to act as decision makers. There were two choice situations: one in a municipality deciding on an action plan and one in a government agency having to propose a national limit value. In both settings, the outcome that would pass a benefit-cost test would not achieve a natural state of the environment, hence a social dilemma choice situation. We find that a majority of the respondents prefer outcomes that can be considered environmental "optimum" but that there is a difference depending on academic major. The choice context also influences the response behavior and so does the information about an international standard. The latter increases the likelihood to accept alternatives that imply higher costs.
Civil servants in governmental agencies regularly both propose environmental policies for the elected politicians and make own decisions. In making these decisions they may be influenced by legal norms, agency policy and culture, professional norms acquired through education as well as personal political preferences. This study tests how students in late stages of professional training in economics, biology and social sciences handle information in order to make a stylized choice of a national nutrient limit for lake water, or choose a program at a municipal level to lower the nutrient level in a local lake. The purpose is to test whether professional norms acquired during academic education and/or the presence of an international standard influences decision-making. We examine three hypotheses. Firstly, students' political attitudes affect their choice of major, i.e. biology, economics or social sciences, and thereby indirectly their decisions. We find that the distribution of the political values among disciplines is compatible with the hypothesis, which therefore is not rejected. Secondly, a student's major influences the kind of information they use and consequently the policy choice they will recommend. In plain words we expected biology students to go for environmentally more ambitious (lower) nutrient limits and economics students to prefer economically efficient (higher) levels. The central result is that while economics majors are more likely than biology or social science majors to choose a cost-efficient nutrient limit, the mean and median values of the nutrient levels chosen by the three groups do not differ from one another in a statistically significant way. Economists thus have a higher standard deviation in their answers than the other majors. The third hypothesis is that the presence of an internationally approved standard level for the nutrient content will significantly influence the choice of national nutrient limit. We find that biology students are influenced to set a lower nutrient limit when presented with the standard than otherwise, thereby rejecting the null hypothesis for this group. For students in economics and social sciences, no significant effect is found. Our results have implications for the feasibility of micromanagement in government agencies as recruiting economists to environmental agencies may not be sufficient to ensure economically efficient decisions. The findings also should sound a warning about the skills learned by economics majors at the two largest universities in Sweden: while some students seem familiar with the concepts of optimality and cost efficiency and able to use them, this applies to far from all of them.
Civil servants in governmental agencies regularly both propose environmental policies for the elected politicians and make own decisions. In making these decisions they may be influenced by legal norms, agency policy and culture, professional norms acquired through education as well as personal political preferences. This study tests how students in late stages of professional training in economics, biology and social sciences handle information in order to make a stylized choice of a national nutrient limit for lake water, or choose a program at a municipal level to lower the nutrient level in a local lake. The purpose is to test whether professional norms acquired during academic education and/or the presence of an international standard influences decision-making. We examine three hypotheses. Firstly, students' political attitudes affect their choice of major, i.e. biology, economics or social sciences, and thereby indirectly their decisions. We find that the distribution of the political values among disciplines is compatible with the hypothesis, which therefore is not rejected. Secondly, a student's major influences the kind of information they use and consequently the policy choice they will recommend. In plain words we expected biology students to go for environmentally more ambitious (lower) nutrient limits and economics students to prefer economically efficient (higher) levels. The central result is that while economics majors are more likely than biology or social science majors to choose a cost-efficient nutrient limit, the mean and median values of the nutrient levels chosen by the three groups do not differ from one another in a statistically significant way. Economists thus have a higher standard deviation in their answers than the other majors. The third hypothesis is that the presence of an internationally approved standard level for the nutrient content will significantly influence the choice of national nutrient limit. We find that biology students are influenced to set a lower nutrient limit when presented with the standard than otherwise, thereby rejecting the null hypothesis for this group. For students in economics and social sciences, no significant effect is found. Our results have implications for the feasibility of micromanagement in government agencies as recruiting economists to environmental agencies may not be sufficient to ensure economically efficient decisions. The findings also should sound a warning about the skills learned by economics majors at the two largest universities in Sweden: while some students seem familiar with the concepts of optimality and cost efficiency and able to use them, this applies to far from all of them.
A commonly assumed reason for the delegation of authority from a legislature (politicians) to bureaucracies is that the bureaucrats have an information advantage over the politicians, including knowledge of cost–benefit analysis (CBA). But it is reasonable to assume that the bureaucrats use their information advantage by taking all relevant aspects of policy into account? We model the use of CBA using a delegation model and then test the theoretical predictions with empirical data collected from five Swedish government agencies. The empirical results lend support both for the hypothesis that risk aversion concerning the environmental outcome, the bureaucrats' environmental attitudes, and the cost of taking CBA information into account have a considerable impact on the probability of using information from a CBA. Hence risk averse and bureaucrats with strong environmental preferences are less likely and bureaucrats with low cost of doing a CBA more likely than other bureaucrats to use CBA information. Finally, a binding governmental budget constraint may positively influence a bureaucrat's choice of using CBA information. A tentative conclusion is therefore that it may be possible to increase the use of CBA by making the budgetary consequences of policies much clearer and demanding due consideration of costs.
Social scientists regularly criticize the use of cost-benefit analysis (CBA), which has led to much focus being placed on investigating the possible biases related to its results. Recent research shows that CBA is not routinely done prior to environmental, energy, and climate policymaking in Sweden, and in countries where a CBA is made, the results have little influence on political decisions. This paper investigates obstacles to using CBA information with a focus on bureaucrats. We use empirical data from Sweden, where the ministries are small by international standards and hence government agencies have a sizeable influence on policymaking. We construct a theoretical model and then test the theoretical predictions with empirical data collected from five Swedish government agencies. The empirical results lend support both for the assertion that risk aversion concerning the environmental outcome, the bureaucrats' environmental attitudes, and the cost of taking CBA information into account have a considerable impact on the probability of using information from a CBA. Hence risk averse and bureaucrats with strong environmental preferences are less likely and bureaucrats with low cost of doing a CBA more likely than other bureaucrats to use CBA information. Finally, a binding governmental budget constraint may positively influence a bureaucrat's choice of undertaking a CBA. A tentative conclusion is therefore that it may be possible to increase the use of CBA by making the budgetary consequences of policies much clearer and demanding due consideration of costs.
