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Article

Economic, Social, and Environmental Costs of the Waste-to-Energy Industry  

Jinbo Song, Lulu Jin, Chen Qian, and Yan Sun

With the upgrading of living standards and rapid urbanization around the globe, waste treatment has become a ubiquitous environmental issue. Increased waste generation and narrowed prospects for landfill and composting have brought strong growth prospects for the waste-to-energy (WtE) industry. WtE is considered an effective method for waste treatment because it can significantly reduce the land use and environmental pollutants caused by other methods and can generate energy by means of electricity or heat from the treatment of waste. However, there have been supportive and opposing opinions about WtE from the economic, environmental, and social perspectives. Whether WtE plants are the best option depends not only on associated investment and operating costs but also on the environmental and social costs (termed as external cost) as compared to other waste treatment options. Economic costs are generally estimated by market price of materials, labor, and equipment. Social costs normally refer to health effects, transportation congestion, and environmental impacts, including the emission of gas and leachate. Qualitative and quantitative methods are proposed to assist in decision making on waste disposal alternatives. The qualitative method relies on the expert experience to rank waste treatment options, such as analytic hierarchy process and multicriteria decision model, while the quantitative method, such as life cycle assessment and social cost-benefit analysis, calculates the economic cost and monetizes the abstract external cost in the light of the historical data. The two methods offer different advantages and disadvantages, and thus cater to different conditions. In developed countries, along with the rapid development of WtE and the increase in available cost data, the estimation of the economic, environmental, and social costs is achievable, which promotes the popularization of quantitative method. In China and other developing countries, quantitative analysis is limited to the estimation of economic cost and the qualitative method is still dominated in the evaluation of environmental and social impacts due to the lack of cost data.

Article

The Emerging Environmental Economic Implications of the Urban Water–Energy–Food (WEF) Nexus: Water Reclamation with Resource Recovery in China, India, and Europe  

Daphne Gondhalekar, Hong-Ying Hu, Zhuo Chen, Shresth Tayal, Maksud Bekchanov, Johannes Sauer, Maria Vrachioli, Mohammed Al-Azzawi, Hannah Patalong, Hans-Dietrich Uhl, Martin Grambow, and Jörg E. Drewes

With economic and population growth, industrialization, urbanization, and globalization, demand for natural resources such as water, energy, and food continues to increase, particularly in cities. Overconsumption of resources has led to degradation of the environment, a process that is interacting with and is further accelerated by a dangerous alteration to the climate. Fast growing cities worldwide already face severe technical difficulties in providing adequate infrastructure and basic services in terms of water and energy. This situation is set to become increasingly difficult with climate change impacts. The latter are increasingly affecting economically developing as well as developed countries. However, cities often have limited capacities to take comprehensive climate action. Hence, practicable, scalable, and adaptable solutions that can systematically target key entry points in cities are needed. The Water-Energy-Food (WEF) Nexus concept is one potential integrated urban planning approach offering cities a more sustainable development pathway. Within this concept, urban water reclamation with resource recovery offers a key potential: reclaimed products such as water, bioenergy, nutrients, and others are valuable resources for which markets are emerging. Reclaiming water can also reduce stress on natural resources and support the prevention of environmental pollution. Thus, it can support water, energy, and food security and the achievement of the United Nations Sustainable Development Goals. However, so far there are few implemented examples of urban water reclamation with resource recovery at urban scales. Examples of good practice in cities in China, India, and Europe highlight key enablers and barriers to the operationalization of water reclamation with resource recovery and implications in terms of environmental economics relevant for cities worldwide. These findings can support a systemic sociotechnical transition to a circular economy.

Article

Input–Output Models Applied to Environmental Analysis  

Joaquim J.M. Guilhoto

Input–Output (I–O) models and analysis were originally conceived by the Nobel Prize winner Wassily Leontief in the 1930s as a tool that can be used by economists and economic policy makers to help in their decision process. The I–O models provide a “picture” of how the economy works, that is, what are the necessities to produce goods and services, how this production generates income, profits and taxes, and how this income is spent. In a simplified way the I–O models can be seen as the model implementation of the economy circular-flow diagrams usually shown in economics introductory courses. Associated with the theory behind I–O models and analysis, I–O tables contain the empirical information necessary to implement these models and theory. Taking, for example, the production of computer screens: • On the production side, the I–O models have information on: (a) how much is spent on the inputs, goods and services necessary to produce the screens; (b) whether these inputs have their origin in the domestic market or are imported; (c) how much was paid in tax to the government; (d) what was the total amount paid in wages and salaries; (e) what were the profits of the producing firms; (f) how many computer screens are sold on the domestic market or on the international market (exported); and (g) whether they are sold directly to the final consumer or are used as a production input, that is, incorporated into other goods, for example, a refrigerator with a computer screen; • On the demand side, the I–O models, taking into consideration the total income received by the different players in the economy, that is, households, firms, and government, have information on: (a) how the income of these players is spent on goods and services, and whether it is used for consumption or investment; (b) whether these goods and services were produced domestically or abroad (imported); and (c) how much consumer tax was paid. From the aforementioned structure of I–O models, and using economic mathematical models, it is possible to measure the direct and indirect inputs needed to produce goods and services in the economy, for example, to produce a car there is no need for agricultural goods as a direct input for production, but the fabric used in the car seats or on the car carpets could have come from cotton, which is an agricultural good, so, cotton is an indirect input used in car production. I–O models, by their capability to show a complete picture of the economic system, and tracing of the origin of direct and indirect inputs used in the production process, can be used in environmental studies by linking economic and environmental variables, on the production and consumption sides. From the production side it is possible to measure, by considering the direct and indirect inputs used, how many natural resources were used and how much pollution was generated in producing the goods and services. On the demand side it is possible to measure the environmental variables, natural resources, and pollution, embodied in the goods and services consumed in the economy. Expanding I–O models to a global scale, that is, using inter-country I–O models, it is possible to measure the environmental impacts, and contents, of the goods and services by country of origin of production and by countries of consumption.

Article

Use of Experimental Economics in Policy Design and Evaluation: An Application to Water Resources and Other Environmental Domains  

Simanti Banerjee

Economics conceptualizes harmful effects to the environment as negative externalities that can be internalized through implementation of policies involving regulatory and market-based mechanisms, and behavioral economic interventions. However, effective policy will require knowledge and understanding of intended and unintended stakeholder behaviors and consequences and the context in which the policy will be implemented. This mandate is nontrivial since policies once implemented can be hard to reverse and often have irreversible consequences in the short and/or long run, leading to high social costs. Experimental economics (often in combination with other empirical evaluation methods) can help by testing policies and their impacts prior to modification of current policies, and design and implementation of new ones. Such experimental evaluation can include lab and field experiments, and choice experiments. Additionally, experimental policy evaluation should pay attention to scaling up problems and the ethical ramifications of the treatment. This would ensure that the experimental findings will remain relevant when rolled out to bigger populations (hence retaining policy makers’ interest in the method and evidence generated by it), and the treatment to internalize the externality will not create or exacerbate societal disparities and ethical challenges.