Appunti Environmental Economics and Management

GREEN TAXES

There is a graph with x= pollution abatement with the standards S1,S2,S3, y=costs,tax and three curves MAC1, MAC2, MAC3 representing marginal abatement cost curves. There is also a constant line t*. Total cost abatement will be higher under the standard-setting solution than the tax solution.

Under standard setting: TAC(standard)= 0AS2+0BS2+0CS2

Under the tax: TAC(tax)= 0XS1+0BS2+0YS3

TAC(st)-TAC(tax)= S1XAS2-S2CYS3

S1XAS2>S2CYS3 so standard>tax

To set a tax in the right way it’s necessary to understand six aspects:

1. The firm’s output of goods
2. The pollution dose which this output produces
3. Any long-term accumulation of pollution
4. Human exposure to this pollution
5. The damage response to this pollution
6. The monetary evaluation of the cost of pollution damage

So it means that lot of information is required to set a tax.

Who has more disadvantages from taxes, the company or the consumer?

It depends on the elasticity of the demand curve. If the demand curve is

quite flat the part of thetax paid by the company (p1-p0-t*) > (p1-p0) which is paid by the consumer.

When a firm produces more emissions than the established there are two options:

1. It has to pay the tax for the amount of units left
2. It can buy from the market the permits to pollute

CIRCULAR ECONOMY

To increase the stock of natural resources we need to reduce their consumption for exampleschanging phones rarely or less clothes…So there is the need to create a circle between production and consumption so that some→products or production wastes can be use again in other productions Circular economy. Theaim is to escape the disposal of the product recycling also production wastes to avoid wastes ofnatural resources.

The circular economy impacts on the three dimensions of sustainable development: society,environment and economy and there are 3 principles:

1. Eliminate wastes and pollution
2. Circular products and materials→ from the linear flow move to two cycles:

product functionality-design for a cycle→ easily recyclable

Closing the loops of the supply chain and making industrial symbiosis

Products have reusable materials

Circular business strategies →invent- Access and performance model a new shop for example like librieriesbut for everything →- Extending product model more functions→- Extending resource value even if a resoure is not rich giving it an higher value

Limits of the circular economy: Thermodynamic limits because non everything can be recycled,Spatial and temporal limits because it should be a global approach and economic limits because ofthe new technologies required.

Examples of circular economy applied by the consumers are the repair café.

What is a green product? It’s a term use to describe products made with the aim of protect andenhance the natural environment by conserving energy and/or resources reducing and/oreliminating waste. Green products use less resources and have a lower impact on theenvironment.

Industrial symbiosis

Process A O(A)W(A)◼ → → →Q I(B) Process B O(B)W(A)-Q I(B) – TxQ W(B)

Examples of wastes that can be use for other productions:

• Texile wastes isolating materials for buildings
• padding for toys
• padding for cars
• raw materials for high-quality paper

How to implement circular economy from the business

CIRCULAR ECONOMY STRATEGIES:

1. Access and performance model for example the creation a library of things (Product service system)
2. Extending product model at the end of the lifecycle of the product some parts of the old product (regenerating phones) reusing just a part of old products
3. Extended resource value producs that should be of a particular materials realized with others.

WHICH ARE THE LIMITS OF THE CIRCULAR ECONOMY:

• Thermodynamic limits not everything can be recycled
• Spatial and temporal limits circular economy must be a global approach
• Economic limits which are the negative

spillovers

What is the role of consumers? Pushing people to buy sustainable products is a topic in research now, how to increment the WTP of people.

INDUSTRIAL SYMBIOSIS

It is one of the operational tools of Circular economy.

The concept of symbiosis is very close to COLLABORATION. The relationship of industrial symbiosis is the mutualism type because it will give benefits to all the parts involved.

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INDUSTRIAL SYMBIOSIS 18

Industrial symbiosis engages traditionally separate entities in a collective approach to competitive advantage involving physical exchange of materials, energy, water and by-products.

The symbiosis can be perfect or imperfect:

• perfect - the waste of a production process becomes the primary input of the following production process.
• imperfect - the waste need to be treated before being used in another production process

Which are the models of industrial symbiosis?

• McDonald's imperfect symbiosis - the waste is generated by the same

firm that will use the waste again to replace a pollutant input (INPUT REPLACEMENTE INTERNAL USE)

• Guitang Group: it produces fertilizer and paper production starting from the bagasse, the sugar wastes are moved from a factory to another to develop a new product but the firm is the same. From bagasse you can have bioil, reducing the emissions of co2, and also sugar plastic which is recyclable. (INTERNAL USE E PRODUCT DEVELOPMENT)

firm that will use the waste again to replace a pollutant input (INPUT REPLACEMENTE INTERNAL USE)

• Dong Energy and Gyproc: to build houses with less polluting processes using fly ash (cenere) and they buy it from other companies. (INPUT REPLACEMENT E EXTERNAL USE)

firm that will use the waste again to replace a pollutant input (INPUT REPLACEMENTE INTERNAL USE)

• Kazmok: they were the same to produce talking about circular economy 'extended resource value'. (PRODUCT DEVELOPMENT E EXTERNAL USE)

Why companies should introduce Industrial symbiosis?

There are environmental benefits such as less waste discharged, less raw materials used in production processes and less GHG emissions.

How to assess environmental benefits:

• Flow

analysis (materials, substance and the Enterprise Input-Output Analysis)

Enterprise Input-Output analysis works transforming all the wastes in the same udmdividing the process in all of its phases and expressing all of the wastes quantities needed

• Life-cycle assessment

I ask myself how much CO2 I produce or others polluting effects during all the life-cycle ofmy product.

There are also econommic benefits in fact I can reduce my wastes cost if I sell them to others or if Iproduce more using them as inputs (lower waste disposal costs, lower input purchasing costs andadditional revenues) 19

PRODUCER USER

The arrows are the wastes. Who has revenues? Sometimes even the user has some revenuesbecause it is paid to use the wastes. In the case in the middle no one add revenues, situation freeof charges.

BE= [(dc + pc) – (rc+tc)]*ee is the amount of waste exchangedceasing costs: dc= waste disposal costpc= input purchase costadditional costs: rc= waste treatement cost (imperfect

INDUSTRIAL SYMBIOSIS NETWORKs (ISN)

It's a network of firms exchanging wastes and it has to be at least 3 companies exchanging at least 2 wastes and it is called 3-2 heuristic.

There are 2 mechanisms of creation of ISN:

1. TOP-DOWN eco-industrial parks
2. BOTTOM-UP Self-organized industrial symbiosis

TOP-DOWN: There is centralization of control in one company; the central organization is in charge of including new companies in the network and designing infrastructure. It is mainly in Asia and an example is Ulsan in the Republic of Korea (Hyundai...).

BOTTOM-UP: The network arises spontaneously, so there is the decentralization of control. At first, maybe there were just two companies exchanging wastes, but then a network is created. Mainly applied in Europe, companies can enter and exit the ISN, and they are free to design their relationships. An example is Kalundborg, which is in Denmark and involves several pharmaceutical companies.

flow of water and other materials.

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How does a self-organised ISN arises?

◼ → → →SPROUTING UNCOVERING EMBEDDEDNESS

20- Sprouting (germogliare): is the step in which the relationship starts to exist

- Uncovering (scoperta): idea of multiple companies that are cooperating so there is the creation of the network

- Embeddedness (Istituzionalizzazione): companies create for example a board to advertise the existence of the network or some events that underline the presence of the network

When a urban area is add into a network we talk about Industrial Urban Symbiosis (it means that exchanges are also with the commercial, agricolture, residential…not only between industries)

What are the good externalities generated by the ISN?

-Proximity facilitates knowledge exchanges (geographical proximity leads to social proximity)

- Cluster of companies can drive other companies to enter

-New markets can arise to serve the ISN

-Cluster of companies can enforce local

Workforce-New infrastructures of improvement of existing ones

RESILIENCE OF ISNs

How those networks survive during the years?

• DIVERSITY: network diversity (number of wastes exchanged into the ISN) and firm diversity → (number of wastes exchanged by the company) HIGH NETWORK DIVERSITY INCREASES RESILIENCE because the risk that the network will disappear are lower; on the contrary the firm diversity generates a risk if it is too high.
• UBIQUITY: ubiquity of waste (number of companies exchanging the same waste) → HIGH UBIQUITY IS PERFECT FOR RESILIENCE

BARRIERS TO INDUSTR