Spatial Dimensions of Climate Change
Paper Session
Saturday, Jan. 8, 2022 10:00 AM - 12:00 PM (EST)
- Chair: Jonathan Eaton, Pennsylvania State University
Can Forward Commodity Markets Improve Spot Market Performance? Evidence from Wholesale Electricity
Abstract
Forward markets are widely believed to aggregate information across market participants about future spot prices and reduce the cost of producing the commodity. We develop a measure of the extent to which forward and spot prices agree in commodity markets with transaction costs, using this measure to show that day-ahead prices better reflect real-time prices at all locations in California's wholesale electricity market after the introduction of financial trading. We then present evidence suggesting that daily average operating costs and input fuel use fell after the introduction of financial trading on days when a significant fraction of the non-convexities in the production and delivery impact the real-time market solution.Deforestation Dynamics: A Global Perspective
Abstract
This paper studies deforestation from a global and dynamic perspective. We develop a dynamic, multi-country, general equilibrium framework to study the interactions between global trade, productivity, and deforestation. In our framework, forest-conversion decisions are forward-looking and internalize future streams of rents, which means we treat productive land as an asset. Taking our model to data on production, international trade, and deforestation, we show that both agricultural trade liberalization and agricultural productivity growth decrease global deforestation. But along the path to the steady state, these shocks potentially reallocate deforestation across countries. In both cases, the dynamics of structural change regulate the direction and strength of the shocks.Discussant(s)
Samuel Kortum
,
Yale University
Paul Grieco
,
Pennsylvania State University
Dave Donaldson
,
Massachusetts Institute of Technology
JEL Classifications
- Q5 - Environmental Economics
- F3 - International Finance