As Swedish policymakers put together a climate bill, they relied on economic models to pinpoint policies that will reduce greenhouse gas emissions while minimizing costs to GDP, employment and growth. At the heart of this analysis was Sweden’s sector-by-sector accounting of CO2 emissions and energy use, in parallel with standard economic accounts. The emissions and energy accounts enabled detailed modeling of alternative proposals, which led to a finely tuned policy package with significant cost savings.

The objective of this paper is to analyze the rebound effect from increased efficiency in industrial use of energy in Sweden. Energy efficiency improvements can have significant micro- and macroeconomic effects that hampers the positive effect on real energy savings. To assess the size of the overall rebound effect in the Swedish economy we apply a computable general equilibrium model. The results show that the economy-wide rebound effect in Sweden depends on a number of factors, e.g. the extent of the energy efficiency improvement, how the labour market is modeled as well as if the increase in energy efficiency is combined with a cost or not. We find that the rebound effect following a 5 percent increase of energy efficiency in the Swedish industry lies in the range of 40-70 percent. When energy efficiency only is improved in energy-intensive production, the rebound effect becomes even higher. These findings are in line with the results in the literature.

There is concern that the carbon prices generated through climate policies are too low to create the incentives necessary to stimulate technological development. This paper empirically analyzes how the Swedish carbon dioxide (CO2) tax and the European Union emission trading system (EU ETS) have affected productivity development in the Swedish pulp and paper industry 1998-2008. A Luenberger total factor productivity (TFP) indicator is computed using data envelopment analysis. The results show that climate policy had a modest impact on technological development in the pulp and paper industry, and if significant it was negative. The price of fossil fuels, on the contrary, seems to have created important incentives for technological development. Hence, the results suggest that the carbon prices faced by the industry through EU ETS and the CO2 tax have been too low. Even though the data for this study is specific for Sweden, the models and results are applicable internationally. When designing policy to mitigate CO2 emissions, it is vital that the policy creates a carbon price that is high enough - otherwise the pressure on technological development will not be sufficiently strong.

The main objective of this paper is to test the Porter hypothesis by assessing static and dynamic effects of environmental policy on productivity. According to the hypothesis, stringent environmental regulations have dynamic effects on firm performance, and these effects eventually generate profits that offset the adaptation costs. We extend previous analyses by using unique data on environmental protection investments in the Swedish manufacturing industry as a proxy for environmental stringency. These data enable us to separate environmental protection investments into pollution prevention and pollution control. This distinction is crucial since the hypothesis claims that it is investments in prevention that have positive dynamic effects on firm performance. To test the hypothesis, a stochastic production frontier model is estimated where firm inefficiency is a function of investments in environmental protection. In general, we find no support for the Porter hypothesis within the time frame of our study, indicating that environmental regulations lead to efficiency losses. This result is even stronger in the harshly regulated pulp and paper industry.

The major aim of this paper is to analyze how government funding affects the pace of progress in four states of the remediation process of contaminated sites, from basic risk classification to cleanup. We introduce a methodological framework that takes into account the unobserved site-heterogeneity and simultaneously models duration in the different states. The results show that although site-heterogeneity contributes to make remediation a slow process, the third state, from the elaborate risk classification to the cleanup start, is a particular bottleneck. Even if government funding can speed up the process at this state, the effect is minuscule compared to the amounts of funding required. Thus, there is a need for policy to also focus on other barriers to remediation.

Sweden has only just begun remediation of its many contaminated sites, a process that will cost an estimated SEK 60,000 million (USD 9100 million). Although the risk assessment method, carried out by the Swedish EPA, is driven by health effects, it does not consider actual exposure. Instead, the sites are assessed based on divergence from guideline values. This paper uses an environmental medicine approach that takes exposure into account to analyse how cancer risks on and near arsenic-contaminated sites are implicitly valued in the remediation process. The results show that the level of ambition is high. At 23 contaminated sites, the cost per life saved varies from SEK 287 million to SEK 1,835,000 million, despite conservative calculations that in fact probably underestimate the costs. It is concluded that if environmental health risks are to be reduced, there are probably other areas where economic resources can be used more cost-effectively.

Swedish environmental policy often emphasizes the importance of “taking the lead”. For example, Sweden has chosen a more ambitious climate policy target than required by the European Union (EU), namely a reduction of Swedish emissions of greenhouse gases by 40 percent by 2020 compared to the 1990 level. Government Bill 2008/09:162 emphasizes Sweden’s role as a good example in making an effort to re-duce climate change by showing that an offensive climate policy can indeed be com-bined with high economic growth. This view of environmental policy is, however, the subject of constant debate. A common argument is that environmental requirements induce private costs by forc-ing firms to make investments that crowd out other more productive investments, which hampers productivity growth and therefore competitiveness. Professor Mi-chael E. Porter of Harvard questioned this argument, and his view has become known as the Porter hypothesis (Porter, 1991). This hypothesis implies that levying stringent environmental regulations on firms enhances their productivity compared to competi-tors not subject to, or subject to lax, environmental regulations. A central message is that the connection between environmental regulation and competitiveness should be scrutinized within a dynamic framework (Porter and van der Linde, 1995). The main objective of this paper is to test the Porter hypothesis by assessing static and dynamic effects of environmental policy on productivity within the Swedish manufac-turing industry, specifically on the component total efficiency. The paper adds mainly to previous literature by using unique data on environmental protection investments, divided into investments in pollution control and pollution prevention, as a proxy for envi-ronmental regulation. The distinction between these types of investments is crucial to the understanding of the outcomes anticipated by the Porter hypothesis. The international literature studying the Porter hypothesis is extensive. A comprehen-sive review reveals that neither theoretical nor empirical literature gives general sup-port for the hypothesis (Brannlund and Lundgren, 2009). We argue that, to some ex-tent, the Porter hypothesis has not yet been given a fair chance in the empirical litera-ture, as dynamic effects are often neglected in empirical tests. Two exceptions are Managi et al. (2005) and Lanoie et al. (2008), who first estimate Total Factor Produc-tivity (TFP) scores that then are used as dependent variables in regression analyses where explanatory lagged environmental stringency measures model dynamic effects. A disadvantage with these studies is, however, that environmental stringency is ap-proximated by the cost of complying with environmental command- and-control regulations, such regulations are not emphasized by the Porter hypothesis. The empirical test of the Porter hypothesis is performed as a two-step procedure, where total efficiency scores are first estimated by adopting a stochastic production frontier function approach. In the second step, the efficiency scores are used as the dependent variable in random effects regression analyses, where the independent vari-ables are, e.g., investment in pollution control and pollution prevention. In order to assess whether these investments have dynamic effects on total efficiency these vari-ables are also lagged. If positive effects are established we cannot reject the claim that environmental leadership will benefit the Swedish industry. The estimations are based on firm level data from five Swedish industries for the period 1999-2004, and carried out for the pooled data as well as for the industries separately.

The interim targets of the Swedish environmental quality objective “A non-toxic environment” emphasize that remediation of contaminated sites should progress at a high speed. Since remediation is an expensive venture, it is valuable to gain knowledge about where in the remediation process government funding affects the pace of progress the most. In this paper we analyze how government funding, in the form of a directed grant, affects the pace of progress in four different states of the remediation process. The estimation is performed in a simultaneous sequential duration model in which a site has to exit a state to be eligible for inclusion in the following state. We control for a number of variables that may also affect the pace of the remediation process, such as the municipal tax base and the site’s level of contaminants. Although there is heterogeneity between the sites that contribute to making remediation a slow process, our analyses show that the directed grant positively affects the probability of leaving the first and third states. We identify the third state (i.e., the time between the end of a thorough risk classification and the inception of on-site remediation)as the remediation process’ bottleneck. Even if the directed grant can speed up the process in this state, the effect is minuscule compared to the amount of directed grants needed to do so.

ISEE-0190 Background and Objective: Sweden has only begun remediation of its many contaminated sites. A risk assessment carried out by the Swedish EPA (SEPA) is mainly driven by health effects, and based on divergence from guideline values. It does not consider actual exposure. Arsenic (As) is the single most common primary contaminant, mainly from impregnation of wood. At low-level exposure, cancer risk is the relevant health outcome. Our aim was to estimate cancer risk at As-contaminated sites and compare it with the cost of remediation. Methods: Arsenic concentrations in soil were scrutinized at 23 As-contaminated remediation sites. A rough classification of numbers of exposed people (residential areas, work-places or recreational areas) was performed. Exposure and dose from inhalation, oral intake and dermal uptake was estimated using appropriate (although “conservative”) exposure factors, mainly based on the US EPA Exposure handbook. Drinking water was not relevant. Estimated numbers of extra cases of cancer (lung, bladder, and skin) was estimated using WHO (skin) and NAS (lung and bladder) exposure-response relationships, adapted to Swedish background rates. Results: Mean pre-remediation As concentrations at the 23 sites ranged 23–1128 (median 119) μg/g. The number of extra cases of cancer was only 0.24, summed up over a 30 year period at all sites. Using an average mortality of 50% (lung, bladder and skin), 0.12 lives were saved at a remediation cost of SEK 881 million (about 100 million USD), about 900 million USD per life saved. Conclusion: The cancer risk from As exposure at contaminated sites was low, and the cost to save a statistical life was high. The SEPA risk assessment does not permit socioeconomic calculations since it stops at comparisons with guideline values without assessing the number of exposed subjects or extent of exposure. Socioeconomic analyses may be appropriate when considering costly environmental policy measures.

In 1998 the Swedish government launched its largest ecological subsidization programme to date, the Local Investment Programme (LIP). By having two political objectives; to step up the pace at which Sweden transforms into an ecologically sustainable society and to reduce unemployment, the programme did not conform to the "one-instrument-per-objective" policy guideline often advocated by economists. Concentrating on a subset of the subsidized projects, the projects for we evaluate how effectively the LIP's separate political remediation of contaminated sites, objectives were fulfilled. Between 1998 and 2002,,C 670 million (SEK 6.2 billion) were allocated to over 1800 different projects under the LIP. Twenty-four, i.e. one percent, of the projects aimed at remediation of contaminated sites. These projects received a disproportionate amount, six percent, of the total LIP subsidies. By using data on both accepted and rejected remediation projects, we find that the LIP's ecological sustainability objective could have been achieved better if the most hazardous sites had been prioritized to a greater extent. Furthermore, society's cost for the employment opportunities generated in the remediation projects was higher than society's cost for the equivalent number of employment opportunities generated in traditional labour market policies. Although other subsets of the LIP projects may have been more successful in achieving the programme's separate objectives, our results illustrate inefficiencies that may arise from a desire to attain several political objectives through a single policy instrument. (C) 2007 Elsevier B.V. All rights reserved.

Samhallsekonomiska varderingar av luft- och bullerrelaterade halsoproblem : En sammanstallning av underlag for konsekvensanalyser

Much of the debate on global climate change has focused on direct costs of mitigation. Recently this debate has included the issue of ancillary benefits. The present analysis incorporates a linkage between air pollution and ancillary health benefits into a general equilibrium model applied to Sweden. Direct disutility and indirect health effects are modelled using concentration-response and contingent valuation data. Health benefits are compared in three scenarios for attaining the Swedish carbon dioxide target with alternative projected and harmful emission levels. Results show that the costs of climate policy could be overstated when not accounting for ancillary health benefits.

We provide a theoretical framework for measuring welfare when pollution influences economic growth by impairing health and driving up defensive medical expenditures. We demonstrate the usefulness of our framework in practice by applying it to data from Swedish valuation studies designed according to the accounting principles suggested here. We estimate that the negative health effects of nitrogen dioxide emissions amount to 0.6% of GDP in Sweden. We also show that a corrective Pigouvian tax should internalize the direct disutility, reduced labor productivity, and increased healthcare expenditures caused by pollution. According to our calculations, harmful health impacts alone (excluding ecosystem effects) justify 65% of the current Swedish tax on nitrogen dioxide.

Konjunkturinstitutet (KI) vill lämna principiella synpunkter på producentansvaret för förpackningar och tidningar. KI finner dock ingen anledning att närmare kommentera Naturvårdsverkets utvärdering av hur producentansvaret fungerar rent praktiskt. Naturvårdsverkets slutsats är att producentansvaret fungerar i stort sett väl och bör vara kvar i sin nuvarande form eftersom Sverige har höga insamlings- och återvinningsresultat och lagstiftningen lägger ansvar och kostnader på den som förorenar. KI ifrågasätter om dagens hantering av returpapper och förpackningsavfall verkligen är samhällsekonomiskt försvarbar. Enligt producentansvaret ska producenten bl a ansvara för att en hög andel av förpackningarna, oavsett materialslag, materialutnyttjas d v s inte går till förbränning eller deponering. Den här prioriteringen baseras på avfallshierarkin som prioriterar reduktion av avfallet före återanvändning, följt av återvinning som följs av förbränning och sist kommer deponering. Avfallshierarkins rangordning, som har influerat avfallspolitiken inom EU, varierar inte mellan materialslag eller länder. Rangordningen påstås vara satt utifrån de olika metodernas miljöpåverkan, även om det råder oklarheter om rangordningen gäller för alla materialslag. IVL Svenska Miljöinstitutet skriver t ex i litteraturstudien till Naturvårdsverkets utvärdering att det är osäkert om det för pappersförpackningar överhuvudtaget ger en miljövinst att materialåtervinna jämfört med att förbränna tillsammans med övrigt hushållsavfall. KI anser att rimligheten i att producentansvaret prioriterar materialåtervinning framför t ex förbränning för alla materialslag kan ifrågasättas. Vidare anser KI att prioriteringen mellan olika avfallshanteringsalternativ bör, istället för att bara beakta miljöeffekter, baseras på en analys där samhällsekonomiska kostnader vägs mot intäkter. Eftersom kostnader och intäkter för olika avfallshanteringsalternativ rimligen skiljer sig åt mellan material och mellan länder kommer en sådan analys visa på avfallshierarkier som skiljer sig åt beroende på vilket material och vilket lands förutsättningar som analyseras. Beslut i detta ärende har fattats av generaldirektör Mats Dillén. Föredragande har varit Eva Samakovlis.

Does Environmental Leadership Pay Off for Swedish Industry? : Effects of Environmental Investmentments on Efficiency