Research domains and cross-cutting themes

The research of the Environmental Economics and Natural Resources Group (ENR) addresses three core research domains within environmental and resource economics: (i) natural resources, (ii) pollution, and (iii) climate change. Throughout these domains we pay particular attention to three cross-cutting themes: Behaviour & ethics, institutions & policy, and risk & uncertainty. Our research domains and cross-cutting themes are described below.

Research Domains

1. Economics of Natural Resources

Natural resources provide essential inputs for human society such as food, energy and water. However, sustainable use of natural resources, ensuring quality of life for all, is threatened by many factors such as misallocation of resources, strategic interactions between users, ineffective governance, and global environmental changes. Our research addresses how we can use natural resources sustainably considering the interactions between the biophysical and the socio-economic systems. First, we use bio- economic optimization models that account for current and future welfare to inform policy makers how to use scarce resources efficiently. Second, we develop game-theoretical models to shed light on the strategic interactions between resource users. Third, we develop social-ecological systems models to study the institutions that govern the use of natural resources in response to global environmental changes. We combine those approaches to analyse renewable resources such as fisheries, forests and water, and non-renewable resources such as phosphorus. We use theoretical and empirical methods to provide novel scientific insights and policy recommendations.

Staff involved
Xueqin Zhu (contact person), Rolf Groeneveld, Ekko van Ierland, Andries Richter, Hans-Peter Weikard, and Edwin van der Werf

Key publications

  • Eikeset, A.M., A. Richter, E.S. Dunlop, U. Dieckmann, and N.C. Stenseth, 2013. The economic repercussions of fisheries-induced evolution. Proceedings of the National Academy of Sciences 110(30):12259-12264.
  • Richter,  A.  and  V.  Dakos,  2015.  Profit  fluctuations  signal  eroding  resilience  of  natural resources. Ecological Economics 117:12-21.
  • R.A. Groeneveld and M.F. Quaas, 2016. Promoting selective fisheries through certification? An analysis of the PNA unassociated-sets purse seine fishery. Fisheries Research 182:69-78.
  • T.W. Gezahegn and X. Zhu, 2016. How should urban water be priced? An empirical analysis for the city  of Mekelle, Ethiopia. Urban Water Journal Advance Online Publication.

2. Economics of Pollution Management

Ecosystems and humans are exposed to multiple types of pollution, for example to contaminants in water, soil, air and sediment, which can be very costly to society. Moreover, some forms of pollution,
e.g. radioactive waste, macro-and micro-plastics, or persistent, bioaccumulative and toxic chemicals, can have long-term and even irreversible impacts on the environment and humans. The key role of economics in this research domain is (i) to transform available information  and the absence of information  about pollution risks into values for decision-making, (ii) to develop tools for an  assessment of the impacts and the damages of pollution, (iii) to identify appropriate risk management and governance strategies (e.g. for particularly harmful chemicals), and (iv) to unravel the behavioural drivers and institutional mechanisms which may facilitate or prevent actions towards pollution mitigation and abatement. To address the economics of pollution management we use theoretical and empirical modelling approaches (e.g. decision-theory, behavioural experiments, cost benefit analysis, Value-of- Information analysis), and strive for cross-disciplinary integration of tools from natural sciences and economics.

Staff involved

  • Silke Gabbert (contact person)
  • Ekko van Ierland
  • Andries Richter and
  • Xueqin Zhu

Key publications

  • Gabbert, S. and I. Hilber, 2016. Time matters: A stock-pollution approach to authorisation decision- making for PBT/vPvB chemicals under REACH. Journal of Environmental Management 183:236- 244.
  • Ilg, P., S. Gabbert and H.P. Weikard, 2016. Nuclear Waste Management under Approaching Disaster: A Comparison of Decommissioning Strategies for the German Repository Asse II. Risk Analysis Advance Online Publication.
  • Zhu, X and E.C. van Ierland, 2012. Economic modelling for water quantity and quality management: A welfare program approach. Water Resources Management 26(9):2491-2511.

3. Economics of climate change

Climate change is one of the greatest challenges society is currently facing, caused by the daily activities of billions of people and millions of firms. It affects people, animals, vegetation and ocean life in various ways (some positive, but mostly negative) and with large variation in the geographical distribution of the impacts. ENR studies climate change impacts, strategies for individuals and society to cope with these impacts (adaptation), and policies and behavioural adjustments that can reduce emissions and store carbon (mitigation and sequestration). Empirical analysis of the economic impacts of natural disasters allows us to gain insights into the effects of climate-induced disasters. We use applied partial and general equilibrium models to study the impacts on the agricultural sector and on water availability, and we analyse adaptation strategies. Using dynamic optimization techniques we analyse optimal investment in adaptation measures (e.g. dikes) and the potential of forests as a carbon sink. ENR also has a strong record in the analysis of international climate agreements (STACO model).

Staff involved

  • Edwin van der Werf (contact person)
  • Jeroen Klomp
  • Ekko van Ierland
  • Hans-Peter Weikard and
  • Xueqin Zhu

Key publications

  • Indrajaya, Y., E. van der Werf, H.P. Weikard, F. Mohren, and E.C. van Ierland, 2016. The Potential of REDD+ for Carbon Sequestration in Tropical Forests: Supply Curves for Carbon Storage for Kalimantan, Indonesia. Forest Policy and Economics 71:1-10.
  • Weikard, H.P. and R. Dellink, 2014. Sticks and Carrots for the design of international climate agreements with renegotiations. Annals of Operations Research 220(1):49-68.
  • Zhu, X., M. Moriondo, E.C. van Ierland, G. Trombi, and M. Bindi, 2016. A model-based assessment of adaptation options for Chianti wine production in Tuscany (Italy) under climate change. Regional Environmental Change 16:85-96.

Cross-cutting themes

A. Institutions & policy

Institutions are the man-made constraints that structure political, economic and social interaction to create order and reduce uncertainty. Under this umbrella of institutions we can include both informal constraints such as customs and traditions, and more formal rules like constitutions, laws, regulation and property rights. Along with the standard constraints of economics (scarce resources) they define the choice sets of groups and individuals, determine transaction and production costs, and hence the profitability and feasibility of economic activities. Under the theme institutions & policy ENR conducts  both theoretical and empirical research. We investigate how the behaviour of different economic agents (i.e., consumers, producers, government) is affected by the institutional setup at the local, national or even global level. We explore how institutions, such as social norms, evolve over time and to what extent they adapt to the problems society is facing. Relevant topics under this cross-cutting theme include (1) natural resources such as water, forestry or fisheries, (2) risk management and (3) climate change.

Staff involved

Jeroen Klomp (contact person), Andries Richter, Edwin van der Werf, Silke Gabbert, Hans-Peter Weikard and Xueqin Zhu

Key publications

  • Di Maria, C., I. Lange, and E. van der Werf, 2014. Should we be worried about the Green Paradox?
  • Announcement effects of the Acid Rain Program. European Economic Review 69:143-162.
  • Richter, A., D.P. van Soest, and J. Grasman, 2013. Temptation, contagious cooperation and ecosystem collapse. Journal of Environmental Economics and Management 66(1):141-158.
  • Klomp, J. and J. de Haan, 2016. Election cycles in natural resource rents: Empirical evidence. Journal of Development Economics 121:79-93.
  • De Haan, J. and J. Klomp, 2013. Conditional political budget cycles: a review of recent evidence. Public Choice 157(3-4):387-410.

B. Behaviour & ethics

Research in behavioural and experimental economics has shown that social norms and psychological factors have an immense influence on human decisions. Such social complexities are insufficiently addressed in standard economic models assuming rational actors who maximize their own utility. This is especially important for environmental problems, where social and natural complexities interact and jointly influence decisions of actors. Often characterized as 'wicked' problems, where scientific and moral perspectives are conflicting, the moral philosophy underlying welfare economics, i.e. utilitarianism, is only one of many different perspectives to be considered in environmental policy. Under the cross-cutting theme behaviour & ethics ENR develops theories and methods to take these considerations into account in both positive (behaviour) and normative (ethics) economic analyses. Examples include (1) behavioural-economic experiments; (2) theoretical behavioural models, and (3) innovative decision- making tools, based on normative criteria, such as welfare and equity. Relevant topics under this cross- cutting theme include, for example, coastal zone and river basin management, the management of common-pool resources, and animal testing.

Staff involved

  • Rolf Groeneveld (contact person)
  • Andries Richer
  • Hans-Peter Weikard
  • Silke Gabbert
  • Xueqin Zhu

Key publications

  • Weikard, H.P. 2017. A Lockean approach to greenhouse gas emission rights. In: Adrian Walsh, Sde Hormio and Duncan Purves (eds.) The Ethical Underpinnings of Climate Economics. London & New York: Routledge, pp 183-197.
  • Binh, P.T., X. Zhu, R. Groeneveld, and E. van Ierland, 2016. What Factors Make People Act to  protect themselves from Floods? A Study from Vietnam. EEPSEA Policy Brief.

C. Risk & Uncertainty

Decision makers often do not have perfect information about what the future will bring. As a result, making decisions is challenging. This affects regulators who have to decide which policies are needed to prevent, for example, negative climatic changes. This also affects private actors who have to make sure that they do not regret their decisions (e.g. regarding investment) if environmental or regulatory changes occur. This research theme covers two aspects. First, we look at optimal decisions under risk  and uncertainty. What is the best way to deal with the future knowing that we do not know how it will unfold? Second, decision makers rarely calculate what is optimal, but instead rely on simple heuristics.  An example is the tendency to focus only on the most likely outcome and ignore everything else. At ENR, we are trying to understand why certain heuristics are applied and how they perform across different stakeholder groups. We combine empirical and theoretical approaches to better understand exposure to and decisions under risk and uncertainty and their policy implications. Relevant topics under this cross- cutting theme include fisheries, climate change, natural disasters, and the use of toxic substances.

Staff involved

  • Andries Richter (contact person)
  • Silke Gabbert
  • Rolf Groeneveld 

Key publications

  • Van der Pol, T.D., E.C. van Ierland, and S. Gabbert, 2016. Economic analysis of adaptive strategies for flood risk management under climate change. Mitigation and Adaptation Strategies for Global Change Advance Online Publication.
  • Van der Pol, T.D., S. Gabbert, H.P. Weikard, E.C. van Ierland and E.M.T. Hendrix, 2016. A Minimax Regret Analysis of Flood Risk Management Strategies Under Climate Change Uncertainty and Emerging Information. Environmental and Resource Economics Advance Online Publication.
  • Groeneveld, R.A., M. Springborn, and C. Costello, 2014. Repeated experimentation to learn about a flow-pollutant threshold. Environmental and Resource Economics 58(4):627-647.