Browsing by study line "Ympäristö- ja luonnonvaraekonomia"

The importance of multipurpose forests is increasing since forests can simultaneously provide solutions for climate change mitigation, biodiversity protection, and the diverse needs of humans. Therefore, forest management practices, various management objectives, and forest-related policies become necessary parts of sustainable forestry. A notable share of forest management decisions depends on the preferences and motives of private forest owners, and an increasing number of owners are interested in other than timber values in their properties. In addition, changes in forest ownership structures and varied use of forest management alternatives emphasize understanding private forest owners’ management motives. This thesis aims to examine Finnish private forest owners and their forest management preferences regarding the support of biodiversity values and interest in wood-material production for the needs of the bioeconomy. The survey data were collected in spring 2020 and included a choice experiment with three forest management schemes. Two hypothetical management contracts, timber-oriented, and nature-oriented strategies, were used as alternatives for the conventional management practices. The long-term effects from each management scheme were described with the changes in profit, biodiversity, carbon stock, climate change-induced damages, and one-time subsidy. The survey data were analyzed using conditional logit, random parameters logit, and latent class logit models. Forest owners consider biodiversity values and raw material supply for the bioeconomy important. However, the results suggest that, on average, forest owners may not be willing to accept the timber-oriented management contract, whereas the nature-oriented management strategy is generally a more preferred option. The latent class model reveals three forest owner types with different preferences and management objectives. The largest share of the respondents is identified as Traditionalists who prefer conventional management practices to other alternatives. They might be reluctant to change their strategies despite the level of subsidies. The smallest group, Environmentalists, is oriented towards environmental and natural values in their forests and would most likely use continuous cover forestry and safeguard biodiversity values. The monetary support does not necessarily impact their management decisions. The rest of the respondents are described as Profit-oriented owners who may be a potential target for various forest management contracts. They consider their property more often as financial security and could be motivated by compensation. The possibility for productive and viable forests has a considerable impact on forest owners’ management decisions. However, the results indicate broad interest in various management alternatives, and the segment-based analyses reveal different forest management objectives among the owners. Therefore, understanding the diversity between forest owners helps policymakers to target specific policy goals more effectively.

Mining is globally one of the fastest growing and developing industries (Vasara, 2019). It is important to find functional and reliable methods via academic research to solve societal issues in a rapidly evolving industry. Such a method is, for example, a valuation method for a producing mine which determines the value of the mine for the owner with sufficient accuracy. This thesis studied the theory of Hotelling's valuation principle and valuation method of Cairns and Davis (1998) and their role in the economic literature. In the empirical part of the thesis, the net present value of the Siilinjärvi phosphate mine was calculated, and sensitivity analysis was performed for the determined data using the studied valuation methods, instead of statistical analysis of the methods. The thesis answered the following questions: what are the effects of a valuation method and the available data on the net present value of a single producing mine? How are the above-mentioned impacts possibly reflected in social value of the mine and thus in social decision-making? In the analysis of the thesis, the base year was defined as 2020. Data was determined to describe the base year, and sensitivity analysis was performed relative to it. The estimated data described the production of phosphate concentrate, and the valuation was outlined accordingly. The net present value of the Siilinjärvi phosphate mine, calculated using the Hotelling valuation principle, was 663,27 million US dollars. The net present value obtained using the valuation method of Cairns and Davis was 378.23 million US dollars. Thus, the Hotelling valuation principle also produces higher social value than the valuation method of Cairns and Davis. And it is possible that using the Hotelling valuation principle, a single mining project would be approved, which would not necessarily be accepted using the valuation method of Cairns and Davis. The effects of the available data are transmitted to the net present value obtained by the valuation method and thus to the social value and decision-making. The magnitude of the effects depends, for example, on the method used and the magnitude of the error in the estimates. Future research could be testing the valuation method of Cairns and Davis with statistical means to allow the valuation method to gain empirical support. Also, the valuation method of Cairns and Davis valuation method could be extended to cover the ecological and social impacts of mining.

Aquaculture production has enabled the considerably increased consumption of fish for the past decades. While fish is a good source of nutrition, its production is causing negative externalities for instance in a form of eutrophicating nutrient releases. These are attempted to diminish by regulation which has in turn enhanced the stagnation of the aquaculture sector in the EU. Most of the production is currently performed in marine net cages but to harness the economic potential of the sector without further deteriorating the waters, new, more environmentally sustainable options are sought. Bringing the production to land-based indoor facilities with recirculating water is one plausible option. The nutrient releases from these Recirculating Aquaculture Systems (RAS) are significantly smaller as most of the nitrogen (N) and phosphorus (P) can be purified. However, despite the efficiency perks the indoor rearing with adjustable conditions is yielding, the operation and especially the investment costs are likely to be much higher than in the prevailing cage-based production decreasing the desirability of the technology. I conducted a social cost-benefit analysis (CBA) to compare these two alternative aquaculture production technologies, net cage and RAS, from the society’s perspective. In addition to private costs, i.e., investment and production costs, the analysis takes into consideration the eutrophication damage of the released nutrients. The eutrophication damage is determined in monetary terms to make them commensurate with the other costs. For the same reason, all the costs and benefits are discounted to present values prior the comparison. The analysis has special focus on the Baltic Sea and Finland. Due to its dominance in the Finnish aquaculture production, rainbow trout was chosen as the main specie to study along whitefish as a higher value specie. To further examine the economic performance of RAS technology, pike perch production is also included. In addition, due to the uncertainties regarding the cost factors and developing technology, I present a comprehensive sensitivity analysis regarding the discount rate, investment costs of RAS, producer price, and eutrophication damage valuation. When it comes to large scale production of rainbow trout, the results show higher net present value (NPV) for the net cage production. However, when the eutrophication damage costs are taken into consideration the difference between net cage and RAS production decreases. RAS technology seems to be highly profitable in whitefish production, implying that is economically sensible to focus on higher value species. Under the strict environmental legislation regarding the Weser ruling of the EU Water Framework Directive (WFD) activities preventing or hindering to reach the good environmental status waters cannot be allowed. As this can also cause denial of permits for RAS production and further decreasing the distinctive nutrient load of the net cage aquaculture is a challenge considering the economic and technological restrictions, one solution could be offsetting the nutrient load. Gypsum amendment of fields has been found to be a cost-effective measure in preventing phosphorus releases; thus, the initial analysis is extended to include onetime nutrient offsets from farmers. According to the results, it is sensible offsetting measure as the environmental benefits from offsetting are higher than the costs of doing so under net cage production and at the same level under RAS production. The current environmental regulation is affecting hardest on the point sources such as aquaculture farms. This is felt unfair by the fish farmers. To shed light on the issue, another social CBA examines the social net benefits of beef and cultured meat production and compares the NPVs with rainbow trout farming under net cage and RAS technologies. The analysis is conducted with respect to produced protein to make the alternative food sources commensurate. In addition to private costs and eutrophication damage costs of nutrients, it also includes the atmospheric damage costs of carbon dioxide emissions. The results show clear superiority of aquaculture as a protein producer. The thesis concludes that due to the efficiency of aquaculture in producing protein and its potential in the blue growth sector, it is definitely reasonable to seek sustainable ways to produce fish. While net cage technology is currently the best option for large scale aquaculture, RAS has potential on the niche market of higher value species. The technological development has tendency to decrease the costs related to the necessary equipment and if the technology is to overcome its other uncertainties, it may have an important role in the future. Nevertheless, the environmental regulation ought to be adjusted to enable the blue growth in an environmentally and financially sustainable manner.

This thesis examines the effects of Internationally Transferred Mitigation Outcomes (ITMOs) trade –embedded in the market mechanisms of Article 6 of the Paris Agreement– in assisting countries to achieve their Nationally Determined Contributions (NDCs), incentivize increased mitigation ambition, and contribute to the long-term goals of the Paris Agreement. The study takes place within a context characterized by highly heterogeneous and non-Paris aligned NDCs, reflecting current global circumstances. The study employs a conceptual framework that integrates the Social Cost of Carbon (SCC), Marginal Abatement Cost (MAC) curves, and Marginal Benefit (MB) curves. This framework is used to analyze the impact of ITMO trading on the ambition of NDCs and the potential for global mitigation. The research reveals that the roles countries play in the ITMO market—whether as buyers or sellers—is significantly influenced by the varied nature of NDCs, each country’s unique domestic marginal abatement costs, and how their mitigation ambition aligns with the SCC. In addition, it was found that ITMO trading can potentially trigger additional mitigation and escalate target ambitions. However, the success of this mechanism heavily depends on certain conditions, restrictions, and alignment with Article 6 principles. For instance, allowing negative reoptimization could lead to countries manipulating their NDCs for short-term gain, thus undermining long-term climate goals. In contrast, scenarios permitting positive reoptimization and restricting trade to beyond-NDC targets can encourage higher ambition levels in line with the Paris Agreement goals. However, the study also highlighted significant challenges and limitations. The risk of overselling could undermine future mitigation efforts, and managing these complexities requires a thorough understanding of each country’s domestic mitigation context. Moreover, the varied nature of NDCs adds a layer of complexity to ITMO trading, necessitating a meticulous examination of each country’s future actions. The study recommends future research to devise methods for better aligning NDCs to facilitate more effective ITMO trading. This could involve an extensive exploration of potential safeguards for ITMO trade such as transfer limits, ambition coefficients, surplus targets, and taxes. Evaluating their effectiveness could offer valuable policy implications for ITMO trade regulation. Future studies should also delve into the uncertainties and dynamic intertemporal effects that impact ITMO trading, aspects not accounted for in the current conceptual framework. By broadening the focus to include imperfect markets and real-world uncertainties, we can strive towards more robust and effective climate policies.

Tässä tutkielmassa tarkastellaan Suomessa vuonna 2018 järjestetyssä syöttöpreemiohuutokaupassa saatujen tarjousten suhteutumista huutokauppateorian mukaisiin odotuksiin optimaalisista tukitasoista. Lähtökohdaksi yritysten optimaalisen tarjousstrategian tarkasteluun valittiin yksityisten arvostusten perushuutokauppamalli. Koska voimalaitoshankkeen tarvitsemaa tukitasoa määrittää keskeisesti yrityksen näkemys hankkeensa kannattavuudesta ilman tukea, lähestytään optimaalisen tukitason tarkastelua tässä työssä nimenomaan kannattavuusnäkökulmasta. Työkaluna käytetään nettonykyarvomenetelmää, ja kannattavuusanalyysin avulla muodostetaan hankekohtaiset arviot kannattavuuden edellyttämistä sähkön hinnoista, jotka kattaisivat hankkeiden elinkaaren aikaiset nettokustannukset tarkastelluilla WACC-laskentakoroilla. Keskeinen osa tutkimusta on myös tuotantoarvioiden laatiminen kullekin tarjotulle voimalaitoshankkeelle, joista kaikki koskevat maalle rakennettavaa tuulivoimaa. Työssä hyödynnetään luvanvaraisesti huutokaupan toimeenpanneelta viranomaiselta (Energiavirasto) saatua tarjousaineistoa, Suomen tuuliatlaksen tuulisuusaineistoa, sekä laitevalmistajilta saatuja tuuliturbiinien tehokäyriä. Tulosten perusteella tukihuutokaupassa saadut tarjoukset eivät juuri vastaa huutokauppateorian mukaisia odotuksia optimaalisista tukitasoista. Hankkeiden kannattavuuden vaatimat sähkön hinnat eivät seuraa odotetusti tarjottujen preemioiden tasoa, vaan hajautuvat korkeampiin ja matalampiin tarjousten tasoista huolimatta. Kannattavuusanalyysin perusteella alhaisemmat tukitasot tarvitseville hankkeille on tarjottu hyvinkin korkeita preemioita, kun taas moni korkeampien kustannusten hanke näyttäisi tarjonneen verrattain alhaista preemiota kannattavuuden vaatimaan hintatasoon nähden. Erot voivat johtua niin poikkeamista tässä työssä arvioiduista tuloista ja menoista, kuin myös sovelletusta mallista ja sen oletuksista. Tämä tutkielma täydentää uusiutuvan energian tukihuutokauppojen tutkimusta toteutuneeseen huutokauppaan perustuvilla havainnoilla.

Oceans, seas, lakes and other waterbodies are increasingly suffering from too much plastic waste. Numerous sources are contributing to this plastic waste problem. Additionally, conventional fishing nets, made out of nylon, are causing environmental damage by disintegrating into microplastics. The breakdown process stops there, as these microscopic particles are non-biodegradable. Microplastics remain in waters for years causing harm to marine organisms that ingest them. Linen fishing nets are a valid alternative and more ecological production of nets. This study aims to compare the costs of these new linen nets with conventional nets. These costs can be related to the environmental benefits of these alternative nets. The research objective is to study the question under which conditions it would be optimal to choose linen nets over conventional (nylon) fishing nets. The conditions examined are economic and policy, environmental and technological. This research question is put into the wider context of microplastics. A rotation model, typically used in forest economics, is applied to analyze the optimal lengths of periods to renew both a linen and a nylon fishing net. A comparison of the costs is conducted and a subsidy-based policy instrument is determined for the fishers using linen nets. A subsidy-based policy could be applied to make fishing enterprises in Finland use ecological fishing gear. The results suggest that the costs of such a policy would be reasonable, estimated between €1.1 and €4.5 million in this study. Importantly, an increase in the use of ecological nets would lead to a decrease in the total microplastic load in waterbodies.

The late 1900s and the beginning of the 2000s saw a rise in global value chains. Foreign direct investments grew faster than international trade and CO2 emissions grew at unprecedented speeds. These two phenomena spurred a lot of research into carbon leakage trying to assess its magnitude and the reasons behind the reallocation of manufacturing. Developing countries have generally higher carbon intensity compared to developed countries and thus the reallocation of manufacturing has raised concerns over its climate impacts. EU is im- plementing a Carbon Border Adjustment Mechanism to prevent carbon leakage and to incentivize decarbonization globally. Carbon leakage has also been used to argue against stricter environmental regulation in developed countries. Therefore it is important to know what are the drivers behind the reallocation of manufacturing from low to high carbon intensity countries? Andreas Malm proposed the Fossil Capital Hypothesis to explain why the globalization of man- ufacturing results inevitably in higher emissions. In its simplest form, the hypothesis states that globally mobile companies face two opposing forces when deciding where to manufacture goods: cheap labor and the cost of infrastructure. As companies venture to less developed countries in search of cheap labor the cost of setting up adequate infrastructure increases. In the cross-draught of these two forces, companies end up setting up shop in low-middle income countries which are coincidentally the countries with the highest carbon intensities. This thesis assesses the empirical foundation of the Fossil Capital Hypothesis by analyzing three questions using panel regression: (1) whether high carbon intensity and low labor costs are corre- lated, (2) whether foreign direct investments flow to countries with relatively high carbon intensity and (3) whether labor costs are the main driver of foreign direct investments. The analysis shows that foreign direct investments flow to countries with high carbon intensity and that low wages are correlated with high carbon intensity. However, the analysis doesn’t find a correlation between low labor costs and a high influx of foreign direct investments. Therefore the analysis finds limited support for the Fossil Capital Hypothesis.

There are many potential ways to reduce CO2 emissions in road freight transportation, of which the utilisation of electrification offers several interesting opportunities. The study analyses the relative cost-competitiveness of battery-electric heavy-duty vehicles and vehicles utilizing electric road system (ERS) to the traditional diesel-powered fleet through the TCO framework. The framework is extended to the cost-effectiveness analysis to consider the external effects regarding vehicle´s life-cycle emissions, and thus the unit cost of the emission reduction achieved through the electrification can be determined. The concrete effects of the electrification of Finnish domestic heavy-duty freight are roughly studied through three arterial roads located in Southern Finland: Helsinki–Turku, Helsinki–Lahti and Helsinki–Tampere. The study utilises existing public research and statistical data on the subject areas. Although the operating costs of the electric trucks are lower than the diesel trucks, only the overhead catenary ERS vehicle in the heaviest 60-ton weight class is less expensive than the equivalent diesel-powered truck in terms of the total cost of ownership. The costs of the battery packs and the catenary line connection in ERS vehicles significantly increases the purchase cost of the electric trucks. Based on the analysis, the emission reduction of 66–79 percent can be achieved with battery-electric trucks and 81–89 percent reduction with ERS-powered vehicles compared to the corresponding diesel-powered vehicles. Although the TCO of ERS vehicles is lower and the achievable emission reduction potential is higher than in the battery-electric vehicles studied, the investment cost of the ERS infrastructure increases the total costs so substantially that the utilisation of battery-electric technology is less expensive option from the society´s point of view. The less expensive life-cycle emission reductions are achieved with the heaviest battery-electric vehicles studied, which according to the analysis, could be achieved with a cost of 139–150 EUR/tCO2. The emission reduction cost of a battery-electric truck without a trailer would be 650 EUR/tCO2. Assuming that it is possible to fully electrify the heavy-duty freight which utilises the studied arterial roads, the total increase in life-cycle costs is approximately EUR 0.7–2.1 billion for battery-electric trucks and EUR 1.5–2.3 billion for ERS trucks. The annual emission reduction potential by replacing fossil fuels with electric vehicles is approximately 0.3–0.5 Mt CO2-eq., which is circa 9–15 percent of the annual emissions of all heavy road freight in Finland. Although the analysis is carefully conducted, it would be fair to say, that significant uncertainties are associated with the background assumptions and data. Already the wide spectrum of the vehicle usage and operating environment can have a major impact to the vehicle characteristics, and thus the results. Further research would also be needed to investigate the effects of the COVID-19 pandemic and the war in Ukraine to the component availability, purchase prices, and changes in fuel and electricity costs. Also, the applicability of electric technology in commercial heavy-duty transportation requires further research.

Tutkimuksessa konkretisoidaan muutostarpeita maatalouden suojakaistojen käyttöönottoon liittyen, kun ulkoisvaikutukset huomioidaan ravinnehuuhtouman, eroosion, kasvihuonekaasupäästöjen, monimuotoisuuden sekä virkistyksen näkökulmista. Ulkoisvaikutuksien taloudellista mittaamista varten muodostetaan haitta- ja hyötyfunktiot soveltuvien tutkimusten perusteella. Tutkielmassa optimoidaan suojakaistan leveys ja rantapeltohehtaarien lannoitusmäärä ja tarkastellaan optimoinnin tuottamaa hyvinvointia (€/ha). Tarkastelussa muodostetaan kaksi hyvinvointiyhtälöä, joista toisessa on käytössä nurmipeitteisiä suojakaistoja ja toisessa luonnontilaisia suojakaistoja. Tapausesimerkkinä toimii Eurajoen pääuoma. Yksin ravinnehuuhtouman näkökulmasta on voinut olla perusteltua ohjata maanviljelijöitä kapeiden nurmipeitteisten suojakaistojen käyttöönottamiseen. Tämän tarkastelun mukaan suojakaistojen optimaalinen käyttöönotto selvästi muuttuu, kun useampi ulkoisvaikutus huomioidaan. Usean ulkoisvaikutuksen oloissa suurimman hyvinvoinnin Eurajoen pääuoman valuma-alueella tuotti luonnontilainen 86 metriä leveä suojakaista. Optimaalinen typpilannoitustaso vesistön viereisellä pellolla oli tällöin 83 kg N/ha. Lisäksi huomattiin, että kapeat alle kymmenen metriä leveät suojakaistat tuottavat aina hyvinvointitappion. Ulkoisvaikutuksista ilmastohaitta ja monimuotoisuushyöty vaikuttivat tuloksiin voimakkaimmin, ja ravinnehuuhtoumahaitta heikoiten. Herkkyysanalyysissä suojakaistan leveyteen vaikutti voimakkaimmin viljan markkinahinta ja hyvinvoinnin määrään puolestaan maksuhalukkuus monimuotoisuudesta. Nykyisten maataloustukien joukosta ei löydy tukivaihtoehtoa puustoisen suojakaistan säilyttämiseen. Tarkastelun perusteella maatalouden kannustimia tulisi muuttaa tukemaan luonnontilaisten suojakaistojen käyttöönottoa muuttamalla suojakaistoihin tai -vyöhykkeisiin liittyviä maataloustukia ja niiden ehtoja. Tarkastelun optimin saavuttamiseksi luonnontilaisen suojakaistan perustamisen tueksi laskettiin 681 €/ha ja nurmipeitteisen suojakaistan tueksi 580 €/ha. Typpilannoiteveroksi saatiin 0,44 €/kg N. Tarkasteluun liittyy useita oletuksia ja yksinkertaistuksia rajautuen saatavilla olevaan tutkimustietoon maatalouden suojakaistoilla. Esimerkiksi oletettu Eurajoen kasvillisuuden alkuperäisyys ja lajimäärä ovat karkeita arvioita. Lisäksi esimerkiksi luonnontilaisen suojakaistan ravinnehuuhtoumafunktioon hyödynnettiin metsätaloustutkimukseen perustuvaa tietoa, ja monimuotoisuuden rajahyötyä kuvaa kosteikkotutkimukseen liittyvä arvottamistieto.