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Browsing by study line "Ympäristö- ja luonnonvaraekonomia"

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  • Van Kooten, Sebastiaan Cornelis Antonius (2022)
    Over the past century, several protection schemes have been introduced in Finland, among which more recently the Natura 2000 programme. As of date, no large scale analysis of the economic effects of protection programmes exist in Finland, even though protection schemes can have large distorting effects. This thesis utilised over 1 million property transactions in Finland from the period 1990-2020 in a hedonic pricing model to analyse the net economic effects of environmental protection. Difference-in-Differences analyses were applied to assess the effects on productive and environmental value of property transactions. This thesis has provided quantified estimates of the economic effects on different stakeholder groups. Average productive value was found to decrease by 15.46% inside protected areas, whereas environmental value increased by 6.76% inside and bordering a protected area. Forest land and land acquired for protection were most reduced in value, whereas residential houses and cottages were found to profit from protection. A net realised welfare gain of €1,127,000,000 was estimated over the period 1990-2020 for the Natura 2000 programme. Besides the net societal welfare gain, distributional disparities were found across stakeholder groups and spatial locations. This research calls for the accurate inclusion of all interests to guarantee net gains for all stakeholders in future protection programmes.
  • Mutila, Matias (2021)
    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.
  • Laine, Christine (2021)
    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.
  • Paajanen, Tiina Pauliina (2020)
    Forests are vital for biodiversity and climate change mitigation through carbon storage and sequestration. In Finland, forests are the most important renewable natural resource and forestry is significant for the national economy. In addition, forests are the largest carbon sinks of the land use, land-use change and forestry (LULUCF) sector and provide remarkable amount of biodiversity. The Finnish non-industrial private forest (NIPF) owners have significant potential to supply ecosystem services and have substantial opportunities regarding the forests, as 60% of the total area of forest land is privately owned. The NIPF owners may enhance the state of biodiversity and carbon sequestration by participating in the forest conservation programs. The regulations and inclusion of the LULUCF sector in the climate targets of the European Union (EU) and a 30% conservation target of land in the EU Biodiversity Directive are intensifying the pressure on further development of conservation programs. Hence, it is important to understand the behavior of the NIPF owners to motivate the program participation. The aim of the thesis is to get insight into the Finnish NIPF owners’ participation behavior in permanent forest conservation programs by using the choice experiment (CE) method. A novel conservation program is being planned in Finland and this survey processes it for the NIPF owners by using a survey questionnaire. The survey questionnaire was targeted to 5,010 NIPF owners and the overall response rate was 11.7%. The study provides analysis on specific non-participant group of protesters, attribute preferences of the conservation program as well as estimates of the willingness to accept (WTA) compensation for program participation. The forest conservation program is described with four attributes being the payment for biodiversity; payment for carbon sequestration; conduction of non-timber businesses and eligibility of the forest area. The sources behind preference heterogeneity regarding the conduction of non-timber businesses and eligibility of the forest area are examined using interactions in the econometric model. The results reveal that a significant share (77%) of serial non-participants are identified as protesters and should be excluded from the WTA estimates. Several socio-economic and attitudinal characteristics were found to statistically significantly influence on protest behavior. The probability to protest increases with e.g. older age, pensioners, female gender and renters for hunting club. Additionally, the protest behavior depends on a number of stated attitudinal statements. Using a binary logit model, the model estimates show that the WTA for program participation is considerably higher when protesters are included, being 16,032 €/ha and respectively 5,641 €/ha, when protesters are excluded. The results regarding the preferences reveal attitudinal and socio-economic aspects affecting statistically significantly on the program attribute of the eligibility of forest area. According to the analyses, the possibility to conduct non-timber businesses is rather irrelevant for the respondents. In addition, there are a few attitudinal factors that influence the preferences of the conduction of non-timber businesses which are statistically significant. However, none of the socio-economic factors regarding the preferences of the attribute are statistically significant. To our knowledge, this is the first study that aims to explain the sources behind protest behaviour as well as to investigate the conduction of non-timber businesses, in the context of permanent forest conservation program. The results provide novel information about protesters and preferences of program attributes of forest management requirements and conduction of non-timber businesses. The results may be useful for the development and targeting of voluntary forest policies and incentives as well as for the business development of organizations that provide services for the NIPF owners. Further, the results help recognizing protesters more easily and reducing protest behavior. To conclude, further studies on the objectives of protests in the context of permanent forest conservation program could be valuable. In addition, further examination on individual attribute level WTAs, could be useful to reveal detailed information of the program attributes of conduction of non-timber businesses and required management activities.
  • Penttilä, Marko (2020)
    Ilmastonmuutos on globaali ongelma, jonka torjunta vaatii merkittäviä päästövähennyksiä. Energiantuotanto on yksi merkittävä ilmastolle haitallisia päästöjä aiheuttava sektori. Samaan aikaan globaali energiankysyntä kasvaa jatkuvasti väestönkasvun ja teollistumisen seurauksena. Energiantuotannon päästöjä voidaan vähentää energiateknologialla, uusiutuvan energian ja energiatehokkuuden avulla. Tieteelliset teoriat, joista yksi tunnetuimmista on Porterin hypoteesi, näkevät tiukan ympäristöregulaation vaikuttavan positiivisesti teknologiseen kehitykseen. Ympäristösääntelyn ollessa korkealla tasolla sekä Suomessa että EU:ssa, on Suomella Porterin teorian mukaan hyvät edellytykset kehittää energiateknologiaa ulkomaanvientiin asti. Myös Suomen valtio on panostanut viimevuosina energiateknologian kehitykseen ja maan tavoitteena on hyötyä energiateknologian kehityksestä kotimaisten päästövähennysten lisäksi energiateknologiaviennin kasvattamisen avulla. Tutkielmassani selvitän Suomen energiateknologiaviennin kehitystä ja sen piirteitä vuosina 2010–2018. Olen määrittänyt 457 energiateknologian tuotetta, jotka kuvaavat Suomen energiateknologiaviennin kokonaisuutta. Tutkin tarkemmin Suomen vuoden 2018 energiateknologiavientiä sekä tuulivoimateknologiavientiä vuosina 2010–2018. Suomen energiateknologiavienti on pysynyt melko tasaisena tarkastelujakson ajan. Suomen vuotuinen energiateknologiavienti liikkui viiden miljardin euron tuntumassa vuodesta 2010 vuoteen 2018. Sen sijaan Suomen tuulivoimateknologiavienti on aaltoilevaa, mutta siitä oli havaittavissa kehittyvä kasvutrendi vuodesta 2010 vuoteen 2018. Global climate change is a major issue. Limiting the rise in global temperature below a critical point requires big emission reductions. Globally, energy production causes emissions harmful to the climate. Demand for energy is constantly growing because of population growth and industrialization. However, advances in renewable energy technology can help reduce the levels of emissions. Energy technology can also reduce the final consumption levels of energy by improving energy efficiency. In Finland and EU, environmental regulation is on high level and some theories suggest that this advances technological development. A well-known theory supporting this is Porter’s hypothesis. Regarding these theories, Finland has a good opportunity to develop its energy technology. The government of Finland is investing in low-carbon energy technology and it aims is to gain some benefits by exporting these technologies. In this paper, I will study the exportation of energy technology of Finland in 2010–2018 in general, but also focusing on the exportation of wind power technology. I have defined 457 energy technology products that form the export of energy technology of Finland. The energy technology of Finland has been stable in 2010–2018. The value of this trade in euros has remained stable, approximately five billion euros. While the share of energy technology exports from the total value of exports in Finland has slowly reduced in 2010-2018. Wind power technology export of Finland have been fluctuating, but they have increased more clearly than the total energy technology export of Finland.
  • Rantala, Helena (2021)
    Given the urgency of the drastic reduction targets for air traffic, it is necessary to assess which different actions will benefit the achievement of the targets in the short-term. Investments in new and lower-emission aircrafts take time, making them long-term solutions. The introduction of alternative jet fuels, in turn, are impaired by inadequate production levels and lack of economic viability. The benefits of climate offsetting will only be seen in the long term, despite short-term actions. This study presents different tax instruments as the only solution to reduce aviation emissions in the short-term, in the absence of abatement technology. In this Master's thesis I examined, how taxation as a policy instrument can curb aviation emissions in the short-term. The policy instruments considered were fuel, ticket and seat tax and VAT, as well as emissions trading. The impact of the taxes were tested on three different one-way routes. The selected routes included a domestic flight and one intra- and inter-EEA flights. The analysis of short-term emission reduction measures assumed a monopolistic market structure, where the focal airlines have market power. The results were derived by optimizing the flight ticket price from the airline’s profit function, which was used to estimate the number of passengers on the given routes, and thereby the weight of the aircraft as well as the final fuel consumption and the emissions. The results showed, that emission reductions for all the given policy instruments remained very low in the short-term. This finding was not only due to insufficient tax levels, but also to the relatively low share of the passengers in the total emissions. Of the selected instruments, the smallest emission reduction was achieved by emissions trading, and the largest reductions by ticket and value-added tax. The seat tax was not found to have any impact on the emissions. Looking at airline profits, it was found that despite the highest emission reduction figures, the impact of the ticket tax on profits was relatively low compared to other instruments. The largest losses and highest tax revenues were generated from VAT on flight tickets. In addition to emissions trading, the fuel tax was the only policy instrument directly linked to emissions. The increase in fuel prices caused by the fuel tax could make alternative jet fuels, such as synthetic fuels, competitive in the markets. Achieving significant emission reductions in the short-term would require cutting entire flights. However, a significant reduction in passenger numbers could be avoided by seeking to increase the passenger load factors. In reality, airlines have multiple ways to adjust to the given policy instruments. The future research could be extended to consider also other forms of policy adaptation and long-term adaptation strategies.
  • Uusivuori, Erika (2019)
    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.
  • Longi, Meri (2020)
    Forests can sequester large amounts of carbon with relatively low costs. Thus, they are an important instrument for climate policies. The forestry sector can be directly included in an emissions trading system (ETS). Another way is to exclude it but award offsets for additional carbon sinks. The awarded offsets can be used to cover a certain percentage of emissions under the ETS. Offset broaden the scope of an ETS and increase the overall emission reductions at lower cost. However, they face some issues. The main issues are non-additionality, non-permanence and carbon leakage, which are defined in the Kyoto Protocol and scientific literature. The approaches to these issues are compared in three ETS, which are the California Cap-and-Trade Program, the Regional Greenhouse Gas Initiative (RGGI) and the New Zealand Emissions Trading Scheme (NZ ETS). Three research questions are answered. First, how are the forestry related issues of non-additionality, non-permanence and carbon leakage considered in the California Cap-and-Trade Program, the RGGI and the NZ ETS? Second, how these approaches differ between the systems? And third, how could the forestry offset programs be improved in parts of the three main issues based on scientific literature? The approaches to all three issues are almost similar between the California's program and the RGGI. Both programs award only additional sinks. To account for the non-permanence issue, both programs require a 100-year monitoring period after credit issuance. They also require annual reporting and monitoring and a third-party verification every six years. They use a buffer account or reversal risk adjustments for unintentional reversals. Intentional reversals are covered by retiring offset credits in both programs, but the California’s program also requires a penalty. The carbon leakage risk for shifting cropland and grazing activities is determined the same way in both programs and is between zero and 50%. The secondary emissions resulting from these activities are based on the leakage risk, annual difference in actual onsite carbon and annual difference in baseline onsite carbon. The NZ ETS credits all sinks and has not implemented an ETS design to account for carbon leakage. However, non-permanence is addressed. Post-1989 forest owners must repay units if the forest is removed from the program, do a carbon sink inventory every five years and pay units if the number of sinks decreases. Pre-1990 forest owners must repay units in case of deforestation. The California’s program and the RGGI could improve the timing of accounting the onsite carbon sinks and leakage releases, which are inconsistent. Also, the reductions based on the estimated leakage risk may not be high enough because the actual leakage can be up to 80%. The long monitoring periods can be a barrier for participation especially for financially motivated forest owner. On the other hand, the additionality requirements can be a barrier for conservation motivated forest owners. The NZ ETS could be improved by crediting only additional sinks because crediting all sinks increases the government's expenditures, i.e. the taxpayer’s costs, without any environmental benefit. Carbon leakage should also be considered to gain environmental benefits.
  • Ketonen, Minna-Maria (2022)
    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.
  • Kupari, Victor (2022)
    The European Union classification system for sustainable activities obligates companies with more than 500 employees to report their EU taxonomy alignment from 2022 on. The purpose of the study was to find out what kind of action companies have taken in preparing for the EU taxonomy classification and reporting. In addition, the aim was to map companies' views on the challenges and benefits of EU taxonomy and environmental responsibility in general. The study was conducted as a case study, and the material was collected through an online survey. The target group was corporate finance and environmental managers from companies employing more than 500 people in Finland, Sweden, and Denmark. Forty-two people answered the survey, 28 of whom say the EU taxonomy affects the company they represent. Most of the respondents were representatives of large Finnish companies operating in the industrial sector. The data were examined by comparing the means and correlations of the responses. According to the survey, 97% of respondents said that their represented company was prepared for EU taxonomy. There were negative correlations between internal preparations and external support based on the data. Finding the EU taxonomy challenging, in turn, positively correlates with the acquisition of external support. Only a small proportion of the respondents said that companies they represented had calculated their own EU taxonomic eligibility or were willing to report on them. Most respondents assessed that their company was a pioneer in environmental responsibility. Based on the results, companies can be divided into two groups in preparation for EU taxonomy. Companies either seek to operate with internal resources or outsource the work. The respondents found that the most significant benefit of EU taxonomy was an improvement in the company's reputation. Topics related to EU taxonomy reporting and determining the company's taxonomic eligibility were identified as the most significant challenges. Companies that did not respond to the survey might not consider EU taxonomy a clear or preferred topic. This fact may also explain the high level of environmental responsibility of the companies that responded to the survey and their good preparation for the challenges posed by EU taxonomy. The role of EU taxonomy in promoting sustainability in companies is remarkable.