Scandinavian Working Papers in Economics

Working Paper Series,
Swedish University of Agricultural Sciences, Department Economics

No 2013:1: Cost effective nutrient abatement for the Baltic Sea under learning-by-doing induced technical change

Martin Lindqvist () and Ing-Marie Gren ()
Additional contact information
Martin Lindqvist: Department of Economics, Swedish University of Agricultural Sciences, Postal: Department of Economics, Box 7013, Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden
Ing-Marie Gren: Department of Economics, Swedish University of Agricultural Sciences, Postal: Department of Economics, Box 7013, Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden

Abstract: Technical change is an important factor to take into consideration when analysing environmental issues that span over a long time horizon. One important source of technical change is learning-by-doing. The purpose of this paper is to analyse the impact of technical change through learning-by-doing on the cost effective implementation of the nutrient goals stipulated in the 2007 HELCOM Baltic Sea Action Plan. Effects of learning-by-doing on the cost and allocation of abatement are analysed using a dynamic discrete model of control costs for abatement in the riparian countries of the Baltic Sea. The results indicate that the impact of learning-by-doing on the cost of abatement can be substantial depending on the learning rate and that technical change could lead to substantial cost decreases for the largest polluter, which is Poland.

Keywords: Cost effectiveness; learning-by-doing; eutrophication; nutrient abatement; technical change; Baltic Sea

JEL-codes: D99; Q52; Q55

36 pages, March 27, 2013

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http://pub.epsilon.slu.se/9474/  

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