•We assessed the market performance of Shenzhen’s emission trading scheme.•Trading records were used to estimate the degree of volatility and return premium.•We found that the rate of return was ...negatively associated with expected risk.•Kurtosis in trading volume was excessively high and fluctuations were highly concentrated.•Measures are needed to improve market efficiency and eliminate market distortions.
China has developed its own domestic carbon markets by setting up emission trading schemes. This study addresses concerns about the functioning of these schemes and the financial performance of the Chinese carbon market. It aims to assess an actual outcome of this policy intervention, i.e. trading records, which were used in our analysis to examine a key financial property of the allowance-based market in Shenzhen. In a mature market, assets that incur higher risks are likely to yield higher returns, i.e. a positive relationship. To examine this property, we solicited historical data on the price and trading volume of emission allowances. We statistically estimated the degree of volatility in the Shenzhen market and its relationship with expected return premium. We found that the rate of return was negatively associated with expected risk. This stands at odds with the usual expectation in the financial market and the prediction of asset pricing theory. Also, kurtosis in trading volume was excessively high and its fluctuations were highly concentrated. We discuss these findings in terms of market liquidity and information uncertainties, and offer some policy recommendations. More regulatory attention and economic fixes are needed to improve market efficiency and eliminate sources of market distortions.
•This paper ascertains how social norms are related to flood insurance decision.•Perceived flood risk failed to predict the likelihood of having flood cover.•Contrary to the dominant view, risk ...perception did not have direct impacts.•Perceived social norms created positive impacts and also varied with perceived risk.•Social norms played a mediating role between risk perception and behaviour.
Flood insurance plays an important role in climate adaptation by recovering insured losses in the event of catastrophic flooding. Voluntary adoption of flood insurance has been seen as a function of risk perception that is shaped by social norms. This paper attempts to clarify the relationship between these factors. It is based on a household survey conducted in the eastern cities of Australia and involving a total of 501 randomly selected residents. Results of a path analysis show that the likelihood of having flood insurance cover was associated with perceived social norms, but not perceived flood risk. In addition, perceived norms and risk were statistically related to each other. It is concluded that social norms played a mediating role between insuring decision and risk perception. Risk perception might influence the insuring decision indirectly through shaping perception of social norms. This implies that adaptive behaviour is not necessarily a function of risk perception, but an outcome of its impacts upon the ways in which the individuals situate themselves in their social circles or the society. There is a feedback process in which individual perceptions of risk manifest as both a cause and effect, shaping and being shaped by the socio-cultural context.
•The paper defines the concept of green infrastructure within the context of climate adaptation.•Green infrastructure uptake is subject to biophysical and socio-political constraints.•Interviews with ...planners indicate tendencies for institutional path dependence.•We discuss this as an institutional barrier to the green infrastructure adoption.•We propose a conceptual model that explicitly recognizes such institutional factors.
Urban green infrastructure can help cities adapt to climate change. Spatial planning can play an important role in utilizing green infrastructure for adaptation. Yet climate change risks represent a different sort of challenge for planning institutions. This paper aims to address two issues arising from this challenge. First, it defines the concept of green infrastructure within the context of climate adaptation. Second, it identifies and puts into perspective institutional barriers to adopting green infrastructure for climate adaptation, including path dependence. We begin by arguing that there is growing confusion among planners and policy makers about what constitutes green infrastructure. Definitional ambiguity may contribute to inaction on climate change adaptation, because it muddies existing programs and initiatives that are to do with green-space more broadly, which in turn feeds path dependency. We then report empirical findings about how planners perceive the institutional challenge arising from climate change and the adoption of green infrastructure as an adaptive response. The paper concludes that spatial planners generally recognize multiple rationales associated with green infrastructure. However they are not particularly keen on institutional innovation and there is a tendency for path dependence. We propose a conceptual model that explicitly recognizes such institutional factors. This paper contributes to the literature by showing that agency and institutional dimensions are a limiting factor in advancing the concept of green infrastructure within the context of climate change adaptation.
Plural values contribute to multiple arrays of expressed preferences. Conventionally, preference convergence toward consensus among initially disagreeing decision makers is understood in terms of ...diminishing value differences. A cogent account of consensual decision that respects non-diminishing value plurality is lacking. Instead there is a theoretic expectation for categorical consistency between subjective values and expressed preferences. Valuing agents in social interaction are expected to indicate identical preference orderings only if they hold correspondingly identical categories of values. This expectation precludes meaningful conceptualization of preference convergence under divisive normative dispositions. An alternative framework is proposed and illustrated by results from a designed deliberative forum on Australia's climate change policy. Data were analyzed based on Q methodology. Results show that small-group deliberations enabled effective communication between distinctive subjective positions and broadened understandings between individuals. While a consensual decision gained progress, no identified value discourse diminished below a significant degree. Observed changes in values did not run parallel to the converging preferences, suggesting a decline in value-preference consistency. These changes nonetheless are amenable to the principle of value pluralism. An alternative rationality concept is needed to account for this moral ideal within economics.
► Small-group deliberations enabled communication across discursive divide. ► Subjective understandings between participants improved. ► Consensual decision gained progress and normative plurality did not diminish. ► Results indicated generalization of interests. ► Conceptual significance to a pluralistic conception of economics is discussed.
China has introduced several pilot emission trading schemes to build the basis for a national scheme. The potential scale of this initiative raises prospects for a regional carbon trading network as ...a way to further engage other major Asian economies. However, the Chinese carbon markets rest upon a unique political-economic context and institutional environment that are likely to limit their development and viability. This article offers an overview of such structural economic and political constraints. Four main challenges are identified, namely, inadequate domestic demand, limited financial involvement, incomplete regulatory infrastructure, and excessive government intervention. The first two challenges concern economic dimensions and may be partially addressed by the incentives created by the newly introduced emission trading schemes. The other two are more deeply entrenched in the dominant political system and governing practice. They require fundamental changes to the ways in which the state and the market interact. The success of China's carbon market reform depends crucially on the ability of the ongoing efforts to transform the distorted state–market relationship. Policy relevance The burgeoning carbon markets offer opportunities for emissions mitigation at lower costs and enable circulation of a new form of capital, i.e. carbon credits, across borders. China accounts for a gigantic share of global GHG emissions and has the potential to significantly scale up these opportunities. There are clear implications for market developers and participants worldwide, including climate policy makers who attempt to link their emission trading schemes to other schemes, firms who seek to take advantage of the inexpensive carbon offsets generated in developing countries, international financial institutions who endeavour to establish their business in an emerging major carbon market, etc. This article can inform their decisions by identifying key issues that may undermine their ability to achieve these goals. Policy makers and stakeholders will benefit from this analysis, which shows how the Chinese carbon markets operate in ways that may be different from their experience elsewhere.
A global carbon trading system has gained shape since several major Asia-Pacific economies declared their participation. As the largest national source of greenhouse gases, China is probably the most ...prominent newcomer. Pilot emission trading schemes are being introduced in this country with prospects for developing into a national scheme. The initiative is primarily motivated by expected economic benefits rather than environmental commitments. Viability is uncertain due to the absence of a liberal political–economic system as we know in the western world. The theory of carbon trading is being tested in an unusual place, with huge implications, both practically and theoretically.
The Contingent Valuation Method (CVM) could assist green-space planning, management and appreciation by assigning a monetary value to urban trees. However, the use of CVM is limited by its inherent ...methodological weaknesses. A critical concern is the existence of a large proportion of survey respondents providing zero willingness-to-pay (WTP) and that these responses are not amenable to economic theory — known as ‘protest’ responses. Censoring protest responses from further treatment is a common practice, which warrants reconsideration in light of our CVM survey results. The survey involved 800 residents requested to state their WTP for preserving the culturally significant stonewall trees in urban Hong Kong. About 28% of respondents returned a zero WTP. For all respondents the strength of protest beliefs was assessed, and the relationship between protest beliefs and WTP were examined. Our analysis produced contradictory results: some protest items varied negatively with WTP as expected, but other items increased with it. Respondents' stated positive WTP harbored latent protest beliefs which are related to non-economic preference. The findings stand at odds with the assumptions underlying the censoring treatment and raise questions about the validity of WTP estimates. These methodological implications should be taken into account in using CVM.
•Protest responses are zero willingness-to-pay (WTP) that is not amenable to economic theory.•Censoring protest WTPs is a common practice in the use of Contingent Valuation Method.•This study examined the relationship between protest belief and WTP for urban trees.•We found both positive and negative relationships between them.•Findings raise question about the assumptions underlying the censoring treatment.
A domestic alternative to the Clean Development Mechanism (CDM) is operating in China, creating new opportunities for offsetting greenhouse gas emissions. More than two thousands ‘Chinese Certified ...Emission Reduction’ (CCER) projects have been validated. The state-led programme is important as it represents a transition of China's carbon market from specializing in the export of emission reductions toward serving domestic consumption. This article provides a snapshot of the ‘post-CDM’ context in China. It explores whether the CCER scheme reveals a general pattern of development that is different from that of the CDM. Official project records are used to show the geographical and sectoral distribution of CCER projects. These records suggest that the western and northern areas of China will continue to play a key role in generating emission reductions, if not a stronger one than in the CDM. The shift toward inland may create development benefits. Sectoral distribution is a potential source of variations from the CDM. While the majority of emission reductions will be derived from renewable energy sources, a significant minority will come from waste-based ones. The market has expressed an interest in the re-use of biogas in rural areas. These initial observations could inform policy discussions and help forecast the potential share of key provinces and sectors in the new carbon market.
•We offer updates about the ‘Chinese Certified Emission Reduction’ (CCER) scheme.•The aim is to show a snapshot of the ‘post-CDM’ context in China.•The Project Design Documents (PDD) published by the Chinese government are analyzed.•CCER projects are concentrated in the western and northern areas of China.•The majority of emission reductions will be derived from renewable energy sources.
As the Clean Development Mechanism (CDM) has experienced a decline in investments, major host countries in this mechanism have met with a surplus capacity in the production of carbon offset credits. ...One of these countries is China, which has turned its focus to its own emission trading institutions, such as the ‘China Certified Emission Reduction’ (CCER) scheme, a domestic carbon offsetting mechanism. In this study, we analyse this mechanism by identifying the regional determinants of the emissions-reduction projects. We examine the distribution of 2789 projects of China Certified Emission Reduction scheme and use regional economic attributes to predict the number of projects in 30 Chinese Provinces. Results from a panel data analysis indicate that these projects are more likely to be implemented in locations where per capita GDP is lower, CO2 emissions is higher, energy intensity is higher, and the amount of domestic loan is larger. This voluntary carbon market in China continues to demonstrate economic sensitivity in project implementation as it moves towards a new governing system in the post-CDM context. These findings could provide insights into the prospects for market-driven emission reduction initiatives in China and facilitate their mitigation actions.
•China has created its own system for generating carbon emissions-reduction credits.•We extracted data from a total of 2789 emissions-reduction projects in China.•We identified the regional determinants of these projects using panel data analysis.•More projects in less developed areas with greater access to domestic finance.•The distribution of these projects is consistent with standard economic theory.
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