Final report on marginal abatement cost curves for the evaluation of the market stability reserve
Computable general equilibrium (CGE) models are wide-spread tools for policy evaluation in the national and international context. They typically feature a detailed representation of productive industries and can track the impacts of price based policies or scarcity of production factors across the economy. Calibrated to benchmark equilibria given in form of social accounting matrices (SAMs), they represent both production and the consumer basket as nested constant elasticity of substitution (CES) functions. Positive elasticities of substitution in the production functions give industries (or representative households) the possibility to react to price changes by increasing demand of cheaper inputs and demanding less of the more expensive goods for the production of any unit of output (or utility). Production sectors adjust their activity levels such that they make zero economic profit, and representative consumers spend on consumption such that their income balances expenditures (which thus include saving). Market balance conditions for each commodity in the model set the prices such that demand and supply at those prices clear.
Modelling a Market Stability Reserve in Carbon Markets
We examine under which conditions a cap-and-trade mechanism can deliver a dynamically efficient abatement pathway and contribute to a robust investment framework. For this we develop a numerical dynamic partial-equilibrium model that includes differentiated objective functions of different market participants for holding emission allowances based on their banking strategy. If the surplus of allowances is large, as currently observed in the European Union Emissions Trading System, the equilibrium market outcome can deviate from an efficient abatement pathway and performance of the policy is reduced against a set of key criteria (dynamic efficiency, price credibility, price consistency, and robustness to shocks). The model is applied to assess design options of quantity and price based market stability reserves as discussed in Europe. Both price and quantity based mechanisms can improve the performance of the EU ETS against key criteria.
Vertebral Fusion in Two Early Jurassic Sauropodomorph Dinosaurs from the Lufeng Formation of Yunnan, China
Here we describe two instances of pathological vertebral fusion in two genera of sauropodomorph dinosaurs from the Early Jurassic Lufeng Formation in Yunnan, China. The first is a specimen, of Lufengosaurus huenei with two fused cervical vertebrae, and the other is a specimen of the Lufeng basal sauropod, with two fused caudal vertebrae. Both pathologies are consistent with spondyloarthropathy and represent the earliest known occurrence of that disease in dinosaurs. The two specimens affirm that early dinosaurs suffered from the same bone diseases as living vertebrates. Spondyloarthropathy in these dinosaurs may have been induced by long-term mechanical stress, such as weight bearing, and/or limited motion at the joint that would otherwise have inhibited such remodeling. In both cases, surface remodeling suggests that the animals survived well beyond the initiation of spondyloarthropathy.