Research Themes

Economic valuation

The Economic Valuation research theme is led by Dr Pieter van Beukering.

The department of Environmental Economics has a long tradition in the economic valuation of the environment. The first environmental valuation studies in the Netherlands were carried out by the Institute for Environmental Studies in the 1970s, for instance on the impact of noise on house prices near Schiphol airport. Since then, numerous other valuation studies have been conducted, including several PhD studies on stated preference methods.

We are specialized in non-market valuation approaches such as choice experiments, meta-analysis and benefits transfer. In recent years, novel valuation approaches have been developed integrating economic values in GIS-based value maps to inform environmental policymakers about the economic values associated with water, wetlands and biodiversity conservation. IVM researchers have also written guidelines for water resource valuation under the EU Water Framework Directive. Besides, we collaborate with other universities and research institutes worldwide on The Economics of Ecosystems and Biodiversity (TEEB).

Currently, several PhD students work in the department on different environmental valuation issues, developing and testing novel valuation methodologies in the area of, for example, flood risk valuation, climate change, and renewable energy.

Economic Instruments

The Economic Instruments research theme is led by Prof. Wouter Botzen.

Different economic policy instruments exist to change behavior and decision-making towards the environment. In this research theme, research focuses on the design and evaluation of economic instruments, considering instrument efficiency and effectiveness, and instrument performance under uncertainty and imperfect information.

Examples include subsidies to enhance the transition to renewable energy sources; water pricing; self-enforcing agreements; incentives for community-based nature conservation and natural resource management; payments for ecosystem services and contested water rights; and the stability of water allocation agreements at transboundary scale using game theory. Also, the demand and supply of climate change insurance to mitigate future impacts on climate-vulnerable households and economic sectors is estimated, both in the developed and developing world.

Most of the research is conducted in small-scale experimental settings, adding to theoretical advancements in the growing field of behavioral and experimental economics. In view of the fact that economic instruments are embedded in institutional structures, special attention is paid to the broader context of environmental governance. Currently several PhD researchers work in the department on economic instruments such as payments for nature protection and ecosystem services as well as (flood) risk transfer mechanisms.

Economic Modelling

The economic modeling research theme is led by Dr Onno Kuik.

Economic models are widely used to support complex decision-making, because they can help to simulate future economic developments and predict the economic consequences of a given policy.

The state of the environment influences economic development because our economic systems make abundant use of natural resources. Whereas some of these resources are fully renewable, such as wind and solar power, others are limited such as land and water, or non-renewable such as oil and gas. At the same time, human economic activities affect the quality of the natural environment through the discharge of the negative by-products of production and consumption processes in the form of pollution. Examples include the emission of greenhouse gases such as CO2 from industrial activities, and the leaking of nutrients from agriculture into soils, surface and groundwaters etc. Economic models are powerful tools to understand and quantify the complex link between economic activities and the natural environment. Developing and using an integrated model framework, one can analyze these links and feedbacks simultaneously in a dynamic way.

The economic models developed at IVM have for instance been used to (i) measure the economic impact of climate change; (ii) inform the government about a sustainable national income level for the Netherlands; and (iii) identify the least expensive way to improve water quality in transboundary river basins. Current PhD research in the cluster includes the identification of the indirect economic effects and growth impacts of coastal climate change; general equilibrium modelling of water resources management and development; and the relationship between economic growth and the environment within a spatial framework.