This workshop is intended for researchers and doctoral students in economics who are interested in resource and environmental economics. The webinar is led by a team of researchers composed of Geir B. Asheim (Oslo University), Hassan Benchekroun (McGill University), Sophie Bernard (Polytechnique Montréal), Etienne Billette de Villemeur (Université de Lille, UQAM), Robert Cairns (McGill University), Justin Leroux (HEC Montréal), and Charles Séguin (UQAM).

This workshop on natural resource and environmental economics will host Renaud Coulomb (Mines Paris), and Coline Metta-Versmessen, Temporary Teaching and Research Assistant at the University of Lille.

→ This event will be in English.

• Renaud Coulomb (Mines Paris)
  The Welfare Economics of Oil Exploration

Abstract

Despite growing calls to phase it out, oil exploration persists, often justified by the natural decline of existing fields and potential efficiency gains from discoveries. This paper quantifies the global welfare and environmental impacts of restricting oil exploration. We develop a global dynamic model calibrated to a granular dataset of 14,637 proven oilfields, accounting for heterogeneity in private extraction costs, capacity constraints, life-cycle carbon intensities of oil barrels, along with exploration dynamics and basin-specific estimates of yet-to-find resources. We find that exploration restrictions are an effective second-best climate policy: in the absence of a global carbon tax, a universal ban increases global welfare by $12.5 trillion due to lower social costs of oil production and use (assuming a social cost of carbon of $200/tCO2eq). A partial ban by OECD and BRICS countries alone captures 66% of these gains. Under optimal carbon pricing, however, a global ban yields a modest $0.3 trillion welfare loss, as it precludes access to lower-social-cost deposits and prevents the easing of short-run capacity constraints.

• Coline Metta-Versmessen, Temporary Teaching and Research Assistant at the University of Lille.
  Carbon price is in the house: short-run effects of the EU-ETS2

Abstract

This study examines the short-term effects of the European Union’s Emissions Trading System 2 (ETS2) on fossil fuel consumption, carbon prices, and household welfare, explicitly accounting for heterogeneity in incomes. ETS2 effectively enforces emissions reductions but increases fossil fuel prices, reducing both individual and aggregate utility, with disproportionately large effects on low-income households. To mitigate these distributional consequences, we compare two revenue-recycling mechanisms: a unitary subsidy on fossil fuel consumption and a lump-sum transfer. While unitary subsidies distort marginal consumption incentives and produce nonlinear and sometimes ambiguous effects on aggregate welfare, lump-sum transfers preserve marginal prices, provide predictable welfare outcomes, and enhance policy transparency, potentially increasing public acceptability. Importantly, ETS2 acts as a binding environmental safety net: by capping total fossil fuel use, it ensures environmental compliance regardless of redistribution design. Our results highlight the effectiveness of combining ETS2 with targeted lump-sum transfers for achieving both environmental and social objectives, while underscoring the need for further research on long-term adaptation, technology adoption, and societal acceptance of such regulatory packages.