Public-private partnerships as a policy response to climate change

Anne Stenger-Letheux () and Marco Buso ()
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Anne Stenger-Letheux: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, AgroParisTech
Marco Buso: Interdept Ctr Giorgio Levi Cases, CRIEP Interuniv Res Ctr Publ Econ - Unipd - Università degli Studi di Padova = University of Padua, Unipd - Università degli Studi di Padova = University of Padua

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Abstract: The negative impacts of climate change on the environment and economic activities are increasingly obvious and relevant. Private response to this threat often proves to be inadequate. For example, empirical evidence reveals a sub-optimal investment by firms in energy efficiency projects capable of reducing energy costs and CO2 emissions, as well as adaptation projects able to reduce the vulnerability of the ecosystem. On the other hand, past public programs that provided financial subsidies to the above-mentioned projects have proven to be not particularly cost-effective or able to enhance final performances. In this paper, as an alternative to public subsidies, we propose and assess the opportunity to implement Public-Private Partnerships (PPPs) where the public regulator plays a more active role in the investment choice. Precisely, we model the decision-making process through a Nash bargaining procedure between public and private actors. We end up with two main results: (i) compared to public subsidies, the use of PPPs leads to higher outcomes/performances and allows governments to overcome incompleteness in contracts; (ii) PPPs are optimally chosen only when there is a fair allocation of the bargaining power between the two sides and when bargaining procedures are not perceived as being too lengthy or costly.

Keywords: Climate change; Public-private partnership; Adaptation; Energy efficiency (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (11)

Published in Energy Policy, 2018, 119, pp.487-494. ⟨10.1016/j.enpol.2018.04.063⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01952098

DOI: 10.1016/j.enpol.2018.04.063

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