Energy, Biodiversity and Natural Resources (EBN)

The research program examines questions related to cost efficiencies of energy systems and forest conservation systems, and welfare implications of various natural resources policies. There is a growing interest in these issues worldwide, but they are also locally important in Northern Finland. The research partners in the project come from the universities of Jyväskylä, Helsinki, Colorado Boulder and Hokkaido.

Regarding the Nordic energy system and policy, the main purpose of our research is to analyse whether it is possible to improve social welfare by changing the regulation schemes of the electricity markets or not. We combine the theory of different regulation schemes to the specific cost information of e.g. electricity distribution utilities obtained by using various Stochastic Frontier models. Our preliminary results shows that welfare can be significantly improved by removing from the pure cost based regulation to the menu of contracts regulation.

Regarding the biodiversity conservation in boreal forests, we develop tools to determine cost-effective conservation plans at landscape level by applying numeric optimization. In addition, we examine the performance of voluntary incentive mechanisms to conserve privately owned forests. This type of conservation contracting has been recently tested, for example, in Australia and Finland. Finally, we examine how visitors value different characteristics of national parks by using the choice experiment method. This information is important for management of national parks as there are conflicting goals related to biodiversity conservation and constantly increasing demand for recreation.