|
on Environmental Economics |
| By: | Sonia Akter (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | This study aims to show how Australian households perceive climate change and what they are prepared to do to reduce the harmful effects of climate change. A web-based survey in November 2008 asked approximately 600 New South Wales households about their willingness to pay additional household expenses caused by the Carbon Pollution Reduction Scheme (CPRS) proposed by the Australian government. The Contingent Valuation Method (CVM), a widely used non-market valuation technique, was applied. Results of the study show there is a positive demand to mitigate climate change in Australia resulting from a wish to avoid climate change. Households’ willingness to pay (WTP) for climate change was, however, significantly curbed as households were uncertain about the extent of climate change and whether climate change policies are effective. Australian household support for the CPRS is influenced by schemes of other major greenhouse gas emitting countries (global co-operation). Only when people who didn’t answer the survey are assumed to value climate change mitigation the same as people who did answer the survey, do the benefits of the CPRS, as estimated by respondents’ WTP, exceed its costs. Key words: Contingent valuation, climate change, Carbon Pollution Reduction Scheme, willingness to pay, uncertainty, Australia |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0919&r=env |
| By: | Frank Jotzo (Research School of Pacific and Asian Studies, the Australian National University, Australia) |
| Abstract: | The Asia-Pacific region is the major source of global growth in greenhouse gas emissions. Strong action is needed in Asian countries, particularly China and India, to reduce these global emissions. Driven by the desire to limit energy consumption, some Asian countries already have domestic policies to limit greenhouse gas emission. But much more ambitious policies are needed to turn emission trends around. This research report examines the implications of international efforts to mitigate the impacts of human activity on climate in the Asia-Pacific region. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0911&r=env |
| By: | Gilbert Metcalf |
| Abstract: | In previous papers I have described a revenue and distributionally neutral approach to reducing U.S. greenhouse gas emissions that uses a carbon tax. The revenue from the carbon tax is used to finance an environmental earned income tax credit designed to be distributionally neutral. The carbon tax reform proposal is also revenue neutral and avoids conflating carbon policy with debates over the appropriate size of the federal budget. This paper describes a variant to address concerns of environmentalists that a carbon tax does not provide certainty of emission reductions over the control period. The Responsive Emissions Autonomous Carbon Tax (REACT) combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0731&r=env |
| By: | John C.V. Pezzey (Fenner School of Environment and Society, Australian National University, Canberra, Australia); Salim Mazouz (Eco Perspectives, Canberra, Australia); Frank Jotzo (Research School of Pacific and Asian Studies, the Australian National University, Australia) |
| Abstract: | The Australian Government's Carbon Pollution Reduction Scheme (CPRS), March 2009, set a target of 5 to 15 per cent emission cuts during 2000 and 2020. The proposed target is weak and is likely to increase mitigation costs in Australia in the long run. This research report analyses the target’s efficiency as well as provisions for preventing carbon leakage. The research also looks at the nature of changes to the CPRS made during 2008 as well as the likely cause of these changes. The free allocation of output-linked, tradable permits to Emissions-Intensive, Trade-Exposed (EITE) sectors was much higher than previously proposed and greater than what is needed to prevent carbon leakage. This means EITE emissions could rise by 13 per cent during 2010 and 2020. To meet the proposed national targets, non-EITE sectors must also cut emissions by 34 to 51 per cent (or make equivalent permit imports). This is far from a cost-effective outcome. The weak targets and over-generous EITE assistance illustrate how collective action by the ‘carbon lobby’ can damage economic efficiency. To resist this, new national or international institutions to assess lobby claims impartially are needed. More government publicity about the true economic importance of carbon-intensive sectors is also required. Over-concern that voluntary emission cuts will be nullified by the CPRS is another, different, demonstration of lobby power. Key words: climate policy, Australia, targets, emission trading, carbon leakage, lobbying |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0924&r=env |
| By: | Regina Betz; Stefan Seifert (University of Karlsruhe, Germany); Peter Cramton (University of Maryland, USA); Suzi Kerr (Moto Research and Public Policy, New Zealand) |
| Abstract: | Allocating permits based on individual historical emissions (‘grandfathering’), or industry benchmark data, is an important design aspect of an emissions trading scheme. Free permit allocation has proven complex and inefficient (particularly in the European Union) with distribution implications also politically difficult to justify. For these reasons, auctioning emissions permits has become more popular than allocating permits. The European Union is now moving towards auctioning more than 50 per cent of all permits in 2013. In the US, the Regional Greenhouse Gas Initiative (RGGI) has started with auctioning 100 per cent of permits. The Australian proposal for a Carbon Pollution Reduction Scheme (CPRS) also provides for auctioning a significant share of total permits. This report discusses important theoretical and practical auction design aspects for allocating emissions permits in Australia. Particularly interesting is the proposal to simultaneously auction multiple emissions units of different vintages. The specific design details proposed have been adopted by the Australian Government in their CPRS White Paper. |
| Keywords: | Climate policy, Greenhouse gases, Auctions, Emissions trading |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0929&r=env |
| By: | Gilbert Metcalf |
| Abstract: | The U.S. tax code provides a number of subsidies for low-carbon technologies. I discuss the difficulties of achieving key policy goals with subsidies as opposed to using taxes to raise the price of pollution-related activities. In particular, subsidies lower the cost of energy (on average) rather than raising it. Thus consumer demand responses work at cross purposed to the goal of reducing emissions (especially as average cost pricing is used for electricity). Second, it is difficult to achieve technology neutrality with subsidies-here defined as an equal subsidy cost per ton of CO2 avoided. Third, many subsidies are inframarginal. Finally, subsidies often suffer from unintended interactions with other policies. I conclude with some observations on the use of price-based instruments. In particular I discuss how a carbon tax could be designed to achieve environmental goals of emission caps over a control period. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0733&r=env |
| By: | Frankel, Jeffrey (Harvard University) |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-006&r=env |
| By: | Regina Betz (Centre for Energy and Environmental Markets, School of Economics, University of New South Wales, Australia); Todd Sanderson (Agriculture and Resource Economics, Faculty of Agriculture, Food and Natural Resources, University of Sydney); Tihomir Ancev (Agriculture and Resource Economics, Faculty of Agriculture, Food and Natural Resources, University of Sydney) |
| Abstract: | Regulators around the world are currently considering national emissions trading systems (ETS) as a cost-effective way to reduce greenhouse gas emissions. ETS installations coverage is one of the numerous design issues confronting them. ‘Blanket coverage’ that includes all an economy’s industrial emitters of greenhouse gases has some intuitive appeal. Although it seems equitable it does not, however, take into full account all the costs related to the extent of coverage. This report shows how an alternative approach of ‘efficient coverage’ can achieve the same emission reduction outcome at lower social cost. The approach is based on maximising the benefits of including installations in an ETS, while at the same time taking into account all relevant transaction costs. A broad definition of transaction costs is used – the regulatory costs to the government as well as regulatory costs imposed on covered installations. Particularly for relatively modest emissions reduction targets, the study found there are significant cost savings with an ‘efficient coverage’ compared with ‘blanket coverage’. Key words: Emissions Trading Scheme, Environmental Policy, Installation Coverage, Transaction costs. |
| JEL: | Q50 Q58 H23 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0928&r=env |
| By: | Hooi Hooi Lean; Russell Smyth |
| Abstract: | This study examines the causal relationship between carbon dioxide emissions, electricity consumption and economic growth within a panel vector error correction model for five ASEAN countries over the period 1980 to 2006. The long-run estimates indicate that there is a statistically significant positive association between electricity consumption and emissions and a non-linear relationship between emissions and real output, consistent with the Environmental Kuznets Curve. The long-run estimates, however, do not indicate the direction of causality between the variables. The results from the Granger causality tests suggest that in the long-run there is unidirectional Granger causality running from electricity consumption and emissions to economic growth. The results also point to unidirectional Granger causality running from emissions to electricity consumption in the short-run. |
| Keywords: | ASEAN, carbon dioxide emissions, energy consumption, economic growth. |
| JEL: | Q43 Q53 Q56 |
| Date: | 2009–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-13&r=env |
| By: | Nicola Cantore (Overseas Development Institute, Università Cattolica del Sacro Cuore, Milan); Emilio Padilla Rosa (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona) |
| Abstract: | An abundant scientific literature about climate change economics points out that the future participation of developing countries in international environmental policies will depend on their amount of pay offs inside and outside specific agreements. These studies are aimed at analyzing coalitions stability typically through a game theoretical approach. Though these contributions represent a corner stone in the research field investigating future plausible international coalitions and the reasons behind the difficulties incurred over time to implement emissions stabilizing actions, they cannot disentangle satisfactorily the role that equality play in inducing poor regions to tackle global warming. If we focus on the Stern Review findings stressing that climate change will generate heavy damages and policy actions will be costly in a finite time horizon, we understand why there is a great incentive to free ride in order to exploit benefits from emissions reduction efforts of others. The reluctance of poor countries in joining international agreements is mainly supported by historical responsibility of rich regions in generating atmospheric carbon concentration, whereas rich countries claim that emissions stabilizing policies will be effective only when developing countries will join them. Scholars recently outline that a perceived fairness in the distribution of emissions would facilitate a wide spread participation in international agreements. In this paper we overview the literature about distributional aspects of emissions by focusing on those contributions investigating past trends of emissions distribution through empirical data and future trajectories through simulations obtained by integrated assessment models. We will explain methodologies used to elaborate data and the link between real data and those coming from simulations. Results from this strand of research will be interpreted in order to discuss future negotiations for post Kyoto agreements that will be the focus of the next Conference of the Parties in Copenhagen at the end of 2009. A particular attention will be devoted to the role that technological change will play in affecting the distribution of emissions over time and to how spillovers and experience diffusion could influence equality issues and future outcomes of policy negotiations. |
| Keywords: | climate change, equality, emissions, technology, spillovers |
| JEL: | Q52 Q53 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:uab:wprdea:wpdea0907&r=env |
| By: | Kasia Mazur (Crawford School of Economics and Government, the Australian National University and Australian Bureau of Agricultural and Resource Economics, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | To elicit household willingness to pay (WTP) for improvements in environmental quality in three NSW catchments (Lachlan, Namoi and Hawkesbury-Nepean), a choice modelling (CM) study was conducted.This report presents results of research designed to investigate variations in WTP across different communities. The communities included local residents, distant/urban and distant/rural residents. Nine split samples were established to test for ‘location effects’. The analysis involved both conditional logit and random-parameters logit models. Natural resource management (NRM), including Catchment Management Authorities (CMAs), can use the non-market values obtained from this study to guide their investment decisions. Key words: Choice modelling, location effects, non-market valuation, catchment planning, environment |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0921&r=env |
| By: | Marta Biancardi; Giovanni Villani |
| Abstract: | The paper investigates the stability of the International Environmental Agreement in a model of emission reduction. We consider a two stage game, in which in the first stage each country decides whether or not to join the agreement while, in the second stage, the quantity of emissions reduction is chosen. Agents may act cooperatively, building coalitions and acting according to the interest of the coalition, or they make their choices taking care of their individual interest only. Unlike conventional coalition stability models, we assume that countries are not identical but they are divided in two different kinds: developing countries and developed ones; the first have a lower attention about environmental pollution than developed ones. According to environmental awareness, stable coalitions of different sizes occur. On this subject, we present a Maple algorithm to compute the optimal costs and the abatement level for each coalition forms assuming an arbitrary number of developed and developing countries and to determine the internal and the external stability. In order to expand a coalition of any size to the grand coalition, which reaches the greatest abatement level and the lowest aggregate costs, we introduce monetary transfers. |
| Keywords: | IEA; Coalition stability; Implementation; Monetary Transfers |
| JEL: | F50 C70 C60 H23 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ufg:qdsems:09-2009&r=env |
| By: | Marit E Kragt (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | Integrated catchment policies are widely used to manage natural resources in Australian catchments. Integration of environmental processes with socio-economic systems is often difficult due to the limitations of decision support tools. To support assessments of the environmental and economic trade-offs of changes in catchment management, fully integrated models are needed. This research demonstrates a Bayesian Network (BN) approach to integrating environmental modelling with economic valuation. The model incorporates hydrological, ecological and economic models for the George catchment in Tasmania. Choice experiments were used to elicit information about the non-market costs and benefits of environmental changes. This allows the efficiency of alternative management scenarios to be assessed. |
| Keywords: | Hydro-economic modelling, Integrated catchment modelling, Ecological modelling, Valuation, Bayesian networks, Water quality |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0915&r=env |
| By: | Huifang Tian; John Whalley |
| Abstract: | Large population / rapidly growing economies such as China and India have argued that in the upcoming UNFCCC negotiations in Copenhagen, any emission reduction targets they take on should be based on their intensity of emissions (emissions/$GDP) on a target date not the level of emissions. They argue that this will allow room for their continued high growth, and level commitments in the presence of sharply differential growth between OECD and non-OECD economies represent asymmetric and unacceptable arrangements. Much of the policy literature agrees with this position, also arguing that while there is equivalence between commitments if growth rates are certain, where growth rates are uncertain equivalence breaks down. However, no explicit models or experimental design are used to support this claim. Here we use a modeling framework in which countries face a business as usual (BAU) growth profile under no mitigation, and can mitigate (reduce consumption) and lower temperature change but with a utility loss. International trade enters through trade in country differentiated goods, and the impact of mitigation on country welfare depends critically on the assumed severity of climate related damage. We then consider cases where country growth rates are uncertain, and compare the impacts of levels versus intensity commitments, with the latter made equivalent in the sense that expected emissions are the same. There are different senses of this equivalence; global equivalence with differing country impacts, or strict country by country equivalence. Under intensity commitments there is more variation in both consumption and emissions than is the case with level commitments, and we show cases where level commitments are preferred to intensity commitments by all countries. Whether this is the case also depends upon how growth rate uncertainty is specified. We are also able to consider packages of mixed level and intensity commitments by country which might be the outcome of UNFCCC negotiations. Outcomes can thus be opposite to prevailing opinion, but it depends on how the equivalent targets are specified. |
| JEL: | F02 F18 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15370&r=env |
| By: | Sonia Akter (Crawford School of Economics and Government, the Australian National University, Australia); R. Quentin Grafton (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | Decision tools for species conservation, such as benefit cost analysis (BCA) and project prioritization protocol (PPP) use monetary values to measure benefits or to assign priorities across species. Non-use (or passive) values are an important, yet difficult to quantify, category of benefits. When not estimated they may be assigned a zero value by decision makers. This results in the under-provision of conservation dollars to substantial non-use values generating projects and actions. To overcome the problem, we provide a guide to environmental value transfer (EVT) that allows decision makers to derive indirect estimates of non-use values. Environmental value transfer, together with consideration of estimated benefits uncertainty, promise better decision making and improved species conservation outcomes. Key words: environmental value transfer, species conservation, non-use values |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0926&r=env |
| By: | Russell Smyth; Ingrid Nielsen; Qingguo Zhai; Tiemin Liu; Yin Liu; Chunyong Tang; Zhihong Wang; Zuxiang Wang; Juyong Zhang |
| Abstract: | We examine the relationship between atmospheric pollution, water pollution, traffic congestion, access to parkland and personal well-being using a survey administered across six Chinese cities in 2007. In contrast to existing studies of the determinants of well-being by economists, which have typically employed single item indicators to measure well-being, we use the Personal Well-Being Index (PWI). We also employ the Job Satisfaction Survey (JSS) to measure job satisfaction, which is one of the variables for which we control when examining the relationship between environmental surroundings and personal well-being. Previous research by psychologists has shown the PWI and JSS to have good psychometric properties in western and Chinese samples. A robust finding is that in cities with higher levels of atmospheric pollution and traffic congestion, respondents report lower levels of personal well-being ceteris paribus. Specifically, we find that a one standard deviation increase in suspended particles or sulphur dioxide emissions is roughly equivalent to a 12-13 per cent reduction in average monthly income in the six cities. |
| Keywords: | China, Environment, Pollution, Personal Well-Being. |
| JEL: | A13 D60 |
| Date: | 2009–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-11&r=env |
| By: | David I.Stern (Arndt-Corden Division of Economics, Research School of Pacific and Asian Studies, The Australian National University, Australia) |
| Abstract: | A recent paper in the Journal of Environmental Economics and Management points out that time effects are not uniquely identified in reduced-form models, such as the environmental Kuznets curve. This Research Report proposes a solution that assumes the time effect is common to each pair of most similar countries. The between estimator makes no a priori assumption about the nature of the time-effects and is likely to provide consistent estimates of long-run relationships in real-world data situations. This research applies several common panel data estimators to the data set for carbon and sulfur emissions in the OECD collected by Vollebergh et al. and the global sulfur dataset compiled by Stern and Common The between estimates of the sulfur-income elasticity are 0.732 in the OECD and 1.157 in the global data set. The estimated carbon-income elasticity is 1.612. |
| JEL: | C23 Q53 Q56 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0934&r=env |
| By: | Greg Buckman (Fenner School of Environment and Society, The Australian National University, Australia); Mark Diesendorf (Institute of Environmental Studies, University of New South Wales, Australia) |
| Abstract: | If long-term greenhouse gas emissions in Australia are to be reduced, renewable energy is likely to be critical. This is particularly so if deep cuts are eventually implemented. Current government policies ( including emissions trading and electricity, the feed-in tariffs announced in 2008), are likely to have only modest impacts on renewable electricity generation in Australia at least until 2020. Australia’s renewable electricity base will remain narrow with little solar technologies’ contribution before 2020. This will not provide an adequate basis for delivering long-term deep cuts to Australia’s greenhouse emissions nor for achieving major greenhouse gas emission reductions at least cost. The future of Australia’s renewable electricity rests mainly with the success, or otherwise, of its Mandatory Renewable Energy Target and expanded Renewable Energy Target. Their effectiveness may be eroded, however, by the long-term banking of tradable certificates used with both target mechanisms. Unless there is a change of policy mechanisms, Australia will probably fail to reach its renewable electricity target of 20 per cent by 2020. Australia will also fail to build up its solar and hot rock geothermal electricity generation capacity to make large supply contributions beyond 2020. |
| Keywords: | Renewable electricity, energy, greenhouse emissions, emissions trading, renewable portfolio standard, feed-in tariff. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0930&r=env |
| By: | Dell'Era, Mario; Sodini, Mauro |
| Abstract: | The attention to environmental conditions of the planet drives many scientists to study and to analyze the externalities of the economic activities and their relapses on nature. The issue is quite complex because of the non-linear interactions between human and natural phenomena. Our intention is to study the particular case of tourist activities. Starting from the specification of the concept of sustainable development, using a simple model we characterize the conditions for which there exists an optimal equilibrium between nature and tourism. Then, trough several simulations we study which policies are able to guarantee the better synergies between economy and environmental quality. |
| Keywords: | Policy; Sustainable Tourism |
| JEL: | C71 P16 A14 |
| Date: | 2009–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17412&r=env |
| By: | Jonathan R.Evers (PhD Student, Griffith University, Australia); Tor Hundloe (Environmental Management, Griffith University, Australia); Peter Daniels (Griffith University, Australia) |
| Abstract: | This research has been carried out to establish; the importance of valuing externalities in relating decision making to the triple bottom line of ethanol production. By treating organic wastes as a resource and applying a different method of waste management, organic wastes could contribute significantly to global energy needs. The ethanol distillation process has a waste product - stillage; a soup like waste stream that contains substantial organic content. By digesting this material to optimum efficiency there are three resources recovered – biogas (80% methane), biosolids (high in nutrients equivalent to high grade fertiliser) and recyclable water. Current waste treatment in the ethanol production industry focuses on drying the stillage waste and using the resultant material as mulch to be spread over crops; energy intensive, has little benefit and increases the cost of production. Therefore if a waste treatment process could convert the waste into recoverable resources; such as methane; then the subsequent methane utilised back in the distillation / production process as a source of energy, this would essentially reduce the cost of producing ethanol in accordance with the true costs being considered – in other words making sure all externalities are valued. Unless an economic advantage can be established, the true benefit of valuing this type of waste treatment is redundant. This relates to the current way in which the economy works. Ultimately all decisions of business and industry relate to the bottom line, the profitability of a project, will the project make money. By putting a value on externalities associated with a project or process it can be shown whether a project will be profitable, even when considering the impact on the environment and society, not just the economy. Ultimately, when all externalities can be quantified and valued and shown to be positive - the project is inherently sustainable Values for the externalities can be derived from various references such as: current market value. Carbon now has a value per tonne of emissions established in several markets around the world – these values can be attributed directly to energy use. The value of water has been established through research and can also be attributed to water use. The total economic value (TEV) of water, can be broken down into three components: the direct use-value (used or potentially useable by humans); the ecological support value (value to the environment), and the option value (value to society from having the resource available at some time in the future to be used). Ecosystem support value is associated with the assumed contributions of the resource cycles in their naturally-occurring states, or in some similar state, to provide flows to the ecosphere of the area – such as carbon, water and nitrogen. To the degree that the water is removed from the area, as with the industrial uses, for instance, this value is lost. Use value is triggered explicitly by the removal of the water from the aquifer, and its delivery to a specified user, or its storage in a location where it is available for use, in some way, by humans. Therefore, this research aims to show that within ethanol distillation, by utilising waste treatment to recover resources, using those resources directly in the operation / process / production, valuing all externalities associated both foregone and utilised; the cost of production should decrease when scrutinised from an environmental economic perspective. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0931&r=env |
| By: | David Stern (ANU Climate Change Institute, the Australian National University, Australia) |
| Abstract: | The aim of this study is to measure and understand the long-term factors behind trends in energy and carbon intensity in different economies. It also looks at how improvements in energy efficiency are spread to countries around the world. Of particular interest is the rate at which efficiency improvements spread from developed to developing countries and what affects this diffusion. Countries that are considered are Australia, major European economies, USA, Canada, Mexico, Japan, China, and India. Key Words: Energy efficiency, carbon emissions, environmental Kuznets curve, economic growth |
| JEL: | Q43 Q55 Q56 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0920&r=env |
| By: | Sonia Akter (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | This paper proposes an extension to existing models of non-expected utility (NEU) in the stated preference (SP) literature. The extension incorporates the impact of multiple sources of ambiguity in individual decision making behavior. Empirical testing of the proposed decision model was carried out in Australia using a dichotomous choice contingent valuation study of a national ‘Carbon Pollution Reduction Scheme (CPRS)’. The results of the study demonstrate that subjective expectations of the context scenario and subjective policy expectations are important determinants of individual decision making in a SP framework. Furthermore, the results of the study demonstrate that decision weight functions are non-linear (quadratic) in subjective scenario expectations and subjective policy expectation. Although evidence was found to link willingness to pay to scenario ambiguity, policy ambiguity was found to have no statistically significant influence on individual decision making |
| JEL: | C93 D81 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0932&r=env |
| By: | Marit E Kragt (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | Choice experiments (CE), also known as choice modelling (CM), are now used widely in environmental valuation in Australia. Many examples assess the trade-offs between river catchment management and socio-economic impacts. There is, however, limited information about the values of Australian estuaries and none of the existing valuation studies addresses catchment management changes in Tasmania. The CE study described in this report aims to elicit community preferences for protecting the rivers and estuary of the George catchment in north-eastern Tasmania. Results from conditional and mixed logit models show that respondents are, on average, willing to pay between $2.47 and $4.46 for a one kilometre increase in native riverside vegetation, and between $9.35 and $10.97 per species for the protection of rare native plants and animals, ceteris paribus. The study results are ambiguous about respondents’ preferences for estuary seagrass area. It also shows significant differences between logit models when accounting for individual heterogeneity, and repeated choices made by individual respondents. Key words: Choice experiments, Preference heterogeneity, Mixed Logit models, River health, Estuary health, Tasmania, Environmental valuation |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0916&r=env |
| By: | Jill Windle (Centre for Environmental Management, Central Queensland University, Australia); John Rolfe (Faculty of Business and Informatics, Queensland University, Australia); Roy Brouwer (Institute of Environmental Studies (IVM)) |
| Abstract: | Metrics for evaluating environmental trade-offs can be developed with varying levels of consistency across case study sites. A key issue is whether standard evaluation experiments can be conducted over multiple sites, or whether experiments have to be tailored to each case study application. To test how useful a consistent approach is, choice modeling (CM) has been used in a number of countries. Choice modeling assess the trade-offs households are prepared to make between water use restrictions, maintaining environmental conditions in waterways, and increased water costs. This research paper reports the results of the Queensland survey. The results show that it is not possible to downplay case study framing issues and that it is not appropriate to standardise applications across case studies that have different characteristics. |
| Keywords: | choice modelling, water, environment, framing |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0918&r=env |
| By: | Thomas Eichner; Rüdiger Pethig |
| Abstract: | A small open economy produces a consumer good along with green and black energy and imports fossil fuel for black-energy production at an uncertain world market price. Efficient risk management requires curbing fuel consumption, and hence carbon emissions, when consumers are prudent. Moreover, if consumer preferences display constant absolute risk aversion (implying prudence), an efficient response to increasing risk is promoting green energy and reducing total energy production. Unregulated competitive markets are inefficient when consumers are risk averse. With the plausible assumption of prudent consumers and risk neutral producers, taxing both fossil fuel and green energy restores efficiency. |
| Keywords: | Price uncertainty, black energy, green energy, fossil fuel |
| JEL: | F18 Q42 Q48 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:sie:siegen:138-09&r=env |
| By: | Kasia Mazur (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | The survey was designed to estimate environmental values suitable for integration into MOSAIC, a bio-economic model for catchment and farm level planning. Local residents, as well as distant rural and distant urban communities, were surveyed in three NSW catchments (Lachlan, Namoi and Hawkesbury-Nepean) using choice modelling (CM). The survey aimed to find out respondents’ attitudes about, and preferences for, potential natural resource management (NRM) improvements. In total, 3,997 responses were collected from seven different locations in NSW. Fourteen split samples were established to allow for testing of incentive compatibility in CM, the impact of respondent location on values held, and scale effects. This research report describes the development of the CM questionnaires, the survey design and the data collection process. |
| Keywords: | Nonmarket valuation, choice modelling, survey, questionnaire design |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0913&r=env |
| By: | Lee Endress (Asia Pacific Center for Security Studies, Hawaii); Sittidaj Pongkijvorasin (Chulalongkorn University); James Roumasset (Department of Economics, University of Hawaii at Manoa); Basharat Pitafi (Southern Illinois University, Carbondale) |
| Abstract: | We argue that intergenerational neutrality has been prematurely excluded from the dialogue on sustainable growth. By incorporating Burton’s distinction between intragenerational and intergenerational discounting into a model suitable for analyzing sustainability issues, we are able to accommodate some of the underlying concerns. We show that in an economy with a renewable resource, eschewing intergenerational discounting leads to the implication of a sustained growth path, without the necessity of a sustainability constraint. We find that green net national product remains constant along the optimal approach path to golden rule consumption. This avoids the paradox that maximizing sustainable income leads to unsustained consumption and income. |
| Keywords: | Sustainable development, intergenerational equity, intra-generational discounting, renewable resources, green net national product |
| JEL: | Q56 Q41 Q01 |
| Date: | 2009–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200906&r=env |
| By: | Majah-Leah Ravago (Department of Economics, University of Hawaii at Manoa; East-West Center); James Roumasset (Department of Economics, University of Hawaii at Manoa; University of Hawaii Economic Research Organization); (School of Economics, University of the Philippines) |
| Abstract: | Sustainability science emerged from the felt need to employ appropriate science and technology in the pursuit of sustainable development. Despite its inertia and avowed purpose of being practical and feasible, however, sustainability science has yet to embrace the policy sciences. In pursuit of this objective, we first trace the history of thought of sustainable development, including its definition and operationalization. Sustainable development encompasses sustainable growth and dynamically efficient development patterns. Two promising approaches to sustainable growth are contrasted. Negative sustainability counsels policy makers to offset any decrease in natural capital with at least the same value of net investment in produced capital. This sustainability criterion neither prescribes how and how much to conserve natural capital nor how much to build up human and productive capital. To fill the void, we offer positive sustainability, which maximizes intertemporal welfare while incorporating interlinkages within the total environomy, dynamic efficiency, and intertemporal equity. In addition, sustainable development must include the lessons from traditional development studies, including how optimal patterns of production, consumption, and trade change with standards of living. However, like Tolstoy’s unhappy families, there are many pathways to unsustainable development. We describe two broad causes of unsustainable growth – rent-seeking and preservationism. We also illustrate patterns of unsustainable development by drawing on lessons from the Philippines. While specialization is the engine of growth, fragmentation is the anchor. We show how policy and governance driven by rent-seeking promote economic stagnation. Low economic growth in turn exacerbates population pressure and environmental degradation – the vicious circle of unsustainable development. We give particular attention to how a resource curse can exacerbate policy distortions and rent-seeking and how the same phenomenon can be promulgated by foreign aid, foreign direct investments, remittances and tourism. For sustainable development not to be at odds with policy science, positive sustainability must be combined with projects and policies that promote dynamic comparative advantage and poverty reduction. We emphasize the facilitative role of government and what it can do to transform the vicious circle into a virtuous circle. |
| Keywords: | Sustainable development and patterns, positive sustainability, specialization, the Philippines |
| JEL: | Q01 Q33 Q56 |
| Date: | 2009–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200909&r=env |
| By: | Manuel Couret Branco (Universidade de Evora, Departamento de Economia, CEFAGE-UE); Pedro Damião Henriques (Universidade de Evora, Departamento de Economia, CEFAGE-UE) |
| Abstract: | In poor as much as in rich countries there is a fear that environmentally sustainable development might be contradictory to development in general and equitable development in particular. There could be indeed a contradiction between environmental and social sustainability, too much care for the environment eventually leading to forgetting about the people. The purpose of this paper is to explore institutional principles and tools that allow the conciliation between environmental and social sustainability. In this respect we will present human rights based political economy as an institutional tool of this sort. We will show how a human-rights based political economy could at the same time respect ecological sustainability and social equity. One of the reasons for that consists in the fact that within a human-rights based political economy, welfare is not the result of economic growth, as within traditional political economy, but of justice. The main objectives of development will be attained, therefore, not through growth but through redistribution of resources or of access to resources. In this paper more specific aspects will be presented by examining the human right to work and the human right to water. Regarding the human right to work the main aspect which will be stressed is that within a human rights frame full employment becomes disconnected from both growth and labour market deregulation. It will be shown that traditional policies not only do not solve unemployment but are also not environmentally and socially sustainable. The only policy that is not contradictory with either human rights and de-growth is work sharing by decreasing the length of the work day. When properly enforced this policy has, indeed, historically shown to be the only one that has created jobs. Regarding the right to water, the point is that democratic and human rights oriented exploitation and distribution policies of water are both more sustainable and more equitable than those that intend to transform water into a private good as any other and, thus, promote commodification and privatisation of resources. This way of controlling water exploitation and distribution not only may relieve pressure from the resource but also alleviate deprivation of poorer families, conciliating, therefore, environmental and social sustainability. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:cfe:wpcefa:2009_11&r=env |
| By: | Krishna Prasad Pant |
| Abstract: | The effects of indoor air pollution on respiratory health after adjusting for endogenous health behaviours are estimated. The study includes measurements on indoor air pollution and is based on detailed survey 600 households from Syangja and Chitwan districts of Nepal. Instrumental variable probit regressions to find the effects of pollution-reducing interventions on chronic bronchitis, asthma and acute respiratory infections are used. [SANDEE]. |
| Keywords: | endogenous, Indoor air pollution, Biogas, Chronic bronchitis, Asthma, Acute respiratory infections, Instrumental variable probit, regressions, health behaviours, Nepal, asthma, respiratory infections |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2214&r=env |
| By: | Constant Tra (Department of Economics, University of Nevada, Las Vegas) |
| Abstract: | This study develops a discrete choice locational equilibrium model to evaluate the benefits of the air quality improvements that occurred in the Los Angeles area following the 1990 Clean Air Act Amendments (CAAA). The discrete choice equilibrium approach accounts for the fact that air quality improvements brought about by the 1990 CAAA will change housing choices and prices. The study also provides new evidence for the distributional welfare impacts of the 1990 CAAA in the Los Angeles area. Findings suggest that the air quality improvements that occurred in the Los Angeles area between 1990 and 2000 provided substantial general equilibrium benefits to households. The analysis reveals noticeable differences between partial and general equilibrium welfare gains, demonstrating that ignoring equilibrium effects will likely misrepresent the benefits of large environmental changes. In addition, we find that the equilibrium welfare impacts of the 1990 CAAA in the Los Angeles area varied significantly across income groups. |
| Keywords: | benefit analysis, ozone improvement, locational equilibrium, discrete choice |
| JEL: | H0 Q28 R13 R21 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:nlv:wpaper:0922&r=env |
| By: | Alpizar, Francisco (Environment for Development Center, Tropical Agricultural and Higher Education Center (CATIE)); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Naranjo, Maria (Environment for Development Center, Tropical Agricultural and Higher Education Center (CATIE)) |
| Abstract: | The risk of loses of income and productive means due to adverse weather associated to climate change can significantly differ between farmers sharing a productive landscape. It is important to learn more about how farmers react to different levels of risk, under measurable and unmeasurable uncertainty. Moreover, the costs associated to investments in reduced vulnerability to climatic events are likely to exhibit economies of scope. We explore these issues using a framed field experiment that captures realistically the main characteristics of production, and the likely weather related loses of premium coffee farmers in Tarrazu, Costa Rica. Given that the region recently was severely hit by an extreme, albeit very infrequent, climatic event, we expected to observe, and found high levels of risk aversion, but we do observe farmers making trade offs under different risk levels. Although hard to disentangle at first sight given the high level of risk aversion, we find that farmer’s opt more frequently for safe options in a setting characterized by unknown risk. Finally, we find that farmers to a large extent are able to coordinate their decisions in order to achieve a lower cost of adaptation, and that communication among farmers strongly facilitates coordination.<p> |
| Keywords: | Risk aversion; ambiguity aversion; technology adoption; climate change; field experiment |
| JEL: | C93 D81 H41 Q16 Q54 |
| Date: | 2009–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0382&r=env |
| By: | Marit E Kragt (Crawford School of Economics and Government, the Australian National University, Australia); Jeff Bennett (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | Choice experiments (CE) are increasingly used to estimate the values of non-market goods and services. A cost attribute is typically included in a CE questionnaire to estimate monetary values for changes in the non-market attributes presented. Although the cost attribute is centrally important, there has been limited research into the impacts of varying cost attribute levels on respondents’ choices in CE surveys. The context in which non-market attributes are presented to respondents (the ‘attribute frame’) may also affect value estimates. The challenge for CE practitioners is to identify the ‘appropriate’ attribute frames and cost level range. Results from a CE study in Tasmania show that respondents’ preferences are not impacted by describing an attribute in ‘presence’ versus ‘loss’. The absolute attribute levels, therefore, were most important in this study. Comparisons between different split samples are evidence that changing the cost attribute level does affect respondents’ preferences – higher levels lead to significantly higher estimates of willingness to pay for one of the three environmental attributes. |
| Keywords: | Choice experiments, Mixed Logit models, Environmental valuation, Attribute framing, Cost bias |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0917&r=env |
| By: | Mary F. Evans; Christine Poulos; V. Kerry Smith |
| Abstract: | Individuals who are likely to realize the largest benefits from improvements in air quality often depend on other members of their households to make time or monetary contributions to their care. The presence of these dependency relationships among household members poses challenges for benefit estimation since it is unlikely that the conditions necessary for recovering the underlying individual preferences from household choices are satisfied in this setting. We propose a conceptual framework that highlights the role of these dependencies in the choice models used to estimate the willingness to pay for environmental quality improvements. We design a complementary stated preference survey that describes hypothetical dependency relationships for household members of different ages to test the implications of our conceptual model. Respondents’ choices take into account the care-giving responsibilities for young children and teenagers but not for older adults. |
| JEL: | H41 Q51 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15366&r=env |
| By: | Frank Jotzo (Research School of Pacific and Asian Studies, the Australian National University, Australia); Regina Betz (Centre for Energy and Environmental Markets, School of Economics, University of New South Wales, Australia) |
| Abstract: | A detailed proposal for an economy-wide emissions trading scheme in Australia was tabled by the government in December 2008 with a proposed start date for mid-2010. The government proposes unilateral linking, with no initial bilateral linkages, through the clean development mechanism and joint implementation. The proposal has resulted in serious concern about significant permit price increases and price capping, leading to a ban on permit sales. This research paper evaluates the proposed Australian scheme in relation to international emissions trading and linkages. Different scenarios for the Australian permit price under unilateral linking are considered. Options for bilateral linking with the European Union and New Zealand schemes are also evaluated, including access to ‘hot air’ units. The research paper argues that Australia needs to dismantle linking obstacles, such as the price cap, and move towards suitable bilateral linking schemes. |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0914&r=env |
| By: | McCarthy, Nancy; Essam, Timothy |
| Abstract: | "This article uses combined household- and community-level data collected from the Maule Region (VII) of Chile to evaluate factors affecting the decision to participate in yearly irrigation maintenance activities, and the influence of current behavior on farm revenues. Empirical results indicate that water user association characteristics explain much of the variation in participation decisions, contribution amounts, variable input purchases, and subsequent farm revenues." from authors' abstract |
| Keywords: | Water user association, Participation, Irrigation, Water resources, Environmental impacts, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:892&r=env |
| By: | R. Quentin Grafton (Crawford School of Economics and Government, the Australian National University, Australia); Sonia Akter (Crawford School of Economics and Government, the Australian National University, Australia); Tom Kompas (Crawford School of Economics and Government, the Australian National University, Australia) |
| Abstract: | Marine protected areas (MPA) potentially offer a wide range of use and non-use benefits. These include critical habitat protection, conservation of marine biodiversity, recovery of threatened and endangered marine species, and increased biomass of targeted marine species. To assess whether such benefits exceed the potential costs, we provide the first-ever comprehensive ex-ante, socio-economic guide to MPA evaluation. Our framework shows how to quantify four key values of MPAs: consumptive, non-consumptive, indirect, and non-use values. The framework also shows how to use decision tools to determine the desirability of establishing MPAs. Overall, the guide offers the promise of improved information and better decision making for marine protected areas. Key words: Marine protected areas, use value, non-use value, benefit-cost analysis. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:0927&r=env |
| By: | Faße, Anja, Grote, Ulrike; Winter, Etti |
| Abstract: | This paper gives an overview of different methodologies related to value chain analysis in the context of environment and trade research. Four major fields of methodologies are identified: Accounting of input-output flows, general computable equilibrium models, econometrics, and global commodity chain analysis. Accounting of flows includes different physical (e.g. life cycle assessment) and monetary (e.g. social accounting matrix) accounting frameworks providing the foundation for computable general equilibrium models. Econometric value chain analysis is widespread in the field of impact assessment of value chains. It can be applied to analyze the effects of standards (e.g. food, social, and environmental) as well as transaction costs on the income of households (micro level) or on trade volumes of countries (macro level). Global commodity chain analysis aims to identify and measure the balance of power between the participating actors. |
| Keywords: | Value Chain Analysis, Environment, International Trade, Mapping, Accounting, Econometrics, General Equilibrium Model |
| JEL: | Q56 D57 D58 C13 L23 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-429&r=env |
| By: | d'ALBIS Hippolyte; AMBEC Stefan |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ler:wpaper:09.23.299&r=env |