nep-ene New Economics Papers
on Energy Economics
Issue of 2005‒03‒20
eight papers chosen by
Roger Fouquet
Imperial College, UK

  2. A Residential Energy Demand System for Spain By Xavier Labandeira; José M. Labeaga; Miguel Rodríguez
  3. Microsimulating the Effects of Household Energy Price Changes in Spain By Xavier Labandeira; José M. Labeaga; Miguel Rodríguez
  4. Russia from Bust to Boom: Oil, Politics or the Ruble? By Bruno Merlevede; Koen Schoors; Bas van Aarle
  5. Exploiting the Oil-GDP Effect to Support Renewables Deployment By Shimon Awerbuch; Raphael Sauter
  6. Non-Catastrophic Endogenous Growth and the Environmental Kuznets Curve By J. Aznar-Márquez; J. R. Ruiz-Tamarit
  7. Carbon Sequestration in Agricultural Soils: Discounting for Uncertainty By Kurkalova, Lyubov
  8. The Labor Market for New Agricultural and Resource Economics Ph.D.s By Wendy A. Stock; John J. Siegfried

  1. By: Witold J. Henisz; Bennet A. Zelner;
    Abstract: In this paper we examine the effects of interest group pressure and the structure of political institutions on infrastructure deployment by state-owned electric utilities in a panel of 78 countries during the period 1970 – 1994. We consider two factors that jointly influence the rate of infrastructure deployment: (1) the extent to which the consumer base consists of industrial consumers, which are capable of exerting discipline on political actors whose competing incentives are to construct economically inefficient “white elephants” to satisfy the demands of concentrated geographic interests, labor unions and construction firms; and (2) veto points in formal policymaking structures that constrain political actors, thereby reducing these actors’ sensitivity to interest group demands. A higher fraction of industrial customers provides political actors with stronger incentives for discipline, reducing the deployment of white elephants and thus the infrastructure growth rate, ceteris paribus. Veto points reduce political actors’ sensitivity to interest group demands in general and thus moderate the relationship between industrial interest group pressure and the rate of infrastructure deployment.
    Keywords: Electricity, Institutional Environment, Investment, Regulation, interest group, state owned enterprise
    JEL: L94 L32 F21
    Date: 2004–07–01
  2. By: Xavier Labandeira; José M. Labeaga; Miguel Rodríguez
    Abstract: Sharp price fluctuations and increasing environmental and distributional concerns, among other issues, have led to a renewed academic interest in energy demand. In this paper we estimate, for the first time in Spain, an energy demand system with household microdata. In doing so, we tackle several econometric and data problems that are generally recognized to bias parameter estimates. This is obviously relevant, as obtaining correct price and income responses is essential if they may be used for assessing the economic consequences of hypothetical or real changes. With this objective, we combine data sources for a long time period and choose a demand system with flexible income and price responses. We also estimate the model in different sub-samples to capture varying responses to energy price changes by households living in rural, intermediate and urban areas. This constitutes a first attempt in the literature and it proved to be a very successful choice.
  3. By: Xavier Labandeira; José M. Labeaga; Miguel Rodríguez
  4. By: Bruno Merlevede; Koen Schoors; Bas van Aarle
    Abstract: This paper develops and estimates a small macroeconomic model of the Russian economy. The model is tailored to analyze the impact of the oil price, the exchange rate, and political stability on economic performance. The model does very well in explaining Russia’s economic history in the period 1995-2002. We then use the model to simulate two sets of scenarios, one with various oil price scenarios and one with various adverse shocks. The simulations suggest that the Russian economy is still very vulnerable to oil price swings, and that these swings have asymmetric effects. Indeed the cost of a downward swing of oil prices seems to be larger than the benefit of an upward swing. We also find that the aggregate effects of an oil price collapse are comparable to these of renewed political instability. Although their propagation mechanism is quite different, both adverse shocks do have a similar effect on real GDP. A real exchange rate appreciation on the other hand has relatively mild effects on real GDP. All in all, it is suggested that Russia should reduce its vulnerability to adverse oil price shocks and maintain political stability.
    Keywords: Russia, Macroeconomic Modeling, Macroeconomic stabilization
    JEL: C70 E17 E58 E63
    Date: 2004–10–01
  5. By: Shimon Awerbuch (SPRU, University of Sussex); Raphael Sauter (SPRU, University of Sussex)
    Abstract: The empirical evidence from a growing body of academic literature clearly suggests that oil price increases and volatility dampen macroeconomic growth by raising inflation and unemployment and by depressing the value of financial and other assets. Surprisingly, this issue seems to have received little attention from energy policy makers. In percentage terms, the Oil-GDP effect is relatively small, producing losses in the order of 0.5% of GDP for a 10% oil price increase. In absolute terms however, even a 10% oil price rise. and oil has risen at least 50% in the last year alone. produces GDP losses that, could they have been averted, would significantly offset the cost of increased RE deployment. While we focus on renewables, the GDP offset applies equally to energy efficiency, DSM and nuclear and other non-fossil technologies. This paper draws on the empirical Oil-GDP literature, which we summarize, to show that by displacing gas and oil, renewable energy investments can help nations avoid costly macroeconomic losses produced by the Oil-GDP effect. We show that a 10% increase in RE share avoids GDP losses in the range of $29.$53 billion in the US and the EU ($49.$90 billion for OECD). These avoided losses offset one-fifth of the RE investment needs projected by the EREC and half the OECD investment projected by a G-8 Task Force. For the US, the figures further suggest that each additional kW of renewables, on average, avoids $250.$450 in GDP losses, a figure that varies across technologies as a function of annual capacity factors. We approximate that the offset is worth $200/kW for wind and solar and $800/kW for geothermal and biomass (and probably nuclear). The societal valuation of non-fossil alternatives needs to reflect the avoided GDP losses, whose benefit is not fully captured by private investors. This said, we fully recognize that wealth created in this manner does not directly form a pool of public funds that is easily earmarked for renewables support. Finally, the Oil-GDP relationship has important implications for correctly estimating direct electricity generating cost for conventional and renewable alternatives and for developing more useful energy security and diversity concepts. We also address these issues.
    Keywords: Oil price shocks, oil price volatility, Oil-GDP effects, renewable energy, RES-E targets, financial beta risk, funding renewables
    JEL: Q4 E2
    Date: 2005–01–13
  6. By: J. Aznar-Márquez; J. R. Ruiz-Tamarit
    Abstract: The competitive equilibrium in an endogenous growth model is not Pareto-optimal nor environmentally sustainable in presence of pollution externalities, even if costly abatement activities are allowed to be endogenously decided. In this paper we introduce the possibility of an ecological catastrophe by imposing an upper-limit to the pollutants stock. We characterize the socially optimal solution and study sustainability of the long-run balanced growth path. We find that the rate of growth depends negatively on the weight of environmental cares in utility and positively on the population growth rate. The latter effect is stronger as higher is the weight of environment in the utility function. We also identify some policies the central planner could undertake looking to guarantee sustainability. An EKC is derived in the long term using the implications of the demographic transition for the rate of population growth, and the accompanying variation in the willingness to pay for environmental quality as the economy develops.
  7. By: Kurkalova, Lyubov
    Abstract: The study presents a conceptual model of an aggregator who selectively pays farmers for altering farming practices in exchange for carbon offsets that the change in practices generates. Under the assumption that the offsets are stochastic and that the aggregator maximizes the sum of the offsets from the purchase that he/she can rightfully claim with a specified level of confidence subject to a budget constraint, we investigate the optimal discounting of expected carbon offsets. We use the model to estimate empirically the optimal discounting levels and costs for a hypothetical carbon purchasing project in the Upper Iowa River Basin.
    Date: 2005–03–11
  8. By: Wendy A. Stock (Department of Agricultural Economics and Economics, Montana State University); John J. Siegfried (Vanderbilt University and American Economic Association)
    Abstract: This paper describes the characteristics and labor market experiences of new agricultural and natural resource (ANR) economics Ph.D.s, based on surveys of graduates in 1996-97 and 2001-02. An average of 185 new Ph.D.s in ANR economics were awarded in each of these years. Among these, an average of 27 percent were earned by women, and 36 percent were earned by U.S. citizens. The median graduate took 5.2 years to earn the Ph.D. Ninety-five percent of the graduates were employed. About half of the jobs were in academe, with the remainder divided roughly equally among government, international or research organizations, and business, industry, and consulting. The median salary of new ANR economics Ph.D.s holding full-time jobs in the U.S. was $62,500 in 2002, up from $47,500 five years earlier. Ninety-one percent of the respondents reported that they like their job fairly well. Those who do less research and more service are more likely to be dissatisfied with their jobs. Overall, 85 percent of the new ANR economics Ph.D.s reported that had they known at matriculation what they know after graduation, they still would have pursued a Ph.D.
    Keywords: Agricultural and natural resource economists, market for agricultural economists, salaries of agricultural economists
    JEL: A11
    Date: 2005–02

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