nep-ene New Economics Papers
on Energy Economics
Issue of 2005‒04‒03
eight papers chosen by
Roger Fouquet
Imperial College, UK

  1. Did Iraq Cheat the United Nations? Underpricing, Bribes, and the Oil for Food Program By Chang-Tai Hsieh; Enrico Moretti
  2. General Purpose Technologies and Energy Policy By Zon,Adriaan,van; Kronenberg,Tobias
  3. Industrialization and Urbanization: Did the Steam Engine Contribute to the Growth of Cities in the United States? By Sukkoo Kim
  4. Consequences of Co-benefits for the Efficient Design of Carbon Sequestration Programs, The By Feng, HongLi; Kling, Catherine L.
  5. Designation of Co-benefits and Its Implication for Policy: Water Quality versus Carbon Sequestration in Agricultural Soils, The By Secchi, Silvia; Jha, Manoj; Kurkalova, Lyubov; Feng, HongLi; Gassman, Philip W.; Kling, Catherine L.
  6. RECLAIM (Regional Clean Air Incentives Market) - Ein Emissionshandelsprogramm als marktbasiertes politisches Instrument zur Lösung des Smogproblems im Großraum Los Angeles? By Iris Säger
  7. Taxes vs Permits: Options for Price-Based Climate Change Regulation By Isabelle Sin; Suzi Kerr; Joanna Hendy
  8. Environmental Kuznets Curves: Mess or Meaning? By Don J Webber; David O Allen

  1. By: Chang-Tai Hsieh; Enrico Moretti
    Abstract: From 1997 through early 2003, the United Nations Oil for Food Program allowed Iraq to export oil in exchange for humanitarian supplies. We measure the extent to which this program was corrupted by Iraq's attempts to deliberately set the price of its oil below market prices in an effort to solicit bribes, both in the form of direct cash bribes and in the form of political favors, from the buyers of the underpriced oil. We infer the magnitude of the potential bribe by comparing the gap between the official selling price of Iraq's two crude oils (Basrah Light and Kirkuk) and the market price of several comparison crude oils during the Program to the gap observed prior to the Program. We find consistent evidence that underpricing of Basrah Light averaged $1 per barrel from 1997 through 1999 and reaches a peak (almost $3 per barrel) from May 2000 through September 2001. The estimated underpricing quickly declines after the UN introduced a retroactive pricing scheme that reduced Iraq's ability to set the price of its oil. The evidence on whether Kirkuk was underpriced is less clear. Notably, we find that episodes of underpricing of Basrah Light are associated with a decline in the share of major oil multinationals among the oil buyers, and an increase in the share of obscure individual traders. The observed underpricing of Iraqi oil suggests that Iraq generated $5 billion in rents through its strategic underpricing. Of this amount, we estimate that Iraq collected $0.7 to $2 billion in bribes (depending on Iraq's share of the rents implied by the price gap), which is roughly 1 to 3 percent of the total value of oil sales under the Program. Finally, we find little evidence that underpricing was associated with increases in the relative supply or declines in the relative demand of Iraqi oil.
    JEL: J0 K4
    Date: 2005–03
  2. By: Zon,Adriaan,van; Kronenberg,Tobias (MERIT)
    Abstract: We employ a general purpose technology model with endogenous stochastic growth to simulate the effects of different energy policy schemes. An R&D sector produces endogenous growth by developing radical and incremental technologies. These innovations result in blueprints for capital intermediates, which require raw capital and either carbon or non-carbon-based fuels. A carbon tax therefore affects not only the final production sector but also the R&D sector by making the development of non-carbon-based technologies more attractive. Due to path dependencies and possible lock-in situations, policy can have a significant long-term impact on the energy structure of the economy. Allowing for different elasticities of substitution between consumption and environmental quality, we examine the effects of different carbon policies on growth, environmental quality, and welfare. We find that an anti-carbon policy may reduce welfare initially, but in the long run there is a strong potential for a ‘double dividend’ due to faster growth and reduced pollution.
    Keywords: research and development ;
    Date: 2005
  3. By: Sukkoo Kim
    Abstract: Industrialization and urbanization are seen as interdependent processes of modern economic development. However, the exact nature of their causal relationship is still open to considerable debate. This paper uses firm-level data from the manuscripts of the decennial censuses between 1850 and 1880 to examine whether the adoption of the steam engine as the primary power source by manufacturers during industrialization contributed to urbanization. While the data indicate that steam-powered firms were more likely to locate in urban areas than water-powered firms, the adoption of the steam engine did not contribute substantially to urbanization.
    JEL: N60 N90 R38
    Date: 2005–03
  4. By: Feng, HongLi; Kling, Catherine L.
    Abstract: In this paper, we study the social efficiency of private carbon markets that include trading in agricultural soil carbon sequestration when there are significant co-benefits (positive environmental externalities) associated with the practices that sequester carbon. Likewise, we investigate the efficiency of government-run conservation programs that are designed to promote a broad array of environmental attributes (both carbon sequestration and its co-benefits) for the supply of carbon. Finally, policy design and efficiency issues associated with the potential interplay between a private carbon market and a government conservation program are studied. Empirical analyses for an area that represents a significant potential source of carbon sequestration and its associated co-benefits illustrate the magnitude and complexity of these issues in real-world policy design.
    Date: 2005–03–29
  5. By: Secchi, Silvia; Jha, Manoj; Kurkalova, Lyubov; Feng, HongLi; Gassman, Philip W.; Kling, Catherine L.
    Abstract: This study investigates the implications of treating different environmental benefits as the primary target of policy design. We focus on two scenarios, estimating for both of them in-stream sediment, nutrient loadings, and carbon sequestration. In the first, we assess the impact of a program designed to improve water quality in Iowa on carbon sequestration, and in the second, we calculate the water quality impact of a program aimed at maximizing carbon sequestration. In both cases, the policy instrument is the retirement of land from agricultural production. Our results, limited to the state of Iowa, and to the case of set-aside for water quality or carbon sequestration purposes, indicate that the amount of co-benefits depends on what indicators are used to measure water quality. In general, this study shows that improving “water quality” in the sense of reducing nutrient or sediment loadings is too vague. Even if it is taken to refer to in-stream nutrients, because the responses of nitrogen and phosphorus to conservation efforts are not well correlated, this terminology may not provide much guidance.
    Date: 2005–03–23
  6. By: Iris Säger
    Date: 2005–03–31
  7. By: Isabelle Sin; Suzi Kerr; Joanna Hendy (New Zealand Treasury)
    Abstract: This paper provides an overview of key issues involved in the choice among market-based instruments for climate change policy. Specifically, it examines the potential net benefits from shifting to a permit system for emission reduction, and the preconditions necessary for this change. It also draws out the implications of New Zealand’s specific circumstances and current climate policies for future policy development.
    Keywords: climate change; emissions trading; permits; taxation; New Zealand
    JEL: Q28 Q48
    Date: 2005–04
  8. By: Don J Webber (School of Economics, University of the West of England); David O Allen (School of Economics, University of the West of England)
    Abstract: The shape of the relationship between the rate of environmental degradation and income per capita has been the subject of much empirical examination. When test results based around this so-called ‘environmental Kuznets curve’ are compared, the empirical evidence is neither consistently supportive of its traditional inverted-U shape nor uniform across pollutants. A deeper understanding of the characteristics of pollutants and of the derived demand and derived supply of pollutants needs to be achieved if environmental Kuznets curves are to be useful.
    Keywords: Environmental Kuznets Curves, Empirical Evidence
    JEL: O49 Q20
    Date: 2004–06

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