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on Energy Economics |
| By: | Mohn, Klaus (University of Stavanger) |
| Abstract: | , |
| Keywords: | Oil; Exploration: Production |
| JEL: | A10 |
| Date: | 2009–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_010&r=ene |
| By: | Foros, Øystein (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Steen, Frode (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | This paper examines Norwegian gasoline pump prices using daily station-specific observations from March 2003 to March 2006. Whereas studies that have analyzed similar price cycles in other countries find support for the Edgeworth cycle theory (Maskin and Tirole, 1988), we demonstrate that Norwegian gasoline price cycles involve a form of coordinated behavior. Retail gasoline prices follow a fixed weekly pattern, where retail outlets all over Norway simultaneously increase their prices to the same level every Monday at noon. Consequently, the sharp price increase is tied to time rather than the current price level. The gasoline companies’ headquarters publish a recommended price that de facto is a RPM arrangement towards the retail outlets. The vertical arrangement is industry-wide adopted, and is used to coordinate the time and the level for retail price increases among the big four gasoline companies. Monday changed from being the low-price day to becoming the high-price day almost ‘overnight’ in April 2004, and we empirically establish that the change corresponds to a significant jump in the gross margin. |
| Keywords: | Gasoline Prices; Resale Price Maintenance |
| JEL: | E30 E32 |
| Date: | 2009–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_002&r=ene |
| By: | Osmundsen, Petter (University of Stavanger); Sørenes, Terje; Toft , Anders |
| Abstract: | , |
| Keywords: | Oil |
| JEL: | A10 |
| Date: | 2009–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_007&r=ene |
| By: | Osmundsen, Petter (University of Stavanger) |
| Abstract: | , |
| Keywords: | Oil reserves; |
| JEL: | A10 |
| Date: | 2009–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_006&r=ene |
| By: | Osmundsen, Petter (University of Stavanger); Løvås, Kjell |
| Abstract: | , |
| Keywords: | Oil; Taxation |
| JEL: | A10 |
| Date: | 2009–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_008&r=ene |
| By: | Aune, Finn Roar; Mohn, Klaus (University of Stavanger); Osmundsen, Petter (University of Stavanger); Rosendahl, Knut Einar |
| Abstract: | , |
| Keywords: | Oil Market; Investment behaviour; market power; collusion; equilibrium model |
| JEL: | G31 L13 Q41 |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_014&r=ene |
| By: | Mohammadi, Hassan; Jahan-Parvar, Mohammad R. |
| Abstract: | The paper studies the long-run relation and short-run dynamics between real oil prices and real exchange rates in a sample of fourteen oil-exporting countries to examine the possibility of Dutch disease in these countries. The results, based on threshold and momentum-threshold autoregressive (TAR and M-TAR) tests of cointegration, are mixed. Support for Dutch disease is found in five countries. For these countries, we also find evidence of (a) long-run uni-directional causality from oil prices to exchange rates; (b) faster adjustments in exchange rates to positive deviations from the equilibrium; and (c) short-run unidirectional causality from oil prices to exchange rates in two countries, unidirectional causality from exchange rates to oil prices in one country, and bi-directional causality between oil prices and exchange rates in one country. |
| Keywords: | Asymmetry; Cointegration; Dutch Disease; Error Correction; Oil Prices; Real Exchange Rates; Threshold and Momentum Threshold Autoregressive Models |
| JEL: | F37 C32 C52 F47 F31 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:14578&r=ene |
| By: | Emhjellen, Magne; Osmundsen, Petter (University of Stavanger) |
| Abstract: | , |
| Keywords: | Oil; project; evaluation |
| JEL: | A10 |
| Date: | 2009–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_016&r=ene |
| By: | Mohn, Klaus (University of Stavanger); Osmundsen, Petter (University of Stavanger) |
| Abstract: | , |
| Keywords: | Oil; Investment |
| JEL: | A10 |
| Date: | 2008–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_013&r=ene |
| By: | Helin, Sven (Department of Business, Economics, Statistics and Informatics); Frostenson, Magnus (Uppsala University) |
| Abstract: | Intresset för hållbar utveckling har ökat markant under det senaste åren. Inte minst märks det i att allt fler företag numera lämnar hållbarhetsredovisningar. I takt med denna utveckling har även olika ramverk växt fram för att utveckla kvaliteten på dessa redovisningar där GRI(GlobalReportingInitiative)är den vanligast förekommande. I den här rapporten granskar vi fjärrvärmeföretag (143 företag) i syfte att kartlägga hur de redovisar hållbarhetsinformation och om de redovisningsprinciper som presenteras i GRI:s ramverk beaktas och tillämpas. Resultatet visar att endast ett fåtal av företagen följer GRI:s ramverk men att ungefär hälften av företagen lämnar någon form av hållbarhetsredovisning separat eller som en del av årsredovisningen. Studien visar också att den information som lämnas av de företag som inte följer GRI:s riktlinjer är olikartad och ofta saknar precision varför exempelvis möjligheten att jämföra företag är liten samt pekar på att behovet av redovisningsstandards för hållbarhetsredovisning. |
| Keywords: | Sustainability reporting; GRI; energy industry; Sweden |
| JEL: | M40 |
| Date: | 2009–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2009_005&r=ene |
| By: | Osmundsen, Petter (University of Stavanger) |
| Abstract: | , |
| Keywords: | Petroleum; Taxation |
| JEL: | A10 |
| Date: | 2009–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:stavef:2009_018&r=ene |
| By: | Michal Król |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:man:sespap:0904&r=ene |
| By: | Luthfi Fatah (Faculty of Agriculture, Lambung Mangkurat University) |
| Abstract: | Coal mining is an engine of economic growth in many developing countries, but it is also responsible for a great deal of environmental pollution and social disruption. This study has looked at the * impact of coal mining on the economy and environment of the province of South Kalimantan - one of the country's most important coal producing regions. It also investigates what policy options will best reduce its negative environmental impacts at least cost to the province's economy. |
| Keywords: | Coal, Kalimantan |
| JEL: | Q32 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:eep:pbrief:pb2008061&r=ene |
| By: | Luthfi Fatah (Faculty of Agriculture, Lambung Mangkurat University) |
| Abstract: | This study investigates the impact of coal mining on the economy and environment of South Kalimantan Province, one of the most important coal producing regions in Indonesia. It uses a Social Accounting matrix to assess how the industry affects the province's economy and the livelihoods of its people. It also investigates what policy options will best reduce its negative environmental impacts at least cost to the province's economy. The study, by Luthfi Fatah of Lambung Mangkurat University, finds that mining is one of the most significant parts of the province's economy and that it is steadily growing in importance. However, it also shows that the industry disproportionately benefits the better-off sectors of society and is having an unacceptable impact on the environment. Fatah recommends that policy makers slow the growth in coal mining through regulation of small-scale mining. This should help the environment. He also suggests that the government boost investment in agricultural -based activities to improve the employment prospects of the poorer sectors of society. |
| Keywords: | Coal, Kalimantan |
| JEL: | Q32 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:eep:report:rr2008061&r=ene |
| By: | Reyes, Celia M; Gonzales, Kathrina G.; Predo, Canesio D.; de Guzman, Rosalina G. |
| Abstract: | <p>Rainfall variability greatly influences corn production. Thus, an accurate forecast is potentially of value to the farmers because it could help them decide whether to grow their corn now or to delay it for the next cropping opportunity. A decision tree analysis was applied in estimating the value of seasonal climate forecast (SCF) information for corn farmers in Isabela.</p> <p>The study aims to estimate the value of SCF to agricultural decisionmakers under climate uncertainty. Historical climatic data of Isabela from 1951 to 2006 from PAGASA and crop management practices of farmers were used in the Decision Support System for Agrotechnology Transfer (DSSAT) to test the potential impact of climate change on corn. The approach is developed for a more accurate SCF and to be able to simulate corn yields for wet and dry seasons under different climatic conditions. While SCF may potentially affect a number of decisions including crop management practices, fertilizer inputs, and variety selection, the focus of the study was on the effect of climate on corn production. Improving SCF will enhance rainfed corn farmers’ decisionmaking capacity to minimize losses brought about by variable climate conditions.</p> |
| Keywords: | seasonal climate forecast (SCF), decision tree analysis, climate uncertainty, Decision Support System for Agrotechnology Transfer (DSSAT) |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2009-05&r=ene |
| By: | Arief Anshory Yusuf (Padjadjaran University/EEPSEA); Herminia Francisco (Economy and Environment Program for Southeast Asia (EEPSEA)) |
| Abstract: | This paper provides information on the sub-national areas (regions/districts/provinces) most vulnerable to climate change impacts in Southeast Asia. This assessment was carried out by overlaying climate hazard maps, sensitivity maps, and adaptive capacity maps following the vulnerability assessment framework of the United Nations’ Inter-governmental Panel on Climate Change (IPCC). The study used data on the spatial distribution of various climate-related hazards in 530 sub-national areas of Indonesia, Thailand, Vietnam, Lao PDR, Cambodia, Malaysia, and the Philippines. Based on this mapping assessment, all the regions of the Philippines; the Mekong River Delta in Vietnam; almost all the regions of Cambodia; North and East Lao PDR; the Bangkok region of Thailand; and West Sumatra, South Sumatra, West Java, and East Java of Indonesia are among the most vulnerable regions in Southeast Asia. |
| Keywords: | Climate change, vulnerability, Southeast Asia, Mapping |
| JEL: | Q54 Q56 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:eep:tpaper:tp200901s1&r=ene |
| By: | Jacinto F. Fabiosa (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)) |
| Abstract: | Many studies on the impact of biofuels on greenhouse gas emissions do not consider indirect land-use change and land use avoided because of co-products utilization. This paper provides estimates of the land-use credit for corn ethanol when its by-product—distillers dried grains with solubles (DDGS)—is used in swine feed rations to substitute for corn and soymeal. The range of estimates used here covers the land-use credit used in the literature. Moreover, this study departs from earlier studies because feed rations from a least-cost optimization are used rather than rations from feeding trials, and DDGS nutrient profile variability is fully accounted for. As a result, displacement rates and the land-use credit can be better characterized using a distribution rather than a single point estimate. The land-use credit for corn ethanol for DDGS used in swine feed rations ranges from -0.367 to -0.596 hectares, whereby substitution for corn in the feed ration accounts for 56.09% and soymeal substitution contributes 48.46%. Variability of the land-use credit is contributed more by the variability of land use from the substitution of soymeal than that of corn. Finally, when feed compounders discount the DDGS nutrient profile to ensure they are at or above any realized nutrient profile 90% of the time, the land-use credit for corn ethanol declines by 8.47% for DDGS in a swine feed ration. |
| Keywords: | biofuel, DDGS quality, displacement rate, greenhouse gas accounting, land-use credit, optimal, stochastic LP, swine grower-finisher optimal feed ration. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:09-wp489&r=ene |
| By: | Elias Asproudis; Maria José Gil-Moltó |
| Abstract: | We model competition in an emissions trading system (ETS) as a game between two firms and environmental group. In a previous stage, firms endogenously choose their manufacturing technologies. Our results show that there is an inverted U-shape relationship between how polluting the chosen technology is and the degree of the environmentalists' impure altruism. Firms choose a less polluting technology in the presence of the environmentalists than in their absence only if they are characterised by intermediate degrees of impure altruism. |
| Keywords: | ETS; Technology Choice; Induced Technological Change; Impure Altruism |
| JEL: | L13 Q30 O31 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:09/9&r=ene |
| By: | John Whalley; Yufei Yuan |
| Abstract: | This paper analyzes the medium to long-term implications of global warming for the evolution of global financial structures. Stern (2007) and other related scientific literature reports that greenhouse gas emissions generated by human activities will very possibly lead to global temperature increase of 1-5 degrees C by 2050. This will cause a dramatic increase in global risks to human life. The response to this will be the seeking-out of financial innovation by major forms, primarily in the area of insurance, but also in the diversification of asset holdings. We suggest in this paper that, with modest climate changes of 1-2 degrees C, the global insurance market will expand dramatically. However, under more extreme climate change scenarios, the entire global financial structure will undergo major changes, with a re-focusing of major financial activity away from intermediation between borrowers and lenders and the facilitation of the accumulation of assets, and towards a focus on insurance arrangements and the diversification of risks associated with climate change. |
| JEL: | G21 Q54 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14888&r=ene |
| By: | Johannes Bollen; Bruno Guay; Stéphanie Jamet; Jan Corfee-Morlot |
| Abstract: | There are local air pollution benefits from pursuing greenhouse gases emissions mitigation policies, which lower the net costs of emission reductions and thereby may strengthen the incentives to participate in a global climate change mitigation agreement. The main purpose of this paper is to assess the extent to which local air pollution co-benefits can lower the cost of climate change mitigation policies in OECD and non-OECD countries and can offer economic incentives for developing countries to participate in a post- 2012 global agreement. The paper sets out an analytical framework to answer these questions. After a literature review on the estimates of the co-benefits, new estimates, which are obtained within a general equilibrium, dynamic, multi-regional framework, are presented. The main conclusion is that the co-benefits from climate change mitigation in terms of reduced outdoor local air pollution might cover a significant part of the cost of action. Nonetheless, they alone may not provide sufficient participation incentives to large developing countries. This is partly because direct local air pollution control policies appear to be typically cheaper than indirect action via greenhouse gases emissions mitigation.<P>Les bénéfices connexes des politiques d’atténuation du changement climatique : Revue de la littérature et nouveaux résultats<BR>Les politiques de réduction des émissions de gaz à effet de serre ont des bénéfices en termes de pollution atmosphérique locale, ce qui diminue le coût net de ces politiques et ainsi renforce les incitations à participer à un accord mondial d'atténuation du changement climatique. Le principal objectif de ce document est d'évaluer dans quelle mesure les bénéfices connexes sur la pollution atmosphérique locale peuvent, d'une part réduire le coût des politiques d'atténuation du changement climatique dans les pays de l'OCDE et dans les pays en dehors de l'OCDE et d'autre part fournir des incitations économiques aux pays en développement à participer à un accord mondial pour l'après 2012. Le document établit un cadre d'analyse pour répondre à ces questions. Après une revue de la littérature des estimations des bénéfices connexes, de nouvelles estimations, obtenues dans un cadre d'équilibre général dynamique couvrant l'ensemble des régions du monde, sont présentées. La principale conclusion est que les bénéfices connexes de l'action climatique en termes de réduction de la pollution atmosphérique locale couvriraient une part importante du coût des politiques. Néanmoins, à eux seuls, ils seraient insuffisants pour amener les grands pays en développement à participer. Cela tient en partie au fait que l'application de mesures visant directement la pollution atmosphérique locale est généralement meilleur marché qu'une action indirecte via la réduction des émissions de gaz à effet de serre. |
| Keywords: | health, santé, climate change, changement climatique, co-benefits, mitigation policy, politique d'atténuation, local air pollution, pollution atmosphérique locale, bénéfices connexes |
| JEL: | I10 Q53 Q54 |
| Date: | 2009–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:693-en&r=ene |
| By: | Arief Anshory Yusuf (Department of Economics, Padjadjaran University) |
| Abstract: | This research is an attempt to further understand the social and environmental dimension of sustainable development focusing on the impact of environmental reforms, such as pollution reduction and energy pricing policy, has on inequality and poverty for the case of Indonesia. A multi-sector, multi-household, Computable General Equilibrium (CGE) model is used to provide the basis for two important empirical case studies: (i) the effects of a carbon tax, and (ii) energy pricing reforms. The main finding from the carbon tax study suggests that in contrast to most studies from developed countries, the introduction of a carbon tax in Indonesia would not necessarily be regressive. It is shown to be strongly progressive in rural areas, and either neutral or slightly progressive in urban areas, with overall progressive distributional effect nationwide. The industries that experience the largest contraction are generally more energy intensive. The owners of factors of production in these industries are largely concentrated among higher income households and people living in the cities. For the analysis of counter factual scenarios on energy price reforms, the results suggest recognizing the difference between urban and rural household's income and expenditure patterns are crucial in the attempt to minimize the adverse distributional impacts of the energy pricing reform. In general, this study shows there is not necessarily a conflict between environmental and equity objectives, especially when the policies or reforms to achieve environmental goals are carefully designed. |
| Keywords: | Carbon tax, Climate change, Indonesia |
| JEL: | Q58 Q54 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:eep:report:rr2008101&r=ene |
| By: | Stéphanie Jamet; Jan Corfee-Morlot |
| Abstract: | Climate change is expected to have significant implications for the world economy and, more broadly, for many areas of human activity. The purpose of this review is twofold. First, it is to summarise current estimates of the impacts of climate change and to explain how these estimates are built in order to identify the main sources of uncertainty and approximation affecting them. Second, the paper discusses how this uncertainty should influence policymaker?s decisions. A main conclusion of the review is that there are large uncertainties, which are not fully reflected in existing estimates of global impacts of climate change in monetary units. Nonetheless, despite these uncertainties, policy action may be justified, provided that policies are cost-effective, even if the marginal cost of GHG emissions mitigation exceeds the marginal damage of one additional ton of carbon. This is because two features of the impacts of climate change tilt the balance in favour of action: their irreversibility, and the risk that they are extreme.<P>Évaluer les impacts du changement climatique : Une revue de la littérature<BR>Le changement climatique devrait avoir des conséquences importantes sur l'économie mondiale et, plus généralement, sur un large éventail d'activités humaines. L'objectif de cette revue est double. D?une part, il s'agit de résumer les estimations récentes des impacts du changement climatique et d'expliquer comment ces estimations sont obtenues afin d'identifier les principales sources d'incertitude et d'approximation qui les entourent. D'autre part, la façon dont cette incertitude devrait influencer les décisions des responsables politiques est discutée. L'une des conclusions principales de cette revue est qu'il existe un grand nombre d'incertitudes autour des impacts du changement climatique qui ne sont pas pleinement reflétées dans les estimations des impacts globaux exprimés en unité monétaire. Néanmoins, en dépit de ces incertitudes, une politique active pourrait être justifiée, à condition que ces politiques soient efficaces au regard des coûts, même si le coût marginal de réduction des émissions des gaz à effet de serres est supérieur au coût marginal d'une tonne additionnelle de carbone. Ce résultat provient de deux caractéristiques des impacts qui inclinent la balance en faveur de l'action : leur irréversibilité et le risque qu'ils soient extrêmes. |
| Keywords: | uncertainty, incertitude, climate change, changement climatique, impact, impact, irreversibility, irréversibilité, extreme events, événements extrêmes |
| JEL: | Q00 Q54 |
| Date: | 2009–04–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:691-en&r=ene |
| By: | Yan Dong; John Whalley |
| Abstract: | This paper presents both analytics and numerical simulation results relevant to proposals for carbon motivated regional trade agreements summarized in Dong & Whalley(2008). Unlike traditional regional trade agreements, by lowing tariffs on participant’s low carbon emission goods and setting penalties on outsiders to force them to join such agreements , carbon motivated regional trade agreements reflect an effective merging of trade and climate change regimes, and are rising in profile as part of the post 2012 Copenhagen UNFCC negotiation. By adding country energy extraction cost functions, we develop a multi-region general equilibrium structure with endogenously determined energy supply. We calibrate our model to business as usual scenarios for the period 2006-2036. Our results show that carbon motivated regional agreements can reduce global emissions, but the effect is very small and even with penalty mechanisms used, the effects are still small. This supports the basic idea in our previous policy paper that trade policy is likely to be a relatively minor consideration in climate change containment. |
| JEL: | F13 Q54 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14880&r=ene |
| By: | Ishikawa, Jota; Okubo, Toshihiro |
| Abstract: | This paper studies greenhouse-gas (GHG) emission controls in the presence of carbon leakage through international firm relocation. The Kyoto Protocol requires developed countries to reduce GHG emissions by a certain amount. Comparing emission quotas with emission taxes, we show that taxes coupled with lower trade costs facilitate more firm relocations than quotas do, causing more international carbon leakage. Thus, if a country is concerned about global emissions, emission quotas would be adopted to mitigate the carbon leakage. Firm relocation entails a trade-off between trade liberalization and emission regulations. Emission regulations may be hampered by trade liberalization, and vice versa. |
| Keywords: | trade liberalization, global warming, Kyoto Protocol, emission tax, emission quota, carbon leakage |
| JEL: | F18 Q54 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:hit:ccesdp:3&r=ene |
| By: | Jeffrey A. Frankel |
| Abstract: | This paper analyzes a detailed plan to set quantitative national limits on emissions of greenhouse gases, following along the lines of the Kyoto Protocol. It is designed to fill in the most serious gaps: the absence of targets extending as far as 2100, the absence of participation by the United States and developing countries, and the absence of reason to think that countries will abide by commitments. The plan elaborates on the idea of a framework of formulas that can assign quantitative limits across countries, one budget period at a time. Unlike other century-long paths of emission targets that are based purely on science (concentration goals) or ethics (equal rights per capita) or economics (cost-benefit optimization), this plan is based partly on politics. Three political constraints are particularly important. (1) Developing countries are not asked to bear any cost in the early years. (2) Thereafter, they are not asked to make any sacrifice that is different in kind or degree than was made by those countries that went before them, with due allowance for differences in incomes. (3) No country is asked to accept an ex ante target that costs it more than, say, 1% of GDP in present value, or more than, say, 5% of GDP in any single budget period. They would not agree to ex ante targets that turned out to have such high costs, nor abide by them ex post. An announced target path that implies a future violation of these constraints will not be credible, and thus will not provide the necessary signals to firms today.<br><br>The idea is that (i) China and other developing countries are asked to accept targets at BAU in the coming budget period, the same in which the US first agrees to cuts below BAU; and (ii) all countries are asked to make further cuts in the future in accordance with a formula which sums up a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. The paper tries out specific values for the parameters in the formulas (parameters that govern the extent of progressivity and equity, and the speed with which latecomers must eventually catch up). The resulting target paths for emissions are run through the WITCH model. It does turn out to be possible to achieve the carbon abatement goal (concentrations of 500 PPM in 2100) while simultaneously obeying the economic/political constraint (no country suffers a disproportionate loss in GDP). Preliminary efforts to achieve a target of 450 ppm have so far been unable to do so without violating the cost constraint. |
| JEL: | Q54 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14876&r=ene |
| By: | Humberto Llavador (Universitat Pompeu Fabra); John E. Roemer (Yale University); Joaquim Silvestre (University of California, Davis) |
| Abstract: | Climate science indicates that climate stabilization requires low GHG emissions. Is this consistent with nondecreasing human welfare? Our welfare index, called quality of life (QuoL), emphasizes education, knowledge, and the environment. We construct and calibrate a multigenerational model with intertemporal links provided by education, physical capital, knowledge and the environment. We reject discounted utilitarianism and adopt, first, the Intergenerational Maximin criterion, and, second, Human Development Optimization, that maximizes the QuoL of the first generation subject to a given future rate of growth. We apply these criteria to our calibrated model via a novel algorithm inspired by the turnpike property. The computed paths yield levels of QuoL higher than the year 2000 level for all generations. They require the doubling of the fraction of labor resources devoted to the creation of knowledge relative to the reference level, whereas the fractions of labor allocated to consumption and leisure are similar to the reference ones. On the other hand, higher growth rates require substantial increases in the fraction of labor devoted to education, together with moderate increases in the fractions of labor devoted to knowledge and the investment in physical capital. |
| Keywords: | Quality of life, Climate change, Education, Maximin, Growth |
| JEL: | D63 O40 O41 Q50 Q54 Q56 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1673r&r=ene |