nep-ene New Economics Papers
on Energy Economics
Issue of 2009‒08‒16
23 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Dynamic Effects of Oil Price Shocks and their Impact on the Current Account By Schubert, Stefan Franz
  2. Electric Cars and Oil Prices By Azar, Jose
  3. Monetary policy response to oil price shocks By Jean-Marc Natal
  4. Resource Price Turbulence and Macroeconomic Adjustment for a Resource Exporter: a conceptual framework for policy analysis By Harvie, Charles; Cox, Grant M
  5. Main sources of uncertainty in formulating potential growth scenarios for oil supply By Tatiana Alonso Gispert
  6. A Nonparametric Test of Strategic Behavior in the Cournot Model By Deb, Rahul; Fenske, James
  7. Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing By Sahu, Santosh; Narayanan, K
  8. Who Pays a Price on Carbon? By Corbett A. Grainger; Charles D. Kolstad
  9. Uncertain Outcomes and Climate Change Policy By Robert S. Pindyck
  10. The Role of Uncertainty and Learning for the Success of International Climate Agreements By Pintassilgo, Pedro; Finus, Michael
  11. Emission Abatement with Per Capita and Trade Considerations By Levy, Amnon; Livermore, Jonathon
  12. Les déterminants de la qualité des divulgations non-financières – Le cas du Carbon Disclosure Project By Yann Kervinio
  13. Weathering the Storm: Measuring Household Willingness-to-Pay for Risk-Reduction in Post-Katrina New Orleans By Craig E. Landry; Paul Hindsley; Okmyung Bin; Jamie B. Kruse; John C. Whitehead; Kenneth R. Wilson
  14. El cambio climático y sus efectos en el Perú By Vargas, Paola
  15. Forested Farmland and Biofuel Production: Combining Spatial and Economic Data to Estimate the Impact of Land Use-Values on Forestation Rates By Smith Minihan, Erin
  16. New responsibilities of agriculture: structural differences in stakeholder networks and intentions towards climate change abatement strategies in peatland By Hubner, Rico; Kantelhardt, Jochen
  17. Prospects for climate friendly peatland management â Results of a socioeconomic case study in Germany By Schaller, Lena; Kantelhardt, Jochen
  18. The non-permanence of optimal soil carbon sequestration By Hediger, Werner
  19. Estimating the Marginal Costs of Greenhouse Gas Emissions Abatement using Irish Farm-Level Data By Breen, James; Donellan, Trevor
  20. Marginal abatement cost curves for UK agriculture, forestry, land-use and land-use change sector out to 2022 By Moran, Dominic; MacLeod, Michael J.; Wall, Eileen; Eory, Vera; McVittie, Alistair; Barnes, Andrew; Rees, Bob; Smith, Pete; Moxey, Andrew
  21. Environmental Crises: Past, Present and Future By M. Scott Taylor
  22. Impact Of Greenhouse Gas Abatement Targets On Agricultural Activity By Donnellan, Trevor; Gillespie, Patrick; Hanrahan, Kevin
  23. 09-02 "Economic Writing on the Pressing Problems of the Day: The Roles of Moral Intuition and Methodological Confusion" By Julie A. Nelson

  1. By: Schubert, Stefan Franz
    Abstract: Our objective is to study the dynamic effects of an oil price shock on economic key variables and on the current account of a small open economy. To do this, we introduce time non-separable preferences in a standard model of a small open economy, where labor supply is endogenous and imported oil is used both as an intermediate input in production and as a consumption good. Using a plausible calibration of the model, we show that the changes in output and employment are quite small, and that the current account exhibits the J-curve property, both being in line with recent empirical evidence. After an oil price increase, the current account first deteriorates, and after some time it turns into surplus. We explain this non-monotonic behavior with agents' reluctance to change their consumption expenditures, resulting in an initial trade balance deficit which causes the current account to deteriorate. Over time, with gradually falling expenditures, the trade balance improves sufficiently to turn the current account into surplus. The model thus provides a plausible explanation of recent empirical findings.
    Keywords: oil price shocks; time non-separable preferences; current account dynamics
    JEL: F32 F41 Q43
    Date: 2009–02
  2. By: Azar, Jose
    Abstract: This paper studies the joint dynamics of oil prices and interest in electric cars, measured as the volume of Google searches for related phrases. Not surprisingly, I find that oil price shocks predict increases in Google searches for electric cars. Much more surprisingly, I also find that an increase in Google searches predicts declines in oil prices. The high level of public interest in electric cars between April and August of 2008 can explain approximately half of the decline in oil prices during the second half of 2008. These findings are significant because they show that oil markets respond to developments related to alternative technologies. I investigate several hypotheses explaining these results.
    Keywords: Oil prices; crude oil; electric cars; electric vehicles; Google Trends; Google Insights;
    JEL: G1 Q5 Q4
    Date: 2009–08–06
  3. By: Jean-Marc Natal
    Abstract: How should monetary authorities react to an oil price shock? This paper argues that a meaningful trade-off between stabilizing inflation and the welfare relevant output gap arises in a distorted economy once one recognizes (1) that oil (energy) cannot be easily substituted by other factors, (2) that monopolistic competition implies that production is suboptimally low in the steady state, and (3) that increases in oil prices also directly affect consumption by raising the price of fuel, heating oil, and other energy sources. While the first two conditions are necessary to introduce a microfounded monetary policy trade-off, the third one makes it quantitatively significant. ; The optimal precommitment monetary policy relies on unobservables and is therefore hard to implement. To address this concern, I derive a simple interest rate feedback rule that mimics the optimal plan for all practical purposes but that depends only on observables, namely core inflation, oil price inflation, and the growth rate of output.
    Keywords: Monetary policy ; Petroleum products - Prices
    Date: 2009
  4. By: Harvie, Charles (University of Wollongong); Cox, Grant M (University of Wollongong)
    Abstract: Increased global demand for energy and other resources, particularly from the rapidly developing economies of China and India and the opening up of global resource markets to global investors and speculative activity, has resulted in considerable recent turbulence in resource prices. The recent magnitude of change in resource prices, both positive and negative, and their macroeconomic implications is of considerable contemporary importance to both resource importing and exporting economies. For a resource exporting economy, such as that of Australia, the recent resource price boom has resulted in: increased government taxation revenue, increased employment and wages in the resource and resource related sectors, increased spending in the domestic economy that contributed to buoyant economic growth, increased resource exports to the booming economies of China and India and contributed to a stronger domestic currency with beneficial effects upon inflation. On the other hand these developments have had adverse effects on the non resource sector by: subjecting it to more intense competition for limited resources, contributing to a loss of international competitiveness and reduced exports arising from a stronger exchange rate, reducing employment in the relatively more labour intensive non resource sector, and contributing to an eventual slow down in the overall economy. These positive and negative effects, and the overall impact of a resource price boom, require a fundamentally closer analysis of the structure of the economy under scrutiny. In this context the policy response by government is likely to be pivotal in determining the overall macroeconomic outcomes from a resource price boom. The aim of this paper is to develop a generic analytical framework to appraise economic outcomes in the wake of a resource price boom for a resource producing and exporting economy. To this end a dynamic long run macroeconomic model is developed, emphasising the important role and contribution of government fiscal policy in influencing subsequent macroeconomic outcomes. The adjustment process in the model arising from a resource price shock emphasises a spending (or wealth) effect, an income effect, a revenue effect, a current account effect and an exchange rate effect, which facilitate a robust analysis of subsequent macroeconomic outcomes from such a shock as well as related policy responses.
    Keywords: Resource price shock, dynamic macroeconomic model, simulation analysis, macroeconomic adjustment, policy analysis
    JEL: E27 E60 E62 Q48
    Date: 2009
  5. By: Tatiana Alonso Gispert
    Abstract: The purpose of this paper is to provide an informed contribution to the existing debate on the topic of peak oil and the future sustainability of the prevailing dominant energy model. More specifically, the primary objective is to heighten general awareness of the high levels of uncertainty currently plaguing the future physical potencial of global oil supply. The main sources of uncertainty pinpointed in this analysis are rooted, on the one hand, in the general shortage of verifiable information on the volume of existing reserves and, on the other, in our collective hazy knowledge regarding the current rate of decline of the world’s oil supply. The reliability of available estimates concerning these two variables has been clearly thrown into doubt by the poor quality and availability of the source data employed.
    Keywords: Oil reserves, rates of decline, oil, peak oil, Hubbert peak theory, future oil production
    JEL: Q31 Q32 Q38
    Date: 2009–03
  6. By: Deb, Rahul; Fenske, James
    Abstract: We devise a nonparametric test of strategic behavior in a multiproduct Cournot oligopoly. It is assumed that firms have cost functions that do not change over the period of observation but that market demand can change in each period. Market prices and firm-specific production quantities are observed and it is assumed that neither the inverse demand functions nor the cost functions are known. The driving assumptions of the test are that market inverse demand functions are decreasing and differentiable at each period and that cost functions are increasing and convex for each firm. Under these very general conditions, we show that this test imposes strong restrictions on observed data. We apply the test to the crude oil market and find that strategic behavior is strongly rejected.
    Keywords: Competitive behavior; Multiproduct Cournot oligopoly; Nonparametric test; Crude oil market; OPEC.
    JEL: D21 C14 D43 C72
    Date: 2009–08–01
  7. By: Sahu, Santosh; Narayanan, K
    Abstract: The demand for energy, particularly for commercial energy, has been growing rapidly with the growth of the economy, changes in the demographic structure, rising urbanization, socio-economic development. In this context the energy intensity is one of the key factors which impact the projections of future energy demand. The Indian manufacturing sector is among the largest consumer of commercial energy compared to the other industries in India. Energy consumption per unit of production in the manufacturing of steel, aluminum, cement, paper, textile, etc. is much higher in India, in comparison to other developing countries. The purpose of this study is to understand the factors that influence industrial energy intensity in Indian manufacturing. The analysis undertaken in this paper find a positive relationship between energy intensity and firm size and an inverted U’ shaped relationship between energy intensity and size of the firm. The analysis shows that the foreign owned firms are less energy intensive compared to the domestic firms. Capital intensive firms as well as firms spending more on repair and maintenance are found to be more energy intensive. Further the results shows that expenditure on the research and development contribute to reduce firm level energy intensity and there is a sizable difference between highly energy intensive firm and less energy intensive firms.
    Keywords: Energy Intensity, Commercial Energy Consumption, Indian Manufacturing Industries
    JEL: B23 Q4
    Date: 2009–04–16
  8. By: Corbett A. Grainger; Charles D. Kolstad
    Abstract: We use the 2003 Consumer Expenditure Survey and emissions estimates from an input-output model to estimate the incidence of a price on carbon induced by a cap-and-trade program or carbon tax in the US context. We present results on how much difference income deciles pay for a carbon tax as well as which industries see the largest increase in costs due to a carbon tax. We illustrate the main determinant of the regressivity: consumption patterns for energy-intensive goods. We find that a policy targeting CO2 from energy consumption is more regressive than a price on all emissions. Furthermore, on a per-capita basis a carbon price is much more regressive than calculations at the household level. We discuss policy options to offset the adverse distributional effects of a carbon emissions policy.
    JEL: H22 Q43 Q5 Q52 Q53 Q54 Q58
    Date: 2009–08
  9. By: Robert S. Pindyck
    Abstract: Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w*(tau) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to tau. Using information on the distributions for temperature change and economic impact from studies assembled by the IPCC and from “integrated assessment models†(IAMs), I fit displaced gamma distributions for these variables. Unlike existing IAMs, I model economic impact as a relationship between temperature change and the growth rate of GDP as opposed to its level, so that warming has a permanent impact on future GDP. The fitted distributions for temperature change and economic impact generally yield values of w*(tau) below 2%, even for small values of tau, unless one assumes extreme parameter values and/or substantial shifts in the temperature distribution. These results are consistent with moderate abatement policies.
    JEL: D81 Q5 Q54
    Date: 2009–08
  10. By: Pintassilgo, Pedro; Finus, Michael
    Abstract: Technological developments intensify linkages between nations, making unilateral policies less effective. Though transnational externalities (e.g. trade, contagious diseases and terrorism) warrants coordination and cooperation between governments, this proves some times difficult. This is particularly true for international environmental agreements. One reason for meager success is the public good character of environmental protection encouraging free-riding. Another reason one might suspect are the large uncertainties surrounding most environmental problems, and in particular climate change, providing sufficient excuse to remain inactive. Paradoxically, some recent papers have concluded just the opposite: the veil of uncertainty can be conducive to the success of international environmental cooperation. This sheds serious doubts on the benefits from research on better understanding environmental impacts. In this paper, we explain why and under which conditions such a pessimistic conclusion can be true. However, taking a broader view, we argue that these unfavorable conditions are rather an exception than the rule. Most important, we suggest a mechanism that mitigates the negative effect of learning and which may even turn it into a positive effect. Our results apply beyond the specifics of climate change to similar problems of cooperation in the presence of externalities.
    Keywords: learning; uncertainty; self-enforcing agreements; climate change; coop eration
    Date: 2009–08
  11. By: Levy, Amnon (University of Wollongong); Livermore, Jonathon (University of Sydney)
    Abstract: In the absence of a comprehensive international agreement, each country unilaterally sets her abatement of greenhouse gas emissions at a level that possibly maximizes her expected net benefit. In addition to a cleaner and healthier domestic environment and a slower global warming, a country’s benefit from self emission-abatement may include improved image and, in turn, bilateral economic and political relations. This paper analyses a country’s cooperative and non-cooperative emission abatements within a cost-benefit framework that, for equality consideration, is centered on per capita emission and takes international rewards for commitment to be responsive to per capita income and output composition.
    Keywords: Emissions; Inequality; International Relations; Cooperative Abatement; Unilateral Abatement
    JEL: O24 F51 Q54 Q56
    Date: 2009
  12. By: Yann Kervinio
    Abstract: Non-financial disclosures are mainly discretionary and, consequently, environmental and social data about firms are incomplete and difficult to assess. In this report, we raise the issue of the quality of these data. A review of the literature first presents the broad range of conclusions reached and highlights the main results. This leads us to question the ability of current data to meet the goals which are expected from them, and to reconsider the relevance of somewhat regulating social and environmental disclosures. Next, we turn to the case of the Carbon Disclosure Project, which frames and promotes voluntary disclosures concerning greenhouse gas emissions. We analyse the determinants of responses and their quality using a sample from the Fortune Global 500. Consistently with prior results, we find that the size of firms influences both participation and the quality of responses, and that firms with more dispersed ownership are more likely to participate. Our findings also point at the weak quality of responses from firms associated with the BRIC group of countries (Brasil, Russia, India and China). Finally, we introduce a model which aims at addressing the main econometric problems encountered and we outline an agenda for future research. <P>De la part des entreprises, les divulgations non-financières restent essentiellement soumises à la discrétion des dirigeants, ce qui conduit à une information environnementale et sociale lacunaire à l’interprétation délicate. En particulier, la question de la qualité de ces divulgations est soulevée. Une revue de littérature présente tout d’abord les principaux résultats parmi la diversité des conclusions auxquelles aboutissent les études. Cette revue nous amène à douter de la possibilité d’assurer une information de qualité par voie volontaire et à nous interroger sur la pertinence d’un encadrement. Nous nous penchons ensuite sur le cas du Carbon Disclosure Project qui encadre et stimule la divulgation volontaire d’informations relatives aux émissions de gaz à effet de serre de la part des grandes entreprises. À partir des données recueillies pour l’échantillon du Fortune Global 500, nous analysons les déterminants de la réponse et de la qualité de celle-ci. En cohérence avec les résultats de la littérature, nous trouvons que la taille influence positivement à la fois la propension à participer et la qualité des réponses et que les entreprises dont l’actionnariat est diffus participent plus facilement au programme. Les résultats pointent par ailleurs la qualité médiocre des divulgations des entreprises des BRIC. Au final, nous utilisons un modèle qui vise à traiter l’ensemble des problèmes économétriques soulevés et nous suggérons des voies de développement pour les recherches à venir.
    Keywords: Data disclosures, disclosures mecanism, divulgation de données, mécanismes de divulgation
    Date: 2009–08–01
  13. By: Craig E. Landry; Paul Hindsley; Okmyung Bin; Jamie B. Kruse; John C. Whitehead; Kenneth R. Wilson
    Abstract: The city of New Orleans suffered extensive damage as a result of Hurricane Katrina. Katrina overwhelmed the natural and built environment, inundating the city. As rebuilding proceeds, decisions on investment in protective measures will include the choice of lines of defense and the storm severity that design criteria should meet. An exhaustive list of protective measures has been studied in planning documents such as the Louisiana Coastal Protection and Restoration Technical Report (2009), with public comment solicited in town hall meetings. In this study we employ a different approach to examine public sentiment towards the selection and investment in protective measures. Our study utilizes a stated choice experiment with a stratified sample to investigate individuals’ willingness-to-pay for rebuilding New Orleans’ man-made storm defenses, restoring natural storm protection, and improving evacuation options through a modernized transportation system. We target residents of the New Orleans metropolitan area as well as other US citizens. Our results indicate that individuals are willing-to-pay for increased storm protection for New Orleans, but the allocation of these resources differs among residents of the New Orleans metro area and other US citizens. Key Words: storm surge mitigation, conjoint analysis, willingness to pay, Hurricane Katrina, flood control, stated choice, rebuilding New Orleans, recovery
    JEL: H43 Q51 R53
    Date: 2009
  14. By: Vargas, Paola (Banco Central de Reserva del Perú)
    Abstract: Existe extensa literatura que evidencia que el calentamiento del sistema climático es una realidad y que de no adoptar una política ambiental internacional rígida frente a este tema, se haría más inminente avanzar hacia escenarios extremos de más de 5° C de aumentos de temperatura para fin de siglo; lo que significaría pérdidas de hasta 20% del PBI mundial. Los impactos del cambio climático se distribuyen de manera heterogénea entre países siendo los menos afectados aquellos países con mayor participación en la acumulación de GEI, como China y USA. Entre las regiones más afectadas se encuentran las que tienen sistemas productivos más sensibles al clima como África, el Sur y Sur-Este de Asia y América Latina. Para el caso peruano se estima, basado en el marco teórico propuesto por Dell, et al (2008), que un aumento de 2°C en la temperatura máxima y 20% en la variabilidad de las precipitaciones al 2050, generaría una pérdida de 6% respecto al PBI potencial en el año 2030, mientras que en el año 2050 estas pérdidas serían superiores al 20%; reduciéndose estas pérdidas a menos de la tercera parte en caso se adopten políticas globales que estabilicen la variables climáticas al 2030.
    Date: 2009–06
  15. By: Smith Minihan, Erin
    Abstract: State and national policies driving ethanol production in Pennsylvania and elsewhere in the United States have elevated corn prices and subsequently the amount of land devoted to growing corn. There are concerns this may have a negative impact on water quality and other ecosystem services, especially if land is converted from forest to corn production. Pennsylvania has experienced a net increase in forested farmland in recent years, but higher corn prices may slow down or reverse such a pattern. The overall benefit from expanding ethanol production has to take into account landâuse changes that decrease forested land and therefore bear a cost of foregone carbon sequestration and water quality benefits. This paper utilizes land cover and soil maps to create spatially explicit variables to examine the pattern of forestation in a heavily corn producing region of Pennsylvania using multinomial logistic regression. Results are mainly consistent with expectations that land with the highest rents from corn production are least likely to become forested over the period, indicating that the framework developed has potential for further analyses pertaining to agricultural landâuse
    Keywords: Land Economics/Use,
    Date: 2009–04–01
  16. By: Hubner, Rico; Kantelhardt, Jochen
    Abstract: Agriculture is required to fulfil the needs and wants of society in a variety of fields: food supply, environmental services, landscape preservation and finally: climate mitigation. Using the example of land-use change in peatland in order to create possibilities for greenhouse-gas reduction, a survey about the intentions and future expectations of stakeholders was undertaken. The underlying network structure of these stakeholders in three representative peatland areas of Germany was determined and compared. The results show that considerable differences exist in the degree of knowledge about climate change and in the willingness to cooperate. Depending on the area studied, the most influential political entities are different and thus require different strategies for agenda setting. From the study it can be concluded, that the realisation of a political or societal goal, for example greenhouse-gas reduction, relies largely on the intentions among the stakeholders and structural differences in the stakeholder networks. Our example has shown that for these reasons, land-use change for climate protective reasons will be supported more in the study-area in the South of Germany in comparison to the case in the eastern part.
    Keywords: Land-use in peatland areas, network analysis, climate change mitigation., Land Economics/Use, D83, D85, L31, Q54.,
    Date: 2009–04–01
  17. By: Schaller, Lena; Kantelhardt, Jochen
    Abstract: In the current debate on climate protection, agricultural production has become a focal point of interest. This study introduces the climate effectiveness of agricultural management of peat-soils. Agriculture on peatland demands a water-level drawdown that causes aerobe degradation of the soils. The resulting trace-gas emissions have a negative impact on the greenhouse-gas balance. In Germany more than 80% of peatland is used agriculturally; the resulting emissions account for 2.3 â 4.5% of Germanyâs overall emission. Climate-friendly peatland management strategies, however, demand enhanced groundwater tables and decreased land-use intensity. With regard to agricultural income, severe economic consequences are to be expected. Against this background we analyse opportunities to reorganise agricultural use of peatland. As it is assumed that the potential to reduce land-use intensity greatly depends on local socio-economic conditions which are likely to vary across different regions, six representative sample regions are surveyed. To analyse microeconomic effects with simultaneous consideration of local diversity, stakeholder workshops and extensive farm surveys were undertaken in all regions. First results indicate that a reorganisation of peatland use causes severe loss of agricultural income and necessitates financial compensation for farmers. However the results also show that the potential of rearrangement varies significantly according to regional conditions.
    Keywords: agricultural peatland use, reduction of greenhouse gases, farm survey, economic consequences, Land Economics/Use, Q24, Q54, R58,
    Date: 2009–04–01
  18. By: Hediger, Werner
    Abstract: Carbon sequestration in agricultural soils is considered as an option of greenhouse gas mitigation in many countries. But, the economic potential is limited by the dynamic process of saturation and the opportunity cost of land use change. In addition, this article shows that permanence cannot, in general, be achieved in the strict sense of maintaining the soil carbon stock on an increased equilibrium level. Rather, a cyclical pattern with periodical release of sequestered carbon can be economically optimal from both the farmersâ and societal point of view.
    Keywords: Agriculture, Climate policy, Carbon sequestration, Land use change, Economic analysis., Land Economics/Use, Q15, Q24, Q54.,
    Date: 2009–04–01
  19. By: Breen, James; Donellan, Trevor
    Abstract: Agriculture in Ireland accounts for a higher proportion of greenhouse gas (GHG) emissions than in any other EU member state. Furthermore as part of the EUâs commitment to reduce emissions by 20 percent by 2020, Ireland is one of the few countries who will have to cuts its 2005 GHG emissions level by the full 20 percent. Given the magnitude of the cut in national emissions that is required and the size of agricultureâs contribution to Irelandâs total emissions, the agriculture sector has been identified by some parties as a sector that could make a significant contribution to achieving the national target. In order to evaluate the impact on Irish farmers of reducing GHG emissions it is necessary to first estimate the marginal cost of emissions abatement. This paper uses Irish farm-level data to construct a linear programming model which in turn is used to estimate the marginal abatement cost curve for GHG emissions on Irish farms and this is aggregated to estimate a marginal cost curve for the agriculture sector. The impact of an emissions tax in achieving targeted levels of GHG emissions will be measured under a baseline scenario of no policy change.
    Keywords: Keywords: Farm-Level, Greenhouse Gas Emissions, Marginal Abatement Cost Curve, Agricultural and Food Policy, Q12, Q18, Q52,
    Date: 2009–04–01
  20. By: Moran, Dominic; MacLeod, Michael J.; Wall, Eileen; Eory, Vera; McVittie, Alistair; Barnes, Andrew; Rees, Bob; Smith, Pete; Moxey, Andrew
    Abstract: Greenhouse gas emissions from agriculture, land use, land use change and forestry (ALULUCF) are a significant percentage of UK industrial emissions. The UK Government is committed to ambitious targets for reducing emissions and all significant industrial sources are coming under increasing scrutiny. The task of allocating shares of future reductions falls to the newly appointed Committee on Climate Change (CCC), which needs to consider efficient mitigation potential across a range of sectors. Marginal abatement cost curves are derived for a range of mitigation measures in the agriculture and forestry sectors over a range of adoption scenarios and for the years 2012, 2017 and 2022. The results indicate that in 2022 around 6.36 MtCO2e could be abated at negative or zero cost. Further, in same year over 17% of agricultural GHG emissions (7.85MtCO2e) could be abated at a cost of less than the 2022 Shadow Price of Carbon (£34tCO2e).
    Keywords: Environmental Economics and Policy,
    Date: 2009–04–01
  21. By: M. Scott Taylor
    Abstract: Environmental crises are distinguished by rapid and largely unexpected changes in environmental quality that are difficult if not impossible to reverse. Examples would be major extinctions and significant degradations of an ecosystem. I argue there are three preconditions for crisis: failures in governance, an ecological system exhibiting a tipping point, and an economy/environment interaction with positive feedbacks. I develop a simple model to illustrate how a crisis may arise, and draw on our knowledge of past and present crises to highlight the mechanisms involved. I then speculate as to whether climate change is indeed a crisis in the making.
    JEL: Q00 O1
    Date: 2009–01–14
  22. By: Donnellan, Trevor; Gillespie, Patrick; Hanrahan, Kevin
    Abstract: As part of its continuing commitment to address the causes of climate change, the EU has agreed reduction targets for greenhouse gas (GHG) emissions to be achieved by 2020. In the case of Ireland the target is a reduction of 20 percent relative to the 2005 level. Agriculture is a major source of GHG emissions in Ireland, comprising 26.8 percent of total GHG emissions in 2007. Understanding the scale and cost of the decrease in agricultural production required to achieve this reduction in GHG emissions is particularly important, as is the comparison of the cost of this approach with a range of possible other means of achieving emissions reductions in the sector. This study finds that, even with reduced fertiliser usage and more extensive production practices, a very substantial decrease in the livestock population is required to meet the emission reduction targets by 2020. The paper concludes that a solution involving a mix of measures may ultimately be required
    Keywords: agriculture, policy analysis, partial equilibrium modelling, baseline, scenario analysis, GHG, Kyoto, climate, Ireland, FAPRI, EU Gold Model, abatements, Environmental Economics and Policy, Q11, Q17, Q18, Q54,
    Date: 2009–04–01
  23. By: Julie A. Nelson
    Abstract: Economists are often called on to help address pressing problems of the day, yet many economists are uncomfortable about disclosing the values that they bring to this work. This essay explores how an inadequate understanding of the role of methodology, as related to ethics and human emotions of concern, underlies this reluctance and compromises the quality of economic advice. The tension between caring about the problems, on the one hand, and writing within the existing culture of the discipline, on the other, are illustrated with examples from U.S. policymaking, behavioral economics, and the economics of climate change and global poverty. Potential steps towards a more responsible, "strongly objective," and policy-useful economics are discussed.

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