|
on Energy Economics |
| By: | ZhongXiang Zhang (Research Program East-West Center) |
| Abstract: | China, from its own perspective cannot afford to, and from an international perspective, is not allowed to continue on the conventional path of encouraging economic growth at the expense of the environment. The country needs to transform its economy to effectively address concern about a range of environmental problems from burning fossil fuels and steeply rising oil import and international pressure to exhibit greater ambition in fighting global climate change. This paper first discusses China’s own efforts towards energy saving and pollutants cutting, the widespread use of renewable energy and participation in clean development mechanism, and puts carbon reductions of China’s unilateral actions into perspective. Given that transition to a low carbon economy cannot take place overnight, the paper then discusses China’s policies on promoting the use of low-carbon energy technologies and nuclear power and efforts to secure stable oil and gas supplies during this transition period. Based on these discussions, the paper provides some recommendations on issues related to energy conservation and pollution control, wind power, nuclear power, clean coal technologies, and overseas oil and gas supplies, and articulates a roadmap for China regarding its climate commitments to 2050. |
| Keywords: | Energy Saving, Renewable Energy, Clean Development Mechanism, Nuclear Power, Power Generation, Oil and Gas, Post-Copenhagen Climate Negotiations, China |
| JEL: | Q42 Q48 Q52 Q54 Q58 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.76&r=ene |
| By: | Karen Pittel; Dirk Rübbelke |
| Abstract: | The paper provides an introduction to energy, respective resource, use within the framework of endogenous growth models. We provide an overview of different modeling approaches as well as intuition with respect to the results obtained. We consider the source problem, i.e. the supply of energy, as well as the sink problem, i.e. pollution generated by the consumption of energy resources. The introduction to the theoretical framework shortly discusses the use of neoclassical versus endogenous growth models and also points to the implications of the different types of endogenous growth approaches. We additionally give an introduction to CGE-models that include energy use and present an example of a numerical solvable model in detail. The paper closes with an outlook on future research.<br /> |
| Keywords: | endogenous growth, energy, resources, pollution, CGE-models |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2010-10&r=ene |
| By: | Roger Fouquet |
| Abstract: | Understandably, focus on a transition to a low carbon economy has overshadowed what happens when the transition has been completed. This paper tries to offer lessons about the very long run aspects of a future economy reliant predominantly on renewable energy sources. The evidence is based on past economies and civilizations and their experiences of economic expansion driven by renewable energy resources. The paper proposes that economies around the world, since antiquity, have managed to survive, and even develop and grow driven by renewable energy sources. Successful long run economic growth depended on sound management of demand, supply and trade of woodfuel. Where governments failed to develop appropriate policies, growth and development was severely constrained. Despite the uncertainty about the future, this paper proposes that researchers start to consider the nature of long run economic growth and appropriate policies within renewable energy systems.<br /> |
| Keywords: | renewable energy; economic growth; low carbon economy; economic history |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2010-09&r=ene |
| By: | Koichi Futagami (Graduate School of Economics, Osaka University); Yasuhiro Nakamoto (Faculty of Economics, Kyushu Sangyo University) |
| Abstract: | We examine the effects of environmental policies such as a subsidy for reforestation and an export-income tax in a small open economy with a renewable resource. In the small economy, the harvested renewable resources are exported to acquire foreign assets and consumers can invest in the natural resource to preserve it. In the setup, using a phase diagram, we show how the environmental policies affect the natural resource and the domestic economy. |
| Keywords: | Renewable resources; The effects of environmental policies. |
| JEL: | F41 H21 Q28 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1021&r=ene |
| By: | Arnaud De La Tour (CERNA - Centre d'économie industrielle - Mines ParisTech); Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech); Yann Ménière (CERNA - Centre d'économie industrielle - Mines ParisTech) |
| Abstract: | China is the largest solar photovoltaic cell producer in the world, with more than one third of worldwide production in 2008, exporting more than 95 percent of what it produces. The purpose of this paper is to understand the drivers of this success and its limits, with a particular emphasis on the role of technology transfers and innovation. Our analysis combines a review of international patent data at a detailed technology level with field interviews of ten Chinese PV companies. We show that Chinese producers have acquired the technologies and skills necessary to produce PV products through two main channels: the purchasing of manufacturing equipment in a competitive international market and the recruitment of skilled executives from the Chinese diaspora who built pioneer PV firms. The success of these firms in their market is, however, not reflected in their performance in terms of innovation. Rather, patent data rather highlight a policy-driven effort to catch up in critical technological areas. |
| Keywords: | Solar photovoltaic energy; technology diffusion; technology transfer; China |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00498578_v1&r=ene |
| By: | Brand, Bernhard (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Zingerle, Jonas (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | Morocco, Algeria and Tunisia, the three countries of the North African Maghreb region, are showing increased efforts to integrate renewable electricity into their power markets. Like many other countries, they have pronounced renewable energy targets, defining future shares of “green” electricity in their national generation mixes. The individual national targets are relatively varied, reflecting the different availability of renewable resources in each country, but also the different political ambitions for renewable electricity in the Maghreb states. Open questions remain regarding the targets’ economic impact on the power markets. Our article addresses this issue by applying a linear electricity market optimization model to the North African countries. Assuming a competitive, regional electricity market in the Maghreb, the model minimizes dispatch and investment costs and simulates the impact of the renewable energy targets on the conventional generation system until 2025. Special emphasis is put on investment decisions and overall system costs. |
| Keywords: | North Africa; Renewable energy sources; Electricity markets |
| JEL: | L94 Q42 |
| Date: | 2010–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2010_002&r=ene |
| By: | Gustavo A. Marrero; Francisco Javier Ramos-Real |
| Abstract: | The Canary Islands offer an example of an isolated electric grid of relative important size within the EU. Due to its peculiarities, the role of renewable energies and their complementarity with fossil fuels offers a solid path to achieving the main energy policy goals of the Islands. The purpose of this paper is to assess the current situation and the energy objectives proposed in the Energy Plan of the Canaries (PECAN 2006) for the electricity industry, taking into account the average cost and the risk associated with the different alternatives for generating electricity by means of the Mean-Variance Portfolio Theory. Our analysis highlights the inefficiency of the current electricity generating mix in terms of cost, risk and lack of diversification. Shifting toward an efficient system would involve optimizing the use of endogenous energy sources and introducing natural gas to generate electricity. This scenario would mean reducing both cost and risk by almost 30% each, as well as atmospheric CO2 emissions. Our results agree with the PECAN philosophy. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2010-17&r=ene |
| By: | Chakravorty, Ujjayant (University of Alberta, Department of Economics); Leach, Andrew (University of Alberta School of Business); Moreaux, Michel (Toulouse School of Economics) |
| Abstract: | In this paper, we show that the potential for endogenous technological change in alternative energy sources may alter the behaviour of resource-owning firms. When technological progress in an alternative energy source can occur through learning-by-doing, resource owners face competing incentives to extract rents from the resource and to prevent expansion of the new technology. We show that in such a context, it is not necessarily the case that scarcity-driven higher traditional energy prices over time will induce alternative energy supply as resources are exhausted. Rather, we show that as we increase the learning potential in the substitute technology, lower equilibrium energy prices prevail and there may be increased resource extraction and greenhouse gas emissions. We show that the effectiveness and the incidence of emissions reduction policies may be altered by increased potential for technological change. Our results suggest that treating finite resource rents as endogenous consequences of both technological progress and policy changes will be important for the accurate assessment of climate change policy. |
| Keywords: | resource extraction; climate change; induced innovation; learning-by-doing |
| JEL: | Q30 Q42 Q54 |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2010_012&r=ene |
| By: | Viehmann, Johannes (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | This paper conducts an empirical analysis of risk premiums in the German day-ahead Electricity Wholesale Market. We compare hourly price data of the European Energy Exchange (EEX) auction and of the continuous over-the-counter (OTC) market taking place prior to EEX. As OTC price data are not publicly available, data provided by the Energy Exchange Austria (EXAA) have been used as a snapshot of the OTC market. It has been found that market participants are willing to pay both, positive and negative premiums for hourly contracts that are significantly different from zero. The largest positive premiums were paid for evening peak hours on weekdays during winter months, the period of time with the highest electricity consumption levels of the year. By contrast, night hours on weekends featuring lowest demand levels display negative premiums. Hence, findings by Longstaff and Wang (2004) can be supported that power traders in liberalised markets behave like riskaverse rational economic agents. |
| Keywords: | Electricity trading; Risk premium; EEX |
| JEL: | L94 N74 Q41 |
| Date: | 2010–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2009_001&r=ene |
| By: | Donald N. Dewees; Trevor Tombe |
| Abstract: | Growing concern about the environmental effects of electricity generation is renewing demands for electricity conservation and efficient usage. With a substantial fraction of the population insulated from energy price signals in bulk-metered apartment and condominium buildings, some jurisdictions are considering mandatory metering of individual suites. This study analyses data from a Toronto condominium building to assess the impacts of suite (or sub-) metering. We estimate the aggregate reduction in electricity usage arising from sub-metering to be about 20%. Financial savings to residents are much smaller. We analyze large variations across units in electricity consumption after sub-metering finding that unit characteristics explain much but not all of this variation. We perform both private and public cost-benefit analyses of sub-metering and find that the social net benefits depend strongly on the value assigned to externalities from generation and that net social benefits may often be positive when private benefits to the residents are negative. |
| Keywords: | electricity demand, electricity sub-metering, energy conservation |
| JEL: | D12 L94 Q41 |
| Date: | 2010–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-407&r=ene |
| By: | Malte Sunderkötter; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | Optimal capacity allocation for investments in electricity generation assets can be deterministically derived by comparing technology specific long-term and short-term marginal costs. In an uncertain market environment, Mean-Variance Portfolio (MVP) theory provides a consistent framework to valuate financial risks in power generation portfolios that allows to derive the efficient fuel mix of a system portfolio with different generation technologies from a welfare maximization perspective. Because existing literature on MVP applications in electricity generation markets uses predominantly numerical methods to characterize portfolio risks, this article presents a novel analytical approach combining conceptual elements of peak-load pricing and MVP theory to derive optimal portfolios consisting of an arbitrary number of plant technologies given uncertain fuel prices. For this purpose, we provide a static optimization model which allows to fully capture fuel price risks in a mean variance portfolio framework. The analytically derived optimality conditions contribute to a much better understanding of the optimal investment policy and its risk characteristics compared to existing numerical methods. Furthermore, we demonstrate an application of the proposed framework and results to the German electricity market which has not yet been treated in MVP literature on electricity markets. |
| Keywords: | power plant investments, peak load pricing, mean-variance portfolio theory, fuel mix diversification |
| JEL: | G11 L94 Q43 C44 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:0904&r=ene |
| By: | Carlo Cambini (Politecnico di Torino, IMT Lucca and FEEM); Laura Rondi (Politecnico di Torino and FEEM) |
| Abstract: | This paper examines the investment and financial decisions of a sample of 92 EU regulated utilities, taking into account key institutional features of EU public utilities, such as: a) regulation by agencies with various degrees of independence; b) partial ownership of the state in the regulated firm; and c) the government’s political orientation, which may ultimately influence the regulatory climate to be either more pro-firm or more pro-consumers. Our results show that regulatory independence matters for both investment and financial decisions. Investment increases under an Independent Regulatory Agency (IRA), while ownership has no effect. Leverage also increases when the IRA is in place, especially so if the regulated firm is privately controlled. Finally political orientation does matter, as firm investment increases under more conservative (pro-firm) governments, but this effect appears to revert when the IRA is in place. |
| Keywords: | Regulated Utilities, Investment, Capital Structure, Private and State Ownership, Regulatory Independence, overnment’s Political Orientation |
| JEL: | G31 G32 L33 L51 L90 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.69&r=ene |
| By: | Michael Stamminger |
| Abstract: | This paper throws light on the issue of privatisation of electricity in Delhi. [Working Paper No. 0032] |
| Keywords: | privatisation, Delhi, Electricity, Power sector, India |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2669&r=ene |
| By: | Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | Uncertainty is almost ubiquitous in energy related decision making. It has many sources, multiple facets and numerous implications. From the uncertainties surrounding Global Warming over the incertitude of future technological progress to the volatility of fuel and other energy prices, the uncertainties account for an important part of the current energy strategy puzzle. One key element of this puzzle is however political risk. Especially when it comes to the supply of oil and gas, where around 70 % of the worldwide resources are concentrated in what is sometimes labelled the �strategic ellipse� (cf. e.g. Rempel et al. 2006), encompassing the region from the Arabian peninsula over the surroundings of the Caspian Sea up to the most important Siberian hydrocarbon reservoirs. How should political risk be taken into account when aiming at solving the energy strategy puzzle? This is the key issue addressed in this paper, however with a clear focus on the first step of strategic decision making, namely the environment analysis. Thereby environment does not mean only the natural environment but the entire surrounding world which is relevant for the decision making. Consequently the first point to be discussed in the following is energy related decision making in general and the role of risk herein in particular (cf. Section 2). Then a typology of risks and especially political risks is sketched in Section 3 before approaches to the modelling and quantification of political risk are reviewed in Section 4. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:1001&r=ene |
| By: | Catherine Locatelli (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | The issue of EU gas supply security has become more and more important in the 2000s in the context of the gas market liberalisation and the question of reliability of Russian supplier. One answer to these problems is the EU gas diversification, specifically the opening up of a fourth gas corridor to supply the EU via the “Caucasus” or “southern” route with gas from Central Asia. The feasibility of this strategy might now be called into question. The aim of this article is to examine the new strategies that could emerge in the producing countries as well as those of international oil companies, and then look at what the consequences might be as far as the EU's diversification strategy is concerned. The aim of this article is to identify some of the problems and limits for this corridor. |
| Keywords: | SECURITY OF SUPPLY ; NATURAL GAS SUPPLY ; EUROPE ; RUSSIA ; CAUCASUS |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00459202_v2&r=ene |
| By: | Fereydoun Verdinejad (Faculty of Management, University of Tehran & Economic History Department, Faculty of Letters and Philosophy, University of Milan, Fondazione Eni Enrico Mattei); Yasaman Gorji (Faculty of Management, University of Tehran & Economic History Department, Faculty of Letters and Philosophy, University of Milan, Fondazione Eni Enrico Mattei) |
| Abstract: | In order to activate the cycle of wealth production, promote social justice and eliminate poverty and inequality, developing countries are currently faced with a multiplicity of structural problems. According to some economic theories, this is mainly due to inefficient or lack of access to financial resources, which has proved a major obstacle in activating the cycle of wealth production in such countries. On this assumption, countries with huge oil reserves including Iran, should not encounter obstacles in terms of creating and accelerating the national cycle of wealth production. However, the fact is almost all major oil-producing countries and the main exporters of petroleum products in the world are dealing with serious structural issues in establishing a natural cycle of wealth production and a cycle of wealth and income distribution. In order to examine the dependence of Iran’s economic systems (as one of the major exporters of petroleum products) on oil revenues, the paper shall first present an overview of the energy sector in these countries by expounding on their conditions and features and redefine the issue. Thus, in addition to an overview of Iran’s unique geographical and demographic features and a brief account of its history of oil discovery and its effects on the country’s continuum of social and historical events, the paper is going to elaborate on its oil and gas reserves and resources. In the end, considering the huge effect of petroleum export on Iran’s annual budget and its economy and the country’s necessities and obligations, the paper explains some strategies for reducing the economy’s dependence on oil and gas resources in the future and the main obstacles to implementation of these strategies. |
| Keywords: | Oil-Based Economies, Iran, Wealth Production, Income Distribution |
| JEL: | O O43 Q43 Q48 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.74&r=ene |
| By: | Paresh Kumar Narayan; Seema Narayan; Xinwei Zheng |
| Abstract: | In this paper we examine the long-run relationship between gold and oil spot and futures markets. We draw on the conceptual framework that when oil price rises, it creates inflationary pressures, which instigate investments in gold as a hedge against inflation. We test for the long-run relationship between gold and oil futures prices at different maturity and unravel evidence of cointegration. This implies that: (a) investors use the gold market as a hedge against inflation, and (b) the oil market can be used to predict the gold market prices and vice versa, thus these two markets are jointly inefficient, at least for the sample period considered in this study. |
| Keywords: | Gold; Oil; Spot and Futures Markets; Inflation; Cointegration |
| Date: | 2010–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:dkn:econwp:eco_2010_06&r=ene |
| By: | Sebastian Morris; Jayanth Varma; Samir Barua |
| Abstract: | Reform of the oil sector is long overdue. The problems in the sector emanate from the structure of central taxes and the system of subsidisation through prices. Solutions to the problems necessarily have to address both tax and subsidy simultaneously. The social losses include, misuse / wasteful use of scarce petroleum resources, diversion, adulteration, other avoidable negative externalities, improper substitution between products, tax arbitrage, distortion of consumer preferences and input choices of industries, and international cross hauling of petroleum. Nearly all these costs, and problems arise not because of subsidisation per se but due to the use of varying retail prices that are used to subsidise. Prices for the same product vary for different consumers besides. They also vary across products. These tax /subsidy variations are the root cause of nearly all problems in the sector. Autonomous price variations (i.e. those resulting from the actions of firms (under a regime of non- distortionary subsidies) would be small and not subject to ‘arbitrage’ i.e. to the realisation of rents through diversion and adulteration. [Working Paper No. 2010-03-03] |
| Keywords: | Reform, oil sector, subsidisation, subsidy, externalities, arbitrage’ |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2642&r=ene |
| By: | James D. Hamilton |
| Abstract: | This paper reviews some of the literature on the macroeconomic effects of oil price shocks with a particular focus on possible nonlinearities in the relation and recent new results obtained by Kilian and Vigfusson (2009). |
| JEL: | E32 Q43 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16186&r=ene |
| By: | Raven Molloy; Hui Shan |
| Abstract: | Gasoline prices influence where households decide to locate by changing the cost of commuting. Consequently, the substantial increase in gas prices since 2003 may have reduced the demand for housing in areas far from employment centers, leading to a decrease in the price and/or quantity of housing in those locations relative to locations closer to jobs. Using annual panel data on ZIP codes and municipalities in a large number of metropolitan areas of the United States from 1981 to 2008, we find that a 10 percent increase in gas prices leads to a 10 percent decrease in construction after 4 years in locations with a long average commute relative to locations closer to jobs, but to no significant change in house prices. Thus, the supply response may prevent the change in housing demand from capitalizing in house prices. Because housing is durable, the resulting change in construction has a long-lived impact on the spatial distribution of housing units. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2010-36&r=ene |
| By: | Claudio Agostini (ILADES-Georgetown University, Universidad Alberto Hurtado) |
| Abstract: | La política tributaria respecto a los combustibles en Chile ha mantenido desde sus inicios impuestos menores para las gasolinas respecto al diesel. Como resultado la fracción de automóviles con motor diesel en el parque automotor ha crecido fuertemente, en especial durante los últimos cinco años. Dado que en promedio 20% de las emisiones de los motores diesel equivalen a un 80% de las emisiones de motores a gasolinas, esto tiene consecuencias importantes en la magnitud de las externalidades asociadas al uso de automóviles y puede afectar fuertemente a ciudades como Santiago que tienen altos niveles de contaminación. En este trabajo se estima el efecto del diferencial de impuestos a los combustibles en la demanda de automóviles. Los resultados muestran elasticidades de la demanda por automóviles a diesel de 3?4 y 2?1 respecto al precio del automóvil y al diferencial de impuestos. Estas magnitudes permitirían implementar una política tributaria con efectos significativos en la reducción de emisiones, al igualar las tasas de impuestos de la gasolina y el diesel y establecer un impuesto específico a los automóviles con motor diesel. |
| Keywords: | Impuesto a los Combustibles, Motores Diesel, Demanda de Automóviles, Externalidades |
| JEL: | H23 Q58 L91 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv243&r=ene |
| By: | Lochner, Stefan (Energiewirtschaftliches Institut an der Universitaet zu Koeln) |
| Abstract: | Especially in the short-term, prices in natural gas markets are not exclusively determined by overall supply and demand, but also by the availability of the transport infrastructure. If transportation capacity is scarce, prices may form in (local) residual markets and can differ regionally. If available, storages provide intertemporal arbitrage possibilities which also impact prices. Temporal and regional price differences, in turn, determine the value of storage and transport capacity if either one is scarce. This paper applies an analytical framework for a simple pipeline grid with a storage over two periods to illustrate the interdependencies between prices, scarce capacity and capacity value. The theoretically optimal transportation and storage tariffs are described analytically. The optimal pipeline investment size is shown to be related to marginal storage investment and a function of the discounted and aggregated cost of congestion over the lifetime's asset. |
| Keywords: | Natural gas; Prices; Transport capacity; Storage; Investment |
| JEL: | D41 L50 P42 Q41 |
| Date: | 2010–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2009_002&r=ene |
| By: | Bastian Felix (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen); Oliver Woll (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen); Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen) |
| Abstract: | Natural gas storages may be valuated by applying real options theory. However it is crucial, not to ignore that most evolving gas spot markets, like the German spot market, lack of liquidity. In this context, considering storage operators as price takers does not account for interdependencies of storage operations and market prices. This paper offers a novel approach to storage valuation taking into account the effect of management decisions on market prices. The within this paper proposed methodology determines the optimal production schedule and value by determining the stochastic differential equation describing the storage value and then applying a finite difference scheme. We find that limited liquidity lowers the storage value and reduces withdrawal and injection amounts. Further, we observe decreasing reservation prices for injection and withdrawing for growing illiquidity resulting in a left shift of injection and withdrawing threshold prices. |
| Keywords: | natural gas valuation, limited liquidity |
| JEL: | D52 Q40 Q41 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:0903&r=ene |
| By: | Frank Ackerman, Elizabeth A. Stanton, Ramón Bueno |
| Abstract: | This paper describes a new model, Climate and Regional Economics of Development (CRED), which is designed to analyze the economics of climate and development choices. Its principal innovations are the treatment of global equity, calculation of the optimum interregional flows of resources, and use of McKinsey marginal abatement cost curves to project the cost of mitigation. The model shows more equitable scenarios have better climate outcomes; the challenge of climate policy is to persuade high-income countries to accept the need for both international equity and climate protection. |
| Keywords: | climate economics, development, global equity, abatement costs, integrated assessment models |
| JEL: | Q54 Q56 O13 Q52 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:96&r=ene |
| By: | Xavier Pautrel (Université de Nantes, Laboratoire d’Économie et de Management de Nantes (LEMNA), Institut d’Économie et de Management de Nantes - IAE) |
| Abstract: | This note shows that the assumptions about the abatement technology modify the impact of the environmental taxation (both the size and the “direction”) on the long-run growth driven by human capital accumulation à la Lucas (1988), when the source of pollution is private consumption and lifetime is finite. When the human capital’s share in the abatement services production is higher (respectively lower) than in the final output production, a higher environmental tax reduces (resp. increases) the allocation of human capital in production sectors (abatement service and final output) and boostes (resp. decreases) the BGP rate of growth. When abatement services are produced with the final output, the environmental taxation does not influence growth. |
| Keywords: | Growth, Environment, Overlapping Generations, Human capital, Finite Lifetime, Abatement |
| JEL: | Q5 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.70&r=ene |
| By: | Sonia Schwartz (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Hubert Stahn (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579) |
| Abstract: | Permit markets lead polluting firms to purchase abatement goods from an eco-industry, which is often concentrated. This paper studies the consequences of imperfect competition in an eco-industry on the equilibrium choices of the competitive polluting firms. It then characterizes the second best pollution cap. By comparing this situation to a competitive one, we show that Cournot competition on the abatement good market contributes not only to a non optimal level of emission reduction but also to a higher permit price, which reduces the production level. These distortions increase with market power measured by the margin taken by the non competitive firms and suggest a second best less stringent pollution cap |
| Keywords: | pollution permit market, eco-industry, imperfect competition |
| Date: | 2010–07–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00501831_v1&r=ene |
| By: | Mireille CHIROLEU-ASSOULINE; Sébastien ROUSSEL |
| Abstract: | According to several studies, agricultural carbon sequestration could be a relatively low cost opportunity to mitigate greenhouse gas (GHG) concentration and a promis-ing means that could be institutionalised. However the potential for additional carbon quantities in agricultural soils is critical and comes from the agricultural .rms behaviour with regards to land heterogeneity. In this paper, our aim is to set incentive mechanisms to enhance carbon sequestration by agricultural .rms. A policymaker has to arrange incentives as agricultural .rms have private information and do not spontaneously switch to the required practices. Moreover, a novelty in our paper is to show that the potential for additional carbon sequestration is similar to an exhaustible resource. As a result, we construct an intertemporal principal-agent model with adverse selection. Our contribution is to specify contracts in order to induce truthful revelation by the .rms regarding their intrinsic characteristics towards carbon sequestration, while analytically characterizing the optimal path to sequester carbon as an exhaustible resource. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:10-07&r=ene |
| By: | Robert W. Hahn (University of Manchester and University of Oxford); Robert N. Stavins (John F. Kennedy School of Government, Harvard University Resources for the Future National Bureau of Economic Research) |
| Abstract: | We examine an implication of the “Coase Theorem” which has had an important impact both on environmental economics and on public policy in the environmental domain. Under certain conditions, the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights. That is, the overall cost of achieving a given aggregate emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation. We call this the independence property. This property is very important because it allows equity and efficiency concerns to be separated in a relatively straightforward manner. In particular, the property means that the government can establish the overall pollution-reduction goal for a cap-and-trade system by setting the cap, and leave it up to the legislature – such as the U.S. Congress – to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs. Our primary objective in this paper is to examine the conditions under which the independence property is likely to hold – both in theory and in practice. A number of factors can call the independence property into question theoretically, including market power, transaction costs, non-cost-minimizing behavior, and conditional allowance allocations. We find that, in practice, there is support for the independence property in some, but not all cap-and-trade applications. |
| Keywords: | Cap-and-Trade System, Tradable Permits, Coase Theorem, Allowance Allocation |
| JEL: | Q58 H11 L51 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.80&r=ene |
| By: | Gollin, Douglas (Williams College); Zimmermann, Christian (University of Connecticut) |
| Abstract: | We study the impact of global climate change on the prevalence of tropical diseases using a heterogeneous agent dynamic general equilibrium model. In our framework, households can take actions (e.g., purchasing bednets or other goods) that provide partial protection from disease. However, these actions are costly and households face borrowing constraints. Parameterizing the model, we explore the impact of a worldwide temperature increase of 3° C. We find that the impact on disease prevalence and especially output should be modest and can be mitigated by improvements in protection efficacy. |
| Keywords: | DSGE models, climate change, tropical diseases, incomplete markets |
| JEL: | I1 O11 E13 E21 Q54 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5042&r=ene |
| By: | Antoine Leblois (CIRED (Centre International de Recherche sur l’Environnement et le Développement)); Philippe Quirion (CIRED, CNRS, LMD-IPSL (Laboratoire de Météorologie Dynamique – Institut Pierre-Simon Laplace)) |
| Abstract: | In many low-income countries, agriculture is mostly rain-fed and yields highly depend on climatic factors. Furthermore, farmers have little access to traditional crop insurance, which suffers from high information asymmetry and transaction costs. Insurances based on meteorological indices could fill this gap since they do not face such drawbacks. However their implementation has been slow so far. In this article, we first describe the most advanced projects that have taken place in developing countries using these types of crop insurances. We then describe the methodology that has been used to design such projects, in order to choose the meteorological index, the indemnity schedule and the insurance premium. We finally draw an agenda for research in economics on this topic. In particular, more research is needed on implementation issues, on the assessment of benefits, on the way to deal with climate change, on the spatial variability of weather and on the interactions with other hedging methods. |
| Keywords: | Agriculture, Insurance, Climatic Risk |
| JEL: | G21 O12 Q12 Q18 Q54 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.71&r=ene |
| By: | Shardul Agrawala (OECD Environment Directorate); Maëlis Carraro (OECD Environment Directorate) |
| Abstract: | Much of the current policy debate on adaptation to climate change has focussed on estimation of adaptation costs, ways to raise and to scale-up funding for adaptation, and the design of the international institutional architecture for adaptation financing. There is however little or no emphasis so far on actual delivery mechanisms to channel these resources at the sub-national level, particularly to target the poor who are also often the most vulnerable to the impacts of climate change. It is in this context that microfinance merits a closer look. This paper offers the first empirical assessment of the linkages between microfinance supported activities and adaptation to climate change. Specifically, the lending portfolios of the 22 leading microfinance institutions in two climate vulnerable countries – Bangladesh and Nepal - are analysed to assess the synergies and potential conflicts between microfinance and adaptation. The two countries had also been previously examined as part of an earlier OECD report on the links between macro-level Official Development Assistance and adaptation. This analysis provides a complementary “bottom-up” perspective on financing for adaptation. Insights from this analysis also have implications for OECD countries. This is because microfinance is also being increasingly tapped to reduce the vulnerability of the poor in domestic OECD contexts as well and may therefore have the potential to contribute to adaptation. The paper identifies areas of opportunity where microfinance could be harnessed to play a greater role in fostering adaptation, as well as its limitations in this context. It also explores the linkage between the top-down macro-financing for adaptation through international financial mechanisms and the bottom-up activities that can be implemented through microfinance. |
| Keywords: | Microfinance, Climate Change, Financing, Adaptation, Bangladesh, Nepal |
| JEL: | Q56 Q54 R51 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.82&r=ene |
| By: | Rasmus Heltberg (The World Bank); Radhika Prabhu (The World Bank); Habiba Gitay (The World Bank) |
| Abstract: | The Development Marketplace 2009 focused on adaptation to climate change. This paper identifies lessons from the Marketplace and assesses their implications for adaptation support. Our findings are based on: statistical tabulation of all proposals; in-depth qualitative and quantitative analysis of the 346 semi-finalists; and interviews with finalists and assessors. Proposals were fuelled by deep concerns that ongoing climate change and its impacts undermine development and exacerbate poverty, migration and food insecurity. Proposals addressed both local poverty and climate change challenges, and offered a wide range of approaches to render local development more resilient to current climate variability. Therefore, support to community-based adaptation should: exploit its strong local grounding and synergies with development; help connect local initiatives to higher levels; and use complementary approaches to address policy issues. |
| Keywords: | Community-based Adaptation, Development Marketplace, Adaptation, Climate Change |
| JEL: | O1 Q5 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.84&r=ene |
| By: | Michael Finus (University of Exeter); Pedro Pintassilgo (University of Algarve) |
| Abstract: | Na and Shin (1998) showed that the veil of uncertainty can be conducive to the success of self-enforcing international environmental agreements. Later papers confirmed this negative conclusion about the role of learning. In the light of intensified research efforts worldwide to reduce uncertainty about the environmental impact of emissions and the cost of reducing them, this conclusion is intriguing. The purpose of this paper is threefold. First, we analyze whether the result carries over to a more general setting without restriction on the number of players and which considers not only no and full learning but also partial learning. Second, we test whether the conclusion also holds if there is uncertainty about abatement costs instead of uncertainty about the benefits from global abatement. Third, we propose a transfer scheme that mitigates the possible negative effect of learning and which may even transform it into a positive effect. |
| Keywords: | Transnational Cooperation, Self-enforcing International Environmental Agreements, Uncertainty, Learning |
| JEL: | C72 D62 D81 H41 Q20 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.79&r=ene |