nep-ene New Economics Papers
on Energy Economics
Issue of 2010‒12‒23
28 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Granger non-causality between (non)renewable energy consumption and output in Italy since 1861 By Andrea Vaona
  2. Financing a National Transmission Grid: What Are the Issues? By Gilbert E. Metcalf
  3. Price Spikes in Electricity Markets: A Strategic Perspective By Joseph Mullins; Liam Wagner; John Foster
  4. Solar Industry –Entering new Dimensions: Comparison of Technologies, Markets and Industries By Bank Sarasin
  5. An evaluation of public aids towards renewable energy sources in Spain By José Luis Ferreira; Álvaro Escribano
  6. What is the strategic value of investments in alternative local energy supply? By Gerd KUPPER
  7. L'énergie dans le développement de la Nouvelle-Calédonie = Energy in the development of New Caledonia By Y. Le Bars; E. Faugère; P. Menanteau; B. Multon; A. Riedacker; S. Velut
  8. Methodologies for Assessment of Building's Energy Efficiency and Conservation: A Policy-Maker View By Aleksandra Novikova
  9. Democracy, Foreign Direct Investment and Natural Resources By Elizabeth Asiedu; Donald Lien
  10. What drives gasoline taxes? By Fay DUNKERLEY; Amihai GLAZER; Stef PROOST
  11. The Weak Tie Between Natural Gas and Oil Prices By David J. Ramberg; John E. Parsons
  12. The Impacts of Biofuels Targets on Land-Use Change and Food Supply: A Global Cge Assessment By Timilsina, Govinda; Beghin, John C.; van der Mensbrugghe, Dominique; Mevel, Simon
  13. The Impact of Economic Instruments on the Auto Industry and the Consequences of Fragmenting Markets: Focus on the EU Case By Luc Bastard
  14. Do the selected Trans European transport investments pass the Cost Benefit test? By Stef PROOST; Fay DUNKERLEY; Saskia VAN DER LOO; Nicole ADLER; Johannes BRÖCKER; Artem KORZHENEVYCH
  15. Capacity Factor Risk At Nuclear Power Plants By Yangbo Du; John E. Parsons
  16. Greenhouse gas emissions and the energy system: decomposition analysis and the environmental Kuznets curve By Borghesi, Simone; Vercelli, Alessandro
  17. Do Environmental Benefits Matter? A Choice Experiment Among House Owners in Germany By Achtnicht, Martin
  18. Environmental Kuznets curve (EKC): Times series evidence from Portugal By Shahbaz, Muhammad; Jalil, Abdul; Dube, Smile
  19. A decomposition of CO2 production emissions in the Andalusian economy By M. Alejandro Cardenete; P. Fuentes-Saguar; C. Polo
  20. Reviewing Existing and Proposed Emissions Trading Systems By Christina Hood
  21. Emission Credit Trading and Regional Inequalities By TAKATSUKA Hajime; NAKAMURA Ryohei
  22. The Time Value of Carbon and Carbon Storage: Clarifying the terms and the policy implications of the debate By Marshall, Liz; Kelly, Alexia
  23. The Economics of Climate Change Adaptation in India – Research and Policy Challenges Ahead By South Asian Network for Development SANDEE
  24. How Green Should Environmental Regulators Be? By Sandeep Kapur; Anthony Heyes
  25. Intergenerational equity, efficiency and constructability By Luc LAUWERS
  26. The Zero Discounting and Maximin Optimal Paths in a Simple Model of Global Warming By Katheline Schubert; Antoine D'Autume; John Hartwick
  27. International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help? By Finus, Michael; Pintassilgo, Pedro
  28. Party Divides: Expertise in and Attitude towards Climate Change among Australian Members of Parliament By Anita Talberg; Stephen Howes

  1. By: Andrea Vaona (Department of Economics (University of Verona))
    Abstract: The present paper considers an Italian dataset with an annual frequency from 1861 to 2000. It implements Granger non-causality tests between energy consumption and output following the Toda-Yamamoto and - on the basis of unit root, stationarity and cointegration tests - the Box and Jenkins approaches. We find that results can differ for renewable and non-renewable energy and we discuss policy and research implications.
    Keywords: renewable energy, non-renewable energy, real GDP, Granger-causality, cointegration
    JEL: C32 Q43
    Date: 2010–12
  2. By: Gilbert E. Metcalf
    Abstract: The United States requires a substantial investment in transmission capacity over the next several decades. This investment is needed to ensure system reliability, to accommodate growth in demand for electricity, and to allow the integration of significant amounts of renewable generating capacity. In this paper I survey the need for new transmission capacity and consider the financial and regulatory obstacles that stand in the way of this new investment. This paper makes three points. First, the historical pace of transmission investments will not be adequate to enhance grid reliability or to allow largescale penetration of renewable generating capacity. Second, the replacement of a vertically integrated electric utility industry in many parts of the country by a more disaggregated one composed of merchant generators has added to the challenge of transmission planning and investment. Third, the focus on federal funding for grid improvements is misplaced. There is no evidence that the private sector is incapable of raising the funds needed for critical investment, provided a rationalized regulatory structure is put into place. Making changes to our regulatory and political systems that facilitate transmission investment and siting will not be easy. But the costs of underinvesting in an improved and enlarged national transmission grid are high. Moving to a largely carbon-free economy by the middle of the century will require a transformation of the power system in this country, one that cannot be successful without a strong interstate high-voltage transmission backbone.
    Date: 2010–10
  3. By: Joseph Mullins (School of Economics, The University of Queensland); Liam Wagner (School of Economics, The University of Queensland); John Foster (School of Economics, The University of Queensland)
    Abstract: This paper aims to analyze the issue of price spikes in electricity markets through the lens of noncooperative game theory. The case we consider is Australia’s long established National Electricity Market (NEM). Specifically, we adapt von der Fehr and Harbord’s multi-unit auction model to settings that more closely reflect the structure of the NEM, showing that price spikes can be related to a specifiable threshold in demand.
    Keywords: Electricity Markets, Spot Price Behaviour, Non-Cooperative Game Theory.
    JEL: C72 Q40
    Date: 2010–12
  4. By: Bank Sarasin
    Abstract: Over the past two years the solar industry has shown itself to be incredibly resilient to the general economic crisis. Supported by cost-cutting and efficiency improvements, the photovoltaics (PV) industry has managed to achieve a growth rate of 87%, or 13.8 GW, of newly installed capacity in 2010. However, individual companies are feeling the strong price and margin pressure, and the intensifying competition. At least eight new PV markets with a potential annual capacity of 500 MW are expected to be added over the next two years. The PV industry will therefore acquire the stability and political autonomy it needs to be able to continue to grow unimpeded and to enter new dimensions. Concentrating solar power (CSP) and thin-film PV modules are jostling for the most cost-efficient technology for large-scale solar energy production. At the moment thin-film PV technology is just ahead.
    Keywords: PV markets, solar power, energy, CSP, production, industry, markets, photovoltaics
    Date: 2010
  5. By: José Luis Ferreira; Álvaro Escribano
    Abstract: Public aids towards renewable energy sources in Spain have had the consequence of a great increase in their use. This is particularly true for the case of wind generation. For the year 2007, we show that the savings in social costs due to carbon emissions account for a figure between 25% and 78% of total aids. Since some of the public aids are just a money transfer with no effect on total social welfare the justification of the net costs of the aids is higher. For the particular case of wind generation, we find that in the worst case scenario 45% of the social cost implied by the public aids is justified by the reduction in carbon emissions, and that the benefits of CO2 reductions are 135% higher than the costs in the best case scenario.
    Date: 2010–12
  6. By: Gerd KUPPER
    Abstract: This paper studies strategic incentives to invest in electricity generation capacity using a local fuel like renewables or coal. It shows that investing in this capacity, even if not used, improves the bargaining position of a power producing firm that also imports another fuel such as gas. When several importers are considered, the paper finds that investment has a positive strategic effect on all other importers’ bargaining position. A government energy policy that forces utilities to invest in capacity based on particular fuels can be justified not only for environmental but also for strategic reasons.
    JEL: C78 Q40 Q48 Q50
    Date: 2010–02
  7. By: Y. Le Bars (YLB Conseils - Cabinet conseil); E. Faugère (ECODEVELOPPEMENT - Unité de recherche d'Écodéveloppement - INRA : UR0767); P. Menanteau (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II); B. Multon (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan); A. Riedacker (MONA - Unité de recherche Paysannerie, Territoires, Environnement, Marchés et politiques Publiques - INRA : UR1217); S. Velut (Université Paris III, Sorbonne nouvelle - Université de la Sorbonne nouvelle - Paris III)
    Abstract: Dans un contexte de raréfaction des ressources en énergie fossile et de changements climatiques, la Nouvelle-Calédonie, qui n'est pas actuellement soumise au protocole de Kyoto, doit répondre aux préoccupations environnementales et trouver les voies et moyens d'une moins grande dépendance énergétique. Au moment où le Territoire définit son Schéma d'aménagement et de développement 2025 et, dans le prolongement, son Schéma de l'énergie et du climat, le Gouvernement de la Nouvelle-Calédonie et l'ADEME, via le Comité territorial pour la maîtrise de l'énergie (CTME), ont demandé à l'Institut de recherche pour le développement (IRD) de produire un état des lieux complet et une analyse pluridisciplinaire des enjeux constitutifs de la question de l'énergie dans le développement de la Nouvelle-Calédonie. La maîtrise de l'énergie, les nouvelles technologies en matière de production et de stockage d'énergie, les moyens de réduction des émissions de gaz à effet de serre, la géopolitique de l'énergie et du climat et la coopération régionale, la gouvernance de l'énergie et du climat en Nouvelle-Calédonie, ont ainsi été examinés au cours de l'année 2009 par un collège d'experts qui en restitue ici le bilan détaillé. Cette expertise collégiale qui a mobilisé l'ensemble des données scientifiques disponibles pour les décliner sur le cas particulier de la Nouvelle-Calédonie, livre une série de recommandations qui pourront utilement venir à l'appui des politiques que le Territoire est sur le point de se donner.
    Date: 2010
  8. By: Aleksandra Novikova
    Keywords: Buildings, energy efficiency potential, greenhouse gas mitigation, policy assessment, energy policy impact evaluation, sectoral efficiency targets
    Date: 2010
  9. By: Elizabeth Asiedu (Department of Economics, The University of Kansas); Donald Lien (Department of Economics, University of Texas, San Antonio)
    Abstract: Existing studies assume that the impact of democracy on FDI is the same for re- source exporting and non-resource exporting countries. This paper examines whether natural resources alter the relationship between FDI and democracy. We estimate a linear dynamic panel-data model using data from 112 developing countries over the period 1982-2007, and we .nd that there is some critical value of the share of miner- als and oil in total exports below which democracy enhances FDI, and above which democracy reduces FDI. We identify 90 countries where an expansion of democracy may enhance FDI and 22 countries where an increase in democratization may reduce FDI.
    Keywords: Democracy, Foreign Direct Investment, Natural Resources.
    JEL: F23 D72
    Date: 2010–12
  10. By: Fay DUNKERLEY; Amihai GLAZER; Stef PROOST
    Abstract: Gasoline taxes are the most important tax on car use. The question naturally arises as to what tax would be adopted by a government that responds to the preferences of the public. To address that issue, we begin with the standard Downsian model, where policy is determined by the median voter. This model predicts that as long as the median voter is not a car user, he wants high taxes on road use and a road capacity that maximizes net tax revenues. When he becomes a driver himself, he wants road user taxes that are lower and only increase to control congestion, as well as more road capacity. We then use panel data for 28 countries and find support for our theory. When the median voter becomes a driver, the gasoline tax drops on average by 20%.
    Keywords: gasoline taxes, median voter theory, political economy
    JEL: H23 R48 Q48 L98 Q52
    Date: 2010–01
  11. By: David J. Ramberg; John E. Parsons
    Abstract: Several recent studies establish that crude oil and natural gas prices are cointegrated, so that changes in the price of oil appear to translate into changes in the price of natural gas. Yet at times in the past, and very powerfully in the last two years, many voices have noted that the two prices series appear to have “decoupled”. We explore the apparent contradiction between these two views. Although we also find that the two series are cointegrated, recognition of the statistical fact of cointegration needs to be tempered with two additional points that we think have been insufficiently emphasized in the past literature. First, there is an enormous amount of unexplained volatility in natural gas prices at short horizons. Hence, any simple formulaic relationship between the price of oil and the price of natural gas will leave a large portion of the price of natural gas unexplained. Second, the cointegrating relationship does not appear to be stable through time. Natural gas prices may be tied to oil prices, but the relationship can shift dramatically over time. Therefore, although the two price series are cointegrated, the confidence intervals for both short and long time horizons are large.
    Date: 2010–11
  12. By: Timilsina, Govinda; Beghin, John C.; van der Mensbrugghe, Dominique; Mevel, Simon
    Abstract: We analyze the long-term impacts of large-scale expansion of biofuels on land-use change, food supply and prices, and the overall economy in various countries or regions using a multi-country, multi-sector global computable general equilibrium model augmented with an explicit land-use module and detailed biofuel sectors. We find that an expansion of biofuel production to meet the existing or even higher targets in various countries would slightly reduce GDP at the global level but with mixed effects across countries or regions. Significant land re-allocation would take place with notable decreases in forest and pasture lands in a few countries. The expansion of biofuels would cause a moderate decrease in world food supply and more significant decreases in developing countries like India and Sub-Saharan Africa. Feedstock commodities (sugar, corn and oil seeds) would experience significant increases in their prices in 2020, but other price changes are small.
    Keywords: biofuels; ethanol; biodiesel; land use; food supply; food prices; CGE model; impacts
    JEL: D58 Q Q17 Q42 Q48 Q54
    Date: 2010–12–15
  13. By: Luc Bastard
    Abstract: This paper will focus on taxation issues addressing CO2 emissions in the European Union. When observing the different systems in place, a very broad diversity appears even with a cursory first glance. Actually, the diversity of taxation schemes among the Member States is such that it jeopardizes the concept of a Single Market in the European Union. Furthermore, this tax environment is not predictable. Even if the question of the efficiency of using such taxes to reduce CO2 emissions is put to one side, cost-effectiveness is an important issue, including in terms of the consequences for vehicle and component manufacturers.
    Date: 2010–02
    Abstract: This paper assesses the economic justification for the selection of priority projects defined under the auspices of the Trans-European transport network. In analyzing the current list of 30 priority projects, we apply three different transport models to undertake a cost-benefit comparison. We find that many projects do not pass the cost-benefit test and only a few of the economically justifiable projects would need European subsidies to make them happen. Two remedies are proposed to minimize the inefficiencies in future project selection. The first remedy obliges each member state or group of states to perform a cost-benefit analysis (followed by a peer review) and to make the results public prior to ranking priority projects. The second remedy would require federal funding to be available only for projects with important spillovers to other countries, in order to avoid pork barrel behaviour.
    Keywords: transport infrastructure, cost benefit analysis, Europe Union
    JEL: R42 H11 H54
    Date: 2010–01
  15. By: Yangbo Du; John E. Parsons
    Abstract: We develop a model of the dynamic structure of capacity factor risk. It incorporates the risk that the capacity factor may vary widely from year-to-year, and also the risk that the reactor may be permanently shutdown prior to the end of its anticipated useful life. We then fit the parameters of the model to the IAEA’s PRIS dataset of historical capacity factors on reactors across the globe. The estimated capacity factor risk is greatest in the first year of operation. It then quickly declines over the next couple of years, after which it is approximately constant. Whether risk is constant or increasing in later years depends significantly on the probability of a premature permanent shutdown of the reactor. Because these should be very rare events, the probability is difficult to estimate reliably from the small historical sample of observations. Our base case is parameterized with a conservatively low probability of a premature permanent shutdown which yields the approximately constant variance. Our model, combined with the global historical dataset, also yields relatively low estimates for the expected level of the capacity factor through the life of the plant. Our base case estimate is approximately 74%. Focusing on alternative subsets of the data raises the estimated mean capacity factor marginally, but not significantly, unless the sample chosen is restricted to selected countries over select years. This emphasizes the need for judgment in exploiting the historical data to project future probabilities.
    Date: 2010–11
  16. By: Borghesi, Simone; Vercelli, Alessandro
    Abstract: This paper discusses to what extent the recent trends in energy consumption and production are compatible with the requirements of sustainable development. For this purpose, starting from a simple identity applied to the energy sector, we use the decomposition analysis to derive a few analytical requirements for the long-term sustainability of the energy system and examine whether they are satisfied on the basis of the currently available data. From the analysis conducted in the paper, it emerges that an Environmental Kuznets Curve in energy intensity and/or carbon intensity may be insufficient to satisfy the sustainability conditions identified in the paper. Moreover, using simple graphical analysis, we show that the decomposition approach and the EKC imply two different relationships between per capita income (y) and carbon intensity (gy) and discuss the relative implications.
    Keywords: sustainable development; energy; global warming; environmental Kuznets curve; decomposition analysis; Kaya identity
    JEL: Q32 Q56 O13 Q42 Q53 Q43
    Date: 2010–12
  17. By: Achtnicht, Martin (Centre for European Economic Research (ZEW))
    Abstract: Residential buildings strongly contribute to global CO2 emissions due to the high energy demand for electricity and heating, particularly in industrialised countries. Within the EU, decentralised heat generation is of particular relevance for future climate policy, as its emissions are not covered by the EU ETS. We conducted a choice experiment concerning energy retrofits for existing houses in Germany. In the experiment, the approximately 400 sampled house owners could either choose a modern heating system or an improved thermal insulation for their home. We used standard and mixed logit specifications to analyse the choice data. We found environmental benefits to have a significant impact on choices of heating systems. However, they played no role in terms of insulation choices. Based on the estimated mixed logit model, we further obtained WTP measures for CO2 savings.
    Keywords: Choice experiment; CO2 emissions; Energy efficiency; Energy saving; Mixed logit; Residential buildings; Willingness to pay.
    JEL: C25 D12 Q40 Q51
    Date: 2010–12
  18. By: Shahbaz, Muhammad; Jalil, Abdul; Dube, Smile
    Abstract: The paper provides empirical evidence of an EKC – a relationship between income and environmental degradation for Portugal by applying autoregressive distributed lag (ARDL) to times series data. In order to capture Portugal’s historical experience, demographic changes, and international trade on CO2 emissions, we assess the traditional income-emissions model with variables such as energy consumption, urbanization, and trade openness in time series framework. There is evidence of an EKC in both the short and long-run approaches. All variables carry the expected sign except trade openness which has the wrong sign and is statistically insignificant in both the short-run and long-run. Despite the success of Portugal in containing CO2 emissions so far, it is important to note that in recent years, emissions have risen. In order to comply with the 1992 Kyoto Protocol on CO2 emissions, there is need for policies that focus on the top five sectors responsible for about 55 percent of CO2 emissions are due to the extraction of crude petroleum, manufacturing of refined products, electricity distribution, construction, land transport and transport via pipeline services.
    Keywords: Cointegration; Causality; Environmental Kuznets Curve
    JEL: C22 E21 P28
    Date: 2010–10–15
  19. By: M. Alejandro Cardenete (Department of Economics, Universidad Pablo de Olavide de Sevilla); P. Fuentes-Saguar (Department of Economics, Universidad Pablo de Olavide de Sevilla); C. Polo (Department of Economics, Universidad Autonoma de Barcelona)
    Abstract: The aim of this paper is to analyze the energy sector in Andalusia, a Spanish region, and its importance from the viewpoint of final energy consumption, trying to determine which demands are the most costly to satisfy in terms of emissions of pollutants to the atmosphere. To do this, we apply an additive multiplier decomposition methodology to the Andalusian Social Accounting Matrix for the year 1995. The method implemented allow us disaggregate the Andalusian energy sector’s revenue-generating process into different effects depending on the source of the demand. To gain a better understanding of the behaviours of the different branches of the economy, we divide Andalusian productive activities into two groups, which we call subsystems (energy subsystem and complementary subsystem). We then apply the multiplier decomposition methodology to each one separately. This way, we can identify the influence that the final demand of each of these groups has on income generation and energy sector emissions in the Andalusian economy. The information obtained from this exercise allow know which sectors are the final main responsible of the emissions, and confirm that Construction and some branches of the services sector are the most costly in terms of CO2 emissions.
    Keywords: Social Accounting Matrices, Regional Accounts, Input-Output Tables, Energy SAM Multipliers, CO2 emissions.
    JEL: C67 D58 Q43 Q51 R13
    Date: 2010–12
  20. By: Christina Hood
    Abstract: Putting a price on greenhouse gas emissions is a cornerstone policy in climate change mitigation. To this end, many countries have implemented or are developing domestic emissions trading systems. This paper reviews key design features of mandatory emissions trading systems that had been established or were under consideration in 2010, with a particular focus on implications for the energy sector.
    Date: 2010–11
  21. By: TAKATSUKA Hajime; NAKAMURA Ryohei
    Abstract: This paper examines how regional inequalities are affected by emission controls via credit trading and availability of absorption sources. We assume that homogeneous goods are costly traded without emission controls and that the rural areas have an advantage in terms of the availability of absorption sources. We especially focus on the long-term effects of firm relocation. Our two key findings are as follows. First, in the case where an emission control scheme is implemented without allowing for offsetting emissions with carbon absorption sources (carbon sinks), strengthening the emission controls drives firms to relocate from rural areas to urban areas, in the case that wage levels remain unchanged in both areas. As a result, regional inequalities in terms of both the number of firms and relative public welfare are enlarged by emission controls. Our second finding shows that in the case in which the emission control scheme allows for emissions-absorption offsetting, strengthening emission controls has mixed effects on the relative welfare of rural areas. Numerical simulations show that when the costs associated with transporting differentiated goods are relatively low, the introduction of emission controls with an offsetting system results in greater inequality across regions compared with introducing emission controls without such offsetting.
    Date: 2010–12
  22. By: Marshall, Liz; Kelly, Alexia
    Abstract: The question of whether there is any value to the temporary storage of carbon is fundamental to climate policy design across a number of arenas, including physical carbon discounting in greenhouse gas accounting, the relative value of temporary carbon offsets, and the value of other carbon mitigation efforts that are known to be impermanent, including deferred deforestation. Quantifying the value of temporary carbon storage depends on a number of assumptions about how the incremental impact (or social cost) of a given ton of carbon emissions is expected to change over time. In 2009, a U.S. government interagency working group was established and assigned the responsibility of calculating social cost of carbon estimates to be used in benefit/cost analysis of regulations impacting carbon dioxide emissions. Those estimates were released in March 2010. This working paper explores what those estimates imply about the value of temporary carbon storage, as well as the implications of those temporary storage values for several critical policy design questions relating to greenhouse gas accounting and biological offsets. This analysis suggests, for instance, that appropriate physical carbon discount rates for carbon accounting may be even lower than the social discount rates often used in intergenerational analyses. In the context of agricultural offsets, the social cost of carbon estimates are used to establish a definition of equivalence between permanent and temporary offsets; equivalence ratios are derived that vary between ~2 and 30, depending on the discount rate used and the length of the temporary offset contract period.
    Keywords: temporary carbon storage; time value of carbon; temporary offsets; physical carbon discount rate
    JEL: H43 D60
    Date: 2010–11
  23. By: South Asian Network for Development SANDEE
    Abstract: The Madras School of Economics (MSE), the M.S. Swaminathan Research Foundation (MSSRF) and the South Asian Network for Development and Environmental Economics (SANDEE) organized a brain-storming workshop on the Economics of Climate Change Adaptation on the 12th and 13th February 2010 at the MSE, Chennai to identify policy gaps, research questions and capacity-building needs related to India’s need to adapt to climate change. This note provides a summary of the discussions at this workshop and draws some conclusions for future policy analyses.
    Keywords: developing countries, adaptation, agriculture, economic development, economics, climate change, India, policy challenges, chennai, MSE,
    Date: 2010
  24. By: Sandeep Kapur (Department of Economics, Mathematics & Statistics, Birkbeck); Anthony Heyes (Royal Holloway, University of London)
    Abstract: The extent to which environmental regulatory institutions are either 'green' or 'brown' impacts not just the intensity of regulation at any moment, but also the incentives for the development of new pollution-control technologies. We set up a strategic model of R&D in which a polluter can deploy technologies developed in-house, or license technologies developed by specialist outsiders. Polluters exert R&D effort and may even develop redundant technologies to improve the terms on which they procure technology from outside. We find that, while regulatory bias has an ambiguous impact on the best-available technology, strategic delegation to systematically biased regulators can improve social welfare.
    Date: 2010–12
  25. By: Luc LAUWERS
    Abstract: Global environmental issues - like biodiversity conservation or climate change - are in reality long term issues that are not properly taken into account with traditional models that incorporate the impatience axiom manifested in fixed discount factors and in the use of present discounted utility criteria. When both the short and the very long run are important, one can appeal to overtaking criteria and Chichilnisky criteria. Unfortunately, overtaking criteria are highly incomplete. In order to decrease this incompleteness, stronger anonymity (or equity) axioms were developed. I show that a maximal anonymity axiom compatible with Pareto is a non-constructible object; its existence relies on the Axiom of Choice. The Chichilnisky criterion is based upon two axioms: non dictatorship of the present and non dictatorship of the future. Here, the very long run is captured by a finitely additive measure. Such a measure is a non-constructible object and has therefore no explicit description.
    Date: 2010–07
  26. By: Katheline Schubert (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Antoine D'Autume (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); John Hartwick (Department of Economics - Queen's University)
    Abstract: Following Stollery (1998), we extend the Solow-- Dasgupta--Heal model to analyze the effects of global warming The rise of temperature is caused by the use of fossil resources so that the temperature level can be linked to the remaining stock of these resources. The rise of temperature affects both productivity and utility. We characterize optimal solutions for the maximin and zero-discounting cases and present closed form solutions for the case where the production and utility functions are Cobb-Douglas, and the temperature level is an exponential function of the remaining stock of resources. We show that a greater weight of temperature in intratemporal preferences or a larger intertemporal elasticity of substitution both lead to postpone resource use.
    Keywords: Global warming; Zero discounting; maximin
    Date: 2010–03–01
  27. By: Finus, Michael (Exeter Business School); Pintassilgo, Pedro (CIEO - Research Centre for Spatial and Organizational Dynamics)
    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 result. In the light of intensified research efforts worldwide to reduce uncertainty about the environmental impact of emissions and the cost of reducing them, the result 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, that is, three different scenarios of uncertainty dissipation. Second, we test whether the result 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: 2010–10–29
  28. By: Anita Talberg (Parliamentary Library, Parliament of Australia, Canberra, Australia); Stephen Howes (Crawford School of Economics and Government, The Australian National University, Canberra, Australia)
    Abstract: This study investigates Australian federal politiciansÕ expertise in and attitudes towards climate change. Telephone interviews were conducted with a sample of 26 Members of Parliament (MPs). Results of the survey, undertaken in late 2009, suggest that climate change expertise is low to moderate among MPs, and that there is no correlation between expertise in and concern about climate change. The survey reveals important differences in attitudes to climate change by party. About 40 per cent of Coalition (Liberal and National) MPs are climate change ÔdeniersÕ, but no Labor Party (ALP) MPs are. ALP MPs rate climate change as the most important (with water management) out of four long-term challenges, but Coalition MPs rate it as the least important (after not only water, but also aging and defence). All ALP MPs think climate change demands urgent action, and that Australia should play a leadership role globally, but only about one-fifth of Coalition MPs does. Even those Coalition MPs who are climate change ÔbelieversÕ tend to give lower importance to climate change than ALP MPs.
    JEL: Q54 D72
    Date: 2010–12

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