nep-ene New Economics Papers
on Energy Economics
Issue of 2011‒04‒09
35 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. The Long-term Impact of Wind Power on Electricity Prices and Generating Capacity By Richard Green; Nicholas Vasilakos
  2. The Effect of Divestitures in the German Electricity Market By Weigt, H.; Willems, Bert
  3. Le nucléaire n'est pas l'énergie dominante du bilan énergétique français By Ghislaine Destais
  4. Electricity Intensities of the OECD and South Africa: A Comparison By R. Inglesi-Lotz; J. Blignaut
  5. South Africa’s Electricity Consumption: A Sectoral Decomposition Analysis By R. Inglesi-Lotz; J. Blignaut
  6. The Distributional Effects of the Hilmer Reforms on the Australian Gas Industry By George Verikios; Xiao-guang Zhang
  7. A Conditionally Heteroskedastic Model with Time-varying Coefficients for Daily Gas Spot Prices. By Regnard, Nazim; Zakoïan, Jean-Michel
  8. Demand for Gasoline Is More Price-Inelastic than Commonly Though By Tomáš Havránek; Zuzana Iršová; Karel Janda
  9. Technical efficiency analysis of banks in major oil exporting Middle East countries By Onour, Ibrahim; Abdalla, Abdelgadir
  10. Les évolutions du modèle pétrolier russe : une réponse institutionnelle à la crise de l'industrie By Sylvain Rossiaud; Catherine Locatelli
  11. A Utility Based Approach to Energy Hedging By John Cotter; Jim Hanly
  12. Time Varying Risk Aversion: An Application to Energy Hedging By John Cotter; Jim Hanly
  13. Special Taxation of the Mining Industry By John Freebairn; John Quiggin
  14. End of the line: A Note on Environmental Policy and Innovation when Governments cannot Commit By Juan Pablo Montero.
  15. Innovation and Diffusion of Clean/Green Technology: Can Patent Commons Help? By Bronwyn H. Hall; Christian Helmers
  16. Grazing the Commons: Global Carbon Emissions Forever? By Melenberg, B.; Vollebergh, H.R.J.; Dijkgraaf, E.
  17. Who Should Bear the Administrative Costs of an Emissions Tax? By John K. Stranlund; Carlos A. Chavez
  18. The effects of environmental taxes and quotas on the optimal timing of emission reductions under Choquet-Brownian uncertainty By Elettra Agliardi; Luigi Sereno
  19. Is There a Principle of Targeting in Environmental Taxation? By Jianquiao Liu; Leslie Shiell
  20. Climate Effects of Carbon Taxes, Taking into Account Possible Other Future Climate Measures By Habermacher, Florian; Kirchgässner, Gebhard
  21. Coalition formation and strategic permit trade under the Kyoto Protocol By Godal, Odd; Meland, Frode
  22. Bankable Emission Permits under Uncertainty and Optimal Risk Management Rules. By Chevallier, Julien; Etner, Johanna; Jouvet, Pierre-André
  23. Business Responses to the Introduction of the New Zealand Emissions Trading Scheme: Part I By Numan-Parsons, Elisabeth; Stroombergen, Adolf Stroombergen; Fletcher, Ngaio
  24. Global Warming and Local Dimming: The Statistical Evidence By Magnus, J.R.; Melenberg, B.; Muris, C.H.M.
  25. Panel Data Econometrics and Climate Change. By Muris, C.H.M.
  26. Estimating the Social Cost of Carbon for Use in U.S. Federal Rulemakings: A Summary and Interpretation By Michael Greenstone; Elizabeth Kopits; Ann Wolverton
  27. International Environmental Agreements in the Presence of Adaptation By Marrouch, W.; Ray Chaudhuri, A.
  28. Natural natural disasters and economic disruption By Yanos Zylberberg
  29. Aggregate Impacts of Natural and Man-made Disasters: A quantitative comparison By SAWADA Yasuyuki; Rima BHATTCHARYAY; KOTERA Tomoaki
  30. How economic growth and rational decisions can make disaster losses grow faster than wealth By Hallegatte, Stephane
  31. Modelling the Impact of Policies to Reduce Environmental Impacts in the New Zealand Dairy Sector By Anna Strutt; Allan N. Rae
  32. Climate change, uncertainty and adaptation: the case of irrigated agriculture in the Murray–Darling Basin in Australia By John Quiggin; David Adamson; Sarah Chambers; Peggy Schrobback
  33. A Ricardian analysis of the climate change impact on Nepalese agriculture By Thapa, Sridhar; Joshi, Ganesh Raj
  34. Promoting Pollution Prevention in Small Businesses: Costs and Benefits of the “Enviroclub” Initiative By Paul Lanoie; Alexandra Rochon-Fabien
  35. Trade Policies, Investment Climate,and Exports By Seker, Murat

  1. By: Richard Green; Nicholas Vasilakos
    Abstract: This paper uses a market equilibrium model to calculate how the mix of generating capacity would change if large amounts of intermittent renewables are built in Great Britain, and what this means for operating patterns and the distribution of prices over time. If generators bid their marginal costs, we find that the changes to the capacity mix are much greater than the changes to the pattern of prices. Thermal capacity falls only slightly in response to the extra wind capacity, and there is a shift towards power stations with higher variable costs (but lower fixed costs). The changes to the pattern of prices, once capacity has adjusted, are relatively small. In an oligopolistic setting, strategic generators will choose lower levels of capacity. If wind output does not receive the market price, then mark-ups on thermal generation will be lower in a system with large amount of wind power.
    Keywords: Electricity Markets, Wind Generation, Intermittent Output, Capacity Mix
    JEL: L74 Q42
    Date: 2011–03
  2. By: Weigt, H.; Willems, Bert (Tilburg University, Center for Economic Research)
    Abstract: In the most liberalized electricity markets, abuse of market power is a concern related to oligopolistic market structures, flaws in market architecture, and the specific characteristics of electricity generation and demand. Several methods have been suggested to improve the competitiveness of the liberalized electricity markets and to reallocate rents from generators to consumers. In this paper we study to what extend divestitures can improve the competitiveness of the electricity market. We quantify the expected developments under different divestiture scenarios for the German market, using Cournot and Supply Function Equilibrium simulations. We find an overall welfare gain in both models and show that those gains are highest if the divested assets are sold to independent and small firms, preventing the formation of additional firms that set prices strategically.
    Keywords: Supply Function Equilibrium;Cournot competition;electricity markets;divestitures.
    JEL: L L13 C72 D43
    Date: 2011
  3. By: Ghislaine Destais (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: Visant à apporter au débat sur l'énergie des bases rigoureuses, ce papier effectue une mise au point concernant la place réelle du nucléaire dans la satisfaction des besoins énergétiques de la France. Les résultats sont basés sur une analyse détaillée du bilan énergétique 2009, qui va au delà des présentations officielles.
    Keywords: énergie nucléaire ; bilan énergétique ; France
    Date: 2011–03–24
  4. By: R. Inglesi-Lotz; J. Blignaut
    Abstract: Improving a country’s electricity efficiency is considered one of the important ways to reduce its greenhouse gas emissions and to meet its commitments concerning climate change mitigation. In this paper, we conduct a comparative analysis between South Africa and OECD members’ total and sectoral electricity intensities. This is done to establish a sense of South Africa’s relative performance in this regard, to ascertain the possible scope for improvement and, if such scope exists, to determine in which of the industrial sectors
    Date: 2011
  5. By: R. Inglesi-Lotz; J. Blignaut
    Abstract: South Africa's electricity consumption has increased sharply since the early 1990s. Here we conduct a sectoral decomposition analysis of the electricity consumption for the period 1993 to 2006, to determine the main drivers of this increase. The results show that the increase was due mainly to output- or production-related factors, with structural changes playing a secondary role. While there is some evidence of efficiency improvements, indicated here as a slowdown in the rate of increase in electricity intensity, it was not nearly sufficient to offset the combined production and structural effects that propelled electricity consumption higher.
    Date: 2011
  6. By: George Verikios; Xiao-guang Zhang
    Abstract: We analyse changes in the Australian gas industry during 1990s that were driven by the Hilmer Reforms. We estimate the direct and indirect effects on household income of these gas industry changes by combining a computable general equilibrium model with a microsimulation model in a two-stage simulation procedure. The changes lead to minor effects on household income in all regions due to the unimportance of the gas industry at that time. Some regions benefit from the changes and some lose. Income inequality is only slightly affected by the changes.
    Keywords: computable general equilibrium, gas, household income distribution, microeconomic reform, microsimulation
    JEL: C68 C69 L94 D31
    Date: 2011–01
  7. By: Regnard, Nazim; Zakoïan, Jean-Michel
    Abstract: This paper examines the relationship between gas spot prices at the Zeebrugge market, one-month ahead Brent prices and temperatures over the period 2000–2005. A cointegration analysis is carried out and it is discovered that a cointegration relationship exists between the three series. To take into account the influence of temperature on the gas volatility, a GARCH(1,1) model with temperature-dependent coefficients is considered. Stability and estimation properties are discussed. An empirical finding is the existence of distinct volatility regimes for the volatility of gas prices, depending on the temperature level.
    Keywords: Gas Prices; Nonstationary Models; GARCH; Periodic models; Time-Varying Coefficients; Quasi-Maximum Likelihood Estimation;
    JEL: C73 G13 C13
    Date: 2011
  8. By: Tomáš Havránek (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Zuzana Iršová (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Karel Janda (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: One of the most frequently examined statistical relationships in energy economics has been the price elasticity of gasoline demand. We conduct a quantitative survey of the estimates of elasticity reported for various countries around the world. Our meta-analysis indicates that the literature suffers from publication selection bias: insignificant and positive estimates of the price elasticity are rarely reported, although implausibly large negative estimates are reported regularly. In consequence, the average published estimates of both short- and long-run elasticities are exaggerated twofold. Using mixed-effects multilevel meta-regression, we show that after correction for publication bias the average long-run elasticity reaches -0.31 and the average short-run elasticity only -0.09
    Keywords: Gasoline demand; Price elasticity; Meta-analysis; Publication selection bias
    JEL: Q41 Q48
    Date: 2011–03
  9. By: Onour, Ibrahim; Abdalla, Abdelgadir
    Abstract: This paper investigates efficiency performance of thirty six banks operating in Gulf Cooperation Council (GCC) countries during the period 2006-2008 . Our results indicate in general GCC banks showed considerable pure technical efficiency in the past three years with the year 2007 exhibit the most efficient year, as the number of pure technical efficient banks reached 33 percent of the total banks compared to 25 percent in 2008. The fall in technical efficiency in 2008 is due to simultaneous fall in pure technical efficiency and the scale efficiency. The output loss caused by scale inefficiency (fall of scale operations below optimum level) in 2008 is estimated 16 percent compared to 5 percent in 2007. Our results also indicate scale efficiency is inversely related to banks' size implying a major source of scale inefficiency in GCC banks is due to sub-optimal size of operations. It is also indicated in the paper that scale efficiency is inversely related to risk, implying effective risk management policies may also enhance scale efficiency.
    Keywords: technical efficiency;scale efficiency;DEA
    JEL: C44 C63 C61
    Date: 2011–01–25
  10. By: Sylvain Rossiaud (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II); Catherine Locatelli (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: L'industrie pétrolière russe est depuis le début des années 1990 marquée par d'importants mouvements de réforme de son modèle organisationnel. La montée en puissance de l'Etat au sein de l'industrie est le facteur le plus souvent mentionné pour caractériser les évolutions en cours. L'objectif de cet article est de fournir un cadre d'interprétation à ces évolutions à partir d'une lecture néo institutionnaliste des modèles d'organisation de l'industrie pétrolière. Il est argumenté que la réorganisation actuelle est une tentative d'introduire une plus grande cohérence dans l'arrangement institutionnel encadrant la transaction d'ouverture de l'amont pétrolier à des opérateurs
    Keywords: Russie ; modèle pétrolier ; cohérence institutionnelle ; droits de propriété
    Date: 2011
  11. By: John Cotter; Jim Hanly
    Abstract: A key issue in the estimation of energy hedges is the hedgers' attitude towards risk which is encapsulated in the form of the hedgers' utility function. However, the literature typically uses only one form of utility function such as the quadratic when estimating hedges. This paper addresses this issue by estimating and applying energy market based risk aversion to commonly applied utility functions including log, exponential and quadratic, and we incorporate these in our hedging frameworks. We find significant differences in the optimal hedge strategies based on the utility function chosen.
    Date: 2011–03
  12. By: John Cotter; Jim Hanly
    Abstract: Risk aversion is a key element of utility maximizing hedge strategies; however, it has typically been assigned an arbitrary value in the literature. This paper instead applies a GARCH-in-Mean (GARCH-M) model to estimate a time-varying measure of risk aversion that is based on the observed risk preferences of energy hedging market participants. The resulting estimates are applied to derive explicit risk aversion based optimal hedge strategies for both short and long hedgers. Out-of-sample results are also presented based on a unique approach that allows us to forecast risk aversion, thereby estimating hedge strategies that address the potential future needs of energy hedgers. We find that the risk aversion based hedges differ significantly from simpler OLS hedges. When implemented in-sample, risk aversion hedges for short hedgers outperform the OLS hedge ratio in a utility based comparison.
    Date: 2011–03
  13. By: John Freebairn (University of Melbourne); John Quiggin (Department of Economics, University of Queensland)
    Abstract: The mining industry in Australia, and in most other countries, pay special taxes for the use of community owned resources in additional to taxes levied on businesses in general. General taxes include the corporate income tax, payroll and transaction taxes, and labour pay personal income taxes. In the states and territories the additional tax in most cases takes the form of a royalty levied as a tax on production, either as a specific tax per unit of production or as an ad valorem percentage of the value per unit mined. Details are in The Treasury (2008). In the case of offshore energy resources, the commonwealth imposes a special tax either as a royalty or as the petroleum resource rent tax (PRRT) (The Treasury, 2008).
    Date: 2010–12
  14. By: Juan Pablo Montero.
    Abstract: It is widely accepted that one of the most important characteristics of an effective climate policy is to provide firms with credible incentives to make long-run investments in R&D that can drastically reduce emissions. Recognizing that a government may be tempted to revise its policy design after innovations become available, this note shows how the performance of two policy instruments –prices (uniform taxes) and quantities (tradeable pollution permits)– differ in such a setting.I also discuss the gains from combining either instrument with subsidies to adopting firms.
    Keywords: Pollution control, Innovation, Commitment
    JEL: D42 Q55 Q58
    Date: 2011
  15. By: Bronwyn H. Hall; Christian Helmers
    Abstract: This paper explores the characteristics of 238 patents on 94 “inventions” contributed by major multinational innovators to the “Eco-Patent Commons”, which provides royalty-free access to third parties to patented climate change related innovations. By comparing the pledged patents to other patents in the same technologies or held by the same multinationals, we investigate the motives of the contributing firms as well as the potential for such commons to encourage innovation and diffusion of climate change related technologies. This study, therefore, indirectly provides evidence on the role of patents in the development and diffusion of green technologies. More generally, the paper sheds light on the performance of hybrid forms of knowledge management that combine open innovation and patenting.
    JEL: H23 H42 K11 O33 O34
    Date: 2011–03
  16. By: Melenberg, B.; Vollebergh, H.R.J.; Dijkgraaf, E. (Tilburg University, Center for Economic Research)
    Abstract: This paper presents the results from our investigation of the per-capita, long- term relation between carbon dioxide emissions and gross domestic product (GDP) for the world, obtained with the use of a new, exible estimator. Consistent with simple economic growth models, we find that regional, population-weighted per- capita emissions systematically increase with income (scale effect) and usually de- cline over time (composition and technology effect). Both our in-sample results and out-of-sample scenarios indicate that this negative time effect is unlikely to compen- sate for the upward-income effect at a global level, in the near future. In particular, even if China's specialization in carbon-intensive industrial sectors would come to a halt, recent trends outside China make a reversal of the overall global trend very unlikely.
    Keywords: CO2 Emissions;Environmental Kuznets Curve;Panel Data;(Semi)parametric Estimation.
    JEL: C33 O50 Q40
    Date: 2011
  17. By: John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst); Carlos A. Chavez (Departmento de Economics, Universidad de Concepcion Chile)
    Abstract: All environmental policies involve administrative costs, the costs of implementing and managing policies that extend beyond abatement costs. We examine theoretically the optimal distribution of these costs between the public and regulated sources of pollution. The distribution of administrative costs affects social welfare only if public funds are more expensive than private funds, or if the distribution of administrative costs affects the size of a regulated industry. If having the public take on a larger part of administrative costs increases the size of the industry and this does not lead to lower emissions for a given emissions tax, then it is optimal to make the pollution sources bear all of the administrative costs. A necessary, but not sufficient, reason for having the public bear part of the cost burden is if aggregate emissions decrease as a result.
    Keywords: Emissions Taxes, Pigouvian Taxes, Administrative Costs, Pollution Control
    JEL: L51 Q58
    Date: 2011–04
  18. By: Elettra Agliardi; Luigi Sereno
    Abstract: The effects of two environmental policy options for the reduction of pollution emissions, i.e. taxes and non-tradable quotas, are analyzed. In contrast to the prior literature this work endogenously takes into account the level of emissions before and after the adoption of the new environmental policy. The level of emissions is determined by solving the firm's profit maximization problem under taxes and fixed quotas. We find that the optimal adoption threshold under taxes is always larger than the adoption threshold under fixed quota, even in a setting characterized by ecological uncertainty and ambiguity - in the form of Choquet-Brownian motions - on future costs and benefits over adopting environmental policies.
    Keywords: Environmental taxation; Non-tradable quotas; Optimal implementation time; Choquet-Brownian uncertainty; Real options
    JEL: Q28 Q L51 H23
    Date: 2011–10–01
  19. By: Jianquiao Liu (Department of Economics, University of Ottawa, Ottawa, ON); Leslie Shiell (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: We test whether the principle of targeting (alternatively Sandmo’s (1975) additivity property and Kopczuk’s (2003) decomposition involving the Pigovian rule) has relevance for environmental taxation in a second best world consisting of an exogenous revenue requirement and pre-existing distortionary taxes. In the context of differentiated commodity taxes, we find that Sandmo’s additivity property breaks down once one solves explicitly for the marginal cost of public funds (MCPF). Further, in the more realistic setting of a uniform commodity tax and a dedicated emissions tax, we find that the additivity property no longer holds even in the form Sandmo studied it, i.e. without solving explicitly for the MCPF. Finally, we argue that Koczuk’s decomposition is not persuasive, as it requires that a second government agency must apply a corrective tax or subsidy to adjust the choice of the Pigovian rule by the environmental agency. In a same-numbers exercise (i.e. the number of tax instruments is not increased), we show that there is no presumption in favour of a direct emissions tax over a uniform commodity tax; rather, the choice depends upon the size of the environmental damages. We conclude that there does not exist a principle of targeting in environmental taxation.
    Keywords: environmental taxation; second best; principle of targeting
    JEL: H23
    Date: 2011
  20. By: Habermacher, Florian; Kirchgässner, Gebhard
    Abstract: The increase of fuel extraction costs as well as of temperature will make it likely that in the medium-term future technological or political measures against global warming may be implemented. In assessments of a current climate policy the possibility of medium-term future developments like backstop technologies is largely neglected but can crucially affect its impact. Given such a future measure, a currently introduced carbon tax may more generally mitigate climate change than recent reflections along the line of the Green Paradox would suggest. Notably, the weak and the strong version of the Green Paradox, related to current and longer-term emissions, may not materialize. Moreover, the tax may allow the demanding countries to extract part of the resource rent, further increasing its desirability.
    Keywords: Climate change policy, greenhouse gas tax, carbon tax, Green Paradox, anticipation effects, exhaustible resources, fossil fuels market, backstop technology, uncertainty, resource rent.
    JEL: Q54 Q31 Q38 Q41 Q42
    Date: 2011–03
  21. By: Godal, Odd (Göteborg University and University of Bergen); Meland, Frode (University of Bergen, Department of Economics)
    Abstract: This paper discusses coalition formation with side payments in markets for transferable property rights where strategic agents prevail on both sides of the market. Our concern is emissions permit trading under the Kyoto Protocol. While a seller cartel is not profitable, our analysis indicates that coalitions between sellers and buyers pay off. Three stable cartels are found. None involve all agents, yet they all induce overall e¢ ciency. To support a stable coalition, the EU, Japan and Canada may pay together between 0 and 13 billion US dollars per year to Russia. The permit price and society-wide emission reductions are nil.
    Keywords: Emissions trading; Kyoto Protocol; cartel formation; merger profitability.
    JEL: C71 C72 Q58
    Date: 2011–04–01
  22. By: Chevallier, Julien; Etner, Johanna; Jouvet, Pierre-André
    Abstract: This article proposes a theory of banking of emission permits under conditions of regulatory uncertainty. Based on a two-period partial equilibrium framework, we examine the effects of increasing risk - in the sense of a mean-preserving spread - regarding a future permits allocation at the firm-level. We also examine the role of an agency to pool risks by re-allocating permits for a group of firms. Our results are twofold. First, an increase in risk may lead to changes in a firm’s banking strategy, depending on the third partial derivative of its production function with respect to pollution. Second, we define an optimal risk-sharing rule between agents to respond to political decision changes. Our results overall suggest that the bankability of permits may be used as a risk-management tool.
    Keywords: Banking; Emission permits; Policy risk; Uncertainty;
    JEL: Q58 D80 D21
    Date: 2011
  23. By: Numan-Parsons, Elisabeth (Ministry of Economic Development, New Zealand); Stroombergen, Adolf Stroombergen (Infometrics Ltd); Fletcher, Ngaio
    Abstract: This study creates a 2010 baseline of business responses to the introduction of the New Zealand Emissions Trading Scheme (NZ ETS) and the reasons for those responses. It is too soon to judge the effectiveness of the NZ ETS. Indeed at the time of this study many firms were still coming to terms with the scheme. What has been observed, however, are early signs that the price incentive is starting to have an effect. Potential issues that may in the future require policy intervention are also identified.
    Keywords: Emissions trading scheme; abatement; business strategy
    JEL: Q52 Q58
    Date: 2011–03–30
  24. By: Magnus, J.R.; Melenberg, B.; Muris, C.H.M. (Tilburg University, Center for Economic Research)
    Keywords: Global warming;Dimming;Aerosols;Dynamic panel data.
    Date: 2011
  25. By: Muris, C.H.M. (Tilburg University)
    Date: 2011
  26. By: Michael Greenstone; Elizabeth Kopits; Ann Wolverton
    Abstract: The United States Government recently concluded a year-long process to develop a range of values representing the monetized damages associated with an incremental increase in carbon dioxide (CO2) emissions, commonly referred to as the social cost of carbon (SCC). These values are currently used in benefit-cost analyses to assess potential federal regulations. For 2010, the central value of the SCC is $21 per ton of CO2 emissions and sensitivity analyses are to be conducted at $5, $35, and $65 (2007$). This paper summarizes the methodology and process used to develop the SCC values, complemented with our own commentary about how the SCC can be used to inform regulatory decisions and areas where further research would be particularly useful.
    JEL: Q51 Q54 Q58
    Date: 2011–03
  27. By: Marrouch, W.; Ray Chaudhuri, A. (Tilburg University, Center for Economic Research)
    Abstract: We show that adaptive measures undertaken by countries in the face of climate change, apart from directly reducing the damage caused by climate change, may also indirectly mitigate greenhouse gas emissions by increasing the stable size of international agreements on emission reductions. Moreover, we show that the more effective the adaptive measure in terms of reducing the marginal damage from emissions, the larger the stable size of the international environmental agreement. In addition, we show that larger coalitions, in the presence of adaptation, may lead to lower global emission levels and higher welfare.
    Keywords: international environmental agreements;adaptation;coalition formation;cli- mate change.
    JEL: Q54 Q59
    Date: 2011
  28. By: Yanos Zylberberg (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The cost of natural calamities is not limited to direct damages and immediate material costs. Economies in the wake of severe shocks experience important slowdowns and long business disruptions. I construct a unique dataset of objective measures on cyclones and earthquakes between 1980 and 2006 and complement existing reports on direct damages. I then estimate the amplitude of indirect economic losses in the aftermath of catastrophes. Declared damages accounting for 1% of GDP translate into a slowdown of .05 to .06 points of GDP growth. The results are essentially driven by cyclones; earthquakes having no effects on immediate growth rate. When instrumenting by the actual exposure, this elasticity piles up to .4. This observation points out censorship issues regarding declarations of losses. In addition, the objective measures happen to be better at predicting the economic slack than reports from officials.
    Keywords: natural disasters ; economic disruption ; declaration biases
    Date: 2010–10
  29. By: SAWADA Yasuyuki; Rima BHATTCHARYAY; KOTERA Tomoaki
    Abstract: In recent decades, the world has faced an increasing number of natural and man-made disasters. Such disasters include tsunamis, earthquakes, the current ongoing financial crisis, terrorism, riots, and wars. These disasters generate tremendous social and economic costs, especially for the poor in low income economies. This paper assesses and compares the impacts of various natural and man-made disasters quantitatively. We carefully construct cross-country panel data of 189 countries within the range between 1968 to 2001 on a wide variety of natural disasters such as hydro-meteorological, geophysical, climatological, technological and biological disasters as well as man-made disasters such as economic crises, civil conflicts and wars. The paper employs this unique panel dataset to estimate econometric models which enable us to quantify and compare the impacts of different natural and man-made disasters on welfare as captured by per capita consumption. According to our estimation results, in the short term, natural disasters generate the largest negative welfare impacts which are followed by wars and economic disasters. Intriguingly, in the long term, natural disasters and wars have positive impacts on per capita GDP growth. Wars affect large economies more than small economies while natural disasters affect small economies disproportionately.
    Date: 2011–03
  30. By: Hallegatte, Stephane
    Abstract: Assuming that capital productivity is higher in areas at risk from natural hazards (such as coastal zones or flood plains), this paper shows that rapid development in these areas -- and the resulting increase in disaster losses -- may be the consequence of a rational and well-informed trade-off between lower disaster losses and higher productivity. With disasters possibly becoming less frequent but increasingly destructive in the future, average disaster losses may grow faster than wealth. Myopic expectations, lack of information, moral hazard, and externalities reinforce the likelihood of this scenario. These results have consequences on how to design risk management and climate change policies.
    Keywords: Natural Disasters,Hazard Risk Management,Insurance&Risk Mitigation,Labor Policies,Economic Theory&Research
    Date: 2011–03–01
  31. By: Anna Strutt (University of Waikato); Allan N. Rae (Massey University)
    Abstract: Agriculture remains a major sector of the New Zealand economy, with the vast majority of farm and food production exported. The accelerating intensification of farming in New Zealand over recent decades raises concern over the current sustainability of New Zealand farming, and whether it can remain so in the future. In this study, we focus on the impacts of policies to reduce environmental impacts of dairy farming, with a particular focus on nitrogen pollution and greenhouse gases (GHG) emissions. We use a modified version of the Global Trade Analysis Project (GTAP) model and database, with improved specification of the agricultural sector and land-use. We augment the model with environmental indicators for New Zealand, including nitrogen balances and GHG emissions.
    Keywords: global CGE model; dairy production; environmental impacts; environmental policy
    JEL: F14 F17 F18 O13 Q15 Q17 Q53 Q58
    Date: 2011–03–28
  32. By: John Quiggin (Risk & Sustainable Management Group, School of Economics, University of Queensland); David Adamson (Risk and Sustainable Management Group, University of Queensland); Sarah Chambers (Risk and Sustainable Management Group, University of Queensland); Peggy Schrobback (Risk & Sustainable Management Group, School of Economics, University of Queensland)
    Abstract: Climate change is likely to have substantial effects on irrigated agriculture. Extreme climate events such as droughts are likely to become more common. These patterns are evident in median projections of climate change for the Murray–Darling Basin in Australia. Understanding climate change effects on returns from irrigation involves explicit representation of spatial changes in natural stocks (i.e. water supply) and their temporal variability (i.e. frequency of drought states of nature) and the active management responses to capital stocks represented by mitigation and alternative adaptation strategies by state of nature . A change in the frequency of drought will induce a change in the allocation of land and water between productive activities. In this paper, a simulation model of state-contingent production is used to analyze the effects of climate change adaptation and mitigation. In the absence of mitigation, climate change will have severe adverse effects on irrigated agriculture in the Basin. However, a combination of climate mitigation and adaptation through changes in land and water use will allow the maintenance of agricultural water use and environmental flows.
    Keywords: Irrigation, Uncertainty, Climate Change
    JEL: Q25 Q54
    Date: 2010–12
  33. By: Thapa, Sridhar; Joshi, Ganesh Raj
    Abstract: This paper applies Ricardian approach to measure the effect of climate change on crop production in Nepal using cross-section data of Nepal Living Standard Survey 2003/04 and climate data from Department of Hydrology and Meteorology, Nepal. The study examines the relationship between net farm revenue and climate variables using 656 households of 14 districts covering all climatic zones of Nepal. Net farm revenue is regressed on climate and socio-economic variables. The findings show that these variables have significant impact on the net farm value per hectare. More specifically, relatively low precipitation and high temperature seem to have positive impact on net farm income during the fall and spring seasons. Net farm income is likely to be increased by summer precipitation, but not by temperature. Marginal impacts are mostly in line with the Ricardian model, showing marginally increasing precipitation during summer and winter would increase net farm income, but reduce by the quarter terms and temperature of these seasons. Moreover, marginally increasing precipitation would increase farm income in the hilly region, but reduce in Terai region. Other variables such as ratio of irrigated farm land and obtaining credit are found to be positive impact on net farm value but not by farm size. Conclusively, the impact of climate change on agriculture seems to be varied with the temperature and precipitation in different climatic zones.
    Keywords: climate change; agriculture; Ricardian approach; marginal impact; Nepal
    JEL: Q24 C31 Q54
    Date: 2010–12
  34. By: Paul Lanoie (IEA, HEC Montréal); Alexandra Rochon-Fabien
    Abstract: The Enviroclub initiative was developed by three federal government agencies—Canada Economic Development for Quebec Regions, Environment Canada and the National Research Council Canada—and launched in 2001 to assist small and medium-sized enterprises (SMEs) in improving their profitability and competitiveness through enhanced environmental performance. An Enviroclub consists of a group of 10-15 SMEs involved in training sessions on environmental management and carrying out at least one profitable in-plant pollution prevention project. The objective of this article is to provide a cost benefit analysis (CBA) of this original initiative in order to inform policy makers as to the social desirability of such programs. One of the main social benefits of this initiative is to reduce emissions of various pollutants, so that one of our largest challenges is to place a value on these environmental improvements. To do so, we use the “environmental value transfer” method to obtain values from previous relevant studies. We conduct our CBA at three different levels: we consider the costs and benefits first for the whole of society, then from the participating firms’ point of view and, finally, from the governments’ perspective. We conclude that, whichever perspective we choose, The Enviroclub initiative has been highly profitable.
    Keywords: cost-benefit analysis, SMEs, environment training, environmental performance
    Date: 2011–02
  35. By: Seker, Murat
    Abstract: There is a large body of research that explores international trade as a source of the dispersion in income levels and growth performances across countries. The trade liberalization policies undertaken between 1950 and 2006 led to an almost 30 fold growth in the volume of international trade. However this increase has not been homogeneous across countries. This study investigates a possible reason that prevents convergence of countries in export performance. It shows that regulatory quality, customs efficiency, quality of infrastructure, and access to finance among other factors increase export performance. Furthermore, it shows that countries that are relatively more constrained in accessing to foreign markets benefit more from improvements in investment climate than the countries with easier foreign market access. Hence attaining a favorable investment climate for private sector development should be an important policy objective for relatively closed economies to achieve convergence in export volumes with countries that have more liberal trade policies.
    Keywords: Export performance; trade policy; investment climate; institutions; trade facilitation
    JEL: O1 F15 F4 F14
    Date: 2011–02

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