nep-ene New Economics Papers
on Energy Economics
Issue of 2011‒04‒23
twenty-six papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Supply Curves for Conserved Electricity By Paul, Anthony; Palmer, Karen; Woerman, Matt
  2. Goldilocks and the Three Electricity Prices: Are Irish Prices "Just Right"? By Devitt, Conor; Diffney, Seán; Fitz Gerald, John; Malaguzzi Valeri, Laura; Tuohy, Aidan
  3. The Effect of REFIT on Irish Electricity Prices By Devitt, Conor; Malaguzzi Valeri, Laura
  4. Korea nuclear exports: Why did the Koreans win the UAE tender? Will Korea achieve its goal of exporting 80 nuclear reactors by 2030? By Francois Leveque; Michel Berthélemy
  5. Recent Researches in Energy and Environment By Roberto Revetria Lotfi A. Zadeh Alexander Zemliak, Zoran Bojkovic Janusz Kacprzyk Nikos Mastorakis Valeri Mladenov; Covaci, Brindusa; George Robert Lazaroiu, Alexandru T Bogdan
  6. Economic Regulation: Recentralisation of Power or Improved Quality of Regulation? By Gorecki, Paul K.
  7. Riding the Roller Coaster: Fiscal Policies of Nonrenewable Resources Exporters in Latin America and the Caribbean . By Mauricio Villafuerte; Pablo López-Murphy; Rolando Ossowski
  8. Propagation of Inflationary Shocks in Chile and an International Comparison of Progagation of Shocks to food and Energy Prices. By Michael Pedersen
  9. Financial Development, Energy Consumption and CO2 Emissions: Evidence from ARDL Approach for Pakistan By Muhammad , Shahbaz; Faridul, Islam; Muhammad Sabihuddin , Butt
  10. Causal relationship between fossil fuel consumption and economic growth in Japan: a multivariate approach By Hazuki Ishida
  11. Assessment of the impacts of oil: Opportunities and challenges for economic development in Sudan By Nour, Samia Satti Osman Mohamed
  12. Do Political Institutions protect the poor? Intra Countries Health Inequalities and Air Pollution in Developing Countries By Alassane Drabo
  13. Profiting from Regulation: An Event Study of the EU Carbon Market By Bushnell, James; Mansur, Erin T.; Chong, Howard G.
  14. Adverse Selection and Emissions Offsets By Bushnell, James
  15. Optimal Pollution Trading without Pollution Reductions: A Note By Jorge H. García; Matthew T. Heberling; Hale W. Thurston
  16. The Political Economy of Carbon Securities and Environmental Policy By Polborn, Sarah
  17. Carbon Neutrality and Bioenergy: A Zero-Sum Game? By Sedjo, Roger A.
  18. The Social Cost of Carbon By Tol, Richard S. J.
  19. The Marginal Damage Costs of Different Greenhouse Gases: An Application of FUND By Anthoff, David; Rose, Steven K.; Tol, Richard S. J.; Waldhoff, Stephanie
  20. The Economic Impact of Climate Change in the 20th Century By Tol, Richard S. J.
  21. Regional and Sectoral Estimates of the Social Cost of Carbon: An Application of FUND By Anthoff, David; Rose, Steven K.; Tol, Richard S. J.; Waldhoff, Stephanie
  22. Local Warming, Local Economic Growth, and Local Change in Democratic Culture By Van de Vliert, Evert; Tol, Richard S. J.
  23. Trade Liberalisation and Climate Change: A CGE Analysis of the Impacts on Global Agriculture By Calzadilla, Alvaro; Rehdanz, Katrin; Tol, Richard S. J.
  24. Making Sense of Climate Change: How to Avoid the Next Big Flood By Whiteman, G.M.
  25. On International Equity Weights and National Decision Making on Climate Change By Anthoff, David; Tol, Richard S. J.
  26. Tipping Climate Negotiations By Geoffrey Heal; Howard Kunreuther

  1. By: Paul, Anthony (Resources for the Future); Palmer, Karen (Resources for the Future); Woerman, Matt (Resources for the Future)
    Abstract: In this paper, we introduce a new top-down approach to modeling the effects of publicly financed energy-efficiency programs on electricity consumption and carbon dioxide emissions. The approach draws on a partial-adjustment econometric model of electricity demand and represents the results of a reverse auction for electricity savings from different levels of public investment. The model is calibrated to recent estimates of the cost-effectiveness of rate payer–funded efficiency programs at reducing electricity consumption. The results suggest that supply curves for conserved electricity are upward sloping, convex, and dependent on policy design and electricity prices. Under the scenarios modeled, electricity savings of between 1 and 3 percent are achievable at a marginal cost of $50 per megawatt hour (MWh) and a corresponding average cost of $25–$35/MWh.
    Keywords: energy efficiency, climate change
    JEL: Q41 Q48 Q58
    Date: 2011–04–07
  2. By: Devitt, Conor; Diffney, Seán; Fitz Gerald, John; Malaguzzi Valeri, Laura; Tuohy, Aidan
    Abstract: In this paper we analyse the 2008 electricity price in the Irish All-Island Market. We test whether this price is 'efficient' by comparing it to the electricity price in Great Britain. This analysis suggests that around ?16 per MWh of the difference in wholesale prices between Ireland and Britain is due to differences in generating technology. The new wholesale electricity market for the island of Ireland appears to be working well ? it is producing a wholesale price that approximates the long run marginal cost that would apply in a large liquid competitive market. In the British market the wholesale price appears to be below the long run marginal cost of producing electricity. Retail margins in Great Britain are high, especially for households. Only some of this margin compensates vertically integrated utilities for the low wholesale price. In the Republic of Ireland the retail margin was probably also higher than it should have been.
    Keywords: electricity/Ireland/cost/Republic of Ireland
    Date: 2011–02
  3. By: Devitt, Conor; Malaguzzi Valeri, Laura
    Abstract: This paper evaluates the likely effect of REFIT, the Irish scheme to support renewable electricity generation, on the wholesale price of electricity. The cost of REFIT is passed on to Irish consumers. Here we calculate that when there are 4071MW of on-shore wind in the Republic of Ireland the cost of the REFIT scheme is between 5 per cent and 10 per cent of the gross wholesale price of electricity. Off-shore wind has higher levels of support than on-shore wind, as do technologies that are still in development such as wave and tidal. When off-shore wind, wave and tidal are added to the system, the cost of REFIT increases significantly. We argue that wave and tidal should be sustained with a different scheme that provides capital grants, and that off-shore wind that is channelled to exports should not be supported by Irish consumers.
    Keywords: feed-in targets/Ireland/Renewable electricity
    JEL: L94 Q40 Q42
    Date: 2011–02
  4. By: Francois Leveque (CERNA - Centre d'économie industrielle - Mines ParisTech); Michel Berthélemy (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: The success of Korea in winning, in December 2009, a USD 18.6 billion nuclear tender in the United Arab Emirates (UAE) has led to a growing interest in the organization and strengths of the Korean nuclear industry. In this paper, we present the main economic and political factors that explain the success of the Korean consortium. In particular, thanks to an active national program of Nuclear Power Plant (NPP) construction, Korea has developed distinct competitive advantages in terms of low cost, high credibility and high performance. At the same time, due to the important barriers to enter into the nuclear export market in the UAE, Korea has had to sacrifice its profit margin and has benefited from a strong political support from its government through export financing. More importantly, Korea's success is also due to its alliance with Westinghouse and the support of the US diplomacy. Subsequently, we show that while Korea has recently experienced setbacks in nuclear tenders, it will most certainly try to win in the short run a second nuclear tender with another aggressive price. In the longer run, Korea could take a growing share of the international market for NPPs. However, the extent to which Korea can achieve its long term export target will depend upon its capacity to finance nuclear export through export credits and upon the development of its alliance with Westinghouse.
    Keywords: Nuclear energy; Nuclear power plant; nuclear industry; Korea nuclear exports
    Date: 2011
  5. By: Roberto Revetria Lotfi A. Zadeh Alexander Zemliak, Zoran Bojkovic Janusz Kacprzyk Nikos Mastorakis Valeri Mladenov (University of Berkley, Genoa University); Covaci, Brindusa (Osterreichish-Rumanischer Akademischer Verein); George Robert Lazaroiu, Alexandru T Bogdan (Romanian Academy)
    Abstract: This year the 6th IASME / WSEAS International Conference on ENERGY & ENVIRONMENT (EE '11) was held in Cambridge, UK, February 23-25, 2011. The conference remains faithful to its original idea of providing a platform to discuss power generation, power plants, solar power, photovoltaic energy, fuel cells, environmental issues, electric vehicles, hybrid vehicles, transmission planning, transformers, circuit breakers, sustainable management, cleaner energy systems, energy storage, materials chemistry, electrochemistry, cogeneration systems, environmental management, biodiversity, sustainability indicators, natural resources management, feasibility analysis etc. with participants from all over the world, both from academia and from industry.
    Keywords: sustainable management; cleaner energy systems; energy storage; materials chemistry; electrochemistry; cogeneration systems; environmental management; biodiversity; sustainability indicators; natural resources management
    JEL: A10
    Date: 2011–04–09
  6. By: Gorecki, Paul K.
    Abstract: The October 2009 Government Statement on Economic Regulation issued proposes a number of sensible reforms that are likely to improve regulatory performance in energy, airports, telecommunications, postal services and transport. However, the Government Statement also proposes to reduce the independence of regulators by holding them to account through a whole series of additional mechanisms, some of which are informal and lack transparency, while at the same time instructing regulators to take into account evolving/current ? possible transient ? priorities. There are good reasons for preserving and strengthening rather than undermining regulatory independence. For example, it facilitates investment in long-lived assets with a large element of sunk or irrecoverable investment, a common characteristic of network sectors. The Government Statement's unexplained move to reduce regulators' independence finds no support in either the government commissioned background report prepared by the Economic Intelligence Unit, Review of the Regulatory Environment in Ireland, or recent European Union legislation on energy and telecommunications regulation. Indeed, these sources are strongly in favour of regulatory independence. Two, not necessarily mutually exclusive explanations, for reducing regulatory independence are discussed: to remove an anomaly in the Irish political system; and, to assist in the delivery of social partnership. The paper concludes by arguing that some thought might be given to public consultation of the reforms in the Government Statement prior to further implementation.
    Keywords: European Union/investment/Ireland/postal services/regulation/transport
    Date: 2011–02
  7. By: Mauricio Villafuerte; Pablo López-Murphy; Rolando Ossowski
    Abstract: This paper analyzes recent fiscal policies of nonrenewable resource exporting countries in Latin America and the Caribbean in the context of sharp swings in resource prices. Fiscal policies were predominantly procyclical during the boom period 2003-08 but to significantly differing degrees within the sample. Countries that pursued more conservative fiscal policies during the boom were then able to implement countercyclical fiscal policies during the downturn; moreover, they reduced or maintained their fiscal vulnerability to resource shocks, while their long-term fiscal sustainability positions improved or were broadly unchanged. However, these dimensions of fiscal policy did not seem to be linked to fiscal rules or resource funds, as countries with such institutions displayed a broad range of fiscal responses to the recent cycle.
    Date: 2011–02
  8. By: Michael Pedersen
    Abstract: When a specific price is affected by a shock, this may spread to other prices and thus affect the overall inflation rate by more than the initial effect. This phenomenon is known as propagation of inflationary shocks and is the subject investigated in the present paper. It is argued that structural VAR models, with an imposed Cholesky decomposition, are suitable for the propagation analysis when the data vector includes the component affected by the initial shock and the rest of the CPI basket. The empirical analysis with annual Chilean inflation rates suggests that the propagation effects have generally diminished after the implementation of the inflation-targeting regime in September 1999. Propagation of shocks to the division including food prices, however, has increased, albeit with a delay of four months. An analysis of propagation of energy and food price shocks in seven industrialized and four Latin-American countries suggests that the effects in Chile are amongst the largest and, in the case of energy price shocks, with the longest duration.
    Date: 2010–04
  9. By: Muhammad , Shahbaz; Faridul, Islam; Muhammad Sabihuddin , Butt
    Abstract: The paper explores the existence of a long run equilibrium relationship among CO2 emissions, financial development, economic growth, energy consumption, and population growth in Pakistan. ARDL bounds testing approach to cointegration is implemented to the data for 1974-2009. The results confirm a long run relation among these variables. Financial development appears to help reduce CO2 emissions. The main contributors to CO2 emissions however are: economic growth, population growth and energy consumption. Our results also lend support to the existence of Environmental Kuznets Curve for Pakistan. Based on the findings we argue that policy focus on financial development might be helpful in reducing environmental degradation.
    Keywords: Financial Development; CO2 Emissions; Cointegration
    JEL: A10
    Date: 2011–02–18
  10. By: Hazuki Ishida (Faculty of Symbiotic Systems Science, Fukushima University)
    Abstract: Fossil fuels (oil, coal, gas) are low-entropy natural resources which seem to be indispensable for our economic prosperity. This paper investigates the relationship between fossil fuel consumption and economic growth in Japan, using a multivariate model of fossil fuels, non-fossil energy, labor and GDP. Using the Johansen cointegration technique, the empirical results indicate that there is a long-run relationship among the variables. Then using vector error correction model, the study reveals unidirectional causality running from fossil fuels to GDP. It implies that decline in fossil fuel consumption may hamper economic growth. On the other hand, non-fossil energy use does not appear to have positive effects on economic growth.
    Keywords: Fossil fuels, Economic growth, Cointegration, Granger causality
    JEL: Q32 Q43 Q57
    Date: 2011–04
  11. By: Nour, Samia Satti Osman Mohamed (Faculty of Economic and Social Studies, Khartoum University, and UNU-MERIT)
    Abstract: This paper provides an assessment of the impacts of oil and discusses the opportunities and challenges for enhancing economic development in Sudan. One advantage of our analysis in this paper is that we provide a more comprehensive analysis using the most recent secondary data to discuss the positive and negative impacts of oil for enhancing economic development in Sudan. We explain that the various positive impacts of oil and the opportunities for enhancing development in Sudan's economy include the impacts of oil in satisfying domestic consumption and achievement of self sufficiency, increasing government and public revenues, rapid and impressive economic growth as measured by the growth in the GDP and its composition and structure, increasing foreign direct investment (FDI) and increasing the volume of foreign trade as measured by the volume and structure of exports. We find that while oil has recently contributed to the improvement of economic performance in the country, the recent heavy dependence on it, may lead to negative impacts and serious challenges for the Sudan since oil is an exhaustible resource and because of the instability of oil prices in the international market the revenue from oil is uncertain and volatile and may lead to instability of economic growth. Moreover, the increasing dependence on oil leads to increasing debate for and against the incidence of the Dutch Disease in Sudan economy, the lack of diversification and the challenges related to potential north-south conflict and division of the country.
    Keywords: oil economy, oil impacts, economic development, Sudan
    JEL: O10 O11 Q30 Q32 Q40 Q43
    Date: 2011
  12. By: Alassane Drabo (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper examines the link between health inequalities, air pollution and political institutions. In health economics literature, many studies have assessed the association between environmental degradation and health outcomes. This paper extends this literature by investigating how air pollution could explain health inequalities both between and within developing countries, and the role of political institutions in this relationship. Theoretically, we argue that differential in exposition to air pollution among income classes, prevention ability against health effect of environment degradation, capacity to respond to disease caused by pollutants and susceptibility of some groups to air pollution effect are sufficient to expect a positive link between air pollution and income related health inequality. Furthermore, in democratic countries, this heterogeneity in the health effect of pollution may be mitigated since good institutions favour universal health policy issues, information and advices about hygiene and health practices, and health infrastructures building. Our econometric results show that sulphur dioxide emission (SO2) and particulate matter (PM10) are in part responsible for the large disparities in infant and child mortalities between and within developing countries. In addition, we found that democratic institutions play the role of social protection by mitigating this effect for the poorest income classes and reducing the health inequality it provokes.
    Keywords: health inequality;air pollution;political institutions;social protection
    Date: 2011–04–11
  13. By: Bushnell, James; Mansur, Erin T.; Chong, Howard G.
    Abstract: We investigate the effect of cap-and-trade regulation of CO2 on firm profits by performing an event study of a CO2 price crash in the EU market. We examine returns for 90 stocks from carbon intensive industries and 600 stocks in the broad EUROSTOXX index. Firms in carbon intensive, or electricity intensive industries, but not involved in international trade were most hurt by the event.  This implies investors were focused on product price impacts, rather than compliance costs. We find evidence that firms’ net allowance positions also strongly influenced the share price response to the decline in allowance prices.
    Keywords: Emissions Markets; Incidence of Taxation; Event Study
    JEL: G14 H22 H23 Q50 Q54
    Date: 2010–12–15
  14. By: Bushnell, James
    Abstract: Programs where firms sell emissions ``offsets'' to reduce their emissions continue to provide important complementsto traditional environmental regulations. However in many cases, particularly with current and prospective climate change policy, they continue to be very controversial. The problem of adverse selection lies at the heart of this controversy, as critics of offset programs continue to produce evidence that these projects are paying firms for actions they would have undertaken anyway, and are not producing ``additional'' reductions. This paper explores the theoretical sources of non-additional offsets.  An important distinction arises between sales that indicate adverse selection and those that reveal information about aggregate emissions levels.  
    Keywords: adverse selection; Emissions Markets; Offsets; Climate Policy
    JEL: G12 Q50
    Date: 2011–04–06
  15. By: Jorge H. García; Matthew T. Heberling; Hale W. Thurston
    Abstract: Many kinds of water pollution occur in pulses, e.g., agricultural and urban runoff. Ecosystems, such as wetlands, can serve to regulate these pulses and smooth pollution distributions over time. This smoothing reduces total environmental damages when the “instantaneous” damage function is convex. This paper introduces a water quality trading model between a farm (a pulse-pollution source) and a firm (a more steady pollution source) where the object of exchange is the ‘temporary’ retention of runoff as opposed to total runoff reductions. The optimal trading ratio requires firm emissions to be offset by more than a proportional retention of the initial agricultural runoff pulse. The reason is twofold: a) emissions are steady over time and -in this sense- have relatively larger environmental impact, and b) certain kinds of runoff management cause otherwise inexistent delayed environmental damages.
    Date: 2010–05–02
  16. By: Polborn, Sarah (Department of Economics, Aarhus School of Business)
    Abstract: The costs of the current suboptimal carbon abatement policy are likely in the range of 3 to 6 trillion 2005 US dollars. Using methods from the political economy of environmental policy, the paper develops a new carbon abatement policy instrument, carbon securities. A carbon security entitles its owner to a fixed proportion of ex ante unknown total emissions. This creates an additional group of stakeholders on the side of the issue that has traditionally been underrepresented. The advantages over existing systems include an equilibrium carbon price closer to the social optimum, a more predictable environmental policy, and higher investment in abatement technology
    Keywords: Carbon abatement; environmental policy; global warming; interest groups; lobbying; policy instrument design; political process
    JEL: D72 Q54 Q58
    Date: 2011–09–07
  17. By: Sedjo, Roger A. (Resources for the Future)
    Abstract: Biomass, a renewable energy source, has been viewed as “carbon neutral”—that is, its use as energy is presumed not to release net carbon dioxide. However, this assumption of carbon neutrality has recently been challenged. In 2010 two letters were sent to the Congress by eminent scientists examining the merits—or demerits—of biomass for climate change mitigation. The first, from about 90 scientists (to Nancy Pelosi and Harry Reid, from W.H. Schlesinger et al. May 17, 2010), questioned the treatment of all biomass energy as carbon neutral, arguing that it could undermine legislative emissions reduction goals. The second letter, submitted by more than 100 forest scientists (to Barbara Boxer et al. from Bruce Lippke et al. July 20, 2010), expressed concern over equating biogenic carbon emissions with fossil fuel emissions, as is contemplated in the Environmental Protection Agency’s Tailoring Rule. It argued that an approach focused on smokestack emissions, independent of the feedstocks, would encourage further fossil fuel energy production, to the long-term detriment of the atmosphere. This paper attempts to clarify and, to the extent possible, resolve these differences.
    Keywords: carbon neutrality, biomass, wood biomass, bioenergy, carbon dioxide, feedstock, energy, alternative fuel, rational expectations
    JEL: Q2 Q23 Q4 Q42 Q5
    Date: 2011–04–07
  18. By: Tol, Richard S. J.
    Abstract: This paper surveys the literature on the economic impact of climate change. Different methods have been used to estimate the impact of climate change on human welfare. Studies agree that there are positive and negative impacts. In the short term, positive impacts may dominate, but these are largely sunk. In the longer term, there are net negative impacts. Poorer people tend to be more vulnerable to climate change. There is a trade-off between development policy and climate policy. Estimated aggregate impacts are not very large, but they are uncertain and incomplete. Estimates of the marginal impacts suggest that greenhouse gas emissions should be taxed, and that the emission reduction targets announced by politicians are probably too ambitious.
    Keywords: Climate change/Climate policy/cost/emission reduction target/impacts/Policy/Social cost of carbon
    Date: 2011–02
  19. By: Anthoff, David; Rose, Steven K.; Tol, Richard S. J.; Waldhoff, Stephanie
    Abstract: We use FUND 3.5 to estimate the social cost of carbon dioxide, methane, nitrous oxide, and sulphur hexafluoride emissions. We show the results of a range of sensitivity analyses, focusing on the impact of carbon dioxide fertilization. Ignored in previous studies of the social cost of greenhouse gas emissions, carbon dioxide fertilization has a positive effect at the margin, but only for carbon dioxide. Because of this, the ratio of the social cost of a greenhouse gas to that of carbon dioxide (the global damage potential) is higher - that is, previous papers underestimated the importance of reducing non-carbon dioxide greenhouse gas emissions. When leaving out carbon dioxide fertilization, our estimate of the social cost of methane is comparable to previous estimates. Our estimate of the global damage potential of methane is close to the estimates of the global warming potential because discounting roughly cancels carbon dioxide fertilization. Our estimate of the social cost of nitrous oxide is higher than previous estimates, also when omitting carbon dioxide fertilization. This is because, in FUND, vulnerability to climate change falls over time (with development) while in the long run carbon dioxide is a more potent greenhouse gas than nitrous oxide. Our estimate of the global damage potential of nitrous oxide is larger than the global warming potential because of carbon dioxide fertilization, discounting, and rising atmospheric concentrations of both gases. Our estimate of the social cost of sulphur hexafluoride is similar to the one previous estimate. Its global damage potential is higher than the global warming potential because of carbon dioxide fertilization, discounting, and rising concentrations.
    Keywords: Climate change/cost/Social cost of carbon
    Date: 2011–03
  20. By: Tol, Richard S. J.
    Abstract: The national version of FUND3.6 is used to infrapolate the impacts of climate change to the 20th century. Carbon dioxide fertilization of crops and reduced energy demand for heating are the main positive impacts. Climate change had a negative effect on water resources and, in most years, human health. Most countries benefitted from climate change until 1980, but after that the trend is negative for poor countries and positive for rich countries. The global average impact was positive.
    Keywords: Climate change/impacts/Impacts of climate change/Human health
    Date: 2011–02
  21. By: Anthoff, David; Rose, Steven K.; Tol, Richard S. J.; Waldhoff, Stephanie
    Abstract: The social cost of carbon is an estimate of the benefit of reducing CO2 emissions by one ton today. As such it is a key input into cost-benefit analysis of climate policy and regulation. We provide a set of new estimates of the social cost of carbon from the integrated assessment model FUND 3.5 and present a regional and sectoral decomposition of our new estimate. China, Western Europe and the United States have the highest share of harmful impacts, with the precise order depending on the discount rate. The most important sectors in terms of impacts are agriculture and increased energy use for cooling. We present an extensive sensitivity analysis with respect to the discount rate, equity weights, different socio economic scenarios and values for the climate sensitivity parameter.
    Keywords: cost/Social cost of carbon/cost-benefit analysis/Climate policy/Policy/regulation/decomposition/europe/impacts/discount rate/energy use/equity/scenarios
    Date: 2011–02
  22. By: Van de Vliert, Evert; Tol, Richard S. J.
    Abstract: In a 104-nation study we first demonstrate that cultural self-expression, individualism and democracy languish in poor countries with colder-than-temperate winters, but flourish in rich countries with such winters. Mild summers are kind to this syndrome of culturally embedded democracy in rich countries only. Using these climato-economic niches of culture, we then estimate how unarrested global warming in conjunction with unaltered economic growth would affect democratic culture in 138 countries and regions. Local warming in concert with local economic trends would weaken democratic culture, especially the strongly democratic cultures of Australia, New Zealand, Northern Europe, and North America, but would strengthen democratic culture in China and Russia.
    Keywords: growth/europe/North America
    Date: 2011–03
  23. By: Calzadilla, Alvaro; Rehdanz, Katrin; Tol, Richard S. J.
    Abstract: Based on predicted changes in the magnitude and distribution of global precipitation, temperature and river flow under the IPCC SRES A1B and A2 scenarios, this study assesses the potential impacts of climate change and CO2 fertilization on global agriculture, and its interactions with trade liberalisation as proposed for the Doha Development Round. The analysis uses the new version of the GTAP-W model, which distinguishes between rainfed and irrigated agriculture and implements water as an explicit factor of production for irrigated agriculture. Significant reductions in agricultural tariffs lead to modest changes in regional water use. Patterns are non-linear. On the regional level water use may go up for partial liberalization, and down for more complete liberalization. This is because different crops respond differently to tariff reductions, and because trade and competition matter too. Moreover, trade liberalization tends to reduce water use in water scarce regions, and increase water use in water abundant regions, even though water markets do not exist in most countries. Considering impacts of climate change the results show that global food production, welfare and GDP fall over time while food prices increase. Larger changes are observed under the SRES A2 scenario for the medium term (2020) and under the SRES A1B scenario for the long term (2050). Combining scenarios of future climate change with trade liberalization countries are affected differently. However, the overall effect on welfare does not change much.
    Keywords: Climate change/competition/impacts/Impacts of climate change/scenarios
    Date: 2011–03
  24. By: Whiteman, G.M.
    Abstract: Over the last two decades, management studies on sustainability have grown considerably, including a recent surge of research on climate change. However, environmental problems have not been resolved, and most of the top management journals remain focused on the firm, not the system. This presents both a paradox and an opportunity. The year 2010 was the hottest year on record, making it the warmest decade since 1880. In certain places (like Australia and the Arctic), the impacts of climate change are already apparent. In the future, as CO2 continues to rise, we can expect more extreme events like floods, droughts, fires, and melting ice caps. This has profound implications for the way we manage and organize our societies. Before we can manage something, we have to make sense of the situation. In a complex environment, people need to pay attention to subtle cues, overcome barriers, and collectively develop ‘sensemaking’ across organizations. If people do not pay sufficient attention, they will encounter a ‘predictable surprise’ – a crisis situation that could be avoided but isn’t because of existing social and economic structures. This lecture considers how to make better sense of climate change. Professor Whiteman argues that it essential for managers and academics to take a more systemic approach and collaborate with the natural sciences and local people. She ends with management lessons for the 21st Century.
    Keywords: climate change;ecological sensemaking;extreme event;management lessons;sustainability
    Date: 2011–04–01
  25. By: Anthoff, David; Tol, Richard S. J.
    Date: 2011–01
  26. By: Geoffrey Heal; Howard Kunreuther
    Abstract: Thinking about tipping provides a novel perspective on finding a way forward in climate negotiations and suggests an alternative to the current framework of negotiating a global agreement on reductions in greenhouse gas emissions. Recent work on non-cooperative games shows games with increasing differences have multiple equilibria and have a “tipping set,” a subset of agents who by changing from the inefficient to the efficient equilibrium can induce all others to do the same. We argue that international climate negotiations may form such a game and so have a tipping set. This set is a small group of countries who by adopting climate control measures can make in the interests of all others to do likewise.
    JEL: C72 F53 Q56
    Date: 2011–04

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