nep-ene New Economics Papers
on Energy Economics
Issue of 2011‒09‒22
28 papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Oil Shocks in a Global Perspective: Are they Really that Bad? By Tobias N. Rasmussen; Agustin Roitman
  2. Stationarity Changes in Long-Run Fossil Resource Prices: Evidence from Persistence Break Testing By Aleksandar Zaklan; Jan Abrell; Anne Neumann
  3. On the link between forward energy prices: A nonlinear panel cointegration approach By Marc Joëts; Valérie Mignon
  4. Nonlinear Regime Shifts in Oil Price Hedging Dynamics By Giulio Cifarelli
  5. Estimating Income Elasticity of Government Expenditures: Evidence from Oil Price Shocks By Brückner, Markus; Chong, Alberto; Gradstein, Mark
  6. Medium Term Economic Effects of Peak Oil Today By Dr. Ulrike Lehr; Dr. Christian Lutz; Kirsten Wiebe
  7. Burkina Faso - Policies to Protect the Poor from the Impact of Food and Energy Price Increases By Isabell Adenauer; Javier Arze del Granado
  8. External Sustainability of Oil-Producing Sub-Saharan African Countries By Misa Takebe; Robert C. York
  9. Efficient Mechanisms for Access to Storage with Imperfect Competition in Gas Markets By Alberto Cavaliere; Valentina Giust; Mario Maggi
  10. Energy efficiency in transition: do market-oriented economic reforms matter? By Nepal, Rabindra
  11. Not Only Subterranean Forests: Wood Consumption And Economic Development In Britain (1850-1938) By Iñaki Iriarte-Goñi; María Isabel Ayuda
  12. Sustainable energy development in Austria until 2020: Insights from applying the integrated model “” By Stocker, Andrea; Großmann, Anett; Wolter, Marc Ingo; Madlener, Reinhard
  13. The impact of policy elements on the financing costs of RE investment: The case of wind power in Germany By Giebel, Olaf; Breitschopf, Barbara
  14. Climbing the electricity ladder generates carbon Kuznets curve downturns By Paul J Burke
  15. Three New Empirical Tests of the Pollution Haven Hypothesis When Environmental Regulation is Endogenous By David L. Millimet; Jayjit Roy
  16. Industrial development, agricultural growth, urbanization and environmental Kuznets curve in Pakistan By Muhammad , Anees; Ishfaq, Ahmed
  17. Towards Sustainable Carbon Markets: Requirements for Ecologically Effective, Economically Efficient, and Socially Just Emissions Trading Schemes By Sven Rudolph; Christine Lenz; Barbara Volmert; Achim Lerch
  18. The Uncertainty about the Social Cost of Carbon: A Decomposition Analysis Using FUND By Anthoff, David; Tol, Richard S. J.
  19. The Time Evolution of the Social Cost of Carbon: An Application of FUND By Anthoff, David; Rose, Steven K.; Tol, Richard S. J.; Waldhoff, Stephanie
  20. A tale of tails: Uncertainty and the social cost of carbon dioxide By Pycroft, Jonathan; Vergano, Lucia; Hope, Chris; Paci, Daniele; Ciscar, Juan Carlos
  21. The social cost of carbon on an optimal balanced growth path By Kögel, Tomas
  22. The Political Economy of Deforestation in the Tropics By Robin Burgess; Matthew Hansen; Benjamin A. Olken; Peter Potapov; Stefanie Sieber
  23. Gender Inclusion in Climate Change Adaptation By Aoyagi, Midori; Suda, Eiko; Shinada, Tomomi
  24. Japan's New Growth Strategy to Create Demand and Jobs By Randall S. Jones; Byungseo Yoo
  25. The Role of Pension Funds in Financing Green Growth Initiatives By Raffaele Della Croce; Christopher Kaminker; Fiona Stewart
  26. A Mechanism Design Approach to Climate Agreements By Martimort, David; Sand-Zantman, Wilfried
  27. Expectation-Driven Climate Treaties with Breakthrough Technologies By Daiju Narita; Ulrich J. Wagner
  28. The Political Economy of Climate Change Mitigation Policies: How to Build a Constituency to Address Global Warming? By Alain de Serres; John Llewellyn; Preston Llewellyn

  1. By: Tobias N. Rasmussen; Agustin Roitman
    Abstract: Using a comprehensive global dataset, we outline stylized facts characterizing relationships between crude oil prices and macroeconomic developments across the world. Approaching the data from several angles, we find that the impact of higher oil prices on oil-importing economies is generally small: a 25 percent increase in oil prices typically causes GDP to fall by about half of one percent or less. While cross-country differences in impact are found to depend mainly on the relative size of oil imports, we also show that oil price shocks are not always costly for oil-importing countries: although higher oil prices increase the import bill, there are partly offsetting increases in external receipts. We provide a small open economy model illustrating the main transmission channels of oil shocks, and show how the recycling of petrodollars may mitigate the impact.
    Keywords: Cross country analysis , Developing countries , Economic models , Emerging markets , External shocks , Imports , Oil prices , Price increases ,
    Date: 2011–08–11
  2. By: Aleksandar Zaklan; Jan Abrell; Anne Neumann
    Abstract: This paper considers the question of whether changes in persistence have occurred during the long-run evolution of U.S. prices of the non-renewable energy resources crude oil, natural gas and bituminous coal. Our main contribution is to allow for a structural break when testing for a break in persistence, thus disentangling the effect of a deterministic break from that of a stochastic break and advancing the existing literature on the persistence properties of non-renewable resource prices. The results clearly demonstrate the importance of specifying a structural break when testing for breaks in persistence, whereas our findings are robust to the exact date of the structural break. Our analysis yields that coal and natural gas prices are trend stationary throughout their evolution, while oil prices exhibit a break in persistence during the 1970s. The findings suggest that especially the coal market has remained fundamentals-driven, whereas for the oil market exogenous shocks have become dominant. Thus, our results are consequential for the treatment of energy resource prices in both causal analysis and forecasting.
    Keywords: non-renewable resource prices, primary energy, persistence, structural breaks
    JEL: C12 C22 Q31 Q41
    Date: 2011
  3. By: Marc Joëts; Valérie Mignon
    Abstract: This paper investigates the relationship between forward prices of oil, gas, coal, and electricity using a nonlinear panel cointegration framework. To this end, we consider a panel of 35 maturities and control for the economic and financial environment using equity futures prices. Estimating the cointegrating relationship, we find that oil, gas and coal forward prices are positively linked, while the negative link between oil and electricity prices is consistent with a substitution effect between the two energy sources on the long run. Estimating panel smooth transition regression (PSTR) models, we show that the forward oil price adjustment process toward its equilibrium value is nonlinear and asymmetric, putting forward the key role played by self-sustaining dynamics and speculation phenomena.
    Keywords: forward energy prices, speculation, panel cointegration, nonlinear model, PSTR
    JEL: C33 Q40
    Date: 2011
  4. By: Giulio Cifarelli (Dipartimento Scienze Economiche)
    Abstract: The interaction between rational hedgers and informed oil traders is parameterized and tested empirically with the help of a complex non linear smooth transition regime shift CCC-GARCH procedure. In spite of their gyrations, futures price changes are usually self-correcting. Well informed producers and consumers will ensure that crude oil prices – and thus the prices of the corresponding futures contracts – fluctuate within a long run equilibrium range determined by market fundamentals. During the 2008 oil price upswing, however, shifts in positions in the futures markets by well informed optimizing agents, that usually dampen price changes, result in destabilizing positive feedback trading. Futures price changes that can be classified as speculative are due to hedgers’ reaction to movements in the variability of the return of their covered cash position.
    Keywords: oil price dynamics; dynamic hedging; logistic smooth transition; multivariate GARCH.
    JEL: G11 G12 G18 Q40
    Date: 2011
  5. By: Brückner, Markus; Chong, Alberto; Gradstein, Mark
    Abstract: We estimate the income elasticity of government expenditures using variation in the international oil price as a plausibly exogenous source of within-country variation of countries’ permanent income. Our short run elasticity estimates, between 0.25-0.50, are generally somewhat smaller than the previously obtained ones, and they, in particular, indicate that Wagner’s law does not hold; long run elasticities are larger, but still smaller than unity. We also explore the correlates of the income elasticity of government spending and find no support for views that either democracy, inequality, or openness are associated with a larger elasticity. However, we find evidence consistent with “voracity” theories: cross-country differences in ethnic polarization are associated with a significantly higher oil price driven income elasticity of government spending.
    Keywords: Wagner law
    JEL: H1
    Date: 2011–09
  6. By: Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research); Dr. Christian Lutz (GWS - Institute of Economic Structures Research); Kirsten Wiebe (GWS - Institute of Economic Structures Research)
    Abstract: The paper at hand presents results of a model-based scenario analysis on the economic implications in the next decade of an oil peak today and significantly decreasing oil production in the coming years. For that the extraction paths of oil and other fossil fuels given in LBST (2010) are implemented in the global macroeconomic model GINFORS. Additionally, the scenarios incorporate different technological potentials for energy efficiency and renewable energy, which cannot be forecast using econometric methods. GINFORS then endogenously determines world-wide energy demand and energy prices.The results show that the oil shortage firstly and strongly affects the transport sector but then has indirect effects on all other sectors through global supply chains. The medium term reactions to the oil shortage and corresponding substantial increase in the oil price of the global energy system and the individual sectors are energy saving and substitution, lowering global energy demand. The global macroeconomic effects of an increase of the oil price as high as modelled here are comparable to the effects of the financial and economic crises of 2008/2009.
    Keywords: oil peak today, model-based scenario analysis, world-wide energy demand, energy prices
    JEL: Q32
    Date: 2011
  7. By: Isabell Adenauer; Javier Arze del Granado
    Abstract: This paper assesses the effectiveness of policies taken by the Burkinabè authorities to protect the poor from the adverse impact of a combined food and oil price shock in 2008. Estimates of the impact based on household survey data and a price pass-through model suggest that these policies were not well-targeted, benefiting the wealthier groups of the population rather than the poor. More effective policy measures, such as a conditional cash transfer system, which is already being implemented on a pilot basis in urban areas, are discussed as an alternative policy option.
    Keywords: Agricultural prices , Burkina Faso , Energy prices , Fiscal policy , Price increases , Price stabilization , Social safety nets ,
    Date: 2011–08–19
  8. By: Misa Takebe; Robert C. York
    Abstract: In the extensive empirical work carried out across the IMF on oil-producing sub-Saharan African (SSA) countries, the notion of "sustainability" is often directed toward fiscal policies, and, in particular, views on the "optimal" non-oil primary fiscal deficit. The bulk of this work does not, however, address external sustainability, which is a concern especially for those SSA oil producers operating under a fixed exchange rate regime. A couple of recent papers have extended the existing methodologies to assess external sustainability for some oil-producing countries but they do not focus on those in sub-Saharan Africa. In this paper, we bolster this empirical work by providing a range of estimates for the long-run external current external account balance for each of the SSA oil-producing countries, based on three widely used methodologies in the IMF. Our research strategy is to apply these models to the eight countries in the subregion - Angola, Cameroon, Chad, Côte d’Ivoire, Equatorial Guinea, Gabon, Nigeria, and the Republic of Congo - using similar simplifying assumptions so that we are using the same lens to view how they do and do not differ.
    Date: 2011–08–25
  9. By: Alberto Cavaliere (Department of Economics and Quantitative Methods, University of Pavia); Valentina Giust (Sorgenia); Mario Maggi (Department of Economics and Quantitative Methods, University of Pavia)
    Abstract: Scarce storage capacity and distortions in access to gas storage are considered causes of market foreclosure in liberalized gas markets. We consider rules currently adopted in Europe for storage rationing and propose efficient rationing mechanism based on the value of storage, when other flexibility inputs are available. Firstly we analyse productive efficiency issues neglecting vertical restraints and strategic behaviour in the final market. Then we assume imperfect compettion in the downstream market for gas supplies, given the avaialbility of storage capacity upstream. We consider effciency issues in a two stage model comparing regulated storage tariffs – coupled with a centralizedrationing mechanism – with storage auctions. Finally we consider as an optimal mechanism the allocation of storage arising from welfare maximization by a social planner. We find that it is usually optimal to maximize the amount of storage capacity allocated to new entrants in the gas markets. Storage auctions deviates from the optimal mechanism, but still improve efficiency, with respect to current mechanisms, to the extent that they allocate storage according to its value. Furthermore storage allocation appear to be an extremeley powerful mechanism to improve competition and efficiency in gas markets.
    Keywords: Liberalization, Auctions, Essential Facilities
    JEL: L51 L95 D45
    Date: 2011–07
  10. By: Nepal, Rabindra
    Abstract: Global climate change and security of supply concerns pose significant challenges for sustainable development as well as the need to improve energy efficiency in transition and developing economies. Meanwhile, economic theory suggests that market-based economic policies and reforms are crucial for accelerating energy efficiency in developing and transition countries. Hence, this paper analyses the impacts of several market-oriented economic reforms on energy efficiency in the transition countries. The transition countries experienced a rapid marketization process that saw their economies transformed from central planning towards more market based economies since the early 1990s. The econometric results from the bias corrected fixed-effect analysis (LSDVC) suggest that both large and small scale privatisation process has been the sole driver of energy efficiency in transition countries. However, the lack of suitable institutions to support overall-market reforms implies that other market based economic reforms remain ineffective in improving energy efficiency in transition countries.
    Keywords: market reforms; energy efficiency; transition countries; institutions
    JEL: Q54 P28 C33
    Date: 2011–09–13
  11. By: Iñaki Iriarte-Goñi (Department of Applied Economics and Economic History, Faculty of Economics. Gran Vía 4, (50005) Zaragoza, Spain); María Isabel Ayuda (Department of Economic Analysis, Faculty of Economics. Gran Vía 4, (50005) Zaragoza, Spain.)
    Abstract: The essential aim of this paper is to analyze wood consumption in Great Britain over the period 1850-1938. We calculate the apparent consumption of wood in Britain, taking into account both net imports of wood and the home harvest of wood. Then we develop some quantitative exercises which correlate wood consumption with GDP, and with prices of wood and iron (as an alternative material to wood). The main conclusion is that, although wood had lost its economic centrality after the energetic transition, wood consumption continued to grow in Britain both in absolute and relative terms, showing a positive elasticity to GDP superior to the unity. The decline of wood prices in the long run, the innovations affecting wood exploitation and treatment, and the fact that wood was used in a wide range of economic activities, can explain that growth in consumption. Britain faced the increase in wood demand relying almost totally on imports. Thus, although British economic development was to a great extent focussed on what has been called the “subterranean forests” of coal, simultaneously supported large tracts of foreign forest.
    Keywords: wood, forest history, industrialization, consumption function
    JEL: C22 N53 N54 O13 Q21
    Date: 2011–09
  12. By: Stocker, Andrea (Sustainable Europe Research Institute (SERI)); Großmann, Anett (Institute of Economic Structures Research (GWS)); Wolter, Marc Ingo (Institute of Economic Structures Research (GWS)); Madlener, Reinhard (E.ON Energy Research Center, Institute for Future Energy Consumer Needs and Behavior (FCN), RWTH Aachen University)
    Abstract: This paper reports on the Austrian research project “Renewable energy in Austria: Modeling possible development trends until 2020”. The project investigated possible economic and ecological effects of a substantially increased use of renewable energy sources in Austria. Together with stakeholders and experts, three different scenarios were defined, specifying possible development trends for renewable energy in Austria. The scenarios were simulated for the period 2006–2020, using the integrated environment–energy–economy model “”. The modeling results indicate that increasing the share of renewable energy sources in total energy use is an important but insufficient step towards achieving a sustainable energy system in Austria. A substantial increase in energy efficiency and a reduction of residential energy consumption also form important cornerstones of a sustainable energy policy.
    Keywords: renewable energy; macro-econometric modeling; scenario development
    Date: 2011–07
  13. By: Giebel, Olaf; Breitschopf, Barbara
    Abstract: Renewable energy support mechanisms affect the attractiveness of projects by influencing uncertainties in revenues or expenditures and ultimately result in a change in the financing costs. The influence of feed-in tariffs on financing costs was investigated. 26 wind onshore investors were surveyed in a conjoint analysis and the results were used in a cash flow model to quantify the impact. The introduction of premium models under a fixed remuneration tariff scheme seems to increase the financing costs considerably. --
    Date: 2011
  14. By: Paul J Burke
    Abstract: This paper examines why some countries have experienced environmental Kuznets curve (EKC)-type reductions in carbon dioxide (CO2) emissions, while others have not. The hypothesis that climbing to the upper rungs of the electricity ladder (nuclear power and modern renewables) has been the primary mechanism via which countries have achieved substantial reductions in per capita CO2 emissions is tested using a binomial dependent variable modelling approach for a sample of 105 countries. The findings suggest that electricity mix transitions caused by long-run growth in per capita incomes are indeed the primary determinant of carbon Kuznets curve downturns. The paper explores additional mechanisms via which carbon Kuznets curves may have been generated, but the results indicate that these are of lesser overall importance than the electricity mix effect. The evidence also suggests that countries with larger fossil fuel endowments are less likely to experience carbon Kuznets curve downturns, an additional curse of natural resources.
    Date: 2011–09
  15. By: David L. Millimet; Jayjit Roy
    Abstract: The validity of existing empirical tests of the Pollution Haven Hypothesis (PHH) is constantly under scrutiny due to two shortcomings. First, the issues of unobserved heterogeneity and measurement error in environmental regulation are typically ignored due to the lack of a credible, traditional instrumental variable. Second, while the recent literature has emphasized the importance of geographic spillovers in determining the location choice of foreign investment, such spatial eects have yet to be adequately incorporated into empirical tests of the PHH. As a result, the impact of environmental regulations on trade patterns and the location decisions of multinational enterprises remains unclear. In this paper, we circumvent the lack of a traditional instrument within a model incorporating geographic spillovers utilizing three novel identication strategies. Using state-level panel data on inbound U.S. FDI, relative abatement costs, and other determinants of FDI, we consistently nd (i) evidence of environmental regulation being endogenous, (ii) a negative impact of own environmental regulation on inbound FDI in pollution-intensive sectors, particularly when measured by employment, and (iii) larger eects of environmental regulation once endogeneity is addressed. Neighboring environmental regulation is not found to be an important determinant of FDI. Key Words: Foreign Direct Investment, Environmental Regulation, Spillovers, Instrumental Variables, Control Function, Heteroskedasticity
    JEL: C31 F21 Q52
    Date: 2011
  16. By: Muhammad , Anees; Ishfaq, Ahmed
    Abstract: The debate of environmental issues and their analysis is of vital interest for economic policies. Institutions are engaged in identifying and estimating the extent of environmental impact of determinants controllable via policy measures. Annual data from the on Carbon Dioxide emission, economic growth, consumption of energy, openness for foreign trade, urbanization, industrial growth and agriculture growth on Pakistan is used for 1971 to 2007. Augmented Vector Autoregression technique and cointegration analysis is implemented to test Granger causality. Gross domestic product significantly Granger causes emission of Carbon Dioxide and energy consumption. On the other hand emissions of CO2 affect economic growth, agriculture and industrial growth in the long run. It is also evident that energy consumption unidirectional Granger causes emission of Carbon Dioxide. Industrialization and urbanization bidirectional Granger causes each other. The results indicate the more careful industrial and energy policies to reduce emissions and control global warming.
    Keywords: Pakistan; Carbon Dioxide emission; Environment; Energy Consumption; Economic Growth; Foreign Trade
    JEL: C32 A12 O13 C22
    Date: 2011–09–17
  17. By: Sven Rudolph (University of Kassel); Christine Lenz (University of Kassel); Barbara Volmert (University of Kassel); Achim Lerch (Hesse University of Cooperative Education)
    Abstract: Domestic climate policy emissions trading schemes appear to be spreading all over the word. However, carbon markets in existence often suffer from dilution in terms of ecological effectiveness, economic efficiency, and social justice. Thus, in order to firmly base carbon markets on the main pillars of Sustainable Development, this paper defines the criteria of ecological effectiveness, economic efficiency and social justice and operationalizes them for giving design recommendations for sustainable carbon markets. Methodologically, the paper uses welfare and institutional economics, jurisprudential reasoning, and modern climate justice thinking in order to discuss the three criteria. In addition, design and implication analysis is applied in order to develop design recommendations for sustainable carbon markets. By doing so, the paper provides evaluation criteria for emissions trading schemes in existence and in planning, but also allows for improvements in order to make emissions trading a valuable instrument of a sustainable global climate policy.
    Keywords: sustainability, emissions trading, climate policy, justice, efficiency, effectiveness
    JEL: D62 D63 Q48 Q54 Q58
    Date: 2011
  18. By: Anthoff, David; Tol, Richard S. J.
    Abstract: We report the results of an uncertainty decomposition analysis of the social cost of carbon as estimated by FUND, a model that has a more detailed representation of the economic impact of climate change than any other model. Some of the parameters particularly influence impacts in the short run whereas other parameters are important in the long run. Some parameters are influential in some regions only. Some parameters are known reasonably well, but others are not. Ethical values, such as the pure rate of time preference and the rate of risk aversion, therefore affect not only the social cost of carbon, but also the importance of the parameters that determine its value. Some parameters, however, are consistently important: cooling energy demand, migration, climate sensitivity, and agriculture. The last two are subject to a large research effort, but the first two are not.
    Keywords: cost/decomposition/Social cost of carbon/uncertainty/Economic Impact/Climate change/impacts/risk/risk aversion/migration
    Date: 2011–09
  19. By: Anthoff, David; Rose, Steven K.; Tol, Richard S. J.; Waldhoff, Stephanie
    Abstract: We estimate the growth rate of the social cost of carbon. This is an indication of the optimal rate of acceleration of greenhouse gas emission reduction policy over time. We find that the social cost of carbon increases by 1.3% to 3.9% per year, with a central estimate of 2.2%. Previous studies found an average rate of 2.3% and a range of 0.9-4.1%. The rate of increase of the social carbon depends on a range of factors, including the pure rate of time preference, the rate of risk aversion, equity weighting, the socio-economic and emission scenarios, the climate sensitivity, dynamic vulnerability, and the curvature of the impact functions.
    Keywords: agency/cost/equity/Greenhouse Gas emission reduction/growth/Policy/protection/risk/risk aversion/scenarios/Social cost of carbon
    Date: 2011–09
  20. By: Pycroft, Jonathan; Vergano, Lucia; Hope, Chris; Paci, Daniele; Ciscar, Juan Carlos
    Abstract: Recent thinking about the economics of climate change has concerned the uncertainty about the upper bound of both climate sensitivity to greenhouse gases and the damages that might occur at high temperatures. This argument suggests that the appropriate probability distributions for these factors may be fat-tailed. The matter of tail shape has important implications for the calculation of the social cost of carbon dioxide (SCCO2). In this paper a probabilistic integrated assessment model is adapted to allow for the possibility of a thin, intermediate or fat tail for both (i) the climate sensitivity parameter and (ii) the damage function exponent. Results show that depending on the tail shape of the climate sensitivity parameter the mean SCCO2 rises by 29 to 85 percent. Changes in the mean SCCO2 due to the adjustments to the damage function alone range from a reduction of 7 percent to a rise of 12 percent. The combination of both leads to rises of 33 to 115 percent. Greater rises occur for the upper percentiles of the SCCO2 estimates. Given the uncertainties in both the science and the economics of climate change different tail shapes deserve consideration due to their important implications for the range of possible values for the SCCO2. --
    Keywords: Climate change,integrated assessment models,social cost of carbon dioxide,uncertainty
    JEL: Q54
    Date: 2011
  21. By: Kögel, Tomas
    Abstract: This paper derives analytically the growth rate of the social cost of carbon (SSC) on an optimal balanced growth path. More specifically, the paper examines a deterministic Ramsey model of optimal economic growth with carbon emissions. In this model, restrictions on technology and preferences are imposed that guarantee optimal balanced growth, i.e., that guarantee an optimal path with constant and positive economic growth and a constant stock of carbon in the atmosphere. The paper exploits these restrictions to show that the growth rate of the SCC on the optimal balanced growth path is negative, provided the elasticity of marginal utility of consumption with respect to consumption is larger than or equal to one. There seems to be consensus in the literature that this latter requirement is fulfilled in reality. --
    Keywords: Climate change,sustainability,social cost of carbon
    JEL: D61 Q54
    Date: 2011
  22. By: Robin Burgess; Matthew Hansen; Benjamin A. Olken; Peter Potapov; Stefanie Sieber
    Abstract: Tropical deforestation accounts for almost one-fifth of greenhouse gas emissions worldwide and threatens the world's most diverse ecosystems. The prevalence of illegal forest extraction in the tropics suggests that understanding the incentives of local bureaucrats and politicians who enforce forest policy may be critical to understanding tropical deforestation. We find support for this thesis using a novel satellite-based dataset that tracks annual changes in forest cover across eight years of institutional change in post-Soeharto Indonesia. Increases in the numbers of political jurisdictions are associated with increased deforestation and with lower prices in local wood markets, consistent with a model of Cournot competition between jurisdictions. Illegal logging increases dramatically in the years leading up to local elections, suggesting the presence of "political logging cycles". And, illegal logging and rents from unevenly distributed oil and gas revenues are short run substitutes, but this effect dissapears over time as political turnover occurs. The results illustrate how incentives faced by local government officials affect deforestation, and provide an example of how standard economic theories can explain illegal behavior.
    JEL: D73 L73
    Date: 2011–09
  23. By: Aoyagi, Midori (Asian Development Bank Institute); Suda, Eiko (Asian Development Bank Institute); Shinada, Tomomi (Asian Development Bank Institute)
    Abstract: There is increasing evidence that climate change has an impact on natural disasters, such as flooding, and on agricultural production, both of which have implications for gender issues. In this paper the authors briefly review issues related to gender and poverty and examine the relationships between gender and various indices. They then look at systems of land ownership and inheritance, and discuss an example of job recovery after a disaster through interviews with three female agricultural workers in Japan. The results of the interviews demonstrate the recent empowerment of women in agricultural production and that these women have strong adaptive abilities.
    Keywords: climate change; natural disasters; gender issues; agricultural production
    JEL: J16 Q54 Q58
    Date: 2011–09–12
  24. By: Randall S. Jones; Byungseo Yoo
    Abstract: The New Growth Strategy aims to create demand and jobs through regulatory reform and fiscal measures. The Strategy focuses on key challenges, notably climate change and population ageing, which can be turned into sources of growth. Given Japan’s precarious fiscal position, it is essential to co-ordinate spending related to the Strategy with the medium-term fiscal plan, in part by increasing the emphasis on regulatory reform. Such measures should cover the entire economy, rather than being limited to the seven areas identified in the Strategy. Among those areas, effectively promoting green innovation will require market-based instruments to place a price on carbon, preferably through a mandatory and comprehensive emissions trading system, to promote private investment, accompanied by a range of other policies. Achieving deeper economic integration with Asia depends on reducing support for agriculture to facilitate more bilateral and regional trade agreements, while bringing down barriers to foreign direct investment and foreign workers. Policies to expand venture capital would help launch innovative firms. This Working Paper relates to the 2011 OECD Economic Survey of Japan (<P>La Nouvelle stratégie de croissance du Japon visant à stimuler la demande et l'emploi<BR>La Nouvelle stratégie de croissance a pour objectif de stimuler la demande et l’emploi par le biais de la réforme de la réglementation et de mesures budgétaires. Elle met l’accent sur des enjeux fondamentaux, notamment le changement climatique et le vieillissement de la population, qui peuvent devenir des sources de croissance. La situation budgétaire du Japon étant délicate, il est primordial de coordonner les dépenses liées à la stratégie avec le plan budgétaire à moyen terme, en partie en privilégiant la réforme de la réglementation. Ces mesures devraient intéresser l’ensemble de l’économie, et non être limitées aux sept volets définis dans la stratégie. S’agissant de ces derniers, pour promouvoir efficacement l’innovation verte, il faudra utiliser des instruments fondés sur le marché pour instituer une tarification du carbone, de préférence dans le cadre d’un système obligatoire et complet d’échange de droits d’émission, afin d’encourager l’investissement privé, parallèlement à diverses autres mesures. Pour parvenir à une intégration économique plus étroite avec l’Asie, il importe de réduire le soutien à l’agriculture de manière à faciliter la multiplication des accords commerciaux bilatéraux et régionaux, tout en éliminant les obstacles à l’entrée des investissements directs étrangers et des travailleurs étrangers. Des mesures destinées à accroître le capital-risque favoriseraient la création d’entreprises innovantes. Ce Document de travail se rapporte à l’Étude économique de l’OCDE du Japon, 2011 (
    Keywords: Japan, regulatory reforms, financial sector, foreign direct investment, health care reforms, climate change, economic partnership agreements, immigration, free trade agreements, Japanese economy, green growth, regional development, New Growth Strategy, Asian economic integration, réforme de la réglementation, Japon, secteur financier, investissement direct étranger, changement climatique, accords de partenariat économique, accords libre-échange, réforme du système de soins de santé, économie japonaise, croissance verte, Nouvelle stratégie de croissance, intégration économique en Asie, développement régional
    JEL: F13 I18 Q54
    Date: 2011–09–06
  25. By: Raffaele Della Croce; Christopher Kaminker; Fiona Stewart
    Abstract: It is estimated that transitioning to a low-carbon, and climate resilient economy, and more broadly „greening growth? over the next 20 years to 2030 will require significant investment and consequently private sources of capital on a much larger scale than previously. With their USD 28 trillion in assets, pension funds - along with other institutional investors - potentially have an important role to play in financing such green growth initiatives...
    Keywords: infrastructure, pension fund, green growth, green bonds
    JEL: G15 G18 G23 G28 J26
    Date: 2011–09
  26. By: Martimort, David; Sand-Zantman, Wilfried
    Abstract: We analyze environmental agreements in contexts with asymmetric information, voluntary participation by sovereign countries and possibly limited enforcement. Taking a mechanism design perspective, we study how countries can agree on effort levels and compensations to take into account multilateral externalities. We delineate conditions for efficient agreements and trace out possible inefficiencies to the conjectures that countries hold following disagreement. We show how optimal mechanisms admit simple approximations with attractive implementation properties. Finally, we also highlight how limits on commitment strongly hinder performances of optimal mechanisms.
    JEL: D82
    Date: 2011–08–31
  27. By: Daiju Narita; Ulrich J. Wagner
    Abstract: The production of bioenergy is considered to be a promising energy source for a sustainable energy mix and it is politically promoted in many countries. With the exception of Brazilian ethanol, bioenergy not competitive to fossil energy sources, and therefore needs to be subsidised. Several types of bioenergy are based on bulky raw biomass with high per unit transport costs, importantly impacting on the plant’s production costs and profitability. In addition, considerable quantities of digestates are released, causing disposal costs. Various studies in the past aimed primarily at analysing transport costs of inputs. In this paper we focus on disposal costs of fermentation digestates from biogas production in Germany and analyse different processing techniques and their impact on profitability for three plant size in three case study areas. Our results show that especially in regions with only a small amount of agricultural land and a large heterogeneity in its agricultural area, processing of digestates increases the profitability of biogas production. The same accounts for regions with high livestock density, where the area needed for disposal is comparatively large. The cost efficiency is enforced by a high share of animal excrements on input and the biogas plant size
    Keywords: International environmental agreements (IEAs), climate policy, technology choice, expectations, multiple equilibria
    JEL: Q54 O33 H87
    Date: 2011–09
  28. By: Alain de Serres; John Llewellyn; Preston Llewellyn
    Abstract: Developments over the past few years have shown that reforms to address climate change are no less difficult to implement than reforms in other areas, even if the objective of limiting global warming is broadly accepted. In the case of global public goods such as the climate, the political challenge is further complicated by the need to convince voters that domestic action to reduce greenhouse gas emissions is worth taking, notwithstanding the cost and uncertainties regarding other countries’ commitments. This paper seeks to draw a number of political-economy lessons from reform experience in other economic areas, and considers how these lessons can be applied to the particular case of climate change mitigation policy. It examines the main ingredients for building a constituency for greenhouse gas (GHG) emissions reduction policies at home, stressing the need to establish the credibility of the overall objective and intermediate targets. It also reviews the challenges faced in securing successful implementation of the least-cost set of policies, focusing on how to address the concerns raised by the uneven distribution of costs and benefits of pricing instruments without undermining their effectiveness.<P>L'économie politique de l'atténuation du changement climatique : comment assurer un soutien populaire en faveur d'actions pour enrayer le réchauffement planétaire<BR>Les discussions des dernières années ont montré que la mise en place de mesures pour atténuer le changement climatique peut s’avérer aussi difficile que la conduite de réformes économiques dans d’autres secteurs, même si l’objectif de limiter le réchauffement de la planète est largement accepté. Dans le cas d’un bien public comme le climat, le défi politique est accentué par la nécessité de convaincre les électeurs du bien fondé de l’action au plan national, malgré les coûts et les incertitudes concernant l’engagement des autres pays. Cette étude vise à tirer certains enseignements de l’expérience en matière de politique économique acquise lors de la mise en place de réformes majeures dans d’autres champs d’action, et à voir dans quelle mesure ces enseignements peuvent s’appliquer au cas particulier de la lutte au changement climatique. Les principaux ingrédients pour assurer un large soutien à des mesures efficaces de réduction des émissions de gaz à effet de serres sont passés en revue, de même que les défis que posent leur mise en place, ce qui nécessite de prendre en compte les inquiétudes concernant la distribution inégale des coûts et des bénéfices des instruments de prix en tout évitant de saper leur efficacité.
    Keywords: competitiveness, political economy, carbon tax, cost-effectiveness, climate change mitigation, compétitivité, économie politique, taxes carbone, efficacité par rapport aux coûts, atténuation du changement climatique
    JEL: Q52 Q54
    Date: 2011–09–05

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