nep-ene New Economics Papers
on Energy Economics
Issue of 2012‒01‒18
twenty-six papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Energy populism and household welfare By Cont, Walter; Hancevic, Pedro; Navajas, Fernando H.
  2. What drove down natural gas production in Argentina? By Barril, Diego; Navajas, Fernando H.
  3. A stochastic generalized Nash-Cournot model for the northwestern European natural gas markets with a fuel substitution demand function: The S-GaMMES model By Ibrahim Abada
  4. Study of the evolution of the northwestern European natural gas markets using S-GaMMES By Ibrahim Abada
  5. Oil Prices and Emerging Market Exchange Rates By M. Ibrahim Turhan; Erk Hacihasanoglu; Ugur Soytas
  6. Do Financial Investors Destabilize the Oil Price? By M. J. LOMBARDI; I. VAN ROBAYS
  7. The costs of electricity systems with a high share of fluctuating renewables - a stochastic investment and dispatch optimization model for Europe By Nagl, Stephan; Fürsch, Michaela; Lindenberger, Dietmar
  8. The electricity consumption versus economic growth of the Polish economy By Gurgul, Henryk; Lach, Lukasz
  9. Oil Prices, External Income, and Growth: Lessons from Jordan By Kamiar Mohaddes; Mehdi Raissi
  10. Reducing Petroleum Consumption from Transportation By Christopher R. Knittel
  11. Inflation Differentials in the GCC: Does the Oil Cycle Matter? By Kamiar Mohaddes; Oral Williams
  12. Monetary Policy and the Dutch Disease in a Small Open Oil Exporting Economy By Mohamed Tahar Benkhodja
  13. The bioenergies development: the role of biofuels and the CO2 price By Pierre-Andre Jouvet; Frederic Lantz; Elodie Le Cadre
  14. Environmental Impacts of Emerging Biomass Feedstock Markets: Energy, Agriculture, and the Farmer By Rebecca S. Dodder; Amani Elobeid; Timothy L. Johnson; P. Ozge Kaplan; Lyubov A. Kurkalova; Silvia Secchi; Simla Tokgoz
  15. Can Dispersed Biomass Processing Protect the Environment and Cover the Bottom Line for Biofuel? By Egbendewe-Mondzozo, Aklesso; Swinton, Scott M.; Bals, Bryan D.; Dale, Bruce E.
  16. Effects of Demographics and Attitudes on WTP for Fuel Import Reductions through Ethanol Purchases By Jensen, Kimberly L.; Clark, Christopher D.; English, Burton C.
  17. Futures pricing in electricity markets based on stable CARMA spot models By Fred Espen Benth; Claudia Kl\"uppelberg; Gernot M\"uller; Linda Vos
  18. Achieving a sustainable automotive sector in Asia and the Pacific: Challenges and opportunities for the reduction of vehicle CO2 emissions By Masato Abe
  19. Technical productivity analysis for cement industry at firm level By Binaykumar Ray; B. Sudhakara Reddy
  20. Who’s Going Green and Why? Trends and Determinants of Green Investment By Abdoul Aziz Wane; Luc Eyraud; Changchang Zhang; Benedict J. Clements
  21. Green growth, technology and innovation By Dutz, Mark A.; Sharma, Siddharth
  22. Why Do Environmental Taxes Work Better in Developed Countries? By Coria, Jessica; Villegas-Palacio, Clara; Cárdenas, J.C.
  23. Adaptation to climate change: Formulating policy under uncertainty By Leo Dobes
  24. Climate Change, Crop Yields, and Internal Migration in the United States By Shuaizhang Feng; Michael Oppenheimer; Wolfram Schlenker
  25. Dynamic Activity Analysis Model Based Win-Win Development Forecasting Under the Environmental Regulation in China By Shiyi Chen; Wolfgang Karl Härdle
  26. Investment and Environmental Regulation: Evidence on the Role of Cash Flow By Evangelina Dardati; Julio Riutort

  1. By: Cont, Walter; Hancevic, Pedro; Navajas, Fernando H.
    Abstract: We study a cycle of subsidized energy prices and estimate its welfare impact on households in the Buenos Aires Metropolitan Region. A simple framework explains its emergence in terms of the preference of a median household (voter) for receiving transfer gains followed by a future flow of transfer losses. We evaluate actual transfers and welfare effects that a departure of prices of natural gas and electricity generation from opportunity costs since 2003 had on households and explore the impact of a way back to opportunity cost pricing.
    Keywords: energy prices; distortions; subsidies; welfare effects
    JEL: H22 Q48 D78
    Date: 2011–04
  2. By: Barril, Diego; Navajas, Fernando H.
    Abstract: We address the causes behind the drop in natural gas production in Argentina since 2004, starting from a basic supply model that depends on economic incentives, and adding control variables related to different potential explanations such as firm specific (or area specific) behavior and the absence of contractual renegotiation of concessions extensions. Results from a panel of the change in natural gas production in all areas between 2004 and 2009 show that once a basic supply-past production (or reserve) relationship is modeled, other often mentioned effects become non-significant. Chiefly among them are firm specific effects and the role of renegotiations of concessions extensions. We find preliminary evidence that post 2007 renegotiations –which are associated with better price prospects- may have had an impact in correcting production decline in one leader firm. Other significant effects come from a negative impact of a change in the seasonality of production that in turn can be related to demand rationing and to price controls. Overall, the evidence suggests that the observed downcycle conforms to the prediction of a simple model of depressed economic incentives acting upon mature conventional natural gas fields and hindering investment in reserve additions or new technologies.
    Keywords: Natural gas; peak production;supply behaviour
    JEL: Q3 Q4
    Date: 2011–04
  3. By: Ibrahim Abada (EDF Research and Development, IFP Energies nouvelles and EconomiX-CNRS, University of Paris 10, France)
    Abstract: This article presents a stochastic dynamic Generalized Nash-Cournot model to describe the evolution of the natural gas markets. The major gas chain players are depicted including: producers, consumers, storage, and pipeline operators, as well as intermediate local traders. Our economic structure description takes into account market power and the demand representation tries to capture the possible fuel substitution that can be made between the consumption of oil, coal, and natural gas in the overall fossil energy consumption. The demand is made random because of the oil price fluctuations. We take into account the long-term aspects inherent to some markets, in an endogenous way. This particularity of our description makes the model a Generalized Nash Equilibrium problem that needs to be solved using specialized mathematical techniques. The model has been applied to represent the European natural gas market and to forecast, until 2035, after a calibration process, consumption, prices, production, and long-term contract prices and volumes. Finally, we defined and calculated the value of stochastic solution adapted to our model.
    Keywords: Energy markets modeling, Game theory, Generalized Nash-Cournot equilibria, Quasi-Variational Inequality, Equilibrium problems, Stochastic programing.
    Date: 2012–01
  4. By: Ibrahim Abada (EDF Research and Development, IFP Energies nouvelles and EconomiX-CNRS, University of Paris 10, France)
    Abstract: This article presents an application of S-GaMMES in order to study the evolution of the natural gas trade in northwestern Europe. S-GaMMES is a stochastic dynamic Generalized Nash-Cournot model that describes the evolution of the natural gas markets. The major gas chain players are depicted including: producers, consumers, storage, and pipeline operators, as well as intermediate local traders. The gas demand is made random because of the oil price fluctuations. The model has been applied to represent the northwestern European natural gas market and to forecast, until 2035, after a calibration process, consumption, prices, production, and long-term contracts prices and volumes in the different scenarios. Finally, we defined and calculated the value of stochastic solution adapted to our model.
    Keywords: Energy markets modeling, Game theory, Generalized Nash-Cournot equilibria, Quasi-Variational Inequality, Equilibrium problems, Stochastic programing.
    Date: 2012–01
  5. By: M. Ibrahim Turhan; Erk Hacihasanoglu; Ugur Soytas
    Abstract: This paper investigates the role of oil prices in explaining the dynamics of selected emerging countries exchange rates. Using daily data series, the study concludes that a rise in oil price is leading to a significant appreciation in emerging economies currencies against the US dollar. In our study, we divide daily returns from 03/01/2003 to 02/06/2010 into 3 subsamples and test the role of oil price changes on exchange rate movements. We employ generalized impulse response functions to trace out the dynamic response of each exchange rate in three different time periods. Our findings suggest that oil price dynamics are changing significantly in the sample period and the relation between oil prices and exchange rates becomes more relevant after the 2008 financial crisis.
    Keywords: oil prices, emerging market exchange rates, financial crisis
    JEL: F31 G01 Q43
    Date: 2012
    Abstract: We assess whether and to what extent …nancial activity in the oil futures markets has contributed to destabilize oil prices in recent years. We de…ne a destabilizing …nancial shock as a shift in oil prices that is not related to current and expected fun- damentals, and thereby distorts e¢ cient pricing in the oil market. Using a structural VAR model identi…ed with sign restrictions, we disentangle this non-fundamental …- nancial shock from fundamental shocks to oil supply and demand to determine their relative importance. We …nd that shocks to oil demand and supply remain the main drivers of oil price swings. Financial investors in the futures market can however destabilize oil spot prices, although only in the short run. Moreover, …nancial ac- tivity appears to have exacerbated gyrations in the oil market over the past decade, particularly in 2007-2009.
    Keywords: Oil price, Speculation, Structural VAR, Sign restrictions.
    JEL: C32 Q41 Q31
    Date: 2011–11
  7. By: Nagl, Stephan (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Fürsch, Michaela (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Lindenberger, Dietmar (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: Renewable energies are meant to produce a large share of the future electricity demand. However, the availability of wind and solar power depends on local weather conditions and therefore weather characteristics must be considered when optimizing the future electricity mix. <p>In this article we analyze the impact of the stochastic availability of wind and solar energy on the cost-minimal power plant mix and the related total system costs. To determine optimal conventional, renewable and storage capacities for different shares of renewables, we apply a stochastic investment and dispatch optimization model to the European electricity market. The model considers stochastic feed-in structures and full load hours of wind and solar technologies and different correlations between regions and technologies. <p>Key findings include the overestimation of fluctuating renewables and underestimation of total system costs compared to deterministic investment and dispatch models. Furthermore, solar technologies are - relative to wind turbines - underestimated when neglecting negative correlations between wind speeds and solar radiation.
    Keywords: Stochastic programming; electricity; renewable energy
    JEL: C61 C63 Q40
    Date: 2012–01–09
  8. By: Gurgul, Henryk; Lach, Lukasz
    Abstract: The aim of this contribution is an investigation of causal interdependences between electricity consumption and GDP in Poland. Our research was conducted for total electricity consumption as well as for the industrial consumption of electricity. In order to reflect the causality between GDP and electricity consumption properly we performed our investigations in a threedimensional framework with employment chosen as an additional variable. We used reliable quarterly data from the period Q1 2000 - Q4 2009. In order to check the stability of the causalities the investigations were performed on two samples: a full sample and a pre-crisis (i.e. Q1 2000 - Q3 2008) subsample. We applied both traditional methods as well as some recently developed econometric tools. We found feedback between total electricity consumption and GDP as well as between total electricity consumption and employment. We also found unidirectional causality running from industrial electricity consumption to employment and no direct causal links between industrial electricity consumption and GDP. In addition, all these findings were, in general, not seriously affected by the financial and economic crisis of 2008. A significant exception is the causal effect of industrial electricity consumption on employment, which was more pronounced after the crisis of 2008.
    Keywords: electricity consumption; causality
    JEL: E21
    Date: 2011–12–01
  9. By: Kamiar Mohaddes; Mehdi Raissi
    Abstract: This paper extends the long-run growth model of Esfahani et al. (2009) to a labor exporting country that receives large inflows of external income—the sum of remittances, FDI and general government transfers—from major oil-exporting economies. The theoretical model predicts real oil prices to be one of the main long-run drivers of real output. Using quarterly data between 1979 and 2009 on core macroeconomic variables for Jordan and a number of key foreign variables, we identify two long-run relationships: an output equation as predicted by theory and an equation linking foreign and domestic inflation rates. It is shown that real output in the long run is shaped by: (i) oil prices through their impact on external income and in turn on capital accumulation, and (ii) technological transfers through foreign output. The empirical analysis of the paper confirms the hypothesis that a large share of Jordan's output volatility can be associated with fluctuations in net income received from abroad. External factors, however, cannot be relied upon to provide similar growth stimuli in the future, and therefore it will be important to diversify the sources of growth in order to achieve a high and sustained level of income.
    Keywords: Capital inflows , Economic growth , Economic models , External shocks , Foreign direct investment , Income , Jordan , Oil prices , Workers remittances ,
    Date: 2011–12–12
  10. By: Christopher R. Knittel
    Abstract: The United States consumed more petroleum-based liquid fuel per capita than any other OECD-high-income country – 30 percent more than the second-highest country (Canada) and 40 percent more than the third-highest (Luxemburg). This paper examines the main channels through which reductions in U.S. oil consumption might take place: (a) increased fuel economy of existing vehicles, (b) increased use of non-petroleum-based low-carbon fuels, (c) alternatives to the internal combustion engine, and (d) reduced vehicles miles travelled. I then discuss how the policies for reducing petroleum consumption used in the US compare with the standard economics prescription for using a Pigouvian tax to deal with externalities. Taking into account that energy taxes are a political hot button in the United States, and also considering some evidence that consumers may not correctly value fuel economy, I offer some thoughts about the margins on which policy aimed at reducing petroleum consumption would have the largest impact on economic efficiency.
    JEL: H2 H5 L0 L4 L5 L9 Q1 Q2 Q3 Q4 Q5 R4
    Date: 2012–01
  11. By: Kamiar Mohaddes; Oral Williams
    Abstract: This paper uses a pairwise approach to investigate the main factors that have been driving inflation differentials in the Gulf Cooperation Council (GCC) region for the past two decades. The results suggest that inflation differentials in the GCC are largely influenced by the oil cycle, mainly through the credit and fiscal channels. This implies that closer coordination of fiscal policies will be key for facilitating the closer integration of the GCC economies and ahead of the move to a monetary union. The results also indicate that after controlling for cyclical factors, convergence increased even during the recent oil boom.
    Keywords: Business cycles , Cooperation Council for the Arab States of the Gulf , Inflation , Oil revenues , Oil sector ,
    Date: 2011–12–15
  12. By: Mohamed Tahar Benkhodja (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: In this paper, we compare, first, the impact of a windfall and a boom sectors on the economy of an oil exporting country and their welfare implications ; in a second step, we analyze how monetary policy should be conducted to insulate the economy from the main impact of these shocks, namely the Dutch Disease. To do so, we built a Multisector DSGE model with nominal and real rigidities. The main finding is that Dutch disease effect arise after spending and resource movement effects in the following cases : i) flexible prices and wages both in the case of a windfall and in the case of a boom ; ii) flexible wage and sticky price only in the case of a fixed exchange rate. In other cases, Dutch disease effect can be avoided if : prices are sticky and wages are flexible when the exchange rate is flexible ; iii) prices and wages are sticky whatever the objective of the central bank is in both cases : windfall and boom. We also compare the source of fluctuation that leads to Dutch disease effect and we conclude that the windfall leads to a strong e¤ect in terms of de-industrialization compared to a boom. The choice of flexible exchange rate regime also helps to improve welfare.
    Keywords: Monetary Policy; Dutch Disease; Oil Prices; Small Open Economy
    Date: 2011–12–22
  13. By: Pierre-Andre Jouvet (Universite Paris Ouest Nanterre La Defense, Climate Economics Chair, France); Frederic Lantz (IFPEN); Elodie Le Cadre (IFPEN, Universite Paris Ouest Nanterre La Defense,)
    Abstract: Reduction in energy dependancy and emissions of CO2 via renewables targeted in the European Union energy mix and taxation system might trigger the production of bioenergy production and competition for biomass utilization. Torrefied biomass could be used to produce second generation biofuels to replace some of the fuels used in transportation and is also suitable as feedstock to produce electricity in large quantities. This paper examines how the CO2 price aspects demand of torrefied biomass in the power sector and its consequences on the profitability of second generation biofuel units (Biomass to Liquid units). Indeed, the profitability of the BtL units which are supplied only by torrefied biomass is related to the competitive demand of the power sector driven by the CO2 price and feed-in tarifis. We propose a linear dynamic model of supply and demand. On the supply side, a profit-maximizing torrefied biomass sector is modelized. The model aims to represent the transformation of biomass into torrefied biomass which could be sold to the refinery sector and the power sector. A two-sided (demanders and supplier) bidding process led us to arrive at the equilibrium price for torrefied biomass. The French case is used as an example. Our results suggest that the higher the CO2 price, the more stable and important the power sector demand. It also makes the torrefied biomass production less vulnerable to uncertainty on demand coming from the refining sector. The torrefied biomass co-firing with coal can offer a near-term market for the torrefied biomass for a CO2 emission price lower than 20 euros/tCO2, which can stimulate development of biomass supply systems. Beyond 2020, the demand for torrefied biomass from the power sector could be substituted by the refining sector if the oil price goes up whatever the CO2 price.
    Keywords: Bioenergy, CO2 price, Renery market, Electricity market, Optimization.
    JEL: C61 Q16 Q41 Q42 Q58
    Date: 2012–01
  14. By: Rebecca S. Dodder; Amani Elobeid (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Timothy L. Johnson; P. Ozge Kaplan; Lyubov A. Kurkalova; Silvia Secchi; Simla Tokgoz
    Abstract: The tighter linkages between energy and crop markets due to recent climate and energy legislation in the US have large potential environmental impacts beyond carbon sequestration and climate mitigation. These range from effects on water quality and quantity, soil erosion, habitat and biodiversity preservation. These impacts are very location and management-decision specific, as they are the product of atomistic decisions and depend on soil and landscape specific variables. In order to fully understand the effects of biomass markets, the new and stronger linkages and feedback effects between national- and global-scale energy and commodity markets must be properly understood and identified using an integrated perspective. We discuss the various interactions between agricultural and energy markets and their environmental impacts for existing biomass crops and detail how these interactions may be strengthened with the emergence of corn stover as a second generation biofuel feedstock. The tighter coupling of land use and management and energy systems needs to be accounted for to ensure that we have accurate indicators of the sustainability of biomass as an energy resource.
    Keywords: Energy and Commodity markets linkages, Integrated energy system assessment, Environmental impacts, Biofuels.
    Date: 2011–12
  15. By: Egbendewe-Mondzozo, Aklesso; Swinton, Scott M.; Bals, Bryan D.; Dale, Bruce E.
    Abstract: This paper compares environmental and profitability outcomes for a centralized biorefinery for cellulosic ethanol that does all processing versus a biorefinery linked to a decentralized array of local depots that pretreat biomass into concentrated briquettes. The analysis uses a spatial bioeconomic model that maximizes predicted profit from crop and energy products, subject to the requirement that the biorefinery must be operated at full capacity. The model draws upon biophysical crop input-output coefficients simulated with the EPIC model, as well as input and output prices, spatial transportation costs, ethanol yields from biomass, and biorefinery capital and operational costs. The model was applied to 82 cropping systems simulated across 37 sub-watersheds in a 9-county region of southern Michigan in response to ethanol prices simulated to rise from $1.78 to $3.36 per gallon. Results show that the decentralized local biomass processing depots lead to lower profitability but better environmental performance, due to more reliance on perennial grasses than the centralized biorefinery. Simulated technological improvement that reduces the processing cost and increases the ethanol yield of switchgrass by 17% could cause a shift to more processing of switchgrass, with increased profitability and environmental benefits.
    Keywords: Biomass production, bioenergy supply, cellulosic ethanol, environmental trade-off analysis, bioeconomic modeling, EPIC, spatial configuration, local biomass processing, Crop Production/Industries, Environmental Economics and Policy, Production Economics, Resource /Energy Economics and Policy, Q16, Q15, Q57, Q18,
    Date: 2011–12
  16. By: Jensen, Kimberly L.; Clark, Christopher D.; English, Burton C.
    Keywords: imported fuel, willingness to pay, Marketing,
    Date: 2012
  17. By: Fred Espen Benth; Claudia Kl\"uppelberg; Gernot M\"uller; Linda Vos
    Abstract: We present a new model for the electricity spot price dynamics, which is able to capture seasonality, low-frequency dynamics and the extreme spikes in the market. Instead of the usual purely deterministic trend we introduce a non-stationary independent increments process for the low-frequency dynamics, and model the large fluctuations by a non-Gaussian stable CARMA process. The model allows for analytic futures prices, and we apply these to model and estimate the whole market consistently. Besides standard parameter estimation, an estimation procedure is suggested, where we fit the non-stationary trend using futures data with long time until delivery, and a robust $L^1$-filter to find the states of the CARMA process. The procedure also involves the empirical and theoretical risk premiums which -- as a by-product -- are also estimated. We apply this procedure to data from the German electricity exchange EEX, where we split the empirical analysis into base load and peak load prices. We find an overall negative risk premium for the base load futures contracts, except for contracts close to delivery, where a small positive risk premium is detected. The peak load contracts, on the other hand, show a clear positive risk premium, when they are close to delivery, while the contracts in the longer end also have a negative premium.
    Date: 2012–01
  18. By: Masato Abe (Economic and Social Commission for Asia and the Pacific)
    Abstract: This working paper analyses the contribution of the Asia-Pacific automotive sector to greenhouse gas (GHG) emissions, and the challenges and opportunities facing the sector in efforts to reduce those emissions, primarily carbon dioxide (CO2). The main purpose of this paper is to identify recommendations for appropriate policies and strategies as well as for regional cooperation, to ensure that future developments in the automotive sector contribute to mitigating and adapting to climate change.
    Keywords: climate change, vehicle carbon emission, automotive sector development, economic development
    JEL: F1
    Date: 2011–12
  19. By: Binaykumar Ray (Indira Gandhi Institute of Development Research); B. Sudhakara Reddy (Indira Gandhi Institute of Development Research)
    Abstract: This paper analyses the energy use in the manufacture of cement in India during 1992-2005. Cement manufacturing requires large amounts of various energy inputs. The most common types of energy carriers used are coal, electricity, natural gas and fuel oil. Over the years, the fuel use shift is less, but use of natural gas has decreased and that of electricity has increased. Using panel data, stochastic frontier production function method has been used to evaluate the efficiency of individual firms and industries across the years. The results show a significant decrease in energy as well as carbon intensities because of differences in production techniques.
    Keywords: Cement industry, Energy demand, Firm, Technical efficiency
    JEL: Q4 L94 L95 L98
    Date: 2012–01
  20. By: Abdoul Aziz Wane; Luc Eyraud; Changchang Zhang; Benedict J. Clements
    Abstract: This paper fills a gap in the macroeconomic literature on renewable sources of energy. It offers a definition of green investment and analyzes the trends and determinants of this investment over the last decade for 35 advanced and emerging countries. We use a new multi-country historical dataset and find that green investment has become a key driver of the energy sector and that its rapid growth is now mostly driven by China. Our econometric results suggest that green investment is boosted by economic growth, a sound financial system conducive to low interest rates, and high fuel prices. We also find that some policy interventions, such as the introduction of carbon pricing schemes, or “feed-in-tariffs,†which require use of “green†energy, have a positive and significant impact on green investment. Other interventions, such as biofuel support, do not appear to be associated with higher green investment.
    Keywords: Asia , China , Climatic changes , Cross country analysis , Economic models , Energy policy , Energy prices , Europe , Greenhouse gas emissions , North America , Public investment , United States ,
    Date: 2011–12–16
  21. By: Dutz, Mark A.; Sharma, Siddharth
    Abstract: The paper explores existing patterns of green innovation and presents an overview of green innovation policies for developing countries. The key findings from the empirical analysis are: (1) frontier green innovations are concentrated in high-income countries, few in developing countries but growing; (2) the most technologically-sophisticated developing countries are emerging as significant innovators but limited to a few technology fields; (3) there is very little South-South collaboration; (4) there is potential for expanding green production and trade; and (5) there has been little base-of-pyramid green innovation to meet the needs of poor consumers, and it is too early to draw conclusions about its scalability. To promote green innovation, technology and environmental policies work best in tandem, focusing on three complementary areas: (1) to promote frontier innovation, it is advisable to limit local technology-push support to countries with sufficient technological capabilities -- but there is also a need to provide global technology-push support for base-of-pyramid and neglected technologies including through a pool of long-term, stable funds supported by demand-pull mechanisms such as prizes; (2) to promote catch-up innovation, it is essential both to facilitate technology access and to stimulate technology absorption by firms -- with critical roles played by international trade and foreign direct investment, with firm demand spurred by public procurement, regulations and standards; and (3) to develop absorptive capacity, there is a need to strengthen skills and to improve the prevailing business environment for innovation -- to foster increased experimentation, global learning, and talent attraction and retention. There is still considerable progress to be made in ranking green innovation policies as most appropriate for different developing country contexts -- based on more impact evaluation studies of innovation policies targeted at green technologies.
    Keywords: Environmental Economics&Policies,E-Business,ICT Policy and Strategies,Technology Industry,Climate Change Mitigation and Green House Gases
    Date: 2012–01–01
  22. By: Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University); Villegas-Palacio, Clara (Facultad de Minas, Universidad Nacional de Colombia - Sede Medellin); Cárdenas, J.C. (Dept of Economics, Universidad de los Andes, Colombia)
    Abstract: We compare of the performance of emission taxes between Colombia and Sweden in an experimental setting where subjects are regulated through environmental taxes and had to decide on emission levels, compliance behavior, and adoption of an environmentally friendly technology. Our design allows us to analyze the role of variations in the stringency of the policy enforcement by regulatory agencies in two different cultural contexts. In line with previous literature that emphasizes the role of social norms and intrinsic motivations explaining compliance behavior, we find that actual emissions and tax underreporting are lower than predicted by traditional models that are solely based on self-interested preferences. However, we find that for an equivalent monitoring stringency, there are no statistically significant differences in emission levels and compliance behavior between Colombian and Swedish subjects. This is to say that despite the positive effect of social norms enhancing compliance, a more stringent enforcement remains as an important mechanism to induce firms to comply with the regulation.<p>
    Keywords: laboratory experiments; emission taxes; imperfect monitoring; technology adoption; developing countries; cross-country comparison; Colombia; Sweden.
    JEL: C91 L51 Q58
    Date: 2012–01–03
  23. By: Leo Dobes (Crawford School of Economics and Government, The Australian National University)
    Abstract: Economists were able to formulate and recommend policy approaches for reducing emissions of greenhouse gases (mitigation) by drawing on an existing body of economic theory related to externalities. However, no comparably straightforward approach has yet emerged in the adaptation literature, possibly due to the diffuse nature of climatic effects that may occur in very diverse geographical locations. By acknowledging that the hallmark of future climate change effects is uncertainty, rather than readily identifiable and deterministic outcomes, it is possible to formulate coherent policy approaches. Recognising that there are differing degrees of uncertainty is a key aspect to making policy formulation more realistic.
    Keywords: adaptation, climate change, risk, uncertainty, unknown unknowns
    JEL: G11 H43 O44 Q54
    Date: 2012–01
  24. By: Shuaizhang Feng; Michael Oppenheimer; Wolfram Schlenker
    Abstract: We investigate the link between agricultural productivity and net migration in the United States using a county-level panel for the most recent period of 1970-2009. In rural counties of the Corn Belt, we find a statistically significant relationship between changes in net outmigration and climate-driven changes in crop yields, with an estimated semi-elasticity of about -0.17, i.e., a 1% decrease in yields leads to a 0.17% net reduction of the population through migration. This effect is primarily driven by young adults. We do not detect a response for senior citizens, nor for the general population in eastern counties outside the Corn Belt. Applying this semi-elasticity to predicted yield changes under the B2 scenario of the Hadley III model, we project that, holding other factors constant, climate change would on average induce 3.7% of the adult population (ages 15-59) to leave rural counties of the Corn Belt in the medium term (2020-2049) compared to the 1960-1989 baseline, with the possibility of a much larger migration response in the long term (2077-2099). Since there is uncertainty about future warming, we also present projections for a range of uniform climate change scenarios in temperature or precipitation.
    JEL: N3 N5 Q1 Q54
    Date: 2012–01
  25. By: Shiyi Chen; Wolfgang Karl Härdle
    Abstract: Porter Hypothesis states that environmental regulation may lead to win-win opportunities, that is, improve the productivity and reduce the undesirable output simultaneously. Based on directional distance function, this paper proposes a novel dynamic activity analysis model to forecast the possibilities of win-win development in Chinese Industry between 2009 and 2049. The evidence reveals that the appropriate energy-saving and emission-abating regulation will result in both the improvement in net growth of potential output and the steadily increasing growth of total factor productivity. This favors Porter Hypothesis.
    Keywords: Dynamic Activity Analysis Model, Energy-Saving and Emission-Abating, Environmental Regulation, Win-Win Development
    JEL: D24 O47 Q25 Q32
    Date: 2012–01
  26. By: Evangelina Dardati; Julio Riutort
    Abstract: We exploit the heterogeneity in pollution permits allocation and the variation in the permits price to identify a new channel by which cap-and-trade programs can affect firm decisions: they may affect investment through the impact of free pollution permits on the firms cash flow. A firm with a permit allocation higher than its emissions will have a higher cash inflow if the price of permits increases, whereas a firm whose emissions are higher than its permit allocation will have a higher cash outflow if the price of permits increases. In the margin they are both paying the same for pollution but the cash flow consequences of the change in permit prices differ. Using data from investor-owned utilities participating in the US SO2 program, we find that for smaller firms the permit cash flow is positively related to capital expenditures. Small firms with a high permit cash flow invest more tan small firms with a lower permit cash flow. This effect is consistent with smaller firms in this industry facing financial constraints.
    Date: 2011

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