nep-ene New Economics Papers
on Energy Economics
Issue of 2012‒03‒28
fifty-one papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Price convergence and information efficiency in German natural gas markets By Growitsch, Christian; Stronzik, Marcus; Nepal, Rabindra
  2. How are investment decisions in the steam coal market affected by demand uncertainty and buyer-side market power? By Paulus, Moritz
  3. The role of grid extensions in a cost-efficient transformation of the European electricity system until 2050 By Fürsch, Michaela; Hagspiel, Simeon; Jägemann, Cosima; Nagl, Stephan; Lindenberger, Dietmar; Tröster, Eckehard
  4. Renewable Portfolio Standards and implicit tax-subsidy schemes: Structural differences induced by quantity and proportional mandates By Amigues, Jean-Pierre; Chakravorty, Ujjayant; Lafforgue, Gilles; Moreaux, Michel
  5. How Should Journal Quality be Ranked? An Application to Agricultural, Energy, Environmental and Resource Economics By Chia-Lin Chang; Michael McAleer
  6. Global warming and electricity demand in the rapidly growing city of Delhi: A Semi-parametric variable coefficient approach By Eshita Gupta
  7. Energy in the development strategy of Indian households: The Missing half By B. Sudhakara Reddy; Hippu Salk Kristle Nathan
  8. The prospects of developing Biofuels in Mali By Dorothée Boccanfuso; Massa Coulibaly; Govinda R. Timilsina; Luc Savard
  9. Energy consumption, emissions and economic growth in an oil producing country By Ismail, Mohd Adib; Mawar, Murni Yunus
  10. Energy and Climate Change in China By Carraro, Carlo; Massetti, Emanuele
  11. Power Ahead: Meeting Ethiopiaâ..s Energy Needs under a Changing Climate By Block, Paul
  12. Energy Flow: Costa Rica (2008) By Lenin Balza; Carlos Sucre
  13. Energy Flow: Latin America and Caribbean (2008) By Lenin Balza; Carlos Sucre
  14. Consumo de servicios de energía y agua en la población uruguaya By Verónica Amarante; Mery Ferrando
  15. Final report of the Hills Independent Fuel Poverty Review: Getting the Measure of Fuel Poverty By John Hills
  16. Price and Income Elasticities of Demand for Oil Products in African Member Countries of OPEC: A Cointegration Analysis By Suleiman , Sa’ad; Muhammad, Shahbaz
  17. Demand for gasoline is more price-inelastic than commonly thought By Havranek, Tomas; Irsova, Zuzana; Janda, Karel
  18. Income Growth and Institutional Quality: Evidence from International Oil Price Shocks By Brückner, Markus; Gradstein, Mark
  19. On the Macroeconomic Determinants of the Long-Term Oil-Stock Correlation By Conrad, Christian; Loch, Karin; Rittler, Daniel
  20. International trade in natural resources: Practice and policy By Ruta, Michele; Venables, Anthony J
  21. Benefits and costs of electric vehicles for the public finances: integrated valuation model and application to France By Fabien Leurent; Elisabeth Windisch
  22. Forecasting adoption of ultra-low-emission vehicles using the GHK simulator and Bayes estimates of a multinomial probit model By Daziano, Ricardo A.; Achtnicht, Martin
  23. L'acceptabilité potentielle des voitures électriques : Quelle profitabilité financière pour l'usager privé en Ile-de-France? By Elisabeth Windisch; Fabien Leurent
  24. Vehicle Manufacturing Futures in Transportation Life-cycle Assessment By Chester, Mikhail; Horvath, Arpad
  25. The Stockholm congestion charges – five years on. Effects, acceptability and lessons learnt By Börjesson, Maria; Eliasson, Jonas; Hugosson, Muriel; Brundell-Freij, Karin
  26. A financial impact analysis of market conditions and policy measures on total costs of vehicle ownership By Elisabeth Windisch
  27. The influence of individuals’ environmental attitudes and urban design features on their travel patterns in sustainable neighborhoods in the UK By Susilo, Yusak O.; Williams, Katie; Lindsay, Morag; Dair, Carol
  28. Tradeoffs among Free-flow Speed, Capacity, Cost, and Environmental Footprint in Highway Design By Ng, Chen Feng; Small, Kenneth
  29. Understanding Sustainable Transportation Choices: Shifting Routine Automobile Travel to Walking and Bicycling By Schneider, Robert James
  30. Biofuels: Review of Policies and Impacts By Janda, Karel; Kristoufek, Ladislav; Zilberman, David
  31. Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany By Adamou, Adamos; Clerides, Sofronis; Zachariadis, Theodoros
  32. The Economic Impact of the Great East Japan Earthquake: Comparison with other disasters, supply chain disruptions, and electric power supply constraint (Japanese) By TOKUI Joji; ARAI Nobuyuki; KAWASAKI Kazuyasu; MIYAGAWA Tsutomu; FUKAO Kyoji; ARAI Sonoe; EDAMURA Kazuma; KODAMA Naomi; NOGUCHI Naohiro
  33. Global Warming and the Population Externality By Stuart, Charles; Bohn, Henning
  34. Measuring the Carbon Content of the South African Economy By Arndt, Channing; Makrelov, Konstantin; Thurlow, James
  35. Transaction costs and tradable permits: Empirical evidence from the EU emissions trading scheme By Heindl, Peter
  36. Emissions Trading and Social Justice By Farber, Daniel A
  37. Cooperation to Reduce Developing Country Emissions By Kerr, Suzi; Millard-Ball, Adam
  38. Environmental and socio-economic consequences of forest carbon payments in Bolivia: Results of the OSIRIS-Bolivia model By Lykke Andersen; Jonah Busch; Elizabeth Curran; Juan Carlos Ledezma; Joaquín Mayorga; Mélissa Bellier
  39. Does Air Pollution Matter for Low Birth Weight? By Seonyeong Cho; Choongki Lee; Beomsoo Kim
  40. Cheering Up the Dismal Theorem By Ross McKitrick
  41. Why uncertainty matters - discounting under intertemporal risk aversion and ambiguity By Traeger, Christian P.
  42. Risk and aversion in the integrated assessment of climate change By Crost, Benjamin; Traeger, Christian P.
  43. Economics and Climate Change: Integrated Assessment in a Multi-Region World By Hassler, John; Krusell, Per
  44. Climate Change and Industrial Policy By Naude, Wim
  45. Climate policy and innovation in the absence of commitment By Ashokankur Datta; E. Somanathan
  46. Tipping points and ambiguity in the economics of climate change By Lemoine, Derek M.; Traeger, Christian P.
  47. Climate and Industrial Policy in an Asymmetric World By Gries, Thomas
  48. Reconciling Trade and Climate Policies By de Melo, Jaime; Mathys, Nicole Andréa
  49. Public preferences for climate change policies: Exploratory evidence from Spain By Michael Hanemann; Xavier Labandeira; María L. Loureiro
  50. Adaptation Can Help Mitigation: An Integrated Approach to Post-2012 Climate Policy By Bosello, Francesco; Carraro, Carlo; De Cian, Enrica
  51. Incentives and Stability Of International Climate Coalitions: An Integrated Assessment By Bosetti, Valentina; Carraro, Carlo; De Cian, Enrica; Massetti, Emanuele; Tavoni, Massimo

  1. By: Growitsch, Christian (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Stronzik, Marcus (Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH); Nepal, Rabindra (Heriot-Watt University, Department of Economics)
    Abstract: In 2007, Germany changed network access regulation in the natural gas sector and introduced a so-called entry-exit system. The re-regulation’s spot market effects remain to be examined. <p> We use cointegration analysis and a state space model with time-varying coefficients to study the development of natural gas spot prices in the two major trading hubs in Germany and the interlinked Dutch spot market. To analyse information efficiency in more detail, the state space model is extended to an error correction model. <p> Overall, our results suggest a reasonable degree of price convergence between the corresponding hubs. However, allowing for time-variant adjustment processes, the remaining price differentials are only partly explained by transportation costs, indicating capacity constraints. Nonetheless, market efficiency in terms of information processing has increased considerably among Germany and The Netherlands.
    Keywords: natural gas market; regulation; cointegration; price convergence; time-varying coefficient
    JEL: C32 G14 L95
    Date: 2012–03–19
  2. By: Paulus, Moritz (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: During the last decade, China has evolved into the largest consumer by far and one of the largest importers of coal. The main driver for the increase in coal demand in China has been economic growth. Future Chinese growth rates, and therefore coal consumption and coal imports, are highly uncertain, which may affect proffitability of new investments of international mining companies. Furthermore, China has actively employed an array of instruments to control coal trade flows in the last years. In this paper, we analyse the potential impact of increased Chinese coal import volatility and of potential exertion of Chinese market power on global mining investment decisions. For this purpose, we develop a multi-stage stochastic equilibrium model which is able to simulate investments under uncertainty and a monopolistic player in addition to a competitive fringe. We find that accounting for Chinese demand uncertainty yields significant costs for investors and also leads to a delay in investments. Additionally, the exertion of Chinese market power further reduces overall investment activity.
    Keywords: Investments under uncertainty; value of perfect information; risk aversion; strategic behaviour
    JEL: C61 F10 L13 L71
    Date: 2012–03–19
  3. By: Fürsch, Michaela (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Hagspiel, Simeon (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Jägemann, Cosima (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Nagl, Stephan (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Lindenberger, Dietmar (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Tröster, Eckehard (Energynautics GmbH,)
    Abstract: As an attempt to fi ght global warming, many countries try to reduce CO2 emissions in the power sector by significantly increasing the proportion of renewable energies (RES-E). A highly intermeshed electricity transmission grid allows the achievement of this target cost-efficiently by enabling the usage of most favorable RES-E sites and by facilitating the integration of fluctuating RES-E infeed and regional electricity demands. <p> However, construction of new lines is often proceeding very slowly in areas with a high population density. In this paper, we try to quantify the bene ts of optimal transmission grid extensions for Europe until 2050 compared to moderate extensions when ambitious RES-E and CO2 reduction targets are achieved. We iterate a large-scale dynamic investment and dispatch optimization model for Europe with a load-flow based transmission grid model, in order to determine the optimal deployment of electricity generation technologies and transmission grid extensions from a system integrated point of view. <p> Main findings of our analysis include that large transmission grid extensions are needed to achieve the European targets cost-efficiently. When the electricity network is cost-optimally extended, 228,000 km are built until 2050, representing an increase of 76% compared to today. Further findings include substantial increases of average system costs for electricity until 2050, even if RES-E are deployed efficiently throughout Europe, the grid is extended optimally, and if signi cant cost reductions of RES-E are assumed.
    Keywords: Renewable energy; GHG reduction; transmission grid; power system optimization
    JEL: C61 C63 Q40 Q58
    Date: 2012–03–19
  4. By: Amigues, Jean-Pierre; Chakravorty, Ujjayant; Lafforgue, Gilles; Moreaux, Michel
    Date: 2012–02
  5. By: Chia-Lin Chang (Department of Applied Economics, Department of Finance, National Chung Hsing University Taichung, Taiwan); Michael McAleer (Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute, The Netherlands, Department of Quantitative Economics, Complutense University of Madrid, and Institute of Economic Research, Kyoto University)
    Abstract: The Thomson Reuters ISI Web of Science citations database (hereafter ISI) category of Economics has one of the largest numbers of journals, at 304, of any ISI discipline, and hence has wide coverage. The paper analyses the leading international journals in the Economics sub-disciplines of Energy, Environmental and Resource Economics using quantifiable Research Assessment Measures (RAMs), and highlights the similarities and differences in alternative RAMs. The RAMs are based on alternative transformations of citations taken from the ISI database. Alternative RAMs may be calculated annually or updated daily to answer the perennial questions as to When, Where and How (frequently) published papers are cited (see Chang et al. (2011a, b, c)). The RAMs include the most widely used RAM, namely the classic 2-year impact factor including journal self citations (2YIF), 2-year impact factor excluding journal self citations (2YIF*), 5-year impact factor including journal self citations (5YIF), Immediacy (or zero-year impact factor (0YIF)), Eigenfactor, Article Influence, C3PO (Citation Performance Per Paper Online), h-index, PI-BETA (Papers Ignored - By Even The Authors), 2-year Self-citation Threshold Approval Ratings (2Y-STAR), Historical Self-citation Threshold Approval Ratings (H-STAR), Impact Factor Inflation (IFI), and Cited Article Influence (CAI). As data are not available for 5YIF, Article Influence and CAI for one of the 20 journals considered, 13 RAMs are analysed for 19 highly-cited journals in Energy, Environmental and Resource Economics in the ISI category of Economics. Harmonic mean rankings of the 13 RAMs for the 19 highly-cited journals are also presented. It is shown that emphasizing the 2-year impact factor of a journal, which partly answers the question as to When published papers are cited, to the exclusion of other informative RAMs, which answer Where and How (frequently) published papers are cited, can lead to a distorted evaluation of journal impact and influence relative to the Harmonic Mean rankings.
    Keywords: Research assessment measures, Impact factor, IFI, C3PO, PI-BETA, STAR, Eigenfactor, Article Influence, h-index.
    JEL: Q10 Q20 Q30 Q40 Q50
    Date: 2011
  6. By: Eshita Gupta (Indian Statistical Institute, New Delhi; Institute of Economic Growth)
    Abstract: This paper estimates the climate sensitivity of electricity demand by examining the impact of apparent temperature on electricity demand in Delhi using daily data on electricity demand for the period 2000-09. The study adopts a semi-parametric variable coefficient model in order to investigate the non-linear time-varying impact of climatic factors on electricity demand...
    Date: 2012–02
  7. By: B. Sudhakara Reddy (Indira Gandhi Institute of Development Research); Hippu Salk Kristle Nathan (Indira Gandhi Institute of Development Research)
    Abstract: There is a growing consensus that universalisation of modern energy services is central to reducing major elements of poverty and hunger, increasing literacy and education, and improving health care, employment opportunities, and lives of women and children. In India, more than 700 million people lack access to modern energy services for lighting, cooking, water pumping and other productive purposes. Without these services people-most often women-are forced to spend significant amount of their time and energy on subsistence activities. This acts as a barrier to the gender development. Although the links between gender, poverty and energy have been studied by many authors, not many have come out with practical solutions. The present paper explores the nexus between gender-energy-poverty, highlights areas of gender concern, and suggests actions. We analyse how women from rural areas and low income households are at the receiving ends of energy poverty. We then analyse the roles of different stakeholders in universalizing modern energy services with specific emphasis to women. We argue how women self help groups can be a vital link in large scale diffusion of energy efficient and renewable technologies. The paper concludes with policy prescriptions of sustainable development and gender empowerment through energy solutions.
    Keywords: Development, Energy, Environment, Gender
    JEL: Q4 L94 L95 L98
    Date: 2012–01
  8. By: Dorothée Boccanfuso (Département d’économique and GRÉDI, Université de Sherbrooke); Massa Coulibaly (GREAT - Groupe de recherche en économie appliquée et théorique); Govinda R. Timilsina (The World Bank); Luc Savard (Département d’économique and GRÉDI, Université de Sherbrooke)
    Abstract: A biofuels race has emerged because of the increasing cost of oil. In parallel, a growing concern for environmental protection has been observed. The expansion of biofuel production has occurs concurrently with raising prices of the foodstuffs. Developing countries like Mali have seen this situation as an opportunity to reduce its dependency on oil imports and generate gains from biofuel production. This development strategy could put pressure on food security in the country. The government of Mali has developed a strategy to promote biofuels production particularly with jatropha. The economic and environmental stakes around this strategy are far from being negligible. In this paper, we provide an analysis of this sector with opportunities and risk of developing this sector.
    Keywords: Biofuels, agriculture
    JEL: D58 D31 I32 Q17
    Date: 2012–02
  9. By: Ismail, Mohd Adib; Mawar, Murni Yunus
    Abstract: This study is aimed to examine the causal relationship between economic growth, energy consumption and emissions in Bahrain. As required by the Kyoto Protocol where Bahrain has ratified in 2006, it is to reduce greenhouse gas (GHG) emissions. This study uses Toda and Yamamoto’s (1995) approach to investigate the relationship. The finding regarding the relationship is crucial as it will justify appropriate steps should be taken by Bahrain to reduce emissions without affecting her national output. Using annual data for a period from 1980 to 2007, this study finds that there are unidirectional relationship between output, capital, energy use, labor and emissions. It also finds that there is causality running from output to capital, energy use and emissions, but not vice versa. Therefore, this study suggests emissions cut cannot be simply taken without sacrificing the economy. On the other hand, replacing capitals with greener capitals is the best choice as it reduces emissions through energy efficiency and less GHG emissions.
    Keywords: Economic growth; emission; greenhouse gas; energy; Bahrain
    JEL: Q50 Q40 O40 Q43
    Date: 2012–02
  10. By: Carraro, Carlo; Massetti, Emanuele
    Abstract: This paper examines future energy and emissions scenarios in China generated by the Integrated Assessment Model WITCH. A Business-as-Usual scenario is compared with five scenarios in which Greenhouse Gases emissions are taxed, at different levels. The elasticity of China’s emissions is estimated by pooling observations from all scenarios and compared with the elasticity of emissions in OECD countries. China has a higher elasticity than the OECD for a carbon tax lower than 50$ per ton of CO2-eq. For higher taxes, emissions in OECD economies are more elastic than in China. Our best guess indicates that China would need to introduce a tax equal to about 750$ per ton of CO2-eq in 2050 to achieve the Major Economies Forum goal set for mid-century. In our preferred estimates, the discounted cost of following the 2°C trajectory is equal to 5.4% and to 2.7% of GDP in China and the OECD, respectively.
    Keywords: China; climate change; energy; policy
    JEL: F5 Q1 Q54 Q58
    Date: 2012–03
  11. By: Block, Paul
    Abstract: Ethiopia is powering ahead with an ambitious energy development strategy, highly reliant on abundant hydropower potential. A changing climate, including uncertain water supply, however, may pose a salient challenge to meeting expected targets. Bridging the modeling gaps between climate, energy, and economics, and effectively transforming climate changes into economic measures, is an emerging inter-disciplinary field as nations attempt to position themselves for an uncertain future. Such a framework is adopted here to assess energy production and adaptation costs for four climate change scenarios over 2010â..49. Scenarios that favor a drying trend country-wide may lead to losses of 130â..200 terawatt hours over the 40-year period, translating to adaptation costs of US$2â..4 billion, compared to a no climate change scenario. Even given these potential losses, energy development utilizing hydropower appears economically reasonable from this deterministic, sector-independent evaluation. This development is desperately needed, independent of future climate change trends, with the hope of appreciably reducing vulnerability to variability.
    Keywords: Ethiopia, energy development, hydropower, climate change, economics
    Date: 2011
  12. By: Lenin Balza; Carlos Sucre
    Abstract: An energy flow is an innovative graphical depiction of the energy matrix of a country or region. Using homogenous data provided by the International Energy Agency (IEA), which allows for cross-country comparisons, the flow shows the supply of primary energy, produced domestically and imported, along with exports of primary energy and imports of secondary energy. The flow then moves to the transformation and consumption of this supply, depicting inputs towards electricity generation and the final consumption of primary and secondary energy, by product and by sector of the economy. The different sources of energy are measured in thousand barrels of oil equivalent per day (kboe/day), in order to provide a method for comparing distinct energy sources. These flows are part of a larger project that also takes into account the institutional frameworks of the energy sector of each country in Latin America and are produced yearly since 2008 and by historical periods: 1971-1974, 1984-1987, 1999-2002 and 2005-2008. The project gives Bank officers a clear, more thorough understanding of a country's energy sector, in an easy-to-use fashion, allowing them to be better informed during lending and partnering processes. It similarly allows country policymakers to identify energy patterns and direct investments with more ease.
    Keywords: Energy & Mining :: Energy Markets, energy, Costa Rica, energy matrix, energy flow, energy market
    Date: 2012
  13. By: Lenin Balza; Carlos Sucre
    Abstract: An energy flow is an innovative graphical depiction of the energy matrix of a country or region. Using homogenous data provided by the International Energy Agency (IEA), which allows for cross-country comparisons, the flow shows the supply of primary energy, produced domestically and imported, along with exports of primary energy and imports of secondary energy. The flow then moves to the transformation and consumption of this supply, depicting inputs towards electricity generation and the final consumption of primary and secondary energy, by product and by sector of the economy. The different sources of energy are measured in thousand barrels of oil equivalent per day (kboe/day), in order to provide a method for comparing distinct energy sources. These flows are part of a larger project that also takes into account the institutional frameworks of the energy sector of each country in Latin America and are produced yearly since 2008 and by historical periods: 1971-1974, 1984-1987, 1999-2002 and 2005-2008. The project gives Bank officers a clear, more thorough understanding of a country's energy sector, in an easy-to-use fashion, allowing them to be better informed during lending and partnering processes. It similarly allows country policymakers to identify energy patterns and direct investments with more ease.
    Keywords: Energy & Mining :: Energy Markets, energy, Latin America, Caribbean, energy matrix, energy flow, energy market
    Date: 2012
  14. By: Verónica Amarante (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Mery Ferrando (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This document reflects the technical cooperation between Ministerio de Industria, Energía y Minería (MIEM) and Instituto de Economía, with de objective of providing technical support for the design of a subsidy for the consumption of certain basic services, such as electricity and water, targeted towards lower income population. As a first step, we review similar experiences of such public policies in the region. We also consider previous attemps to subsidize energy consumption in Uruguay. A detailed analysis of the consumption pattern for energy and water services of the Uruguayan population is undertaken using the latest available expenditure survey. One important problem in the case of Uruguay refers to the fact that a relevant percentage of households do not pay for electricity they consume. We estimate their consumption based on an econometric model, as it is a relevant aspect for the design of the subsidy
    Keywords: consumption, energy and water expenditure, subsidies
    JEL: D12
    Date: 2011–08
  15. By: John Hills
    Abstract: The review confirms that fuel poverty is a serious national problem and shows that it is set to rise rapidly. It affects people with low incomes and energy costs above typical levels. It proposes a new way of measuring the problem, focused both on the number of people affected and the severity of the problem they face. Using the proposed measure: Nearly 8 million people in England, within 2.7 million households, both had low incomes and faced high energy costs in 2009 (the most recent year with available data). These households faced costs to keep warm that added up to £1.1 billion more than middle or higher income people with typical costs. The review's central projection is that this "fuel poverty gap" - already three-quarters higher than in 2003 - will rise by a further half, to £1.7 billion by 2016. This means fuel poor households will face costs nearly £600 a year higher on average than better-off households with typical costs. The report also argues that: Fuel poverty exacerbates other hardship faced by those on low incomes, has serious health effects (including contributing to extra deaths every winter), and acts as a block to efforts to cut carbon emissions. The current official way of measuring it, based on whether a household would need to spend more than 10 per cent of its income on energy, is flawed, giving a misleading impression of trends, excluding some affected by the problem at some times and including people with high incomes at others. Interventions targeted on the core of the problem - especially those that improve the energy efficiency of homes lived in by people with low incomes - can make a substantial difference, but the impact of those planned to be in place by 2016 is only to reduce the problem by a tenth.
    Keywords: Fuel, Poverty, Energy, Heat, Health
    Date: 2012–03
  16. By: Suleiman , Sa’ad; Muhammad, Shahbaz
    Abstract: This paper analyses the demand for petroleum products in African member countries of OPEC namely Algeria, Angola, Libya and Nigeria over the period of 1980-2007. For this purpose, econometric models based on time series data are generated for individual products so as to capture product specific factors affecting demand. In doing so, the ARDL bounds testing approach to cointegration is applied to examine the long run relationship among the variables. Four specifications such as total petroleum product demand function, gasoline demand function, diesel demand function and kerosene demand functions have been estimated. The review of trends in the consumption and real prices of the various products suggest that demand for oil products has risen fast due to fast rise in income levels of individuals in these countries as compared to price level. Furthermore, results of estimation show mixed evidence about cointegration between the variables in all the countries studied. The evidence from the estimates show that the diesel demand specification provided satisfactory results in terms of producing expected signs than other specifications. The results for the kerosene model was the least satisfactory as most of the coefficients were found with unexpected signs. Finally the overall result indicates that demand for oil products are more responsive to changes in income than the real prices, both in the short and long run. This result is consistent with the previous studies on developing countries. Finally, the policy implication for result show the need for diversification, increase refining capacity and demand management policies in these countries to promote energy efficiency, conservation as well as discourage cross border smuggling of products and encourage private investment into the oil sector.
    Keywords: Petroleum product demand; ARDL procedure
    JEL: Q43
    Date: 2012–01–03
  17. By: Havranek, Tomas; Irsova, Zuzana; Janda, Karel
    Abstract: One of the most frequently examined statistical relationships in energy economics has been the price elasticity of gasoline demand. We conduct a quantitative survey of the estimates of elasticity reported for various countries around the world. Our meta-analysis indicates that the literature suffers from publication selection bias: insignificant or positive estimates of the price elasticity are rarely reported, although implausibly large negative estimates are reported regularly. In consequence, the aver- age published estimates of both short- and long-run elasticities are exaggerated twofold. Using mixed effects multilevel meta-regression, we show that after correction for publication bias the average long-run elasticity reaches -0:31 and the average short-run elasticity only -0:09.
    Keywords: gasoline demand, price elasticity, meta-analysis, publication selection bias, Agricultural and Resource Economics
    Date: 2011–09–01
  18. By: Brückner, Markus; Gradstein, Mark
    Abstract: In this paper, we study the causal effect of income growth on institutional quality in the 1984-2007 cross country panel. To focus on exogenous income windfalls, we employ international oil price shocks as an instrument for income growth. While national incomes and measures of institutional quality are highly correlated, our analysis fails to identify a clear pattern of a causal effect, and estimations often yield statistically insignificant coefficients, albeit with positive signs. We then explore the possibility that fixed country characteristics may mediate the effect of income on institutions. Focusing on measures of ethnic heterogeneity, we find that ethnic polarization acts adversely as a mediating factor in this regard.
    Keywords: Income growth; Institutional quality
    JEL: O11
    Date: 2012–03
  19. By: Conrad, Christian; Loch, Karin; Rittler, Daniel
    Abstract: Using a modified DCC-MIDAS specification, we endogenize the long-term correlation between crude oil and stock price returns with respect to the stance of the U.S. macroeconomy. We find that variables which contain information on current and future economic activity are helpful predictors for changes in the oil-stock correlation. For the period 1993-2011 there is strong evidence for a counter cyclical behavior of the long-term correlation. For prolonged periods with strong growth above trend our model predicts a negative long-term correlation, while before and during recessions the sign changes and remains positive throughout the economic recovery. Our results strongly suggest that crude oil prices cannot be viewed as being exogenous with respect to the U.S. macroeconomy and explain the controversial results concerning the oil-stock relationship in previous studies.
    Keywords: Oil-stock relationship; long-term volatility; long-term correlation; GARCH-MIDAS; DCC-MIDAS
    JEL: C32 C58 Q43
    Date: 2012–03–14
  20. By: Ruta, Michele; Venables, Anthony J
    Abstract: Natural resources account for 20% of world trade, and dominate the exports of many countries. Policy is used to manipulate both international and domestic prices of resources, yet this policy is largely outside the disciplines of the WTO. The instruments used include export taxes, price controls, production quotas, and domestic producer and consumer taxes (equivalent to trade taxes if no domestic production is possible). We review the literature, and argue that the policy equilibrium is inefficient. This inefficiency is exacerbated by market failure in long run contracts for exploration and development of natural resources. Properly coordinated policy reforms offer an avenue to resource exporting and importing countries to overcome these inefficiencies and obtain mutual gains.
    Keywords: export tax; natural resources; OPEC; tariff escalation; terms of trade; trade; WTO
    JEL: F1 F13 Q3
    Date: 2012–03
  21. By: Fabien Leurent (LVMT - Laboratoire Ville, Mobilité, Transport - Université Paris Est Marne-la-Vallée - Ecole des Ponts ParisTech - IFSTTAR UMR-T9404); Elisabeth Windisch (LVMT - Laboratoire Ville, Mobilité, Transport - Université Paris Est Marne-la-Vallée - Ecole des Ponts ParisTech - IFSTTAR UMR-T9404)
    Abstract: The development of electro-mobility, with electric motors replacing the internal combustion engine, raises issues relating to the environment, energy and industry. Within a given country, it would have an economic and social impact in many areas, in particular on governments. Our objective is to quantify the respective impacts on the public finances of an electrically powered or petrol fuelled private car. In order to do this, we establish an integrated method of valuation, covering both manufacture and use of the vehicle, which locates these stages within or outside the country concerned. From a "depth" perspective, it incorporates the economic proceeds from the different activities and what they consume, and from a "breadth" perspective it incorporates the fiscal effects (VAT, fuel and energy taxes, tax on production, etc.) and the social effects (social contributions, unemployment benefits). The valuation method is based on an input-output model of the productive economy within a country, combined with mechanisms of fiscal and social transfer. We postulate the existence of an activity for the Manufacture of electric vehicles, and we include this within the consumption matrix associated with production. We apply this method to France, and to a diverse range of scenarios regarding the place in which the vehicle is manufactured and used. From this assessment it emerges that the impact of a vehicle on the public finances is substantial: manufacture contributes approximately the purchase price excluding VAT, and usage adds an amount of the same order of magnitude. The vast majority of the revenues arise from the social contributions associated with production (approximately 70%); VAT accounts for almost 20%, tax on production around 5%, and energy surcharge 9% for an internal combustion vehicle or 1% for an electric vehicle. If it is both manufactured and used inside the country, then an electric vehicle might contribute very slightly more to the public finances than an internal combustion vehicle, before any purchase incentive bonus, which would markedly reverse the outcome. The worst scenario would be the use of an imported electric vehicle instead of a domestically manufactured internal combustion vehicle. At the other end of the scale, as an export product, an electric vehicle contributes substantially more to the public purse than an internal combustion vehicle.
    Keywords: Input-output model. Taxation. Social transfers. Life-cycle analysis
    Date: 2012–02–01
  22. By: Daziano, Ricardo A.; Achtnicht, Martin
    Abstract: In this paper we use Bayes estimates of a multinomial probit model with fully flexible substitution patterns to forecast consumer response to ultra-low-emission vehicles. In this empirical application of the probit Gibbs sampler, we use stated-preference data on vehicle choice from a Germany-wide survey of potential light-duty-vehicle buyers using computer-assisted personal interviewing. We show that Bayesian estimation of a multinomial probit model with a full covariance matrix is feasible for this medium-scale problem. Using the posterior distribution of the parameters of the vehicle choice model as well as the GHK simulator we derive the choice probabilities of the different alternatives. We first show that the Bayes point estimates of the market shares reproduce the observed values. Then, we define a base scenario of vehicle attributes that aims at representing an average of the current vehicle choice situation in Germany. Consumer response to qualitative changes in the base scenario is subsequently studied. In particular, we analyze the effect of increasing the network of service stations for charging electric vehicles as well as for refueling hydrogen. The result is the posterior distribution of the choice probabilities that represent adoption of the energy-effcient technologies. --
    Keywords: Discrete choice models,Bayesian econometrics,Low emission vehicles,Charging infrastructure
    JEL: C25 D12 Q42
    Date: 2012
  23. By: Elisabeth Windisch (LVMT - Laboratoire Ville, Mobilité, Transport - Université Paris Est Marne-la-Vallée - Ecole des Ponts ParisTech - IFSTTAR UMR-T9404); Fabien Leurent (LVMT - Laboratoire Ville, Mobilité, Transport - Université Paris Est Marne-la-Vallée - Ecole des Ponts ParisTech - IFSTTAR UMR-T9404)
    Abstract: Depuis quelques années, le véhicule électrique (VE) suscite un très important regain d'intérêt, au titre de divers enjeux d'ordre aussi bien écologique (qualité de l'air, bruit, émissions de gaz à effet de serre) qu'économique, pour revitaliser l'industrie automobile et à travers elle la production économique générale, ou encor énergétique, pour réduire la dépendance aux carburants importés. C'est pourquoi les pouvoirs publics promeuvent le développement de la mobilité électrique. Les acheteurs de VE bénéficient dès aujourd'hui de réductions de taxes et de fortes subventions à l'achat. Les fournisseurs de l'infrastructure de recharge profitent de nouvelles réglementations et de subventions de la part de l'Etat. Des prévisions de la demande en VE sont absolument nécessaires pour anticiper les économies d'échelle dans l'industrie et déterminer le prix de vente par voiture, ainsi que pour dimensionner les consommations de ressources. Leur élaboration est soumise à la complexité du système de mobilité électrique, dont les circonstances subissent une évolution permanente et parfois peu prévisible (ex. en ce qui concerne le prix du carburant) ; et aussi parce que la demande en véhicules dépendra fortement des politiques publiques. Les études antérieures qui explorent la demande en VE masquent souvent cette complexité systémique. L'interrelation entre les politiques publiques et la demande n'est pas prise en compte. Des modèles agrégés sont conçus pour des régions vastes (comme tout un pays) et servent ensuite à établir des prévisions plutôt contestables. Des paramètres désagrégés, tels que les caractéristiques des ménages ou du territoire analysé, restent bien souvent ignorés, alors qu'ils jouent un rôle important dans le bilan financier pour un ménage. Cette étude a pour but de mieux comprendre l'impact des paramètres désagrégés sur le choix d'équipement des ménages. Nous nous plaçons dans la perspective d'un ménage particulier résidant en Ile-de-France, et nous menons une analyse économique par type de véhicule, thermique ou électrique, en termes de coûts totaux de détention. Le modèle est conçu sous une forme flexible et permet l'analyse de scénarios divers. Nous investiguons les impacts de paramètres désagrégés, de politiques publiques et du développement de marché. De plus, chaque scénario fait l'objet d'une analyse de " point mort ": quel est le kilométrage annuel, et/ou le prix de carburant, nécessaire pour rendre le VE plus avantageux que son concurrent thermique ? Les résultats démontrent l'importance déterminante des paramètres désagrégés dans la prospection de la demande.
    Date: 2012–02–01
  24. By: Chester, Mikhail; Horvath, Arpad
    Abstract: Vehicle manufacturing effects are critical life-cycle components in the total costs of vehicle travel and future manufacturing processes should be evaluated for travel forecasts. With efforts to introduce lightweight materials, increased fuel economy, and new technologies such as electric vehicles, understanding the energy and environmental effects of these expected vehicles is critical. Current vehicle manufacturing energy use and greenhouse gas emissions are summarized from existing research for passenger (conventional gasoline vehicles, hybrid electric vehicles, aircraft, high-speed rail) and freight (trucks, trains, and ocean going vessels) modes. Future vehicle manufacturing effects are then determined incorporating the aforementioned modes as well as plug-in hybrid and battery electric vehicles.
    Keywords: Engineering, Operations Research, Systems Engineering and Industrial Engineering
    Date: 2011–08–23
  25. By: Börjesson, Maria (Royal Institute of Technology (KTH)); Eliasson, Jonas (Royal Institute of Technology (KTH)); Hugosson, Muriel (Royal Institute of Technology (KTH)); Brundell-Freij, Karin (WSP Analysis & Strategy)
    Abstract: Congestion charges were introduced in Stockholm in 2006, first as a trial followed by a referendum, then permanently from 2007. This paper discusses what conclusions can be drawn from the first five years of operation, until mid-2011. We show that the traffic reduction caused by the charges has increased slightly over time, once external factors are controlled for. Alternative-fuel vehicles were exempt from the charges through 2008, and we show that this substantially increased the sales of such vehicles. We discuss public and political acceptability, synthesizing recent research and Swedish experience. We conclude that objective and subjective effects on the traffic system, as well as general environmental and political attitudes, formed the basis of the strong public support, while institutional reforms and resolution of power issues were necessary to gain political support. Finally, we briefly discuss implications for the transport planning process in general.
    Keywords: Congestion pricing; acceptability; evaluation; Stockholm
    JEL: R41 R42 R48
    Date: 2012–02–02
  26. By: Elisabeth Windisch (LVMT - Laboratoire Ville, Mobilité, Transport - Université Paris Est Marne-la-Vallée - Ecole des Ponts ParisTech - IFSTTAR UMR-T9404)
    Abstract: A range of electric vehicle policy-, market condition-, and user/usage specification scenarios is modeled in order to derive total costs of ownership (TCO) of electric vehicles (EVs) compared to conventional vehicles (CVs). Special importance is given to user and territorial characteristics that prove to have significant impact on the TCO. For this purpose the Paris region is taken as example. Further, sensitivity analyses of cost influencing factors are carried out; break-even analyses reveal most stringent requirements (concerning vehicle detention period, fuel prices and annual mileage) for a successful EV uptake. The set up model and derived TCO can (should!) serve for well founded future EV demand analyses.
    Keywords: Electric mobility; public policy; total costs of ownership; economic analysis; scenario analysis
    Date: 2011–05–25
  27. By: Susilo, Yusak O. (Royal Institute of Technology (KTH)); Williams, Katie (University of the West of England (UWE)); Lindsay, Morag (Oxford Brookes University); Dair, Carol (Oxford Brookes University)
    Abstract: This paper explores the influence of individuals’ environmental attitudes and urban design features on travel behavior, including mode choice. It uses data from residents of 13 new neighborhood UK developments designed to support sustainable travel. It is found that almost all respondents were concerned about environmental issues, but their views did not necessarily ‘match’ their travel behavior. Individuals’ environmental concerns only had a strong relationship with walking within and near their neighborhood, but not with cycling or public transport use. Residents’ car availability reduced public transport trips, walking and cycling. The influence of urban design features on travel behaviors was mixed, higher incidences of walking in denser, mixed and more permeable developments were not found and nor did residents own fewer cars than the population as a whole. Residents did, however, make more sustainable commuting trips than the population in general. Sustainable modes of travel were related to urban design features including secured bike storage, high connectivity of the neighborhoods to the nearby area, natural surveillance, high quality public realm and traffic calming. Likewise the provision of facilities within and nearby the development encouraged high levels of walking.
    Keywords: Sustainable urban design; Travel patterns; Attitudes and beliefs; Sustainable travel modes
    JEL: O18 O21 O44 R21 R28 R31 R42 R58 Z10
    Date: 2012–02–02
  28. By: Ng, Chen Feng; Small, Kenneth
    Abstract: This paper investigates differentiated design standards as a source of capacity additions that are more affordable and have smaller aesthetic and environmental impacts than modern expressways. We consider several tradeoffs, including narrow versus wide lanes and shoulders on an expressway of a given total width, and high-speed expressway versus lower-speed arterial. We quantify the situations in which off-peak traffic is sufficiently great to make it worthwhile to spend more on construction, or to give up some capacity, in order to provide very high off-peak speeds even if peak speeds are limited by congestion. We also consider the implications of differing accident rates. The results support expanding the range of highway designs that are considered when adding capacity to ameliorate urban road congestion.
    Keywords: Engineering, General, highway design, capacity, free-flow speed, parkway
    Date: 2011–05–17
  29. By: Schneider, Robert James
    Abstract: In the two decades since the United States Congress passed the federal Intermodal Surface Transportation Efficiency Act, there has been a surge of interest in making urban transportation systems more sustainable. Many agencies, representing all levels of government, have searched for strategies to reduce private automobile use, including policies to shift local driving to pedestrian and bicycle modes. Progress has been made in a number of communities, but the automobile remains the dominant mode of transportation in all metropolitan regions. Sustainable transportation advocates are especially interested in routine travel, such as shopping and other errands, because it tends to be done frequently and for distances that could be covered realistically by walking or bicycling. According to the 2009 National Household Travel Survey, Americans made more trips for shopping than for any other purpose, including commuting to and from work. One-third of these shopping trips were shorter than two miles (3.2 km). However, 76% of these short shopping trips were made by automobile, while only 21% were made by walking and 1% by bicycling. In order to identify effective strategies to change travel behavior, practitioners need a greater understanding of why people choose certain modes for routine travel. Choosing to walk or bicycle rather than travel by automobile may help individuals get exercise, save money, interact with neighbors, and reduce tailpipe emissions. Yet, in some communities, non-motorized modes may also require more time and physical effort to run a series of errands, be less convenient for carrying packages and traveling in bad weather, and be perceived as having a higher risk of traffic crashes or street crime than driving. A mixed-methods approach was used to develop a more complete understanding of factors that are associated with walking or bicycling rather than driving for routine travel. An intercept survey was implemented to gather travel data from 1,003 customers at retail pharmacy stores in 20 San Francisco Bay Area neighborhoods in fall 2009. Follow-up interviews were conducted with 26 survey participants in spring and summer 2010 to gain a deeper understanding of factors that influenced their transportation decisions. The methodological approach makes several contributions to the body of research on sustainable transportation. For example, the study: Explored multiple categories of factors that may be associated with walking and bicycling, including travel, socioeconomic, attitude, perception, and shopping district characteristics. Few studies of pedestrian or bicycle mode choices have included all of these categories of factors. Statistical models showed that variables in all categories had significant associations with mode choice. Documented and analyzed short pedestrian movements, such as from a parking space to a store entrance or from a bus stop to home. These detailed data provided a greater understanding of pedestrian activity than traditional travel survey analyses. Walking was used as the primary mode for 65% of respondent trips between stops within shopping districts, and 52% of all respondents walked along a street or between stops at some time between leaving and returning home. Maps of respondent pedestrian path density revealed distinct pedestrian activity patterns in different types of shopping districts. Used four different approaches to capture participant travel mode information. Respondents reported the primary mode of transportation they were using on the day of the survey, the mode they typically used, and all modes that they would consider using to travel to the survey store. They also mapped all stops on their tour and said what modes they used between each stop. These four approaches revealed nuanced travel habits and made it possible to correct inaccuracies in self-reported primary travel mode data. Measured and tested fine-grained local environment variables in shopping districts rather than around respondents' homes. These variables characterized the shopping district area (e.g., sidewalks, bicycle facilities, metered parking, and tree canopy coverage), the main commercial roadway (e.g., posted speed limit, number of automobile lanes, and pedestrian crossing distance), and the survey store site (e.g., number of automobile and bicycle parking spaces and distance from the public sidewalk to the store entrance). This dissertation adds to the small number of studies that have explored how the characteristics of activity destinations are related to travel behavior. The study results contribute to the body of knowledge about factors that may encourage people to shift routine travel from automobile to pedestrian or bicycle modes. After controlling for travel factors such as time and cost, socioeconomic characteristics, and individual attitudes, mixed logit models showed that automobile use was negatively associated with higher employment density, smaller parking lots, and metered on-street parking in the shopping district. Walking was positively associated with higher population density, more street tree canopy coverage, lower speed limits, and fewer commercial driveway crossings. The exploratory analysis of a small number of bicycle tours found that bicycling was associated with more extensive bicycle facility networks and more bicycle parking. However, people were more likely to drive when they perceived a high risk of crime. Results also suggest the magnitude of mode shifts that could occur if short- and long-term land use and transportation system changes were made to each study shopping district. The mode choice model representing travel only to and from the study shopping districts (N = 388) was used to estimate respondent mode shares under the following three scenarios: 1) double population and employment densities in each study shopping district, 2) double street tree canopy coverage in each study shopping district, and 3) eliminate half of the automobile parking 3 spaces at the survey store. Based on the model, the combination of these three changes could increase pedestrian mode share among the 388 sample respondents from 43% to 61% and decrease automobile mode share from 50% to 31%. This shift could eliminate 129 (13%) of the 983 respondent vehicle miles traveled (208 of the 1,580 respondent vehicle kilometers traveled), and 110 (36%) of the 308 times respondents parked their automobiles in the shopping district. The mode choice model of walking versus driving within survey shopping districts (N = 286) was used to test the combination of the following scenarios: 1) cluster separated stores around shared parking lots, 2) consolidate commercial driveways so that there are half as many driveway crossings along the main commercial roadway, 3) reduce all main commercial roadway speed limits to 25 miles per hour (40 kilometers per hour), and 4) install metered parking in all shopping districts. These changes could increase the percentage of the 286 sample respondents walking between shopping district activities from 32% to 54%. This shift could eliminate 29 (38%) of the 76 respondent vehicle miles traveled (47 of the 122 respondent vehicle kilometers traveled), and 105 (22%) of the 469 times respondents parked their automobiles in the shopping district. Note that these forecasted mode shifts are illustrative examples based on cross-sectional data and do not account for the process of modifying travel behavior habits. Qualitative interviews provided a foundation for a proposed Theory of Routine Mode Choice Decisions. This five-step theory also drew from survey results and other mode choice theories in the transportation and psychology fields. The first step, 1) awareness and availability, determines which modes are viewed as possible choices for routine travel. The next three steps, 2) basic safety and security, 3) convenience and cost, and 4) enjoyment, assess situational tradeoffs between modes in the choice set and are supported by many of the statisticallysignificant factors in the mode choice models. The final step, 5) habit, reinforces previous choices and closes the decision process loop. Socioeconomic characteristics explain differences in how individuals view each step in the process. Understanding each step in the mode choice decision process can help planners, designers, engineers, and other policy-makers implement a comprehensive set of strategies that may be able to shift routine automobile travel to pedestrian and bicycle modes.
    Keywords: Urban Studies and Planning
    Date: 2011–05–01
  30. By: Janda, Karel; Kristoufek, Ladislav; Zilberman, David
    Abstract: This paper provides an overview of the environmental, economical, and policy considerations related to biofuels. While the biofuel production and consumption exhibited significant increase over the first decade of the new millennium, this and further increases in biofuel production are driven primarily by government policies. Currently available first generation biofuels are with a few exceptions not economically viable in the absence of fiscal incentives or high oil prices. Also the environmental impacts of biofuels as an alternative to fossil fuels are quite ambiguous. The review of the most recent economic models dealing with biofuels and their economic impacts provides a distinction between structural and reduced form models. The review ofreduced models is structured toward the time series analysis approach to thedependencies between prices of feedstock, biofuels, and fossil fuels.
    Keywords: Agriculture, Agriculture Operations, and Related Sciences, biofuels, ethanol, biodiesel
    Date: 2011–10–23
  31. By: Adamou, Adamos; Clerides, Sofronis; Zachariadis, Theodoros
    Abstract: Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet little is known about the effectiveness and overall economic impact of these schemes. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to purchasers of low-carbon automobiles. We estimate a discrete choice model of demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. The analysis shows that a well-designed scheme can lead to emission reductions without reducing overall welfare.
    Keywords: carbon taxation; CO2 emissions; feebates; German automobile market
    JEL: L92 Q52 Q58
    Date: 2012–01
  32. By: TOKUI Joji; ARAI Nobuyuki; KAWASAKI Kazuyasu; MIYAGAWA Tsutomu; FUKAO Kyoji; ARAI Sonoe; EDAMURA Kazuma; KODAMA Naomi; NOGUCHI Naohiro
    Abstract: The Great East Japan Earthquake of March 11, 2011 had a serious negative impact on the Japanese economy. The earthquake reduced production substantially not only in the regions that were directly affected but also throughout Japan via the disruption of supply chains. The meltdowns at the Fukushima Daiichi Nuclear Power Plant caused the shutdown of many other nuclear power plants as a result of a greater awareness of the risks associated with operating them in a country prone to earthquakes and tsunamis. Chapter 1 of this paper surveys previous research on the economic impacts of various disasters around the world, and compares them with that of the Great East Japan Earthquake. Chapter 2 examines the economic impact of the supply chain disruptions immediately following the earthquake using regional input-output (IO) tables, the Japanese Industrial Productivity (JIP) database, and other statistics, and analyzes its scale as well as the extent of the damage mitigating effect of building multiple supply chains to cope with potential natural disasters in the future. Chapter 3 also uses regional IO tables, the JIP database, and other statistics to examine the economic impact of the power shortages immediately after the earthquake and, in addition, in the coming few years. The main finding of Chapter 3 shows that electricity shortages may reduce domestic production substantially in the coming years, while the expected increase in electricity prices will not lead to a sharp increase in output prices in the other sectors of the economy apart from the electricity sector itself.
    Date: 2012–03
  33. By: Stuart, Charles; Bohn, Henning
    Abstract: We calculate the harm a birth imposes on others when greenhouse gas emissions are a problem and a cap limits emissions damage. This negative population externality, which equals the corrective Pigovian tax on having a child, is substantial in calibrations. In our base case, the Pigovian tax is 21 percent of a parent's lifetime income in steady state and 5 percent of lifetime income immediately after imposition of a cap, per child. The optimal population in steady state, which maximizes utility taking account of the externality, is about one quarter of the population households would choose voluntarily
    Keywords: population externality, Pigovian tax, emissions cap, endogenous fertility, population growth, economic growth, optimal population, calibrated optimal child tax, greenhouse gas emissions, global warming, Economic Theory, Growth and Development, Public Economics
    Date: 2011–04–22
  34. By: Arndt, Channing; Makrelov, Konstantin; Thurlow, James
    Abstract: We estimate the carbon intensity of industries, products, and households in South Africa. Direct and indirect carbon usage is measured using multiplier methods that capture inter-industry linkages and multi-product supply chains. Carbon intensity is found to be high for exports but low for major employing sectors. Middle-income households are the most carbon-intensive consumers. These results suggest that carbon pricing policies (without border tax adjustments) would adversely affect export earnings, but should not disproportionately hurt workers or poorer households. 7per cent of emissions arise though marketing margins, implying that carbon pricing should be accompanied by supporting public policies and investments.
    Keywords: greenhouse gas emissions, carbon use, input-output analysis, South Africa
    Date: 2011
  35. By: Heindl, Peter
    Abstract: In this paper, transaction costs in the EU emissions trading scheme (EU ETS) are examined empirically based on survey data from German companies. Transaction costs from measurement, reporting and verification (MRV) of emissions, permit trading and general informational costs are considered. Transaction costs from MRV and permit trading are of non-linear form and dependent on annual emission and trading volumes based on OLS and nonparametric estimation. As a consequence of non-linear transaction costs, welfare losses occur compared to a first-best setup under zero transaction costs. In practice, smaller emitters will emit less (abate more) compared to larger emitters and vice versa due to economies of scale in the management of emissions trading. The results further imply that optimal firm size might be influenced by transaction costs in the EU ETS because of relatively high average transaction costs amongst smaller emitters. Overall annual transaction costs in the EU ETS in Germany are estimated to be EUR 8.7 million. --
    Keywords: Emissions Trading,Transaction Costs,EU ETS
    JEL: Q52 H23 D23
    Date: 2012
  36. By: Farber, Daniel A
    Abstract: Cap and trade is controversial in part because of claims that it is unjust, an issue that was highlighted by recent litigation against California’s proposed carbon market. This essay considers an array of fairness issues relating to cap and trade. In terms of fairness to industry, the conclusion is that distributing free allowances overcompensates firms for the cost of compliance, assuming any compensation is warranted. Industry should not receive, in effect, ownership of the atmosphere at the expense of the public. Environmental justice advocates argue that cap-and-trade systems promote hotspots and encourage dirtier, older plants to continue operating to the detriment of some communities. Designers of cap-and-trade systems should be alert to possible hotspots, particularly in disadvantaged communities. Little reason exists, however, to believe that any such hotspots are systematically linked with disadvantage. Finally, any regulation of emissions raises costs, with a disproportionate impact on low-income consumers. This effect can be greatly ameliorated through adroit use of revenue from auctions. The bottom line is that fairness issues are not a deal-breaker for cap and trade, but do deserve thoughtful consideration in designing a system.
    Keywords: Administrative Law, Economics, Energy and Utilities Law, Environmental Law, Social Welfare, Administrative Law, Energy Law, Environmental Law, Law and Economics, Social Welfare Law
    Date: 2011–09–20
  37. By: Kerr, Suzi (Motu Economic and Public Policy Research); Millard-Ball, Adam (McGill University)
    Abstract: Without effective developing country participation in climate mitigation it will be impossible to meet global concentration and climate change targets. However, developing countries are unwilling and, in many cases, unable to bear the mitigation cost alone. They need huge transfers of resources – financial, knowledge, technology, and capability – from industrialised countries. In this paper, we evaluate instruments that can induce such resource transfers, including tradable credits, mitigation funds and results-based agreements. We identify key constraints that affect the efficiency and political potential of different instruments, including two-sided private information leading to adverse selection, moral hazard and challenging negotiations; incomplete contracts leading to under-investment; and high levels of uncertainty about emissions paths and mitigation potential. We consider evidence on the poor performance of current approaches to funding developing country mitigation – primarily purchasing offsets through the Clean Development Mechanism – and explore to what extent other approaches can address problems with offsets. We emphasise the wide spectrum of situations in developing countries and suggest that solutions also need to be differentiated and that no one policy will suffice: some policies will be complements, while others are substitutes. We conclude by identifying research needs and proposing a straw man to broaden the range of “contracting” options considered.
    Keywords: Climate; finance; cap and trade; CDM; clean development mechanism; developing countries; additionality; international agreements; Durban Platform
    JEL: Q54 Q56 Q58 H87
    Date: 2012–03
  38. By: Lykke Andersen (Institute for Advanced Development Studies); Jonah Busch (Conservation International – Arlington, Virginia); Elizabeth Curran (CEEMA-INESAD, San Francisco, California); Juan Carlos Ledezma (Conservation International – Bolivia); Joaquín Mayorga (CEEMA-INESAD, San Francisco, California); Mélissa Bellier (University of Montesquieu Bordeaux IV, France)
    Abstract: Bolivia has significant potential to abate climate change by reducing deforestation. This opportunity presents economic and environmental tradeoffs. While these tradeoffs have been hotly debated, they have as yet been the subject of little quantitative analysis. We introduce the OSIRIS-Bolivia model to provide a quantitative basis for decision-making. OSIRIS-Bolivia is an Excel-based tool for analyzing the potential effects of incentive payments to reduce emissions from deforestation (REDD) in Bolivia. It is based on a spatial econometric model of deforestation in Bolivia during the period 2001-2005, and uses information on forest cover, deforestation rates, geographical conditions, and drivers of deforestation, including agricultural opportunity costs, for more than 120,000 pixels covering the whole country. OSIRIS-Bolivia is based on a partial equilibrium model in which reductions in deforestation in one region reduce the supply of agricultural products to the domestic market, which in turn causes an increase in the price of agricultural products, making conversion of land to agriculture more attractive and thus stimulating an increase in deforestation in other regions (leakage). The model can help answer questions such as: Where in Bolivia are carbon incentive payments most likely to result in reduced deforestation? Who are most likely to benefit from REDD? How much money will it take to reduce deforestation by a given amount? To what extent might transaction costs or preferences for agricultural income undermine the goals of the REDD program?
    Keywords: Deforestation, REDD, environmental impacts, socio-economic impacts
    JEL: Q21 Q56
    Date: 2011–12
  39. By: Seonyeong Cho; Choongki Lee; Beomsoo Kim (Department of Economics, Korea University, Seoul, Republic of Korea)
    Abstract: There is growing concern that air pollution may impact the health of newborns. This study examines this issue by considering overtime variation generated by exogenous changes in the pollution level in Korea in early 2000, when some part of Korea experienced huge drop in air pollution. We matched the census of all births from 1998 to 2008 and air pollution data in mother¡¯s residence county level. For air pollutants, we considered carbon monoxide, nitrogen dioxide, particulate matter, sulfur dioxide, and ozone levels. The mother¡¯s exposure to one ozone level above 0.12 ppm per hour during the first trimester increased the probability of low birth weight by 0.4 percentage point (0.08% of the sample mean). On the other hand, the mother¡¯s exposure to carbon monoxide or sulfur dioxide during the third trimester led to a significant but modest increase in the probability of low birth weight. The results indicate that the effects of an air pollutant on the probability of low birth weight vary according to wh en the mother is exposed to the pollutant during the pregnancy.
    Keywords: Air Pollution, Ozone, Carbon Monoxide, Sulfur Dioxide, Nitrogen Dioxide, Low Birth Weight
    Date: 2012
  40. By: Ross McKitrick (Department of Economics,University of Guelph)
    Abstract: The Weitzman Dismal Theorem (DT) suggests agents today should be willing to pay an unbounded amount to insure against fat-tailed risks of catastrophes such as climate change. The DT has been criticized for its assumption that marginal utility (MU) goes to negative infinite faster than the rate at which the probability of catastrophe goes to zero, and for the absence of learning and optimal policy. Also, it has been pointed out that if transfers to future generations are non-infinitesimal, the insurance pricing kernel must be bounded from above, making the DT rather irrelevant in practice. Herein I present a more basic criticism of the DT having to do with its mathematical derivation. The structure of the model requires use of ln(C) as an approximate measure of the change in consumption in order to introduce an ex term and thereby put the pricing kernel into the form of a moment generating function. But ln(C) is an inaccurate approximation in the model’s own context. Use of the exact measure completely changes the pricing model such that the resulting insurance contract is plausibly small, and cannot be unbounded regardless of the distribution of the assumed climate sensitivity. .
    Keywords: climate change; insurance; catastrophe
    JEL: Q2 Q3 Q4
    Date: 2012
  41. By: Traeger, Christian P.
    Abstract: Uncertainty has an almost negligible impact on project value in the economicstandard model. I show that a comprehensive evaluation of uncertainty and uncertainty attitude changes this picture fundamentally. The analysis relies on the discount rate, which is the crucial determinant in balancing immediate costs against future benefits and the single most important determinant of optimal mitigation  policies in the integrated assessment of climate change. The paper examines two shortcomings in the recent debate and the current models addressing climate change assessment. First, removing an implicit assumption of (intertemporal) risk neutrality reduces the growth effect in social discounting and significantly amplifies the importance of risk and correlation. Second, debate and models largely overlook the difference in attitude with respect to risk and with respect to non-risk uncertainty. The paper derives the resulting changes of the risk-free and the stochastic social discount rate and points out the importance of even thin tailed uncertainty for climate change evaluation. It discusses combinations ofuncertainty and correlation that reduce the social discount rate to pure preference. In a theoretical contribution, the paper extends the smooth ambiguity model by providing a threefold disentanglement between, risk aversion, ambiguity aversion, and the propensityto smooth consumption over time.
    Keywords: ambiguity, climate change, cost benefit analysis, discounting, intertemporal substitutability, risk aversion, uncertainty, Agricultural and Resource Economics, Natural Resources and Conservation
    Date: 2012–01–26
  42. By: Crost, Benjamin; Traeger, Christian P.
    Abstract: We analyze the impact of damage uncertainty on optimal mitigation policies in the integrated assessment of climate change. Usually, these models analyzeuncertainty by averaging deterministic paths. In contrast, we build a consistentmodel deriving optimal policy rules under persistent uncertainty. For this purpose,we construct a close relative of the DICE model in a recursive dynamic programming framework. Our recursive approach allows us to disentangle effects of risk, risk aversion, and aversion to intertemporal substitution. We analyze different ways how damage uncertainty can affect the DICE equations. We compare the optimal policies to those resulting from the wide-spread ex-ante uncertainty approach averaging deterministic paths.
    Keywords: climate change, uncertainty, integrated assessment, risk aversion, intertemporal substitution, recursive utility, dynamic programming, Agricultural and Resource Economics, Agriculture, Agriculture Operations, and Related Sciences, Natural Resources and Conservation
    Date: 2011–11–01
  43. By: Hassler, John; Krusell, Per
    Abstract: This paper develops a model that integrates the climate and the global economy---an integrated assessment model---with which different policy scenarios can be analyzed and compared. The model is a dynamic stochastic general-equilibrium setup with a continuum of regions. Thus, it is a full stochastic general-equilibrium version of RICE, Nordhaus's pioneering multi-region integrated assessment model. Like RICE, our model features traded fossil fuel but otherwise has no markets across regions---there is no insurance nor any intertemporal trade across them. The extreme form of market incompleteness is not fully realistic but arguably not a decent approximation of reality. Its major advantage is that, along with a set of reasonable assumptions on preferences, technology, and nature, it allows a closed-form model solution. We use the model to assess the welfare consequences of carbon taxes that differ across as well as within oil-consuming and -producing regions. We show that, surprisingly, only taxes on oil producers can improve the climate: taxes on oil consumers have no effect at all. The calibrated model suggests large differences in views on climate policy across regions.
    Keywords: climate; dynamic; integrated assessment; regional; stochastic
    JEL: H23 O44 Q0
    Date: 2012–01
  44. By: Naude, Wim
    Abstract: This paper explores the implications of climate change for industrial policy (IP). Five implications are discussed, namely the need for international coordination of IPs; for putting human development, and not emission targets, as the overriding objective of low-carbon IP; of stimulating innovation for energy efficiency, energy diversification, and carbon capture and storage; and for aligning IP with trade policies. Finally the funding needs of low-carbon IPs are discussed, and the importance of private sector funding emphasized.
    Keywords: climate change, sustainable development, industrialization, industrial policy, low-carbon growth
    Date: 2011
  45. By: Ashokankur Datta (Indian Statistical Institute, New Delhi); E. Somanathan (Indian Statistical Institute, New Delhi)
    Abstract: It is well-recognized that new technology is a crucial part of any solution to the problem of climate change. But since investments in research and development take time to mature, price and quantity instruments, i.e., carbon taxes and cap-and-trade, run into a commitment problem. We assume that the government cannot commit to the level of a policy instrument in advance, but sets the level to be optimal ex-post. Under these assumptions, we show that when the supply curve of dirty (emission-producing) energy is flat, then an emissions tax is ineffective in promoting R & D into green (emission-free) energy while an emissions quota (i.e., cap and trade) can be effective. A subsidy to R & D is welfare-reducing. More realistically, when the supply curve of dirty energy is upward-sloping, then both tax and quota regimes can be effective in promoting R & D into emission-free technology. In this case, a tax generally induces more R & D than a quota. When the supply curve is sufficiently steep compared to the demand curve, a subsidy to R & D can expand the range of parameter values under which R & D occurs and this can be welfare-improving. If there is sufficient uncertainty about whether a climate policy will be adopted ex-post, then subsidizing R & D is an even more attractive policy option since a welfare-improving subsidy to R & D exists under a wider range of circumstances.
    Date: 2010–12
  46. By: Lemoine, Derek M.; Traeger, Christian P.
    Abstract: We model optimal policy when the probability of a tipping point, the welfare change due to a tipping point, and knowledge about a tipping point's trigger all depend on the policy path. Analytic results demonstrate how optimal policy depends on the ability to affect both the probability of a tipping point and also welfare in a post-threshold world. Simulations with a numerical climate-economy model show that possible tipping points in the climate system increase the optimal near-term carbon tax by up to 45% in base case speciffcations. The resulting policy paths lower peak warming by up to 0.5 C compared to a model without possible tipping points. Different types of tipping points have qualitatively different effects on policy, demonstrating the importance of explicitly modeling tipping points' effects on system dynamics. Aversion to ambiguity in the threshold's distribution can amplify or dampen the effect of tipping points on optimal policy, but in our numerical model, ambiguity aversionincreases the optimal carbon tax.
    Keywords: tipping point, threshold, regime shift, ambiguity, climate, uncertainty, integrated assessment, dynamic programming, social cost of carbon, carbon tax, Agricultural and Resource Economics, Environmental Studies, Environmental Science
    Date: 2011–12–28
  47. By: Gries, Thomas
    Abstract: Climate change is a phenomenon leading to randomly distributed disasters around the globe. Due to massive economic and technical asymmetry between the advanced North and the developing South efficient climate and industrial policy is particular difficult. Globally efficient policy would need to equip the South with pollution reducing technologies. However, there is a tradeoff between capital accumulation for consumption growth and low-carbon development. The pollution stock affecting today.s climate was historically accumulated by the North, therefore, the .ability-to-pay principal. and the .polluter pays principle. suggest to allocate the main burden of climate change policy to the advanced economies.
    Keywords: climate change policy, North-South asymmetries, stock pollution, distribution of burdens
    Date: 2011
  48. By: de Melo, Jaime; Mathys, Nicole Andréa
    Abstract: The outcome of the 15th conference of the Parties to the UNFCC showed a shift from a top-down approach with a collective target favoring environmental objectives to a bottom-up accord favoring political feasibility. There is no meaningful binding agreement in sight, also because the global climate regime and the global trade policy regime, represented by the WTO, appear to be on a collision course. Following a review of the challenges ahead, the paper argues that trade will have a second-order contribution to world-wide CO2 emissions. Evidence shows increasing carbon transfers through trade, but the magnitude of carbon leakage effects, likely to be induced by differences in climate mitigation policies, may be less than feared in some circles. Trade policy, however, will play a role in implementing climate mitigation policies in two areas: maintaining an open trading system and hence boosting growth and facilitating technological diffusion, and trade policy as a strategic instrument in negotiations. The paper concludes that an agreement with a few guiding principles and leeway where much initial mitigation would first take place unilaterally or in small groups, as under the early days of the GATT, is the most promising way ahead while preserving an open trading system and environmental integrity.
    Keywords: carbon leakage; climate change; trade policy
    JEL: F18 Q54 Q56
    Date: 2012–01
  49. By: Michael Hanemann; Xavier Labandeira; María L. Loureiro
    Abstract: There is a body of evidence showing public attitudes towards climate change in various countries around the world. In this study, we employ a phone survey in order to assess attitudes towards climate change in Spain and preferences for a green electricity program that reduces CO2 emissions while making electricity more expensive. Results are similar to those obtained in other studies elsewhere, and complement them by showing a strong public support for implementing the green electricity program. In particular, we find that the mean willingness to pay per month and household is about 29.36€ over the current electric bill. Our results also show that younger individuals who live in the Mediterranean region of Spain are more likely to be willing to pay for this green electricity program.
    Keywords: abatement policies, citizen preferences, contingent valuation, green electricity
    Date: 2010–06
  50. By: Bosello, Francesco; Carraro, Carlo; De Cian, Enrica
    Abstract: The latest round of international negotiations in Copenhagen led to a set of commitments on emission reduction which are unlikely to stabilise global warming below or around 2°C. As a consequence, in the absence of additional ambitious policy measures, adaptation will be needed to address climate related damages. What is the role of adaptation in this setting? How is it optimally allocated across regions and time? To address these questions, this paper analyses the optimal mix of adaptation and mitigation expenditures in a cost-effective setting in which countries cooperate to achieve a long-term stabilisation target (550 CO2-eq). It uses an Integrated Assessment Model (AD-WITCH) that describes the relationships between different adaptation modes (reactive and anticipatory), mitigation, and capacity building to analyse the optimal portfolio of adaptation measures. Results show the optimal intertemporal distribution of climate policy measures is characterised by early investments in mitigation followed by large adaptation expenditures a few decades later. Hence, the possibility to adapt does not justify postponing mitigation, although it reduces its costs.
    Keywords: adaptation; climate change impacts; integrated assessment model; mitigation
    JEL: Q43 Q54 Q56
    Date: 2012–03
  51. By: Bosetti, Valentina; Carraro, Carlo; De Cian, Enrica; Massetti, Emanuele; Tavoni, Massimo
    Abstract: This paper analyses the incentives to participate in and the stability of international climate coalitions. Using the integrated assessment model WITCH, the analysis of coalitions’ profitability and stability is performed under alternative assumptions concerning the pure rate of time preference, the social welfare aggregator and the extent of climate damages. We focus on the profitability, stability, and 'potential stability' of a number of coalitions which are 'potentially effective' in reducing emissions. We find that only the grand coalition under a specific sets of assumptions finds it optimal to stabilise GHG concentration below 550 ppm CO2-eq. However, the grand coalition is found not to be stable, not even 'potentially stable' even through an adequate set of transfers. However, there exist potentially stable coalitions, but of smaller size, which are also potentially environmentally effective. Depending on the assumptions made, they could achieve up to 600 ppm CO2-eq. More ambitious targets lead to the collapse of the coalition.
    Keywords: Climate coalitions; Climate policy; Free riding; Game theory
    JEL: C68 C72 D58 Q54
    Date: 2012–02

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