nep-ene New Economics Papers
on Energy Economics
Issue of 2012‒09‒22
thirty-six papers chosen by
Roger Fouquet
Basque Climate Change Centre, Bilbao, Spain

  1. Economics of Energy and Climate Change: Origins, Developments and Growth By Roger Fouquet
  2. The Elusive Arthur Pigou By Karen Knight; Michael McLure
  3. The Institutional Blind Spot in Environmental Economics By Burtraw, Dallas
  4. 'Rebound' effects from increased energy efficiency: a time to pause and reflect By Turner, Karen
  5. The effect of ECSOs on energy use By WenShwo Fang; Stephen M. Miller; Chih-Chuan Yeh
  6. The effect of ESCOs on carbon dioxide emissions By WenShwo Fang; Stephen M. Miller
  7. Energy cost modelling of new technology adoption for Russian regional power and heat generation By Alexandra Bratanova; Jacqueline Robinson; Liam Wagner
  8. Public Procurement and the Private Supply of Green Buildings By Timothy Simcoe; Michael W. Toffel
  9. Energy efficiency measurement in agriculture with imprecise energy content information By Stéphane Blancard; Elsa Martin
  10. Modeling the impact of climate change in hydropower projects’ feasibility valuation By Suarez, Ronny
  11. Roles of discount rate, risk premium, and device performance in estimating the cost of energy for photovoltaics By Sergei Manzhos
  12. Regulation and electricity market integration: When trade introduces inefficiencies By Billette de Villemeur, Etienne; Pineau, Pierre-Olivier
  13. The 2012 Power Trading Agent Competition By Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M. de
  14. Shale Gas Development and Property Values: Differences across Drinking Water Sources By Lucija Muehlenbachs; Elisheba Spiller; Christopher Timmins
  15. Análisis empírico de la función de demanda por gasolina en Puerto Rico: (1999-2006) By Rodríguez, Carlos, A.
  16. Second Response to Knittel and Smith By Dermot J. Hayes
  17. Changes in the Operational Efficiency of National Oil Companies By Peter R Hartley; Kenneth B. Medlock III
  18. Soverign Wealth Fund Issues and the National Fund(s) of Kazakhstan By David Kemme
  19. The Implications of a Break-Up of China for Carbon Dioxide Emissions By Richard S.J. Tol
  20. The Regional Economic Effects of a Reduction in Carbon Emissions and An Evaluation of Offsetting Policies in China By Anping Chen; Nicolaas Groenewold
  21. How Environmental Pollution from Fossil Fuels can be included in measures of National Accounts and Estimates of Genuine Savings By Greasley, David; Hanley, Nicholas; Kunnas, Jan; McLaughlin, Eoin; Oxley, Les; Warde, Paul
  22. The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing By Michael Greenstone; John A. List; Chad Syverson
  23. Ecological Footprint Inequality: A methodological review and some results By Jordi Teixidó-Figueras; Juan Antonio Duro
  24. Dimensiunea Economică a Strategiei Europa 2020 By Anton, Casian
  25. Migration, Congestion Externalities, and the Evaluation of Spatial Investments By Dinkelman, Taryn; Schulhofer-Wohl, Sam
  26. Integration von Nachhaltigkeitsfaktoren bei der Bestimmung kostenoptimaler Bestellzyklen in der Sustainable Supply Chain By Jürgen Wicht
  27. The impact of low emission zones on PM10 levels in urban areas in Germany By Christiane Malina; Frauke Fischer
  28. Retail demand for voluntary carbon offsets – a choice experiment among Swiss consumers By Blasch, Julia; Farsi, Mehdi
  29. Optimal timing of CCS policies with heterogeneous energy consumption sectors By Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
  30. Optimal timing of CCS policies with heterogeneous energy consumption sectors By Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
  31. Climate Policy and Fiscal Constraints: Do Tax Interactions Outweigh Carbon Leakage? By Fischer, Carolyn; Fox, Alan K.
  32. Stable climate coalitions (Nash) and international trade By Thomas Eichner; Rüdiger Pethig
  33. The Effects of the Length of the Period of Commitment on the Size of Stable International Environmental Agreements By Nkuiya, Bruno
  34. Self-enforcing environmental agreements and international trade By Thomas Eichner; Rüdiger Pethig
  35. Potentially Harmful International Cooperation on Global Public Good Provision By Wolfgang Buchholz; Richard Cornes; Dirk Rübbelke
  36. The Choice of Discount Rate for Climate Change Policy Evaluation By Goulder, Lawrence H.; Williams, Roberton C.

  1. By: Roger Fouquet
    Abstract: This paper briefly highlights some of the most influential ideas in the literature on the economics of energy and (energy-related) climate change. This paper will use bibliometric evidence to examine the trends in related research over the last forty years, and analyse the explosion in energy and climate change research in the last ten years. It will also, more controversially, consider the validity of the hypothesised rise in original ideas in the literature (during the 1990s) and then decline (or relative decline) since the explosion in research output (since 2005). This paper proposes that if economists are going to make an equally important and constructive contribution as they did up to 2012, then their ideas will need to move forward and evolve, offering exciting and stimulating new solutions for the post-Kyoto era.
    Keywords: Energy, Climate Change.
    Date: 2012–09
  2. By: Karen Knight (Business School, University of Western Australia); Michael McLure (Business School, University of Western Australia)
    Date: 2012
  3. By: Burtraw, Dallas (Resources for the Future)
    Abstract: Economic approaches are expected to achieve environmental goals at less cost than traditional regulations, but they have yet to find widespread application. One reason is the way these tools interact with existing institutions. The federalist nature of governmental authority assigns to subnational governments much of the implementation of environmental policy and primary authority for planning the infrastructure that affects environmental outcomes. The federalist structure also interacts with the choice of economic instruments; a national emissions cap erodes the additionality of actions by subnational governments. Even the flagship application of sulfur dioxide emissions trading has been outperformed by the venerable Clean Air Act, and greenhouse gas emissions in the United States are on course to be less than they would have been if Congress had frozen emissions with a cap in 2009. The widespread application of economic tools requires a stronger political theory of how they interact with governing institutions.
    Keywords: environmental federalism, additionality, emissions cap, Clean Air Act, sulfur dioxide, carbon dioxide
    JEL: Q50 Q58 H77
    Date: 2012–08–24
  4. By: Turner, Karen
    Abstract: The phenomenon of rebound effects has sparked considerable academic, policy and press debate over the effectiveness of energy efficiency policy in recent years. There has been a huge surge in empirical studies claiming rebound effects of hugely varying magnitudes. The contention of this paper is that the lack of consensus in the literature is grounded in a rush to empirical estimation in the absence of solid analytical foundations. Focus on measuring a single 'rebound' measure has led to a neglect of detail on precisely what type of change in energy use is considered in any one study and on the range of mechanisms governing the economy-wide response. This paper attempts to bring a reflective pause to the development of the rebound literature, with a view to identifying the key issues that policymakers need to understand and analysts need to focus their attention on.
    Keywords: Energy supply; Energy demand; Rebound; Energy efficiency
    Date: 2012–07
  5. By: WenShwo Fang (Feng Chia University); Stephen M. Miller (University of Nevada, Las Vegas and University of Connecticut); Chih-Chuan Yeh (The Overseas Chinese University)
    Abstract: Energy saving can importantly help prevent greenhouse gas emissions and, thus, climate change. Energy service companies (ESCOs) provide a crucial instrument for delivering improved energy efficiency and potentially contributing to substantial energy savings in the public and private sectors. This paper investigates empirically the effect of ESCO activities on energy use. Based on a dynamic IPAT model, using a panel data of 94 countries over the period 1981 to 2007, we provide significant evidence that ESCOs reduce energy use. This finding proves robust to different dates of the first ESCO. The negative ESCO effect increases over time. The dynamic adjustment process produces small effects in the short run, but large effects in the long run. Moreover, the long-run ESCO effect differs across the stages of development. That is, for the high- and low-income countries, the short-run ESCO effect remains negative, but the long-run effects differ, remaining negative in high-income countries, but becoming positive in low-income countries. Finally, we discuss energy policy implications.
    Keywords: Energy use, Energy service companies (ESCOs), Dynamic IPAT model
    JEL: O13 Q43 Q55
    Date: 2012–08
  6. By: WenShwo Fang (Feng Chia University); Stephen M. Miller (University of Nevada, Las Vegas and University of Connecticut)
    Abstract: Proponents of energy service companies (ESCOs) argue that these firms provide a crucial instrument for delivering improved energy efficiency in public and private sectors, thus contributing to carbon dioxide (CO2) emissions reduction around the world. Do ESCOs reduce CO2 emissions? To answer this question, we develop an estimating equation, which approximates the IPAT model, from a simple model of production. Based on the modified dynamic IPAT model, using the panel data of 129 countries over the period 1980 to 2007, we provide significant evidence to show that the ESCOs effectively reduce CO2 emissions and this effect increases over time. These findings also prove robust to the inclusion of a set of control variables, different dates of the first ESCO, and the Kyoto Protocol. Finally, we discuss energy policy implications.
    Keywords: Energy service companies (ESCOs), Carbon dioxide (C02) emissions, Dynamic IPAT model
    JEL: Q55 Q56
    Date: 2012–08
  7. By: Alexandra Bratanova (Department of Economics, University of Queensland); Jacqueline Robinson (Department of Economics, University of Queensland); Liam Wagner (Department of Economics, University of Queensland)
    Abstract: Russia is frequently referred to as a country with sufficient energy efficiency potential. Although an improvement has been shown (energy-GDP ratios were improved by 35% between 2000-2008 [2]), the contribution of technological progress is estimated to account for only 1% of the energy-GDP ratio reduction, the existing share of renewable energy sources (RES) based electricity generation is estimated at 0.1%. Analysis shows that regional and federal levels of governance in Russia are missing efficient mechanisms for stimulation of energy saving and technological development [7]. This research aims to develop an analytical tool for energy sector economic analysis for technological development planning to support policy decision making. The paper adapts the levelized cost of energy (LCOE) methodology of Wagner and Foster [9], which has been upgraded to facilitate combined energy generation processes, to examine the cost structures associated with energy system and applies it to a Russian regional case study. The model run for two fuel price scenarios allowed us to conclude that the regional energy supply system is dependent on natural gas price. Strong political and financial support is needed to boost technological development and RES application.
    Keywords: Russian Electricity Sector; Levelised Cost of Energy; Electricity Generation;
    JEL: Q40 G12 Q48
    Date: 2012–09
  8. By: Timothy Simcoe; Michael W. Toffel
    Abstract: We measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and supplier investments in green building expertise. Our findings suggest that government procurement policies can accelerate the diffusion of new environmental standards that require coordinated complementary investments by various types of private adopter.
    JEL: L15 O33 Q55 Q58
    Date: 2012–09
  9. By: Stéphane Blancard; Elsa Martin
    Abstract: Energy efficiency measurement is crucial when planning energy reduction policies. However, decision makers understandably are reluctant to act in the absence of solid data and results supporting a policy position. The main objective of this paper is to propose an alternative method to measure farm energy efficiency. This method is based on the Data Envelopment Analysis (DEA) approach in a cost framework introduced by Farrell (1957) and developed by Färe et al. (1985). We decompose energy efficiency measurement into two components, namely technical and allocative efficiencies. Here, input prices are replaced by their energy content. The energy efficiency model is used to explore the optimal input-mix that produces the current outputs at minimum energy-consumption. We show that this decomposition can help policy makers considerably to design accurate energy policies. The presence of uncertainty on data, and more particularly on energy content of inputs, leads us to recommend exploiting the methodologies proposed for calculating the bounds of efficiency measurement in order to produce more robust results. We expect to alert policy-makers in the fact that efficiency is not a fixed value and should be considered with caution. A 2007 database of French farms specialized in crops is used for empirical illustration.
    Keywords: Data Envelopment Analysis, energy efficiency, uncertainty
    JEL: D24 O13 Q15 Q4
    Date: 2012–09–06
  10. By: Suarez, Ronny
    Abstract: In this paper a case study is presented to propose an alternative mechanism to include the impact of climate change into the hydropower projects’ feasibility valuation. We started from an independent engineer historical energy generation simulations; therefore, applying mixing unconditional disturbance and extreme value theory, a new path that satisfies a return level’ specification is created. The new path is used to analyze the effect of extreme events on the internal rate of return of the project. This mechanism could also be used to execute an educated guess as simple sensitivity test.
    Keywords: Extreme Value Theory; Generalized Pareto Distribution; Return Level; Mixing Unconditional Disturbances; Climate Change; Stress Testing
    JEL: C00 G00
    Date: 2012–09–12
  11. By: Sergei Manzhos
    Abstract: We show that different rates should be used for borrowing and discount rates, and that the risk-free rate should be used for discounting when assessing and comparing the cost of energy accross diffferent producers and technologies, on the example of photovoltaics. Recent quantitative models using the same rate for borrowing and discounting lead to an underestimation of the cost for risky borrowers and to distorted sensitivities of the cost to financial and non-financial factors. Specifically, it is shown that they may lead to gross underestimation of the importance of solar-to-electricity conversion efficiency. The importance of device efficiency is re-established under the treatment of the discount rate proposed here. The effects on the cost of energy of the installation efficiency and degradation rate, on the discount rate and risk premium as well as on the project lifetime are estimated.
    Date: 2012–09
  12. By: Billette de Villemeur, Etienne; Pineau, Pierre-Olivier
    Abstract: Electricity markets vary greatly across jurisdictions, in terms of regulatory institutions, cost levels and environmental impacts. Integrating such different markets can lead to significant changes. This paper considers two jurisdictions - one with a regulated monopoly selling at average cost and one with a competitive market - and compares three different institutional regimes: autarky, a mixed-market structure with trade and a fully integrated market, where electricity is sold at marginal cost. We show that, in the second regime, the regulated monopoly always exports toward the jurisdiction pricing at marginal cost, up to inducing productive inefficiencies. By contrast, a shift from the second to the third regime, i.e. "integrated deregulation" yields a decrease in overall consumption. We identify the exact conditions under which the shift from one regime to the other results in environmental gains.
    Keywords: Market Integration; Regulation; Electricity Trade; Environmental Impacts
    JEL: F15 Q52 Q56 F14 L94 L50
    Date: 2012
  13. By: Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M. de
    Abstract: This is the specification for the Power Trading Agent Competition for 2012 (Power TAC 2012). Power TAC is a competitive simulation that models a “liberalized†retail electrical energy market, where competing business entities or “brokers†offer energy services to customers through tariff contracts, and must then serve those customers by trading in a wholesale market. Brokers are challenged to maximize their profits by buying and selling energy in the wholesale and retail markets, subject to fixed costs and constraints. Costs include fees for publication and withdrawal of tariffs, and distribution fees for transporting energy to their contracted customers. Costs are also incurred whenever there is an imbalance between a broker’s total contracted energy supply and demand within a given time slot.The simulation environment models a wholesale market, a regulated distribution utility,and a population of energy customers, situated in a real location on Earth during a specific period for which weather data is available. The wholesale market is a relatively simple call market, similar to many existing wholesale electric power markets, such as Nord Pool in Scandinavia or FERC markets in North America, but unlike the FERC markets we are modeling a single region, and therefore we do not model location-marginal pricing. Customer models include households and a variety of commercial and industrial entities, many of which have production capacity (such as solar panels or wind turbines) as well as electric vehicles. All have “real-time†metering to support allocation of their hourly supply and demand to their subscribed brokers, and all are approximate utility maximizers with respect to tariff selection, although the factors making up their utility functions may include aversion to change and complexity that can retard uptake of marginally better tariff offers. The distribution utility models the regulated natural monopoly that owns the regional distribution network, and is responsible for maintenance of its infrastructure and for real-time balancing of supply and demand. The balancing process is a market-based mechanism that uses economic incentives to encourage brokers to achieve balance within their portfolios of tariff subscribers and wholesale market positions, in the face of stochastic customer behaviors and weather-dependent renewable energy sources. The broker with the highest bank balance at the end of the simulation wins.
    Keywords: power;portfolio management;sustainability;preferences;energy;trading agent competition;autonomous agents;policy guidance;electronic commerce
    Date: 2012–09–10
  14. By: Lucija Muehlenbachs; Elisheba Spiller; Christopher Timmins
    Abstract: While shale gas development can result in rapid local economic development, negative externalities associated with the process may adversely affect the prices of nearby homes. We utilize a triple-difference estimator and exploit the public water service area boundary in Washington County, Pennsylvania to identify the housing capitalization of groundwater risk, differentiating it from other externalities, lease payments to homeowners, and local economic development. We find that proximity to wells increases housing values, though risks to groundwater fully offset those gains. By itself, groundwater risk reduces property values by up to 24 percent.
    JEL: Q4 Q53
    Date: 2012–09
  15. By: Rodríguez, Carlos, A.
    Abstract: This paper makes an empirical analysis to the functional form derived from the demand function for gasoline in Puerto Rico. According to the structure of the gas market in Puerto Rico and the international context, we studied the consumption of gasoline based on an exercise of constrained optimization. The demand function for that model was the basis for the empirical development. According to empirical evidence gasoline consumption has a direct relationship with the price of gasoline, personal income and the number of motor vehicles and a negative relationship with respect to the unemployment rate.
    Keywords: Fuel consumption; demand function; gasoline market
    JEL: Q41 N7
    Date: 2012
  16. By: Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: Knittel and Smith present seven alternative versions of our model all of which apparently show a lower impact of ethanol production on gasoline prices. Four of these models are based on the flawed assumption that one can use the change in refiner’s margin and the change in gasoline prices interchangeably. The remaining three models all suffer from an obvious and endogeneity problem that when corrected results in results that are similar to ours. What is then left of their paper is a series of regressions of unrelated variables without appropriate controls, and with predictable results. I believe that the magnitude of all our results are reasonable and that they can be used in the current policy debate. Our results show that the closure of ethanol plants will have a serious impact on gasoline prices.
    Date: 2012–09
  17. By: Peter R Hartley (Business School, University of Western Australia and Rice University); Kenneth B. Medlock III (Rice University)
    Abstract: Using data on 61 oil companies from 2001-09, we examine the evolution of revenue efficiency of National Oil Companies (NOCs) and shareholder-owned oil companies (SOCs). We find that NOCs generally are less efficient than SOCs, but their efficiency increased faster over the last decade. We also find evidence that partial privatizations increase operational efficiency, and (weaker) evidence that mergers and acquisitions during the decade tended to increase the efficiency of the merging firms. Finally, we find evidence that much of the inefficiency of NOCs is consistent with the hypothesis that government ownership leads to different firm objectives.
    Date: 2012
  18. By: David Kemme
    Abstract: This paper first describes the major concerns associated with SWFs, mainly revolving around state ownership and lack of transparency. It then focuses on the National Fund for the Future of Kazakhstan (the “oil fund”, or NOF) and Samruk Kazyna (SK), the holding company for state owned enterprises. The NOF is funded predominately by corporate income taxes and royalties on natural resource production and is an instrument to provide financial stability and intergenerational equity. SK includes most large public monopolies and state owned enterprises not privatized in the 1990s with all of the accompanying issues related to state ownership and control of productive activities.
    Keywords: Sovereign Wealth Funds, Kazakhstan, Oil Fund
    JEL: F33 G20 O53 P33
    Date: 2012–08–01
  19. By: Richard S.J. Tol (Department of Economics, University of Sussex, UK; Institute for Environmental Studies, Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands; Department of Economics, Trinity College, Dublin, Ireland)
    Abstract: The transition from autocracy to democracy may lead a country to break-up. The break-ups of the USSR and Yugoslavia led to sharp falls in emissions. If something similar would happen in China, projected emissions would fall by 50% or more. Break-up uncertainty dominates other scenario uncertainty.
    Keywords: China, scenarios, carbon dioxide emissions
    JEL: Q54
    Date: 2012–09
  20. By: Anping Chen (School of Economics Jinan University); Nicolaas Groenewold (Business School, University of Western Australia)
    Abstract: China has promised to cut CO2 emissions per unit of GDP 40-50% by 2020. It is almost certain that the reduction in emissions will have negative effects on the economy; moreover, the effects are likely to differ across regions, given that there is considerable heterogeneity among Chinese regions. These differential regional impacts will affect regional disparities, which are already very substantial and the source of great concern at the highest policy levels. Yet, very little analysis of them has yet been carried out. We help fill this gap by building a small theoretical model involving two regions designed to capture some of the features of the Chinese economy. We incorporate the right to emit CO2 as a factor of production with the national level of permitted emissions set by the national government. The model is solved numerically based on a parameterisation using Chinese data to simulate the effects on the regions of the carbon-reduction. We find that a reduction has regionally differentiated effects on key variables such as income, welfare and output. We also explore the effects of offsetting policies that may be undertaken by governments at both regional and national levels to ameliorate the effects of the carbon reduction. We find that the effects of standard fiscal policies (both regional and national) depend crucially on whether one or both regions are targeted. Welfare changes are often in the opposite direction to output changes. Boosts to productive capacity do better in terms of output but also have “perverse” welfare effects.
    Date: 2012
  21. By: Greasley, David; Hanley, Nicholas; Kunnas, Jan; McLaughlin, Eoin; Oxley, Les; Warde, Paul
    Abstract: In this paper, we examine means to incorporate the environmental effects of fossil fuel use into national accounts and genuine savings estimates. The main focus is on the rationales for the inclusion of carbon dioxide, and its appropriate price tag. We do this in the context of the pricing of historic carbon emissions in United Kingdom over the long run (from the onset of the industrial revolution to the present). Furthermore, we examine the reasonableness of taking into account other greenhouse gases than carbon dioxide. The global effects of carbon dioxide are compared to the local detrimental effects of the production and consumption of coal in the UK.
    Keywords: Britain; Economic History; Global Warming; Carbon Dioxide; Fossil Fuels; National accounts; Genuine Savings
    Date: 2012–07
  22. By: Michael Greenstone; John A. List; Chad Syverson
    Abstract: The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than four decades ago. Using detailed production data from nearly 1.2 million plant observations drawn from the 1972-1993 Annual Survey of Manufactures, we estimate the effects of air quality regulations on manufacturing plants’ total factor productivity (TFP) levels. We find that among surviving polluting plants, stricter air quality regulations are associated with a roughly 2.6 percent decline in TFP. The regulations governing ozone have particularly large negative effects on productivity, though effects are also evident among particulates and sulfur dioxide emitters. Carbon monoxide regulations, on the other hand, appear to increase measured TFP, especially among refineries. The application of corrections for the confounding of price increases and output declines and sample selection on survival produce a 4.8 percent estimated decline in TFP for polluting plants in regulated areas. This corresponds to an annual economic cost from the regulation of manufacturing plants of roughly $21 billion, about 8.8 percent of manufacturing sector profits in this period.
    JEL: D2 K3 L5 L6 Q5
    Date: 2012–09
  23. By: Jordi Teixidó-Figueras (Departament d’Economia Universitat Rovira i Virgili, Av. de la Universitat, 1, 43204. Reus, Spain, CREIP and XREAP); Juan Antonio Duro (Departament d’Economia Universitat Rovira i Virgili, Av. de la Universitat, 1, 43204. Reus, Spain, CREIP and XREAP)
    Abstract: Scarcities of environmental services are no longer merely a remote hypothesis. Consequently, analysis of their inequalities between nations becomes of paramount importance for the achievement of sustainability in terms either of international policy, or of Universalist ethical principles of equity. This paper aims, on the one hand, at revising methodological aspects of the inequality measurement of certain environmental data and, on the other, at extending the scarce empirical evidence relating to the international distribution of Ecological Footprint (EF), by using a longer EF time series. Most of the techniques currently important in the literature are revised and then tested on EF data with interesting results. We look in depth at Lorenz dominance analyses and consider the underlying properties of different inequality indices. Those indices which fit best with environmental inequality measurements are CV2 and GE(2) because of their neutrality property, however a trade-off may occur when subgroup decompositions are performed. A weighting factor decomposition method is proposed in order to isolate weighting factor changes in inequality growth rates. Finally, the only non-ambiguous way of decomposing inequality by source is the natural decomposition of CV2, which additionally allows the interpretation of marginal term contributions. Empirically, this paper contributes to the environmental inequality measurement of EF: this inequality has been quite stable and its change over time is due to per capita vector changes rather than population changes. Almost the entirety of the EF inequality is explainable by differences in the means between the countries of the World Bank group. This finding suggests that international environmental agreements should be attempted on a regional basis in an attempt to achieve greater consensus between the parties involved. Additionally, source decomposition warns of the dangers of confining CO2 emissions reduction to crop-based energies because of the implications for basic needs satisfaction.
    Keywords: Ecological footprint; ecological inequality measurement, inequality decomposition.
    Date: 2012–09
  24. By: Anton, Casian
    Abstract: The aim of the paper is to present the economic dimension of the Europe 2020 strategy. The new strategy of European Union, was launched on 3 march 2010, as a response for economic crisis. Considerated as a new agenda for economic problem, continue, as Lisbon strategy did, to offer a new instrument to boost growth and jobs in all EU’s country. It contains 3 key priorities: smart growth, sustainable growth and inclusive growth. The economic dimension identify 3 headline targets that EU must achive them until 2020: 75 % of the population aged 20-64 should be employed; 3% of the EU's GDP should be invested in R&D and „20/20/20” climate/energy targets. The two primary research objective are: 1. the explore the economic dimension as a part of Europe 2020 strategy and 2. a short geoeconomic analysis of the economic targets, based on the EU reports.
    Keywords: economic dimension; instruments; target; economic governance; European Union
    JEL: N24 N3 J0
    Date: 2012–06–01
  25. By: Dinkelman, Taryn; Schulhofer-Wohl, Sam
    Abstract: Evaluations of new infrastructure in developing countries typically focus on direct effects, such as the impact of an electrification program on household energy use. But if new infrastructure induces people to move into an area, other local publicly provided goods may become congested, offsetting the benefit of the infrastructure. We use a simple model to show how to measure the net benefit of a place-based program without data on land prices -- an indicator that is commonly used to measure congestion in developed countries but that often cannot be used in poor countries because land markets are missing or land prices are badly measured. Our model shows that congestion externalities are especially large when land markets are missing. To illustrate, we estimate the welfare impact of a recent household electrification program in South Africa. Congestion externalities from migration reduced local welfare gains by half.
    Keywords: congestion effects; migration; program evaluation; rural infrastructure; South Africa; welfare
    JEL: H23 H43 H54 O15 O18 R13
    Date: 2012–09
  26. By: Jürgen Wicht (Schumpeter School of Business and Economics)
    Abstract: Simulations can be an appropriate tool in the determination of cost-optimal ordering and delivery requirements considering medium and long-term manipulable constraints. Against the background of sustainable supply chain management increasingly relevant environmental factors can be taken into account within such simulations by determining process-related CO2-costs and including these costs into the validation of individual simulation results. This is demonstrated by using the replenishment process between the distribution center and a store of an international drug store chain. Based on actual sales data, logistical product data and given restrictions on date and frequency of possible orders and deliveries different order cycles are simulated, subsequently evaluated and analyzed in terms of costs.
    Keywords: Carbon Footprint, Logistics Costs, Order Cycle, Replenishment, Simulation, Sustainable Supply Chain Management
    JEL: C6 L1 L8
    Date: 2012–09
  27. By: Christiane Malina (Institute of Spatial and Housing Economics, Muenster); Frauke Fischer (Institute of Transport Economics, Muenster)
    Abstract: High levels of particulate matter scaling less than 10 micrometers in diameter (PM10) in many urban areas have led to the introduction of binding PM10 limit values by the European Commission in 2005. Road transport in inner city areas is believed to be one of the main contributors to accumulated PM10 levels and, thus, is the focus of regulation. One of the strongest regulatory mechanisms to meet the new PM10 air quality standard is the introduction of low emission zones (LEZs) in Germany. This policy allows local authorities to define geographical areas in urban agglomerations as LEZs, into which vehicles that do not meet predetermined emission standards are prohibited from entering. This paper evaluates the effectiveness of LEZs on reducing PM10 levels in German cities. We employ a fixed effects panel data model to analyze the effects of LEZs on daily PM10 levels using data from 2000 to 2009. We take into account daily data for meteorological conditions and traffic volume. The results of the analysis reveal that the introduction of LEZs has significantly reduced daily PM10 levels in urban areas. We can also show that PM10 levels are significantly driven down further when LEZ standards in cities become more stringent over time.
    Keywords: Particulate matter, low emission zones, panel data
    JEL: Q58 R49
    Date: 2012–08
  28. By: Blasch, Julia; Farsi, Mehdi
    Abstract: Using a choice experiment conducted among more than a thousand Swiss consumers, we analyze the individual demand for voluntary carbon offsets in different contexts. The analysis is used to identify the consumers’ underlying motives for offsetting emissions, the context effects on their willingness to pay and the influence of the offsetting project characteristics on their propensity for contribution. Furthermore, the characteristics of potential buyers as well as the possibilities of behavioral rebound are explored. To support our results, we assess whether the hypothetical preferences are consistent with the revealed behavior. The adopted latent class model accounts for heterogeneity of preferences with respect to offset products offered in the market. The results provide a quantitative assessment of consumers’ marginal valuation of carbon offsets and a better understanding of individual preferences. The results also point to strong heterogeneity among individuals favoring targeted policy measures to induce voluntary contribution.
    Keywords: Voluntary carbon offsets; Willingness to pay; Choice experiment; Latent class model
    JEL: D03 D12 Q54
    Date: 2012–09
  29. By: Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
    Abstract: Using the Chakravorty et al. (2006) ceiling model, we characterize the optimal consumption paths of three energy resources: dirty oil, which is non-renewable and carbon emitting; clean oil, which is also non-renewable but carbon-free thanks to an abatement technology, and solar energy, which is renewable and carbon-free. The resulting energy-mix can supply the energy needs of two sectors. These sectors differ in the additional abatement cost they have to pay for consuming clean rather than dirty oil (sector 1 can abate its emissions at a lower cost than sector 2). We show that it is optimal to begin by fully capturing sector 1’s emissions before the ceiling is reached. Also, there may exist optimal paths along which both capture devices have to be activated. In this case first sector’s 1 emissions are fully abated before sector 2 abates partially. Finally, we discuss the effect of heterogeneity regarding the abatement cost on the uniqueness of the sectoral energy price paths.
    Keywords: Energy resources; Carbon stabilization cap; Heterogeneity; Carbon capture and storage; Air capture.
    JEL: Q32 Q42 Q54 Q58
    Date: 2012–07–23
  30. By: Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
    Abstract: Using the Chakravorty et al. (2006) ceiling model, we characterize the optimal consumption paths of three energy resources: dirty oil, which is non-renewable and carbon emitting; clean oil, which is also non-renewable but carbon-free thanks to an abatement technology, and solar energy, which is renewable and carbon-free. The resulting energy-mix can supply the energy needs of two sectors. These sectors differ in the additional abatement cost they have to pay for consuming clean rather than dirty oil (sector 1 can abate its emissions at a lower cost than sector 2). We show that it is optimal to begin by fully capturing sector 1’s emissions before the ceiling is reached. Also, there may exist optimal paths along which both capture devices have to be activated. In this case first sector’s 1 emissions are fully abated before sector 2 abates partially. Finally, we discuss the effect of heterogeneity regarding the abatement cost on the uniqueness of the sectoral energy price paths.
    Keywords: Energy resources; Carbon stabilization cap; Heterogeneity; Carbon capture and storage; Air capture.
    JEL: Q32 Q42 Q54 Q58
    Date: 2012–07–23
  31. By: Fischer, Carolyn (Resources for the Future); Fox, Alan K.
    Abstract: Climate policymaking faces twin challenges of carbon leakage and public sector revenue requirements. A large literature advocates the use of carbon dioxide (CO2) pricing and recycling the revenues to lower distorting taxes as a way to minimize costs. In this paper, we explore the implications of labor tax interactions for the cost-effectiveness of border adjustments and other measures to cope with leakage. We find that, for plausible values of labor supply elasticities, the cost savings from revenue recycling are significant—from 15 to 25 percent. The cost savings from anti-leakage measures are generally smaller, but also significant, particularly for small coalitions or more binding reduction targets. Tax interactions further enhance the cost savings from border adjustments, but make other measures like rebates or exemptions less attractive.
    Keywords: climate policy, carbon leakage, tax interactions, border adjustments
    JEL: Q5 H21
    Date: 2012–08–23
  32. By: Thomas Eichner; Rüdiger Pethig
    Abstract: The basic model of the literature on self-enforcing international environmental agreements is a model of autarkic countries. We extend that model by international trade and investigate its impact on the performance of ’Nash’ coalitions and on their stability, in particular, in a general equilibrium framework. First we characterize the performance of coalitions and non-coalition countries with regard to emissions and welfare and compare business as usual with the coalition-fringe scenario. In qualitative terms, the results in our free-trade model turn out to be the same as in the basic model for quadratic functional forms. In our model with international trade countries influence the terms of trade with their choice of policy and they make strategic use of that terms-of-trade effect. We find, however, that in the quadratic version of our model - as in the basic model - stable coalitions consist of no more than two countries. Finally, we explore the outcome of trade liberalization by moving from autarky to free trade. Although the coalition steps up its mitigation effort, world emissions rise which may be referred to as a ’green paradox of trade liberalization’. Trade liberalization turns out to be bad for the environment as well as for the coalition countries’ welfare and the aggregate welfare of all countries; it reduces the range of profitable coalitions, and it even tends to hamper the formation of stable coalitions.
    Keywords: sub-global climate coalition, international trade,trade liberalization, self-enforcing IEA
    JEL: C72 F50 Q50 Q58
    Date: 2012
  33. By: Nkuiya, Bruno
    Abstract: This paper extends the standard model of self-enforcing dynamc international environmental agreements by allowing the length of the period of commitment of such agreements to vary as a parameter. It analyzes the pattern of behavior of the size of stable coalitions, the stock of pollution, and the emission rate as a function of the length of the period of commitment. It is shown that the length of the period of commitment can have very significant effects on the equilibrium. We show numerically that at the initial date, as the length of commitment is increased, the potential gain from cooperation tends to diminish, increasing the disincentive to ratify the agreements. This suggests that considerable attention should be given to the determination of the length of such international agreements.
    Keywords: International environmental agreements, global pollution, stock pollution, dynamc games, Environmental Economics and Policy, Q5, C73, F53,
    Date: 2012–08
  34. By: Thomas Eichner; Rüdiger Pethig
    Abstract: In the basic model of the literature on international environmental agreements (IEAs) (Barrett 1994; Rubio and Ulph 2006) the number of signatories of selfenforcing IEAs does not exceed three, if non-positive emissions are ruled out. We extend that model by introducing a composite consumer good and fossil fuel that are produced and consumed in each country and traded on world markets. When signatory countries act as Stackelberg leader and emissions are positive, the size of stable IEAs may be significantly larger in our model with international trade. This would be good news if larger self-enforcing IEAs would lead to stronger reductions of total emissions. Unfortunately, the allocation of total emissions in self-enforcing IEAs turns out to be approximately the same as in the business as usual scenario independent of the number of its signatories. We also investigate the role of international trade by comparing our free-trade results with the outcome in the regime of autarky. Our autarky model turns out to coincide with the basic model of the literature alluded to above. We contribute to that literature by showing that in autarky regime the outcome of self-enforcing IEAs is also approximately the same as in business as usual.
    Keywords: international trade, self-enforcing environmental agreements, Stackelberg equilibrium
    JEL: C72 F02 Q50 Q58
    Date: 2012
  35. By: Wolfgang Buchholz; Richard Cornes; Dirk Rübbelke
    Abstract: Recent international climate negotiations suggest that complete agreements are unlikely to materialize. Instead, partial cooperation between like-minded countries appears a more likely outcome. In this paper we analyze the effects of such partial cooperation between like-minded countries. In doing so, we link the literature on partial cooperation with so-called matching approaches. Matching schemes are regarded as providing a promising approach to overcome undersupply of public goods like climate protection. The functioning of matching mechanisms in a setting with an incomplete agreement, i.e. a contract where only a subset of the players participates, has however not been investigated yet. This paper fills this research gap by analyzing incomplete matching agreements in the context of international climate protection. We analyse their effect on both welfare and the global climate protection level. We show that matching coalitions may bring about a decline in global public good provision and a reduction in the welfare of outsiders.
    JEL: C78 H41 Q54
    Date: 2012–09
  36. By: Goulder, Lawrence H.; Williams, Roberton C. (Resources for the Future)
    Abstract: Nearly all discussions about the appropriate consumption discount rate for climate change policy evaluation assume that a single discount rate concept applies. We argue that two distinct concepts and associated rates apply. We distinguish between a social-welfare-equivalent discount rate appropriate for determining whether a given policy would augment social welfare (according to a postulated social welfare function) and a finance-equivalent discount rate suitable for determining whether the policy would offer a potential Pareto improvement. Distinguishing between the two rates helps resolve arguments as to whether the choice of discount rate should be based on ethical considerations or empirical information (such as market interest rates), and whether the discount rate should serve a prescriptive or descriptive role. Separating out the two rates also helps clarify disputes about the appropriate stringency of climate change policy. We find that the structure of leading numerical optimization models used for climate policy analysis may have helped contribute to the blurring of the differences between the two rates. In addition, we indicate that uncertainty about underlying ethical parameters or market conditions implies that both rates should decline as the time horizon increases.
    Keywords: climate change, discounting, discount rate
    JEL: D61 D63 H43 Q54
    Date: 2012–09–06

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