nep-ene New Economics Papers
on Energy Economics
Issue of 2014‒01‒17
47 papers chosen by
Roger Fouquet
London School of Economics

  1. Energy and Environmental Issues and Policy in China By ZhongXiang Zhang
  2. Embodied Carbon Tariffs By Christoph Böhringer; Jared C. Carbone; Thomas F. Rutherford
  3. A Quantitative Assessment of the Implications of Including non-CO2 Emissions in the European ETS By Carlo Orecchia; Ramiro Parrado
  4. Distributional Effects of the Australian Renewable Energy Target (RET) through Wholesale and Retail Electricity Price Impacts By Johanna Cludiud; Sam Forrest; Iain MacGill
  5. Escape from Third-Best: Rating Emissions for Intensity Standards By Lemoine, Derek
  6. A Comparison Between Shale Gas in China and Unconventional Fuel Development in the United States: Health, Water and Environmental Risks By Paolo D. Farah; Riccardo Tremolada
  7. Energy Prices and the Real Exchange Rate of Commodity-Exporting Countries By Magali Dauvin
  8. The Swedish Tax on Nitrogen Oxide Emissions: Lessons in Environmental Policy Reform By OECD
  9. The Strategic Value of Carbon Tariffs By Christoph Böhringer; Jared C. Carbone; Thomas F. Rutherford
  10. The Clean Energy R&D Strategy for 2°C By Giacomo Marangoni; Massimo Tavoni
  11. Induced Transnational Preference Change: Fukushima and Nuclear Power in Europe By Heinz Welsch; Philipp Biermann
  12. Platform Markets and Energy Services By Claire M. Weiller; Michael G. Pollitt
  13. Technological Change, Vehicle Characteristics, and the Opportunity Costs of Fuel Economy Standards By Klier, Thomas; Linn, Joshua
  14. Economic Insights Required for Using Lifecycle Analysis for Policy Decisions By Klotz, Richard; Bento, Antonio M.; Landry, Joel R.
  15. Energy Efficiency and Industrial Output: The Case of the Iron and Steel Industry By Florens Flues; Dirk Rübbelke; Stefan Vögele
  16. Determinants of Investment under Incentive Regulation: The Case of Norwegian Electricity Distribution Networks By R. Poudineh; T. Jamasb
  17. Climate Change, Climate Science and Economics. Prospects for an Alternative Energy Future: Preface and Abstracts By G. Cornelis van Kooten
  18. German Energiewende and the Heating Market - Impact and Limits of Policy By Klaas Bauermann
  19. Marginal Abatement Cost Curves and the Optimal Timing of Mitigation Measures By Adrien Vogt-Schilb; Stéphane Hallegatte
  20. Prospects for Exporting Liquefied Natural Gas from British Columbia: An Application of Monte Carlo Cost-Benefit Analysis By Matt Zahynacz
  21. The Optimal Share of Variable Renewables. How the Variability of Wind and Solar Power Affects their Welfare-optimal Deployment By Lion Hirth
  22. Planning for Large-Scale Wind and Solar Power in South Africa: Identifying Cost-Effective Deployment Strategies Using Spatiotemporal Modeling-Working Paper 340 By Kevin Ummel
  23. The 2013 Power Trading Agent Competition By Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M.
  24. Modelling the Effects of Oil Prices on Global Fertilizer Prices and Volatility By Chang, C-L.; Chen, C.-C.; McAleer, M.J.; Chen, P-Y.
  25. Made to Measure: Options for Emissions Accounting under the UNFCCC By Andrew Prag; Christina Hood; Pedro Martins Barata
  26. Tactical/Operational Decision Making for Designing Green Logistics Networks By Mallidis, I.; Dekker, R.; Vlachos, D.
  27. Innovation Complementarity and Environmental Productivity Effects: Reality or Delusion? Evidence from the EU By Marianna Gilli; Susanna Mancinelli; Massimiliano Mazzanti
  28. Environmental Kuznets curve and domestic material consumption indicator: an European analysis By Auci, Sabrina; Vignani, Donatella
  29. Nonlinearity, Heterogeneity and Unobserved Effects in the CO2-income Relation for Advanced Countries By Massimiliano Mazzanti; Antonio Musolesi
  30. Oil price: the nature of the shocks and the impact on the French economy By J.-B. BERNARD; G. CLÉAUD
  31. Aiding Decision-Making to Reduce the Impacts of Climate Change By Howard Kunreuther; Elke U. Weber
  32. Risk-averse and Risk-seeking Investor Preferences for Oil Spot and Futures By Lean, H.H.; McAleer, M.J.; Wong, W-K.
  33. Factor Input Substitution in Irish Manufacturing By Haller, Stefanie; Hyland, Marie
  34. Energy Costs and the Optimal Use of Groundwater By Roumasset, James; Wada, Christopher
  35. Abatement R&D, Market Imperfections, and Environmental Policy in an Endogenous Growth Model By Chu, Hsun; Lai, Ching-Chong
  36. International Environmental Agreements with Endogenous or Exogenous Risk By Fuhai HONG; Larry KARP
  37. Auctioning vs. Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information By Francisco Alvarez; Francisco J. André
  38. Contracting for Energy Crops: Effect of Risk Preferences and Land Quality By Yang, Xi; Paulson, Nick; Khanna, Madhu
  39. Determinants of Technology Transfer through CDM: the Case of China By Matthias Weitzel; Wan-Hsin Liu; Andrea Vaona
  40. Oil Prices, Drought Periods and Growth Forecasts in Morocco By Bentour, El Mostafa
  41. Ethics, equity and the economics of climate change. Paper 2: Economics and Politics By Nicholas Stern
  42. International Environmental Agreements with Uncertainty, Learning and Risk Aversion By Michael FinusAlistair Ulph; Alistair Ulph
  43. Leadership and International Climate Cooperation By Gregor Schwerhoff
  44. The Housing Market Impacts of Shale Gas Development By Muehlenbachs, Lucija; Spiller, Elisheba; Timmins, Christopher
  45. Natural Gas, Public Investment and Debt Sustainability in Mozambique By Giovanni Melina; Yi Xiong
  46. EEthics, Equity and the Economics of Climate Change. Paper 1: Science and Philosophy By Nicholas Stern
  47. Rethinking the Consultation-Conflict Link: Lessons from Bolivia’s Gas Sector By Almut Schilling-Vacaflor

  1. By: ZhongXiang Zhang (University Distinguished Professor and Chairman, School of Economics, Fudan University, Shanghai, China)
    Abstract: China’s rampant environmental pollution problems and rising greenhouse gas emissions and the resulting climate change are undermining its long-term economic growth. China, from its own perspective cannot afford to and, from an international perspective, is not meant to continue on the conventional path of encouraging economic growth at the expense of the environment. Instead, concerns about a range of environmental stresses from burning fossil fuels, energy security as a result of steeply rising oil imports and international pressure on it to exhibit greater ambition in fighting global climate change have sparked China’s determination to improve energy efficiency and cut pollutants, and to increase the use of clean energy in order to help its transition to a low-carbon economy. This chapter focuses on China’s efforts towards energy conservation, nuclear power and the use of renewable energy. The chapter examines a number of market-based instruments, economic and industrial policies and measures targeted for energy saving, pollution cutting, energy greening. To actually achieve the desired outcomes, however, requires strict implementation and coordination of these policies and measures. The chapter discusses a variety of implementation/compliance/reliability issues. The chapter ends with some concluding remarks and recommendations.
    Keywords: Energy Saving, Renewable Energy, Power Generation, Nuclear Power, CCS, Market-Based Instruments, Economic and Industrial Policies, Carbon Intensity, Resource Taxes; Implementation, Compliance and Reliability, Financial Institutions
    JEL: Q42 Q43 Q48 Q52 Q54 Q55 Q56 Q58 R13 R15
    Date: 2013–11
  2. By: Christoph Böhringer (Carl von Ossietzky Universität Oldenburg, Institut für Volkswirtschaftslehre & ZenTra); Jared C. Carbone (University of Calgary and Resources for the Future, Department of Economics); Thomas F. Rutherford (University of Wisconsin, Madison)
    Abstract: Embodied carbon tariffs tax the direct and indirect carbon emissions embodied in trade — an idea popularized by countries seeking to extend the reach of domestic carbon regulations. We investigate their effectiveness using simulations from an applied general equilibrium model of global trade and energy use. We find that the tariffs do reduce foreign emissions, but their ability to improve the global cost-effectiveness of climate policy is limited. Their main welfare effect is to shift the burden of developed-world climate policies to the developing world.
    Keywords: climate policy, border tax adjustments, carbon leakage
    JEL: D58 H2 Q43 Q54
    Date: 2013–08
  3. By: Carlo Orecchia; Ramiro Parrado (Fondazione Eni Enrico Mattei (FEEM), and Euro-Mediterranean Center on Climate Change (CMCC), Italy)
    Abstract: Although CO2 emissions stand for most of greenhouse gas (GHG) emissions, the contribution of mitigation efforts based on non-CO2 emissions is still a field that needs to be explored more thoroughly. Extending abatement opportunities to non-CO2 could reduce overall mitigation costs but it could also exert a negative pressure on agricultural output. This paper offers insights about the first effect while provides a preliminary discussion for the second. We investigate the role of non-CO2 GHGs in climate change mitigation in Europe using a computable general equilibrium (CGE) model. We develop a specific modelling framework extending the model with non-CO2 GHGs as an additional mitigation alternative. These modifications allow us to analyse the implications for the European Union (EU) of including non-CO2 GHG emissions in its cap and trade system. We distinguish two targets on all GHG emissions for 2020, a reduction by 20% and 30% with respect to 1990 levels. Within each reduction cap, we consider two mitigation opportunities by means of a carbon tax levied on: 1) CO2 emissions only, and 2) All GHGs emissions (both CO2 and non-CO2 GHG). Results show that a multi-gas mitigation policy would slightly decrease policy costs compared to the CO2 only alternative.
    Keywords: CGE, Greenhouse gas emissions, Cap-and-trade system, Agriculture, Non-CO2 emissions, European Union, Effort Sharing Decision
    JEL: Q5 Q58
    Date: 2013–11
  4. By: Johanna Cludiud (School of Economics, Australian School of Business, the University of New South Wales); Sam Forrest (Centre for Energy and Environmental Markets, the University of New South Wales); Iain MacGill (School of Electrical Engineering and Telecommunications and Centre for Energy and Environmental Markets, the University of New South Wales)
    Abstract: The Australian Renewable Energy Target (RET) has spurred considerable investment in renewable electricity generation, notably wind power, over the past decade. This paper considers the distributional implications of the RET for different electricity customers. Using time-series regression, we show that the increasing amount of wind energy fed into the NEM has placed a considerable downward pressure on wholesale electricity prices through the so-called merit order effect. On the other hand, costs of the RET are passed on to consumers in the form of retail electricity price premiums imposed by the retailers who are liable parties under the scheme. Potential complexities for the analysis include the many drivers of wholesale price outcomes, the mix of regulated and competitive retail tariffs on offer in Australia, and the partial RET exemptions given to energy-intensive trade-exposed industries. Nevertheless, our findings highlight likely significant redistributive transfers between different energy user classes under current RET arrangements. In particular, some energy-intensive industries are benefiting from lower wholesale electricity prices whilst being largely exempted from contributing to the costs of the scheme. By contrast, many households are paying significant RET pass-through costs whilst not necessarily benefiting from lower wholesale prices. A more equitable distribution of RET costs and benefits could be achieved by reviewing the scope and extent of industry exemptions from the RET and ensuring regulators apply methodologies to estimate wholesale price components in regulated electricity tariffs that reflect more closely actual market conditions. More generally, these findings support the growing international appreciation that policy makers need to better integrate distributional assessments into policy design and implementation.
    Keywords: Renewable energy, Electricity market, Distributional effects
    Date: 2013–12
  5. By: Lemoine, Derek
    Abstract: An increasingly common type of environmental policy instrument limits the carbon intensity of transportation and electricity markets. In order to extend the policy's scope beyond point-of-use emissions, regulators assign each competing fuel an emission intensity rating for use in calculating compliance. I show that welfare-maximizing ratings do not generally coincide with the best estimates of actual emissions. In fact, the regulator can achieve a higher level of welfare by manipulating the emission ratings than by manipulating the level of the standard. Moreover, a fuel's optimal rating can actually decrease when its estimated emission intensity increases. Numerical simulations of the California Low-Carbon Fuel Standard suggest that when recent scientific information suggested greater emissions from conventional ethanol, regulators should have lowered ethanol's rating (making it appear less emission-intensive) so that the fuel market would clear with a lower quantity.
    Keywords: externality, emission, intensity, rating, second-best, Environmental Economics and Policy, H23, Q42, Q58,
    Date: 2013–09–30
  6. By: Paolo D. Farah (Edge Hill University, Department of Law & Criminology, UK, gLAWcal, Global Law Initiatives for Sustainable Development, UK); Riccardo Tremolada (Università degli Studi del Piemonte Orientale, Dipartimento di Studi per l’Impresa e il Territorio, Italy, EU Commission Marie Curie Fellow (2013), Chinese Research Academy on Environmental Sciences (CRAES), China, J.D. and LL.M. Università degli Studi di Milano, School of Law, Italy)
    Abstract: China is appraised to have the world's largest exploitable reserves of shale gas, although several legal, regulatory, environmental and investment-related issues will likely restrain its scope. China's capacity to successfully face these hurdles and produce commercial shale gas will have a crucial impact on the regional gas market and on China’s energy mix, as Beijing strives to decrease reliance on imported oil and coal, while attempting to meet growing energy demand and maintain a certain level of resource autonomy. The development of the unconventional natural gas extractive industry will also endow China with further negotiating power to obtain more advantageous prices from Russia and future liquefied natural gas (LNG) suppliers. This paper, adopting a comparative perspective, underlines the trends learned from unconventional fuel development in the United States, emphasizing their potential application to the Chinese context in light of recently signed production-sharing contracts between qualified foreign investors and China. The wide range of regulatory and enforcement problems in this matter are accrued by an extremely limited liberalization of gas prices, lack of technological development, and political hurdles curbing the opening of resource extraction to private investors. These issues are exacerbated by concerns related to the risk of water pollution deriving from mismanaged drilling and fracturing, absence of adequate regulation framework and industry standards, entailing consequences on social stability and environmental degradation.
    Keywords: Shale Gas, Unconventional Fuel, China, U.S.A., Health, Water, Environmental Risks
    JEL: A12 A13 D40 D62 D81 F10 F13 F18 H23 K32 K33 Q4 Q40 Q41 Q42 Q43 Q48 F1 F13 F40 L95 Q3 Q30 Q32 Q33 Q25
    Date: 2013–11
  7. By: Magali Dauvin (EconomiX-CNRS, University Paris West Nanterre-la Défense, France)
    Abstract: This paper investigates the relationship between energy prices and the real effective exchange rate of commodity-exporting countries. We consider two sets of countries: 10 energy-exporting and 23 non-fuel commodity-exporting countries over the period 1980-2011. Estimating a panel cointegrating relationship between the real exchange rate and its fundamentals, we provide evidence for the existence of "energy currencies". Relying on the estimation of panel smooth transition regression (PSTR) models, we show that there exists a certain threshold beyond which the real effective exchange rate of both energy and commodity exporters reacts to oil prices, through the terms-of-trade. More specifically, when oil price variations are low, the real effective exchange rates are not determined by terms-of-trade but by other usual fundamentals Nevertheless, when the oil market is highly volatile, currencies follow an "oil currency" regime, terms-of-trade becoming an important driver of the real exchange rate.
    Keywords: Energy Prices, Terms-of-Trade, Exchange Rate, Commodity-Exporting Countries, Panel Cointegration, Nonlinear Model, PSTR
    JEL: C33 F31 Q43
    Date: 2013–12
  8. By: OECD
    Abstract: Sweden was facing a serious soil acidification and water eutrophication problem caused partly by emissions of nitrogen oxides (NOx) from combustion processes in transport, industry and power. In 1992, Sweden introduced a high tax on NOx emissions from large combustion sources (e.g. power plants, industrial plants, waste incinerators). The tax was accompanied by a refund according to the amount of energy generated. This ensures that facilities with low NOx emission intensitites are net beneficiaries of the scheme. Continuous monitoring of emissions was also made mandatory. The tax was designed to accelerate and stimulate investment in advanced combustion and pollution-abatement technologies and as a supplement to existing regulatory measures.
    Date: 2013–12–24
  9. By: Christoph Böhringer (Carl von Ossietzky Universität Oldenburg, Institut für Volkswirtschaftslehre & ZenTra); Jared C. Carbone (University of Calgary and Resources for the Future, Department of Economics); Thomas F. Rutherford (University of Wisconsin, Madison)
    Abstract: Unilateral carbon policies are inefficient due to the fact that they generally involve emission reductions in countries with high marginal abatement costs and because they are subject to carbon leakage. In this paper, we ask whether the use of carbon tariffs—tariffs on the carbon embodied in imported goods—might lower the cost of achieving a given reduction in world emissions. Specifically, we explore the role tariffs might play as an inducement to unregulated countries adopting emission controls of their own. We use an applied general equilibrium model to generate the payoffs of a policy game. In the game, a coalition of countries regulates its own emissions and chooses whether or not to employ carbon tariffs against unregulated countries. Unregulated countries may respond by adopting emission regulations of their own, retaliating against the carbon tariffs by engaging in a trade war, or by pursuing no policy at all. In the unique Nash equilibrium produced by this game, the use of carbon tariffs by coalition countries is credible. China and Russia respond by adopting binding abatement targets to avoid being subjected to them. Other unregulated countries retaliate. Cooperation by China and Russia lowers the global welfare cost of achieving a 10% reduction in global emissions by half relative to the case where coalition countries undertake all of this abatement on their own.
    Keywords: climate policy, border tax adjustments, carbon leakage, strategic retaliation, applied general equilibrium model
    JEL: D58 H2 Q43 Q54
    Date: 2013–10
  10. By: Giacomo Marangoni (Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Italy); Massimo Tavoni (Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Italy)
    Abstract: This paper uses an integrated assessment model to quantify the climate R&D investment strategy for a variety of scenarios fully consistent with 2°C. We estimate the total climate R&D investment needs in approximately 1 USD Trillion cumulatively in the period 2010-2030, and 1.6 USD Trillions in the period 2030-2050. Most of the R&D would be carried out in industrialized countries initially, but would be evenly split after 2030. We also assess a ‘climate R&D deal’ in which countries cooperate on innovation in the short term, and find that an R&D agreement slightly underperforms a climate policy based on the extension of the Copenhagen pledges till 2030. Both policies are inferior to full cooperation on mitigation starting in 2020. A global agreement on clean energy innovation beyond 2030 without sufficiently stringent GHG emissions reduction policies is found to be incompatible with 2°C.
    Keywords: Clean Energy R&D, Endogenous Technical Change, Climate Policy, 2 Degrees, Durban Action Platform
    Date: 2013–11
  11. By: Heinz Welsch (University of Oldenburg, Institut für Volkswirtschaftslehre & ZenTra); Philipp Biermann (University of Oldenburg, Institut für Volkswirtschaftslehre)
    Abstract: We test whether the relationship between subjective well-being (SWB) of European citizens and the structure of electricity supply has changed after the Fukushima nuclear accident of March 11, 2011. Survey data for about 124,000 individuals in 23 European countries reveal that while European citizens’ SWB was statistically unrelated to the share of nuclear power before the Fukushima disaster, it was negatively related to the nuclear share after the disaster. Taking the relationship between SWB and the electricity supply structure as an indicator of preference, this suggests the existence of an induced transnational preference change.
    Keywords: transnational preference change; subjective well-being; nuclear power; Fukushima
    JEL: Q42 Q54 I31
    Date: 2013–12
  12. By: Claire M. Weiller; Michael G. Pollitt
    Abstract: A structural shift from transaction-based, marginal cost pricing to fee-based service business models often accompanies the emergence of “platform” markets, i.e. multi-sided markets where an intermediary captures the value of the interaction between user groups. The many examples include telecommunications, data storage, cinema, music and media, and the automobile industry. Why not electricity? In this paper, we explore how the electricity supply industry can be conceived of as a platform-mediated, two-sided market and the consequences for pricing. Through two cases, a balancing services provider for smart home energy management systems and an electric vehicle charge manager, we show where a platform entrant could position itself in the retail electricity markets between supply companies and end-users. The drivers of such a transition include increased volatility due to renewable generation, the new complexity of roles for end-users, and the introduction of information and communication technologies. Conceiving of electricity as a platform market where new entrants provide an energy optimisation and management service may stimulate a competitive ecosystem and innovation. We suggest that fee-based pricing would enable the objectives of time-varying pricing to be achieved without adversely affecting the most vulnerable customers.
    Keywords: Platforms, balancing services, electric vehicles, retail electricity markets
    JEL: L81 L94 L10 D4
    Date: 2013–12–19
  13. By: Klier, Thomas; Linn, Joshua (Resources for the Future)
    Abstract: Many countries are tightening passenger vehicle fuel economy standards. In assessing the welfare effects of standards, the literature has not properly accounted either for their effects on the rate of technology adoption, or for improvements in vehicle characteristics in the absence of tightening standards. A dynamic model shows that accounting for both factors has ambiguous effects on estimated welfare costs. We find that recent US and European standards have affected the rate of technology adoption as well as horsepower and torque. Estimated welfare losses from reduced horsepower and torque are of similar magnitude to the welfare gains from fuel savings.
    Keywords: passenger vehicles, US greenhouse gas emissions rate standards, European carbon dioxide emissions rate standards, technology adoption
    JEL: L62 Q4 Q5
    Date: 2013–12–16
  14. By: Klotz, Richard; Bento, Antonio M.; Landry, Joel R.
    Abstract: We develop an analytic and numerical model that integrates land, food and fuel markets and is linked with a sectoral emissions model to examine how the amount of biofuel in the economy impacts the lifecycle emissions of a biofuel under different policies. Our central finding is that the change in GHG emissions due to a unit expansion in biofuel will vary dramatically in the amount of biofuel in the economy and with the policy driving the expansion. The emissions from a unit expansion in corn ethanol due to a blend mandate fall from 12 gCO2e/MJ to 3 gCO2e/MJ, as the quantity of ethanol in the economy increases from 6 to 15 billion gallons. For an input subsidy, emissions due to a unit of ethanol increase from 15 gCO2e/MJ to 26 gCO2e/MJ over the same increase in ethanol. We discuss the implications of these results for lifecycle analysis.
    Keywords: greenhouse gas emissions, lifecycle analysis, biofuel policies, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q54, C68, Q42, Q48,
    Date: 2013
  15. By: Florens Flues (OECD, France, formerly Zentrum für Europäische Wirtschaftsforschung (ZEW), Germany); Dirk Rübbelke (Basque Centre for Climate Change (BC3), and IKERBASQUE – Basque Foundation for Science, Spain); Stefan Vögele (Institute for Energy and Climate Research - Systems Analysis and Technology Evaluation, Forschungszentrum Jülich (IEK-STE), Germany)
    Abstract: The iron and steel industry is one of the most carbon emitting and energy consuming sectors in Europe. At the same time this sector is of high economic importance for the European Union. Therefore, while public environmental and energy policies target this sector, there is political concern that it suffers too much from these policy measures. Various actors fear a policy-induced decline in steel production, and possibly an international reallocation of production plants. This study analyzes the role that input prices and public policies may play in attaining an environmentally more sustainable steel production and how this - in turn - affect total steel output. As we find out for examples of major European steel producing countries, a kind of rebound effect of energy-efficiency improvements in steel production on total steel output may arise.
    Keywords: Energy Efficiency, Iron And Steel Industry, Environmental Protection, Rebound Effect
    JEL: L51 L61 Q43 Q50
    Date: 2013–11
  16. By: R. Poudineh; T. Jamasb
    Abstract: Investment in electricity networks, as regulated natural monopolies, is among the highest regulatory and energy policy priorities. Given the large scale of required investments in the coming years, impelled by the need for decarbonising the electricity sector, identifying investment drivers of power networks facilitates effective regulatory treatment of investment under incentive regulation. This study analyses the determinants of investment in Norwegian electricity distribution networks using a panel dataset of 126 companies from 2004 to 2010. A Bayesian Model Averaging approach is used to provide a robust statistical inference by taking into account the uncertainties around model selection and estimation. The results show that five factors drive nearly all network investments: depreciation, number of network stations, energy density, cost of energy not supplied, and number of leisure homes. Among these, depreciation plays the most important role regardless of the choice of prior. The study finds no evidence of impact on investments by weather and geographic factors which might be due to small variations of these factors across the country. Finally, distributed generations show no effect on investments reflecting the fact that Norwegian distribution networks are already adapted to connect many dispersed small scale hydroelectric resources.
    Keywords: distribution network, investment, regulation, Bayesian model averaging
    JEL: D21 L43 L51 L52 C11
    Date: 2013–07–20
  17. By: G. Cornelis van Kooten
    Date: 2013–04
  18. By: Klaas Bauermann (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen)
    Abstract: The German Energiewende envisages achieving a climate-neutral building stock in 2050 by means of two major pillars of regulation: First, residential buildings should consume 80% less primary energy and, second, the remaining energy demand should be covered primarily with renewables. This paper simulates the future heating market in Germany under different policy scenarios in order to evaluate the impact and limits of recent and conceivable heating market policy. The investigation is based upon a dual model approach, linking a residential heating model to a discrete choice model for the heating system purchase decision. The major finding is that current ‚regulations will not be suitable for meeting government targets. Carbon emission reductions in scenarios assuming current regulation nearly equal those where there is no regulation. In terms of economic efficiency, all calculated policy alternatives perform better than the regulation currently in place. The model results highlight two policy implications. First, rising renewable requirements deliver better results at lower costs. Second, renewable obligations for heating systems must include the existing building stock in order to achieve the postulated political targets.
    Keywords: Residential Heating Market, Policy Evaluation, Decarbonisation, Discrete Choice
    JEL: E27 E61 H21 O18 O38 C35 C53
    Date: 2013–05
  19. By: Adrien Vogt-Schilb (CIRED, France); Stéphane Hallegatte (The World Bank, Sustainable Development Network, USA)
    Abstract: Decision makers facing abatement targets need to decide which abatement measures to implement, and in which order. Measure-explicit marginal abatement cost curves depict the cost and abating potential of available mitigation options. Using a simple intertemporal optimization model, we demonstrate why this information is not su_cient to design emission reduction strategies. Because the measures required to achieve ambitious emission reductions cannot be implemented overnight, the optimal strategy to reach a short-term target depends on longer-term targets. For instance, the best strategy to achieve European's -20% by 2020 target may be to implement some expensive, high-potential, and long-to-implement options required to meet the -75% by 2050 target. Using just the cheapest abatement options to reach the 2020 target can create a carbonintensive lock-in and make the 2050 target too expensive to reach. Designing mitigation policies requires information on the speed at which various measures to curb greenhouse gas emissions can be implemented, in addition to the information on the costs and potential of such measures provided by marginal abatement cost curves.
    Keywords: Climate Change Mitigation, Dynamic Efficiency; Inertia, Sectoral Policies
    JEL: L98 Q48 Q54 Q58
    Date: 2013–10
  20. By: Matt Zahynacz
    Abstract: British Columbia’s natural gas industry is currently facing competitive pressures from other gas-producing jurisdictions in North America. The emergence of shale gas developments has resulted in natural gas prices falling dramatically. Nonetheless, British Columbia is positioned to take advantage of growing markets in Asia that have considerably higher prices than in North America through the export of liquefied natural gas (LNG) in carrier ships. This paper aims to assess the economic viability of an LNG industry in British Columbia by analyzing world LNG prices and trade, market development, and costs through a Monte Carlo risk assessment.
    Keywords: LNG trade, natural gas as coal replacement, Monte Carlo simulation, shale gas
    JEL: Q37 Q41 Q42 Q48
    Date: 2013–04
  21. By: Lion Hirth (Potsdam-Institute for Climate Impact Research, Vattenfall GmbH)
    Keywords: This paper estimates the welfare-optimal market share of wind and solar power, explicitly taking into account their output variability. We present a theoretical valuation framework that consistently accounts for output variability over time, forecast errors, and the location of generators in the power grid, and evaluate the impact of these three factors on the marginal value of electricity from renewables. Then we estimate the optimal share of wind and solar power in Northwestern Europe from a calibrated numerical power market model. The optimal long-term share of wind power of total electricity consumption is estimated to be 20% at cost levels of 50 €/MWh, about three times the current market share of wind; but this estimate is subject to significant parameter uncertainty. Variability significantly impacts results: if winds were constant, the optimal share would be 60%. In addition, the effect of technological change, price shocks, and policies on the optimal share is assessed. We present and explain several surprising findings, including a negative impact of CO2 prices on optimal wind deployment.
    Date: 2013–10
  22. By: Kevin Ummel
    Abstract: South Africa and many other countries hope to aggressively expand wind and solar power (WSP) in coming decades. The challenge is to turn laudable aspirations into concrete plans that minimize costs, maximize benefits, and ensure reliability. Success hinges largely on the question of how and where to deploy intermittent WSP technologies. This study develops a 10-year database of expected hourly power generation for onshore wind, solar photovoltaic, and concentrating solar power technologies across South Africa. A simple power system model simulates the economic and environmental performance of different WSP spatial deployment strategies in 2040, while ensuring a minimum level of system reliability. The results suggest that explicit optimization of the location and relative quantities of WSP technologies has the potential to significantly reduce the cost of greenhouse gas abatement compared to more conventional planning approaches. It is estimated that advanced modeling techniques could save South Africa on the order of $100 million per year (present value) by 2040. The data and techniques introduced here utilize opensource satellite data and software to minimize the cost of analysis. The approach could be translated to other contexts, providing low-cost, early-stage information to guide long-term infrastructure planning as countries prepare to exploit WSP at scale. Additional work is needed to incorporate transmission constraints and costs and embed the model in a probabilistic framework capable of identifying deployment strategies that are spatially robust to uncertainty in future technology and fuel costs.
    Keywords: poverty, inequality, economic development
    JEL: Q40 Q42 Q47
    Date: 2013–09
  23. By: Ketter, W.; Collins, J.; Reddy, P.; Weerdt, M.M.
    Abstract: This is the specification for the Power Trading Agent Competition for 2013 (Power TAC 2013). 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: TAC, autonomous agents, electronic commerce, energy, policy guidance, portfolio management, power, preferences, sustainability, trading agent competition
    JEL: C63 O32 Q56 R4
    Date: 2013–05–22
  24. By: Chang, C-L.; Chen, C.-C.; McAleer, M.J.; Chen, P-Y.
    Abstract: The main purpose of this paper is to evaluate the effect of crude oil price on global fertilizer prices in both the mean and volatility. The endogenous structural breakpoint unit root test, ARDL model, and alternative volatility models, including GARCH, EGARCH, and GJR models, are used to investigate the relationship between crude oil price and six global fertilizer prices. The empirical results from ARDL show that most fertilizer prices are significantly affected by the crude oil price while the volatility of global fertilizer prices and crude oil price from March to December 2008 are higher than in other periods.
    Date: 2013–01–01
  25. By: Andrew Prag; Christina Hood; Pedro Martins Barata
    Abstract: Mitigation pledges put forward by countries under the UNFCCC process are "made to measure" in that they are tailored to fit each country's individual circumstances. However, the pledges also need to be made to be measured so that we have a full understanding of how the various commitments add up to an aggregate global mitigation effort. The Kyoto Protocol provides the only existing international emissions accounting framework, but it applies only to developed countries with specific commitments. This paper assesses what would be required, in addition to existing reporting requirements, to build a robust emissions accounting framework under the UNFCCC applicable to a broad range of Parties. The paper first identifies necessary building blocks for an emissions accounting framework and assesses progress made in agreeing international reporting processes. It then looks in detail at the two most challenging areas for emissions accounting. The first area is accounting for flows of tradable units from market-based mechanisms, including international flows between linked domestic trading systems as well as from offset crediting mechanisms. The second area is accounting for emissions and removals from the forestry and land-use sectors, which have characteristics that make emissions accounting challenging: the need to distinguish anthropogenic emissions from natural variations, to deal with long time-frames and to measure sinks as well as sources of emissions. Finally, options are presented for how these issues might be taken forward in the negotiations, and how negotiators can build on recent progress made on reporting formats. Options sur mesure pour comptabiliser les émissions dans le cadre de la CCNUCC Établis « sur mesure » en ce sens qu’ils sont adaptés à la situation particulière de chaque pays, les engagements de réduction des émissions pris dans le cadre du processus de la CCNUCC doivent aussi se prêter à la mesure, pour permettre de comprendre pleinement les différents engagements qui concourent à l’effort mondial global de réduction des émissions. Le seul cadre international de comptabilisation des émissions qui existe est celui du Protocole de Kyoto, mais il vaut uniquement pour les pays développés ayant pris des engagements spécifiques. Ce document se propose d’évaluer quels éléments seraient nécessaires, en plus des obligations de notification existantes, pour constituer un cadre de comptabilisation des émissions solide et applicable à un large éventail de Parties dans le contexte de la CCNUCC. Il commence par mettre en évidence les éléments de base nécessaires à un cadre de comptabilisation des émissions et analyse les progrès intervenus dans la définition de processus de notification internationaux. Ensuite, les deux aspects les plus délicats de la comptabilisation des émissions sont examinés en détail. Le premier est la comptabilisation des flux d’unités négociables issues des mécanismes fondés sur le jeu du marché, dont les flux internationaux entre systèmes d’échange nationaux couplés et les unités provenant de systèmes de crédits de compensation. Le second est la comptabilisation des émissions et des absorptions des secteurs de la foresterie et de l’utilisation des terres, dont les caractéristiques imposent de distinguer les émissions anthropiques des variations naturelles, de prendre en compte des horizons temporels longs et de mesurer les puits en plus des sources d’émission. Pour finir, le document présente des solutions envisageables pour faire avancer les négociations sur ces questions et permettre aux négociateurs de s’appuyer sur les progrès intervenus récemment dans le domaine des cadres de présentation.
    Keywords: forestry, market-based mechanisms, UNFCCC, climate change, land-use change, emissions accounting, sylviculture, mécanismes de marché, modification de l’affectation des sols, changement climatique, comptabilisation des émissions, UNFCCC
    JEL: Q23 Q54 Q56 Q58
    Date: 2013–12–20
  26. By: Mallidis, I.; Dekker, R.; Vlachos, D.
    Abstract: Cap and trade regulations along with an increasing consumer and company demand for green products and services constitute two major drivers for motivating corporations to adopt green practices. However, the adoption of such practices usually increases their operational costs. Therefore, the trade-off between “green” and cost-optimal policies is a common challenge for most organizations, at least in developed countries. The purpose of this paper is to assess alternative logistic network design options (applicable in most supply chains) taking into account both their cost and CO2 emissions performance. The applicability of the proposed methodology is illustrated through the design of a major white good retailer’s logistics network in the region of Greece. The results indicate that a company optimizes its cost performance by serving all its retail stores directly by truck through one central distribution center. On the other hand, a CO2 emissions optimal performance includes additional distribution centers and the employment of rail instead of truck transportation. Moreover, longer review periods, despite the higher holding and backorder costs, result in lower transportation costs and CO2 emissions.
    Keywords: CO2 emissions, environment, periodic review inventory control system
    Date: 2013–02–04
  27. By: Marianna Gilli (University of Ferrara, Italy); Susanna Mancinelli (University of Ferrara, Italy); Massimiliano Mazzanti (University of Ferrara & Ceris Cnr Milan, Italy)
    Abstract: Innovation is a key element behind the achievement of desired environmental and economic performances. Regarding CO2, mitigation strategies would require cuts in emissions of around 80-90% with respect to 1990. We investigate whether complementarity, namely integration, between the adoption of environmental innovation measures and other technological and organizational innovations is a factor that has supported reduction in CO2 emissions per value added, that is environmental productivity. We merge new EU CIS and WIOD meso level data to assess the innovation effects on sector CO2 performances at a wide EU level. We find that jointly adopting different innovations is not a significant factor to increase environmental productivity, neither for the entire economy nor for manufacturing or narrower ETS sectors. The only case where a complementarity arises is for Northern EU manufacturing sectors that integrate eco innovations with product and process innovations to support environmental productivity. We believe that the lack of integrated innovation adoption behind environmental productivity performance is a signal of the current weaknesses economies face in tackling climate change and green economy challenges. Incremental rather than more radical strategies have predominated so far; this is probably insufficient when we look at long-term economic and environmental goals.
    Keywords: Complementarity, Innovation, Climate Change, Sector Performance
    Date: 2013–10
  28. By: Auci, Sabrina; Vignani, Donatella
    Abstract: In our paper, we investigate the relation between per capita Domestic Material Consumption indicator (DMC) assumed as a potential environmental degradation indicator and per capita income. DMC is a physical measure developed by official statistics in recent years and derived from a Satellite Accounts System to evaluate the material dimension of human development and the environmental consequences of economic growth. While the literature has focused its attention on pollution and its measures, we consider as environmental degradation the impact of production and consumption on natural resources extracted from the global environment for the functioning of social-economic systems. In particular, we want to estimate if there exists a relationship similar to the Environmental Kuznets Curve (EKC) between per capita DMC Indicator and per capita GDP controlling for final Consumption expenditure, Openness index trade and national Research and Development expenditure by using a cross–European panel of countries over the period 2000-2010. Our results support the EKC hypothesis. However, the value of income at the turning point is high and probably there is a delink between DMC indicator and GDP as in the case of CO2 emissions and income literature.
    Keywords: Natural Resource Use, Environmental degradation, Environmental Kuznets Curve, Domestic Material Consumption Indicator, Economy-wide Material Flows Accounts (Environmental Satellite Accounting), GDP, cross-European panel of countries
    JEL: Q53 Q56
    Date: 2013–07–05
  29. By: Massimiliano Mazzanti (University of Ferrara, Department of Economics & Management); Antonio Musolesi (University Grenoble Alpes & INRA France)
    Abstract: We study long run carbon emissions-income relationships for advanced countries grouped in policy relevant groups: North America and Oceania, South Europe, North Europe. By relying on recent advances on Generalized Additive Mixed Models (GAMMs) and adopting interaction models, we handle simultaneously three main econometric issues, named here as functional form bias, heterogeneity bias and omitted time related factors bias, which have been proved to be relevant but have been addressed separately in previous papers. The model incorporates nonlinear effects, eventually heterogeneous across countries, for both income and time. We also handle serial correlation by using autoregressive moving average (ARMA) processes. We find that country-specific time-related factors weight more than income in driving the northern EU Environmental Kuznets. Overall, the countries differ more on their carbon-time relation than on the carbon-income relation which is in almost all cases monotonic positive. Once serial correlation and (heterogeneous) time effects have been accounted for, only three Scandinavian countries - Denmark, Finland and Sweden - present some threshold effect on the CO2-development relation
    Keywords: Environmental Kuznets Curve, Semiparametric Models, Generalized Additive Mixed Models, Interaction Models
    JEL: C14 C23 Q53
    Date: 2013–11
  30. By: J.-B. BERNARD (Insee); G. CLÉAUD (Insee)
    Abstract: Since the late 70s and the first two oil shocks, many economic studies have explored the link between changes in oil prices and global economic growth. However, the causes of the variations in oil price have changed over this period. Thus the impact of these shocks on the economy may also differ. Developing a structural VAR model and the bootstrap-after-bootstrap methodology, this paper offers to identify three types of exogenous shocks to explain the dynamic of the real price of oil. This study then analyzes the impact on the French economy of these three shocks by identifying the channels through which these effects transit with a VARX model integrating data on exports and interest rates. We find that the effects of an increase in the real price of oil, and the channels through which it affects the French economy, greatly differ depending on the nature of the shocks. The 80s were mostly dominated by oil supply shocks. Restricting oil production results in a significant decrease in the French Gross Domestic Product (GDP). The shock of the late 2000s can be explained by the development of global activity and the high demand for oil in emerging economies. A positive global activity shock causes a significant increase in French GDP, while the general price level is not impacted by the increase in oil prices.
    Keywords: real price of oil, SVAR, historical decomposition, bootstrap-after-bootstrap, transmission channels
    JEL: E32 Q41 Q43
    Date: 2013
  31. By: Howard Kunreuther; Elke U. Weber
    Abstract: Utilizing theory and empirical insights from psychology and behavioral economics, this paper examines individuals’ cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We explore various strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes. In both cases there is a reluctance to undertake these measures due to high and certain upfront costs, delayed and probabilistic benefits and behavioral biases related to this asymmetry. The use of choice architecture through framing and the use of default options coupled with short-term incentives and long-term contracts can encourage greater investment in these measures.
    JEL: D03 Q41 Q42 Q54
    Date: 2014–01
  32. By: Lean, H.H.; McAleer, M.J.; Wong, W-K.
    Abstract: This paper examines risk-averse and risk-seeking investor preferences for oil spot and futures prices by using the mean-variance (MV) criterion and stochastic dominance (SD) approach. The MV findings cannot distinguish between the preferences of spot and futures markets. However, the SD tests show that spot dominates futures in the downside risk, while futures dominate spot in the upside profit. On the other hand, the SD findings suggest that spot dominates futures in downside risk, while futures dominate spot in upside profit. Risk-averse investors prefer investing in the spot index. Risk seekers are attracted to the futures index to maximize their expected utility but not expected wealth in the entire period, as well as for both the OPEC and Iraq War sub-periods. The SD findings show that there is no arbitrage opportunity between the spot and futures markets, and these markets are not rejected as being efficient.
    Keywords: futurres market, mean variance, risk averter, risk seeker, spot market, stochastic dominance
    JEL: G12 G15
    Date: 2013–08–01
  33. By: Haller, Stefanie; Hyland, Marie
    Abstract: We use a translog cost function to model production in the Irish manufacturing sector over the period from 1991 to 2009. We estimate both own- and cross-price elasticities and Morishima elasticities of substitution between capital, labour, materials and energy. We find that capital and energy are substitutes in the production process. Across all firms we find that a 1% rise in the price of energy is associated with an increase of 0.1% in the demand for capital. The Morishima elasticities, which reflect the technological substitution potential, indicate that a 1% increase in the price of energy causes the capital/energy input ratio to increase by 1.58%. The demand for capital in larger, more energy-intensive, foreign-owned and export-oriented firms is less responsive to increases in energy prices. We also observe a sharp decline in firms? responsiveness between the first half of the sample period (the 1990s) and second half (the 2000s).
    Date: 2014–01
  34. By: Roumasset, James; Wada, Christopher
    Abstract: To meet the growing demand for freshwater, many regions have increased pumping of groundwater in recent years, resulting in declining groundwater levels worldwide. A promising development is technical change regarding groundwater substitutes such as desalination and wastewater recycling. However, because these technologies are energy intensive, optimal implementation also depends on future energy price trends. We provide an operational model for the application to reverse-osmosis seawater desalination. With this foundation, we outline a research agenda for extending the framework to other groundwater substitutes and for adaptation to climate change.
    Keywords: Groundwater management, water-energy nexus, dynamic optimization, Land Economics/Use, Resource /Energy Economics and Policy, Q25,
    Date: 2013
  35. By: Chu, Hsun; Lai, Ching-Chong
    Abstract: This paper develops an endogenous growth model featuring environmental externalities, abatement R&D, and market imperfections. We compare the economic performances under three distinct regimes that encompass public abatement, private abatement without tax recycling, and private abatement with tax recycling. It is found that the benefit arising from the private conduct of abatement will be larger if the degree of the firms’ monopoly power is greater. With a reasonably high degree of monopoly power, a mixed abatement policy by which the government recycles environmental tax revenues to subsidize the private abatement R&D is a plausible way of reaching the highest growth rate and welfare.
    Keywords: abatement R&D, market imperfections, endogenous growth
    JEL: H23 O32 O44 Q56
    Date: 2013–11
  36. By: Fuhai HONG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.); Larry KARP (Department of Agricultural and Resource Economics, University of California, Berkeley, and the Ragnar Frisch Center for Economic Research.)
    Abstract: We examine the effect of endogenous and exogenous risk on the equilibrium (expected) membership of an International Environmental Agreement when countries are risk averse. Endogenous risk arises when countries use mixed rather than pure strategies at the participation game, and exogenous risk arises from the inherent uncertainty about the costs and benefits of increased abate- ment. Under endogenous risk, an increase in risk aversion increases expected participation. Under exogenous risk and pure strategies, increased risk aver- sion weakly decreases equilibrium participation if and only if the variance of income decreases with abatement.
    Keywords: International Environmental Agreement, climate agreement, endogenous risk, exogenous risk, risk aversion, mixed strategy.
    JEL: D8 H4 Q54
    Date: 2013–10
  37. By: Francisco Alvarez (Department of Fundamentos del Análisis Económico II, Universidad Complutense de Madrid, Spain); Francisco J. André (Department of Fundamentos del Análisis Económico II, Universidad Complutense de Madrid, Spain)
    Abstract: We compare auctioning and grandfathering as allocation mechanisms of emission permits when there is a secondary market with market power and the firms have private information. Based on real-life cases such as the EU ETS, we consider a multi-unit, multi-bid uniform auction, modelled as a Bayesian game of incomplete information. At the auction each firm anticipates his role in the secondary market, which affects the firms’ valuation of the permits (that are not common across firms) as well as their bidding strategies and it precludes the auction from generating a cost-effective allocation of permits, as it would occur in simpler auction models. Auctioning tends to be more cost-effective than grandfathering when the firms’ costs are asymmetric enough, especially if the follower has lower abatement costs than the leader and uncertainty about the marginal costs is large enough. If market power spills over the auction, the latter is always less cost-effective than grandfathering. One central policy implication is that the specific design of the auction turns out to be crucial for cost-effectiveness. The chances of the auction to outperform grandfathering require that the former is capable of diluting the market power that is present in the secondary market.
    Keywords: Cap-and-Trade Systems, Auctions, Grandfathering, Market Power, Bayesian Games of Incomplete Information
    JEL: D44 Q58 L13
    Date: 2013–11
  38. By: Yang, Xi; Paulson, Nick; Khanna, Madhu
    Abstract: This paper analyzes the effect of landowner risk preferences and land quality on the optimal mix of vertically integrated production and contracted production of an energy crop in a region characterized by heterogeneity in landowners’ risk preferences and land quality and with riskiness of returns from both energy crop and conventional crop production. We examine the determinants of the decision of landowners to grow an energy crop for biofuel production under one of three types of contracts, a land leasing contract, a fixed price contract and a revenue sharing contract and the impact of risk and time preferences, land quality and riskiness of energy crop production and prices on the optimal contract terms and effective cost of biomass. We find that as the degree of risk aversion and rate of time preference increases and as the riskiness of producing both the conventional crop and the energy crop increases, the share of vertically integrated production of energy crops increases. While low quality land is more likely to be converted to energy crop production, an increase in the degree of risk aversion results in an increase in the threshold level of land quality converted to energy crops under a land leasing contract but a decrease in the threshold level of land quality converted under a fixed price contract and a revenue sharing contract. We also find that the refinery can potentially earn a higher profit by offering a menu of different types of contracts rather than a single type of contract only; by allowing self-selection of contract type based on their risk preferences, the risk premium needed to induce production of energy crops is reduced.
    Keywords: Contract Farming, Energy Crops, Risk Preferences, Vertical Integration, Agribusiness, Farm Management, Risk and Uncertainty, D86, Q42,
    Date: 2013
  39. By: Matthias Weitzel; Wan-Hsin Liu; Andrea Vaona
    Abstract: Technology transfer (TT) is not mandatory for Clean Development Mechanism (CDM) projects, yet proponents of CDM argue that TT in CDM can bring new technologies to developing countries and thus not only reduce emissions but also foster development. We review the quantitative literature on determinants of TT in CDM and estimate determinants for CDM projects in China. China is by far the largest host country of CDM projects and it is therefore crucial to understand the factors that drive TT there. We focus on heterogeneity within a single country and results can thus be linked to specific policies of the country for better interpretation. Our probit estimations confirm results of international cross-country studies, indicating that larger projects and more advanced technologies are more likely to involve TT. In addition, we find evidence that agglomeration effects are more pronounced on the province level rather than larger regions. We also find a positive effect of FDI on TT and a complementary role of academic R&D engagement to TT
    Keywords: Clean Development Mechanism, Technology Transfer, R&D, Agglomeration, China
    JEL: O33 Q55 Q58
    Date: 2013–12
  40. By: Bentour, El Mostafa
    Abstract: The Moroccan economy suffers deeply from two exogenous shocks: high oil prices and drought periods. The irregular rainfall and instability of oil prices increase the volatility of economic growth and the uncertainty around growth forecasts. We exploit the vulnerability to these shocks in order to forecast the economic growth in Morocco. We use for this an Error Correction model linking output and trade balance in a vector augmented by oil prices and cereal production as exogenous variables over the period 1962-2012. The results are in the range and comparable to those of other national institutions and IMF. For example, based on the hypotheses of 97.7 $ per barrel and a moderate cereal production of 70 million quintals, growth is forecasted to be around 3%, in 2014, with a lower and upper bound of 2.5% and 3.4% respectively. The IMF and the High Commission for Planning forecast respectively 3.8% and 2.5%.
    Keywords: Trade Balance, GDP Volatility, Cereal Production, VECM-X model
    JEL: C53 E27
    Date: 2013–12–01
  41. By: Nicholas Stern
    Abstract: Both intergenerational and intratemporal equity are central to the examination of policy towards climate change. However, many discussions of intergenerational issues have been marred by serious analytical errors, particularly in applying standard approaches to discounting; the errors arise, in part, from paying insufficient attention to the magnitude of potential damages, and in part from overlooking problems with market information. Some of the philosophical concepts and principles of Paper 1 are applied to the analytics and ethics of pure-time discounting and infinite-horizon models, providing helpful insights into orderings of welfare streams and obligations towards future generations. Such principles give little support for the idea of discrimination by date of birth. Intratemporal issues are central to problematic and slow-moving international discussions and are the second focus of this paper. A way forward is to cast the policy issues and analyses in a way that keeps equity issues central and embeds them in the challenge of fostering the dynamic transition to the low-carbon economy in both developed and developing countries. This avoids the trap of seeing issues primarily in terms of burden-sharing and zero-sum games – that leads to inaction and the most inequitable outcome of all.
    Date: 2013–10
  42. By: Michael FinusAlistair Ulph; Alistair Ulph
    Date: 2013
  43. By: Gregor Schwerhoff (Potsdam Institute for Climate Impact Research, Germany)
    Abstract: Which kind of reaction can a nation or group of nations expect when leading by example in climate policy? This literature survey describes possible positive reaction mechanisms from different fields of economics, some of which have scarcely been linked to climate economics previously. One effect may be behavioral, a reaction motivated by fairness, reciprocity or norms. Second, other nations may interpret the leader's action as a signal on his preference or the value of the objective and adjust their own policy based on the new information. Third, the leader may provide a service to other nations, which decreases their costs and risks. The followers could benefit by learning successful policies, adopting technologies and obtaining information on the cost of environmental policy. In addition to these economic mechanisms, a leading group of nations might initiate a political process of successive enlargements.
    Keywords: Climate Change, Leadership, Public Good Provision
    JEL: H41 O33 Q54
    Date: 2013–11
  44. By: Muehlenbachs, Lucija (Resources for the Future); Spiller, Elisheba; Timmins, Christopher
    Abstract: Using data from New York and Pennsylvania and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from shale gas development that vary with geographic scale and water source. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped water-dependent homes are positively impacted by proximity (although by a smaller amount), suggesting an impact of lease payments. At a broader geographic scale, we find evidence that new wellbores can increase property values, but these effects diminish over time. Undrilled permits, conversely, may cause property values to decrease.
    Keywords: shale gas, groundwater, property values, hedonic models, nearest neighbor matching, differences-in-differences, triple differences
    JEL: Q53
    Date: 2013–12–09
  45. By: Giovanni Melina; Yi Xiong
    Abstract: Mozambique has great potential in natural gas reserves and if liquefied/commercialized the sum of taxes and other fiscal revenue from natural gas will, at its peak, reach roughly one third of total fiscal revenue. Recent developments in the natural resource sector have triggered a fresh round of much needed infrastructure investment. This paper uses the DIGNAR model to simulate alternative public investment scaling-up plans in alternative LNG market scenarios. Results show that while a conservative approach, which simply awaits LNG revenues, would miss significant current growth opportunities, an aggressive approach would likely meet absorptive capacity constraints and imply a much bigger (and, in an adverse scenario, unsustainable) build-up of public debt. A gradual scaling up approach represents indeed a desirable path, as it allows anticipating some, though not all, of the LNG revenue and, even in an adverse scenario, keeping public debt at sustainable levels. Structural reforms affecting selection, governance and execution of public investment projects would significantly enhance the extent to which public capital is accumulated and impact non-resource growth and, ultimately, debt sustainability.
    Keywords: Natural gas sector;Mozambique;Public investment;Debt sustainability;Economic models;Natural resources; Debt sustainability, Public investment, Mozambique, DIGNAR
    Date: 2013–12–23
  46. By: Nicholas Stern
    Abstract: This paper examines a broad range of ethical perspectives and principles relevant to the analysis of issues raised by the science of climate change and explores their implications. A second and companion paper extends this analysis to the contribution of ethics, economics and politics in understanding policy towards climate change. These tasks must start with the science which tells us that this is a problem of risk management on an immense scale. Risks on this scale take us far outside the familiar policy questions and standard, largely marginal, techniques commonly used by economists; this is a subject that requires the full breadth and depth of what economics has to offer and a much more thoughtful view of ethics than economists usually bring to bear. Different philosophical approaches bring different perspectives on understanding and policy, yet they generally point to the case for strong action to manage climate change.
    Date: 2013–10
  47. By: Almut Schilling-Vacaflor (GIGA German Institute of Global and Area Studies)
    Abstract: This article sheds light on 26 consultations in Bolivia’s gas sector (2007–2012) and chal-lenges implified conceptions of prior consultation as a tool for conflict prevention and resolution. It shows that consultations do not only appease conflicts, but also exacerbate them as these procedures are used to negotiate broader rievances. This study further argues that narrow consultations (like those carried out in Bolivia) – rather than comprehensive ones – repress conflicts in the shortterm by limiting opportunities to mobilize against extractive projects. It also reveals that the degree of conflict and prevention potential of consultations varied according to the affected groups and highlights the ambiguous effects of the entanglement of consultations and compensations.
    Keywords: prior consultation, FPIC, indigenous rights, extractive industry, resource conflicts, Bolivia
    Date: 2013–10

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