nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒10‒17
twenty-six papers chosen by
Roger Fouquet
London School of Economics

  1. On the transition from nonrenewable energy to renewable energy By Yacoub Bahini; Cuong Le Van
  2. The Value of ICT Platform Investments within Distributed Energy Systems By Garnier, Ernesto; Madlener, Reinhard
  3. The Future of Swiss Hydropower A Review on Drivers and Uncertainties By Michael Barry; Patrick Baur; Ludovic Gaudard; Gianluca Giuliani; Werner Hediger; Franco Romerio; Moritz Schillinger; René Schumann; Gillaume Voegeli; Hannes Weigt
  4. News Shocks in Open Economies: Evidence from Giant Oil Discoveries By Rabah Arezki; Valerie A Ramey; Liugang Sheng
  5. Measuring Economic Cost of Electricity Shortage: Current Challenges and Future Prospects in Pakistan By Shahbaz, Muhammad
  6. The time varying effect of oil price shocks on euro-area exports By Marianna Riggi; Fabrizio Venditti
  7. Quantitative effects of the shale oil revolution By Belu Mănescu, Cristiana; Nuño, Galo
  8. The Political Economy of Local Fracking Bans By Joshua C. Hall; Christopher Shultz; E. Frank Stephenson
  9. Natural Gas Consumption and Economic Growth: The Role of Foreign Direct Investment, Capital Formation and Trade Openness in Malaysia By Solarin, Sakiru Adebola; Shahbaz, Muhammad
  10. Oil and Gas, which is the Belle of the Ball ? The Impact of Oil and Gas Reserves on Sovereign Risk By Emma Hooper
  11. Qualitative and quantitative analysis of solar hydrogen generation literature from 2001 to 2014 By Maghami, Mohammadreza; Navabi asl, Shahin; Rezadad, Mohamad ismail; Ale ebrahim, Nader; Gomes, Chandima
  12. Multiple criteria analysis of policy alternatives to improve energy efficiency in industry in Russia By Bratanova, Alexandra; Robinson, Jacqueline; Wagner, Liam; Kolegov, Vitaly; Nikitchenko, Aleksey; Nikitchenko, Anna
  13. Liability for Solar Geoengineering: Historical Precedents, Contemporary Innovations, and Governance Possibilities By Horton, Joshua; Parker, Andrew Richard; Keith, David
  14. Carbon dioxide emission standards for US power plants: An efficiency analysis perspective By Hampf, Benjamin; Rødseth, Kenneth Løvold
  15. Vog: Using Volcanic Eruptions to Estimate the Health Costs of Particulates By Halliday, Timothy J.; Lynham, John; de Paula, Aureo
  16. Difficulty is critical: Psychological factors in modeling diffusion of green products and practices By Katarzyna Byrka; Arkadiusz Jedrzejewski; Katarzyna Sznajd-Weron; Rafal Weron
  17. Are Fluctuations in Gas Consumption Per Capita Transitory? Evidence from LM Unit Root Test with Two Structural Breaks By Shahbaz, Muhammad; Solarin, Sakiru Adebola; Mallick, Hrushikesh
  18. Dynamics of Technology Adoption and Critical Mass: The Case of U.S. Electric Vehicle Market By Shanjun Li; Yiyi Zhou
  19. Optimal profits under environmental regulation: The benefits from emission intensity averaging By Hampf, Benjamin; Rødseth, Kenneth Løvold
  20. Comment répartir le budget carbone à la COP 21 ? By Eloi Laurent
  21. Impacts of decentralised power generation on distribution networks: a statistical typology of European countries By Darius Corbier; Frédéric Gonand; Marie Bessec
  22. Non-Cooperative and Cooperative Responses to Climate Catastrophes in the Global Economy: A North-South Perspective By de Zeeuw, Aart J.; van der Ploeg, Frederick
  23. Production Externalities, Environmental Taxes, and the Gains from Trade By Soham Baksi; Michael Benarroch
  24. The external impact of the Green Economy: An analysis of the environmental implications of the Green Economy By Villanueva Cortés, Paloma
  25. Effects of Acid Rain Regulations on Production of Eastern Coals of Varying Sulfur Content By Stratford Douglas; Seth Wiggins
  26. Asymmetries, Structural Breaks, and Nonlinear Persistence: Evidence and Implications for Uncovering the Energy-Growth Nexus in Selected African Countries By Njindan Iyke, Bernard

  1. By: Yacoub Bahini; Cuong Le Van
    Abstract: In this paper we use the CMM model (Chakravorty et al.,2006) in
    Keywords: Dynamic optimization, Natural resources, Energetic transition, Environment.
    JEL: P28 Q01 Q32 Q42 Q48 Q52
    Date: 2015–10–07
  2. By: Garnier, Ernesto (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper dissects the ways in which policy regime uncertainty influences decisions over innovative energy technology investments. We apply compound real options methodology to evaluate the investment in a virtual power plant (including an information and communication technology platform) in view of volatile market prices and an uncertain future market design. The analysis reveals two separable effects of policy regime uncertainty: a policy process effect and a policy content effect. The former refers to investment delays caused by uncertainty about the probability and speed of change. The latter refers to changes in investment valuation and timing due to the anticipated impact of policy amendments on wholesale market dynamics. The implication is that policymakers may stimulate investments by merely increasing transparency and predictability of policy and regulatory change. In turn, even well-designed policy regimes may have adverse effects on investment activity if improperly introduced.
    Keywords: Policy uncertainty; Virtual power plant; Distributed energy; Real options
    JEL: G11 Q42 Q48
    Date: 2015–03
  3. By: Michael Barry; Patrick Baur; Ludovic Gaudard; Gianluca Giuliani; Werner Hediger; Franco Romerio; Moritz Schillinger; René Schumann; Gillaume Voegeli; Hannes Weigt (University of Basel)
    Abstract: Swiss Hydropower (HP) is currently facing a wide range of challenges that have initiated a debate about future prospects and its role within the envisioned energy transition. Building on this debate, this paper provides an overview of the status and prospects of Swiss HP by identifying and evaluating the different drivers and uncertainties that Swiss HP faces. Based on a review and the perceptions held by some of the main Swiss HP stakeholders the two main topics that need to be addressed are the market driven impacts and the political, legal and social aspects. While the market dynamics cannot directly be influenced by Swiss companies or authorities, the regulatory framework can and needs to be adjusted. However, this requires a comprehensive stakeholder process and is at least a medium-term process.
    Keywords: Switzerland, energy transition, hydro power, climate change, electricity market
    Date: 2015
  4. By: Rabah Arezki; Valerie A Ramey; Liugang Sheng
    Abstract: This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ? the delay between a discovery and production is on average 4 to 6 years. We first present a two-sector small open economy model in order to predict the responses of macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil discovery, the current account and saving rate decline for the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, while GDP does not increase until after 5 years. Employment rates fall slightly for a sustained period of time.
    Keywords: Oil sector;External shocks;Oil production;Current account;Open economies;oil, news shocks, current account and business cycles
    Date: 2015–09–29
  5. By: Shahbaz, Muhammad
    Abstract: The consistent energy supply is a big challenge for Pakistan. Pakistan’s economy has been hit severely by energy crisis. The electricity shortfall rose to 6000 mega watts in 2013. This study visits the impact of electricity shortage on sectoral GDP such as agriculture, industrial and services sectors in case of Pakistan for the period of 1991-2013. The Ordinary Least Square (OLS) approach is applied for empirical analysis. Our estimates show that electricity shortage is inversely linked with agriculture sector output. Industrial sector output is negatively affected by electricity shortage. Electricity load-shedding deteriorates services sector output. The present study discusses current as well as future economic loss to be caused by electricity shortage. This study provides new insights for policy to devise a wide-ranging energy policy for sustainable agriculture sector, industrial sector and services sectors growth which not only enhances domestic output but will also speed up economic growth for better living standard for people of Pakistan.
    Keywords: Electricity Shortage, Agriculture, Industry, Services, Pakistan
    JEL: C5
    Date: 2015–10–01
  6. By: Marianna Riggi (Bank of Italy); Fabrizio Venditti (Bank of Italy)
    Abstract: In this paper we provide novel evidence on changes in the relationship between the real price of oil and real exports in the euro area. By combining robust predictions on the sign of the impulse responses obtained from a theoretical model with restrictions on the slope of the oil demand and oil supply curves, we identify oil supply and foreign productivity shocks in a time varying VAR with stochastic volatility. We find that from the 1980s onwards the relationship between oil prices and euro area exports has become less negative conditional on oil supply shortfalls and more positive conditional on foreign productivity shocks. Using the theoretical model we show that our empirical findings can be accounted for by (i) stronger trade relationship between the euro area and emerging economies (ii) a decrease in the share of oil in production and (iii) increased competitive pressures in the product market.
    Keywords: oil prices, VAR, time-varying parameters, exports
    JEL: C32 E3 F14
    Date: 2015–09
  7. By: Belu Mănescu, Cristiana; Nuño, Galo
    Abstract: The aim of this paper is to analyze the impact of the so-called “shale oil revolution”on oil prices and economic growth. We employ a general equilibrium model of the world oil market in which Saudi Arabia is the dominant firm, with the rest of the producers as a competitive fringe. Our results suggest that most of the expected increase in US oil supply due to the shale oil revolution has already been incorporated into oil prices and that it will produce an additional increase of 0.2 percent in the GDP of oil importers in the period 2010-2018. We also employ the model to analyse the collapse in oil prices in the second half of 2014 and conclude that it was mainly due to positive unanticipated supply shocks. JEL Classification: Q41, Q47, E17
    Keywords: general equilibrium, Saudi Arabia, shale oil
    Date: 2015–09
  8. By: Joshua C. Hall (West Virginia University, Department of Economics); Christopher Shultz (West Virginia University, Department of Agricultural and Natural Resource Economics); E. Frank Stephenson (Berry College, Department of Economics)
    Abstract: Concerns about harmful effects arising from the increased use of hydraulic fracturing (fracking) to extract underground fuel resources has led to efforts to ban the practice. Many townships in western New York, which lies above the gas-rich Marcellus shale formation, have enacted bans or moratoria. Using spatial econometric techniques, we examine factors related to townships' choice to adopt fracking bans and document the importance of spatial dependence when analyzing fracking bans. We find education levels, the poverty rate, and veterans groups are associated with an increased probability of a township banning or putting a moratorium on fracking.
    Keywords: fracking bans, spatial autocorrelation
    JEL: H73 Q48 R52
    Date: 2015–09
  9. By: Solarin, Sakiru Adebola; Shahbaz, Muhammad
    Abstract: The objective of this paper is to reinvestigate the relationship between natural gas consumption and economic growth by including foreign direct investment, capital and trade openness in Malaysia for the period of 1971-2012. The structural break unit root test is employed to investigate the stationary properties of the series. We have applied combined cointegration test to examine the relationship between the variables in the long run. For robustness sake, the ARDL bounds testing method is also employed to test for possible of long run relationship in the presence of structural breaks. We note the validity of cointegration between the variables. Natural gas consumption, foreign direct investment, capital formation and trade openness have positive influence on economic growth in Malaysia. The results support the presence of feedback hypothesis between natural gas consumption and economic growth, foreign direct investment and economic growth, and natural gas consumption and foreign direct investment. The policy implications of these results are provided.
    Keywords: Natural gas consumption, Economic growth, Causality
    JEL: C1
    Date: 2015–10–11
  10. By: Emma Hooper (†Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS)
    Abstract: Using panel data from emerging oil and gas exporting countries, this paper investigates whether oil and gas reserves have a significant impact on sovereign spreads. The main findings are that oil and gas reserves affect differently financial markets. Indeed, oil reserves increase spreads, contrary to gas reserves that lower them. The evidence shows that financial markets' reaction depends also on institutional quality. When interactions with institutional variables are introduced, financial markets give more importance to political stability and corruption for oil reserves than gas reserves.
    Keywords: exhaustible natural resources, sovereign risk, spreads, emerging markets
    JEL: G15 H63 Q32
    Date: 2015–10–02
  11. By: Maghami, Mohammadreza; Navabi asl, Shahin; Rezadad, Mohamad ismail; Ale ebrahim, Nader; Gomes, Chandima
    Abstract: Solar hydrogen generation is one of the new topics in the field of renewable energy. Recently, the rate of investigation about hydrogen generation is growing dramatically in many countries. Many studies have been done about hydrogen generation from natural resources such as wind, solar, coal etc. In this work we evaluated global scientific production of solar hydrogen generation papers from 2001 to 2014 in any journal of all the subject categories of the Science Citation Index compiled by Institute for Scientific Information (ISI), Philadelphia, USA. Solar hydrogen generation was used as keywords to search the parts of titles, abstracts, or keywords. The published output analysis showed that hydrogen generation from the sun research steadily increased over the past 14 years and the annual paper production in 2013 was about three times 2010-paper production. The number of papers considered in this research is 141 which have been published from 2001 to this date. There are clear distinctions among author keywords used in publications from the five most high-publishing countries such as USA, China, Australia, Germany and India in solar hydrogen studies. In order to evaluate this work quantitative and qualitative analysis methods were used to the development of global scientific production in a specific research field. The analytical results eventually provide several key findings and consider the overview hydrogen production according to the solar hydrogen generation.
    Keywords: Solar hydrogen generation, hydrogen generation, water splitting, hydrogen literature, Bibliometrics
    JEL: L0 L00 R0 Z00
    Date: 2015–01–02
  12. By: Bratanova, Alexandra; Robinson, Jacqueline; Wagner, Liam; Kolegov, Vitaly; Nikitchenko, Aleksey; Nikitchenko, Anna
    Abstract: Russia set an ambitious energy efficiency goal requiring involvement of all sectors of the economy. It requires specific and efficient public policies at all levels of governance. However, decision making in the energy sector in Russia is complex and characterized by multiple policy objectives, conflicting interest groups and a lack of available quantitative data. This study investigates the decision problem of energy efficiency improvements in the industrial sector – a policy proposed by the Moscow City Government. Multiple criteria analysis (MCA) is tendered as an appropriate evaluation tool. As limited studies exist of the application of MCA in Russia, none – for regional energy systems development, this paper provides a novel solution for regional public management. We adapted the MCA PROMETHEE method and undertook an expert survey to evaluate the policy proposal and develop recommendations. This paper describes the adjustment of the evaluation tool to the existing institutional structure and decision making procedures in Russia. It provides a discussion about the participation of stakeholder groups and determination of policy objectives, options and criteria. The analysis leads to a ranking of preferred policy alternatives to assist policy selection and energy efficiency program development. From this, we recommend partial subsidization of the costs of industrial organisations to implement contracts with energy service companies as the best performing option. More importantly we demonstrate the applicability and usefulness of MCA as a decision support tool for Russian public decision-making. Its wide application is expected to improve public management at both regional and federal levels.
    Keywords: multiple criteria analysis; energy; industry; developing country; Russian regions;
    JEL: O21 Q40 Q48
    Date: 2015–10–10
  13. By: Horton, Joshua; Parker, Andrew Richard; Keith, David
    Date: 2015
  14. By: Hampf, Benjamin; Rødseth, Kenneth Løvold
    Abstract: On June 25, 2013, President Obama announced his plan to introduce carbon dioxide emission standards for electricity generation. This paper proposes an efficiency analysis approach that addresses which mission rates (and standards) would be feasible if the existing generating units adopt best practices. A new efficiency measure is introduced and further decomposed to identify different sources' contributions to emission rate improvements. Estimating two Data Envelopment Analysis (DEA) models - the well-known joint production model and the new materials balance model - on a dataset consisting of 160 bituminous-fired generating units, we find that the average generating unit's electricity-to-carbon dioxide ratio is 15.3 percent below the corresponding best-practice ratio. Further examinations reveal that this discrepancy can largely be attributed to non-discretionary factors and not to managerial inefficiency. Moreover, even if the best practice ratios could be implemented, the generating units would not be able to comply with the EPA's recently proposed carbon dioxide standard.
    Keywords: Emission standards,Carbon dioxide emissions,Materials balance condition,Electricity generation,Weak G-disposability,Data Envelopment Analysis
    JEL: Q53 Q48 D24
    Date: 2014
  15. By: Halliday, Timothy J. (University of Hawaii at Manoa); Lynham, John (University of Hawaii at Manoa); de Paula, Aureo (University of Pennsylvania)
    Abstract: The high correlation of industrial pollutant emissions complicates the estimation of the impact of industrial pollutants on health. To circumvent this, we use emissions from Kīlauea volcano, uncorrelated with other pollution sources, to estimate the impact of pollutants on local emergency room admissions and a precise measure of costs. A one standard deviation increase in particulates leads to a 20-30% increase in expenditures on ER visits for pulmonary outcomes mostly among the very young. No strong effects for SO2 pollution or cardiovascular outcomes are found. Since 2008, the volcano has increased healthcare costs in Hawai'i by an estimated $60 million.
    Keywords: pollution, health, volcano, particulates, SO2
    JEL: H51 I12 Q51 Q53
    Date: 2015–10
  16. By: Katarzyna Byrka; Arkadiusz Jedrzejewski; Katarzyna Sznajd-Weron; Rafal Weron
    Abstract: Despite the very positive - as measured by market surveys - attitude towards eco-innovations and sustainability in general, the actual market penetration of green products and practices generally falls behind the expectations. In this paper we argue that considering difficulty of engagement, as used in the Campbell Paradigm, is of critical importance when modeling diffusion of eco-innovations. Such a notion of difficulty possesses three desired properties: (i) parsimony - it is represented by a single value, (ii) interpretability - it can be regarded as an estimator of the otherwise complex notion of behavioral cost, and (iii) applicability - it can be easily measured through market surveys. In an extensive simulation and analytical study involving empirically measured difficulty and an agent-based model spanned on different social network structures, we show that innovation adoption may exhibit abrupt changes in market penetration as a result of even small changes in difficulty. The latter may be of particular interest to policy makers who have to make strategic decisions when introducing socially - but not necessarily individually - desired products and practices, like dynamic or green electricity tariffs.
    Keywords: Green products and practices; Energy policy; Innovation diffusion; Difficulty; Social network; Agent-based model
    JEL: C63 O33 Q48 Q55
    Date: 2015–10–13
  17. By: Shahbaz, Muhammad; Solarin, Sakiru Adebola; Mallick, Hrushikesh
    Abstract: With a view to determine the effectiveness of the policies aimed at boosting the natural gas consumption, this paper examines the unit root properties of natural gas in 44 countries, for the period 1965 to 2010. Applying the LM unit root tests, which allow for a maximum of two structural breaks, we are able to reject the null hypothesis of unit root in the natural gas consumption series of 57% of the countries, under study. The implication of these results is that shocks to natural gas consumption in several countries will produce transitory effects. A key consequence of this finding is that initiatives designed to have permanent positive effects on natural gas, such as construction of large natural gas pipeline network, are to be effective in increasing the share of natural gas consumption in only 43% of the total sample.
    Keywords: Gas Consumption, Stationary, Structural Breaks
    JEL: C1
    Date: 2015–10–10
  18. By: Shanjun Li (Dyson School of Applied Economics and Management, Cornell University, Ithaca, NY 14853); Yiyi Zhou (Department of Economics, Stony Brook University, Stony Brook, NY 11794)
    Abstract: We examine the dynamics of technology adoption and critical mass in network industries with an application to the U.S. electric vehicle (EVs) market. This market exhibits indirect network effects in that consumer EV adoption and investor deployment of public charging stations are interdependent. In markets with positive indirect network effects, multiple equilibria with different level of technology adoption may exist. The diffuion and ultimately the success of technology depend on the equilibrium structure and property. Under certain market conditions, the issue of critical mass arises and the market needs to pass this critical mass in order to reach the high-adoption equilibrium. Using a data set of quarterly EV sales in 354 U.S. metro areas from 2011 to 2013, we quantify indirect network effects and simulate long-run market outcomes in each of the MSAs. Our analysis provides robust and significant evidence of indirect network effects in this market. Simulations show several different market equilibrium outcomes across the 354 MSAs in the long run with a significant number of them exhibiting multiple equilibria and critical mass. Policy suggestions are provided in order to push these markets to pass the critical mass and move towards the high-adoption equilibrium.
    Keywords: electric vehicles; indirect network effects; critical mass
    JEL: Q4 Q5 R4
    Date: 2015–10
  19. By: Hampf, Benjamin; Rødseth, Kenneth Løvold
    Abstract: In this paper we analyze the economic effects of implementing EPA's newly proposed regulations for carbon dioxide (CO2) on existing U.S. coal-fired power plants using nonparametric methods on a sample of 144 electricity generating units. Moreover, we develop an approach for evaluating the economic gains from averaging emission intensities among the utilities' generating units, compared to implementing unit-specific performance standards. Our results show that the implementation of flexible standards leads to up to 2.7 billion dollars larger profits compared to the uniform standards. Moreover, we find that by adopting best practices, current profits can be maintained even if an intensity standard of 0.88 tons of CO2 per MWh is implemented. However, our results also indicate a trade-off between environmental and profit gains, since aggregate CO2 emissions are higher with emission intensity averaging than with uniform standards.
    Keywords: environmental regulation,profit maximization,emission intensity averaging,nonparametric effciency analysis
    JEL: D24 L50 Q54
    Date: 2014
  20. By: Eloi Laurent (OFCE-Sciences PO et Stanford University)
    Abstract: Cet article se propose de passer en revue différents critères d’équité pour mesurer les émissions de CO2 des principaux pays responsables du changement climatique en vue de répartir justement le budget carbone lors de la prochaine négociation de Paris, en décembre 2015(COP 21) Il montre notammentqu’il est possible, dans cette perspective, de bâtir à partir de données fiables un critère hybride de justice climatique relativement simple tenant compte des émissions de consommation, de la responsabilité historique, du niveau de la population et du niveau de développement.
    Keywords: Budget carbone, COP 21, negociations climatiques, justice climatique
    JEL: Q01 Q48 Q54
    Date: 2015–09
  21. By: Darius Corbier; Frédéric Gonand; Marie Bessec
    Abstract: The development of decentralised sources of power produced out of renewable energies has been triggering far-reaching consequences for DSOs over the past decade. Our paper benchmarks across more than 20 European countries the impact of the development of renewables on the physical characteristics of power distribution networks and on their investments. It builds quantitative indicators about the dynamics of installed capacity of and generation from renewable sources of electricity, electric independence, quality of electric distribution, the amount of smart grids investments, DSOs capital expenditures, the length of the distribution networks, overall costs of power networks paid by private agents, and electric losses, all in relation with the development of decentralised generation. The heterogeneity of these indicators across Europe appears to be wide notably because of physical constraints, historic legacies or policy and regulatory choices. A cluster analysis allows for deriving 5 groups of countries that display statistically homogenous characteristics. Our results may provide decision makers and regulators with a tool helping them to concentrate on the main issues specific to their countries as compared to the European median, and to look for possible solutions in the experience of other clusters which are shown to perform better for some indicators.
    Keywords: Renewables, Electric utilities, Distribution networks, Cluster analysis.
    JEL: C38 L94 Q42
    Date: 2015
  22. By: de Zeeuw, Aart J.; van der Ploeg, Frederick
    Abstract: The optimal response to a potential productivity shock which becomes more imminent with global warming is to have carbon taxes to curb the risk of a calamity and to accumulate precautionary capital to facilitate smoothing of consumption. This paper investigates how differences between regions in terms of their vulnerability to climate change and their stage of development affect the cooperative and non-cooperative responses to this aspect of climate change. It is shown that the cooperative response to these stochastic tipping points requires converging carbon taxes for developing and developed regions. The non-cooperative response leads to a bit more precautionary saving and diverging carbon taxes. We illustrate the various outcomes with a simple stylized North-South model of the global economy.
    Keywords: asymmetries; carbon tax; free riding; global warming; growth; international cooperation; precautionary capital; risk avoidance; tipping point
    JEL: D81 H20 O40 Q31 Q38
    Date: 2015–10
  23. By: Soham Baksi; Michael Benarroch
    Abstract: We analyze the effects of environmental taxation on the pattern of and gains from trade in a two-country Ricardian framework, where production in a polluting sector (e.g. manufacturing) adversely affects productivity in an environmentally sensitive sector (e.g. agriculture). The two countries differ in terms of their production technology so that the productivity loss suffered by the environmentally sensitive sector is higher in the dirtier country. When the countries do not pursue any environmental policy, the dirtier country has a comparative advantage in the polluting good and exports that good in the trading equilibrium. If preference for the polluting good is low, the dirtier country loses from trade while its trading partner gains. Global gains from trade are also negative as the market determined pattern of trade is inefficient. Introduction of a unilateral pollution tax by the dirtier country can enable it to reverse the pattern of trade and the distribution of the gains from trade, such that international trade becomes welfare-improving for that country as well as globally. The conventional pollution haven result may get reversed in the presence of cross-sectoral externalities, as each country has an incentive to set the tax such that it exports the good that is more preferred by consumers.
    Keywords: Ricardian model, Production externality, Pollution tax
    JEL: Q56 F18
    Date: 2015–10
  24. By: Villanueva Cortés, Paloma
    Abstract: The Green Economy has increased its popularity among international organizations and OECD countries, as the solution to the current economic and ecological crisis. This strategy consists of a transition to a low-carbon economy and the achievement of resource efficiency, whose assumptions are grounded in environmental economics. Despite its international recognition, Green Economy indicators reveal an uneven distribution of the benefits of its implementation reflected by the externalization of the environmental damage. What is more, empirical studies enlighten its physical boundaries in terms of environmental damage through the extraction of the required raw materials and their future scarcity problems. This evidence is in line with the theory of unequal ecological exchange, which posits that environmental cost is displaced from core countries to the periphery countries. Additionally, the Green Economy can be framed within the concept of environmental fix, in that it lies on the marketization of the environmental problem to solve it.
    Date: 2015
  25. By: Stratford Douglas (West Virginia University, Department of Economics); Seth Wiggins (West Virginia University, Department of Agricultural and Natural Resource Economics)
    Abstract: We analyze the effects of the EPA’s Acid Rain Program on county-level production of coals of varying sulfur content in the Appalachian and Illinois basins, controlling for Powder River Basin production, proximity of power plants to mines, and scrubber installation. Using a thirty-year panel data set, we find that during the Acid Rain Program coal sulfur content positively affected mine closure and negatively affected production in most coal-producing counties, with the greatest effect from 1995-2000. Estimated effects of power plant flue gas desulfurization equipment installation are substantial, and depend on coal sulfur content, scrubber unit size, and distance from the mines. The estimated elasticity of coal mine output to sulfur allowance price varies widely by coal sulfur content and is negative only for mines producing coals above the 77th percentile in sulfur content. Our results complement previous studies of regulatory effectiveness, limiting the degree to which reductions in acid rain may be attributed to market rather than regulatory factors.
    Keywords: acid rain, coal, sulfur content, appalachian basin, illinois basin, epa
    Date: 2015–08
  26. By: Njindan Iyke, Bernard
    Abstract: The paper utilizes the nonparametric Triple test, the Bai-Perron test, and the KSS test to examine whether the paths of energy consumption and economic growth for 19 African countries are characterized by asymmetries, structural breaks, and nonlinear persistence over the period 1971-2011. We find evidence of deepness and steepness asymmetry, structural breaks, and nonlinear persistence in energy consumption and economic growth for these countries. The implications of these findings are that: (i) the findings of studies which examine the energy-growth nexus for these countries in linear settings may be doubtful; (ii) forecasts of energy consumption and economic growth which rely on linear models may contain sizeable forecasting errors. We recommend that future research on the energy-growth nexus should attempt to account for these nonlinearities in order to report more efficient estimates.
    Keywords: Asymmetries, Persistence, Energy Consumption, Economic Growth
    JEL: Q43 Q47
    Date: 2015–09–01

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