nep-ene New Economics Papers
on Energy Economics
Issue of 2015‒12‒01
28 papers chosen by
Roger Fouquet
London School of Economics

  1. An investigation into the determinants of hydropower generation in Ghana By Kwakwa, Paul Adjei
  2. Renewable Energy Consumption and Agriculture: Evidence for Cointegration and Granger causality for Tunisian Economy By Ben Jebli, Mehdi; Ben Youssef, Slim
  3. Reported Utility Service Satisfaction: The Case of Electricity in Transition Economies By Antonio Carvalho
  4. Are we turning a brighter shade of green? The relationship between household characteristics and greenhouse gas emissions from consumption in New Zealand By Corey Allan; Suzi Kerr; Campbell Will
  5. Optimal Timing of Carbon Capture Policies under Learning-by-doing By Jean-Pierre Amigues; Gilles Lafforgue; Michel Moreaux
  6. The Impact of Policy Measures on Future Power Generation Portfolio and Infrastructure: A Combined Electricity and CCTS Investment and Dispatch Model (ELCO) By Roman Mendelevitch; Pao-Yu Oei
  7. Causes and Consequences of Oil Price Shocks on the UK Economy By Marco Lorusso; Luca Pieroni
  8. Impact of low oil prices on the EU economy By Zoi Vrontisi; Alban Kitous; Bert Saveyn; Toon Vandyck
  9. Does corporate environmental performance change through environmental policies between pre and post 2011? Evidence from firm-level data in Germany and Japan By Lara Makowski; Qi Wu; Michiyuki Yagi; Katsuhiko Kokubu
  10. Sustainable Renewable Energy for Development: Access to Finance on Solar Energy for Bangladesh By Kundu, Nobinkhor
  11. The Impact of Combustible Renewables and Waste Consumption and Transport on the Environmental Degradation: The Case of Tunisia By Ben Jebli, Mehdi
  12. An econometric investigation of forecasting liquefied petroleum gas in Ghana By Yeboah Asuamah, Samuel
  13. An empirical examination of how the corporate governance and strategy affect GHG emissions efficiency By Bowen Zhou; Michiyuki Yagi; Katsuhiko Kokubu
  14. Embodied energy in agricultural inputs. Incorporating a historical perspective By Eduardo Aguilera; Gloria I. Guzmán; Juan Infante-Amate; David Soto; Roberto García-Ruiz; Antonio Herrera; Inmaculada Villa; Eva Torremocha; Guiomar Carranza; Manuel González de Molina
  15. On the relevance of differentiated car purchase taxes in light of the rebound effect By Bénédicte Meurisse
  16. The effect of including the environment in the neoclassical growth model By Halkos, George; Psarianos, Iacovos
  17. Oil Prices and the Dynamics of Output and Real Exchange Rate By Meenagh, David; Minford, Patrick; Oyekola, Olayinka
  18. Climate change and agriculture: modelling the impact of carbon dioxide emission on cereal yield in Ghana By Amponsah, Lawrence; Kofi Hoggar, Glory; Yeboah Asuamah, Samuel
  19. An econometric investigation of the effect of financial development on aggregate, and disaggregate energy consumption: time series assessment for Ghana By Yeboah Asuamah, Samuel
  20. Seven Reasons to Use Carbon Pricing in Climate Policy By Andrea Baranzini; Jeroen van den Bergh; Stefano Carattini; Richard Howarth; Emilio Padilla; Jordi Roca
  21. Environmental regulation with and without commitment under irreversible investments By Jean-Philippe Nicolaï
  22. How do firms’ climate-related management and strategy affect climate change risks and opportunities awareness? By Yuchen Shen; Mohammad Tazul Islam; Michiyuki Yagi; Katsuhiko Kokubu
  23. Dynamic cooperation with tipping points in the climate system By Robert C. Schmidt
  24. Determinants of the efficiency of CDM and JCM projects: Viewing from financial and environmental outcomes By Mai Huong Hoang; Mohammad Tazul Islam; Michiyuki Yagi; Katsuhiko Kokubu
  25. Estimation of Social Costs of Highways in Japan By Fumitoshi Mizutani; Yusuke Suzuki; Shuji Uranishi
  26. Gold–oil prices co-movements and portfolio diversification implications By Chkili, Walid
  27. The political economy of climate policy By Robert C. Schmidt
  28. The chase of a multi-armed economist for the elusive social discount rate By Rubinchik, Anna

  1. By: Kwakwa, Paul Adjei
    Abstract: The role of electricity to the growth and developmental process of an economy cannot be overemphasized. Therefore, it is the quest of authorities in every economy to meet the supply of electricity needs of the citizens and industries. Although both renewable and non renewable energy source are available for an economy to generate electricity from, the recent concern for cleaner environment has raised interest of many government, environmentalists and policy makers to generate electricity power from renewable source - that are noted for emitting low carbon emission - prominent among them is hydro source. Meanwhile, the electricity supply for the Ghanaian economy which for years was mainly from hydro source has witnessed a reduction in her hydropower generation in the midst of growing electricity consumption but limited supply pushing the country to resort to power sharing. The paper thus investigates into the drivers of the declining hydro power generation in Ghana using annual time series data for the period 1977-2011. Estimations from the Fully Modified Ordinary Least Squares, Dynamic Ordinary Least Squares and Canonical Cointegration Regression estimators revealed Ghana’s hydropower generation is influenced by foreign direct investment, alternate source of energy, environmental degradation and trade openness.
    Keywords: renewable energy; electricity, hydropower, FMOLS, CCR, DOLS, Ghana
    JEL: Q2 Q25 Q42 Q43 Q5
    Date: 2015–11–09
  2. By: Ben Jebli, Mehdi; Ben Youssef, Slim
    Abstract: This paper uses the vector error correction model (VECM) and Granger causality tests to investigate short and long-run relationships between per capita carbon dioxide (CO2) emissions, real gross domestic product (GDP), renewable and non-renewable energy consumption, trade openness ratio and agricultural value added (AVA) in Tunisia spanning the period 1980-2011. The Johansen-Juselius test shows that all our considered variables are cointegrated. Short-run Granger causality tests reveal the existence of bidirectional causalities between AVA and CO2 emissions, and between AVA and trade; unidirectional causalities running from non-renewable energy and output to AVA and to renewable energy, and from CO2 emissions to renewable energy. Interestingly, there are long-run bidirectional causalities between all considered variables. Our long-run parameters estimates show that non-renewable energy, trade and AVA increase CO2 emissions, whereas renewable energy reduces CO2 emissions. In addition, the inverted U-shaped environmental Kuznets curve (EKC) hypothesis is not supported. Our policy recommendations are to increase international economic exchanges because this gives new opportunities to the agricultural sector to develop and to benefit from renewable energy technology transfer. Subsidizing renewable energy use in the agricultural sector enables it to become more competitive on the international markets while polluting less and contributing to combat global warming.
    Keywords: Renewable energy; Agriculture; Trade; Granger causality; Tunisia.
    JEL: C33 F14 Q1 Q42 Q54
    Date: 2015–11–20
  3. By: Antonio Carvalho (Centre for Energy Economics Research and Policy, Heriot-Watt University)
    Abstract: Since the end of the Soviet Union, the power sector in the countries resulting from its disintegration has evolved from a context of central planning towards independent regulation. There is great heterogeneity in reform progress in transition countries, with consequences to service quality and prices in utilities and also the view the population has of such services. This paper conducts an overview of the modern power sector in transition economies and analyses drivers of reported household satisfaction with the quality of electricity services in 27 countries using cross-sectional survey data from the EBRD Life in Transition Survey II, in a context of improving regulatory and infrastructural frameworks, using an ordinal random effects model with a probit link function. Key drivers of reported satisfaction are the uses of electricity within the household and some characteristics such as age, economic conditions and general life satisfaction. However, there is no evidence of the effect of power sector reform on the opinion of households. This points that the general life experience in transition can be the key driver of how households feel about utilities, as reform brings conflicting effects that stem from increasing cost sustainability, competition, transparency and quality of the service.
    Keywords: Electricity, Transition Economies, Household Satisfaction, Ordinal Probit
    JEL: P21 P28 C25
    Date: 2015–11
  4. By: Corey Allan (Motu Economic and Public Policy Research); Suzi Kerr (Motu Economic and Public Policy Research); Campbell Will (Motu Economic and Public Policy Research)
    Abstract: We test whether New Zealand households have become greener consumers by estimating environmental Engel curves (EECs), which describe the relationship between household income and the pollution embodied in a household’s consumption bundle. Our pollutants of interest are greenhouse gases (GHGs). To our knowledge, this is the first paper that tests for a change over time in climate change-related household behaviour. We calculate the greenhouse gases embodied in household consumption bundles using standard environmental input-output (IO) analysis combined with detailed household expenditure data from the 2006/07 and 2012/13 waves of the New Zealand Household Economic Survey. Consistent with international literature, we find that emissions increase less-than-proportionately with household expenditure (a proxy for permanent income). There is significant variation in expenditure elasticities across consumption categories; emissions from household energy are unresponsive to household expenditure, while emissions from transport are highly responsive to expenditure. Household expenditure and composition explain the majority of the cross-sectional variation in household emissions. We conduct a simple test for changes over time in household consumption patterns that affect emissions, taking price changes into account. We find that, controlling for a rich set of household characteristics, household emissions were marginally lower on average in the 2012/13 survey than the 2006/07 survey. This result is largely driven by a reduction in emissions from household energy. We also find that wealthier households had a smaller reduction in emissions between surveys. Our results suggest this is due to higher levels of international air travel by wealthier households.
    Keywords: Climate change; greenhouse gas emissions; household behaviour; consumption; input–output model
    JEL: Q56 Q57 D12 Q54 D57
    Date: 2015–11
  5. By: Jean-Pierre Amigues (Toulouse School of Economics (INRA and LERNA)); Gilles Lafforgue (Université de Toulouse, Toulouse Business School); Michel Moreaux (Toulouse School of Economics (IDEI and LERNA))
    Abstract: Using a standard Hotelling model of resource exploitation, we determine the optimal energy consumption paths from three options: dirty coal, which is non-renewable and carbon-emitting; clean coal, which is also non-renewable but carbon-free thanks to carbon capture and storage (CCS); and solar energy, which is renewable and carbon-free. We assume that the atmospheric carbon stock cannot exceed an exogenously given ceiling. Taking into account learning-by-doing in CCS technology, we show the following results: i) Clean coal exploitation cannot begin before the outset of the carbon constrained phase and must stop strictly before the end of this phase; ii) The energy price path can evolve non-monotonically over time; and iii) When the solar cost is low enough, an unusual energy consumption sequence along which solar energy is interrupted for some time and replaced by clean coal may exist.
    Keywords: Clean Energy, Food Demand, Land Quality, Renewable Fuel Standards, Transportation
    JEL: Q24 Q32 Q42
    Date: 2015–11
  6. By: Roman Mendelevitch; Pao-Yu Oei
    Abstract: This paper presents a general electricity-CO2 (ELCO) modeling framework that is able to simulate interactions of the energy-only market with different forms for national policy measures. We set up a two sector model where players can invest into various types of generation technologies including renewables, nuclear and Carbon Capture, Transport, and Storage (CCTS). For a detailed representation of CCTS we also include industry players (iron and steel as well as cement), and CO2 transport and CO2 storage including the option for CO2 enhanced oil recovery (CO2-EOR). The players maximize their expected profits based on variable, fixed and investment costs as well as the price of electricity, CO2 abatement cost and other incentives, subject to technical and environmental constraints. Demand is inelastic and represented via a selection of type hours. The model framework allows for regional disaggregation and features simplified electricity and CO2 pipeline networks. The model is balanced via a market clearing for the electricity as well as CO2 market. The equilibrium solution is subject to constraints on CO2 emissions and renewable generation share. We apply the model to a case study of the UK Electricity Market Reform to illustrate the mechanisms and potential results attained from the model.
    Keywords: Energy policy, electricity, CO2, CCS, UK, EOR, modeling
    JEL: C61 L94 O33 Q42
    Date: 2015
  7. By: Marco Lorusso (Centre for Energy Economics Research and Policy, Heriot-Watt University); Luca Pieroni (Department of Political Science, University of Perugia)
    Abstract: In this paper, we assess the impact of oil price fluctuations on the UK economy. We use an empirical strategy which allows us to decompose oil price changes from the underlying source of the shock. Our results show that, since the mid-1970s, oil price movements have been mainly associated with shocks to oil demand rather than oil supply. We also find that the consequences of oil price changes on UK macroeconomic aggregates depend on the different types of oil shocks. While increases in global real economic activity do not depress the UK economy in the short run, shortfalls in crude oil supply cause an immediate fall in GDP growth. In addition, since monetary policy depends on the nature of the shock hitting the oil market, domestic inflation increases following a rise in the real oil price. Finally, our results also show that in response to oil price increases, the government deficit decreases.
    Keywords: Oil Price Shocks, Vector Autoregressions
    JEL: E31 E32 Q41 Q43 Q48
    Date: 2015–11
  8. By: Zoi Vrontisi; Alban Kitous (European Commission – JRC - IPTS); Bert Saveyn (European Commission – JRC - IPTS); Toon Vandyck (European Commission – JRC - IPTS)
    Abstract: The report describes the importance of oil for the EU economy and analyses the potential economic effects that current low oil prices since mid-2014 may have in the EU28 economy. Further it assesses how the current oil price decrease may evolve up to 2020 and the consequences for global oil consumption. The analysis shows that a decrease of the oil price from US$100 to US$50 may lead to a GDP gain of about 0.7%, both on a global level and in the EU28, driven by private consumption and investment. The global gains are not evenly distributed. Net oil importing countries gain, whereas oil exporting countries lose. The analysis mainly focuses on the EU28 and it shows that the more oil-intensive countries and sectors gain more than the rest of the economy. A 50% decrease of the oil price may generate up to 3 million additional jobs (1.3% of the total labour force). Interestingly, oil-intensive sectors do not necessarily improve their competitiveness vis-à-vis their competitors in other regions, as non-EU producers may be less energy efficient and therefore benefit more from low oil prices.
    Keywords: oil price, competitiveness, modelling, GEM-E3, POLES, energy security, European Union
    JEL: C68 Q43
    Date: 2015–11
  9. By: Lara Makowski (Graduate School of Business Administration, Kobe University); Qi Wu (Graduate School of Business Administration, Kobe University); Michiyuki Yagi (Graduate School of Business Administration, Kobe University); Katsuhiko Kokubu (Graduate School of Business Administration, Kobe University)
    Abstract: After the nuclear disaster, in the aftermath of the Great East Japan Earthquake in 2011, the Japanese government shut down all nuclear power plants in Japan. The German government decided to permanently phase out nuclear power. Japan was, and still is, directly affected by the nuclear disaster and Germany is considered the most sensitive country to nuclear energy after the nuclear disaster. This study aims to empirically examine whether there were changes in corporate environmental performance through companies’ implementations of environmental policies from before 2011 to after 2011 in Germany and Japan in the non-financial and non-energy. The dependent variable (as corporate environmental performance) is defined as a firm’s sales divided by corporate direct greenhouse gas emissions (Scope 1) in the logarithm form. The independent variables are nine corporate policies, which all are dummy variables. This study uses the global firm dataset from the Bloomberg professional service where the number of observation is 832 in over a seven-year period (2006-2012). In the regression result, we find that when roughly examining pre and post 2011, using a dummy variable, there is significant change regarding the Japan and both sample. We then find that in eight out of the nine cases there is no effect of implementing the environmental policies on corporate efficiency.
    Keywords: Environmental efficiency; Pre and post disaster; Germany and Japanese companies; environmental, social, and governance policies; greenhouse gas emissions
    JEL: F21 O13 Q54
    Date: 2015–11
  10. By: Kundu, Nobinkhor
    Abstract: Bangladesh will achieve considerable success in acceleration of economic growth of course need for sustainable renewable energy for development. At the present Government of Bangladesh takes the different financing models that have been developed and tested for renewable energy projects, especially solar energy, in urban and rural communities and energy efficiency improvement projects. Logistic regressions have been presented with the dependent variable as an indicator of the probability generates daily solar energy performance. In analysis, primary data and found that all the explanatory variables have a significant impact on the log of daily generates solar energy performance, whose p-value is statistically significant. When successful with these new approaches, the government should also be providing support for the thriving solar energy and energy efficiency technology projects for sustainable renewable energy development in Bangladesh.
    Keywords: Renewable Energy, Energy Efficiency, Sustainable Development, Solar Energy
    JEL: Q26 Q42 Q56
    Date: 2014–07–10
  11. By: Ben Jebli, Mehdi
    Abstract: This study investigates the dynamic causal links between carbon dioxide (CO2) emissions, real Gross Domestic Product (GDP), combustible renewables and waste consumption, and maritime and rail transport in Tunisia spanning the period 1980-2011. The autoregressive distributed lag (ARDL) approach and Granger causality tests are employed to examine the short- and long-run relationships between variables. The empirical results suggest a bidirectional short-run causality between CO2 emissions and maritime transport, and a unidirectional causality running from real GDP, combustible renewables and waste consumption, rail transport to CO2 emissions. The long-run estimates reveal that real GDP contributes to the decrease of CO2 emissions, while combustible renewables and waste consumption and maritime and rail transport have a positive impact on emissions. Our policy recommendation is that Tunisia should use more combustible renewables and waste energy and increase the number of passenger’s rail and maritime transport in order to motivate economic activities. However, the level of renewable energy required to reduce emissions caused by transport sector still very weak.
    Keywords: Combustible renewables and waste; Transport; Autoregressive distributed lag model; Cointegration; Granger causality; Tunisia.
    JEL: L9
    Date: 2015–11–24
  12. By: Yeboah Asuamah, Samuel
    Abstract: The aim of the paper is to contribute to the body of knowledge in the area of forecasting using Autoregressive Integrated Moving Average (ARIMA) modelling for liquefied petroleum gas (LPG) for Ghana using monthly data for the period 2000-2011. The ARIMA (1, 1, 1) model was identified as suitable model. The findings show that the forecasted values insignificantly underestimate the actual consumption and thus indicate consistency of the results. The values of the evaluation statistics such as the ME; MSE; RMSE; MAE, and Theil’s statistic, on the accuracy of the model indicate that the estimated model is suitable for forecasting LPG. The findings support the continuous use of the ARIMA model in forecasting, in econometric time series forecast. Future study should consider modelling other energy sources that are used in Ghana and other developing economies such as kerosene.
    Keywords: Liquefied petroleum gas, autoregressive integrated moving average, Forecasting, Diagnostic statistics
    JEL: C51 C52 C53 E17 Q47
    Date: 2015–07–11
  13. By: Bowen Zhou (Graduate School of Business Administration, Kobe University); Michiyuki Yagi (Graduate School of Business Administration, Kobe University); Katsuhiko Kokubu (Graduate School of Business Administration, Kobe University)
    Abstract: This study aims to empirically examine how environmental efficiency related to GHG emissions is affected by corporate governance and activities. This study uses data from CDP (former Carbon Disclosure Project) where the observations are 686 firms worldwide in 2013. As proxy for the environmental efficiency, this study adopts GHG emissions per employee. As independent variables, this study uses dummy variables made from CDP questionnaire. Regarding the corporate governance, this study finds that the amount of greenhouse gas emissions per employee is low (i.e., efficient) when direct responsibility for climate change is taken by individual/sub-set of the board and other and senior manager/officer. However, when companies engage directly or through trade associations on climate change, the companies are considered to be less efficient than other companies. On the other hand, regarding corporate activities, this study finds that environmentally inefficient companies (i.e., more greenhouse gas emissions per employee) are likely to participate in emissions trading schemes, take a verification/assurance status that applies to firm’s Scope 3 emissions at the first year, and engage with customers.
    Keywords: climate change, corporate governance, corporate activity, CDP, environmental efficiency
    JEL: G30 Q54 Q56
    Date: 2015–11
  14. By: Eduardo Aguilera; Gloria I. Guzmán; Juan Infante-Amate; David Soto; Roberto García-Ruiz; Antonio Herrera; Inmaculada Villa; Eva Torremocha; Guiomar Carranza; Manuel González de Molina
    Abstract: This working paper analyzes the energy embodied in agricultural inputs from a historical perspective. The study is based on a wide literature review, which has been complemented with own estimations in order to create a coherent database including all direct and indirect energy associated to the main agricultural inputs with the maximum possible level of disaggregation. The inputs studied include human labour, energy carriers such as fuels and electricity, materials, machinery, synthetic fertilizers and pesticides, organic inputs, propagation material, irrigation inputs, buildings, greenhouses, transport and non-material services. For each input we describe its historical evolution from an energetic perspective, the most common methods used for the calculation of its embodied energy published in the literature and temporal data series on the historical evolution of this energy. The temporal data series are expressed in 10-year time-steps and, in the majority of cases, they cover the whole 20th century and the first decade of the 21st century. The values provided are global averages or covering the main producing regions. The results show the large changes that have occurred in the energy efficiency of the production of agricultural inputs, underlining the need for the use of dynamic coefficients in historical energy analyses of agricultural systems.
    Keywords: Embodied Energy, Energy Balances, Agricultural Inputs, EROI, Life Cycle Assessment, Industrial History, Energy Efficiency
    JEL: N54 Q01 Q18 Q57
    Date: 2015–11
  15. By: Bénédicte Meurisse
    Abstract: The significant weight of CO2 emissions resulting from car use in the total of CO2 emissions is enough of a signal to set up policy tools aiming at reducing such emissions. This paper investigates the effects of setting a penalty on the purchase of high emitting cars (i.e. a Malus). With static comparative analyses of a basic model of consumer’s behaviour facing two alternatives: a clean and a dirty vehicles, we essentially find that a rebound effect does not necessarily accompany the reduction in the average fuel consumption per kilometre resulting from the implementation of a differentiated car purchase tax such as a Malus scheme. This is because the improvement of the fuel-efficiency is achieved thanks to a new distribution of vehicles over the fleet, and not solely thanks to a reduction of the vehicles’ fuel consumption. Thereby, it happens that we observe a rebound effect only under certain conditions pertaining to the characteristics of the vehicles that make up the fleet (i.e. their unit consumption and market price). We also show that, from the moment that a rebound effect occurs, the higher the amount of Malus, the higher the rebound effect. It implicitly means that because of the rebound effect, the higher the pricing scheme, the less efficient the purchase tax.
    Keywords: Car purchase decision, Car use, CO2 emissions, Rebound effect, Penalty on car purchase.
    JEL: D11 H31 Q58
    Date: 2015
  16. By: Halkos, George; Psarianos, Iacovos
    Abstract: This study begins with an exposition of basic principles of the theory of Optimal Control as this is used in the development of the theory of Economic Growth. Then, a brief presentation of the Neoclassical Model of Economic Growth follows and two applications are presented. In the first, optimal control techniques are used, in the context of neoclassical growth, to maximize the representative household’s total intertemporal welfare. In the second, the same problem is posed with two additional variables that affect welfare in opposing ways: pollution and abatement expenditures. In both applications, the optimal steady-state conditions are derived. This allows for a preliminary comparison of the resulting balanced growth paths under the criterion of welfare maximization with and without environmental externalities. Finally, using a balanced panel data of 43 countries and for the time period 1990-2011 we test the validity of including the environment in the neoclassical growth model approximating pollution abatement with the electricity production from renewable sources and pollution with carbon dioxide emissions. With the help of adequate econometric panel data methods we test the validity of the environmental Kuznets curve hypothesis for the full sample, as well as for the OECD and non-OECD countries
    Keywords: Economic Growth; Physical Capital; Technological Progress; Environment; Pollution.
    JEL: C60 C61 C62 O41 O44 Q56 Q58
    Date: 2015–11–24
  17. By: Meenagh, David (Cardiff Business School); Minford, Patrick (Cardiff Business School); Oyekola, Olayinka
    Abstract: We examine the role of oil price shocks in effecting changes both at the aggregate and sectoral levels using an estimated dynamic stochastic equilibrium open economy model. Our main finding is that energy price shocks are not able directly to generate the magnitude of the economic downturn observed in the data. These shocks, however, do possess a strong indirect transmission link that endogenously spreads their effect through the system such that they account for a considerable portion of the U.S. business cycle movements. This leads us to conclude that previous results that attribute a minimal importance to oil price shocks must be focusing more on the energy cost share of gross domestic product and less on how they affect the intertemporal decisions of economic agents. We also find that external shocks have been responsible for explaining volatility in U.S. economic activities for a long time. This leads us to conclude that modelling the U.S. as a closed economy discounts a sizeable set of very relevant factors.
    Keywords: Two sector; non-stationary DSGE model; Oil price; Relative prices; Domestic shocks; Imported shocks
    JEL: E32 D58 F41 C52 Q43
    Date: 2015–11
  18. By: Amponsah, Lawrence; Kofi Hoggar, Glory; Yeboah Asuamah, Samuel
    Abstract: The objective of the paper is to contribute to the body of knowledge in the area of climate change and agriculture by examining the effect of carbon dioxide concentration (CO2) on cereal yield using autoregressive distributed lag models (ARDL). The research is based on quantitative, descriptive and cross-sectional research using secondary data obtained from World Bank data base for the period of 1961-2010. The co-integration test indicates the series are co-integrated. The results on the long run and shorts run elastically co-efficient indicate that there is significant negative link between CO2 and cereal yield. There significant positive long run and short run link between cereal yield and income (proxied by real gross domestic product). Policy makers and agriculture scientists and environmental scientists should put in place policies to reduce atmospheric temperature increase and pollution to benefit from CO2 fertilization in order to ensure food security. The findings indicate that income (proxied by real gross domestic product) positively affect cereal yield. The link between CO2 and cereal production should be examine in future studies current study considered cereal yield.
    Keywords: Climate change; CO2; real gross product; cereal yield
    JEL: Q54 Q56 Q57 Q58
    Date: 2015–02–18
  19. By: Yeboah Asuamah, Samuel
    Abstract: The paper has examined both long run and short run link between financial development and energy consumption in Ghana for 1970-2011 period using Autoregressive Distributed Lad Model. The ARDL test results produced significant evidence of cointegration among the variables. There are statistical significant long run and short run effects of financial development on energy consumption. The results seem to suggest that financial development is a key explanatory variable in energy consumption and as such, financial development could be relied on as a policy tool to manage energy consumption. Future research should account for the effect of structural effect and the issues of causality.
    Keywords: Financial Development, Fossil fuel consumption, Electricity consumption, Aggregate energy consumption, long run.
    JEL: O13 P28 P48 Q40
    Date: 2015–05–15
  20. By: Andrea Baranzini (Haute Ecole de Gestion Genève, University of Apllied Sciences Western Switzerland); Jeroen van den Bergh (Institute of Environmental Science annd Technology (UAB); ICREA; Institute of Environmental Studies & Faculty of Economics and Business Administration (LSE)); Stefano Carattini (Haute Ecole de Gestion Genève, University of Apllied Sciences Western Switzerland; Grantham Research Institute on Climate Change and the Environment (LSE)); Richard Howarth (Environmental Studies Program, Dartmouth College); Emilio Padilla (Department of Applied Economics (UAB)); Jordi Roca (Faculty of Economics and Business (UB))
    Abstract: The idea of a global carbon price has been a recurrent theme in debates on international climate policy. Discarded at the Conference of Parties (COP) of Copenhagen in 2009, it remained part of deliberations for a climate agreement in subsequent years. Unfortunately, there is still much misunderstanding about the reasons for implementing a global carbon price. As a result, ideological and political resistance against it prospers. Here we present the main arguments in favor of a carbon price to stimulate a fair and well-informed discussion about climate policy instruments. This includes arguments that have received surprisingly little attention so far. It is stressed that a main reason to use carbon pricing is environmental effectiveness, so not only economic efficiency (including the special case of cost-effectiveness). In addition, we provide ideas on how to implement a uniform global carbon price, whether using a carbon tax or emissions trading.
    Date: 2015–11
  21. By: Jean-Philippe Nicolaï (ETH-Zürich)
    Abstract: This paper analyzes the long-term investment decisions of firms that are regulated by an emissions tax and that perceive a degree of market power in their respective output markets. Firms invest in abatement equipment that is fixed over the medium term (e.g., buying a new generator). This paper focuses on environmental regulation with and with- out commitment. In the commitment case, the government announces a long-run tax on emissions, and firms decide upon their investment levels. In the no-commitment case, the regulator announces a tax level and is free to modify it once firms have invested. This paper considers differentiated product goods and determines whether no-commitment regulation leads to more lenient or more stringent regulation than regulation with commitment.
    Keywords: Pollution permits; Imperfect competition; Investment; Strategic effects.
    JEL: L13 Q50 L51
    Date: 2015–11
  22. By: Yuchen Shen (Graduate School of Business Administration, Kobe University); Mohammad Tazul Islam (Graduate School of Business Administration, Kobe University); Michiyuki Yagi (Graduate School of Business Administration, Kobe University); Katsuhiko Kokubu (Graduate School of Business Administration, Kobe University)
    Abstract: Climate change is an international environmental issue that has increasingly attracted business attention in the past decade because of its actual or potential strategic impact on many companies. This study aims to examine how risk and opportunity awareness is correlated with corporate management and strategy. This study obtains firm data from a questionnaire survey of CDP in 2013, and the data includes 899 observations for risk awareness and 827 observations for opportunity awareness in 64 countries and 20 industry groups. Using the data, this study empirically examines how firms’ management and strategy affect risk and opportunity awareness related to climate change in the regression analysis. By regression analysis, we find some types of corporate climate-related governances and strategies are related to risk and opportunity awareness. The regression result also shows that there seems to be few differences between the effectiveness of firms’ climate-related management on their business risk and opportunity awareness related to climate change. Corporate strategies such as setting emissions reduction targets, launching emissions reduction initiatives, participating emissions trading schemes, and originating/purchasing carbon credits are proved found to be beneficial for increasing the corporate risk and opportunity awareness
    Keywords: climate change; risk and opportunity awareness; CDP; corporate governance; supply chain activities
    JEL: M14 Q54 Q56
    Date: 2015–11
  23. By: Robert C. Schmidt (Humboldt-Universitaet zu Berlin)
    Abstract: Tipping points in the climate system can stabilize climate treaties; the stabilizing effect, however, vanishes when the location of the threshold is sufficiently uncertain (Barrett, 2013). We demonstrate that in a dynamic setting, additional welfare gains can improve the prospects of cooperation. In our model, intertemporal efficiency gains result from abatement costs that are convex in each period. While non-cooperative countries tend to postpone their abatement efforts "until the last minute" as a result of the free-rider incentive, cooperation allows countries to allocate their abatement efforts efficiently over time. We show that cooperation often improves the outcome substantially, and arises endogenously in the model. Our main theoretical results are confirmed by experimental evidence.
    Keywords: climate treaty, abatement, long-term commitment, cooperation, free-riding
    JEL: D62 F53 H23 Q55
    Date: 2015–10–26
  24. By: Mai Huong Hoang (Graduate School of Business Administration, Kobe University); Mohammad Tazul Islam (Graduate School of Business Administration, Kobe University); Michiyuki Yagi (Graduate School of Business Administration, Kobe University); Katsuhiko Kokubu (Graduate School of Business Administration, Kobe University)
    Abstract: With the purpose of promoting clean development in developing countries, as well as increasing mitigation toward global warming issue, efforts have been made between government and companies through implementing Clean Development Mechanism and Joint Credit Mechanism projects. This study targets at identifying the determinants of the financial and environmental outcomes of CDM and JCM pilot projects, focusing on host party, project type, and project status. The CDM project data is collected for 11 years (2004 – 2014) from the Institute of Global Environmental Strategies whereas the JCM pilot project data covers 2 years (2013 – 2014) from Global Environment Centre Foundation. Result of this study shows that regarding JCM pilot projects, project type is a crucial determinant for environmental outcome. Meanwhile, regarding CDM projects, statistically significant determinants of environmental outcome are host party, project type, and project status. In terms of CDM financial outcome, only project type and project status show significant effects. It implies that there is no need for considering which country to implement CDM projects if the target is financial outcome. Instead of that, if aiming at projects’ environmental outcome, for either CDM or JCM, it is necessary for companies to take project type/ sector into consideration.
    Keywords: Clean development mechanism; Joint crediting mechanism; Internal Rate of Return; greenhouse gas emissions; country and industry effects
    JEL: F21 O13 Q54
    Date: 2015–11
  25. By: Fumitoshi Mizutani (Graduate School of Business Administration, Kobe University); Yusuke Suzuki (Faculty of Commerce, Kyushu Sangyo University); Shuji Uranishi (Graduate School of Economics, Osaka City University)
    Abstract: This study estimates and evaluates the social costs of highways in Japan. Five kinds of social costs of vehicular transport are considered: traffic accidents, air pollution, noise, global warming, and traffic congestion. Major findings of this study are as follows. First, social costs increase at an accelerated rate as traffic volume increases. Second, the largest component of vehicular transport’s social costs on highways is traffic congestion, accounting for about 64%. The second largest component is traffic accidents, accounting for 24%. Third, among vehicle types, the social costs of buses are largest, at 105 yen per vehicle-km, about 16 times higher than the social costs of regular cars. Last, total social costs for whole highway networks are about 678,212 million yen, or about 0.13% of Japan’s GDP. Compared with highway fare revenues and the operating costs of highways, social costs equal 62.6% and 98.6%, respectively.
    Keywords: Social costs; Car transportation; Highway; External costs
    JEL: H4 H5 L9 Q5 R4
    Date: 2015–05
  26. By: Chkili, Walid
    Abstract: In this paper we use the bivariate fractionally integrated GARCH (FIGARCH) model to analyze the dynamic relationship between gold and crude oil markets. We also test the role of gold as a hedge or safe haven for crude oil risk. Empirical results show that the dynamic links between the two markets vary over time and decline significantly during major economic and political crisis episodes. This suggests that gold can act as a safe haven during extreme oil market conditions. Finally, Findings indicate that adding gold to crude oil portfolio helps to hedge against the oil risk.
    Keywords: Gold, oil, hedge, safe haven, DCC- FIGARCH
    JEL: C58 Q4
    Date: 2015
  27. By: Robert C. Schmidt (Humboldt-Universitaet zu Berlin)
    Abstract: This paper analyzes the political economy of climate policy in a simple framework with asymmetric information between voters and politicians. Two parties are engaged in electoral competition and announce policy platforms. An environmental catastrophe (e.g., a tipping point in the climate system) is approaching with some probability that depends on the state of nature. Climate policy can reduce this probability. Each party receives a private signal about the true state of nature, whereas voters possess little information and only know the prior probability distribution. We analyze under what conditions parties can reveal their private signals truthfully to the voters under electoral competition, and when the implemented policy is optimal, given the available information.
    Keywords: electoral competition, signaling, climate catastrophe, voting, intuitive criterion
    JEL: D72 D83 Q54
    Date: 2015–10–08
  28. By: Rubinchik, Anna (Department of Economics, University of Haifa)
    Abstract: The social discount rate debate has been plagued by the use of inadequate one-agent models and vague analysis. The Weitzman-Gollier puzzle (resolution) is picked here to illustrate.
    Keywords: policy evaluation, social discount rate, social welfare
    JEL: D61 H30
    Date: 2015–11–18

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