nep-env New Economics Papers
on Environmental Economics
Issue of 2005‒02‒06
four papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Optimal Harvesting under Resource Stock and Price Uncertainty By Luis H. R. Alvarez; Erkki Koskela
  2. Optimal location of new forests in a suburban area By Ellen Moons; Bert Saveyn; Stef Proost; Martin Hermy
  3. Are Foreign Investors Attracted to Weak Environmental Regulations? Evaluating the Evidence from China By Judith M. Dean; Mary E. Lovely; Hua Wang
  4. Water Pricing as a Tool for Integrated Water Resource Management: A Synthesis of Key Issues for Rural West Africa By Alyse Schrecongost; John Staatz; Boubacar Diallo; Mbaye Yade

  1. By: Luis H. R. Alvarez; Erkki Koskela
    Abstract: We analyze optimal harvesting policy under stochastic price and stock dynamics. We state a set of weak conditions under which the optimal policy can be characterized by a single exercise threshold and show that the value of optimal harvesting and depletion policies can be expressed as the separable form according to which only the current price and the expected per capita growth rate affect the threshold, while under risk neutrality volatility of price dynamics will have no effect. Uncertainty makes waiting valuable and the optimal threshold is higher when harvesting can be exercised only once than in the sequential case.
    Keywords: optimal harvesting, stochastic price and stock dynamics, single and sequential harvesting opportunity
    JEL: D80 G31 H25
    Date: 2005
  2. By: Ellen Moons (K.U.Leuven-Center for Economic Studies); Bert Saveyn (K.U.Leuven-Center for Economic Studies); Stef Proost (K.U.Leuven-Center for Economic Studies); Martin Hermy (K.U.Leuven-Laboratory for Forest, Nature and Landscape Research)
    Abstract: This paper looks for the optimal location of new forests in a suburban area under area constraints. The GIS-based methodology takes into account timber, hunting, carbon sequestration, non-use and recreation benefits and opportunity costs of converting agricultural land, as well as planting and management costs of the new forest. The recreation benefits of new forest sites are estimated using function transfer techniques. We show that the net social benefit of new forest combinations respecting the area constraints may differ up to a factor 21. The substitution effect between forests, both new and existing, turned out to be the dominant factor in the benefit estimation.
    Keywords: Benefit transfer, travel cost analysis, cost-benefit analysis, forest recreation, Geographical Information Systems (GIS)
    JEL: Q23 Q24 Q26 R14
    Date: 2005–01
  3. By: Judith M. Dean; Mary E. Lovely; Hua Wang (World Bank)
    Abstract: One of the most contentious debates today is whether pollution-intensive industries from rich countries relocate to poor countries with weaker environmental standards, turning them into “pollution havens.” Empirical studies to date show little evidence to support the pollution haven hypothesis, but suffer potentially from omitted variable bias, specification, and measurement errors. Dean, Lovely, and Wang estimate the strength of pollution-haven behavior by examining the location choices of equity joint venture (EJV) projects in China. They derive a location choice model from a theoretical framework that incorporates the firm’s production and abatement decision, agglomeration, and factor abundance. The authors estimate conditional logit and nested logit models using new data sets containing information on a sample of EJV projects, effective environmental levies on water pollution, and estimates of Chinese pollution-intensity for 3-digit ISIC (International Standard Industrial Classification) industries. Results from 2,886 manufacturing joint venture projects from 1993–96 show that EJVs from all source countries go into provinces with high concentrations of foreign investment, relatively abundant stocks of skilled workers, concentrations of potential local suppliers, special incentives, and less state ownership. Environmental stringency does affect location choice, but not as expected. Low environmental levies are a significant attraction only for joint ventures in highly-polluting industries with partners from Hong Kong, Macao, and Taiwan (China). In contrast, joint ventures with partners from OECD sources are not attracted by low environmental levies, regardless of the pollution intensity of the industry. The authors discuss the likely role of technological differences in explaining these results. This paper—a product of the Infrastructure and Environment Team, Development Research Group—is part of a larger effort in the group to understand the impact of environmental policies in developing countries.
    Keywords: Environment; Industry; International Economics; Private Sector Development; Globalization
    Date: 2005–01–31
  4. By: Alyse Schrecongost (Department of Agricultural Economics, Michigan State University); John Staatz; Boubacar Diallo; Mbaye Yade
    Abstract: This synthesis provides an overview of: (1) the objectives of water pricing as a tool for rural water resource management; (2) the characteristics of different water pricing strategies; and (3) some requirements for, and economic constraints to, the implementation of water pricing policies in rural West Africa.
    Keywords: food security, food policy, water pricing, water resource management
    JEL: Q25
    Date: 2004

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