nep-env New Economics Papers
on Environmental Economics
Issue of 2005‒06‒14
eighteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Natural Resources and Economic Growth: From Dependence to Diversification By Gylfason, Thorvaldur
  2. The Public Management of Environmental Risk: Separating Ex Ante and Ex Post Monitors By Hiriart, Yolande; Martimort, David; Pouyet, Jérôme
  3. Regional and Sub-Global Climate Blocs. A Game-Theoretic Perspective on Bottom-up Climate Regimes By Buchner, Barbara; Carraro, Carlo
  4. Optimal Transfers and Participation Decisions in International Environmental Agreements By Carraro, Carlo; Eyckmans, Johan; Finus, Michael
  5. Water, water everywhere: dare I drink a drop? (with apologies to Samuel Taylor Coleridge) By Robert Tannenwald; Nicholas Turner
  6. Can a carbon permit system reduce Spanish unemployment? By Taran Fæhn, Antonio G. Gómez-Plana and Snorre Kverndokk
  7. Green and Brown? Globalization and the Environment By James K. Boyce
  8. Air Pollution and Per Capita Income: A Disaggregation of the Effects of Scale, Sectoral Composition, and Technological Change By Rachel A. Bouvier
  9. A Future for Small Farms? Biodiversity and Sustainable Agriculture By James K. Boyce
  11. Exploring the Carbon Kuznets Hypothesis By Georg Muller-Furstenberger; Martin Wagner; Benito Muller
  12. Do Conservation Easements Reduce Land Prices? The Case of South Central Wisconsin By Kathryn Anderson; Diana Weinhold
  13. Rationality, Tort Reform and Contingent Valuation: A Classroom Experiment in Starting Point Bias By Victor Matheson
  16. The Welfare Effects of Pfiesteria-Related Fish Kills in Seafood Markets: A Contingent Behavior Analysis By George R. Parsons; Ash O. Morgan; John C. Whitehead; Timothy C. Haab
  17. Contingent Valuation and Random Utility Model Estimates of the Recreational Value of King Mackerel By John C. Whitehead
  18. What is the Value of Public Goods Generated by a National Football League Team: A CVM Approach By Bruce K. Johnson; Michael J. Mondello; John C. Whitehead

  1. By: Gylfason, Thorvaldur
    Abstract: This Paper reviews the relationship between natural resource dependence and economic growth, and stresses how natural capital intensity tends to crowd out foreign capital, social capital, human capital, physical capital, and financial capital, thereby impeding economic growth across countries. Specifically, the Paper presents empirical cross-country evidence to the effect that nations that depend heavily on their natural resources tend to have (a) less trade and foreign investment, (b) more corruption, (c) less equality, (d) less political liberty, (e) less education, (f) less domestic investment, and (g) less financial depth than other nations that are less well endowed with, or less dependent on, natural resources. This matters for long-run growth because empirical evidence also suggests that trade, honesty, equality, liberty, education, investment, and financial maturity are all positively and significantly related to economic growth across countries. Before concluding, the Paper briefly compares and contrasts the experience of the OPEC countries with that of Norway, a singularly successful oil producer.
    Keywords: economic growth; natural resources
    JEL: O11
    Date: 2004–12
  2. By: Hiriart, Yolande; Martimort, David; Pouyet, Jérôme
    Abstract: When firms undertake activities which are environmentally risky, the divergence between social and private incentives to exert safety care requires public intervention. This control occurs both through ex ante regulation and ex post legal investigation. We delineate the respective scopes of those two kinds of monitoring when regulators and judges may not be benevolent. Separation between the ex ante and the ex post monitors of the firm helps to prevent capture. The likelihood of both ex ante and ex post inspections is higher under separation than under integration. This provides a rationale for the widespread institutional trend that has led to the separation of ex ante regulation from ex post prosecution. The robustness of this result is investigated in various extensions. Only when collusion is self-enforcing might it be possible that integration dominates separation.
    Keywords: environmental risk; exante and ex post investigations; integration and separation; liability; regulation
    JEL: L51
    Date: 2005–04
  3. By: Buchner, Barbara; Carraro, Carlo
    Abstract: No international regime on climate change is going to be fully effective in controlling GHG emissions without the involvement of countries such as China, India, the United States, Australia, and possibly other developing countries. This highlights an unambiguous weakness of the Kyoto Protocol, where the aforementioned countries either have no binding emission targets or have decided not to comply with their targets. Therefore, when discussing possible post-Kyoto scenarios, it is crucial to prioritise participation incentives for all countries, especially those without explicit or with insufficient abatement targets. This paper offers a bottom-up game-theoretic perspective on participation incentives. Rather than focusing on issue linkage, transfers or burden sharing as tools to enhance the incentives to participate in a climate agreement, this paper aims at exploring whether a different policy approach could lead more countries to adopt effective climate control policies. This policy approach is explicitly bottom-up, namely it gives each country the freedom to sign agreements and deals, bilaterally or multilaterally, with other countries, without being constrained by any global protocol or convention. This study provides a game-theoretic assessment of this policy approach and then evaluates empirically the possible endogenous emergence of single or multiple climate coalitions. Welfare and technological consequences of different multiple bloc climate regimes will be assessed and their overall environmental effectiveness will be discussed.
    Keywords: agreements; climate; incentives; negotiations; policy
    JEL: C72 H23 Q25 Q28
    Date: 2005–05
  4. By: Carraro, Carlo; Eyckmans, Johan; Finus, Michael
    Abstract: The literature on international environmental agreements has recognized the role transfers play in encouraging participation in international environmental agreements (IEAs), but the few results achieved so far are overly specific and do not exploit the full potential of transfers for successful treaty-making. Therefore, in this paper, we develop a framework that enables us to study the role of transfers in a more systematic way. We propose a design for transfers using both internal and external financial resources and making 'welfare optimal agreements' self-enforcing. To illustrate the relevance of our transfer scheme for actual treaty-making, we use a well-known integrated assessment model of climate change to show how appropriate transfers may be able to induce almost all countries into signing a self-enforcing climate treaty.
    Keywords: climate policy; international environmental agreements; self-enforcing international environmental agreements; transfers
    JEL: C72 H23 Q25 Q28
    Date: 2005–05
  5. By: Robert Tannenwald; Nicholas Turner
    Abstract: Given New England’s ample rainfall, green forests, and extensive wetlands, many of the region’s inhabitants might question the notion that it faces potentially severe water shortages. Yet, parts of the region already confront such shortages. These shortages are likely to spread, absent corrective action. This paper describes the characteristics of New England responsible for its looming water problems, identifies areas within the region most vulnerable to such problems, and analyzes alternative strategies for alleviating them. Small, shallow, porous aquifers are the region’s primary geological impediment to trapping and tapping adequate water supplies. Urbanization and a spatial mismatch between economic growth and water availability are contributing factors. Areas within the region most vulnerable to water shortages include, but are not limited to, southern Maine, southern New Hampshire, northern Vermont, and Massachusetts’ North Shore and Route 495 corridor. While no single solution to potential water shortages is clearly superior, the authors conclude that conservation is a promising, effective tactic that should be an important component of any water strategy.
    Keywords: Water-supply - New England
    Date: 2005
  6. By: Taran Fæhn, Antonio G. Gómez-Plana and Snorre Kverndokk (Statistics Norway)
    Abstract: This paper addresses the frequently articulated worry for the unemployment impacts of abating CO2 emissions. The Spanish economy is ridden by unemployment rates well above the EU average. At the same time the deviation from EU's intermediate emission goals is more serious than for most other EU countries. We use a CGE model that includes a matching model with two types of labour, and which allows for different pricing rules and returns-to-scale assumptions. Our findings are optimistic. Due to low labour intensity in most of the dirty, Spanish industries, the unemployment rate is hardly affected by introducing an emission permit system. Further, by recycling the sales revenue into reduced labour taxes, unemployment rates fall. Contrary to other studies of Europe, we find that reducing payroll taxes on skilled labour is the most successful in reducing unemployment rates, both through increasing demand and through dampening the supply response to rising wages. All the recycling schemes also generate dividends in terms of welfare, but none offset the abatement costs entirely.
    Keywords: Spanish unemployment; Tax reform; Emission Permit Auctions; Employment dividend; Matching functions; Increasing returns to scale; Computable general equilibrium models.
    JEL: D58 J68 Q38
    Date: 2005–03
  7. By: James K. Boyce
    Abstract: Globalization – viewed as a process of economic integration that embraces governance as well as markets – could lead to worldwide convergence toward higher or lower environmental quality, or to environmental polarization in which the ‘greening’ of the global North is accompanied by the ‘browning’ of the global South. The outcome will not be dictated by an inexorable logic. Rather it will depend on how the opportunities created by globalization alter balances of power within countries and among them.
    Date: 2004
  8. By: Rachel A. Bouvier
    Abstract: During the last decade, researchers have investigated the relationship between per capita income and environmental quality. This paper disaggregates the relationship between per capita income and emissions of carbon monoxide, carbon dioxide, sulfur dioxide, and volatile organic compounds into scale, composition and technology effects, using data from European and North American countries from the period 1980-1986. Results indicate that the scale effect outweighs the composition and technology effects in the cases of carbon dioxide and volatile organic compounds, while the opposite is true in the cases of carbon monoxide and sulfur dioxide. The results also suggest that greater democracy is associated with lower emissions of all four pollutants.
    Date: 2004
  9. By: James K. Boyce
    Abstract: Small farms play a crucial role in conserving the agricultural biodiversity that underpins long-term food security worldwide. Particularly in centers of crop genetic diversity – such as Mesoamerica in the case of maize (corn) and the Andean region in the case of potatoes – small farmers are the ‘keystone species’ in agricultural ecosystems of great value to humankind. Today, however, a formidable nexus of market forces and political forces threatens both small farmers and the biodiversity they sustain. Countervailing public policies are urgently needed. These should include the removal of existing policy biases against small farmers; social recognition of the contribution of in situ conservation to human well-being; development of markets for ‘traditional’ varieties of crops and livestock; the provision of local public goods in areas where farmers cultivate diversity; payments for the environmental service of on-farm conservation; and support for part-time farming as an element of diversified household livelihood strategies.
    Date: 2004
  10. By: Maurizio Grillenzoni (Alma Mater Studiorum-Università di Bologna); Maurizio Canavari (Alma Mater Studiorum-Università di Bologna)
    JEL: P Q Z
    Date: 2005–06–04
  11. By: Georg Muller-Furstenberger (University of Bern); Martin Wagner (University of Bern); Benito Muller (Oxford Institute for Energy Studies)
    Abstract: The Carbon Kuznets hypothesis conjectures an inverse U{shape relation between GDP and carbon dioxide emissions. We investigate a number of empirical problems with this hypothesis by way of both econometric analysis and CGE modelling. The econometric analysis takes into account the possibility of unit root non{stationary regressors. On a panel of 107 countries covering the years from 1986 to 1998 we ¯nd evidence for unit root non{stationarity in log GDP and log emissions. Our discussion therefore focusses of potential pitfalls in estimating the Carbon Kuznets curve in the context of non{stationary panels context. We conclude that current practice in the literature fails to take these potential problems adequately into account. The second conceptual problem considered in the paper is the question of how to inter- pret an observed inverse U{shaped relationship. With the help of a small GCE model, we illustrate the danger of using observed GDP{emission patterns directly as a policy guide. Our model economy, where decarbonization is exogenous, demonstrates in particular that a carbon policy relating to income levels may not be appropriate even in the face of an observed inverse U{pattern between income and emissions.
    Keywords: Carbon Kuznets curve, non{stationary panel, regressions with integrated variables, CGE modelling
    JEL: Q20 C12 C13
    Date: 2005–06–10
  12. By: Kathryn Anderson (UNDP); Diana Weinhold (London School of Economics)
    Abstract: While theory strongly suggests that restricting development rights should reduce land prices, empirical evidence of this effect has been notoriously hard to obtain. Indeed, largely based on this difficulty a Congressional committee has recently recommended that tax benefits for such restrictions be severely curtailed. We collect data on 131 land transactions in South Central Wisconsin, including 19 cases of development-restricted parcels. When we use the whole sample to estimate the impact of conservation easements we replicate the results of Nickerson and Lynch (2001), finding a negative but statistically insignificant effect. However we then show that when the sample is appropriately restricted to a more homogenous group of land parcels, our ability to detect an effect increases dramatically. In particular, for vacant agricultural land we find a statistically significant negative impact of conservation easements that ranges up to 50% of land values
    Keywords: land use, valuation of development rights, conservation easements, hedonic regression
    JEL: Q24 R52
    Date: 2005–06–03
  13. By: Victor Matheson (Department of Economics, College of the Holy Cross)
    Abstract: This simple classroom experiment demonstrates the existence of starting point bias. Asked to place a dollar value on a non-market good such as the loss of a limb or the destruction of a wetland, students place a much smaller value on the loss if a small value is first suggested by the questioner while placing a significantly higher value on the loss when a large value is originally suggested. This experiment can be used in theory classes to demonstrate the limits of individual rationality or in applied classes in law or environmental economics in relation to tort reform or contingent valuation.
    Keywords: starting point bias, contingent valuation, tort reform, classroom experiment, experimental economics
    JEL: A2 C42 C91 K41 Q51
    Date: 2005–06
  14. By: Eduardo L. Gimenez Fernandez (Departamento de Fundamentos de Analisis Economico e Historia Economica. Universidad de Vigo.); Manuel Gonzalez-Gomez (Departamento de Fundamentos de Analisis Economico e Historia Economica. Universidad de Vigo.)
    Abstract: In this paper the efficient allocation of natural recreational areas is anal- ysed. Natural recreational areas have the features of public goods. We present the efficient allocation of this non-excludable public good in a rational general equilibrium model with heterogeneous agents. This allows us to deal with the free-rider problem in the provision of the public good. This framework could be considered as a microfoundation of the Lopez, Shah and Altobello (1994) model. In addition we study both the "existence" value and the "use" value of the recreational area in the same setting. A methodological critique is also made of previous empirical literature. It is suggested that our theoretical framework is a suitable starting point for further empirical research. Finally an empirical application for the Galician case is presented. Our results sug- gest that current allocations of land to natural recreational areas in Galiza are not efficient.
    Keywords: Land Allocation, Efficient Allocation, Natural Recreational Areas, Public Good, Social Planner Problem, Voluntary Contribution Competitive Equilibrium, Use Value, Existence Value
  15. By: Manuel Gonzalez Gomez (Departamento de Economia Aplicada. Universidad de Vigo.); Philippe Polome (Departamento de Economia Aplicada. Universidad de Vigo.); Albino Prada Blanco (Departamento de Economia Aplicada. Universidad de Vigo.)
    Abstract: In this paper, we present estimates of several models of demand for a natural area using data from surveys on visitors and non-visitors. The estimates take into account the problems of: demand specification, measurement of the cost and of the demand, choosing sampling scheme, and handling the sample. Considering these alternatives allows us to select a model of demand under improved conditions and frees us from initial restrictive hypothesis. The results in terms of prediction of demand and consumer surplus estimates are quite dissimilar, stressing the importance of comparing various models that encompass the range of possible options.
    Keywords: Travel Cost Method, Endogeneous Stratification, Truncation, Demand specification, Hurdle models
  16. By: George R. Parsons; Ash O. Morgan; John C. Whitehead (Appalachian State University); Timothy C. Haab
    Abstract: We use contingent behavior analysis to study the effects of Pfiesteria related fish kills on the demand for seafood in the Mid-Atlantic region. We use a phone-mail-phone survey to look at the effects of various information provision mechanisms used to ameliorate the effects of misinformation regarding fish kills. A set of demand difference models are estimated based on individual responses to multiple questions about seafood consumption with and without fish kills present and with various health risk information treatments. Random effects Tobit models are used to control for the panel nature of responses and natural censoring of the stated responses. We find that 1) Pfiesteria related fish kills have a significant negative effect on the demand for seafood, 2) seafood consumers are nonresponsive to expert risk information designed to reassure consumers that seafood is safe in the presence of a fish kill, and 3) a mandatory seafood inspection program completely eliminates avoidance costs incurred due to misinformation. We estimate that the aggregate avoidance costs incurred in the month immediately following a Pfiesteria related fish kill is $50-$130 million.
    JEL: Q51
    Date: 2005
  17. By: John C. Whitehead (Appalachian State University)
    Abstract: This paper estimates the value of king mackerel bag limit changes with both stated and revealed preference methods. The 1997 Marine Recreational Fishery Statistical Survey allows estimation of the value of avoiding bag limit reductions with the random utility model and the contingent valuation method. Using the contingent valuation method, the willingness to pay to avoid a one fish reduction in the bag limit is $2.45 per year. Using the random utility model, the willingness to pay to avoid a one fish reduction in the bag limit for a two-month time period is $10.83. Considering several methodological issues, the difference in willingness to pay between the stated and revealed preference methods is in the expected direction.
    JEL: Q51
    Date: 2005
  18. By: Bruce K. Johnson; Michael J. Mondello; John C. Whitehead (Appalachian State University)
    Abstract: Using the Contingent Valuation Method, this paper estimates the value of public goods the National Football League’s Jaguars produce for Jacksonville, Florida, including the value of elevating Jacksonville to major league status. It also estimates the incremental value of public goods potentially produced by a National Basketball Association team in Jacksonville. The present value of public goods created by the Jaguars is $25 million or less, far below subsidies provided to attract the Jaguars. For a basketball team, the figure is less than $12.7 million. Sports public goods probably cannot justify the large public expenditures on stadiums and arenas.
    JEL: H41
    Date: 2005

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