nep-env New Economics Papers
on Environmental Economics
Issue of 2005‒10‒29
eight papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. An Economic Analysis of Mixing Wastes By Rob F.T. Aalbers; Herman R.J. Vollebergh
  2. Economic and Environmental Co-benefits of Carbon Sequestration in Agricultural Soils: Retiring Agricultural Land in the Upper Mississippi River Basin By Kling, Catherine L.; Feng, Hongli; Kurkalova, Lyubov; Gassman, Philip W.
  3. Environmental Conservation in Agriculture: Land Retirement vs. Changing Practices on Working Land By Kling, Catherine L.; Feng, Hongli; Kurkalova, Lyubov; Gassman, Philip W.
  4. Tariff Escalation and Invasive Species Risk By Tu, Anh; Beghin, John C.; Gozlan, Estelle
  5. Production and Abatement Distortions under Noisy Green Taxes By Feng, Hongli; Hennessy, David A.
  6. Protected areas, wildlife conservation and local welfare By Anne Borge Johannesen
  7. The climate change challenge and transitions for radical changes in the European steel industry By Christophe Rynikiewicz
  8. Can Coasean Bargaining Justify Pigouvian Taxation? By Stephanie Rosenkranz; Patrick W. Schmitz

  1. By: Rob F.T. Aalbers (SEO Economic Research, Amsterdam); Herman R.J. Vollebergh (Faculty of Economics, Erasmus Universiteit)
    Abstract: Using a general equilibrium model with heterogeneous waste, this paper studies optimal waste policy when households have to exert separation effort to produce near-homogeneous waste streams suitable for recycling. Our model explicitly allows for changes in the composition (quality) of waste streams depending on how much effort households are willing to spend on separating different types of waste. Accordingly, we are able to generalize some earlier contributions to the waste management literature and demonstrate that with both mixing and effort included, a first-best optimum is feasible under reasonable conditions. In particular, we find that a (modified) deposit-refund system still provides the optimal incentives to guide recycling as well as legal disposal (landfilling) and illegal dumping. Both the number and level of taxes and subsidies needed to reach the first-best depend crucially on the socially optimal level of dumping as well as the socially optimal composition of the mix.
    Keywords: Economics of Waste; Recycling; Environmental Taxes and Subsidies; General Equilibrium Theory
    JEL: H21 H23 Q53
    Date: 2005–10–14
  2. By: Kling, Catherine L.; Feng, Hongli; Kurkalova, Lyubov; Gassman, Philip W.
    Abstract: This study investigates the carbon sequestration potential and co-benefits from policies aimed at retiring agricultural land in the Upper Mississippi River Basin, a large, heavily agricultural area. We extend the empirical measurement of co-benefits from the previous focus on environmental benenfits to include economic transfers. These transfers have often been mentioned as a co-benenfit, but little empirical work measruring the potential magnitude of these transfers has previously been undertaken. We compare and contrast five targeting schemes, each based on maximizing different physical environmental measures, including carbon sequestration, soil erosion, nitrogen runoff, nitrogen leaching, as well as the area enrolled in the program. In each case, the other environmental benefits and economic transfers are computed. We find that the geographic distribution of co-benefits (including economic transfers) varies significantly with the benefit targeted, implying that policy design related to targeting can have very important implications for both environmental condition and income distributions in sub-regions.
    Keywords: carbon sequestration, co-benefits, co-effects, economic transfers, environmental benefits targeting, Upper Mississippi River Basin
    Date: 2005–10–17
  3. By: Kling, Catherine L.; Feng, Hongli; Kurkalova, Lyubov; Gassman, Philip W.
    Abstract: The study develops a conceptual framework for analyzing the allocation of conservation funds via selectively offering incentive payments to farmers for enrolling in one of two mutually exclusive agricultural conservation programs: retiring land from production or changing farming practices on land that remains in production. We investigate how the existence of a pre-fixed budget allocation between the programs affects the amounts of environmental benefits obtainable under alternative policy implementation schemes. The framework is applied to a major agricultural production region using field-scale data in conjunction with empirical models of land retirement and conservation tillage adoption, and a biophysical process simulation model for the environmental benefits of carbon sequestration and reduction in soil erosion.
    Keywords: Conservation Reserve Program, land retirement, working land
    Date: 2005–10–17
  4. By: Tu, Anh; Beghin, John C.; Gozlan, Estelle
    Abstract: We investigate the interface between trade and invasive species (IS) risk, focusing on the existing tariff escalation in agro-forestry product markets and its implication for IS risk. Tariff escalation in processed agro-forestry products exacerbates the risk of IS by biasing trade flows toward increased trade of primary commodity flows and against processed-product trade. We show that reducing tariff escalation by lowering the tariff on processed goods increases allocative efficiency and reduces the IS externality, a win-win situation. We also identify policy menus for trade reforms involving tariffs on both raw input and processed goods, leading to win-win situations.
    Keywords: agro-forestry products, exotic pest, international trade, invasive species, tariff escalation, trade flows.
    Date: 2005–10–18
  5. By: Feng, Hongli; Hennessy, David A.
    Abstract: Pigouvian taxes are typically imposed in situations where there is imperfect knowledge on the extent of damage caused by a producing firm. A regulator imposing imperfectly informed Pigouvian taxes may cause the firms that should (should not) produce to shut down (produce). In this paper we use a Bayesian information framework to identify optimal signal-conditioned taxes in the presence of such losses. The tax system involves reducing (increasing) taxes on firms identified as causing high (low) damage. Unfortunately, when an abatement decision has to be made, the tax system that minimizes production distortions also dampens the incentive to abate. In the absence of wrong-firm concerns, a regulator can solve the problem by not adjusting taxes for signal noise. When wrong-firm losses are a concern, the regulator has to trade off losses from distorted production incentives with losses from distorted abatement incentives. The most appropriate policy may involve a combination of instruments.
    Keywords: conditioning; heterogeneity; informativeness; Pigouvian tax; signaling
    Date: 2005–10–20
  6. By: Anne Borge Johannesen (Department of Economics, Norwegian University of Science and Technology)
    Abstract: The establishment and expansion of protected areas in Africa have been motivated by the aspiration of increased wildlife abundance. During the past decades, however, this practise has been subject to a massive debate. While some claim that protected areas have failed in preserving African wildlife, others claim that existing protected areas are successful. This paper adds to this debate by presenting a bio-economic analysis of protected area expansion. The model considers a hunter-agrarian community located on the border of a protected area. An expansion of the protected area means less land for agricultural cultivation and hunting. Depending on the economic conditions in these activities, it is demonstrated that protected area expansion may reduce the degree of wildlife conservation. In addition, it may reduce the welfare of the local people.
    Keywords: protected areas; wildlife conservation; hunting; agriculture; local welfare
    Date: 2005–10–10
  7. By: Christophe Rynikiewicz (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II)
    Abstract: Cet article vise à identifier les transitions technologiques en cours dans la sidérurgie européenne. Les limites actuelles du système socio-technique centré autour du haut-fourneau, impliquent en effet des changements dans les modes production, de distribution et de consommation d'acier. L'agenda évolue de la recherche de process plus propre (« cleaner production ») vers des innovations de système. Les technologies radicales ULCOS (Ultra Low CO2 Steelmaking) doivent répondre à la modification de l'environnement de sélection mais leur adoption et diffusion dépendra fortement du niveau de la contrainte « carbone » et des fondamentaux identifiés par l'économie industrielle et l'approche évolutionniste.<br />Les experts du secteur ont aussi identifié le besoin d'un agenda de recherche dédié aux modes de consommation de matériaux à long terme. L'évolution du contenu en matériaux et énergie des infrastructures, produits et services (mobilité, logement, chauffage, éclairage…) est fortement susceptible d'évoluer, en particulier dans le cadre de contraintes « carbone » fortes. L'approche « PSS » ou « product-service-system » dans le transport et la construction peut devenir une opportunité pour la sidérurgie du 21eme siècle.
    Keywords: changement climatique;eco-efficacité;industrie sidérurgique;innovation
    Date: 2005–10–20
  8. By: Stephanie Rosenkranz; Patrick W. Schmitz
    Abstract: The fact that according to the celebrated Coase theorem rational parties always try to exploit all gains from trade is usually taken as an argument against the necessity of government intervention through Pigouvian taxation in order to correct externalities. However, we show that the hold-up problem, which occurs if nonverifiable investments have external effects and parties cannot be prevented from always trying to exploit all gains from trade, may in fact be solved by taxation. Thus, in our framework Coasean bargaining is not a substitute for Pigouvian taxation, instead it is the very reason for government intervention.
    Keywords: Hold-up problem, Bargaining, Contracts, Taxation, Externalities
    JEL: D62 H21 H23 L14
    Date: 2004–04

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