nep-env New Economics Papers
on Environmental Economics
Issue of 2005‒12‒20
five papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Double informational asymmetry, signaling, and environmental taxes By Manel Antelo
  3. Experimental Designs for Environmental Valuation with Choice-Experiments: A Monte-Carlo Investigation By Silvia Ferrini; Riccardo Scarpa
  4. Reconsidering the Environmental Kuznets Curve hypothesis: the trade off between environment and welfare By Nicola Cantore
  5. The Geographic Distribution of Disaster Damages across the United States By Jeff Olson; Mark Skidmore

  1. By: Manel Antelo (Universidad de Santiago de Compostela)
    Abstract: This paper examines the effect of signaling on environmental taxation when each polluter privately knows whether its production cost is low or high, whereas third parties (i.e. the rival firms and the regulator) have only a subjective perception on such a cost. Consequently, there is both horizontal and vertical asymmetric information, and each polluting firm can strategically manipulate both the competitor and the policymaker's prior cost perceptions. We show that if the policymaker's ecological conscience is sufficiently high, polluters wish to be perceived as low-cost firms and, to this end, they will produce a high output level and they will emit a high emissions level. Therefore, optimal pollution taxes are higher than would be the case if firms' costs were not signaled in such a manner as to force low-cost polluters, in an attempt to distinguish themselves from high-cost polluters (by increasing their output level and their emissions level), to reduce the distortions in their production and also in their emissions levels. By contrast, if the policymaker values environmental quality less than consumption, environmental taxes become negative (a subsidy per unit of pollutant emitted), but each polluting firm continues to attempt to convince the other players (the rival firm and the regulator) that it is a low-cost supplier. In this case, if the quantity produced by each polluter signals its costs, over-subsiding holds as compared to the benchmark case of non-signaling.
    Keywords: Polluting firms, horizontal and vertical asymmetric information, signaling and non-signaling, environmental taxes
    JEL: D82 L13 Q28
    Date: 2005
  2. By: Warwick J. McKibbin
    Date: 2005–12
  3. By: Silvia Ferrini (University of Siena); Riccardo Scarpa (University of
    Abstract: We review the practice of experimental design in the environmental economics literature concerned with choice experiments. We then contrast this with advances in the field of experimental design and present a comparison of statistical efficiency across four different experimental designs evaluated by Monte Carlo experiments. Two different situations are envisaged. First, a correct a priori knowledge of the multinomial logit specification used to derive the design and then an incorrect one. The data generating process is based on estimates from data of a real choice experiment with which preference for rural landscape attributes were studied. Results indicate the D-optimal designs are promising, especially those based on Bayesian algorithms with informative prior. However, if good a priori information is lacking, and if there is strong uncertainty about the real data generating process - conditions which are quite common in environmental valuation - then practitioners might be better off with conventional fractional designs from linear models. Under misspecification, a design of this type produces less biased estimates than its competitors.
    Keywords: logit experimental design; efficiency; Monte Carlo choice experiments; non-market valuation
    JEL: C13 C15 C25 C99 Q26
    Date: 2005–12–13
  4. By: Nicola Cantore (University of York and Università Cattolica del Sacro Cuore, Milan)
    Abstract: Past climate change literature paid great attention to the welfare analysis of international agreements that stabilize emissions over time on the basis of the New Welfare Economics approach claiming “objective” measures of well-being and excluding interpersonal comparisons. In this paper, by using non New Welfare Economics approaches we show that the involvement of developing countries is not a desirable policy option. The implementation of a “Kyoto for ever” scenario including only developed regions could be recommended because improves both environment and welfare also if it does not generate a turning point in the relationship between income and pollution (PIR). The Environmental Kuznets Curve hypothesis (EKC) implies that a bell shaped PIR would induce policy-makers to pursue economic growth in order to overcome the air pollution issue. This normative prescription crucially focuses on the role played by the existence of a turning point in a context where only two sustainability dimensions are important: the economic and the environmental one. Our analysis shows that when we introduce a welfare analysis, policy implications based only on the turning point existence and consequently on the Environmental Kuznets Curve hypothesis could be misleading. In our study a “win-win” policy as the Kyoto Protocol is recommended because the existence of a turning point could be heavily paid in terms of welfare. However results are sensitive to the choice of the welfare measure.
    Keywords: Environmental Kuznets Curve, climate change, welfare, income distribution.
    JEL: H0 H3 I3
    Date: 2005–12
  5. By: Jeff Olson (Department of Geography, Ohio State University); Mark Skidmore (Department of Economics, University of Wisconsin - Whitewater)
    Abstract: In this paper we examine the geographic distribution of economic damages caused by natural disasters throughout the United States. Some economists have advocated the use of appropriately priced comprehensive natural disaster insurance as a means of disaster mitigation. The presumption implicit in the comprehensive disaster framework is that natural disasters are not uniformly distributed across the nation. While it clear that disasters occur more frequently and cause more damages in some regions than in others, limitations on the availability of and public access to disaster damage data have constrained researchers in their examination of the actual experiences across the states. Which states have the most damages resulting from natural disaster events? The objective of the paper is to compile information on disaster damages from multiple sources and present the spatial distribution of damages across the country. Some of the results are in line with what one might expect. However, we document some surprising results. The research also demonstrates the paucity of data on disaster damages over time and across space, highlighting the need for a systematic and comprehensive single public source of information on disaster damages for all types of natural hazards.
    Date: 2005–08

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