nep-env New Economics Papers
on Environmental Economics
Issue of 2006‒04‒29
seventeen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Global Warming and Hyperbolic Discounting By Larry Karp
  2. Analysis and Evaluation of Ecosystem Resilience: An Economic Perspective By Lucia Vergano; Paulo A.L.D. Nunes
  3. Using Discrete Choice Experiments to Derive Individual-Specific WTP Estimates for Landscape Improvements under Agri-Environmental Schemes: Evidence from the Rural Environment Protection Scheme in Ireland By Danny Campbell; W. George Hutchinson; Riccardo Scarpa
  4. Uniqueness and Indeterminacy of Equilibria in a Model with Polluting Emissions By Giovanni Bella
  5. Cooperation, Stability and Self-Enforcement in International Environmental Agreements: A Conceptual Discussion By Henry Tulkens; Parkash Chander
  6. Environment, Human Development and Economic Growth By Valeria Costantini; Salvatore Monni
  7. An Accidental Oil Spill Along the Belgian Coast: Results from a CV Study By Karl van Biervliet; Dirk Le Roy; Paulo A.L.D. Nunes
  8. Endogenous Technology and Tradable Emission Quotas By Michael Hoel; Rolf Golombek
  9. Climate Change and Extreme Events: An Assessment of Economic Implications By Roberto Roson; Alvaro Calzadilla; Francesco Pauli
  10. Effects of Great Barrier Reef Degradation on Recreational Demand: A Contingent Behaviour Approach By Peter C. Roebeling; M.E. Kragt; A. Ruijs
  11. Perceived Diversity of Complex Environmental Systems: Multidimensional Measurement and Synthetic Indicators By Ugo Gasparino; Barbara Del Corpo; Dino Pinelli
  12. Do as you say – Say as you do: Measuring the actual use of environmental information in investment decisions By Rikhardsson, Pall; Holm, Claus
  13. Environmentalism and Technology By Adrian Smith
  14. Trade liberalization and the environment in Vietnam By Jha, Shreyasi; Mani, Muthukumara
  15. Firms ' environmental performance : does news matter ? By Hong, Jong Ho; Laplante, Benoit; Dasgupta, Susmita; Mamingi, Nlandu
  16. Addressing China ' s growing water shortages and associated social and environmental consequences By Shalizi, Zmarak
  17. Bioprospecting, market and the conservation of biodiversity: a theoretical framework By Luca Di Corato

  1. By: Larry Karp (University of California, Berkeley and Giannini Foundation)
    Abstract: The use of a constant discount rate to study long-lived environmental problems such as global warming has two disadvantages: the prescribed policy is sensitive to the discount rate, and with moderate discount rates, large future damages have almost no effect on current decisions. Time-consistent quasi-hyperbolic discounting alleviates both of these modeling problems, and is a plausible description of how people think about the future. We analyze the time-consistent Markov Perfect equilibrium in a general model with a stock pollutant. The solution to the linear-quadratic specialization illustrates the role of hyperbolic discounting in a model of global warming.
    Keywords: stock pollutant, hyperbolic discounting, global warming, time consistency,
    Date: 2004–07–09
  2. By: Lucia Vergano (Università degli studi di Pavia); Paulo A.L.D. Nunes (University of Venice and Fondazione Eni Enrico Mattei)
    Abstract: This paper focuses on the analyses and evaluation of resilience anchored in an economic perspective. Resilience, as well as most of the benefits provided by ecosystems, is not priced on current markets. However, this does not mean that resilience is of no value for humans. On the contrary, the interest of using an economic perspective, and the respective scientific methodology, will be put forward in terms of resilience relevance for ecosystems’ life and functioning, and its impact on human welfare. The economic perspective is anchored in an anthropocentric analysis meaning that resilience is evaluated in terms of provision of natural capital benefits. These, in turn, are interpreted as an insurance against the risk of ecosystem malfunctioning and the consequent interruption of the provision of goods and services to humans. For this analysis, we make use of a conceptual framework so as to identify and describe the different value components of resilience. Finally, we present an illustration that tackles the economic analysis and discussion of resilience benefits in the context of the Venice Lagoon.
    Keywords: Ecosystems’ resilience, Ecosystems’ thresholds, Natural insurance capital, Economic perspective, Economic value
    JEL: D62 H41 Q25 Q28 Q51
    Date: 2006–02
  3. By: Danny Campbell (Queen’s University Belfast); W. George Hutchinson (Queen’s University Belfast); Riccardo Scarpa (University of Waikato and University of York)
    Abstract: Reported in this paper are the findings from two discrete choice experiments that were carried out to address the value of a number of farm landscape improvement measures within the Rural Environment Protection (REP) Scheme in Ireland. Image manipulation software is used to prepare photorealistic simulations representing the landscape attributes across three levels to accurately represent what is achievable within the Scheme. Using a mixed logit specification willingness to pay (WTP) distributions based on the parameter estimates obtained from the individual conditional distributions are derived. These estimates are subsequently adjusted and combined to account for baselines and levels of improvement resulting from the implementation of the REP Scheme. Individual-specific WTP estimates are thus obtained for the contribution of the Scheme to rural landscapes and are subsequently contrasted with the average cost of the Scheme across the Irish adult population. Results indicate that the Scheme contributes substantial benefits to rural landscapes.
    Keywords: Agri-environment, Discrete choice experiments, Individual-specific WTP, Mixed logit
    JEL: Q51 Q24
    Date: 2006–02
  4. By: Giovanni Bella (University of Cagliari)
    Abstract: Is pollution a dirty word? To answer this question we develop an endogenous growth model à la Rebelo (1991) where dirtiness becomes a fundamental choice variable for the economy to grow. Conclusions to our analysis say that a positive sustainable economic growth is attainable only if polluting production activities are taken into account. Moreover, transitional dynamics points out that local stability and uniqueness of equilibria are also achieved.
    Keywords: Environmental quality, Endogenous economic growth, Pollution-augmenting technology
    JEL: O41 Q01 Q32
    Date: 2006–02
  5. By: Henry Tulkens (Center for operations research and econometrics (CORE)); Parkash Chander (National University of Singapore)
    Abstract: In essence, any international environmental agreement (IEA) implies cooperation of a form or another. The paper seeks for logical foundations of this. It first deals with how the need for cooperation derives from the public good aspect of the externalities involved, as well as with where the source of cooperation lies in cooperative game theory. In either case, the quest for efficiency is claimed to be at the root of cooperation. Next, cooperation is considered from the point of view of stability. After recalling the two competing concepts of stability in use in the IEA literature, new insights on the nature of the gamma core in general are given as well as of the Chander-Tulkens solution within the gamma core. Free riding is also evaluated in relation with the alternative forms of stability under scrutiny. Finally, it is asked whether with the often mentioned virtue of “self enforcement” any conceptual gain is achieved, different from what is meant by efficiency and stability. A skeptical answer is offered, as a reply to Barrett’s (2003) attempt at giving the notion a specific content.
    Keywords: International Environmental Agreements, Cooperation, Stability, Self-enforcement
    JEL: C6 C7 C71 D62 H23 Q58
    Date: 2006–02
  6. By: Valeria Costantini (Roma Tre University); Salvatore Monni (Roma Tre University)
    Abstract: Over the last few years, environmental issues have entered into policy design, particularly development and growth policies. Natural resources are considered necessary production inputs and environmental quality is considered a welfare determinant. The integration of environmental issues into economic growth and development theories and empirics is currently widely analyzed in the literature. The effects of natural resources endowment on economic growth are mainly analyzed through the so-called Resource Curse Hypothesis (RCH) whereas the effects of economic growth on environmental quality are part of the Environmental Kuznets Curve (EKC). Furthermore, recent contributions on RCH and EKC have shown the important role of institutions and human development dimensions in building a sustainable development path. In this paper, we attempt to analyze the causal relationships between economic growth, human development and sustainability combining the RCH and EKC models and adopting a human development pers ective.
    Keywords: Natural Resources, Sustainability, Human Development, Trade
    JEL: O15 Q01 Q56
    Date: 2006–02
  7. By: Karl van Biervliet (ECOLAS); Dirk Le Roy (ECOLAS); Paulo A.L.D. Nunes (University of Venice and Fondazione Eni Enrico Mattei)
    Abstract: This paper offers an economic assessment of the loss of non-use values resulting from different oil spill scenarios along the Belgian Coast. Estimation results show that if no oil spill prevention policy action is undertaken, a significant welfare loss may result. As a matter of fact, contingent valuation estimation results show such a welfare loss ranges from 120 million Euro to 606 million Euro, depending on the size and the frequency of the oil spill under consideration. Therefore, any investment program targeted at the prevention of oil spills, and its damage on the marine environment, can be clearly defended from a cost-benefit perspective as long as its cost is no higher than 120 million Euro.
    Keywords: Oil Spill, Prevention Scenario, Contingent Valuation, Cost Benefit Analysis
    JEL: Q51 Q53 Q54 Q58
    Date: 2006–03
  8. By: Michael Hoel (University of Oslo); Rolf Golombek (Frisch Centre)
    Abstract: We study an international climate agreement that assigns emission quotas to each participating country. Unlike the simplest models in the literature, we assume that abatement costs are affected by R&D activities undertaken in all firms in all countries, i.e. abatement technologies are endogenous. In line with the Kyoto agreement we assume that the international climate agreement does not include R&D policies. We show that for a second-best agreement, marginal costs of abatement should exceed the Pigovian level. Moreover, marginal costs of abatement differ across countries in the second-best quota agreement with heterogeneous countries. In other words, the second-best outcome cannot be achieved if emission quotas are tradable.
    Keywords: Climate Policy, International Climate Agreements, Emission Quotas, Technology Spillovers
    JEL: H23 O30 Q20 Q25 Q28
    Date: 2006–03
  9. By: Roberto Roson (Università Ca’ Foscari di Venezia); Alvaro Calzadilla (EEE Programme at the Abdus Salam ICTP); Francesco Pauli (University of Padua)
    Abstract: We use a general equilibrium model of the world economy, and a regional economic growth model, to assess the economic implications of vulnerability from extreme meteorological events, induced by the climate change. In particular, we first consider the impact of climate change on ENSO and NAO oceanic oscillations and, subsequently, the implied variation on regional expected damages. We found that expected damages from extreme events are increasing in the United States, Europe and Russia, and Russia, and decreasing in energy exporting countries. Two economic implications are taken into account: (1) short-term impacts, due to changes in the demand structure, generated by higher/lower precautionary saving, and (2) variations in regional economic growth paths. We found that indirect short-term effects (variations in savings due to higher or lower likelihood of natural disasters) can have an impact on regional economics, whose order of magnitude is comparable to the one of direct damages. On the other hand, we highlight that higher vulnerability from extreme events translates into higher volatility in the economic growth path, and vice versa.
    Keywords: Climate Change, Extreme Events, Computable General Equilibrium Models, Precautionary Savings, Economic Growth
    JEL: D58 D91 Q54
    Date: 2006–03
  10. By: Peter C. Roebeling (CSIRO Sustainable Ecosystems); M.E. Kragt (University and Research Centre); A. Ruijs (University and Research Centre)
    Abstract: Degradation of coral reefs may affect the number of tourists visiting the reef and, consequently, the economic sectors that rely on healthy reefs for their income generation. A Contingent Behaviour approach is used to estimate the effect of reef degradation on demand for recreational dive and snorkel trips, for a case study of the Great Barrier Reef (GBR) in Australia. We assessed how reef degradation affects GBR tourism and to what extent reef-trip demand depends on the visitors’ socio-economic characteristics. A count data model is developed, and results indicate that an average visitor would undertake about 60% less reef trips per year given a combined 80%, 30% and 70% decrease in coral cover, coral diversity and fish diversity, respectively. This corresponds to a decrease in tourism expenditure for reef trips to the Great Barrier Reef Marine Park of about A$ 136 million per year.
    Keywords: Coral Reef, Recreation, Contingent Behaviour Model, Count Data Models
    JEL: Q25 Q26 Q51
    Date: 2006–03
  11. By: Ugo Gasparino (Fondazione Eni Enrico Mattei); Barbara Del Corpo (Fondazione Eni Enrico Mattei); Dino Pinelli (University of Bologna)
    Abstract: The general attitude towards the sustainable management of environmental resources is evolving towards the implementation of ‘participatory’ (as opposed to the classical ‘command and control’) and, especially at local scale, ‘bottom up’ (as opposed to the classical ‘top down’) approaches. This progress pushes a major interest in the development and application of methodologies able to ‘discover’ and ‘measure’ how environmental systems tend to be perceived by the different Stakeholders. Due to the ‘nature’ of the investigated systems, often too ‘complex’ to be treated through a classical deterministic approach, as typical for ‘hard’ physical/mathematical sciences, any ‘measurement’ has necessarily to be multidimensional. In the present report an approach, more typical of ‘soft’ social sciences, is presented and applied to the analysis of the sustainable management of water resources in seven Southern and Eastern Mediterranean Watersheds. The methodology is based on the development and analysis (explorative factor analysis, multidimensional scaling) of a questionnaire and is aimed at the ‘discovery’ and ‘measurement’ of a latent multidimensional ‘underlying structure’ (‘conceptual map’). It is the opinion of the authors, that the identification of a set of ‘consistent’, ‘independent’, ‘bottom up’ and ‘shared’ synthetic indicators (aggregated indices) could be strongly facilitated by the interpretation of the dimensions of the emerging ‘underlying structure’.
    Keywords: Participative Approach, Cognitive Map, Factor Analysis, Indicators of Sustainability, Sustainable Water, Management
    JEL: C13 C42 D74 Q01 Q25
    Date: 2006–04
  12. By: Rikhardsson, Pall (Department of Business Studies); Holm, Claus (Department of Business Studies)
    Abstract: This paper focuses on the use of environmental information in investment decision making. The research approach employed was based on an experiment where three groups were asked to allocate investment funds between two companies based on financial accounts and information material from these companies. The overall con-clusion of the paper is that even though environmental information is not enough in itself to shift decision preferences, it seems to have some impact on decision mak-ing. However, there seems to be a discrepancy between what decision makers say they do and what they actually do. First, environmental information apparently has greater impact on decision making in the short run than the long run despite deci-sion makers saying that they value environmental information more regarding long-run investments. Second, decision makers downplay the value of environmental information in corporate information material but this information seems to affect their decision making just the same. Third, qualitative information seems to affect decision making regarding short-run investments more than the combination of qualitative and quantitative information
    Keywords: No keywords;
    Date: 2005–04–26
  13. By: Adrian Smith (SPRU, University of Sussex)
    Abstract: The environment movement often targets technology. It switches between enthusiasm for some technologies (like wind energy) and resistance to others (like nuclear power). And yet theory regarding the way social movements engage with technology is little developed. Environment groups are simply assumed to contribute to the 'selection pressures' under which technologies evolve. This paper seeks to develop theory by bridging a gap between social movement research and the sociology of technology. It will move between the two literatures and use examples to illustrate how the environment movement's enthusiasm and resistance to technologies penetrate their networks of development.
    Keywords: environment movement, resistance to technologies, sociology of technology
    JEL: Q55 Q58
    Date: 2006–04–11
  14. By: Jha, Shreyasi; Mani, Muthukumara
    Abstract: Vietnam ' s integration with the international economy has increased significantly over the past decade, aided by substantial liberalization of trade, and appears set to increase further as trade-expanding measures take full effect. This dramatic shift in Vietnam ' s trading patterns has important implications for the environment and use of natural resources. This paper offers a systematic analysis of the trading and investment patterns to give a broader understanding of the environmental implications of greater openness of the economy during the past decade. The results suggest increasing manufacturing and export activity in water and toxic pollution-intensive sectors compared with the less pollution-intensive sectors. The story is, on the surface, consistent with the changing composition of Vietnamese production and exports away from traditional sectors and toward pollution-intensive manufacturing (especially leather and textiles). The paper also highlights the need to consider strengthening environmental policies while further trade liberalization is being contemplated through Vietnam ' s joining of the World Trade Organization.
    Keywords: Environmental Economics & Policies,Water a nd Industry,Economic Theory & Research,Free Trade,Green Issues
    Date: 2006–04–01
  15. By: Hong, Jong Ho; Laplante, Benoit; Dasgupta, Susmita; Mamingi, Nlandu
    Abstract: The empirical literature on environmental performance or compliance has followed two strands: one based on the impact of formal regulation as a means of inducing better environmental performance, and another centered on the role of informal regulation which mainly emphasizes the role of communities and capital markets. The authors analyze the impact of environmental news in print media on firms ' environmental performance. Using data from a survey of industrial facilities in the Republic of Korea, probit estimation results indicate that the publication of environmental news in print media and the firm ' s awareness of this publication are important predictors of a firm ' s environmental performance, more so than environmental laws, regulations, and environmental training. This paper thus reemphasizes the key role of media in influencing firms ' environmental performance.
    Keywords: Environmental Economics & Policies,Green Issues,Educational Technology and Distance Education,Brown Issues and Health,Environmental Governance
    Date: 2006–04–01
  16. By: Shalizi, Zmarak
    Abstract: China has experienced a wide-scale and rapid transformation from an agricultural based economy to the manufacturing workshop of the world. The associated relocatio n of the population from relatively low density rural areas to very high density urban areas is having a significant impact on the quantity and quality of water available as inputs into the production and consumption process, as well as the ability of the water system to absorb and neutralize the waste byproducts deposited into it. Water shortages are most severe in the north of the country, where surface water diversion is excessive and groundwater is being depleted. In addition, the quality of water is deteriorating because of pollution, thereby aggravating existing water shortages. The biggest challenge ahead will be for national and local governments to craft policies and rules within China ' s complex cultural and legal administrative system that provide incentives for users to increase efficiency of water use, and for polluters to clean up the water they use and return clean water to stream flows. Using a standard public economics framework, water requirements for public goods-such as ecosystem needs-should be set aside first, before allocating property rights in water (to enable water markets to function and generate efficient allocation signals). Even then, water markets will have to be regulated to ensure public goods, such as public health, are not compromised. Until water markets are implemented, staying the course on increasing water and wastewater prices administratively and encouraging water conservation are necessary to reduce the wasting of current scarce water resources, as well as the new water supplies to be provided in the future.
    Keywords: Water Supply and Sanitation Governance and Institutions,Town Water Supply and Sanitation,Water and Industry,Water Conservation,Water Use
    Date: 2006–04–01
  17. By: Luca Di Corato (University of Padua and University of York)
    Abstract: Since biological resources may be a valuable input for agricultural and pharmaceutical R&D, extracting rents from bioprospection can generate income for funding the conservation of biodiversity hotspots. However, can a market for biological resources effectively create a sufficient incentive for private conservation? In this paper, a market framework is developed in order to derive some possible market equilibria. I discuss the different impact that each equilibrium has on the extent of conservation and I show how industry structure on the supply side of the market can affect the private incentive to conserve. These findings will finally suggest some useful policy implications.
    JEL: Q57 L11
    Date: 2006–04

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