nep-env New Economics Papers
on Environmental Economics
Issue of 2006‒09‒11
ten papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Exploratory Innovation, Exploitative Innovation, and Performance: Effects of Organizational Antecedents and Environmental Moderators By Jansen, J.J.P.; Bosch, F.A.J. van den; Volberda, H.W.
  2. Seeking Rents in the Shadow of Coase By Guiseppe Dari-Mattiacci; Sander Onderstal; Francesco Parisi
  3. How to Make the Clean Development Mechanism Sustainable - The Potential of Rent Extraction By Muller, Adrian
  4. Putting decomposition of energy use and pollution on a firm footing - clarifications on zero and negative values and the residual By Muller, Adrian
  5. An organic farming perspective on the production of biomass for energy use By Muller, Adrian
  6. Financing the alternative: renewable energy in developing and transition countries By Christa N. Brunnschweiler
  7. The Direction of Technical Change in Capital-Resource Economies By Corrado Di Maria; Simone Valente
  8. Cursing the blessings? Natural resource abundance, institutions, and economic growth By Christa N. Brunnschweiler
  9. A Kuznets Curve for Recycling By Karen Pittel
  10. Sharing a river among satiable countries By Ambec, S.; Ehlers, L.

  1. By: Jansen, J.J.P.; Bosch, F.A.J. van den; Volberda, H.W. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Research on exploration and exploitation is burgeoning, yet our understanding of the antecedents and consequences of both activities remains rather unclear. We advance the growing body of literature by focusing on the apparent differences of exploration and exploitation and examining implications for using formal (i.e. centralization and formalization) and informal (i.e. connectedness) coordination mechanisms. This study further examines how environmental aspects (i.e. dynamism and competitiveness) moderate the effectiveness of exploratory and exploitative innovation. Results indicate that centralization negatively affects exploratory innovation while formalization positively influences exploitative innovation. Interestingly, connectedness within units appears to be an important antecedent of both exploratory and exploitative innovation. Furthermore, our findings reveal that pursuing exploratory innovation is more effective in dynamic environments whereas pursuing exploitative innovation is more beneficial to a unit’s financial performance in more competitive environments. Through this richer explanation and empirical assessment, we contribute to a greater clarity and better understanding of how ambidextrous organizations coordinate the development of exploratory and exploitative innovation in organizational units and successfully respond to multiple environmental conditions.
    Keywords: Exploratory and Exploitative Innovation;Coordination Mechanisms;Environment;Performance;
    Date: 2006–08–14
  2. By: Guiseppe Dari-Mattiacci (Universiteit van Amsterdam); Sander Onderstal (Universiteit van Amsterdam); Francesco Parisi (University of Minnesota)
    Abstract: Trade opportunities are generally seen as valuable instruments to improve the allocation of resources in society. However, when the traded rights are secured through unproductive rent-seeking contests, the tradeability of the rents may provide stronger incentives to invest in rent-seeking activities, exacerbating rent-dissipation losses. In some cases the increase in rent dissipation may exceed the benefits of trade, rendering the opportunity to transfer rents socially undesirable. We consider a two-stage game in which the contestants have different valuations of the sought-after rent. In the first stage, parties invest to secure rights by participating in a rent-seeking contest. In the second stage, parties decide whether to reallocate the rights by entering in a Coasean exchange. We show that an opportunity for an ex post reallocation of the rights may have perverse ex ante effects. We consider the effect that such trading opportunities have on the parties’ payoffs and evaluate the final outcome in terms of dissipation and misallocation costs, comparing our scenario with tradeable rents to the conventional case of non-tradeable rents.
    Keywords: Rent-seeking; asymmetric rent valuations; misallocation costs; rent dissipation
    JEL: D72
    Date: 2006–08–09
  3. By: Muller, Adrian (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The Clean Development Mechanism (CDM) should foster sustainable development and greenhouse gas emissions reductions. The design of the CDM and first experience suggest that it may not achieve these goals. Developing countries hosting CDM projects may loose cheap emissions reduction possibilities for their own future use, and sustainable development and technology transfer may not take place. On the other hand, the CDM has the potential to generate considerable rents if permit prices are high or costs low. A deliberate decision on how to distribute these rents should be taken and the potential failure of the CDM in meeting its goals calls for further regulation. I suggest to combine these two issues and to extract the rents by a profit tax. The tax revenues could contribute to national sustainable development strategies, to offset external costs imposed by CDM projects and to extract part of the resource rent they may generate. The international character of the CDM offers a frame for internationally coordinated tax design. This would hedge against a potential race to the bottom. <p>
    Keywords: Clean Development Mechanism; economic rent; rent extraction; profit tax; sustainable development
    JEL: H23 Q01 Q54
    Date: 2006–08–31
  4. By: Muller, Adrian (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: I show how the problems with zero and negative values in decomposition can be resolved by reference to integral approximation, which is the basis of any decomposition analysis. Referring to integral approximation, I also discuss the residual in decomposition and show that the presence of a non-zero residual is natural and that requiring a zero residual as a strategy to identify optimal decomposition methods is without basis. I illustrate these findings with the logarithmic mean Divisia Index decomposition approach and simulations allowing for comparison of the LMDI results to the values based on exact solution of the integrals involved. <p>
    Keywords: decomposition analysis; Divisia Index; logarithmic mean; energy consumption; emissions
    JEL: C63 Q41 Q50
    Date: 2006–08–31
  5. By: Muller, Adrian (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Bioenergy is seen as a promising option to curb greenhouse gas emissions. There is, however, a potential competition for land due to increased demand for biomass resulting in increased food prices. This also would exacerbate future global water scarcity and negatively affect the food security of poor countries depending on cereal imports. Furtheron, the question of how a sufficient large amount of biomass for energy production could be grown sustainably needs to be addressed. Conventional agriculture often has negative effects on the environment. Organic agriculture is one sustainable alternative. Burning significant quantities of organic matter, however, is incompatible with the principles of organic agriculture. Nevertheless, there is potential for sustainable implementation of small-scale, on-site bioenergy projects, in particular in developing countries and also of some forestry practices to harvest biomass for energy use. On the other hand, large-scale production of biomass for transport fuels is likely to be particularly unsustainable. To assess the sustainability of bioenergy on project level and as a global strategy, detailed differentiation is necessary. This paper combines these issues focusing on the potential challenges related to sustainable bioenergy production and its potential incompatibility with sustainable agricultural practices. <p>
    Keywords: bioenergy; sustainable energy; organic agriculture; land scarcity; water scarcity
    JEL: Q01 Q42
    Date: 2006–08–31
  6. By: Christa N. Brunnschweiler (Center of Economic Research, Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: This paper examines the determinants of credit allocation to renewable energy firms in developing and transition countries. Using a simple en- dogenous growth model, we show that the development of the renewable energy sector, i.e. the diversification of renewable energy resources used in primary energy production, depends on the quality of financial intermedia- tion, debtor information costs to banks, and financing needs of renewable energy firms. Policies should aim at increasing financial sector perfor- mance through better institutional frameworks and improving financing conditions for new energy firms. The empirical analysis confirms the pos- itive effect of financial intermediary development on the renewable energy sector.
    Keywords: Financial intermediation, banks, renewable energy, economic growth
    JEL: Q42 G10 O41
    Date: 2006–03
  7. By: Corrado Di Maria (CentER, Tilburg University); Simone Valente (Center of Economic Research, Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: We analyze a multi-sector growth model with directed technical change where man-made capital and exhaustible resources are essen- tial for production. The relative profitability of factor-specific inno- vations endogenously determines whether technical progress will be capital- or resource-augmenting. We show that convergence to bal- anced growth implies zero capital-augmenting innovations: in the long run, the economy exhibits purely resource-augmenting technical change. This result provides sound microfoundations for the broad class of models of exogenous/endogenous growth where resource-aug- menting progress is required to sustain consumption in the long run, contradicting the view that these models are conceptually biased in favor of sustainability.
    Keywords: Endogenous Growth, Directed Technical Change, Exhaustible Resources, Sustainability
    JEL: O31 O33 O41 Q32
    Date: 2006–03
  8. By: Christa N. Brunnschweiler (Center of Economic Research, Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: Since Sachs and Warner's (1995a) contribution, there has been a lively debate on the so-called natural resource curse. This paper re-examines the effects of natural resource abundance on economic growth using new measures of resource endowment and considering the role of institutional quality. We find a positive direct empirical relationship between natural resource abundance and economic growth. In both OLS and 2SLS re- gressions, the positive resource effects are particularly strong for subsoil wealth. Our results also show no evidence of negative indirect effects of natural resources through the institutional channel.
    Keywords: Natural resources, resource curse, economic growth, institutional quality
    JEL: O11 O13 Q0
    Date: 2006–06
  9. By: Karen Pittel (Center of Economic Research, Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: The paper aims at extending the debate on Environmental Kuznets Curves to the case of non-renewable resources and to discuss the driving forces that might give rise to EKC's in this case. The paper at hand deviates from the standard EKC analysis in two ways: First, mostly EKC's are analyzed for flow variables. In this paper we argue that EKC's may very well arise for certain stock variables like minerals or waste. Second, most papers that provide a theoretical foundation for EKC's focus on assumptions like technological anomalies (e.g. increasing returns) or technological switches. We offer an alternative explanation by showing that EKC's might arise simply due to the combination of recycling and the rising scarcity of materials. It is shown that an EKC for non-renewables might emerge during the transition to the long-run balanced growth path. Whether or not an EKC arises depends e.g. on initial conditions, but also on preferences and technology. The assumptions made about the ability of recycling firms to internalize the in- terrelation between recycling decisions today and the future availability of recyclable waste matter with respect to the prerequisites for an EKC and the speed of conver- gence. Internalization furthermore implies that an economy can be caught in a poverty trap, i.e. it might not be able to converge to the long-run growth equilibrium if the initial endowment with resources and capital is too low.
    Keywords: non-renewable resources, recycling, transitional growth, Environmental Kuznets Curve
    JEL: Q32 Q53 O4 O13
    Date: 2006–05
  10. By: Ambec, S.; Ehlers, L.
    Abstract: With diminishing global water reserves the problem of water allocation becomes increasingly important. We consider the problem of efficiently sharing a river among a group of satiable countries. Inducing countries to efficiently cooperate requires monetary compensations via international agreements. We show that cooperation of the other countries exerts a positive externality on the benefit of a coalition. Our problem is to distribute the benefit of efficiently sharing the river under these constraints. If the countries outside of a coalition do not cooperate at all, then the downstream incremental distribution is the unique compromise between the absolute territorial sovereignty (ATS) doctrine and the unlimited territorial integrity (UTI) doctrine. If all countries outside a coalition cooperate, then there may not exist any distribution satisfying the UTI doctrine.
    JEL: D62 H23
    Date: 2006

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