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on Environmental Economics |
| By: | Sudhir A. Shah (Delhi School of Economics) |
| Abstract: | We study the problem caused by international transfrontier pollution. Our re-sults are derived from the analysis of an incomplete information, non-cooperative game model of the determination of emissions in a quantity-rationing setting. We model the emission capping negotiations using the best response dynamic pro-cess and provide natural conditions under which the process has a unique and globally asymptotically stable stationary point. We then analyze the link be-tween type profiles and the stationary points of the negotiation process to derive various comparative statics results and the type-contingent ordering of emission allocations. Finally, we study the investment strategies that nations can use prior to the negotiations in order to manipulate the equilibrium emission caps. The results have implications regarding the political economy of emission capping. |
| Keywords: | Emission capping, non-cooperative game, negotiations, incomplete information, manipulation |
| JEL: | D74 H41 Q21 Q25 R11 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:143&r=env |
| By: | Frank Ackerman and Elizabeth Stanton |
| Abstract: | In a recent article in this journal, Francesco Bosello, Roberto Roson, and Richard Tol make the surprising prediction that the first stages of global warming will, on balance, save a large number of lives. Bosello et al. fail to substantiate this remarkable estimate, and they make multiple mistaken or misleading assumptions. They rely on research that identifies a simple empirical relationship between temperature and mortality, but ignores the countervailing effect of human adaptation to gradual changes in average temperature. While focusing on small changes in average temperatures, they ignore the important health impacts of extreme weather events such as heat waves, droughts, floods, and hurricanes. They extrapolate this pattern far beyond the level that is apparently supported by their principal sources, and introduce an arbitrary assumption that may bias the result toward finding benefits from warming. |
| URL: | http://d.repec.org/n?u=RePEc:dae:daepap:06-05&r=env |
| By: | Daniel Millimet (Southern Methodist University); Rusty Tchernis (Indiana University Bloomington) |
| Abstract: | The use of propensity score methods for program evaluation with non-experimental data typically requires the propensity score be estimated, often with a model whose specification is unknown. While theoretical results suggest that estimators utilizing more flexible propensity score specifications perform better, this has not filtered into applied research. Here, we provide Monte Carlo evidence indicating the benefits of over-specifying the propensity score when using weighting estimators, as well as using normalized weights. We illustrate these results with an application assessing the environmental effects of GATT/WTO membership. We find that membership has a mixed impact, and that under-fitting the propensity score yields misleading inference in several cases. |
| Keywords: | Treatment Effects, Propensity score, Specification, WTO, Environment |
| JEL: | C21 C52 F18 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2006013&r=env |
| By: | Aline Chiabai (Fondazione Eni Enrico Mattei); Paulo A.L.D. Nunes (Fondazione Eni Enrico Mattei) |
| Abstract: | This paper provides an assessment of the economic value of the oceanographic services provided by the Mediterranean operational forecasting system, MFSTEP. The main purpose of this exploratory study is to carry out a cost-benefit analysis for different development scenarios, by comparing the costs associated with the project implementation with the private benefits that arise from delivering its products on the market. As far as the costs are concerned, a total cost assessment has been performed by identifying, classifying and estimating the wide range of inputs that have been allocated both to the project development and maintenance. Against this context, a cost questionnaire has been designed and administered to all MFSTEP partners. In addition, the study focuses on an end-users analysis in order to examine end-users’ attitudes and interests for the forecasting products, their needs and satisfaction. As before, we make the use of a survey. Finally, this questionnaire is characterized by exploring the use of the contingent valuation approach so as to address and estimate the private benefits derived from the provision of the MFSTEP products. Estimation results show that the mean willingness to pay for accessing the forecasting products amounts to 65 euro per download. Cost-benefit analysis reveals that, from a market perspective relying on the profit maximisation, a total of 163 downloads per day are required for total maintenance costs recovery, whereas 90 downloads per day are required to recover personnel maintenance costs. Finally, 33 downloads per day are required so as to recover durable equipment maintenance costs. |
| Keywords: | Cost-Benefit Analysis, Contingent Valuation, Survey Design, Willingness to Pay, Cost Assessment, Observing and Modelling Oceanographic System |
| JEL: | D60 D61 D12 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.104&r=env |
| By: | Paola Minoia (Università Ca’ Foscari di Venezia); Anna Brusarosco (Università Ca’ Foscari di Venezia) |
| Abstract: | During the past century, large hydraulic infrastructures have been considered as the most effective tools for increasing water supply and rationalise water management. According to this approach, large infrastructures are seen as catalysts for territorial development and economic progress. More recently, international surveys of results of water supply policies and performances of large dams, show that these structures need to be integrated in more comprehensive Integrated Water Resource Management strategies at catchments’ scale, to promote equitable and sustainable regional development. The aim of this communication is to present the role of large hydraulic infrastructures within the regional development dynamics with particular attention to the Sebou basin in Morocco, in order to assess some relevant impacts on local communities and their ecosystems. The Sebou region is one of the most important basins in Morocco, in the context of the national strategies and policies of management of water resources, established by the Water Law of 1995. The development of hydraulic infrastructures in the Sebou Basin begun in 1935, with construction of a complex of ten large dams and nine small dams, to provide water for agriculture, domestic and industrial use, and to generate hydropower and control floods, in line with the national water policies that, from the 1960s onwards, looked at large dams as core infrastructures for regional development. A critical view will be given about the coherence of this strategy with the sustainability principles. |
| Keywords: | Water Policy, Morocco, Dams, Sustainable Development, Impacts |
| JEL: | Q25 Q28 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.105&r=env |
| By: | Richard S.J. Tol (Princeton University, Vrije Universiteit and Hamburg University); Stephen W. Pacala (Princeton University); Robert Socolow (Princeton University) |
| Abstract: | We compile a database of energy uses, energy sources, and carbon dioxide emissions for the USA for the period 1850-2002. We use a model to extrapolate the missing observations on energy use by sector. Overall emission intensity rose between 1850 and 1917, and fell between 1917 and 2002. The leading cause for the rise in emission intensity was the switch from wood to coal, but population growth, economic growth, and electrification contributed as well. After 1917, population growth, economic growth and electrification pushed emissions up further, and there was no net shift from fossil to non-fossil energy sources. From 1850 to 2002, emissions were reduced by technological and behavioural change (particularly in transport, manufacturing and households), structural change in the economy, and a shift from coal to oil and gas. These trends are stronger than electrification, explaining the fall in emissions relative to GDP. |
| Keywords: | Carbon Dioxide Emissions, Decomposition, Environmental Kuznets Curve, USA, History |
| JEL: | Q5 Q4 Q0 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.107&r=env |
| By: | Andrea Bigano (Fondazione Eni Enrico Mattei); Francesco Bosello (Fondazione Eni Enrico Mattei and EEE Programme, International Centre for Theoretical Physics); Giuseppe Marano (Fondazione Eni Enrico Mattei) |
| Abstract: | This paper is a first attempt to investigate the effect of climate on the demand for different energy vectors from different final users. The ultimate motivation for this is to arrive to a consistent evaluation of the impact of climate change on key consumption goods and primary factors such as energy vectors. This paper addresses these issues by means of a dynamic panel analysis of the demand for coal, gas, electricity, oil and oil products by residential, commercial and industrial users in OECD and (a few) non-OECD countries. It turns out that temperature has a very different influence on the demand of energy vectors as consumption goods and on their demand as primary factors. In general, residential demand responds negatively to temperature increases, while industrial demand is insensitive to temperature increases. As to the service sector, only electricity demand displays a mildly significant negative elasticity to temperature changes. |
| Keywords: | Energy Demand, Temperature, Dynamic Panels |
| JEL: | C3 Q41 Q54 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.112&r=env |
| By: | Anna Alberini (University of Maryland); Stefania Tonin (University of Venice-IUAV); Margherita Turvani (University of Venice-IUAV); Aline Chiabai (Fondazione Eni Enrico Mattei) |
| Abstract: | We use conjoint choice questions to investigate people’s preferences for income and reductions in mortality risks delivered by contaminated site remediation policies. Our survey is self-administered using the computer by residents of four cities in Italy with severely contaminated sites. We estimate the Value of a Statistical Life to be about €5.6 million for an immediate risk reduction. If the risk reduction takes place 20 years from now, however, the implied VSL is about €1.26 million. The discount rate implicit in the responses to the conjoint choice questions is about 7%. People are willing to pay for permanent risk reductions, but not just any amount. Risk reductions in the nearer future are valued more highly than risk reductions in the more distant future. We also find that the VSL is “individuated,” in the sense that it depends on observable individual characteristics of the respondents, familiarity with contaminated sites, concern about the health effects of exposure to toxicants, having a family member with cancer, perceived usefulness of possible government actions, and the respondent’s beliefs about the goals of government remediation programs. Additional questions suggest that respondents discount lives, and do so at a discount rate in the ballpark of that implicit in their risk v. money tradeoffs. |
| Keywords: | Value of a Statistical Life, Latent Risk Reductions, Individual Discount Rates, Conjoint Choice Questions, Contaminated Sites, Remediation |
| JEL: | J17 I18 K32 Q51 Q53 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.113&r=env |
| By: | Dirk T.G. Rübbelke (Chemnitz University of Technology); Vivekananda Mukherjee (Jadavpur University) |
| Abstract: | The paper develops a model in which a country with better technology for abatement of Green House Gas (GHG) emission (the North) commits to an international protocol to keep the global GHG emission within a specified limit while it helps the mitigation effort in the other country (the South) with unconditional transfer of abatement technology. It finds out in the autarkic (‘no trade’) equilibrium the technology transfer offer from the North is always accepted by the South. The North may offer either a partial or a complete technology transfer. If partial technology transfer is offered it finds out the determinants of the extent of technology transfer. Then it compares the autarkic equilibrium with equilibrium where trade with complete specialization occurs and finds out that trade limits the scope of technology transfer as an instrument for mitigation of global GHG emission. |
| Keywords: | GHG Emission, Mitigation, Technology Transfer, Trade |
| JEL: | F18 F35 Q54 Q56 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.114&r=env |
| By: | Clive Lipchin (Arava Institute For Environmental Studies) |
| Abstract: | The Dead Sea basin plays a major role for regional economic development (industry, tourism and agriculture) in the Middle East. This potential is threatened by the steady disappearance of the Dead Sea. Since around 1930 the water level of the Dead Sea has fallen by about 25 m, about half of this alone in the last 20 years. The Dead Sea is a transboundary resource shared by Israel, the Palestinian Authority and Jordan. The Dead Sea is the terminal point of the Jordan River watershed and as such, it serves as a barometer for the health of the overall system. Its rapid decline reflects the present water management strategies of the riparian and upstream countries. This includes the different water cultures of the three countries. Throughout history, the Dead Sea basin has served as a source of refuge and inspiration for followers of Judaism, Christianity and Islam. Today, the religious significance of the Dead Sea is being overshadowed by its rapid disappearance. This may be explained in part by the water cultures of the three countries that influence water policy in the region. Ideology, together with culture and tradition, such as that of Zionism in Israel, has played a central role in water development in the region. In many cases, this has been at the expense of the environment. Elements pertaining to environmental security and water culture and tradition, whereby a sustainably managed environment provides for social, economic as well as environmental benefits are evident with regards the Dead Sea. The decline for example, undermines its potential as a tourist destination, despite the enormous investment in hotel and resort infrastructures in Israel and in Jordan. The decline also raises ethical issues about the exploitation of water resources by present generations at the expense of this natural heritage to future generations. This paper provides an analysis of a European Union funded project whose aims are to synthesize and assess existing physical and socio-economic data and to assess options for a better future for the Dead Sea. It will identify the patterns of water supply and use in the region, and the factors that control these patterns, including those of water culture. The underlying assumption is that solutions for a more sustainable development than today’s scenario will not come from simply providing "more water for more development", but from a new land and water management system, indeed ethic, that is sensitive to social, cultural and ecological resources thereby providing security and stability across cultures, economic sectors and nations. |
| Keywords: | Water Culture, Dead Sea, Stakeholder Analysis |
| JEL: | Q25 Q56 Q58 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.115&r=env |
| By: | Barbara K. Buchner (Fondazione Eni Enrico Mattei); Carlo Carraro (Fondazione Eni Enrico Mattei and University of Venice); A. Denny Ellerman (Senior Lecturer at MIT) |
| Abstract: | This paper is the concluding chapter of Rights, Rents and Fairness: Allocation in the European Emissions Trading Scheme, edited by the co-authors and forthcoming from Cambridge University Press. The main objective of this paper is to distill the lessons and general principles to be learnt from the allocation of allowances in the European Union Emission Trading Scheme (EU ETS), i.e. in the world’s first experience with allocating carbon allowances to sub-national entities. We discuss the lessons that emerge from this experience and make some comments on what seem to be more general principles informing the allocation process and on what are the global implications of the EU ETS. As has become obvious during the first allocation phase, the diversity of experience among the Member States is considerable, so that it must be understood that these lessons and unifying themes are drawn from the experience of most of the Member States, not necessarily from all. Lessons and unifying observations are grouped in three categories: those concerning the conditions encountered, the processes employed, and the actual choices. |
| Keywords: | Climate Change, Emission Trading, Allocation, Fairness, EU Policy |
| JEL: | C72 H23 Q25 Q28 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.116&r=env |
| By: | Richard S.J. Tol (Hamburg University) |
| Abstract: | A model of carbon dioxide emissions of the USA is presented. The model consists of population, income per capita, economic structure, final and primary energy intensity per sector, primary fuel mix, and emission coefficients. The model is simple enough to be calibrated to observations since 1850. The model is used to project emissions until 2100. Best guess carbon dioxide emissions are in the middle of the IPCC SRES scenarios, but incomes and energy intensities are on the high side, while carbon intensities are on the low side. The confidence interval suggests that the SRES scenarios do not span the range of not-implausible futures. Although the model can be calibrated to reflect structural changes in the economy, it cannot anticipate such changes. The data poorly constrain crucial scenario elements, particularly energy prices. This suggests that the range of future emissions is wider still. |
| Keywords: | Climate Change, Emissions Scenarios, USA |
| JEL: | Q54 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.117&r=env |
| By: | Elena Strukova (World Bank); Alexander (Environmental Defense); Anil Markandya (Fondazione Eni Enrico Mattei) |
| Abstract: | The paper presents estimation of the health losses from urban air pollution in Ukraine. The methodology developed by US EPA and adjusted in Russia for Eastern European transition countries was applied for health risk assessment. PM2.5 was identified as the major source of human health risk, based on experience from the Russian studies. In the absence of reliable computed concentrations of PM2.5, the study was based on monitoring data of total suspended particle (TSP) emissions in Ukraine. Additional cases of mortality and morbidity were calculated based on reporting data on TSP concentration that was recalculated into PM2.5. Then the concentration–response function was applied to estimate individual risk. Next, individual risk was applied to the population exposed to the concentration reported for each city included in the analysis (we selected most polluted cities). For each city we considered individual data on baseline mortality and morbidity and population structure. In total, air pollution related mortality represents about 6 percent of total mortality in Ukraine. In Russia the corresponding indicator totals about 4 percent. The relative mortality risk attributed to air pollution calculated per 100 000 population in both countries is about 55-59 cases. Since applied method is sensitive to the primary data uncertainties we conducted sensitivity analysis applying Monte-Carlo method. Economic damage related to mortality risk was estimated at about 4 percent of GDP. There was no relevant WTP study in Ukraine therefore we applied the benefit-transfer method in order to estimate VSL, since mortality attributed to air pollution is major component of health losses (about 94 percent). In order to compare and aggregate mortality and morbidity risks we recalculated them in DALY. Then morbidity represents about 30 percent of total air pollution health load. Data on baseline morbidity is less reliable than data on baseline mortality; therefore the morbidity risk estimates are more uncertain than mortality estimates. It is likely that morbidity risk is underestimated. Regardless of uncertainties mentioned above and some problems with reported data we can conclude that the mortality risk attributed to air pollution is significant. Therefore, costs of air pollution in Ukraine are sizable and in the nearest future may offset the economic growth. Recovery of the Ukrainian economy based on restoration of polluting industries may lead to stagnation since mortality and morbidity risks not only puts burden on the economy, but also reduce labor force. |
| Keywords: | Air Pollution, Ukraine, Environmental Damages |
| JEL: | Q53 I10 I18 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.120&r=env |
| By: | Holm, Claus (Department of Management Science and Logistics, Aarhus School of Business); Rikhardsson, Pall (Department of Management Science and Logistics, Aarhus School of Business) |
| Abstract: | This paper examines the effect of environmental information on the investment <p> decisions of investors. The motivation for the experimental design <p> applied in this study is that unless actual decision making is observed, <p> the potential usefulness of environmental information (or lack <p> thereof) cannot be taken for granted. The study is based on an experiment <p> where groups of investors (varied by experience) were asked to <p> make investment allocation decisions based on financial information and <p> on supplementary environmental information (varied between cases). As <p> an investment allocation decision (varied by investment horizons) the <p> groups were asked to allocate funds to two companies based on the available <p> information. The findings suggest that environmental information has <p> the potential to influence investment allocation decisions. The findings <p> also suggest that the influence of environmental information on investment <p> allocation decisions is mitigated by the variables considered explicitly <p> in this study, i.e., the investment horizon (varied as short and long) <p> and investor experience (varied as novice and experienced investor). It is <p> concluded that because allocation decisions are multifaceted problems, <p> mixed results related to the influence of environmental information should <p> be expected |
| Keywords: | Environmental reporting; Environmental disclosures; Allocation; Decision making; Investment horizon; Investors; Experiment; |
| Date: | 2006–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aarmsl:1990_002&r=env |
| By: | Muller, Adrian (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | There is a danger that the CDM will fail to live up to its goals, namely reduction of greenhouse gas emissions and enhanced sustainable development. Sustainability labeling is a promising strategy to hedge against such failures. Labels could also serve as a business risk-hedging tool. The existing labels for the CDM are not comprehensive enough, however. A two-tiered stakeholder participatory approach with national flexibility under an international umbrella could be a promising option. Due to the necessary bureaucracy this might not be feasible. Labels in the spirit of the existing approaches – addressing only restricted aspects of sustainability or not applicable to all sectors may be a second best option. Other instruments for the further regulation of the CDM, such as a profit tax, should therefore be discussed as well. <p> |
| Keywords: | CDM; labels; sustainability indicators; risk; equity |
| JEL: | L15 M14 O13 Q01 Q54 |
| Date: | 2006–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0228&r=env |
| By: | Hagem, Cathrine (Dept. of Economics, University of Oslo) |
| Abstract: | The clean development mechanism (CDM) under the Kyoto Protocol may induce a technological change in developing countries. As an alternative to the CDM-regime, developing countries may accept a (generous) cap on their own emissions, let domestic producers invest in new efficient technologies, and sell the excess emission permits on the international permit market (cap&trade-regime). The purpose of this paper is to show how the gains from investment, and hence the incentive for investment in new technology may deviate between the two alternative regimes. We show that the difference in gains from investment depends on whether the producers face competitive or non-competitive output markets, whether the investment affects fixed or variable production costs and whether the producers can reduce emissions through other means than investment in new technology |
| Keywords: | Climate Policy; Technology Adoption; Emission Trading; Clean Development Mechanism; Technological Change |
| JEL: | L13 Q28 |
| Date: | 2006–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2006_019&r=env |
| By: | Elisabeth Hermann Frederiksen (Department of Economics, University of Copenhagen) |
| Abstract: | This paper examines how revenues from a natural resource interact with growth and welfare in an overlapping generations model with altruism. The revenues are allocated between public productive services and direct transfers to members of society by spending policies. We analyze how these policies influence the dynamics, and how the dynamics are influenced by the abundance of the revenue. Abundant revenues may harm growth, but growth and welfare can be oppositely affected. We also provide the socially optimal policy. Overall, the analysis suggests that variation in the strength of altruism and in spending policies may be part of the reason why natural resources seem to affect economic performance across nations differently. |
| Keywords: | natural resources; economic growth; welfare; altruism |
| JEL: | D64 O41 Q33 Q38 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:kud:epruwp:06-09&r=env |
| By: | Giannis Vardas (Department of Economics, University of Crete); Anastasios Xepapadeas (Department of Economics, University of Crete) |
| Abstract: | Safety rules are developed, for biodiversity preservation. These rules are designed to take into account the impact of uncertainty and worst case scenarios, which when combined with unregulated ecosystem management decisions, might produce extinction of species. The safety rules take the form of fixed land allocation and fixed harvesting rules under uncertainty. We explore how model uncertainty affects these safety rules relative to the classic risk aversion case and how a measure of precaution against worst case scenarios can be formulated. |
| Keywords: | Biodiversity Preservation, Model Uncertainty, Safety Rules |
| JEL: | Q57 |
| Date: | 2006–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0607&r=env |