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on Environmental Economics |
| By: | Jan K. Brueckner; Raquel Girvin |
| Abstract: | This paper explores the impact of airport noise regulation on airline service quality and airfares. It also characterizes the socially optimal stringency of noise limits, taking both noise damage and the various costs borne by airlines and their passengers into account. The analysis also investigates the effect of noise taxes, as well as the optimal level of such taxes. Along with the companion paper by Girvin (2006a), this work represents the first complete theoretical investigation into the economics of airport noise regulation using a model where the interests of the key relevant stakeholders are captured. |
| Keywords: | airport, airport noise, airport noise regulation, airline, airline service quality, noise taxes, transportation |
| JEL: | L00 L90 Q20 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1820&r=env |
| By: | Michael Rauscher |
| Abstract: | Social norms and intrinsic motivations lead to environmentally friendly behaviour even in the absence of environmental policy. This paper looks at the interactions of social norms and environmental regulation in their impact on individual behaviour. People obtain social rewards for voluntary abatement efforts. These social rewards may be crowded out by environmental regulation taking the shape of standards or taxes. Moreover, the paper shows that environmental externalities and externalities related to social norms interact and that an optimal environmental policy should consider both types of externalities. From a general welfare point of view, emission taxes are superior to emission standards, but people responsive to social rewards prefer standards. |
| JEL: | H30 Q28 Z13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1838&r=env |
| By: | Klaus Skytte |
| Abstract: | This paper discusses the difficulty of having three different objectives for the electricity supply sectors in the EU: renewable energy goals, emission reduction goals and minimising consumer prices. In the environment associated with the power markets, the regulatory mechanisms interact with each other and thus the attainment of the specified goals. Analytical discussions in the paper show that synergies do exist between the different regulation mechanisms and the targets. However, the challenge of having the different targets lies in the fact that the mechanisms at present cover different geographical areas and sectors, and that the targets are set differently within each Member State.This is an analytical paper, and its aim is to shed some light on the complexity of this regulation area and inspire more researchers to work in it. |
| Keywords: | regulation; electricity; environmental policy |
| Date: | 2006–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euirsc:p0169&r=env |
| By: | Takeuchi, Akie; Cropper, Maureen; Bento, Antonio |
| Abstract: | This paper examines the impact of measures to reduce emissions from passenger transport, specifically buses, cars, and two-wheelers in Mumbai. These include converting diesel buses to compressed natural gas (CNG), as the Indian Supreme Court required in Delhi, which would necessitate an increase in bus fares to cover the cost of pollution controls. The authors model an increase in the price of gasoline, which should affect the ownership and use of cars and two-wheelers, as well as imposing a license fee on cars to retard growth in car ownership. The impact of each policy on emissions depends not only on how the policy affects the mode that is regulated, but on shifts to other modes. The results suggest that the most effective policy to reduce emissions from passenger vehicles-in terms of the total number of tons of PM10 (particulate matter that measure less than or equal to 10 micrometers in aerodynamic diameter) reduced-is to convert diesel buses to CNG. The conversion of 3,391 diesel buses to CNG would result in an emissions reduction of 663 tons of PM10 a year, 14 percent of total emissions from transport. The bus conversion program passes the cost-benefit test. In contrast, the results suggest the elasticities of emissions from transport with respect to a gasoline tax and a tax on vehicle ownership are -0.04 and -0.10 respectively. As a consequence, it would take substantial increases in the gasoline tax or vehicle ownership tax to produce reductions in emissions similar to the bus conversion program. These results, however, reflect the low shares of cars and two-wheelers in the Mumbai emissions inventory and need not apply to cities, such as Delhi, where these shares are higher. |
| Keywords: | Transport Economics Policy & Planning,Transport in Urban Areas,Transport and Environment,Roads & Highways,Urban Transport |
| Date: | 2006–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4059&r=env |
| By: | Bandyopadhyay, Sushenjit; Shyamsundar, Priya; Baccini, Alessandro |
| Abstract: | In this paper, the authors seek to answer three questions about poverty and forests in Malawi: (1) What is the extent of biomass available for meeting the energy needs of the poor in Malawi and how is this distributed? (2) To what extent does fuelwood scarcity affect the welfare of the poor? (3) How do households cope with scarcity? In particular, do households spend more time in fuelwood collection and less time in agriculture in response to scarcity? The authors attempt to answer these questions using household and remote-sensing data. They find that 80 percent of rural poor households in Malawi are likely to benefit from an increase in biomass per hectare in their community. Rural women respond to biomass scarcity by increasing the time they spend on fuelwood collection. But the actual decrease in consumption expenditure and increase in time in fuelwood collection are small and biomass scarcity is not associated with a reduction in agricultural labor supply. |
| Keywords: | Renewable Energy,Crops & Crop Management Systems,Wildlife Resources,Climate Change,Ecosystems and Natural Habitats |
| Date: | 2006–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4068&r=env |
| By: | Urs Steiner Brandt (Department of Environmental and Business Economics, University of Southern Denmark) |
| Abstract: | This paper considers the policy outcome of a contest between two opposing in-terest groups: the incumbent fishermen and a group of conservationalists. The objective of the fishermen is to maximize profit, and they are (partly) concerned over future profitability as well, while the conservationalists have the aim of re-ducing current fishing effort in order to protect fish resources. The probability of a result of overfishing is dependent on the relative benefits the two groups receive if their preferred policy wins the contest. This model enables us to pre-dict how climate change induces changes in the underlying bionomic model and affects the probability of conservation. The main result is that the likelihood of conservation increases when climate change implies a larger percentage in-crease in the conservation value to the conservationalists than the percentage increase in the commercial value for the fishermen. |
| Keywords: | Political contest, probability of conservation, fisheries management, climate change |
| JEL: | Q22 D72 L5 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:72&r=env |
| By: | Juha Honkatukia; Ville Mälkönen; Adriaan Perrels |
| Abstract: | This study deals with the matter to what extent the costs of the EU Emission Trade System (EU ETS) end up in the electricity prices. The study encompasses both a theoretical and an empirical review of electricity price formation. It includes an econometric analysis of electricity price formation and the impact of EU ETS on power prices. On the basis of the econometric analysis is concluded that cost compensation due to EU ETS is indeed occurring. On average, about 75% to 95% of a price change in EU ETS is passed on to the Finnish NordPool spot price. The analysis also shows that the degree of utilisation of generation capacity (and hence the network loads) have an effect on electricity prices. This hints at possible market imperfections and can aggravate the price effects of EU ETS. |
| Keywords: | electricity markets, emission trading, competitiveness |
| Date: | 2006–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:fer:dpaper:405&r=env |
| By: | Emmanuel Petrakis (Department of Economics, University of Crete, Greece); Anastasios Xepapadeas (Department of Economics, University of Crete, Greece) |
| Abstract: | This paper investigates the effect of the government’s ability to commit, or not, to a specific level of environmental policy instrument, or environmental innovation and welfare in imperfectly competitive markets. We that under monopoly if the government is unable to commit, and follows thus a time consistent policy, then in general emission taxes are lower, while environmental innovation, profits and welfare are higher relative to the precommitment case. The monopoly results extend to the small numbers oligopoly, but they are reserved for the last numbers oligopoly case. Thus of the sufficiently large numbers of firms, emission taxes can be lower and innovation efforts and welfare can be higher under government commitment. The two policy regimes converge, regarding emission taxes, abetment effort and welfare, when the numbers of firms tends to infinity. Our findings indicate that, contrary to most of the results obtained previously, welfare gains can be achieve by either policy regime- precommitment or time consistent-depending on the numbers of firms in the industry. |
| Keywords: | Emision Tax, Apatement effort, Time Consistent Policies, Precommitment, Monopoly, Oligopoly |
| JEL: | L12 Q25 Q28 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0110&r=env |
| By: | William Brock (University of Wisconsin, Department of Economics, USA); Anastasios Xepapadeas (Department of Economics, University of Crete, Greece) |
| Abstract: | We develop a conceptual framework for valuing biodiversity from an economic perspective. We consider biodiversity important because of a number of characteristics or services that it provides or enhances. We argue for a dynamic economic welfare measure of biodiversity that complements the existing literature on benefit-cost approaches and genetic distance/phylogenic tree approaches, which to date have been more static. Using a unified model of optimal economic management of an ecosystem under ecological and genetic constraints, we identify gains realized by management policies leading to a more diverse system, using the Bellman state valuation function of the problem. We show that a more diverse system could attain a higher value even though the genetic distance of the species in the more diverse system could be almost zero. We relate this endogenous measure of the biodiversity value to ecologically/biologically oriented biodiversity metrics (species richness, Shannon or Simpson indices). |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0301&r=env |
| By: | Anastasios Xepapadeas (Department of Economics, University of Crete, Greece) |
| Abstract: | The paper jointly models the evolution of compliance with regulation and the evolution of a CPR stock, by combining replicator dynamics describing compliance with harvesting rules, with resource stock dynamics. This evolutionary approach suggests that coexistence, in long run equilibrium, of both cooperative and non-cooperative rules under regulation is possible. Stock effects on profits and a certain structure of auditing probabilities could imply the emergence of a limit cycle in areas of low stock levels, as an equilibrium outcome for compliance and the biomass stock. It might be easier for the regulator to obtain full compliance under precommitment to fixed auditing probabilities. |
| Keywords: | Common pool resources (CPR), harvesting, regulation, replicator dynamics, compliance |
| JEL: | Q20 Q22 C61 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0312&r=env |
| By: | Anastasios Xepapadeas et al (Department of Economics, University of Crete, Greece) |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0404&r=env |
| By: | William Brock (University of Wisconsin, Department of Economics, USA); Anastasios Xepapadeas (Department of Economics, University of Crete, Greece) |
| Date: | 2004–12–26 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0503&r=env |
| By: | Giannis Karagiannis (Department of Economics, University of Macedonia, Greece); Efthymios Tsionas (Department of Economics, Athens University of Economics and Business, Greece); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece) |
| Abstract: | The present paper extents the existing literature providing a theoretically consistent framework for measuring input-specific technical efficiency in damage control inputs (i.e., pesticides) within a stochastic production frontier model. The theoretical framework for modeling damage control agents is based on Fox and Weersink (1995) model specification that allows for increasing returns on damage control inputs. The empirical model is applied on a cross-section data set of 844 crop farms in Greece during the 2003 period obtained from FADN database. The results suggest that crop farms in Greece are using rather inefficiently pesticides in their fields as their average technical efficiency level was 73.9%. On the other hand, technical efficiency in conventional factors of production was found to be lower on the average, 70.8%. Finally, our results indicate that farms that are technical efficient in the use of conventional inputs are also technical efficient in the use of damage control agents. |
| Keywords: | words: output damage function, pesticide-specific technical efficiency, crop farms, Greece. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0507&r=env |
| By: | Dimitra Vouvaki (Department of Economics, University of Crete, Greece); Anastasios Xepapadeas (Department of Economics, University of Crete, Greece) |
| Abstract: | We formulate two kinds of sustainability criteria by using feedback and arbi- trary rules for selecting policy variables in non optimizing economies. We show that when policy variables are selected arbitrarily their accounting prices could determine sustainability in addition to the accounting prices of the economy’s assets. We use our theoretical framework to obtain es- timates of sustainability conditions in real economies. Thus, the paper’s contribution consists in developing a systematic theoretical framework for determining value functions, accounting prices and sustainability criteria, under fairly general non-optimizing behavioral rules, and then showing that this framework can be used in applied work to estimate sustainability con- ditions. Based on our theoretical model, we examined the case of the Greek economy. When there is no binding environmental policy then migration rate, growth of capital per worker and exogenous technical change are strong positive factors for sustainability. When we introduce potential environmen- tal damages due to sulphur dioxide (SO2) emissions, our …ndings indicate that these damages a¤ect negatively the sustainability criterion. |
| Keywords: | sustainability criteria, non-declining social welfare, accounting |
| JEL: | Q01 O13 |
| Date: | 2005–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0511&r=env |
| By: | Anastasios Xepapadeas et al (Department of Economics, University of Crete, Greece); Constadina Passa (Department of Economics, University of Crete, Greece) |
| Abstract: | The joint evolution of participation and compliance of farmers in a public VA, along with the evolution of the pollution stock is examined. Replica- tor dynamics, modeling participation and compliance, are combined with pollution stock dynamics. Fast-slow selection dynamics are used to capture the fact that distinct decisions to participate in and comply with the public VA evolve in di¤erent time scales. Conditions for evolutionary equilibria and evolutionary stable strategies regarding participation and compliance are derived. Depending on the structure of the legislation and auditing probability, polymorphic equilibria indicating partial participation and par- tial compliance or monomorphic equilibria of full (or non) compliance could be the outcome of the evolutionary processes. Multiple equilibria and irre- versibilities are possible, while convergence to evolutionary equilibria could be monotonic or oscillating. Full participation and compliance can be at- tained if the regulator is pre-committed to certain legislation and inspection probabilities, or by appropriate choices of the legislatively set emission level and the non-compliance …ne. Budget constraints associated with monitoring costs seem to produce polymorphic equilibria. |
| Keywords: | Voluntary agreements, participation, compliance, evolution- |
| JEL: | Q2 L5 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:0512&r=env |
| By: | James J. Murphy (Department of Resource Economics, University of Massachusetts Amherst); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This paper uses laboratory experiments to test the theoretical observations that both the violations of competitive risk-neutral firms and the marginal effectiveness of increased enforcement across firms are independent of differences in their abatement costs and their initial allocations of permits. This conclusion has important implications for enforcing emissions trading programs because it suggests that regulators have no justification for targeting their enforcement effort based on firm-level characteristics. Consistent with the theory, we find that subjects’ violations were independent of parametric differences in their abatement costs. However, those subjects that were predicted to buy permits tended to have higher violation levels than those who were predicted to sell permits. Despite this, we find no statistically significant evidence that the marginal effectiveness of enforcement depends on any firmspecific characteristic. We also examine the determinants of compliance behavior under fixed emissions standards. As expected, we find significant differences between compliance behavior under fixed standards and emissions trading programs. |
| Keywords: | enforcement, compliance, emissions trading, permit markets, standards, commandand- control |
| JEL: | C91 L51 Q58 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2005-1&r=env |
| By: | Maria Alejandra Vélez (The Earth Institute, Columbia University); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst); James J. Murphy (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This paper develops and tests several models of pure Nash strategies of individuals who extract from a common pool resource when they are motivated by a combination of self-interest and other motivations such as altruism, reciprocity, inequity aversion and conformism. We test whether an econometric summary of subjects’ strategies is consistent with one of these motivations using data from a series of common pool resource experiments conducted in three regions of Colombia. As expected, average extraction levels are less than that predicted by a model of pure self-interest, but are nevertheless sub-optimal. Moreover, we find that a model of conformism with monotonically increasing best response functions best describes average strategies. Our empirical results are inconsistent with models of altruism, reciprocity and inequity aversion. |
| Keywords: | common pool resources, experiments, altruism, reciprocity, conformism |
| JEL: | C93 D64 H41 Q20 C70 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2005-4&r=env |
| By: | Gilles Grolleau (Centre d’Economie et Sociologie appliquées à l’Agriculture et aux Espaces Ruraux); Julie A. Caswell (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | Some consumers derive utility from using products produced with specific processes, such as environmentally friendly practices. Means of verifying these credence attributes, such as certification, are necessary for the market to function effectively. A substitute or complementary solution may exist when consumers perceive a relationship between a process attribute and other verifiable product attributes. We present a model where the level of search and experience attributes influences the likelihood of production of eco-friendly products. Our results suggest that the market success of ecofriendly food products requires a mix of environmental and other verifiable attributes that together signal credibility. |
| Keywords: | environmental labeling, food attributes, food marketing, quality perception |
| JEL: | L15 Q13 Q18 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2005-5&r=env |
| By: | David T. Damery (Department of Natural Resources Conservation, University of Massachusetts Amherst) |
| Abstract: | The Massachusetts Woodlands Cooperative, LLC (MWC) is working to help members conduct sustainable forestry of the highest standards while increasing financial returns from harvest activities. The forests of Massachusetts, the 3rd most densely populated of the United States, are threatened. Decades of high grading and the threat of conversion to alternative use present challenges for maintaining a forested landscape. Despite being 60% forested Massachusetts imports approximately 98% of the wood fiber that its citizens consume. MWC is a forest management, processing and marketing cooperative organized by and on behalf of forest landowners in western Massachusetts. The cooperative was envisioned in 1999, incorporated in 2001, gained Forest Stewardship Council (FSC) land management certification in 2003 and is currently in the business-start-up and early growth stage. An umbrella group certification protocol was developed to provide cost-effective forestland management certification. Members benefit from cooperative management of harvest operations, above market stumpage payments, and value-added processing and production including marketing traditionally low value and small diameter material. The added revenue from developing these new markets is used to fund both timber and non-timber related management activities that landowners value. The cooperative partners with local wood processing businesses to spur community economic development. |
| Keywords: | Forest certification, value-added processing, cooperative, landowner, marketing |
| JEL: | O13 Q01 Q13 Q23 Q56 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2005-6&r=env |
| By: | James J. Murphy (Department of Resource Economics, University of Massachusetts Amherst); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This paper uses laboratory experiments to test individual responses to policies that seek to encourage firms to voluntarily discover and disclose violations of environmental standards. We find that while it is possible to motivate a significant number of voluntary disclosures without adversely affecting environmental quality, this result is sensitive to both the fine for disclosed violations and the assumption that firms know their compliance status without cost. When firms have to expend resources to determine their compliance status, motivating a significant number of violation disclosures yields worse environmental quality. Finally, relative to conventional enforcement, disclosure polices will result in more violations being sanctioned, but fewer of these sanctions are for violations that are uncovered by the government. |
| Keywords: | enforcement, compliance, environmental standards, self-reporting, self-auditing voluntary disclosure |
| JEL: | C91 L51 Q58 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2005-7&r=env |
| By: | Sirisha C. Naidu (Wright State University) |
| Abstract: | In the past two decades, theoretical and empirical evidence suggests that communities of resource users are capable of overcoming social dilemmas, and are capable of creating and sustaining institutions designed to prevent degradation of common pool natural resources. However, there is incomplete understanding of what motivates this group-level behavior and why some communities are better adept at solving collective action problems than others. This paper specifically explores the role of group heterogeneity in collective action among forest communities in the northwestern Himalayas. Heterogeneity can have important social and ecological consequences and understanding both its nature and effects can help in neutralizing the negative and enhancing the positive. Based on data from 54 forest communities in Himachal Pradesh, India, this paper finds that heterogeneity has at least three dimensions: wealth, identity and interest, and each may significantly affect collective actions related to natural resource management. However, their effects are far from simple and linear. |
| Keywords: | common pool resources, group outcomes, heterogeneity, forests |
| JEL: | D63 D71 H41 Q23 Q57 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2005-8&r=env |
| By: | John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This paper addresses the following question: To achieve a fixed aggregate emissions target cost-effectively, should emissions trading programs be designed and implemented to achieve full compliance, or does allowing a certain amount of noncompliance reduce the costs of reaching the emissions target? The total costs of achieving the target consist of aggregate abatement costs, monitoring costs, and the expected costs of collecting penalties from noncompliant firms. Under common assumptions, I show that allowing noncompliance is cost-effective only if violations are enforced with an increasing marginal penalty. However, one can design a policy that induces full compliance with a constant marginal penalty that meets the aggregate emissions target at lower expected costs. This last result does not depend on setting an arbitrarily high constant marginal penalty. In fact, the marginal penalty need not be higher than the equilibrium marginal penalty under the policy with the increasing marginal penalty,and can actually be lower. Finally, tying the marginal penalty directly to the permit price allows the policy objective to be achieved without any knowledge of firms’ abatement costs. |
| Keywords: | Compliance, Enforcement, Emissions Trading, Monitoring, Transferable Permits |
| JEL: | L51 Q28 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2006-7&r=env |
| By: | Thomas Rawski |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:282&r=env |
| By: | Michida, Etsuyo; Nishikimi, Koji |
| Abstract: | In this paper, we examine the Pollution Haven Hypothesis (PHH) for the case inwhich every industry emits an industry-specific pollutant. When pollution intensities for individual pollutants are measured in terms of elasticity, there appears a clear trade pattern of the PHH. Developing countries export pollution-intensive goods while developed countries export less pollution-intensive goods. However, pollutants that are harmful to consumers may increase in either country as a result of trade liberalization. This suggests that in empirical studies, simple inclusion of harmfulness of pollutants in construction of a pollution intensity measure may mislead the result. We also find that consumers in different countries may exhibit different rankings of detestable pollutants, even though they have identical utility functions. Thus when international policy recommendations are made regarding how to set priorities among pollutants to be regulated, the experience of one country may not simply be applied to other countries. |
| Keywords: | Environment, Pollution Haven Hypothesis, Industry-specific pollutant, North-South trade, Incomplete specialization, Pollution, Environmental problems, Industry, International trade, North-South problem, G World，others |
| JEL: | F18 O13 Q56 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper37&r=env |
| By: | Andrés J. Picazo-Tadeo (Departamento de Economía Aplicada II, Universitat de Valencia); Diego Prior (Department of Business Economics, Universitat Autonoma de Barcelona) |
| Abstract: | Production of desirable outputs is often accompanied by undesirable by-products that have damaging effects on the environment, and whose disposal is frequently regulated by public authorities. In this paper, we compute directional technology distance functions under particular assumptions concerning disposability of bads in order to test for the existence of what we call ‘complex situations’, where the biggest producer is not the greatest polluter. Furthermore, we show that how in such situations, environmental regulation could achieve an effective reduction in the aggregate level of bad outputs without reducing the production of good outputs. Finally, we illustrate our methodology with an empirical application to a sample of Spanish tile ceramic producers. |
| Keywords: | environmental regulation, efficiency, disposability of bads |
| JEL: | C61 D21 L68 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:bbe:wpaper:200502&r=env |