nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒01‒23
24 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Climate Change and Water Resources – An International Perspective By Marianne Keudel
  2. Over-Allocation or Abatement? A Preliminary Analysis of the Eu Ets Based on the 2005 Emissions Data By Barbara Buchner; Denny Ellerman
  3. Why Worry About Climate Change? A Research Agenda By Richard S.J. Tol
  4. Heterogeneity, climate change and stability of international fiscal harmonization By François Gusdorf; Abdelhakim Hammoudi
  5. Costs of alternative environmental policy instruments in the presence of industry compensation requirements By Bovenberg,Lans; Goulder,Lawrence H.; Jacobson,Mark R.
  6. Cost Effectiveness in River Management: Evaluation of Integrated River Policy System in Tidal Ouse By Tao Wang
  7. Environmental Quality in a Differentiated Duopoly By Y. Hossein Farzin; Ken-Ichi Akao
  8. Technology Transfers and the Clean Development Mechanism in a North-South General Equilibrium Model By Linda Sahlén; Thomas Aronsson; Kenneth Backlund
  9. International Technology Spillovers in Climate-Economy Models: Two Possible Approaches By Enrica De Cian
  10. The Internalization of Externalities in The Production of Electricity: Willingness to Pay for the Attributes of a Policy for Renewable Energy By Alberto Longo; Anil Markandya; Marta Petrucci
  11. Costs of Reducing Greenhouse Gas Emissions: A Case Study of India’s Power Generation Sector By Manish Gupta
  12. Decomposing the impact of population growth on environmental deterioration: some critical comments on a widespread method in ecological economics By Oskar Gans; Frank Jöst
  13. Renewable Resources, Pollution and Trade in a Small Open Economy By Horatiu A. Rus
  14. The EMEC model: Version 2.0 By Östblom, Göran; Berg, Charlotte
  15. A Modified Environmental Kuznets Curve for Sustainable Development Assessment Using Panel Data By Valeria Costantini; Chiara Martini
  16. The significance of transport costs in the Swedish forest industry By Hammar, Henrik; Lundgren, Tommy; Sjöström, Magnus
  17. Municipal Waste Production, Economic Drivers, and ‘New’ Waste Policies: EKC Evidence from Italian Regional and Provincial Panel Data By Massimiliano Mazzanti; Anna Montini; Roberto Zoboli
  18. Pursuing the “Public Good:” Sustainable Development as a Common Goal for Social and Environmental Management By Secchi Davide; Zatti Andrea
  19. How well does Learning-by-doing Explain Cost Reductions in a Carbon-free Energy Technology? By Gregory F. Nemet
  20. Economy-Wide Estimates of the Implications of Climate Change: A Joint Analysis for Sea Level Rise and Tourism By Francesco Bosello; Andrea Bigano; Roberto Roson; Richard S.J. Tol
  21. Sustainable Development Policies in Europe By Pietro Caratti; Gabriella Lo Cascio
  22. Climate Change, Insurability of Large-scale Disasters and the Emerging Liability Challenge By Howard C. Kunreuther; Erwann O. Michel-Kerjan
  23. Combining revealed and stated preference methods to assess the private value of agrobiodiversity in Hungarian home gardens By Birol, Ekin; Kontoleon, Andreas; Smale, Melinda
  24. Marginal Cost Versus Average Cost Pricing with Climatic Shocks in Senegal: A Dynamic Computable General Equilibrium Model Applied to Water By Anne Briand

  1. By: Marianne Keudel
    Abstract: Climate change and its consequences are the focus of many environmental policies in the European Union but also in other countries. Whereas in the US marketable instruments like permit trading have already been implemented since the 1980s, the EU first implemented permit trading for CO2 emissions in 2005. Climate change also influences the availability of water resources; water levels of rivers in the EU are assumed to decrease in the next decades. Decreasing water levels, in turn, heavily influence the quality of these water resources. In some countries the instrument of permit trading is also applied to the regulation of water resources (quantity and quality). This paper gives an overview of existing systems in order to show how such trading systems can create incentives for the efficient use of resources by means of pricing.
    Keywords: river basin management, water trading, water quality trading
    JEL: Q25 Q53
    Date: 2007–01
  2. By: Barbara Buchner (Fondazione Eni Enrico Mattei); Denny Ellerman (Massachusetts Institute of Technology)
    Abstract: This paper provides an initial analysis of the EU ETS based on the installation-level data for verified emissions and allowance allocations in the first trading year. Those data, released on May 15, 2006, and subsequent updates revealed that CO2 emissions were about 4% lower than the allocated allowances. The main objective of the paper is to shed light on the extent to which over-allocation and abatement have taken place in 2005. We propose a measure by which over-allocation can be judged and provide estimates of abatement based on emissions data and indicators of economic activity as well as trends in energy and carbon intensity. Finally, we discuss the insights and implications that emerge from this tentative assessment.
    Keywords: Climate Change, Emission Trading, Allocation, Environmental Effects
    JEL: D61 O1 Q51 Q54
    Date: 2006–11
  3. By: Richard S.J. Tol (Vrije Universiteit, Carnegie Mellon University and Economic and Social Research Institute)
    Abstract: Estimates of the marginal damage costs of carbon dioxide emissions suggest that, although climate change is a problem and some emission reduction is justified, very stringent abatement does not pass the cost-benefit test. However, current estimates of the economic impact of climate change are incomplete. Some of the missing impacts are likely to be positive and others negative, but overall the uncertainty seems to concentrate on the downside risks and current estimates of the damage costs may have a negative bias. The research effort on the economic impacts of climate change is minute, and should be strengthened, with a particular focus on the quantification of uncertainties; estimating missing impacts, interactions between impacts and higher-order effects; the valuation of biodiversity loss; the implications of extreme climate scenarios and violent conflict; and climate change in the very long term.
    Keywords: Climate Change, Impacts, Valuation, Cost-benefit Analysis
    JEL: Q54
    Date: 2006–11
  4. By: François Gusdorf (CIRED - Centre international de recherche sur l'environnement et le développement - [CIRAD : UMR56][CNRS : UMR8568] - [Ecole des Hautes Etudes en Sciences Sociales][Ecole Nationale des Ponts et Chaussées][Ecole Nationale du Génie Rural des Eaux et des Forêts]); Abdelhakim Hammoudi
    Abstract: This paper analyses harmonization on fuel taxes between two coalitions. Harmonization is considered as a tool to mitigate greenhouse gas emissions, and reduce environmental costs. Domestic fuel producers can sell abroad, and their profits influence national governments in the negotiations. If all countries are identical, harmonization is environmental friendly provided environmental marginal damages are high. It is also economically profitable, but may be unstable if one of the coalitions is small enough. In this case, however, financial transfers between coalitions can stabilize harmonization. Nevertheless, countries can be heterogeneous with respect to the existence of a domestic producer. Heterogeneity introduces a new instability: not only the size, but also the composition of coalitions matters. Furthermore, the level of environmental damages also influences the stability of harmonization. In this case, intra- and inter-coalition financial transfers are necessary but not sufficient to stabilize harmonization.
    Keywords: Fiscal harmonization; Climate Change; Coalitions; Stability.
    Date: 2007–01–09
  5. By: Bovenberg,Lans; Goulder,Lawrence H.; Jacobson,Mark R. (Tilburg University, Center for Economic Research)
    Abstract: This paper explores how the costs of meeting given aggregate targets for pollution emissions change with the imposition of the requirement that key pollution-related industries be compensated for potential losses of profit from the pollution regulation. Using analytically and numerically solved equilibrium models, we compare the incidence and costs of emissions taxes, fuel (intermediate input) taxes, performance standards and mandated technologies in the absence and presence of this compensation requirement. Compensation is provided either through industry tax credits or industry-specific cuts in capital tax rates. We decompose the added costs from the compensation requirement into (1) an increase in "intrinsic abatement cost," reflecting a lowered efficiency of pollution abatement, and (2) a "lump-sum compensation cost" that captures the efficiency costs of financing the compensation. The compensation requirement affects these components differently, depending on the policy instrument involved and the required extent of pollution abatement. As a result, it can change the cost-rankings of the different instruments. In particular, when compensation is provided through tax credits, the lump-sum compensation cost is higher under the emissions tax than under the command-andcontrol policies (performance standards and mandated technologies) - a reflection of the higher compensation requirements under the emissions tax. When the required pollution reduction is modest, imposing the compensation requirement causes the emissions tax to lose its status as the least costly instrument and to become more costly than command and control policies. In contrast, when required abatement is extensive, the emissions tax again becomes the most-cost effective instrument because of its advantages in terms of lower intrinsic abatement cost.
    Keywords: environmental instrument choice;pollution control;compensation requirements; emissions abatement costs
    JEL: Q58 H23 H21
    Date: 2006
  6. By: Tao Wang (University of York)
    Abstract: The River Ouse forms a significant part of Humber river system, which drains about one fifth the land area of England and provides the largest fresh water source to the North Sea from UK. The river quality in the tidal river suffered from sag of dissolved oxygen (DO) during last few decades, deteriorated by the effluent discharges. The Environment Agency (EA) proposed to increase the water quality of Ouse by implementing more potent environmental policies. This paper explores the cost effectiveness of water management in the Tidal Ouse through various options by taking into account the variation of assimilative capacity of river water, both in static and dynamic scope of time. Reduction in both effluent discharges and water abstraction were considered along side with choice of effluent discharge location. Different instruments of environmental policy, the emission tax-subsidy (ETS) scheme and tradable pollution permits (TPP) systems were compared with the direct quantitative control approach. This paper at the last illustrated an empirical example to reach a particular water quality target in the tidal Ouse at the least cost, through a solution of constrained optimisation problem. The results suggested significant improvement in the water quality with less cost than current that will fail the target in low flow year.
    Keywords: Water Quality Management, Tradable Pollution Permits, Tax and Subsidy, Effluent Discharge, Water Abstraction, Dynamic Equilibrium, Integrated River Policy, Cost Effectiveness
    JEL: C31 C61 L51 R19
    Date: 2006–11
  7. By: Y. Hossein Farzin (University of California); Ken-Ichi Akao (Waseda University)
    Abstract: In a duopoly industry with environmentally differentiated products, we examine the effects of introducing a mandatory environmental quality standard on firms’ environmental quality choices, profits, and the average environmental quality offered by the industry. We show that at low standard levels, both firms choose to overcomply regardless of the standard level. At intermediate levels, the mandatory standard can reduce the profit of the low-cost firm while increasing that of the high-cost firm, and that it can lower the industry’s average environmental quality below what it would be without the standard.
    Keywords: Duopoly, Environmental Quality, Mandatory Environmental Standard, Overcompliance, Product Differentiation
    JEL: Q58 L13 L51 D43
    Date: 2006–11
  8. By: Linda Sahlén (Umeå University); Thomas Aronsson (Umeå University); Kenneth Backlund (Umeå University)
    Abstract: This paper analyzes the potential welfare gains of introducing a technology transfer from Annex I to non-Annex I in order to mitigate greenhouse gas emissions. Our analysis is based on a numerical general equilibrium model for a world economy comprising two regions, North (Annex I) and South (non-Annex I). As our model allows for labor mobility between the formal and informal sectors in the South, we are also able to capture additional aspects of how the transfer influences the Southern economy. In a cooperative equilibrium, a technology transfer from the North to the South is clearly desirable from the perspective of a ‘global social planner’, since the welfare gain for the South outweighs the welfare loss for the North. However, if the regions do not cooperate, then the incentives to introduce the technology transfer appear to be relatively weak from the perspective of the North; at least if we allow for Southern abatement in the pre-transfer Nash equilibrium. Finally, by adding the emission reductions associated with the Kyoto agreement to an otherwise uncontrolled market economy, the technology transfer leads to higher welfare in both regions.
    Keywords: Climate Policy, Technology Transfer, Kyoto Protocol, General Equilibrium, Clean Development Mechanism
    JEL: D58 D62 Q52
    Date: 2006–11
  9. By: Enrica De Cian (Fondazione Eni Enrico Mattei)
    Abstract: This paper analyzes two possible methodologies of modeling international technology spillovers in a climate-economy CGE model. Technological change, by affecting productivity, energy and carbon intensity, eventually influences the amount of CO2 emissions, the costs and the timing of the policies targeted at their reduction. Technological change is here defined so as to include also the diffusion and adoption phase. In an increasingly integrated world, new products and technologies developed in one region will eventually diffuse internationally. The two approaches described in this paper are based on two mechanisms used to model technological change in climate models: learning curves, total factor productivity and the autonomous energy efficient improvement parameter. This paper considers spillovers mediated by international trade in capital goods. In particular, it looks at how imports machinery and equipments from the OECD countries can affect the technology variables related to CO2 emissions: learning rates in the first approach, productivity, energy and carbon intensity in the second one.
    Keywords: Climate Policy, International Trade, Learning Curves, International Technology Spillovers, Biased Technical Change
    JEL: F18 Q54 Q55
    Date: 2006–11
  10. By: Alberto Longo (Queen’s University Belfast and University of Bath); Anil Markandya (University of Bath and Fondazione Eni Enrico Mattei); Marta Petrucci (University of Bath)
    Abstract: This paper investigates the willingness to pay of a sample of residents of Bath, England, for a hypothetical program that promotes the production of renewable energy. Using choice experiments, we assess the preferences of respondents for a policy for the promotion of renewable energy that (i) contributes to the internalization of the external costs caused by fossil fuel technologies; (ii) affects the security of energy supply; (iii) has an impact on the employment in the energy sector; (iv) and leads to an increase in the electricity bill. Responses to the choice questions show that our respondents are in favour of a policy for renewable energy and that they attach a high value to a policy that brings private and public benefits in terms of climate change and energy security benefits. Our results therefore suggest that consumers are willing to pay a higher price for electricity in order to internalize the external costs in terms of energy security, climate change and air pollution caused by the production of electricity.
    Keywords: Non Market Valuation, Choice Experiments, Willingness to Pay, Renewable Energy, Energy Security, Greenhouse Gases Emissions
    JEL: Q42 Q48 Q51
    Date: 2006–11
  11. By: Manish Gupta (National Institute of Public Finance and Policy)
    Abstract: If India were to participate in any international effort towards mitigating CO2 emissions, the power sector which is one of the largest emitters of CO2 in the country would be required to play a major role. In this context the study estimates the marginal abatement costs, which correspond to the costs incurred by the power plants to reduce one unit of CO2 from the current level. The study uses an output distance function approach and its duality with the revenue function to derive these costs for a sample of thermal plants in India. Two sets of exercises have been undertaken. The average shadow prices of CO2 for the sample of thermal plants for the period 1991-92 to 1999-2000 was estimated to be respectively Rs.3380.59 and Rs.2401.99 per ton for the two models. These shadow prices can be used for designing environmental policies and market-based instruments for controlling pollution in the power sector in India.
    Keywords: Marginal Abatement Costs, Distance Function, CO2 Emissions, Shadow Prices, Power Generation Sector
    JEL: Q40
    Date: 2006–11
  12. By: Oskar Gans (University of Heidelberg, South Asia Institute); Frank Jöst (University of Heidelberg, Department of Economics)
    Abstract: The IPAT-model developed by Ehrlich and Holdren is widespread in ecological economics in order to quantify the impact of population growth on environmental deterioration. We comment on this model and extensions proposed by several authors from a theoretical and empirical point of view.
    Keywords: environmental deterioration, population growth, decomposition analysis
    JEL: Q50 J19
    Date: 2005–09
  13. By: Horatiu A. Rus (University of British Columbia)
    Abstract: Industrial pollution can have damaging effects on resource-based productive sectors. International trade creates opportunities for overexploitation of the open-access renewable resources but also for separating the sectors spatially. The paper shows that, depending on the relative damage inflicted by the two industries on the environment, it is possible that the production externality will persist and that specialization in the dirty good may not be the obvious choice from a welfare perspective. Also, the resource exporter does not necessarily have to lose from trade even when specializing incompletely, due to the partially offsetting external effects.
    Keywords: Renewable Resources, Pollution, Production Externalities, Environment, International Trade
    JEL: Q27 Q22 Q53
    Date: 2006–11
  14. By: Östblom, Göran (National Institute of Economic Research); Berg, Charlotte (National Institute of Economic Research)
    Abstract: The present paper introduces a new version of an applied general equilibrium model of the Swedish economy: Environmental Medium Term Economic Model (EMEC). The model is used at NIER for analysing economic implications for households and firms of the Swedish environmental policy. The economy and the environment interact in the model and thus, we can analyse the economic implica-tions of various environmental policy measures, such as a CO2-tax, a CO2-ceiling and CO2-trading. The model captures also ancillary benefits of climate policy for NOx, SO2, PM10 and PM20. This new version of EMEC, in addition, analyses the effects of road user charges and the economic impact of environmental policy measures on six types of households, as transport demand is represented in a much more detail and as households are distributed, by disposal income and residence. Furthermore, the model distinguishes 26 industries, 33 composite commodities, 26 consumer goods, two kinds of labour and eight pollutants. The model produces results for endogenous variables, which can be interpreted fully in terms of the model’s theory, data and the assumptions underlying the exogenous variables.
    Keywords: CGE-model; Sectors; Pollutants; Factors of production; Substitution; Sweden
    Date: 2006–11–01
  15. By: Valeria Costantini (University of Roma Tre); Chiara Martini (University of Roma Tre)
    Abstract: Sustainable development is a concept strictly connected with basic needs of the individuals. During the last years a number of empirical studies have tried to discover and quantify the causal relations between economic growth and environmental consumption and degradation. The most widely used empirical model is the so-called Environmental Kuznets Curve (EKC), nowadays applied to different polluting elements. Despite the huge diffusion of EKC studies, this model has been criticised for incompleteness of a sustainable development analysis. The aim of this paper is to build a Modified EKC (MEKC) in order to consider a wider concept of development rather than pure economic growth, including well-being aspects and sustainability of the development process. Using a macroeconomic measure of sustainability such as the World Bank’s Genuine Saving and a measure of well-being such as the United Nations’ Human Development Index, we build a model in order to analyse linkages between higher welfare levels and natural resources consumption, verifying the sustainability of human development. A panel analysis for three years (1990-1995-2000) for a wide range of countries (including developed and developing countries) has been applied in order to respond to criticisms related to conjunctural results linked to pure cross-section studies. Comparisons among alternative pollutants (i.e., CO2, NOX, and SOX) and GS are described, and the robustness of the MEKC clearly emerges. Furthermore, in order to respond to criticisms for the reduced form of the EKC, an Instrumental Variables model has been tested both on CO2 and GS, while a system of equations has been tested considering simultaneously a traditional EKC and a MEKC for a longer time period (1996-2004). Unit root tests for non-stationary series have been computed, showing that the IV model gives satisfactory results. An indicator for technological capabilities has been added at this stage, accounting for diffusion of technical progress and import technology as suggested by Archibugi and Coco (2004). Causal relations identified within a MEKC allow to identify correlation between human development and sustainable development, following the classic inverted U-shaped curve of the EKC. Nonetheless, comparing the turning points of the MEKC and EKC, respectively, it seems that using this alternative specification some useful policy implications apply. The threshold level of human development in the MEKC corresponds to an income per capita level lower than the threshold level for the EKC, confirming the possibility of “tunnelling through the curve” as suggested in Munasinghe (1999). Our results show that human development should be the first objective of international development policies, and an increase in human well-being is necessary to provide a sustainability path.
    Keywords: Environmental Kuznets Curve, Sustainable development, Human development, Genuine saving, Panel data
    JEL: O15 Q01 Q56
    Date: 2006–11
  16. By: Hammar, Henrik (National Institute of Economic Research); Lundgren, Tommy (Department of Forest Economics); Sjöström, Magnus (National Institute of Economic Research)
    Abstract: Environmental and transport policies based on marginal external costs, such as a kilometer tax for heavy goods vehicles, can be constrained by the risk of industries incurring higher production costs than competi-tors in other countries. However, the significance and size of this cost is largely an empirical question. We estimate factor demand elasticities in the wood and the pulp and paper industries using firm level data for the 1990-2001 period on input prices and quantities. The results show that the introduction of a kilometer tax for heavy goods vehicles affects transport demand as well as other factor demands and output, but that the ef-fects are less pronounced in terms of changes in output. In the wood industry, production decreases by be-tween 0.6 % and 3.0 %. The corresponding decrease in the pulp and paper industry is between 0.4 % and 1.3 %. The effects on average profits are small in both industries.
    Keywords: elasticity; factor demand; kilometer tax; forest industry; transport policy; environmental policy;
    JEL: D20 H23 R48
    Date: 2006–12–01
  17. By: Massimiliano Mazzanti (University of Ferrara); Anna Montini (University of Bologna & National Research Council, CERIS-CNR); Roberto Zoboli (National Research Council, CERIS-CNR Milan & Catholic University of Milan)
    Abstract: This paper provides empirical evidence on delinking and Environmental Kuznets Curve (EKC) for municipal waste production in Italy. First, methodological issues and literature on delinking and EKC for waste are critically re-examined. Secondly, we analyse two very disaggregated panel datasets on Italian Regions and Provinces (1996-2004 data for the 20 regions, 2000-2004 data for the 103 provinces) to estimate the extent to which delinking between waste production and economic drivers is taking place. The empirical analysis of different specifications shows mixed evidence in favour of an EKC relationship. Evidence supporting an EKC hypothesis significantly arises at a provincial level, which presents a very high data heterogeneity. Nevertheless, the turning point is at very high levels of added value per capita (around 23,000-26,000€), which characterise a very limited number of wealthy (Northern) Italian provinces. The analysis does not reveal a similar evidence for the regional dataset: only a relative delinking dynamic emerges at the provincial level, we also note a positive relationship between waste production and the share of separated waste collection, which can be explained by the sharp difference in income and waste-policy performance between Northern and Southern Italy. Population density is not significant. Finally, the test on some policy proxies, i.e. the diffusion of the new waste tariff regime at the local-level and the ability of utilities to recover waste service cost, leads to the conclusion that they are not (yet) impacting waste production. To lower the turning points and to avoid an increasing gap between geographical areas, innovative (market based) and more effective policy instruments should be implemented. In particular, the weight of waste policies should be rebalanced towards waste prevention targets and instruments, in line with the priorities stated by the EU and Member Countries. In fact, the indirect feedback effect of good post-production waste management policies/practices on reducing waste production at a source can be weak and slow. In general, the results confirm that more geographically-disaggregated data may offer more insights with respect to cross-country datasets, also from the policy perspective.
    Keywords: Decoupling, Environmental Kuznets Curves, Environmental Efficiency, Waste Indicators, Waste Policy, Economic Drivers, Panel Data
    JEL: C23 Q38 Q56
    Date: 2006–12
  18. By: Secchi Davide (Department of Economics, University of Insubria, Italy); Zatti Andrea (Department of Public and Territorial Economics, Faculty of Political Science, University of Pavia, Italy)
    Abstract: The environmental and social responsibility “movements” affected jointly corporate behavior and public policy in many countries, while their theoretical backgrounds have resulted often quite different and independent. Despite this divide, we argue that the two approaches share many elements in common, and in this paper we try to analyze advantages that contributions from the two fields of studies should reach if considered as one. The paper is divided into three parts. After few methodological points (section 2), the third section overviews social, environmental, and sustainable issues from a social costs, and externality theory angle. The fourth part focuses on the European framework, where the European Union is on the forefront of the promotion of socially responsible practices. The fifth section is dedicated to present some operative managerial issues. We suggest that this multi-perspective and multi-actors approach well fits the European context and, in the concluding section we suggest that sustainable development is driving the European continent towards a new social and ethical frontier.
    Keywords: corporate social responsibility, ethics, externalities, sustainable development
    Date: 2005–07
  19. By: Gregory F. Nemet (University of California)
    Abstract: The incorporation of experience curves has enhanced the treatment of technological change in models used to evaluate the cost of climate and energy policies. However, the set of activities that experience curves are assumed to capture is much broader than the set that can be characterized by learning-by-doing, the primary connection between experience curves and economic theory. How accurately do experience curves describe observed technological change? This study examines the case of photovoltaics (PV), a potentially important climate stabilization technology with robust technology dynamics. Empirical data are assembled to populate a simple engineering-based model identifying the most important factors affecting the cost of PV over the past three decades. The results indicate that learning from experience only weakly explains change in the most important cost-reducing factors— plant size, module efficiency, and the cost of silicon. They point to other explanatory variables to include in future models. Future work might also evaluate the potential for efficiency gains from policies that rely less on ‘riding down the learning curve’ and more on creating incentives for firms to make investments in the types of cost-reducing activities quantified in this study.
    Keywords: Learning-by-doing, Experience Curves, Learning Curves, Climate Policy
    JEL: O31 Q42 Q48 Q55
    Date: 2006–11
  20. By: Francesco Bosello (Fondazione Eni Enrico Mattei and Ca’Foscari University of Venice); Andrea Bigano (Fondazione Eni Enrico Mattei and REF, Ricerche per l'Economia e la Finanza); Roberto Roson (Fondazione Eni Enrico Mattei and Ca’Foscari University of Venice); Richard S.J. Tol (Vrije Universiteit)
    Abstract: Climate change impacts on human life have well defined and different origins, nevertheless in the determination of their final effects, especially those involving social-economic responses, interactions among impacts are likely to play an important role. This paper is one of the first attempts to disentangle and highlight the role of these interactions. It focuses on the economic assessment of two specific climate change impacts: sea-level rise and changes in tourism flows. By using a CGE model the two impacts categories are first analyzed separately and then jointly. Comparing the results it is shown that, even though qualitatively joint effects follow the outcomes of the disjoint exercises, quantitatively impact interactions do play a significant role. Moreover it has been also possible to disentangle the relative contribution of each single impact category to the final result. In the case under scrutiny demand shocks induced by changes in tourism flows outweigh the supply side shock induced by the loss of coastal land.
    Keywords: Climate Change, Sea Level Rise, Tourism, Computable General Equilibrium Models
    JEL: C68 D58 Q25
    Date: 2006–11
  21. By: Pietro Caratti (Fondazione Eni Enrico Mattei); Gabriella Lo Cascio (Fondazione Eni Enrico Mattei)
    Abstract: The objective of this paper is to investigate the actual situation in the shift towards the implementation of Sustainable Development Policies in Europe. The aim is to highlight the key role of the European Union in bringing about sustainable development within Europe and also on the wider global stage. It will show how the European Commission performs its commitment in reaching a sustainable regulation by issuing some documents and declarations. The paper frames the EU action into an international framework of strategies, agreements and policies on SD and, at the same time, provides an overview on experiences of SD strategy implementations at the national level, according to the commission pressing on MS to produce their own SD strategy and implement it. Indicators systems, issues of interest and fields of actions are compared: the analysis of these elements aims to highlight common scenarios of SD strategies that reveal the trends towards a more sustainable growth in the European Union.
    Keywords: Sustainable Development, Globalization, Environment Policy, Strategy for Sustainable Development, Good Governance, Participation
    JEL: Q01 Q5 Q56
    Date: 2006–12
  22. By: Howard C. Kunreuther; Erwann O. Michel-Kerjan
    Abstract: This paper focuses on the interaction between uncertainty and insurability in the context of some of the risks associated with climate change. It discusses the evolution of insured losses due to weather-related disasters over the past decade, and the key drivers of the sharp increases in both economic and insured catastrophe losses over the past 20 years. In particular we examine the impact of development in hazard-prone areas and of global warming on the potential for catastrophic losses in the future. In this context we discuss the implications for insurance risk capital and the capacity of the insurance industry to handle large-scale events. A key question that needs to be addressed is the factors that determine the insurability of a risk and the extent of coverage offered by the private sector to provide protection against extreme events where there is significant uncertainty surrounding the probability and consequences of a catastrophic loss. We discuss the concepts of insurability by focusing on coverage for natural hazards, such as earthquakes, hurricanes and floods. The paper also focuses on the liability issues associated with global climate change, and possible implications for insurers (including D&O), given the difficulty in identifying potential defendants, tracing harm to their actions and apportioning damages among them. The paper concludes by suggesting ways that insurers can help mitigate future damages from global climate change by providing premium reductions and rate credits to companies investing in risk-reducing measures.
    JEL: H23 H75 K32
    Date: 2007–01
  23. By: Birol, Ekin; Kontoleon, Andreas; Smale, Melinda
    Abstract: " Hungarian home gardens are small-scale farms managed by farm households using traditional management practices and family labor. They generate private benefits for farmers by enhancing diet quality and providing food when costs of transacting in local markets are high. Home gardens also generate public benefits for society by supporting long-term productivity advances in agriculture. In this paper, we estimate the private value to farmers of agrobiodiversity in home gardens. Building on the approach presented in EPTD Discussion Paper 117 (2004), we combine a stated preference approach (a choice experiment model) and a revealed preference approach (a discrete-choice, farm household model). Both models are based on random utility theory. To combine the models, primary data were collected from the same 239 farm households in three regions of Hungary. Combining approaches leads to a more efficient and robust estimation of the private value of agrobiodiversity in home gardens. Findings can be used to identify those farming communities, which would benefit most from agri-environmental schemes that support agrobiodiversity maintenance, at least public cost." Authors' abstract
    Keywords: Home gardens, Small-scale farmers, Diet quality, Agricultural productivity, Agrobiodiversity, Household surveys, Private value, Choice experiment model, Farm household model, Revealed and stated preference methods,
    Date: 2006
  24. By: Anne Briand (University of Rouen)
    Abstract: The model simulates on a 20-year horizon, a first phase of increase in the water resource availability taking into account the supply policies by the Senegalese government and a second phase with hydrologic deficits due to demand evolution (demographic growth). The results show that marginal cost water pricing (with a subsidy ensuring the survival of the water production sector) makes it possible in the long term to absorb the shock of the resource shortage, GDP, investment and welfare increase. Unemployment drops and the sectors of rain rice, market gardening and drinking water distribution grow. In contrast, the current policy of average cost pricing of water leads the long-term economy in a recession with an agricultural production decrease, a strong degradation of welfare and a rise of unemployment. This result questions the basic tariff (average cost) on which block water pricing is based in Senegal.
    Keywords: Computable General Equilibrium Model, Dynamic, Imperfect Competition, Water, Pricing, Sub Saharan Africa
    JEL: C68 O13
    Date: 2006–11

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