nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒01‒28
eleven papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. The Global Refunding System and Climate Change By Hans Gersbach
  2. Assessing the Pollution Haven Hypothesis in an Interdependent World By David Drukker; Daniel Millimet
  3. Now or Never: Environmental Protection under Hyperbolic Discounting By Ralph Winkler
  4. Rural Organization, Territorial Development and Sustainability Environmental in the Caribbean of Costa Rica: The Case of Tortuguero Conservation Area (in Spanish) By Mora-Alfaro, Jorge; Román-Vega, Isabel
  5. Forest cover change in space and time : combining the von Thunen and forest transition theories By Angelsen, Arild
  6. Intergenerational Transfers, Lifetime Welfare and Resource Preservation By Simone Valente
  7. Valoración económica de los servicios recreativos del parque ecológico Chipinque By Guillermo Gándara
  8. Valoración económica de los servicios ecológicos que prestan los murciélagos "Tadarida brasiliensis" como controladores de plagas en el norte de México By Guillermo Gándara; Adriana Nelly Correa Sandoval; Carlos A. Hernández Cienfuegos
  9. Robust Benefit Function Transfer: A Bayesian Model Averaging Approach By Roberto Leon-Gonzalez; Riccardo Scarpa
  10. The Resource Curse Revisited and Revised: A Tale of Paradoxes and Red Herrings By Christa N. Brunnschweiler; Erwin H. Bulte
  11. Behavioral Economics and Climate Change Policy By John M. Gowdy

  1. By: Hans Gersbach (Center of Economic Research (CER-ETH), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: We propose a global refunding scheme as a new international approach to addressing climate change. A global refunding system allows each country to set its carbon emission tax, while aggregate tax revenues are partially refunded to member countries in proportion to the relative emissions reduction they achieve within a period. Nationally determined environmental policies and global refunding create increasing incentives to reduce emissions and may achieve e±ciency and equity objectives of global climate policy.
    Date: 2007–01
  2. By: David Drukker (StataCorp); Daniel Millimet (SMU)
    Abstract: After proposing a simple theoretical framework to illustrate the importance of third-country effects in empirical studies of the Pollution Haven Hypothesis, we test the model using state-level panel data on inbound US FDI and relative abatement costs. Our analysis reveals that while own state attributes rarely have statistically significant effects on own inbound FDI when aggregated over all manufacturing sectors, many neighboring state attributes do matter. Moreover, the theoretical model does well in explaining FDI in the chemical sector; we tend to find significant effects in the correct direction of variables designed to reflect market demand and production costs. Finally, we consistently find a negative impact of own environmental stringency on inbound FDI in the chemical sector; the impact of neighboring environmental stringency is also statistically significant, but the impact is negative on average, contrary to our initial expectations. Nonetheless, the fact that the impact of more stringent environmental regulations spillover across states indicates that future research into the validity of the PHH must account for spatial spillovers.
    Keywords: Foreign Direct Investment, Environmental Regulation, Spillovers, Spatial Econometrics
    JEL: C31 F21 Q52
    Date: 2007–01
  3. By: Ralph Winkler (Center of Economic Research (CER-ETH), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: In this paper, we extend the well known result that hyperbolically discounting agents tend to postpone costs into the future. In a simple model we show that, without commitment to the ex ante optimal plan, no investment in environmental protection is undertaken over the whole time horizon, no matter whether the decision makers are naive or sophisticated, although investment seems optimal in the long run from every generations point of view. This result questions the application of hyperbolic discounting in cost-benefit analysis and gives rise to concern, as it is consistent with unsatisfactory policy performance in solving long-term environmental problems.
    Keywords: environmental policy, environmental protection, hyperbolic discounting, intertemporal decision theory, procrastination, time-(in)consistency
    JEL: Q53 D90 D61
    Date: 2006–10
  4. By: Mora-Alfaro, Jorge; Román-Vega, Isabel
    Abstract: The rural areas of Costa Rica suffered significant transformations as a consequence of two phenomenon: In one hand, the long tendency to economical, political and cultural global integration living by the most diverse nations in the contemporary time. In the other hand, the reorientation of the growth economy model and the institutional reform introduced since the 80 decade in this country. In this document are presented the main discoveries obtained with the evaluating study about the impact of these economic and political changes in Tortuguero Conservation Area (ACTo), focused in the rural organizations development. The main tendencies follow up by the productive, environmental, institutional and social processes, occurred in this rural territory, allow to perceive the context conditions in which the local rural organizations development happened and the opportunities and challenges that they confront in the present time.
    Keywords: Rural development; territorial approach; sustainability; agriculture and environment; conservation areas; institutional change
    JEL: Q52 Q58 Q56
    Date: 2006
  5. By: Angelsen, Arild
    Abstract: This paper presents a framework for analyzing tropical deforestation and reforestation using the von Thunen model as its starting point: land is allocated to the use which yields the highest rent, and the rents of various land uses are determined by location. Forest cover change therefore becomes a question of changes in rent of forest versus non-forest use. While this is a simple and powerful starting point, more intriguing issues arise when this is applied to analyze real cases. An initial shift in the rent of one particular land use generates feedbacks which affect the rent of all land uses. For example, a new technology in extensive agriculture should make this land use more profitable and lead to more forest clearing, but general equilibrium effects (changes in prices and local wages) can modify or even reverse this conclusion. Another issue is how a policy change or a shift in broader market, technological, and institutional forces will affect various land use rents. The paper deals with three such areas: technological progress in agriculture, land tenure regimes, and community forest management. The second part of the paper links the von Thunen framework to the forest transition theory. The forest transition theory describes a sequence over time where a forested region goes through a period of deforestation before the forest cover eventually stabilizes and starts to increase. This sequence can be seen as a systematic pattern of change in the agricultural and forest land rents over time. Increasing agricultural rent leads to high rates of deforestation. The slow-down of deforestation and eventual reforestation is due to lower agricultural rents (the economic development path) and higher forest rent (the forest scarcity path). Various forces leading to these changes are discussed and supported by empirical evidence from different tropical regions.
    Keywords: Environmental Economics & Policies,Forestry,Common Property Resource Development,Economic Theory & Research,Markets and Market Access
    Date: 2007–02–01
  6. By: Simone Valente (CER-ETH - Center of Economic Research at ETH Zurich)
    Abstract: This paper analyzes overlapping-generations models where natural capital is owned by selfish agents. Transfers in favor of young agents reduce the rate of depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an indefinite sequence of generations: if the resource share in production is su¢ ciently high, the welfare gain induced by preser- vation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, claims on monopoly rents, and R&D investment. Transfers raise the welfare of all generations, except that of the first resource owner: if resource endowments are taxed at time zero, all successive generations support resource-saving policies for purely selfish reasons.
    Keywords: Distortionary Taxation, Intergenerational Transfers, Overlapping Generations, Renewable Resources, Sustainability, Technological Change
    JEL: H30 Q01 Q20
    Date: 2006–10
  7. By: Guillermo Gándara
    Abstract: En esta investigación se realiza una estimación del valor económico del beneficio que los visitantes obtienen por disfrutar de los servicios recreativos que ofrece el Parque Chipinque, área natural ubicada en la zona metropolitana de Monterrey, México. Se utiliza el Método de Costo de Viaje estimando una función de demanda por zonas de origen en función de diferentes costos, como el costo de entrada, los gastos de consumo al interior del parque, el costo de transporte y el valor del tiempo de viaje. Se estima que los beneficios anuales del parque por uso recreativo en el año de referencia se ubicarían entre los 13 y 20 millones de pesos.
    Keywords: Chipinque, Mexico, costo de viaje, Monterrey
    JEL: Q51 Q55 Q56 Q57 Q58
    Date: 2006–01
  8. By: Guillermo Gándara; Adriana Nelly Correa Sandoval; Carlos A. Hernández Cienfuegos
    Abstract: Esta investigación tiene como objetivo realizar una primera aproximación al valor económico del servicio ambiental que la subespecie de murciélagos "Tadarida brasiliensis" mexicana ofrece como controlador natural de plagas en el estado de Nuevo León. Se parte de un estudio de los hábitos alimentarios de la población que habita la Cueva de la Boca ubicada en Santiago, Nuevo León. Se identifican los insectos de la dieta que representan potenciales plagas agrícolas en la región. De acuerdo con información primaria y secundaria sobre la importancia económica de los cultivos de sorgo, maíz, cítricos y nuez en la zona de influencia y a la intensidad en la aplicación de compuestos químicos para el control de sus plagas, se estima el valor económico de este servicio ambiental en un rango entre $6.5 y $16.5 millones de pesos, con un valor promedio de $260 por hectárea para estos cultivos. Los resultados de este estudio podrán ser utilizados como herramienta de conservación para apoyar la protección de los ecosistemas alrededor de los sitios de percha, que además del control biológico de enfermedades y plagas aportan de manera integral otros importantes servicios ambientales.
    Keywords: México, murciélagos, Monterrey, Nuevo León
    JEL: Q51 Q55 Q56 Q57 Q58
    Date: 2006–01
  9. By: Roberto Leon-Gonzalez; Riccardo Scarpa
    Abstract: A Benefit Function Transfer obtains estimates of Willingness-to-Pay (WTP) for the evaluation of a given policy at a site by combining existing information from different study sites. This has the advantage that more efficient estimates are obtained, but it relies on the assumption that the heterogeneity between sites is appropriately captured in the Benefit Transfer model. A more expensive alternative to estimate WTP is to analyse only data from the policy site in question while ignoring information from other sites. We make use of the fact that these two choices can be viewed as a model selection problem and extend the set of models to allow for the hypothesis that the benefit function is only applicable to a subset of sites. We show how Bayesian Model Averaging (BMA) techniques can be used to optimally combine information from all models. The Bayesian algorithm searches for the set of sites that can form the basis for estimating a Benefit function and reveals whether such information can be transferred to new sites for which only a small dataset is available. We illustrate the method with a sample of 42 forests from U.K. and Ireland. We find that BMA benefit function transfer produces reliable estimates and can increase about 8 times the information content of a small sample when the forest is ‘poolable’.
    Keywords: Benefit Transfer; Bayesian Model Averaging; Exchangeability; Non-market Valuation; Panel Data
    JEL: C11 C33 C81 Q23 Q26
    Date: 2007–01
  10. By: Christa N. Brunnschweiler (Center of Economic Research (CER-ETH), Swiss Federal Institute of Technology Zurich (ETH)); Erwin H. Bulte (Department of Economics, Tilburg University)
    Abstract: We critically evaluate the empirical basis for the so-called resource curse and find that, despite the topic’s popularity in economics and political science research, this apparent paradox is a red herring. The most commonly used measure of ‘resource abundance’ can be more usefully interpreted as a proxy for ‘resource dependence’—endogenous to underlying institutional factors. In multiple estimations that combine resource abundance and dependence, institutional and constitutional variables, we find that (i) resource abundance, constitutions and institutions determine resource dependence, (ii) resource dependence does not affect growth, and (iii) resource abundance positively affects growth and institutional quality.
    Keywords: Natural resource curse, economic growth, growth regressions, political regimes, institutions, constitutions
    JEL: O11 O13 Q0
    Date: 2006–12
  11. By: John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)
    Abstract: The policy recommendations of most economists are based on the rational actor model of human behavior. Behavior is assumed to be self-regarding, preferences are assumed to be stable, and decisions are assumed to be unaffected by social context or frame of reference. The related fields of behavioral economics, game theory, and neuroscience have confirmed that human behavior is other regarding, and that people exhibit systematic patterns of decision-making that are "irrational" according to the standard behavioral model. This paper takes the position that it is these "irrational" patterns of behavior that uniquely define human decision making and that effective economic policies must take these behaviors as the starting point. This argument is supported by game theory experiments involving humans, closely related primates, and other animals with more limited cognitive ability. The policy focus of the paper is global climate change. The research surveyed in this paper suggests that the standard economic approach to climate change policy, with its almost exclusive emphasis on rational responses to monetary incentives, is seriously flawed. In fact, monetary incentives may actually be counter-productive. Humans are unique among animal species in their ability to cooperate across cultures, geographical space and generations. Tapping into this uniquely human attribute, and understanding how cooperation is enforced, holds the key to limiting the potentially calamitous effects of global climate change.
    Date: 2007–01

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