nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒02‒10
six papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Measuring Environmental Efficiency of Industry: A Case Study of Thermal Power Generation in India By M N, Murty; Kumar, Surender; Dhavala, Kishore
  2. Optimal Timing of Environmental Policy. Interaction between Environmental Taxes and Innovation Externalities By Reyer Gerlagh, Snorre Kverndokk and Knut Einar Rosendahl
  3. Will markets direct investments under the Kyoto Protocol ? By Larson, Donald F.; Breustedt, Gunnar
  4. Poverty and environmental impacts of electricity price reforms in Montenegro By Silva, Patricia; Klytchnikova, Irina; Radevic, Dragana
  5. Multi-Level governance: Towards an analysis of renewable energy governance in the English regions By Adrian Smith
  6. Social Cost-Benefit Analysis of Delhi Metro By M N, Murty; Dhavala, Kishore Kumar; Ghosh, Meenakshi; Singh, Rashmi

  1. By: M N, Murty; Kumar, Surender; Dhavala, Kishore
    Abstract: Technical and environmental efficiency of some coal-fired thermal power plants in India is estimated using a methodology that accounts for firm’s efforts to increase the production of good output and reduce pollution with the given resources and technology. The methodology used is directional output distance function. Estimates of firm-specific shadow prices of pollutants (bad outputs), and elasticity of substitution between good and bad outputs are also obtained. The technical and environmental inefficiency of a representative firm is estimated as 0.10 implying that the thermal power generating industry in Andhra Pradesh state of India could increase production of electricity by 10 per cent while decreasing generation of pollution by 10 percent. This result shows that there are incentives or win-win opportunities for the firms to voluntarily comply with the environmental regulation. It is found that there is a significant variation in marginal cost of pollution abatement or shadow prices of bad outputs across the firms and an increasing marginal cost of pollution abatement with respect to pollution reduction by the firms. The variation in marginal cost of pollution abatement and compliance to regulation across firms could be reduced by having economic instruments like emission tax.
    Keywords: environmental and technical efficiency; shadow prices of bad outputs; air pollution.
    JEL: Q52 Q51 Q53
    Date: 2006–04
  2. By: Reyer Gerlagh, Snorre Kverndokk and Knut Einar Rosendahl (Statistics Norway)
    Abstract: This paper addresses the impact of endogenous technology through research and development (R&D) and learning by doing (LbD) on the timing of environmental policy. We develop two models, the first with technological change through R&D and the second with LbD. We study the interaction between environmental taxes and innovation externalities in a dynamic economy and prove policy equivalence between the second-best R&D and the LbD model. Our analysis shows that the difference found in the literature between optimal environmental policy in R&D and LbD models can partly be traced back to the set of policy instruments available, rather than being directly linked to the source of technological innovation. Arguments for early action in LbD models carry over to a second-best R&D setting. We show that environmental taxes should be high compared to the Pigouvian levels when an abatement industry is developing. We illustrate our analysis through numerical simulations on climate change policy.
    Keywords: Environmental policy; technological change; research and development; learning by doing
    JEL: H21 O30 Q42
    Date: 2007–02
  3. By: Larson, Donald F.; Breustedt, Gunnar
    Abstract: Under the Kyoto Protocol, countries can meet treaty obligations by investing in projects that reduce or sequester greenhouse gases elsewhere. Prior to ratification, treaty participants agreed to launch country-based pilot projects, referred to collectively as Activities Implemented Jointly (AIJ), to test novel aspects of the project-related provisions. Relying on a 10-year history of projects, the authors investigate the determinants of AIJ investment. Their findings suggest that national political objectives and possibly deeper cultural ties influenced project selection. This characterization differs from the market-based assumptions that underlie well-known estimates of cost-savings related to the Protocol ' s flexibility mechanisms. The authors conclude that if approaches developed under the AIJ programs to approve projects are retained, benefits from Kyoto ' s flexibility provisions will be less than those widely anticipated.
    Keywords: Environmental Economics & Policies,Investment and Investment Climate,Non Bank Financial Institutions,Energy Production and Transportation,Economic Theory & Research
    Date: 2007–02–01
  4. By: Silva, Patricia; Klytchnikova, Irina; Radevic, Dragana
    Abstract: The Government of Montenegro is preparing an electricity tariff reform due to recent developments in the national and regional electricity markets. Electricity tariffs for residential consumers in Montenegro are likely to gradually increase by anywhere from 40 to over 100 percent. This significant price rise will impose a heavy burden on poor households and it may adversely affect the environment. In an ex-ante investigation of the welfare impact of this price increase on households in Montenegro, the authors show that the anticipated price increase will result in a significant increase in households ' energy expenditures. A simulation of alternative policy measures analyzes the impact of different tariff levels and structures on the poor and vulnerable households in particular. Higher electricity prices could also significantly increase the proportion of households using fuelwood for space heating.
    Keywords: Energy Production and Transportation,Electric Power,Environment and Energy Efficiency,Energy and Environment,Engineering
    Date: 2007–02–01
  5. By: Adrian Smith (SPRU, University of Sussex)
    Keywords: governance, renewable energy
    JEL: Q48 Q28
    Date: 2007–02–01
  6. By: M N, Murty; Dhavala, Kishore Kumar; Ghosh, Meenakshi; Singh, Rashmi
    Abstract: The growing demand for public transport in mega cities has serious effects on urban ecosystems, especially due to the increased atmospheric pollution and changes in land use patterns. An ecologically sustainable urban transport system could be obtained by an appropriate mix of alternative modes of transport resulting in the use of environmentally friendly fuels and land use patterns. The introduction of CNG in certain vehicles and switching of some portion of the transport demand to the metro rail have resulted in a significant reduction of atmospheric pollution in Delhi. The Delhi Metro provides multiple benefits: reduction in air pollution, time saving to passengers, reduction in accidents, reduction in traffic congestion and fuel savings. There are incremental benefits and costs to a number of economic agents: government, private transporters, passengers, general public and unskilled labour. The social cost-benefit analysis of Delhi Metro done in this paper tries to measure all these benefits and costs from Phase I and Phase II projects covering a total distance of 108 kms in Delhi. Estimates of the social benefits and costs of the project are obtained using the recently estimated shadow prices of investment, foreign exchange and unskilled labour as well as the social time preference rate for the Indian economy for a study commissioned by the Planning Commission, Government of India and done at the Institute of Economic Growth. The financial internal rate of return on investments in the Metro is estimated as 17 percent while the economic rate of return is 24 percent. Accounting for benefits from the reduction of urban air pollution due to the Metro has increased the economic rate of return by 1.4 percent.
    Keywords: Transport; Air Pollution; Cost- benefit analysis and Shadow prices.
    JEL: Q51 Q58 Q53
    Date: 2006–10

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