nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒03‒10
28 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. GTAP-E: An Energy-Environmental Version of the GTAP Model with Emission Trading By Truong P. Truong; Claudia Kemfert; Jean-Marc Burniaux
  2. Conservation policies, environmental valuation and the optimal size of jurisdictions By Giovanni B. Concu
  3. Comment: Legal Liability as Climate Change Policy By Hilary Sigman
  4. Payments for Environmental Services in Costa Rica By Pagiola, Stefano
  5. On the Importance of Equity in International Climate Policy: An Empirical Analysis By Lange, Andreas; Vogt, Carsten; Ziegler, Andreas
  6. Greenwash: Corporate Environmental Disclosure under Threat of Audit By Thomas P. Lyon; John W. Maxwell
  7. Environmental Protection, Consumer Awareness, Product Characteristics, and Market Power By Marcel Boyer; Philippe Mahenc; Michel Moreaux
  8. Why do Manufacturing Plants Invest in Environmental Management? By María Teresa Ruiz-Tagle
  9. How Do Capital Markets Respond to Environmental News? By María Teresa Ruiz-Tagle
  10. Strategic Quality Competition and the Porter Hypothesis. By Francisco J. André; Paula González; Nicolás Porteiro
  11. Green management and green technology - exploring the causal relationship By Nogareda, Jazmin Seijas; Ziegler, Andreas
  12. Incentives and quota prices in an emission trading scheme with updating By Knut Einar Rosendahl
  13. Soil and Water Assessment Tool: Historical Development, Applications, and Future Research Directions, The By Gassman, Philip W.; Reyes, Manuel R.; Green, Colleen H.; Arnold, Jeffrey G.
  14. Environmental valuation: a brief overview of options By Giles ATKINSON; Susana MOURATO
  15. The Establishment and Development of Cambridge Environmental Economic Thought By Masayuki Omori
  16. A Ricardian analysis of the impact of climate change on Latin American farms By Seo, Niggol; Mendelsohn, Robert
  17. An analysis of livestock choice : adapting to climate change in Latin American farms By Seo, Niggol; Mendelsohn, Robert
  18. Water price and water reallocation in Andalusia. A computable general equilibrium approach By Esther Velázquez; M. Alejandro Cardenete; Geoffrey J.D. Hewings
  19. Testing the Natural Resource Curse Hypothesis in Indonesia: Evidence at the Regional Level By Ahmad Komarulzaman; Armida Alisjahbana
  20. An analysis of crop choice : adapting to climate change in Latin American farms By Seo, Niggol; Mendelsohn, Robert
  21. Changing farm types and irrigation as an adaptation to climate change in Latin American agriculture By Mendelsohn, Robert; Seo, Niggol
  22. Population Policy through Tradable Procreation Entitlements By David de la Croix; Axel Gosseries
  23. The Groucho Effect of Uncertain Standards By Rick Harbaugh; John W. Maxwell; Beatrice Roussillon
  25. Modeling Amazon Deforestation for Policy Purposes By Clive W. J. Granger; Lykke E. Andersen
  26. L'agriculture du Maghreb au défi du changement climatique : Quelles stratégies d'adaptation face à la raréfaction des ressources hydriques ? By René Arrus; Nathalie Rousset
  27. Biotechnology as a Competitive Edge for the Finnish Forest Cluster By Terhi Hakala; Olli Haltia; Raine Hermans; Martti Kulvik; Hanna Nikinmaa; Albert Porcar-Castell; Tiina Pursula
  28. "China's Energy Security: National Security, Ecological Balance and Regional Co-operation" By Haider A. Khan; Mariko Frame

  1. By: Truong P. Truong; Claudia Kemfert; Jean-Marc Burniaux
    Abstract: Energy is an important commodity in many economic activities. Its usage affects the environment via CO2 emissions and the Greenhouse Effect. Modeling the energy-economy-environment-trade linkages is an important objective in applied economic policy analysis. Previously, however, the modeling of these linkages in GTAP has been incomplete. This is because energy substitution, a key factor in this chain of linkages, is absent from the standard model specification. This technical paper remedies this deficiency by incorporating energy substitution into the standard GTAP model. It begins by first reviewing some of the existing approaches to this problem in contemporary CGE models. It then suggests an approach for GTAP which incorporates some of these desirable features of energy substitution. The approach is implemented as an extended version of the GTAP model called GTAP-E. In addition, GTAP-E incorporates carbon emissions from the combustion of fossil fuels and this revised version of GTAP-E provides for a mechanism to trade these emissions internationally as well as domestically. The policy relevance of GTAP-E in the context of the existing debate about climate change is illustrated by some illustrative simulations of the implementation the European emissions trading scheme in 2005. It is hoped that the proposed model will be used by individuals in the GTAP network who may not be themselves energy modelers, but who require a better representation of the energy-economy-environmental linkages than is currently offered in the standard GTAP model.
    Date: 2007
  2. By: Giovanni B. Concu (Risk and Sustainable Management Group, University of Queensland)
    Abstract: The size of a jurisdiction is crucial in determining the efficiency, equity or efficacy of environmental regulations. However, jurisdictions are usually taken to coincide with political boundaries even if environmental externalities may transcend them. This paper illustrates the design and implementation of a Choice Modelling experiment to determine the spatial distribution of environmental benefits of Kings Park (Western Australia). The objective is to understand if federal, state or local resources are the appropriate form of funding a conservation policy. Results indicate that there are interstate spillovers of benefits, hence justifying federal contributions to Kings Park. They also show that some benefits are homogeneously spread within Western Australia, and this is an indication that state funding is also appropriate. Other benefits are distance-dependent; some level of local/council funding is warranted
    Keywords: federal regulation, decentralised policies, benefits spillovers, environmental valuation, choice modelling, distance
    JEL: H77 Q51 Q58
    Date: 2006–11
  3. By: Hilary Sigman (Rutgers University)
    Abstract: Several U.S. states have attempted to use of legal liability imposed on greenhouse gas emitters as a public policy instrument for climate change. This brief comment considers the desirability of this approach, focusing on three possible roles for climate change liability: as a source of compensation, as a direct influence on greenhouse gas concentrations, and as a means to facilitate the adoption of ex ante public policies to control greenhouse gases. The strongest argument for liability may be that the threat of liability improves the chances that climate change policies will use more efficient, revenue-raising instruments.
    Keywords: Environmental policy, Law and economics, Revenue recycling
    JEL: K32 Q54
    Date: 2007–02–21
  4. By: Pagiola, Stefano
    Abstract: Costa Rica pioneered the use of the payments for environmental services (PES) approach in developing countries by establishing a formal, country-wide program of payments, the PSA program. The PSA program has worked hard to develop mechanisms to charge the users of environmental services for the services they receive. It has made substantial progress in charging water users, and more limited progress in charging biodiversity and carbon sequestration users. Because of the way it makes payments to service providers (using approaches largely inherited from earlier programs), however, the PSA program has considerable room for improvement in the efficiency with which it generates environmental services. With experience, many of these weaknesses are being gradually corrected as the PSA program evolves towards a much more targeted and differentiated program. An important lesson is the need to be flexible and to adapt to lessons learned and to changing circumstances.
    Keywords: Payments for Environmental Services; Costa Rica; FONAFIFO
    JEL: Q58 Q25 Q20 Q57 Q50 Q28 Q23
    Date: 2006–12–20
  5. By: Lange, Andreas; Vogt, Carsten; Ziegler, Andreas
    Abstract: Based on unique data from a world-wide survey of agents involved in international climate policy, this paper empirically analyzes the importance of equity in this field. We find that equity issues are considered highly important in international climate negotiations and that the polluter-pays rule and the accompanying poor losers rule are the most widely accepted equity principles. Our econometric analysis shows a strong influence of the economic or emission performance of the agents’ country on the importance of equity issues and principles: (i) Equity issues are seen as more important by individuals from G77/China countries or from countries with less current per capita GDP and less future per capita CO2 emissions. (ii) Agents from richer countries are less in favor of incorporating the polluter-pays and the ability-to-pay principle in future international climate agreements. (iii) The poor losers rule is more strongly supported by individuals from G77/China countries or by individuals from countries with less current per capita GDP. While these results are consistent with pure economic self-interest, the support for the egalitarian principle runs contrary to economic intuition: In the long-run, agents from richer countries are more in favor of incorporating the egalitarian principle. Furthermore, the effect of the economic performance variables on the desired degree of incorporating the polluter-pays principle interestingly becomes less significant in the long-run. This indicates that future international climate agreements could possibly be based on a combination of the polluter-pays, the egalitarian, and the poor losers rule.
    Keywords: International Climate Policy, International Environmental Negotiations, Equity Issues, Probit Models
    JEL: D63 H41 Q48 Q54
    Date: 2006
  6. By: Thomas P. Lyon (Stephen M. Ross School of Business at the University of Michigan); John W. Maxwell (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: We develop an economic model of “greenwash,” in which a firm strategically discloses environmental information and a non-governmental organization (NGO) may audit and penalize the firm for failing to fully disclose its environmental impacts. We identify conditions under which NGO punishment of greenwash backfires, inducing the firm to become less rather than more forthcoming about its environmental performance. We show that complementarities with NGO auditing may justify public policies encouraging firms to adopt environmental management systems. Mandatory disclosure rules offer the potential for better performance than NGO auditing, but the necessary penalties may be so large as to be politically unpalatable. If so, a mix of mandatory disclosure rules, NGO auditing and environmental management systems may be needed to induce full environmental disclosure.
    JEL: L0
    Date: 2006–03
  7. By: Marcel Boyer; Philippe Mahenc; Michel Moreaux
    Abstract: We investigate the behavior of a polluting monopolist whose production causes a global damage affecting consumers and non-consumers alike while consumption causes a specific damage affecting consumers only. The monopolist anticipates strategically how her decisions on product variant, price and pollution affect the purchasing decisions in a Hotelling market. We compare a standard unregulated monopolist and a monopolist subject to environmental regulation. We show that both monopolists choose the same product variant, that the regulated monopolist pollutes less, produces as much or more, and charges a higher price than the unregulated one. Hence, environmental regulation always lead to an increase in price but never to a reduction in production. <P>Nous étudions le comportement d'un monopole dont la production cause un dommage global de pollution pour les consommateurs et les non-consommateurs de son produit et un dommage spécifique additionnel pour les consommateurs. Le monopole anticipe de manière stratégique l'impact des caractéristiques et du prix du produit et celui du niveau de pollution sur les décisions d'achat des consommateurs. Nous comparons le monopole standard non réglementé et le monopole sujet à une réglementation environnementale. Nous montrons que les deux monopoles choisissent la même variété de produit, que le monopole réglementé pollue moins, produit autant sinon plus, et demande un prix plus élevé que le monopole non-réglementé. Ainsi, la réglementation environnementale dans ce contexte entraîne toujours une hausse de prix mais ne mène jamais à une baisse de production.
    Keywords: environmental protection, consumer awareness, product characteristics, market power, protection environnementale, consommateurs verts, caractéristiques des produits, pouvoir de marché
    Date: 2007–03–01
  8. By: María Teresa Ruiz-Tagle (Department of Land Economy, University of Cambridge, UK)
    Abstract: While economic and contractual incentives encourage firms to respond to environmental issues, additional contributing factors also provide incentives for them to deal with corporate environmental issues. That is, formal regulation (government monitoring and enforcement) can promote firms’ environmental improvements, but so can informal regulation (consumer pressure, shareholders, employees and local communities). Environmental regulation, in the broadest sense, may affect firms’ decision to implement an Environmental Plan and the attitude of firms towards the environment. However, other characteristics of plants and firms are also relevant elements when taking these decisions. But which are those factors, and how can we assess their impact? The purpose of this paper is to develop a framework that can be used to test empirically the importance of several possible sources of influence on the level of environmental responsiveness of a firm. This paper uses new data from a survey carried out in Chile in year 2001.
    Keywords: plants; investment; environment; monitoring; enforcement; consumer; Chile; incentive; corporate; regulation; impact; responsiveness; 2001
    Date: 2006
  9. By: María Teresa Ruiz-Tagle (Department of Land Economy, University of Cambridge, UK)
    Abstract: countries, there is a large variation in the environmental performance and compliance of firms. Thus, there may be incentives apart from formal regulation to which firms respond; for instance, the influence of “Capital Markets”. Indeed, capital markets are considered to be one of the possible agents that can scrutinise firms’ environmental performance, and therefore information might acquire a new role, and generate incentives for pollution control. In this context, capital markets (through investors) have a role in the enforcement process. There is evidence from a number of countries that capital markets react to the release of new environmental information. Thus, the aim of this paper is to analyse the impact of public information regarding the environmental performance of plants on investors in Chile. Public information is gathered from “El Mercurio” newspaper (main broadsheet in Chile) in the form of environmental news. The impact of such information is measured by fluctuations on the stock market of publicly traded companies over the period 1992-2000. The event-study methodology is thus used to examine the reaction of the stock market to positive and negative environmental news (also called events).
    Keywords: capital market; information; regulation; enforcement; environmental performance
    Date: 2006
  10. By: Francisco J. André (Department of Economics, Universidad Pablo de Olavide); Paula González (Department of Economics, Universidad Pablo de Olavide); Nicolás Porteiro (Department of Economics, Universidad Pablo de Olavide)
    Abstract: In this paper we provide a theoretical foundation for the Porter hypothesis in a context of quality competition. We use a duopoly model of vertical product differentiation where firms simultaneously choose the environmental quality of the good they produce (which can be either high or low) and, afterwards, engage in price competition. In this simple setting, we show that a Nash equilibrium of the game with low quality could be Pareto dominated by another strategy profile in which both firms produce the high environmental quality good. We then show how, in this case, the introduction of a penalty to any firm that produces the low environmental quality can result in an increase in both firms' profits. The impact of the policy on consumers depends on the effect of a quality shift on the cost structure of firms.
    Keywords: environmental quality, vertical differentiation, prisoner's dilemma, environmental regulation, Porter hypothesis.
    JEL: L13 L51 Q55 Q58
    Date: 2007–02
  11. By: Nogareda, Jazmin Seijas; Ziegler, Andreas
    Abstract: In this paper, we analyze potential endogeneity problems in former econometric studies which regress corporate environmental performance such as green technology activities on green management. Based on evolutionary theory and the resource-based view of the firm, we discuss in the first step that green technology could also influence green management and that unobserved firm characteristics could simultaneously influence green management and green technology. Contrary to existing studies, we empirically explore in the second step the structural reverse causality hypothesis with a unique crosssectional firm-level data set from the German manufacturing sector. Our econometric analyses with uni- and multivariate probit models imply a significantly positive effect of environmental process innovations on certified environmental management systems and a significantly positive impact of environmental product innovations on life cycle assessment activities. We interpret these empirical results as a further indicator that the causal relationship between green management and green technology is not clear. We conclude that panel data, which are not available for technological environmental innovations yet, are a necessary condition to solve these endogeneity problems. Such panel data studies could therefore be an appropriate basis for robust conclusions with regard to voluntary green management measures as a non-mandatory approach in environmental policy.
    Keywords: Non-mandatory environmental policy, green management, green technology, uni- and multivariate probit models, endogeneity
    Date: 2006
  12. By: Knut Einar Rosendahl (Statistics Norway)
    Abstract: Emission trading schemes where allocations are based on updated baseline emissions give firms less incentives to reduce emissions. Nevertheless, according to Böhringer and Lange (2005a), such allocation schemes are cost-effective if the system is closed and allocation rules are equal across firms. In this paper we show that the cost-effective solution may be infeasible if the marginal abatement costs grow too fast. Moreover, if a price cap or banking/borrowing are introduced, the abatement profile is no longer the same as in the case with lump sum allocation. In addition, we show that with allocation based on updated emissions, the quota price will always exceed the marginal abatement costs. Numerical simulations indicate that the quota price most likely will be several times higher than the marginal abatement costs, unless a significant share of allowances are either auctioned or lump sum distributed.
    Keywords: Emission trading; Allocation of quotas; Quota prices.
    JEL: H21 Q28
    Date: 2007–02
  13. By: Gassman, Philip W.; Reyes, Manuel R.; Green, Colleen H.; Arnold, Jeffrey G.
    Abstract: The Soil and Water Assessment Tool (SWAT) model is a continuation of nearly 30 years of modeling efforts conducted by the U.S. Department of Agriculture (USDA), Agricultural Research Service. SWAT has gained international acceptance as a robust interdisciplinary watershed modeling tool, as evidenced by international SWAT conferences, hundreds of SWAT-related papers presented at numerous scientific meetings, and dozens of articles published in peer-reviewed journals. The model has also been adopted as part of the U.S. Environmental Protection Agency’s BASINS (Better Assessment Science Integrating Point & Nonpoint Sources) software package and is being used by many U.S. federal and state agencies, including the USDA within the Conservation Effects Assessment Project. At present, over 250 peer-reviewed, published articles have been identified that report SWAT applications, reviews of SWAT components, or other research that includes SWAT. Many of these peer-reviewed articles are summarized here according to relevant application categories such as streamflow calibration and related hydrologic analyses, climate change impacts on hydrology, pollutant load assessments, comparisons with other models, and sensitivity analyses and calibration techniques. Strengths and weaknesses of the model are presented, and recommended research needs for SWAT are provided.
    Keywords: developmental history, flow analysis, modeling, SWAT, water quality.
    Date: 2007–02–28
  14. By: Giles ATKINSON; Susana MOURATO
    Abstract: This paper provides a brief overview of the options available for environmental valuation and is organised as follows. After an introduction, section 2 discusses the concept of total economic value that provides a framework for describing, in economic terms, the ways in which environmental changes might affect peoples’ well-being. Sections 3 and 4 then review the main techniques that have been used to estimate total economic value (or its components). Some of these techniques estimate original values while others make use of (or ‘transfer’ to use the jargon) the findings of existing studies and apply to a new policy or project context. Finally, some concluding comments are offered.
    Keywords: Environmental valuation, Cost-benefits analysis, Benefit transfers
    JEL: H43 G23 D61
    Date: 2007–03
  15. By: Masayuki Omori (Meiji University, Japan)
    Abstract: In this paper we try to make clear that the original utilitarian economic thought of J. S. Mill, which was like a headwater, ran to Cambridge University, after which his followers could tackle environmental problems of their days from an economic point of view (1). First of all we refer to the utilitarian background of Mill’s theoretical suggestions in his Political Economy and his political activities in the Commons Preservation Society (CPS) and the Land Tenure Reform Association (LTRA) (section 2). Next we introduce two of Mill’s disciples of Cambridge insiders, the economist Fawcett and the moral philosopher Sidgwick, and discuss their theoretical and practical succession to Mill’s thought (section 3). Likewise two Cambridge outsiders, the critic Ruskin and the economic theorist Jevons, criticized Mill’s orthodoxy and influenced new Cambridge insiders. We describe these two outsiders (section 4) and identify one insider, Marshall, who established the foundation of today’s Environmental Economics (section 5). Then we mention his disciple, another insider, Pigou, who developed this study (section 6). Lastly, we discuss methodological criticism of Cambridge Environmental Economic Thought (CEET) and suggest other streams to establish and develop Environmental Economics (section 7).
    Keywords: Development; thought; establishment; philosophy; Waste management; Recycling; Composting, Choice experiment; Preference heterogeneity
    Date: 2006
  16. By: Seo, Niggol; Mendelsohn, Robert
    Abstract: This study estimates the vulnerability of Latin American agriculture to climate change using a Ricardian analysis of both land values and net revenues. Examining a sample of over 2,500 farms in seven countries, the results indicate both land value and net revenue are sensitive to climate. Both small farms and large farms have a hill-shaped relationship with temperature. Estimating separate regr essions for dryland and irrigated farms reveals that dryland farms are more sensitive to temperature but irrigated farms are more sensitive to precipitation. Examining the effects from future climate change scenarios reveals that severe scenarios could reduce farm earnings by as much as 62 percent by 2100, whereas more moderate scenarios could reduce earnings by about 15 percent. Small and large farms are equally sensitive to global warming. Land value and net revenue analyses produce quite similar results.
    Keywords: Climate Change,Rural Development Knowledge & Information Systems,Agriculture & Farming Systems,Crops & Crop Management Systems,Common Property Resource Development
    Date: 2007–03–01
  17. By: Seo, Niggol; Mendelsohn, Robert
    Abstract: The authors explore how Latin American livestock farmers adapt to climate by switching spe cies. They develop a multinomial choice model of farmer ' s choice of livestock species. Estimating the models across over 1,200 livestock farmers in seven countries, they find that both temperature and precipitation affect the species Latin American farmers choose. The authors then use this model to predict how future climate scenarios would affect species choice. Global warming will cause farmers to switch to beef cattle at the expense of dairy cattle.
    Keywords: Livestock & Animal Husbandry,Climate Change,Wildlife Resources,Peri-Urban Communities,Rural Urban Linkages
    Date: 2007–03–01
  18. By: Esther Velázquez (Department of Economics, Universidad Pablo de Olavide); M. Alejandro Cardenete (Department of Economics, Universidad Pablo de Olavide); Geoffrey J.D. Hewings (Regional Economics Application Laboratory and University of Illinois)
    Abstract: The objective of this work is to analyze the effects that an increase in the price of the water delivered to the agriculture sector to promote the conservation of this resource would have on the efficiency of the consumption of water and the possible reallocation of water to the remaining productive sectors. The analysis is motivated by the fact that the agriculture consumes a disproportionately large amount of water at very low prices. The methodology that will be used to explore the implications on the economy will be a computable general equilibrium model (CGE), previously designed for an analysis of the direct taxes of the Andalusian economy (Cardenete and Sancho, 2003), but now enhanced and extended to include emissions of pollutants and the introduction of environmental taxes (André, Cardenete and Velázquez, 2005). This model has been further modified to introduce the variations in the water price that we will try to analyze by means of a tariff applied on the production structure. The main conclusion drawn indicates that, although the tax policy applied does not correspond to a significant water saving in the above-mentioned sector, a reallocation of this resource is achieved which seems to generate a more efficient and more rational behavior from a production point of view.
    Keywords: environmental tax reforms, computable general equilibrium, water price
    JEL: D58 H21 H22
    Date: 2007–03
  19. By: Ahmad Komarulzaman (Department of Economics, Padjadjaran University); Armida Alisjahbana (Department of Economics, Padjadjaran University)
    Abstract: Resource curse literatures explain that countries abundant with natural resources tend to grow slower. This hypothesis is relevant for Indonesia as it is a country rich in natural resources. This paper tries to investigate empirically the relationship between resources abundance and its impact on economic development at the regional level using cross section regression approach. The regional financial data from ministry of finance are combined with regional specific data from BPS to seek the pattern. The paper will shed light on whether resources rich regions in Indonesia are trapped in this curse.
    Keywords: Natural resource rent, resource curse hypothesis, Indonesia
    JEL: Q01 Q56 R11
    Date: 2006–08
  20. By: Seo, Niggol; Mendelsohn, Robert
    Abstract: The authors explore how Latin American farmers adapt to climate by changing crops. They develop a multinomial choice model of farmer ' s choice of crops. Estimating the mo del across over 2,000 farmers in seven countries, they find that both temperature and precipitation affects the crops that Latin American farmers choose. Farmers choose fruits and vegetables in warmer locations and wheat and potatoes in cooler locations. Farms in wetter locations are more likely to grow rice, fruits, and squash, and in dryer locations maize and potatoes. Global warming will cause Latin American farmers to switch away from wheat and potatoes toward fruits and vegetables. Predictions of the impact of climate change must reflect not only changes in yields or net revenues per crop but also crop switching.
    Keywords: Crops & Crop Management Systems,Climate Change,Rural Poverty Reduction,Agriculture & Farming Systems,Global Environment Facility
    Date: 2007–03–01
  21. By: Mendelsohn, Robert; Seo, Niggol
    Abstract: This paper estimates a model of a farm that treats the choice of crops, livestock, and irrigation as endogenous. The model is composed of a multinomial choice of farm type, a binomial choice of irrigation, and a set of conditional land value function s. The model is estimated across over 2,000 farmers in seven Latin America countries. The results quantify how farmers adapt their choice of farm type and irrigation to their local climate. The results should help governments develop effective adaptation policies in response to climate change and improve the forecasting of climate effects. The paper compares the predicted effects of climate change using both endogenous and exogenous models of farm choice.
    Keywords: Climate Change,Crops & Crop Management Systems,Livestock & Animal Husbandry,Agriculture & Farming Systems,Rural Development Knowledge & Information Systems
    Date: 2007–03–01
  22. By: David de la Croix (Department of Economics and CORE, Université Catholique de Louvain); Axel Gosseries (FNRS & Hoover Chair, Université Catholique de Louvain)
    Abstract: Tradable permits are now widely used to control pollution. We investigate the implications of setting up such a system in another area – population control –, either domestically or at the global level. We first generalize the framework with both tradable procreation allowances and tradable procreation exemptions, in order to tackle both over- and under-population problems. The implications of procreation rights for income inequality and education are contrasted. We decompose the scheme’s impact on redistribution into three effects, one of them, the tradability effect, entails the following: with procreation exemptions or expensive enough procreation allowances, redistribution benefits the poor. In contrast, cheap procreation allowances redistribute resources to the rich. As far as human capital is concerned, natalist policy worsens the average education level of the next generation, while population control enhances it. If procreation rights are granted to countries in proportion to existing fertility levels (grandfathering) instead of being allocated equally, population control can be made even more redistributive. Our exploratory analysis suggests that procreation entitlements offer a promising tool to control population without necessarily leading to problematic distributive impact, especially at the global level.
    Keywords: Tradable permits, Population control, Pronatalist policy, Income inequality, Differential fertility, Grandfathering.
    JEL: J13 E61 O40
    Date: 2007
  23. By: Rick Harbaugh (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); John W. Maxwell (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Beatrice Roussillon
    Abstract: Consumers are rarely sure of the exact standard that product labels and other certificates of quality represent. We show that any such uncertainty creates a “Groucho effect” in which seeing that a product has a label leads consumers to infer that the standard for the label itself is not very demanding. Label adoption is therefore always less likely to be an equilibrium than without uncertainty over the standard, and if it is an equilibrium it is always less informative than without such uncertainty. The Groucho effect leads to an information externality so better firms are reluctant to adopt labels if worse firms adopt them. Applying the model to eco-labels, we find that industry groups, governments, and NGOs can increase label adoption by publicizing labeling criteria, by encouraging consumers to expect label adoption when there are multiple equilibria, and by setting high standards that are less likely to be devalued by low quality firms.
    Keywords: Eco-labels, disclosure, certification, persuasion, standards
    JEL: L15 L21 D82 Q00
    Date: 2006–11
  24. By: Luz Angela Rodríguez Ramírez
    Abstract: La conservación de áreas naturales genera externalidades ambientales positivas que son a su vez bienes públicos. Tradicionalmente la provisión de dichos bienes ha sido considerada como responsabilidad del gobierno, sin embargo, cada día adquiere más relevancia el tema de incentivos para promover la conservación desde la sociedad civil. El objetivo de este trabajo es analizar los determinantes de las decisiones de conservación de áreas naturales a nivel municipal, para dos de los actores clave en la conservación – gobiernos y propietarios privados-, y la forma como interactúan los dos tipos de actores, desde una perspectiva teórica y empírica. El análisis empírico se realizó mediante una combinación de métodos cualitativos y cuantitativos. Los resultados sugieren, por el lado de los gobiernos locales, que el agua es una de las motivaciones más importantes para encaminarse en actividades relacionadas con la conservación y que los factores institucionales, como la presencia de organizaciones de la sociedad civil y de instituciones en el municipio, afectan de manera positiva y significativa las decisiones de inversión en conservación por parte de los gobiernos municipales. Por parte de los actores privados, el comportamiento conservacionista se ve influenciado de manera positiva por la existencia de motivaciones no económicas, como las motivaciones altruistas, y por el aumento de la conciencia ambiental. Las políticas municipales afectan de manera significativa el comportamiento de los agentes privados en cuanto a la conservación de bosques.
    Date: 2006–11–30
  25. By: Clive W. J. Granger (University of California - San Diego); Lykke E. Andersen (Institute for Advanced Development Studies)
    Abstract: Brazil has long ago removed most of the perverse government incentives that stimulated massive deforestation in the Amazon in the 70s and 80s, but one highly controversial policy remains: Road building. While data is now abundantly available due to the constant satellite surveillance of the Amazon, the analytical methods typically used to analyze the impact of roads on natural vegetation cover are methodologically weak and not very helpful to guide public policy. This paper discusses the respective weaknesses of typical GIS analysis and typical municipality level regression analysis, and shows what would be needed to construct an ideal model of deforestation processes. It also presents an alternative approach that is much less demanding in terms of modeling and estimation and more useful for policy makers as well.
    Keywords: Deforestation, Amazon, Brazil, econometric modeling
    JEL: Q56 Q58
    Date: 2006–10
  26. By: René Arrus (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II]); Nathalie Rousset (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II])
    Abstract: Cet article analyse une double question : quels sont les impacts potentiels du changement climatique sur l'agriculture du Maghreb et quelles stratégies d'adaptation sont envisageables ? La hausse des températures et la perturbation des régimes pluviométriques impactera directement l'agriculture par l'approfondissement des déficits hydriques. Deux types d'options d'adaptation sont explorés : d'un côté, le retrait partiel et organisé de l'agriculture face à son inadaptabilité croissante ; de l'autre, des options permettant de résister à l'évolution des conditions. La réussite de l'adaptation passe essentiellement par la mise en place d'une politique de l'eau axée de manière structurelle sur la rareté croissante de cette ressource.
    Keywords: adaptation ; agriculture ; changement climatique ; eau ; Maghreb
    Date: 2007–02–28
  27. By: Terhi Hakala; Olli Haltia; Raine Hermans; Martti Kulvik; Hanna Nikinmaa; Albert Porcar-Castell; Tiina Pursula
    Abstract: In this study we have collected information by interviewing all identified parties within the Finnish forest sector who might have a potential biotechnology connection : university research groups, research institutions, small and medium-sized biotechnology-companies and up to the largest forest companies. The ultimate goal was to assess how resources have been allocated and biotechnologies utilized within the value chain of the entire forest sector. This study aimed at providing answers to the following questions : • What are the current Finnish academic resources and projects related to forest industry biotechnology? • How much does the Finnish forest cluster invest in biotechnology R&D activity, and what are the key application areas in the value chain? • How well do the academic resources, company R&D investments and research needs converge to help secure the future competitiveness of the Finnish forest industries? In order to answer the questions above, the study approached the matter in consecutive steps. First, the existing forest industry related biotechnological knowledge base within the academia on one hand, and the resource base among firms on the other hand, were mapped. Following up on that, we evaluated the sales expectations of forestry related biotechnological applications within the domestic forestry cluster itself, other potential domestic industries and global export markets. The third step assessed whether the development of forestry related biotechnological applications is justifiable in the framework of comparative advantage. This was accomplished by comparing the relevant existing knowledge and other resource bases to their sales expectations. In order to evaluate the potential of biotechnology in the entire forest industry value chain, the study assessed four value chain modules. Module 1 represents the beginning of the value chain : forestry applications. Module 2 consists of the development of wood products, module 3 is related to the pulp and paper industry, and module 4 to utilization side streams for bioenergy, biochemicals and other food or pharmaceutical applications. The assessment of module 1 implies that there is a constant lack of resources. Basic research conducts some relatively long projects, which often seem too time-consuming in applied research and corporate R&D. There seems to be only few active links between the academic research projects and companies. Many new technologies already exist but since the individual forest owners hardly have incentives to invest in R&D due to e.g. the long breeding cycle, collaboration with companies seems as the only potential pathway to commercialization of forestry related biotechnologies. There were few biotechnology-based projects within the module 2. The research and product development seems to focus on physical modifications, and composite research is based on chemistry. Module 3, paper, pulp and board industry, seems to be the most active in research and product development activity. Their products generate positive cash flows, and research projects are abundantly funded. The companies are closely involved in the research projects as financiers and collaborators. This involvement impacts on the nature of the research, which seems highly applicable and linked closely to industrial applications. Consequently, biotechnology applications are already used in the pulp and paper industry. Some biotechnology applications are adopted rapidly. They, such as enzymes in reducing paper machine runnability problems, do not affect the quality of the fibers, intermediate or end products and are thus easier to take into use in production scale. We observed the research and product development within module 4 as a high priority for both the academia and industry. The research is anticipated to grow strongly and even more than in other modules. Biotechnologies are applied as substitutes to chemical and thermal technologies. However, all of these fields of technology are developed and applied by the industry. This provides some important implications for technology development and innovation policy. Due to the fuzziness between technology border-lines, it seems misleading to prioritize biotechnologies over some other technology; in contrast, the most efficient technology should be preferred. Accordingly, technology subsidies might be most efficient if the public technology programmes would be based on application segments instead of a specific technology. Our assessment of international patenting activity raised some interesting notions. Finland seemed to be comparatively most specialized in plant genetic engineering, food and food additive, and waste disposal and the environment applications. However, biotechnology based biofuels are not included as a source of comparative advantage, which also stresses the importance of parallel development of biotechnologies and other technology fields. A potential source of value creation could be the utilization of process side streams more efficiently, including refinement of by-products such as tall oil, to products with higher value added in other application areas.The paper and board making might also be strongly influenced by new packaging solutions, materials and methods; these utilize, however, only rarely or never biotechnologies as such. Finland has a good overall and mainly publicly maintained infrastructure. If the raw material’s high quality and some special features can compensate the relatively low growth rates, Finland should be able to attract the multinational pulp and paper industry also in the long term. We conclude that the development of biotechnologies should not contain any intrinsic value per se. The commercial value of the biotechnology could be benchmarked with the value of alternative technologies; and consequently, biotechnology could become part of the technology options for companies active in established and conventional industries. The Finnish forest cluster has financial resources to commercialize any new technology that can increase the process efficiency or provide other economic benefits in new application areas. This is a reason why we see this area exceptionally promising compared to any other high technology field without such a financial backbone.
    JEL: L69 O32 O34
    Date: 2007–03–05
  28. By: Haider A. Khan (GSIS, University of Denver); Mariko Frame (GSIS, University of Denver)
    Abstract: This paper analyzes both global and regional approaches to solving problems of energy security and ecological imbalance by addressing specifically the problems of China's energy security. PRC's growing energy dependence has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future . Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China.
    Date: 2007–03

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