nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒04‒09
thirty-six papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Dynamic environmental taxes in an international duopoly By Shuichi Ohori
  2. Environmental Taxation and International Eco-Industries By Joan Canton
  3. Voluntary Environmental Agreements, Emission Taxes and International Trade: The Importance of the Timing of Strategies By Conrad, Klaus
  4. Carbon Sequestration with Reforestations and Biodiversity-Scenic Values By A. Caparrós; E. Cerdá; P. Ovando; P. Campos
  5. Emission trading beyond Europe : linking schemes in a post-Kyoto world By Anger, Niels
  6. Redealing the Cards: How the Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies By Joan Canton
  7. Economic Dynamics, Emission Trends and the EKC Hypothesis New Evidence Using NAMEA and Provincial Panel Data for Italy By Massimiliano Mazzanti; Anna Montini; Roberto Zoboli
  8. Greenhouse gas emissions charges and credits agricultural land: what can a model tell us? By Joanna Hendy; Suzi Kerr; Troy Baisden
  9. Stringency and Distribution in the EU Emissions Trading Scheme –The 2005 Evidence By Stefan P. Schleicher; Claudia Kettner; Angela Köppl; Gregor Thenius
  10. A Modelling Framework for Addressing the Synergies between Global Conventions through Land Use Changes: Carbon Sequestration, Biodiversity Conservation, Prevention of Land Degradation and Food Security in Agricultural and Forested Lands in Developing Countries By Raul Ponce-Hernandez
  11. The case of two self-enforcing international agreements for environmental protection By Dritan Osmani; Richard S.J. Tol
  12. The Impact of the European Union Emissions Trading Scheme on Competitiveness in Europe By Oberndorfer, Ulrich; Rennings, Klaus
  13. Computable General equilibrium Models in Environmental and Resource Economics By Conrad, Klaus
  14. Abatement and Transaction Costs of Carbon-Sink Projects Involving Smallholders By Oscar Cacho; Leslie Lipper
  15. Price Competition and Product an environmental friendly substitute is available. By Klaus Conrad
  16. Climate Coalitions: A Theoretical and Computational Appraisal By Thierry Bréchet; François Gerard
  17. Designing a Decision Support System for Marine Reserves Management: An Economic Analysis for the Dutch North Sea By Arjan Ruijs; Hongyu Ding; Ekko C. van Ierland
  18. Adoption Subsidies and Environmental Impacts of Alternative Energy Crops By Bruce A. Babcock; Philip W. Gassman; Manoj Jha; Catherine L. Kling
  20. Carbon Taxes and Joint Implementation By Böhringer, Christoph; Conrad, Klaus; Löschel, Andreas
  21. Locational Competition under Environmental Regulation when Input Prices and Productivity Differ By Conrad, Klaus
  22. The Optimal Path of Energy and CO2 Taxes for Intertemporal Resource Allocation By Conrad, Klaus
  23. Environmental Contaminants of Asiatic Deserts Ecosystems in relation to Plants Distribution and Structure By Toderich Kristina; Tsukatani Tsuneo; Petukhov Oleg; Gruthinov Victor; Khujanazarov Timur; Juylova Elena
  24. The Effects of the EU ETS on Companies: Research by Conducting Interviews in European Companies By Seiji Ikkatai; Daisuke Ishikawa; Shuichi Ohori
  25. Towards Design for a Nutrient Trading Programme to Improve Water Quality in Lake Rotorua By Suzi Kerr; Glen Lauder; David Fairman
  26. Price Competition and Product Differentiation when Goods have Network Effects By Klaus Conrad
  27. Water Markets in the West: Prices, Trading, and Contractual Forms By Jedidiah Brewer; Robert Glennon; Alan Ker; Gary D. Libecap
  28. Institutional adaptation for integrated water resources management: An effective strategy for managing Asian River Basins By Yaw Opoku-Ankomah; Youssouf Dembélé; Ben Y. Ampomah; Léopold Somé
  29. Unfit to Learn? How Long View Organizations Adapt to Environmental Jolts By Heugens, P.P.M.A.R.; Zyglidopoulos, S.C.
  30. Factors affecting Income Strategies among households in Tanzanian Coastal Villages: Implications for Development-conservation initiatives By Jennifer K. Sesabo; Richard S.J. Tol
  31. Trading for the Future: Signaling in Permit Markets By Bard Harstad; Gunnar S. Eskeland
  32. New Zealand's Quota Management System: A History of the First 20 Years By Kelly Lock; Stefan Leslie
  33. The overprotective parent - Bureaucratic agencies and natural hazard management By Paul Raschky
  34. Perceived Attitude and Marine Protected Areas (MPAs) establishment: Why households’ characteristics matters in Coastal resources conservation initiatives in Tanzania By Jennifer K. Sesabo; Hartmut Lang; Richard S.J. Tol
  35. Valuing Animal Genetic Resources: A Choice Modeling Application to Indigenous Cattle in Kenya By Eric Ruto; Guy Garrod; Riccardo Scarpa
  36. Network effects, Compatibility and the Environment: The Case of Hydrogen Powered Cars By Klaus Conrad

  1. By: Shuichi Ohori (Institute of Economic Research, Kyoto University)
    Abstract: This paper studies a dynamic game of environmental taxes between two countries in a Cournot duopoly. Based on the assumption of linear demand functions, we demonstrate that the environmental tax in the steady-state equilibrium is lower in a dynamic environmental tax game than in a static environmental one. Therefore, the dynamic behavior of the governments results in an increase in the environmental damage. Further, as a result of international cooperation on environmental taxes between two countries in the first period, there is an increase in the optimal environmental tax; this is due to the decrease in the effect of the rent-shifting.
    Keywords: environmental tax, dynamic programming, international duopoly
    JEL: F18 H23 Q58
    Date: 2007–01
  2. By: Joan Canton (GREQAM, Université de la Méditerranée)
    Abstract: Environmental policies are discussed when two countries differ in their ability to abate pollution. Northern eco-industries (the industry supplying abatement activities) are more efficient than Southern ones. Segmented environmental markets and a Northern monopoly yield identical second-best taxes in both countries. When markets are global, Southern countries underestimate the market power of eco-industries. Introducing competition creates positive (resp. negative) rent-shifting distortions in South (resp. North). Cooperation could reduce Northern pollution but has ambiguous consequences in South.
    Keywords: Eco-Industry, Strategic Environmental Policy, Asymmetric Oligopolies
    JEL: D62 H23 F12
    Date: 2007–02
  3. By: Conrad, Klaus (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: The purpose of the paper is to narrow the gap between the widespread use of voluntary agreements and research on the rationale of such approaches. A topical example are voluntary agreements of many industries to reduce carbon dioxide emissions because of
    JEL: D43 F13 H23
  4. By: A. Caparrós (Spanish Council for Scientific Research (CSIC)); E. Cerdá (University Complutense Madrid); P. Ovando (Spanish Council for Scientific Research (CSIC-IPGP)); P. Campos (Spanish Council for Scientific Research (CSIC-IPGP))
    Abstract: This paper presents an optimal control model to analyze reforestations with two different species, including commercial values, carbon sequestration and biodiversity or scenic values. We solve the model qualitatively with general functions and discuss the implications of partial or total internalization of environmental values, showing that internalizing only carbon sequestration may have negative impacts on biodiversity-scenic values. To evaluate the practical relevance, we compare reforestations in the South-west of Spain with cork-oaks (a slow growing native species) and with eucalyptus (a fast growing alien species). We do the analysis with two different carbon crediting methods: the Carbon Flow Method and the Ton Year Accounting Method. With the .first method forest surface increases more, but using mainly eucalyptus. With the second, additional reforestations are done mainly using cork-oaks. We value the impact on visitors of these reforestations using stated preferences methods, showing that when these values are internalized cork-oaks are favored.
    Keywords: Optimal Control, Forests, Carbon, Sequestration, Biodiversity, Scenic, Stated Preferences, Carbon Accounting
    JEL: Q23 Q26 Q51 Q57
    Date: 2007–03
  5. By: Anger, Niels
    Abstract: This paper assesses the economic impacts of linking the EU Emission Trading Scheme (ETS) to emerging schemes beyond Europe, in the presence of a post-Kyoto agreement in 2020. Simulations with a numerical multi-country model of the world carbon market show that linking the European ETS induces only marginal economic benefits: As trading is restricted to energy-intensive industries that are assigned generous initial emissions, the major compliance burden is carried by non-trading industries excluded from the linked ETS. In the presence of parallel government trading under a post-Kyoto Protocol, excluded sectors can however be substantially compensated by international trading at the country level, thus increasing the political attractiveness of the linking process. From an efficiency perspective, a desirable future climate policy regime represents a joint trading system that enables international emission trading between ETS companies and governments. While the Clean Development Mechanism (CDM) cannot alleviate the inefficiencies of linked ETS, in a parallel or joint trading regime the access to abatement options of developing countries induces large additional cost savings. Restricting CDM access via a supplementarity criterion does not significantly decrease the economic benefits from project-based emission crediting.
    Keywords: EU ETS, Emission Trading, Kyoto Protocol, Clean Development Mechanism
    JEL: D61 H21 H22 Q58
    Date: 2006
  6. By: Joan Canton (GREQAM, Université de la Méditerranée)
    Abstract: An incumbent government maximizes its chances of being reelected. Its objective function encompasses both social welfare and political contributions. Its only instrument is a pollution tax. In an open-economy context, we introduce an eco-industry in addition to lobbies of polluting firms and environmentalists. Not only does the eco-industry lobby add a new political contribution toward a higher environmental tax, it also modifies the incentives of the usual lobbies. When the foreign environmental policy is constant, environmentalists can be in favor of a decrease in the local tax in order to reduce foreign pollution. It could also be in the interest of a vertical industrial pressure group to lobby toward more stringent environmental policy. In general, the impact of lobbying activities on the politically optimal tax is ambiguous as pressure groups push in different directions.
    Keywords: Eco-Industry, Environmental Taxation, Lobbies, Political Economy
    JEL: H23 D72
    Date: 2007–02
  7. By: Massimiliano Mazzanti (University of Ferrara); Anna Montini (University of Bologna); Roberto Zoboli (CERIS-CNR and Catholic University of Milan)
    Abstract: This paper provides new empirical evidence on delinking trends concerning emission-related indicators in Italy. We discuss methodological issues regarding the analysis of delinking and examine the related Environmental Kuznets Curves (EKC) literature to explore and assess the most value added research lines after more than a decade of intensive research in the field. The main contribution of the paper is in providing EKC evidence exploiting environmental-economic merged panel datasets at a decentralized level exploiting long time series and rich cross section heterogeneity at both sectoral and provincial level. This crucially augments the unsatisfactory outcomes deriving from cross country analyses, which are less informative for policy purposes since they provide averages for environmental-economic relationships. Two panel datasets: 1990-2000 emissions at province level; and sectoral disaggregated NAMEA emissions sources for 1990-2001 are analyzed. We find mixed evidence supporting the EKC hypothesis. Some of the pollutants in the NAMEA data, such as CO2, CH4 and CO, produce inverted-U shaped curves with coherent within range turning points. Other emission trends for the period under consideration show monotonic or even N shaped (SOX, NOX, PM10) relationship. Other emissions show relatively less robust results, with mixed evidence arising from different specifications. This partially confirms some of the criticisms directed to EKC empirical investigations. However, our analysis shows that probably there is no single EKC dynamic, but rather many EKC dynamics, differing depending on (i) period of observation; (ii) country/area; (iii) emissions/environmental pressures; (iv) sectors. Sectoral disaggregated analysis highlights that an aggregated outcome should hide some heterogeneity across different sectors. Services tend to present an inverted-N shape in most cases. Manufacturing industry shows a mix of EKC inverted- U and N shapes, depending on the emission considered. The same is true for industry (all industries, not only manufacturing): though a turning point has been experienced, N shapes may lead to increased emissions with respect to very high levels of the income driver. The analysis of provincial data shows that inverted-U shaped curves are present for some of the emissions in the SINAnet- APAT database, such as CH4, NMVOC, CO and PM10, with coherent within range turning points. Other emission trends show a monotonic relationship (CO2 and N2O), or in some cases an inverted-N shaped relationship (SOX and NOX). This kind of analysis at macro sector and/or specific sector level appear to be the most promising and robust field of future research for the assessment of EKC dynamics. National studies grounded in geographical heterogeneity, rather than regional/international analysis, and focused on sectoral trends, are more informative for policy making. The implementation of such investigations needs larger datasets than are currently available. We thus point to the need for increasing and continual effort on constructing integrated environmental/economic statistical accounts.
    Keywords: Decoupling, NAMEA Emissions, Economic Drivers, Kuznets Curve, Environmental Efficiency
    JEL: C23 Q38 Q56
    Date: 2007–02
  8. By: Joanna Hendy (Motu Economic and Public Policy Research); Suzi Kerr (Motu Economic and Public Policy Research); Troy Baisden (Landcare Research)
    Abstract: Using the simulation model Land Use in Rural New Zealand version 1 -climate (LURNZv1-climate), we simulate the effects of an agricultural land-use emissions charge and a reward for native forest and scrub regeneration. Our results are preliminary and at this stage should be considered illustrative. We find that, on its own, an agricultural emissions charge based on solely on land use would be disruptive and may not be very effective in reducing emissions. In addition, we find that including an additional policy that rewards regenerating forest and scrub without a similar reward for plantation forestry might negatively impact on plantation forestry, increasing emissions growth in the short-run. We are currently developing a second version of LURNZ-climate, which will be more robust and thus lend more weight to our future results.
    Keywords: Climate change, land use, methane, nitrous oxide, dairy, sheep, beef, Government policy
    JEL: Q24 Q15 Q18 R14 Q54 Q58
    Date: 2006–06
  9. By: Stefan P. Schleicher (Austrian Institute of Economic Research); Claudia Kettner (Austrian Institute of Economic Research); Angela Köppl (Austrian Institute of Economic Research); Gregor Thenius (Austrian Institute of Economic Research)
    Abstract: With the release of the verified emissions for installations covered by the EU Emissions Trading Scheme for the first trading year 2005 we are able to compare actual emissions and allowances for each installation. Based on data available for 24 Member States as of January 2007, this paper uses a thorough data analysis for about 9,900 installations to investigate evidence on three issues: first, the stringency of the total allocation cap and allocation differences both among the Member States and a selection of emission intensive sectors; second, the distribution of the size of installations; and third, the spread of allocation discrepancies and possible allocation biases regarding the size of installations.
    Keywords: Emission Trading, EU Emissions Trading Scheme, Climate Policy
    JEL: D61 O1 Q51 Q54
    Date: 2007–02
  10. By: Raul Ponce-Hernandez (Trent University)
    Abstract: This paper proposed a methodological framework for the assessment of carbon stocks and the development and identification of land use, land use change and land management scenarios, whereby enhancing carbon sequestration synergistically increases biodiversity, the prevention of land degradation and food security through the increases in crop yields. The framework integrates satellite image interpretation, computer modelling tools (i.e. software customization of off-the-shelf soil organic matter turnover simulation models) and Geographical Information Systems (GIS). The framework addresses directly and indirectly the cross-cutting ecological concerns foci of major global conventions: climate change, biodiversity, the combat of desertification and food security. Their synergies are targeted by providing procedures for assessing and identifying simultaneously carbon sinks, potential increases in plant diversity, measures to prevent land degradation and enhancements in food security through crop yields, implicit in each land use change and land management scenario. The scenarios aim at providing “win-win” options to decision makers through the framework’s decision support tools. Issues concerning complex model parameterization and spatial representation were tackled through tight coupling soil carbon models to GIS via software customization. Results of applying the framework in the field in two developing countries indicate that reasonably accurate estimates of carbon sequestration can be obtained through modeling; and that alternative best soil organic matter management practices that arrest shifting “slash-and-burn” cultivation and prevent burning and emissions, can be identified. Such options also result in increased crop yields and food security for an average family size in the area, while enhancing biodiversity and preventing land degradation. These options demonstrate that the judicious management of organic matter is central to greenhouse gas mitigation and the attainment of synergistic ecological benefits, which is the concern of global conventions. The framework is to be further developed through successive approximations and refinement in future, extending its applicability to other landscapes.
    Keywords: Climate Change, Greenhouse Gas Mitigation, Carbon Sequestration, Soil Organic Matter, Modeling, Land-Use Change, Land Management, Ecological Synergies, Agriculture
    JEL: C15 C21 Q1 Q15 Q24
    Date: 2007–03
  11. By: Dritan Osmani; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: Non-cooperative game theoretical models of self-enforcing international environmental agree- ments (IEAs) that employ the cartel stability concept of d'Aspremont et al. (1983) frequently use the assumption that countries can sign a single agreement only. We modify the assump- tion by considering two self-enforcing IEAs. Extending a model of Barrett (1994a) on a single self-enforcing IEA, we demonstrate that there are many similarities between one and two self- enforcing IEAs. But in the case of few countries and high environmental damage we show that two self-enforcing IEA work far better than one self-enforcing IEA in terms of both welfare and environmental equality
    Keywords: self-enforcing international environmental agreements, non-cooperative game theory, stability, nonlinear optimization.
    JEL: C61 C72 H41
    Date: 2005–08
  12. By: Oberndorfer, Ulrich; Rennings, Klaus
    Abstract: This literature review analyses the impacts of the EU ETS on competitiveness focussing on existing simulation studies. We have identified the choice of the reference scenario as the most critical issue for an appropriate analysis of the relevant literature. We find, however, that effects of the scheme on competitiveness are modest, even given the business as usual case that does not take the legally binding framework of the Kyoto Protocol into account. Furthermore, the impacts of the EU ETS are smaller than the impacts of alternative Kyoto-based regulation scenarios. Compared to these other regulation methods ETSs can have positive competitiveness effects. However, the EU ETS is not designed to boost Europe’s economy. Its prime purpose and justification is to ensure that Europe’s CO2 emissions are brought down and Kyoto targets are reached at minimal costs. To our opinion, it is therefore important that the system as well as modifications to it do not undermine the environmental goals associated with this policy instrument.
    Keywords: emissions trading, competitiveness, environmental regulation
    JEL: Q21 Q28 Q43
    Date: 2006
  13. By: Conrad, Klaus (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: The objective of this paper is to give a survey of the theory and application of computable general equilibrium models (CGE-models) in environmental and resource economics. Although CGE models cannot be used to forecast business cycles, they can indicate likely magnitudes of policy-induced changes from future baselines, and they are indispensable for ranking alternative policy measures in environmental policies. The paper emphasizes the important of general versus partial equilibrium models and the advantage of CGE models compared to other macroeconomic models and standard input-output models. It presents models of producer and consumer behavior, of technical change, of abatement technologies and of trade. It also presents several simulation studies in environmental economics based on the use of CGE models. It reviews environmentally related CGE analyses on topics such as global warming, the costs of environmental regulation under different instruments and the double dividend issue. It finally describes some models which look at a two-way link between the environment and economic performance.
  14. By: Oscar Cacho (University of New England); Leslie Lipper (Food and Agriculture Organization)
    Abstract: Agroforestry projects have the potential to help mitigate global warming by acting as sinks for greenhouse gasses. However, participation in carbon-sink projects may be constrained by high costs. This problem may be particularly severe for projects involving smallholders in developing countries. Of particular concern are the transaction costs incurred in developing projects, measuring, certifying and selling the carbon-sequestration services generated by such projects. This paper addresses these issues by analysing the implications of transaction and abatement costs in carbon-sequestration projects. A model of project participation is developed, which accounts for the conditions under which both buyers and sellers would be willing to engage in a carbon transaction that involves a long-term commitment. The model is used to identify critical project-design variables (minimum project size, farm price of carbon, minimum area of participating farms). A project feasibility frontier (PFF) is derived, which shows the minimum project size that is feasible for any given market price of carbon. The PFF is used to analyse how the transaction costs imposed by the Clean Development Mechanism of the Kyoto Protocol affect project feasibility.
    Keywords: Agroforestry, Climate Policy, Carbon Sequestration Costs
    JEL: Q23 Q57 O1 O13
    Date: 2007–03
  15. By: Klaus Conrad (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: When deciding to buy differentiated products, a compromise is sometimes made between preferred characteristics of the good and its environmental properties. In this paper we investigate the market implication of product differentiation when customers are concerned about environmental aspects of the good. We use the spacial duopoly model to determine how environmental concern affects prices, product characteristics and market shares of the competing firms. Our analysis is based on a two-stage game where at the first stage each firm chooses the characteristic of its product. At the second stage each firm chooses its price. The unique equilibrium prices and market shares are affected by consumer awareness of the environment and by the higher costs for producing those goods. As for the Nash equilibria in the characteristics we find three equilibria depending on the parameter constellation. In order to find out whether the market functions in an optimal way we determined the choice of environmental characteristics by a welfare maximizing authority. The result of this analysis is that characteristics differ under private decision making and social one. It can be shown, however, that it is possible to choose environmental policy instruments in order to stimulate private firms to produce the social optimal qualities.
    JEL: L11 Q38 H23
  16. By: Thierry Bréchet (Université Catholique de Louvain); François Gerard (Center for Operations Research and Econometrics (CORE) and Université Catholique de Louvain)
    Abstract: Using an updated version of the CWS model (introduced by Eyckmans and Tulkens in Resource and Energy Economics 2003), this paper intends to evaluate with numbers the respective merits of two competing notions of coalition stability in the standard global public goods model as customarily applied to the climate change problem. After a reminder of the model structure and of the definition of the two game theoretical stability notions involved – namely, core stability and internal-external stability, the former property is shown to hold for the grand coalition in the CWS model only if resource transfers of a specific form between countries are introduced. It is further shown that while the latter property holds neither for the grand coalition nor for most large coalitions, it is nevertheless verified in a weak sense that involves transfers (dubbed “potential internal stability”) for most small coalitions. The reason for this difference is brought to light, namely the differing rationale that inspires the transfers in either case. Finally, it is shown that the stable coalitions that perform best (in terms of carbon concentration and global welfare) are always composed of both industrialized and developing countries. Two sensitivity analyses confirm the robustness of all these results.
    Keywords: Climate Change, Coalitions, Simulation, Integrated Assessment
    JEL: C71 C73 D9 D62 F42 Q2
    Date: 2007–02
  17. By: Arjan Ruijs (Environmental Economics and Natural Resources Group Wageningen University); Hongyu Ding (Fondazione Eni Enrico Mattei and Venice International University); Ekko C. van Ierland (Wageningen University)
    Abstract: In this paper we discuss how a Decision Support System (DSS) for managing the marine environment can be set up. We use the Driving force-Pressure-State-Impact-Respond (DPSIR) framework to analyze which are the major driving forces impacting upon the marine environment in the North Sea. Moreover, a number of potential responses are identified. Furthermore, a preliminary and simplified optimization model has been set up and can be used in a DSS to decide on the best location of marine reserves for the protection of species. The model is based on a bio-economic metapopulation model that can be used to decide which parts of the sea should be opened for fisheries and which should be protected as marine reserve. It accounts for the dispersal of fish and considers both the economic returns from fisheries and the ecological value of marine biodiversity. A number of suggestions are given on how to extend and improve the DSS.
    Keywords: Decision Support System, Marine Biodiversity Conservation, DPSIR Framework, Bioeconomic Modeling, North Sea
    JEL: Q2 Q5 Q57 Q58
    Date: 2007–02
  18. By: Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)); Philip W. Gassman (Center for Agricultural and Rural Development (CARD)); Manoj Jha (Center for Agricultural and Rural Development (CARD)); Catherine L. Kling (Center for Agricultural and Rural Development (CARD))
    Abstract: We provide estimates of the costs associated with inducing substantial conversion of land from production of traditional crops to switchgrass. Higher traditional crop prices due to increased demand for corn from the ethanol industry has increased the relative advantage that row crops have over switchgrass. Results indicate that farmers will convert to switchgrass production only with significant conversion subsidies. To examine potential environmental consequences of conversion, we investigate three stylized landscape usage scenarios, one with an entire conversion of a watershed to switchgrass production, a second with the entire watershed planted to continuous corn under a 50% removal rate of the biomass, and a third scenario that places switchgrass on the most erodible land in the watershed and places continuous corn on the least erodible. For each of these illustrative scenarios, the watershed-scale Soil and Water Assessment Tool (SWAT) hydrological model (Arnold et al., 1998; Arnold and Forher, 2005) is used to evaluate the effect of these landscape uses on sediment and nutrient loadings in the Maquoketa Watershed in eastern Iowa.
    Keywords: adoption subsidy, cellulosic ethanol, energy crops, land use, SWAT, switchgrass, water quality.
    Date: 2007–03
  19. By: Richard S.J. Tol (Economic and Social Research Institute, Dublin); Kristie L. Ebi; Gary W. Yohe
    Abstract: We study the effects of development and climate change on infectious disease in Sub-Saharan Africa. Infant mortality and infectious disease are close related, but there are better data for the former. In an international cross-section, per capita income, literacy, and absolute poverty significantly affect infant mortality. We use scenarios of these three determinants, and of climate change to project the future incidence of malaria, assuming it to change proportionally to infant mortality. Malaria deaths will first increase, because of population growth and climate change, but then fall, because of development. This pattern is robust to the choice of scenario, parameters, and starting conditions; and it holds for diarrhoea, schistosomiasis, and dengue fever as well. However, the time and level of the mortality peak is very sensitive to assumptions. Climate change is important in the medium term, but dominated in the long term by development. As climate can only be changed with a substantial delay, development is the preferred strategy to reduced infectious diseases, even if that is exacerbated by climate change.
    Keywords: Development, infectious disease, climate change, Sub-Saharan Africa, malaria
    JEL: I12 O13 Q54
    Date: 2006–06
  20. By: Böhringer, Christoph; Conrad, Klaus; Löschel, Andreas (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: In this paper, we investigate whether an environmental tax reform cum joint implementation (JI) provides employment and overall efficiency gains as compared to an environmental tax reform stand-alone (ETR). We address this question in the framework of a large-scale general equilibrium model for Germany and India where Germany may undertake joint implementation with the Indian electricity sector. Our main finding is that joint implementation offsets adverse effects of carbon emission constraints on the German economy. JI significantly lowers the level of carbon taxes and thus reduces the total costs of abatement as well as negative effects on labor demand. In addition, JI triggers direct investment demand for energy efficient power plants produced in Germany. This provides positive employment effects and additional income for Germany. For India, joint implementation equips its electricity industry with scarce capital goods leading to a more efficient power production with lower electricity prices for the economy and substantial welfare gains.
    JEL: D24 D58 F20 Q25
  21. By: Conrad, Klaus (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: The purpose of the paper is to outline an analytical framework which captures the ample scope of locational competition: cost differences, resulting from differences in factor prices including taxes, human capital, infrastructure services and total factor productivity. If cost differences are small, locational competition controls excessive government power. We have modeled locational competition by assuming that governments have a vital interest to keep mobile factors of production at home. We represent this aspect by restricting the usage of environmental instruments such that they will at most exhaust the cost difference to a competing foreign firm. If cost differences are large enough there is no binding restriction for the cost-benefit calculus of a national environmental policy. The tax will be below marginal damage due to strategic reasons of rent shifting. If small international cost do not allow taxation in accordance with marginal damage considerations, then locational competition restricts the size of the tax rate such that the firm is indifferent in relocating or staying at home. If no cost differences exist, it is even possible that both governments will subsidize the pollution intensive input in order to make the domestic loacation attractive.
  22. By: Conrad, Klaus (Institut für Volkswirtschaft und Statistik (IVS))
  23. By: Toderich Kristina (Department of Desert Ecology • Water Resources Research, Samarkand Division of Uzbekfs Academy of Sciences); Tsukatani Tsuneo (Institute of Economic Research, Kyoto University); Petukhov Oleg (Department of Environments and Natural Protection, Navoi Mining Metallurgical Combinate); Gruthinov Victor (Department of Environments and Natural Protection, Navoi Mining Metallurgical Combinate); Khujanazarov Timur (Department of Desert Ecology • Water Resources Research, Samarkand Division of Uzbekfs Academy of Sciences); Juylova Elena (Department of Desert Ecology • Water Resources Research, Samarkand Division of Uzbekfs Academy of Sciences)
    Abstract: The focus of this research is on the salt/metalliferous pollutants because of their extreme toxicity, carcinogenicity, wide distribution and slow biodegradation under the harsh arid/semiarid environments. The extent of pollution of surface water and plants by various contents of salts, traces of heavy metals is presented for different regions of Zerafshan River Basin and Kyzylkum Desert. Soils and water contaminated with cadmium, copper, lead, zinc, selenium, arsenic, molybdenum, manganese, chromium, various oxidizers (Mn, NO3-, Fe +3, Al +3, ClO3-), NH4 and organic pollutants show natural colonization by species that have strategies of avoidance or tolerance to salt/metal toxities. Mapping of plant colonists of salts/metal contaminated soils, seed reproduction and cellular structures of tolerant taxa named as metallohalophytes are examined in the light of present knowledge of such strategies. Electrolytic adsorption and in situ immobilization technologies for cleaning pollutants of mining contaminated soils and underground water are suggested. Phytoremediation technology in the present case may offer a cost-effective and ecologically sound alternative.
    Keywords: ion/salt contents, ICP-MS, glandular structures, metallohalophytes, phytoremediation, contaminated ecosystem, Kyzylkum Desert.
    Date: 2007–02
  24. By: Seiji Ikkatai (Institute of Economic Research, Kyoto University); Daisuke Ishikawa (Institute of Economic Research, Kyoto University); Shuichi Ohori (Institute of Economic Research, Kyoto University)
    Abstract: We study the effects of the European Union Emission Trading Scheme (EU ETS)?which was introduced in January 2005?on companies by conducting interviews in some German and UK firms. In this paper, we demonstrate that although the introduction of the EU ETS has increased awareness of the importance of efforts to reduce global warming and emission costs, it has had little influence on the companies CO2 abatement efforts during the first period.
    Date: 2007–01
  25. By: Suzi Kerr (Motu Economic and Public Policy Research); Glen Lauder (Global Learning); David Fairman (Consensus Building Institute)
    Abstract: This paper explores how to enhance the role for academic research (natural sciences, economics and their integration; and stakeholder management) within the development and implementation of water quality policy in New Zealand. Our focus is on the use of market based instruments and particularly nutrient trading programmes, which are one important part of the potential tool kit to address these issues. We discuss why nutrient trading might be an appropriate instrument for the Lake Rotorua catchment. We survey the existing literature and then outline the outstanding scientific, economic and governance questions that need to be addressed to design an effective trading programme. Finally we discuss how to design a process to address these questions drawing on both technical and practical knowledge through a learning process.
    Keywords: water quality; emissions trading; non-point source pollution; nutrients; Rotorua; communication; learning
    JEL: Q53 Q57 Q58 A12
    Date: 2007–03
  26. By: Klaus Conrad (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: The objective of our approach is to develop a model which captures horizontal product differentiation under environmental awareness, product innovation under network effects, and price competition whereby environmentally friendly products are costlier to produce. As an example, we refer to automobile producers, offering cars with a gasoline powered engine and one with a natural gas powered engine. The network of petrol stations provide the complementary good. The fulfilled expectation equilibrium could be one with either the firm offering the conventional engine as the only producer, or one with the firm offering the new technology as the only producer, or one where both firms share the market. Which equilibrium will emerge depends on the cost of producing energy efficient engines and on environmental awareness of the consumers. Due to the latter aspect the innovative firm has a chance to enter the market. We use a two stage game in prices and characteristics to analyse the respective market structure. We show that if environmental awareness is strong, the firm with the conventional technology will improve energy efficiency of its product. If the network effect is weak, both firms will be in the market. Prices and profits will decline if the role of the network effect becomes important.
    JEL: L11 Q38 H23 L62
  27. By: Jedidiah Brewer; Robert Glennon; Alan Ker; Gary D. Libecap
    Abstract: Rising urban and environmental demand for water has created growing pressure to re-allocate water from traditional agricultural uses. The evolution of water markets has been more complicated than those for other resources. In this paper, we first explain these differences by examining water rights and regulatory issues. Second, we place our research in the context of the economics literature on water marketing. Third, we present new, comprehensive data on prices and the extent, nature, and timing of water transfers across 12 western states from 1987-2005. We find that prices are higher for agriculture-to-urban trades versus within-agriculture trades, in part, reflecting the differences in marginal values between the two uses. Prices for urban use are also growing relative to agricultural use. Markets are responding in that the number of agriculture-to-urban transactions is rising, whereas the number of agriculture-to-agriculture transfers is not. Further, there is a shift from using short-term leases to using multi-year leases of water and permanent sales of water rights. This pattern underscores the need to consider the amounts of water obligated over time, rather than examining only annual flows in assessing the quantities of water traded as is the common practice in the literature. Considering water obligated over time, termed committed water, we find significantly more is transferred and the direction of trading is different than if the focus is on annual flows. Finally, the data reveal considerable variation in water trading across the states.
    JEL: H41 K32 Q21 Q25 Q27 Q56
    Date: 2007–03
  28. By: Yaw Opoku-Ankomah; Youssouf Dembélé; Ben Y. Ampomah; Léopold Somé (CSIR Water Research Institute of Ghana.; Environmental and Agricultural Research Institute (INERA); Water Resources Commission of Ghana)
    Keywords: River basin development / Irrigation management / Institutional development / Organizations / Water allocation / Developing countries
    Date: 2006
  29. By: Heugens, P.P.M.A.R.; Zyglidopoulos, S.C. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Long view organizations have a technical core combining high levels of Woodwardian (1958) technological complexity and Thompsonian (1967) technological intensity. This significantly diminishes their capacity for operational flexibility and strategic adaptation. Little is known about how such organizations manage to learn from rare events. We shed light on this issue by reporting a thirteen-year longitudinal study of a major oil company, tracing its experiences with a socio-political crisis from original preparations to learnings that did not fully materialize until years after the event. We use three alternate templates to interpret the organization?s struggle to maintain its technical core under conditions of fierce contestation by changing constituent groups and dwindling public support: (1) a stakeholder template mapping shifts in the salience of constituent groups that punctuate long-standing negotiated equilibria; (2) a legitimacy template showing migration towards new forms of legitimacy while old forms crumble; and (3) a capability template highlighting how pre-existing stocks of capabilities hinder learning before being supplanted by new ones. These templates are tied together in a set of integrative propositions stating how long view organizations learn from rare events.
    Keywords: Organizational learning;Oil industry;Alternate templates;Environmental jolts;Institutional theory;Resource-based view;Stakeholder theory;
    Date: 2007–03–28
  30. By: Jennifer K. Sesabo; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: This paper applies Tobit models to investigate factors that explain households’ decision-making on whether or not to participate in various activities, using household data collected from two Tanzanian coastal villages (Mlingotini and Nyamanzi). The results indicate that households’ decision to participate in various activities is significantly influenced by asset endowments, households’ structure, local institutions, and location- specific characteristics of both villages. In addition, these results reveal that fishing assets entitlements and access influence are the main determinants for variation in total household’s income. Taken together, the findings show existence of households’ heterogeneity in making choices among different activities, which should be considered by policymakers when designing conservation-development policies in coastal areas.
    Keywords: coastal resources, households, assets, activities, Tanzania, conservation-development policies
    JEL: Q22
    Date: 2005–07
  31. By: Bard Harstad; Gunnar S. Eskeland
    Abstract: Tradable permits are celebrated as a political instrument since they allow (i) firms to equalize marginal abatement costs through trade and (ii) the government to distribute the burden of the policy in a politically fair and feasible way. These two concerns, however, conflict in a dynamic setting. Anticipating that high-cost firms will receive more permits in the future, firms purchase excessive amounts of permits to signal high costs. This raises the price above marginal costs and distorts abatements. In fact, it is better with non-tradable permits if the heterogeneity between the firms is small, if the (shadow) price for permits is large, and if the government redistributes permits frequently.
    Keywords: Tradable permits, private information, signaling
  32. By: Kelly Lock (Motu Economic and Public Policy Research); Stefan Leslie (New Zealand Ministry of Fisheries)
    Abstract: New Zealand is a world leader in the use of Individual Transferable Quota (ITQ) to manage fisheries. Although the use of an ITQ system is not unique to New Zealand, no other country has used this system to the same extent as New Zealand. This has meant that, internationally, a lot of interest has been placed on how our system works and the level of success it has achieved. Generally, the New Zealand system is considered to be a success story, yet the system has changed a number of times since its inception in 1986. Despite the level of interest in New Zealand's unique ITQ system, the current literature is unable to provide a complete account of the historic and current regulations surrounding it. This paper addresses this gap by documenting how the Quota Management System (QMS) functions and the changes it has undergone since its introduction. Reviewing these changes facilitates a deeper understanding of the system itself, as well as providing insight into its potential limitations.
    Keywords: Quota management system; individual transferable quota; fisheries; management; New Zealand
    JEL: Q22 Q28
    Date: 2007–04
  33. By: Paul Raschky
    Abstract: Due to the public good character of protective measures against natural disasters events, their allocation is very often in the realm of bureaucratic and expert agencies. Based on the economic theory of bureaucracy the behaviour of a bureau providing the good "protection against natural hazards" is analysed. The existing model is extended by further institutional constraints accounting for societal control mechanisms. The main proposition is that the allocation of protective measures through natural-hazard-management-agencies does also result in cost and allocative inefficiencies, however, the amount of allocative inefficiencies is relatively higher as compared to a normal bureau. This is mainly due to the potential of blame-shifting from politicians to bureaucrats. The considerations made in this paper can help to design a more efficient institutional framework in societal natural hazard management.
    Keywords: Theory of bureaucracy, natural hazards, blame
    JEL: D72 D73 D81 Q54
    Date: 2007–03
  34. By: Jennifer K. Sesabo; Hartmut Lang; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: In recent years, conservation initiatives through Marine Protected Area (MPAs) in many developing countries have been molded to win the support and participation of local communities. Increasingly, studies have been undertaken to enhance the understandings of the characteristics of rural communities. In the case of Tanzania, the level of compliance with marine and coastal resources management is constrained by lack of knowledge regarding coastal communities’ behavior and characteristics. Indeed, it is hypothesized that the knowledge about rural coastal communities will lead to an increase in compliance of conservation initiatives. Therefore, this paper provides an empirical assessment of households’ perceived attitudes towards proposed MPA establishment in two Tanzanian coastal villages (Mlingotini and Nyamanzi) and their vicinity. Based on survey data, the results indicate that 50.23% of households had favorable attitudes towards the introduction of MPA, out of which 34% belonged to the poor class. Moreover, a majority of households indicate that there is a need of public participation in planning and implementation of MPA. Subsequently, Probit regression, which featured in the analysis revealed that perceived costs and benefits accruing from MPAs establishment, awareness of MPAs objectives and rules that govern the use of marine and coastal resources, dependency on marine and coastal-based activities, perceived fishery conditions, wealth and location variables have a significant influence on perceived attitudes towards establishing of new MPA. Based on the findings, it can be concluded that conservation initiatives through the establishment of MPAs may be more beneficial and more effective when policy makers understand the characteristics and behavior of coastal communities. In addition, conservation initiatives should be based on the consensus building and participation of all stakeholders.
    Keywords: marine protection areas, fisheries, Tanzania
    JEL: Q22
    Date: 2006–03
  35. By: Eric Ruto (University of Newcastle); Guy Garrod (University of Newcastle); Riccardo Scarpa (University of Waikato)
    Abstract: In an effort to improve productivity and profits many farmers have replaced traditional livestock breeds with higher yielding alternatives. While such changes may bring about short-term economic gains, the loss of traditional livestock breeds could result in the loss of an important genetic resource as a variety of important genetic traits adapted to local conditions gradually become less common in the population. This is a particular problem in Africa, where livestock make a substantial contribution to human livelihoods. Using the example of cattle in Kenya’s pastoral livestock markets this study uses a choice experiment approach to investigate buyers’ preferences for indigenous breeds such as the Maasai Zebu. The analysis employs a latent class approach to characterize heterogeneity in valuations both within and across respondents buying cattle for breeding, slaughter or resale. The results show that there are at least three classes of buyers with distinct preferences for cattle traits and that most buyers favor exotic rather than indigenous breeds. Such preferences have implications for the conservation of indigenous cattle in Kenya and in other developing countries and suggest that some form of intervention may be required to ensure the preservation of this important animal genetic resource.
    Keywords: animal genetic resources; economic valuation; choice experiments; latent class models;indigenous livestock; Maasai Zebu cattle
    JEL: N5 O13 C25 Q26
    Date: 2007–03–23
  36. By: Klaus Conrad (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: The paper addresses the problem of entry barriers for a new technology – hydrogen powered cars or cars with fuel cell engines – if the network of its filling stations is missing or thin. We use Hotelling’s model of product differentiation to characterize a situation where an incumbent firm produces the old technology, compatible with the existing network of filling stations, and an entrant, who cannot use this network for its products. We assume that the entrant has to invest in remodeling existing filling stations for making them compatible. This, however, raises his costs. In the intertemporal setting of our model, the Hotelling pricing rule for exhaustible resources encourages the entrant to invest in compatibility because the price of gasoline will rise in the long run to the price of the backstop technology - fuel cells. Depending on the cost of compatibility, our model indicates three possible outcomes. Either, the costs of compatibility are too high and governmental support is required. Or the incumbent bears losses in initial periods by waiting for profits in later periods when full compatibility of the network is reached. Or the entrant benefits from the fact that the price of oil reaches the price of the backstop technology (full cells) rather soon.
    JEL: L11 L15 L62 Q42

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