|
on Environmental Economics |
| By: | Östblom, Göran (National Institute of Economic Research) |
| Abstract: | A cost-effective policy instrument to attain the Swedish carbon emission target, suggested by the Government’s commission on flexible mechanisms of the Kyoto protocol, is the purchase of emission allowances within the EU trading scheme, instead of reducing domestic CO2 emissions at higher costs. Also, proposed by the commission, is that only grandfathered, but not imported emission allowances, should be accounted for in the carbon emissions target. This formulation of the target is now under consideration by the Swedish Environmental Protection Agency as instructed in Sweden’s Budget Bill for 2007. The nitrogen and sulphur outcomes of these suggestions for the climate policy are here assessed in the view of Sweden’s official emission projections for 2010 and 2020. In view of the historical emission multipliers and the analysis presented here, the proposed climate policy does not conform to Sweden’s interim targets for nitrogen oxides (NOx) and sulphur dioxide (SO2). Although, the CO2 emission target could be attained at the least costs through emission trading, an environmental policy which brings also SO2 and NOx emissions to the acceptable levels requires additional policy instruments aiming at the exclusive reduction of these emissions. The findings here suggest that these reductions would correspond to decreases of the SO2/GDP and NOx/GDP ratios by 8 and 12 per cent, respectively. The emission multipliers of aggregate demand for CO2-permit trading and non-trading sectors, are calculated by exploiting the environmental accounting matrix of Sweden for 2000 within the framework of an inter industry model. |
| Keywords: | Emission multipliers; carbon trading; emission/GDP ratio; environmental goals |
| Date: | 2007–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nierwp:0101&r=env |
| By: | Crespi Francesco; Costantini Valeria |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:200708&r=env |
| By: | Julien Pierre Chevallier |
| Abstract: | In international emissions trading schemes such as the Kyoto Protocol and the European Union Emissions Trading Scheme, the suboptimal negotiation of the cap with respect to total pollution minimization leads us to critically examine the proposition that generous allocation of grandfathered permits by the regulator based on recent emissions might pave the way for dominant positions. Stemming from this politically given market imperfection, this paper develops a differential Stackelberg game with two types of noncooperative agents: a large potentially dominant agent and a competitive fringe whose size are exogenously determined. The strategic interactions are modelled on an intra-industry permits markets where agents can freely bank and borrow permits. This paper contributes to the debate on initial permits allocation and market power by focusing on the effects of allowing banking and borrowing. A documented appraisal on whether or not such provisions should be included is frequently overlooked by the debate to introduce the permits market itself among other environmental regulation tools. Results are presented under perfect information. |
| Keywords: | emissions trading, banking borrowing, market power |
| JEL: | C73 L11 Q52 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2007-18&r=env |
| By: | Thierry Bréchet; Pierre-André Jouvet |
| Abstract: | The purpose of the article is to analyse the consequences of the constraint of shareholder value on the wage level and equilibrium unemployment rate. We will relate the new program of maximization of the firm, as well as the one of the trade union. We obtain an increase of the unemployment rate when progressing from a maximization of profit to a maximization of the EVA. The unemployment rate is also now depending on others financial variables. |
| Keywords: | innovation, pollution abatement cost, production function, environmental regulation |
| JEL: | H23 L51 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2007-15&r=env |
| By: | Tsuyoshi Toshimitsu (School of Economics, Kwansei Gakuin University) |
| Abstract: | Employing an environmentally differentiated duopoly model, we analyze how emission standards affect imports, the environment, and social welfare. We show that a strict emission standard is not necessarily import-restrictive, whereas it may possibly degrade the environment. Furthermore, we present evidence that the effect of emission standards on net social surplus depends on the mode of market competition and the degree of marginal social valuation of environmental damage. |
| Keywords: | emission standards, environmentally differentiated duopoly, green market |
| JEL: | D43 F12 F13 L52 Q28 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:34&r=env |
| By: | Pierre-André Jouvet; Pierre Pestieau; Grégory Ponthière |
| Abstract: | Whereas existing OLG models with endogenous longevity neglect the impact of environmental quality on mortality, this paper studies the design of the optimal public intervention in a two-period OLG model where longevity is influenced positively by health expenditures, but negatively by pollution due to production. It is shown that if individuals, when choosing how much to spend on health, do not internalize the impact of their decision on environmental quality (i.e. the space available for each person), the decentralization of the social optimum requires a tax not only on capital income, but also, on health expenditures. The sensitivity of the optimal second-best public intervention is also explored numerically.. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2007-19&r=env |
| By: | Anger, Niels; Böhringer, Christoph; Moslener, Ulf |
| Abstract: | This paper quantifies the macroeconomic impacts of the Clean Development Mechanism (CDM) under the Kyoto Protocol based on a computable general equilibrium (CGE) model of international trade and energy use. Employing project-based CDM supply data we assess the relative importance of transaction costs and investment risks as well as CDM regulations through supplementarity and additionality criteria. Our numerical results show that the macroeconomic impacts of transaction costs and investment risks are negligible: Given the large supply of cheap project-based emissions credits in developing countries, compliance to the Kyoto Protocol can be achieved at a very low cost. However, regulatory restrictions such as a supplementarity criterion can substantially curtail the potential efficiency gains from where-flexibility in climate policy. |
| Keywords: | Kyoto Protocol, Emissions Trading, Clean Development Mechanism, Computable General Equilibrium |
| JEL: | C68 D61 Q56 Q58 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5589&r=env |
| By: | Basak Bayramoglu (Paris-Jourdan Sciences Economiques et Centre d'Economie de la Sorbonne) |
| Abstract: | This paper studies the link between the design of international environmental agreements and the incentives for the private sector to invest in cleaner technologies. More specifically, it compares the performance, in the Paretoo sense, of two types of agreement : an agreement on a uniform standard with transfers and an agreement on differentiated standards without transfers. To achieve this goal, we use a multi-stage game where the private sector anticipates its irreversible investment given the expected level of abatement standards, resulting from future bilateral negotiations. Our findings indicate that whenever countries are able to partially commit, the agreement on a uniform standard may be preferable, as it creates greater incentives for firms to invest in costly abatement technology. This result relies on the low level of the set-up cost of this technology. If this level is sufficiently high, the announcement and implementation of the agreement on a uniform standard with transfers is not optimal, because it takes away the incentive of all firms to invest in a new abatement technology. |
| Keywords: | Agreements, standards, transfers, technology adoption, irreversible investment, bargaining, transboundary pollution. |
| JEL: | Q50 C71 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:v07030&r=env |
| By: | Vincent Martinet |
| Abstract: | This paper examines how the viability approach can be used to define sustainability goals. In an economic model with a non renewable natural resource, we define minimal rights to be guaranteed for all generations. These rights can include a minimal consumption (economic goal) and the preservation of natural resources (environmental goal). From a given economic state, it is possible to define the set of minimal rights that can be provided for all generation. To address the intergenerational equity issue, we propose to use a criterion that define the set of minimal rights that provide the maximal utility, in a Rawlsian perspective (Rawls, 1971). We describe how this criterion can be applied and computed, and discuss it with respect to usual criteria, including the maximin criterion, the Green Golden Rule, the Chichilnisky approach and the Mixed Bentham-Rawls criterion. |
| Keywords: | sustainability, intergenerational equity, minimal rights, viability |
| JEL: | Q01 Q32 O13 C61 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2007-20&r=env |
| By: | Mendelsohn, Robert; Seo, Sungno Niggol |
| Abstract: | This paper analyzes t he impact of climate change on animal husbandry in Africa. It regresses the net revenue from raising animals in small and large farms across Africa on climate, soil, and other control variables to test the climate sensitivity of livestock. The study is based on a survey of over 9,000 farmers across 11 countries conducted by the World Bank and the Global Environment Facility. From this dataset, 5,400 farms were found to rely on livestock. The paper develops models to test whether the climate coefficients of small and large farms are similar. It turns out that small farms tend to be more labor intensive, rely on native stocks, and have few animals. Large farms tend to be more commercial operations, with much larger stocks and more modern approaches. The analysis finds that warming is good for small farms because they can substitute animals that are heat tolerant. Large farms, by contrast, are more dependent on cattle, which are not heat tolerant. The wetter scenarios are likely to be harmful to grazing animals because greater rainfall implies a shift from grasslands to forests, an increase in harmful disease vectors, and a shift from livestock to crops. Overall, because large farms dominate the sector, African livestock net revenues are expected to fall. However, if future climates turn out to be dry, livestock net revenue will increase. At least against the risk of dryness, livestock offer a good substitute for crops. |
| Keywords: | Livestock & Animal Husbandry,Rural Development Knowledge & Information Systems,Climate Change,Dairies & Dairying,Wildlife Resources |
| Date: | 2007–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4261&r=env |
| By: | Antoine Mandel (Centre d'Economie de la Sorbonne) |
| Abstract: | In this paper, we extend the problem of decentralization of Pareto optima in an economy with production externalities to the case where the production capacities upon which Pareto optimality is defined may differ from the aggregate of the firms expectations about their production possibilities. This issue is raised in order to deal with the seemingly different expectations of firms and governments about the economic consequences of climate change. We show the government can create a "production allowance" market in order to force the firms to produce in a way it considers as optimal. The results are then applied to the analysis of the economic and welfare consequences of climate change. |
| Keywords: | General equilibrium theory, Pareto Optimality, externalities. |
| JEL: | D51 D62 Q54 Q58 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:b07028&r=env |
| By: | Pagiola, Stefano; Rios, Ana R.; Arcenas, Agustin |
| Abstract: | This paper uses data from a Payments for Environmental Services (PES) project being implemented in Nicaragua to examine the extent to which poorer households that are eligible to participate are in fact able to do so, an issue over which there has been considerable concern. The study site provides a strong test of the ability of poorer households to participate as it requires participants to make substantial and complex land use changes. The results show that poorer households are in fact able to participate—indeed, by some measures they participated to a greater extent than better-off households. Moreover, their participation was not limited to the simpler, least expensive options. Extremely poor households had a somewhat greater difficulty in participating, but even in their case the difference is solely a relative one. Transaction costs may be greater obstacles to the participation of poorer households than household-specific constraints. |
| Keywords: | Payments for Environmental Services; PES; poverty; participation |
| JEL: | Q57 Q2 |
| Date: | 2007–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3705&r=env |
| By: | Antoine Mandel (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]) |
| Abstract: | In this paper, we extend the problem of decentralization of Pareto optima in an economy with production externalities to the case where the production capacities upon which Pareto optimality is defined may differ from the aggregate of the firms expectations about their production possibilities. This issue is raised in order to deal with the seemingly different expectations of firms and governments about the economic consequences of climate change. We show the government can create a "production allowance" market in order to force the firms to produce in a way it considers as optimal. The results are then applied to the analysis of the economic and welfare consequences of climate change. |
| Keywords: | General equilibrium theory, Pareto optimality, externalities. |
| Date: | 2007–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00155798_v1&r=env |
| By: | Basak Bayramoglu (Paris-Jourdan Sciences Economiques et Centre d'Economie de la Sorbonne); Jean-François Jacques (EURiSCO) |
| Abstract: | This note proposes an example which contradicts the idea that similar countries will negotiate an agreement on a uniform standard. It shows that strictly identical countries may have an interest in reducing their emissions differently, and not in a uniform way. This result relies on the existence of fixed costs in the abatement technology. Identical countries could be better off by signing an agreement on differentiated standards in order to exploit increasing returns to scale in the abatement activities. More specifically, one of the countries abates for both, and pays for the fixed cost of investment. In return, it is compensated by monetary transfers for this effort. We show that the level of fixed cost must be sufficiently high in this case. |
| Keywords: | Transboundary pollution, cooperative games, bargaining, standards, transfers, fixed cost. |
| JEL: | Q50 C71 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:v07031&r=env |
| By: | Antoine Mandel (Centre d'Economie de la Sorbonne) |
| Abstract: | This paper focuses on the influence of the influence of the opening of a market of allowances, such as the European Union Emission Trading Scheme, on the general equilibrium of an economy. Assuming there existed an equilibrium before the opening of this new market, we describe the changes in the firms behavior which guarantee that an equilibrium can be reached in the enlarged economy. The existence of an equilibrium in this framework can then be interpreted as ensuring the economy has the capacity to undergo the opening of allowances without too important modifications in its organisation. |
| Keywords: | General equilibrium theory, existence of equilibrium, externalities, increasing returns, markets of allowances. |
| JEL: | C62 D21 D51 D62 Q54 Q58 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:b07027&r=env |
| By: | Lange, Andreas; Löschel, Andreas; Vogt, Carsten; Ziegler, Andreas |
| Abstract: | This paper puts forward equity as an important structural element to understanding negotiation outcomes. We first advance bargaining theory to incorporate the self-serving use of equity. Agents are predicted to push equity principles which benefit them more than other parties, in particular those which are disadvantageous to parties with large bargaining power. Based on unique data from a world-wide survey of agents involved in international climate policy, we then study how participants assess the support of the equity criteria by major parties in the climate negotiations. Comparing these results with cost estimates from a POLES model, we find that the perceived equity preferences of the respective countries or groups of countries are in general consistent with our hypothesis of a self-serving use of equity criteria and thereby lend support for our theoretical model. While this self-interest is recognized by the participants of our survey for the positions of the USA and the G77/China as well as Russia, the EU manages to be seen as choosing (self-serving) equity arguments out of fairness concerns and in order to facilitate the negotiations. |
| Keywords: | bargaining theory, equity criteria, self-serving bias, climate policy, survey data |
| JEL: | C7 D63 H41 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5588&r=env |