nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒07‒07
twelve papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. A Global Land Use and Biomass Approach to Reduce Greenhouse Gas Emissions, Fossil Fuel Use and to Preserve Biodiversity By Arthur Riedacker
  2. The Environmental Kuznets Curve in a World of Irreversibility By Fabien Prieur
  3. On the Design of Global Refunding and Climate Change By Hans Gersbach; Ralph Winkler
  4. Modeling Linkages Between Climate Policy and Land Use: An Overview By Edwin van der Werf; Sonja Peterson
  5. The european energy system in the context of long term climate policies By Patrick Criqui; Silvana Mima; Alban Kitous
  6. Long-run Determinants of Pollution: A Robustness Analysis By Michael Lamla
  7. Climate Change, Mortality, and Adaptation: Evidence from Annual Fluctuations in Weather in the US By Olivier Deschênes; Michael Greenstone
  8. Interaction of European Carbon Trading and Energy Prices By Derek W. Bunn; Carlo Fezzi
  9. Should We Drill in the Arctic National Wildlife Refuge? An Economic Perspective By Matthew J. Kotchen; Nicholas E. Burger
  10. Empirical Study on Costs and Incomes of Organic Farming By Josep Maria Argiles Bosch
  11. Democracy and the curse of natural resources By Esther Hauk; Antonio Cabrales
  12. Urban Transport Policies and the Environment: Evidence from Italy By Marco Percoco

  1. By: Arthur Riedacker (INRA Unité Mona)
    Abstract: As average growth consumptions per capita and world population will continue to grow, the promotion of sustainable developments during the next half a century implies to take into account environmental aspects, local potentialities and futures changes in population as well climatic, economic and social factors. At the global level, land and fossil fuel availability per capita, capacity of absorption of greenhouse gas emissions are considered the most important environmental factors. Whereas at local levels are to be considered preservation or improvement of soil fertility, of water regimes, of quality of air, soil and water. Biodiversity must be taken into account at both levels to cope also with climate change. But as underlined by IPCC lead authors, up to now there is no tool available to deal with these issues in a comprehensive and adequate manner. A new tool, presented here, the Integrated Environmental Assessment (IEA) has therefore been developed. It takes into account all actions, from the sun to final services, in three stages: solar energy bioconversion and phytomass production at I; conversion of phytomass and non renewable resources into final products and waste disposal at II ; arrangement of products to meet final needs, such as nutrition, housing mobility etc. at III. IEAs start at the global level with the “GIEA” , the results of which are then to be confronted with constraints at local levels from “LIEAs”. This new tool can be used to identify impacts of technological changes in land management and to compare alternative practices better than with LCAs. It was used to analyze environmental impacts of technological changes between 1950 and 2000 in France, in wheat production at stage I. It appeared that not only yields, but also the primary mitigation potential (PMP) per hectare have been multiplied by 4, whereas the net primary energy gain per ha has been multiplied by 3.2. Besides this, 14,5 Mha (the area of the French forest about a quarter of France) land use change could be avoided; in the case of deforestation this would have led to the emission of more than 4 billion tons of CO2. Lessons are drawn from the past and for the next fifty years: In developed and industrialized countries, alternative managements of land and increased use of non food phytomass can and should be envisaged. In Sub-Saharan Africa population is expected to double during the next 50 years and soil fertility is drastically decreasing; agricultural practices are no longer sustainable. If no changes appear in agriculture, forests and GHG emission from deforestation as well as biodiversity are threatened by further and inevitable land use change. Increasing yields per hectare should therefore become the priority; it would at the same time increase food security, improve mitigation and adaptation to climate change, help to combat deforestation and desertification, better preserve biodiversity, and ultimately also allow more bioenergy production: This would improve the food security and at the same time help to achieve the objectives of the three main UN environmental conventions and of the UN Millennium Goal.
    Keywords: Greenhouse Gas Emission, Fossil Fuel, Biodiversity
    JEL: Q23 Q27
    Date: 2007–06
  2. By: Fabien Prieur (GREQAM and INRA-LAMETA)
    Abstract: We develop an overlapping generations model where consumption is the source of polluting emissions. Pollution stock accumulates with emissions but is partially assimilated by nature at each period. The assimilation capacity of nature is limited and vanishes beyond a critical level of pollution. We first show that multiple equilibria exist. More importantly, some exhibit irreversible pollution levels although an abatement activity is operative. Thus, the simple engagement of maintenance does not necessarily suffice to protect an economy against convergence toward a steady state having the properties of an ecological and economic poverty trap. In contrast with earlier related studies, the emergence of the environmental Kuznets curve is no longer the rule. Instead, we detect a sort of degenerated Environmental Kuznets Curve that corresponds to the equilibrium trajectory leading to the irreversible solution.
    Keywords: Overlapping Generations, Irreversible Pollution, Poverty Trap, Environmental Kuznets Curve
    JEL: Q56 D62 D91
    Date: 2007–05
  3. By: Hans Gersbach (Center of Economic Research (CER-ETH) at ETH Zurich); Ralph Winkler (Center of Economic Research (CER-ETH) at ETH Zurich)
    Abstract: We design a global refunding scheme as a new international approach to address climate change. A global refunding system allows each country to set its carbon emission tax, while aggregate tax revenues are partially refunded to member countries in proportion to the relative emission reductions they achieve within a given period, compared to some given baseline emissions. In a simple model we show that a suitably designed global refunding scheme is self-enforcing and achieves the social global optimum.
  4. By: Edwin van der Werf (Kiel Institute for the World Economy); Sonja Peterson (Kiel Institute for the World Economy)
    Abstract: Agriculture and forestry play an important role in emitting and storing greenhouse gases. For an efficient and cost-effective climate policy it is therefore important to explicitly include land use, land use change, and forestry (LULUCF) in economy-climate models. This paper gives an overview and assessment of existing approaches to include land use, land-use change, and forestry into climate-economy models or to link economy-climate models to land-use models.
    Keywords: Climate Change, Climate Policy, Modeling, Land Use
    JEL: Q23 Q24 Q25 Q42
    Date: 2007–05
  5. By: Patrick Criqui (LEPII - Laboratoire d'économie de la prospective et de l'intégration internationale - [CNRS : FR2664] - [Université Pierre Mendès-France - Grenoble II]); Silvana Mima (LEPII - Laboratoire d'économie de la prospective et de l'intégration internationale - [CNRS : FR2664] - [Université Pierre Mendès-France - Grenoble II]); Alban Kitous (Enerdata S.A.)
    Abstract: The future of the European energy system will strongly depend on a future world energy context that will be dominated by two key challenges. The first challenge corresponds to the necessity of meeting the energy needs of a growing population in Asia, South America and Africa, while some key energy resources – oil and natural gas – enter in a process of increasing scarcity. The second challenge results from the need to rapidly adjust the structure of the world energy system in order to meet the tightening constraints induced by the will to limit anthropogenic climate change. Both issues are clearly strategic for Europe as on the one hand the Union will have to master a growing import dependency from the international markets and neighbouring regions, and as on the other hand it intends to take the lead on the international scene for climate change mitigation policies.<br />Analyses of world long term energy scenario show that the growing scarcity on hydrocarbon supply will not solve the climate change problem as it will rather result in increased coal consumption. Conversely seriously addressing the climate change challenge will imply lower fossil fuel consumption, allow an extension of oil and gas reserves and lead to a real double dividend in terms of sustainability: by climate change mitigation and by reduced tensions and risks of crises on the oil and gas markets. Similarly, ambitious GHG abatement scenarios for Europe will allow limiting the Union's import dependency, which is of course one key element of overall security. Thus, addressing the fossil fuel emissions abatement issue clearly appears as a top priority on the agenda. In this paper we focus on what GHG emissions mitigation policies mean for the European energy system within a global framework
    Date: 2007–06–27
  6. By: Michael Lamla (KOF Swiss Economic Institute, ETH Zurich)
    Abstract: This paper examines how robust economic, political, and demographic variables are related to water and air pollution. Employing Bayesian Averaging of Classical Estimates (BACE) for a cross section of up to 74 countries, 33 variables and 3 proxies for air and water pollution over a period from 1980 to 1995 we confirm the Environmental Kuznets Curve hypothesis, highlight the relevance of effcient production technologies and underline the role of political and demographic variables.
    Keywords: pollution; sensitivity analysis; BACE
    JEL: C52 O13 Q53
    Date: 2007–05
  7. By: Olivier Deschênes; Michael Greenstone
    Abstract: This paper produces the first large-scale estimates of the US health related welfare costs due to climate change. Using the presumably random year-to-year variation in temperature and two state of the art climate models, the analysis suggests that under a "business as usual" scenario climate change will lead to an increase in the overall US annual mortality rate ranging from 0.5% to 1.7% by the end of the 21st century. These overall estimates are statistically indistinguishable from zero, although there is evidence of statistically significant increases in mortality rates for some subpopulations, particularly infants. As the canonical Becker-Grossman health production function model highlights, the full welfare impact will be reflected in health outcomes and increased consumption of goods that preserve individuals' health. Individuals' likely first compensatory response is increased use of air conditioning; the analysis indicates that climate change would increase US annual residential energy consumption by a statistically significant 15% to 30% ($15 to $35 billion in 2006 dollars) at the end of the century. It seems reasonable to assume that the mortality impacts would be larger without the increased energy consumption. Further, the estimated mortality and energy impacts likely overstate the long-run impacts on these outcomes, since individuals can engage in a wider set of adaptations in the longer run to mitigate costs. Overall, the analysis suggests that the health related welfare costs of higher temperatures due to climate change are likely to be quite modest in the US.
    JEL: H4 I10 I12 I18 Q41 Q51 Q53 Q54 Q58
    Date: 2007–06
  8. By: Derek W. Bunn (London Business School); Carlo Fezzi (University of East Anglia)
    Abstract: This paper addresses the economic impact of the EU Emission Trading Scheme for carbon on wholesale electricity and gas prices. Specifically, we analyse the mutual relationships between electricity, gas and carbon prices in the daily spot markets in the United Kingdom. Using a structural co-integrated VAR model, we show how the prices of carbon and gas jointly influence the equilibrium price of electricity. Furthermore, we derive the dynamic pass-trough of carbon into electricity price and the response of electricity and carbon prices to shocks in the gas price.
    Keywords: Carbon Emission Trading, Energy Markets, Structural VECM
    JEL: Q48 L94 C32
    Date: 2007–06
  9. By: Matthew J. Kotchen; Nicholas E. Burger
    Abstract: This paper provides model-based estimates of the value of oil in Alaska's Arctic National Wildlife Refuge (ANWR). The best estimate of economically recoverable oil in the federal portion of ANWR is 7.06 billion barrels of oil, a quantity roughly equal to US consumption in 2005. The oil is worth $374 billion ($2005), but would cost $123 billion to extract and bring to market. The difference, $251 billion, would generate social benefits through industry rents of $90 billion as well as state and federal tax revenues of $37 billion and $124 billion, respectively. A contribution of the paper is the decomposition of the benefits between industry rents and tax revenue for a range of price and quantity scenarios. But drilling and development in ANWR would also bring about environmental costs. These costs would consist largely of lost nonuse values for the protected status of ANWR's natural environment. Rather than estimate these costs and conduct a benefit-cost analysis, we calculate the costs that would generate a breakeven result. We find that the average breakeven willingness to accept compensation to allow drilling in ANWR ranges from $582 to $1,782 per person, with a mean estimate of $1,141.
    JEL: Q3 Q4 Q5
    Date: 2007–07
  10. By: Josep Maria Argiles Bosch (Universitat de Barcelona)
    Abstract: This paper conducts an empirical study on output, costs and incomes in organic farming with a sample of Spanish firms. Financial accounting data reveals that organic and partly or transitional to organic farming do not get significantly different output than intensive farming. Farms in transition to organic farming bear significantly higher costs and obtain significantly lower income than intensive farming. Costs were recalculated incorporating opportunity costs of family work. Organic and transitional farming displayed significantly higher costs and lower relative income. However, organic farming plays a social role generating more employment than intensive farming and avoiding environmental and health damages. The article recalls for the necessity for accounting to broaden its scope and contents. It should disclose social and environmental data, as well as transactions that are not marketed, registered or valued but yield social profits and costs.
    Keywords: transition to organic farming., organic farming, environmental accounting
    JEL: M10 M40 M41
    Date: 2007
  11. By: Esther Hauk; Antonio Cabrales
    Abstract: We propose a theoretical model to explain empirical regularities related to the curse of natural resources. This is an explicitly political model which emphasizes the behavior and incentives of politicians. We extend the standard voting model to give voters political control beyond the elections. This gives rise to a new restriction into our political economy model: policies should not give rise to a revolution. Our model clarifies when resource discoveries might lead to revolutions, namely, in countries with weak institutions. Natural resources may be bad for democracy by harming political turnover. Our model also suggests a non-linear dependence of human capital on natural resources. For low levels of democracy human capital depends negatively on natural resources, while for high levels of democracy the dependence is reversed. This theoretical finding is corroborated in both cross section and panel data regressions.
    Keywords: Curse of natural resources, democracy, political game, revolution, human capital.
    JEL: D72 H52 O13
    Date: 2007–06–20
  12. By: Marco Percoco (Bocconi University)
    Abstract: The paper reviews urban transport policies in Italian cities and their impact on the concentration of NO2 and PM10. Using parametric and non-parametric techniques, it finds no significant effect of the policy actions currently implemented. Further, it finds evidence of a weak positive impact of plans adoption. These results are interpreted as evidence of positive externalities among actions. Finally, by also discussing case studies, the paper points out the absence of economic instruments and argues that significant welfare gains would derive from their adoption.
    Keywords: Urban Transport Policies, Traffic Externalities, Pollution Abatement
    JEL: Q53 R41
    Date: 2007–05

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