nep-env New Economics Papers
on Environmental Economics
Issue of 2007‒11‒03
eleven papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Costly Enforcement of Voluntary Environmental Agreements with Industries By David M. McEvoy; John K. Stranlund
  2. Markets, Institutions and Sustainability By Reeks, Ella
  3. The Time-Inconsistency of Alternative Energy Policy By Agnes d'Artigues; Jacques Percebois; Thierry Vignolo
  4. Estrutura económica, intensidade energética e emissões de CO2: Uma abordagem Input-Output By Luís Cruz; Eduardo Barata
  5. The economics of a biofuel consumption mandate and excise-tax exemption: An empirical example of U.S. ethanol policy By de Gorter, Harry; Just, David R.
  6. Using Hedonic Property Models to Value Public Water Bodies: A Note Regarding Specification Issues By Nicholas Z. Muller
  7. The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis By Kevin A. Hassett; Aparna Mathur; Gilbert E. Metcalf
  8. La produzione ed erogazione di acqua potabile By Bianco Gianni; Cecati Pierluigi
  9. How to be an Ecological Economist By Malte Faber
  10. The economics of U.S. ethanol import tariffs with a consumption mandate and tax credit By de Gorter, Harry; Just, David R.
  11. Incertitude et information en économie de l'environnement.<br />Choix privés et attitudes individuelles face à<br />l'incertitude. By Jean-Marc Tallon; Jean Christophe Vergnaud

  1. By: David M. McEvoy (Department of Economics, Appalachian State University); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst)
    Abstract: Although the theoretical literature on the performance of voluntary approaches to environmental protection has progressed quite far in the last decade, no one has rigorously addressed the obvious point that even voluntary emissions control policies must be enforced. This paper examines the consequences of the need for costly enforcement of voluntary environmental agreements with industries on the ability of these agreements to meet regulatory objectives, the levels of industry participation with these agreements, and the relative efficiency of voluntary and regulatory approaches. We find that enforcement costs that are borne by the members of a voluntary emissions control agreement limit the circumstances under which an agreement can form in place of an emissions tax. However, if an agreement does form, member-financed enforcement induces greater participation than if compliance with the agreement could be enforced without cost to its members. Moreover, a voluntary emission control agreement with an industry can be a more efficient way to achieve an environmental quality objective than an emission tax, but only if: (1) the members of an agreement bear the costs of enforcing compliance with the agreement; (2) there exists member-financed agreements that reach the government’s environmental quality target while leaving the members of the agreement at least as well off as they would be under an emissions tax, and (3) the enforcer of the agreement has a significantly better monitoring technology or a higher sanction available to it than the government.
    Keywords: Voluntary agreements, self-enforcing agreements, emissions tax, enforcement
    JEL: L51 Q58
    Date: 2007–10
  2. By: Reeks, Ella (School of Economics and Finance, University of Tasmania)
    Abstract: Encouraging and stimulating markets for new and innovative environmental goods and services is crucial to move our economy towards sustainability. Formal legislation, government policies, and price mechanisms alone, are not however, sufficient to guarantee the development of new markets. This paper demonstrates the importance of market participants developing their own ‘rules of the game’, their own sets of informal practices, routines, and institutions to make the market work. A case study on Australia’s successfully developing wind energy market is utilised to illustrate these market processes in action. Market ‘emergence’ or market ‘creation’ is explored from an institutional and evolutionary perspective. The first section is dedicated to elaborating the markets as institutions perspective whilst theoretical insights into how markets as institutions might emerge are detailed in the second section. In the third section institutional emergence of the wind energy market in Australia is explained by means of a theoretical framework developed from the case study. The research points to unique market behaviours, committed buyer-seller relationships, learned exchange capabilities, and institutionalised market practices as necessary features of successfully emergent markets. The paper concludes with directions to support new market development for environmental sustainability.
    Keywords: Market, Institution, Emergence, Learning, Exchange
    Date: 2007–07
  3. By: Agnes d'Artigues; Jacques Percebois; Thierry Vignolo
    Abstract: Time-inconsistency can arise when a government attempts to convince private sector to use a particular alternative energy (gas, green electricity...) rather than petroleum products. By introducing taxes and feed-in prices, a government would encourage firms and households to switch to an alternative energy rather than use petroleum products. However, even if a government is in favor of increasing alternative energy consumption, it can benefit from considerable financial resources resulting from petroleum product consumption. As a result of these conflicting issues, the private sector may not find the alternative energy policy credible, which prevents the government to implement a socially efficient policy.
    Keywords: energy policy; time inconsistency; alternative energy
    JEL: E62 Q42 Q48
    Date: 2007
  4. By: Luís Cruz (GEMF and Faculdade de Economia, Universidade de Coimbra); Eduardo Barata (GEMF and Faculdade de Economia, Universidade de Coimbra)
    Abstract: Este trabalho explora a metodologia Input-Output como uma alternativa válida para estudar interacções entre energia, ambiente e actividades económicas, tendo por desígnio a obtenção de resultados susceptíveis de apoiar estratégias e políticas que respeitem e promovam uma gestão equilibrada da dinâmica que caracteriza as relações entre disponibilidade de energia, protecção ambiental e crescimento económico, num contexto marcado pelos princípios do Protocolo de Quioto e pelas regras do Comércio Europeu de Licenças de Emissão. As ligações entre os diferentes ramos de actividade, a produção e o consumo de energia e a correspondente emissão de CO2 em Portugal são estudadas com recurso ao desenvolvimento de um modelo Input-Output integrado com modelos satélite de fluxos de energia e de CO2 (resultantes da queima de combustíveis fósseis). São estimados coeficientes energéticos e de emissão de CO2 por actividade económica, assim como as necessidades de energia e as emissões correspondentes.
    Keywords: análise Input-Output, energia, emissões de CO2, Portugal
    JEL: C67 D57 Q32 Q43
    Date: 2007
  5. By: de Gorter, Harry; Just, David R.
    Abstract: This paper develops a general framework to evaluate the effects on agricultural and gasoline markets of a consumption mandate and excise-tax exemption, the two most prominent public biofuel policies. Although market prices for biofuels increase under each policy, consumer fuel prices always decline with a tax exemption and increase with a mandate except under special circumstances when oil supply is inelastic relative to the supply of biofuels. A tax exemption alone is a biofuel consumption subsidy but most of the benefits go to biofuel producers because biofuels are a small share of total fuel consumption. Fuel consumers benefit indirectly to the extent gasoline prices decline with increased biofuel production. With a binding mandate in place, the tax exemption acts as a subsidy to fuel consumers instead. Biofuel producers only gain indirectly with the increased biofuel demand resulting from the increase in total fuel consumption. Most of the market effects are due to the mandate with the tax exemption only exacerbating the biofuel price increase and causing an increase in the oil price but a decrease in the consumer fuel price. An important implication is that the effects of each policy are not additive when used in combination. To illustrate the complexity and importance of the interaction between biofuel mandates and tax exemptions, we calibrate a stylized empirical model of the U.S. ethanol market. The results confirm the theoretical findings, including the special case of a mandate reducing consumer prices. The model is well suited to form a basis for evaluating the social benefits of the mandate versus the tax exemption in reducing local pollution, global warming and reliance on oil, and in enhancing farm incomes, reducing tax costs of farm subsidies and promoting rural development.
    Keywords: biofuels; mandate; tax exemption; ethanol
    JEL: Q42 Q18 Q17 F17
    Date: 2007–10–24
  6. By: Nicholas Z. Muller
    Abstract: The hedonic literature has established that public water bodies provide external benefits that are reflected in the value of nearby residential real estate. The literature has employed several approaches to quantify these nonmarket services. With a residential hedonic model, this paper tests whether model specification affects resource valuation using an actively managed reservoir in Indiana and a passively managed lake in Connecticut. The results indicate that valuation is quite sensitive to model specification,and that omitting either the waterview or waterfront variables from the hedonic function likely results in a misspecified model. The findings from this study are important for researchers and public agencies charged with managing water resources to bear in mind as the external benefits from existing or man-made lakes anr reservoirs are estimated. Therefore, while it requires considerably more effort to determine which properties are in waterfront locations and which properties have a view, the potential misspecification of distance-only models likely justifies these extra research costs. Further, the findings in this analysis callinto question results from distance-only models in the literature.
    Date: 2007
  7. By: Kevin A. Hassett; Aparna Mathur; Gilbert E. Metcalf
    Abstract: This paper measures the direct and indirect incidence of a carbon tax using current income and two measures of lifetime income to rank households. Our two measures of lifetime income are current consumption and adjusted or "lifetime" consumption. The use of the adjusted lifetime measure for consumption is intended to correct for long-run predictable swings in behavior. Our results suggest that in general, carbon taxes appear to be more regressive when income is used as a measure of economic welfare, than when consumption (current or lifetime) is used to measure incidence. Further, the direct component of the tax, in any given year, is significantly more regressive than the indirect component. In fact, for 1987, the indirect component of the tax is actually mildly progressive, as the higher deciles tend to pay a larger fraction of their consumption in carbon taxes. Finally we observe a shift over time with the direct component of carbon taxes becoming larger in relation to the indirect component. These effects have mostly offset each other, and the overall distribution of the total tax burden has not changed much over time.
    JEL: H2 Q4 Q54
    Date: 2007–10
  8. By: Bianco Gianni (University of Turin); Cecati Pierluigi
    Abstract: In a future time in the world the water will be a basic problem. At the moment in Italy the water’s problem is represented by her reduction, in front of a growing demand, while for the drinkable water always more numerous administrators are in budget deficit. The causes of this last national and local situation are due to the administrative monopoly, to a absence of planning and coordination politic, that rationalizes water’s use without rations it, starting from the cognizance of numerous variables. The economic quality of spring and consumption water, the oldness of the waterworks and pipe networks, the extremely fragmentation of waterworks (often of minimal dimension), their territorial localisation, the absence of common method of charges, the scanty use of analysis of management, are some aspects at the origin of a variability of coasts, proceeds, tariffs and results absolutely unique and surprising. The following analysis faces these problems observing the coasts of drinkable water in a representative area of many national realties, concerning the environmental, physic and socio-economic plan. The choice to analyse the coasts comes from the wish to contribute to the knowledge of problems linked to an efficient management and to the transparency determination of the tariffs, problem that is object of a lot of discussions. The essay presents a synthesis of the principal observations realized in a detailed research about over two hundred waterworks’ managers/administrators, about their coasts and about the incidence and impact of economies of productive dimension, of territorial economies,of territory economies, confronting owner/proprietary and entrepreneurial typologies with different legal nature.
    Date: 2007–10
  9. By: Malte Faber (University of Heidelberg, Department of Economics)
    Abstract: To answer the question "How to be an Ecological Economist", we must start by defining the field of Ecological Economics. Mainstream Economics altogether lacks the concepts required to deal adequately with nature, justice and time. It was the absence of these three concepts in this otherwise great social science that led to the establishment of Ecological Economics. The interest in nature, justice and time is its defining characteristic. The main thesis of this paper is that our field is a fragile institution and that the professional existence of an ecological economist is no less fragile. However, this very fragility also represents freedom, scope for free thinking, conceptualising and research. Nevertheless, to be able to really use and in turn enjoy the full scope of this freedom, an ecological economist needs certain specific characteristics, in particular what is termed in the German philosophical tradition "Urteilskraft" and in English "power of judgement". A description of these characteristics is developed in this paper, providing an answer to the question "How to be an ecological economist?"
    Keywords: ecological economics; mainstream economics; political economy; nature; justice; time; growth; power of judgement
    JEL: A10 A12 A13 B10 Q00 Q57 O40
    Date: 2007–10
  10. By: de Gorter, Harry; Just, David R.
    Abstract: This paper analyzes the impact of an ethanol import tariff in conjunction with a consumption mandate and tax credit. A tax credit alone acts as a subsidy to ethanol producers, equally benefiting exporters like Brazil. If an import tariff is imposed to offset the tax credit, world prices of ethanol decline by less than the tariff (unless oil prices are unaffected). Eliminating the tariff with a tax credit in place results in a significant gain to exporters like Brazil but eliminating the tax credit too reduces the initial benefits to Brazil of the tariff reduction substantially. The results change however if there is “water” in the tax credit. Then exporters benefit much more with the elimination of both the tariff and tax credit compared to a situation of both policies in place. If only a mandate was in place, exporters like Brazil again benefit as much as domestic ethanol producers do. Eliminating the tariff with a mandate results in an increase in domestic ethanol prices (even if oil prices do not change) because more domestic supply is required to maintain the mandate. The tariff therefore has a smaller negative impact on world ethanol prices with a mandate compared to a tax credit. A tax credit with a binding mandate is a subsidy to fuel consumers and only indirectly benefits ethanol producers if ethanol prices increase due to increased demand for ethanol with the increase in fuel consumption). Therefore, eliminating the tax credit with a binding mandate has little effect on market prices of ethanol – domestic and foreign producers alike benefit very little with a tax credit in this situation. Brazil would much prefer the elimination of the tax credit and the so-called offsetting import tariff when a mandate is binding. Hence, the protective effects of an import tariff are not additive with either a tax credit or the price premium due to a mandate.
    Keywords: biofuels; mandate; tax credit; ethanol; tariff
    JEL: Q42 F13 Q18 Q17
    Date: 2007–10–24
  11. By: Jean-Marc Tallon (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I); Jean Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I)
    Abstract: Nous proposons dans cet article un panorama des modélisations de la<br />prise de décision dans des situations de risque ou d'incertain. Une<br />attention particulière est portée aux incertitudes<br />environnementales. Après avoir rappelé les modèles canoniques<br />d'espérance d'utilité, nous développons les intuitions sous-jacentes<br />au comportement d'aversion vis-à-vis de l'ambiguïté ou de<br />l'imprécision. Nous é%<br />tudions ensuite la manière dont les agents prennent leur décision<br />dans l'incertain (par exemple des décisions d'assurance) en fonction<br />des<br />réalisations des aléas qu'ils ont personnellement subi (leur vécu) plutôt qu'en fonction d'une information statistique plus neutre.<br />Nous dévelopons la possibilité que les acteurs économiques aient des préférences incomplètes, en ce sens qu'ils<br />n'arrivent pas à classer toutes les alternatives incertaines qui se présentent à eux. Enfin, nous considérons les problèmes posés par<br />la dépendance des préférences à la formulation du problème de<br />décision en nous concentrant plus particulièrement sur le biais<br />d'ancrage et ses conséquences dans les enquêtes d'évaluation<br />contingente.
    Keywords: risque,incertain,ambiguïté,préférences incomplètes,environnement
    Date: 2007–10–22

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