nep-env New Economics Papers
on Environmental Economics
Issue of 2008‒01‒19
ten papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Globalization, North-South Industrial Location and Environmental Competition By RIEBER Arsène; TRAN Thi Anh-Dao
  2. Environmental Policy in Majoritarian Systems By Per G. Fredriksson; Xenia Matschke; Jenny Minier
  3. Can China continue feeding itself ? the impact of climate change on agriculture By Zhang, Lijuan; Rozelle, Scott; Huang, Jikun; Dinar, Ariel; Mendelsohn, Robert; Wang, Jinxia
  4. Strategic Trade Policy as Response to Climate Change? By Andreas Freytag; Leo Wangler
  5. Understanding the determinants of consumersf willingness to pay for eco-labeled products: An empirical analysis of the China Environmental Label By Junyi Shen
  6. Ranking Port Cities with High Exposure and Vulnerability to Climate Extremes By R. J. Nicholls; S. Hanson; C. Herweijer; N. Patmore; S. Hallegatte; J. Corfee-Morlot; J. Château; R. Muir-Wood
  7. Natural Resources and Violent Conflict: Resource Abundance, Dependence and the Onset of Civil Wars By Christa N. Brunnschweiler; Erwin Bulte
  8. Optimal Resource Extraction Contracts under Threat of Expropriation By Eduardo Engel; Ronald Fischer
  9. The Provision Point Mechanism and Scenario Rejection in Contingent Valuation By Peter A. Groothuis; John C. Whitehead
  10. Keynes and the Post Keynesians on Sustainable Development By Eric BERR (GREThA)

  1. By: RIEBER Arsène (Center for Analysis and Research in Economics (CARE), University of Rouen); TRAN Thi Anh-Dao (Economics Centre of University Paris-North (CEPN, University Paris 13) and Center for Analysis and Research in Economics (CARE), University of Rouen)
    Abstract: Relying on a North-South model of economic geography, our paper attempts to discuss the management of global pollution issues such as greenhouse gas emissions. As firms are increasingly mobile, they become sensitive to differences in environmental standards across countries and subject the regulatory power of a country to the rule of competition. In this context, we first evaluate the consequences of a passive ecological dumping from the South. We find that the Northern region undergoes a phenomenon of industrial relocation with a fall in its real income. In addition, the outcomes on global pollution abatement appear ambiguous. Globalization of the world economy, by changing the location decisions of firms, can make global pollution even worse. This calls for international cooperation between the North and the South. We then turn to investigate the outcomes of a harmonization of environmental policies. Although better from an ecological point of view, this second scenario harms the South both in terms of industrial relocation and real income.
    Keywords: Economic geography, Global pollution, Environmental competition
    JEL: F12 Q20 R10
    Date: 2008
  2. By: Per G. Fredriksson (University of Louisville); Xenia Matschke (University of Connecticut); Jenny Minier (University of Kentucky)
    Abstract: This paper sheds new light on the determination of environmental policies in majoritarian federal electoral systems such as the U.S., and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental policies. In majoritarian systems, where the legislature consists of geographically distinct electoral districts, the majority party (at either the national or the state level) favors its own home districts; depending on the location of polluting industries and the associated pollution damages, the majority party may therefore impose sub-optimally high or low pollution taxes due to a majority bias. We show that majority bias can influence the social-welfare ranking of alternative government policies and, in some cases, may actually bring distortionary policies closer to the first-best solution.
    Keywords: Institutions, environmental policy, environmental federalism, geography, majority bias, political economy.
    JEL: Q48 D72 D78 H20 R50
    Date: 2008–01
  3. By: Zhang, Lijuan; Rozelle, Scott; Huang, Jikun; Dinar, Ariel; Mendelsohn, Robert; Wang, Jinxia
    Abstract: Several studies addressing the supply and demand for food in China suggest that the nation can largely meet its needs in the coming decades. However, these studies do not consider the effects of climate change. This paper examines whether near future expected changes in climate are likely to alter this picture. The authors analyze the effect of temperature and precipitation on net crop revenues using a cross section consisting of both rainfed and irrigated farms. Based on survey data from 8,405 households across 28 provinces, the results of th e Ricardian analysis demonstrate that global warming is likely to be harmful to China but the impacts are likely to be very different in each region. The mid latitude region of China may benefit from warming but the southern and northern regions are likely to be damaged by warming. More precipitation is beneficial to Chinese farmers except in the wet southeast. Irrigated and rainfed farmers have similar responses to precipitation but not to temperature. Warmer temperatures may benefit irrigated farms but they are likely to harm rainfed farms. Finally, seasonal effects vary and are offsetting. Although we were able to measure the direct effect of precipitation and temperature, we could not capture the effects of change in water flow which will be very important in China. Can China continue feeding itself if climate changes? Based on the empirical results, the likely gains realized by some farmers will nearly offset the losses that will occur to other farmers in China. If future climate scenarios lead to significant reductions in water, there may be large damages not addressed in this study.
    Keywords: Climate Change,Crops & Crop Management Systems,Global Environment Facility,Common Property Resource Development,Rural Development Knowledge & Information Systems
    Date: 2008–01–01
  4. By: Andreas Freytag (Friedrich-Schiller-University Jena); Leo Wangler (Friedrich-Schiller-University Jena)
    Abstract: This paper discusses the political economy of the climate change debate. The objective is to come to a better understanding of why at international levels (e. g. the G-8 summit in Heiligendamm) climate change was one of the main topics at the agenda, despite the fact that climate change cannot be solved by only eight participating countries, even if these eight countries are considered as the "biggest" in the world. The problem of climate change is a supranational one and needs supranational cooperation. Using a strategic trade policy framework, the paper theoretically and from a positive perspective explains why countries like Germany are more engaged in policies related to climate change than other industrial countries, which also have signed the Kyoto Protocol.
    Date: 2008–01–11
  5. By: Junyi Shen (OSIPP,Osaka University)
    Abstract: This study applies data from a web-based survey conducted in mainland China to examine the determinants of consumersf willingness to pay (WTP) for seven different product categories awarded with China Environmental Label and compare the mean WTP estimates among these categories. The Interval Regression method is used for estimation. The results indicate that Chinese consumers who regard environmental conservation as being more important than life convenience, who believe purchasing the eco-labeled products is good for the environment, and who have the experience in purchasing eco-labeled products are willing to pay more for those products with environmental label or eco-label. In addition, socio-demographic characteristics such as gender, age, education and household income are found to be important factors to affect Chinese consumersf WTP amounts. Finally, the results of pair-wise comparison among the mean WTP estimates of various eco-labeled products indicate that most of them are different, which implies that the degrees of Chinese consumersf willingness to pay extra money for China Environmental Label are different based on the types of products.
    Keywords: China Environmental Label, Eco-labeled products, Interval regression, Payment card, Willingness to pay
    JEL: D12 Q28 Q51
    Date: 2008–01
  6. By: R. J. Nicholls; S. Hanson; C. Herweijer; N. Patmore; S. Hallegatte; J. Corfee-Morlot; J. Château; R. Muir-Wood
    Abstract: This global screening study makes a first estimate of the exposure of the world's large port cities to coastal flooding due to storm surge and damage due to high winds. This assessment also investigates how climate change is likely to impact each port city's exposure to coastal flooding by the 2070s, alongside subsidence and population growth and urbanisation. The study provides a much more comprehensive analysis than earlier assessments, focusing on the 136 port cities around the world that have more than one million inhabitants in 2005. The analysis demonstrates that a large number of people are already exposed to coastal flooding in large port cities. Across all cities, about 40 million people (0.6% of the global population or roughly 1 in 10 of the total port city population in the cities considered here) are exposed to a 1 in 100 year coastal flood event. For present-day conditions (2005), the top ten cities in terms of exposed population are estimated to be Mumbai, Guangzhou, Shanghai, Miami, Ho Chi Minh City, Kolkata, Greater New York, Osaka-Kobe, Alexandria and New Orleans; almost equally split between developed and developing countries. When assets are considered, the current distribution becomes more heavily weighted towards developed countries, as the wealth of the cities becomes important. The top 10 cities in terms of assets exposed are Miami, Greater New York, New Orleans, Osaka-Kobe, Tokyo, Amsterdam, Rotterdam, Nagoya, Tampa-St Petersburg and Virginia Beach. These cities contain 60% of the total exposure, but are from only three (wealthy) countries: USA, Japan and the Netherlands. The total value of assets exposed in 2005 is across all cities considered here is estimated to be US$3,000 billion; corresponding to around 5% of global GDP in 2005 (both measured in international USD)... <BR>Cette étude globale propose une première estimation de l'exposition des grandes villes portuaires aux inondations côtières, dues aux marées de tempête, et aux vents forts. Elle s'intéresse en particulier aux effets du changement climatique sur l'exposition de chacune de ces villes à l'horizon des années 2070. Cette évaluation comprend les 136 villes côtières qui ont plus d'un million d'habitants dans le monde en 2005. Elle est donc beaucoup plus exhaustive que les estimations disponibles jusqu'à présent. Cette analyse montre que la population des villes portuaires exposée aux inondations côtières est déjà très importante. Dans les villes considérées par cette étude, environ 40 millions de personnes (soit 0.6% de la population mondiale et environ un habitant sur dix de ces villes) sont exposés à l?inondation centennale (celle dont la probabilité annuelle est de 1% et le temps de retour 100 ans). Dans les conditions présentes (en 2005), les dix villes les plus exposées en termes de population sont Bombay, Canton, Shanghai, Miami, Ho Chi Minh Ville, Calcutta, l?agglomération New-yorkaise, Osaka- Kobe, Alexandrie et la Nouvelle Orléans. Ces villes sont également réparties entre pays développés et pays en développement. Quand on s'intéresse au patrimoine exposé, les pays développé deviennent beaucoup plus représentés, car le niveau de vie est alors un facteur essentiel. Les dix villes les plus exposées en terme de patrimoine sont Miami, l'agglomération New-yorkaise, la Nouvelle Orléans, Osaka-Kobe, Tokyo, Amsterdam, Rotterdam, Nagoya, Tampa-Saint-Petersbourg, et Virginia Beach. Ces villes représentent 60% de l'exposition totale, mais sont dans seulement trois pays riches : les USA, le Japon et la Hollande. La valeur totale du patrimoine exposé en 2005 est estimée à 3.000 milliards de dollars américains, ce qui correspond à environ 5% du PIB annuel mondial...
    Keywords: sustainable development, public policy, climate change, global warming, natural disasters, flood management, coastal zones, environment & development
    JEL: Q01 Q54 Q56 Q58
    Date: 2007–12–04
  7. By: Christa N. Brunnschweiler (CER-ETH Center of Economic Research at ETH Zurich, Switzerland); Erwin Bulte (Development Economics Group, Wageningen University, and Department of Economics, Tilburg University, Netherlands)
    Abstract: In this paper we examine the claim that natural resources invite civil conflict, and challenge the main stylized facts in this literature. We find that the nature of causation between resource dependence and civil war is opposite to conventional wisdom. In particular, (i) civil war creates dependence on primary sector exports, but the reverse is not true, and (ii) resource abundance is associated with a reduced probability of the onset of war. These results are robust to a range of specifications and, considering the conflict channel, we conclude there is no reason to regard resources as a general curse to development.
    Keywords: Civil war, resource abundance, resource dependence, greed versus grievance, resource curse
    JEL: Q34 O11 N40 N50
    Date: 2008
  8. By: Eduardo Engel (Cowles Foundation, Yale University); Ronald Fischer (University of Chile)
    Abstract: The government contracts with a foreign firm to extract a natural resource that requires an upfront investment and which faces price uncertainty. In states where profits are high, there is a likelihood of expropriation, which generates a social cost that increases with the expropriated value. In this environment, the planner's optimal contract avoids states with high probability of expropriation. The contract can be implemented via a competitive auction with reasonable informational requirements. The bidding variable is a cap on the present value of discounted revenues, and the firm with the lowest bid wins the contract. The basic framework is extended to incorporate government subsidies, unenforceable investment effort and political moral hazard, and the general thrust of the results described above is preserved.
    Keywords: Taxation, Mining, Rent extraction, Royalty, Non-renewable natural resource, Present-value-of-revenue auction
    JEL: Q33 Q34 Q38 H21 H25
    Date: 2008–01
  9. By: Peter A. Groothuis; John C. Whitehead
    Abstract: The provision point mechanism mitigates free riding behavior in economic experiments. In two contingent valuation method surveys, we implement the provision point design. We ask respondents about their perceptions about the success of the provision point mechanism. One of the determinants that identifies who is likely to feel the provision point will be met is the bid itself. We find that respondents who believe that the provision point would not be met are more likely to say no to a contingent valuation dichotomous choice question. The scenario rejection that arises may result in biased willingness to pay estimates. Key Words: Provision Point Mechanism, Contingent Valuation, Willingness to Pay, Public Goods
    JEL: Q51
    Date: 2008
  10. By: Eric BERR (GREThA)
    Abstract: Since the beginning of the 1970s, the questions related to ecology come in the forefront and progressively led to the adoption of the concept of sustainable development, which now appears to be a new world-wide objective. We argue that numerous writings of Keynes contain the premises of such a sustainable development. We present his views relatively to the three pillars of sustainability: ecological, social and financial. Indeed, Keynes’ positions on uncertainty, money, the place of economics, arts, financing, philosophy, etc. are consistent with a strong sustainability. Finally, we try to give some insights for an indispensable 21st century post Keynesian sustainable development program.
    Keywords: Keynes, sustainable development, Post Keynesian
    JEL: B31 E12
    Date: 2008

This nep-env issue is ©2008 by Francisco S.Ramos. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.