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on Environmental Economics |
| By: | Bachev, Hrabrin |
| Abstract: | This paper presents a new framework for analysis and improvement of environmental management based on the achievements of the New Institutional and Transaction Costs Economics. Following that new framework we first, identify the major environmental problems and risks in Bulgarian agriculture. Next, we access efficiency of market, private and public modes of environmental management employed in the sector. And finally, we give prospects and major challenges of environmental management in conditions of EU Common Agricultural Policy implementation. Our analysis shows that post-communist transition of Bulgarian agriculture has changed the state of the environment and brought some new challenges such as: degradation and contamination of farmland, pollution of surface and ground waters, loss of biodiversity, significant greenhouse gas emissions etc. Badly defined and enforced environmental rights, prolonged process of privatization of agrarian resources, carrying out farming in structures not motivating in long-term investment, low appropriability of certain environmental rights and high uncertainty and assets specificity of environment related transactions, all these factors have been responsible for failure of market and private modes of environmental management. The strong needs for a public intervention have not been met by an effective government, community, international assistance etc. intervention. Consequently agrarian sustainability has been severely compromised. The assessment of likely impact of EU CAP implementation under “Bulgarian” conditions indicates that the main beneficiary of various new support measures will be the biggest operators. Income, technological and environmental discrepancy between different farms, sub-sectors and regions will be further enhanced. Our analysis has been also supported by field survey data from different type dairy farms from two major milk producing regions of the country. We have found out that a great number of farms have no sufficient capacity for adaptation to new EU requirements for the dairy sector. The bulk of milk producers expect no positive impact of CAP measures on their income, volume and technology of production, investment level, product quality, access to public programs, improvement of environmental care, improvement of animal welfare, development of infrastructure, possibilities for new income generation, and social status of farm households. |
| Keywords: | environmental management; market; private and public governance; agrarian transition; CAP implementation; governing agrarian sustainability; comparative institutional analysis; transaction costs; Bulgaria |
| JEL: | D23 O13 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:7769&r=env |
| By: | Clemens Heuson (University of Augsburg, Department of Economics) |
| Abstract: | It is well known that uncertainty concerning firms’ costs as well as market power of the latter have to be taken into account in order to design and choose environmental policy instruments in an optimal way. As a matter of fact, in the most actual environmental regulation settings the policy maker has to face both of these complications simultaneously. However, hitherto environmental economic theory has restricted itself to either of them when submitting conventional policy instruments to a comparative analysis. The article at hand accounts for closing this gap by investigating the welfare effects of emission standards and taxes against the background of uncertain emission control costs and a polluting asymmetric Cournot duopoly. |
| Keywords: | asymmetric Cournot duopoly, external diseconomies of pollution, cost uncertainty, emission standard, emission tax |
| JEL: | D62 D89 L13 Q58 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:aug:augsbe:0300&r=env |
| By: | Clemens Heuson (University of Augsburg, Department of Economics) |
| Abstract: | It is well known that uncertainty concerning firms’ costs as well as market power of the latter have to be taken into account in order to design and choose environmental policy instruments in an optimal way. As a matter of fact, in most actual regulation settings the policy maker has to face both of these complications simultaneously. However, hitherto environmental economic theory has restricted to either of them when submitting conventional policy instruments to a comparative analysis. The article at hand takes a first step in closing this gap. It investigates the welfare effects of emission standards and taxes against the background of uncertain emission control costs and various degrees of the polluting firms’ market power. |
| Keywords: | Cournot oligopoly, external diseconomies of pollution, cost uncertainty, emission standard, emission tax |
| JEL: | D62 D89 L13 Q58 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:aug:augsbe:0299&r=env |
| By: | Nhemachena, Charles; Hassan, Rashid M. |
| Abstract: | "Adaptation to climate change involves changes in agricultural management practices in response to changes in climate conditions. It often involves a combination of various individual responses at the farm-level and assumes that farmers have access to alternative practices and technologies available in the region. This study examines farmer adaptation strategies to climate change in Southern Africa based on a cross-section database of three countries (South Africa, Zambia and Zimbabwe) collected as part of the Global Environment Facility/World Bank (GEF/WB) Climate Change and African Agriculture Project. The study describes farmer perceptions to changes in long-term temperature and precipitation as well as various farm-level adaptation measures and barriers to adaptation at the farm household level. A multivariate discrete choice model is used to identify the determinants of farm-level adaptation strategies. Results confirm that access to credit and extension and awareness of climate change are some of the important determinants of farm-level adaptation. An important policy message from these results is that enhanced access to credit, information (climatic and agronomic) as well as to markets (input and output) can significantly increase farm-level adaptation. Government policies should support research and development on appropriate technologies to help farmers adapt to changes in climatic conditions. Examples of such policy measures include crop development, improving climate information forecasting, and promoting appropriate farm-level adaptation measures such as use of irrigation technologies." from Authors' Abstract |
| Keywords: | Climate change, Adaptation, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:714&r=env |
| By: | Block, Paul J. |
| Abstract: | "Ethiopia is at a critical crossroads with a large and increasing population, a depressed national economy, insufficient agricultural production, and a low number of developed energy sources. The upper Blue Nile basin harbors considerable untapped potential for irrigation and hydropower development and expansion. Numerous hydrologic models have been developed to assess hydropower and agricultural irrigation potential within the basin, yet often fail to adequately address critical aspects, including the transient stages of large-scale reservoirs, relevant flow retention policies and associated downstream ramifications, and the implications of stochastic modeling of variable climate and climate change. A hydrologic model with dynamic climate capabilities is constructed to assess these aspects. The model indicates that large-scale development typically produces benefit-cost ratios from 1.2-1.8 under historical climate regimes for the projects specified. Climate change scenarios indicate potential for small benefit-cost increases, but reflect possible significant decreases. Stochastic modeling of scenarios representing a doubling of the historical frequency of El Niño events indicates benefit-cost ratios as low as 1.0 due to a lack of timely water. An evaluation of expected energy growth rates reinforces the need for significant economic planning and the necessity of securing energy trade contracts prior to extensive development. A Ramsey growth model for energy development specifies project multipliers on total GDP over the 100-year simulation ranging from 1.7-5.2, for various climatologic conditions." Author's Abstract |
| Keywords: | Water resources development, Hydrologic model, Energy, Climate variability, Climate change, Irrigation, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:700&r=env |
| By: | Sandra Rousseau |
| Abstract: | This model explicitly incorporates the dynamic aspects of conservation programs with incomplete compliance and it allows landholders’ behavior to change over time. A distinction is made between initial and continuing compliance. We find that incomplete and instrument-specific enforcement can have a significant impact on the choice between subsidy schemes and reserves for conservation policies. The results suggest that it is useless to design a conservation scheme for landholders, if the regulator is not prepared to explicitly back the program with a monitoring and enforcement policy. In general, the regulator will prefer to use compensation payments, if the cost of using government revenues is sufficiently low, the environmental benefits are equal, and the cost efficiency benefits exceed the (possible) increase in inspection costs. If the use of government funds is too costly, the reserve-type instruments will be socially beneficial. |
| Keywords: | monitoring and enforcement, policy instruments, conservation policy |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0806&r=env |
| By: | Andrew Reeson (CSIRO Sustainable Ecosystems, Australia) |
| Abstract: | In economic terms, the environment is largely a public good. Contributing to a public good is costly to an individual, while the benefits are enjoyed by all. Despite this, many people voluntarily contribute to public goods, both in laboratory economic experiments and through day-to-day environmental decisions. These voluntary contributions are largely motivated intrinsically, that is satisfaction comes from the act itself rather than external rewards. Policy interventions are often required to increase the provision of public goods to the socially optimal level, which usually take the form of extrinsic incentives such as payments or regulations. Theoretical and empirical evidence from psychology and economics suggests that such extrinsic incentives can crowd out the intrinsic motivations which underlie voluntary contributions. As a result, a policy may have less than the anticipated impact. It is even possible for a costly policy intervention to lead to a decrease in overall public good provision, as individuals cease to contribute voluntarily. This paper argues that environmental policy design should proceed with caution in the presence of intrinsic motivations. Weak regulations and small, competitive financial incentives have the greatest potential for negative effects. Recognising and supporting existing efforts can crowd in, rather than crowd out, voluntary contributions. With careful design and implementation, there is the potential to maintain and support intrinsic motivations while also providing robust extrinsic incentives. |
| Keywords: | public goods; environmental policy; intrinsic motivation; crowding out |
| JEL: | H4 Q0 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cse:wpaper:2008-01&r=env |
| By: | Kristof De Witte; Rui C. Marques |
| Abstract: | Environmental factors add complexity to the comparison between specific activities or entire entities. Decision making units with an inferior performance are tempted to invoke that their organization is different from the others in the data set. By reinterpreting and extending the metafrontier literature, we propose an all-embracing concept to fully capture the operational environment. We suggest the ‘Group Specific Technical Efficiency’ as a new measure to assess the overall efficiency of a utility while allowing for environmental differences. A real-world example of drinking water utilies out of 5 different countries illustrates the concept. |
| Keywords: | Free Disposal Hull, Efficiency Measurement, Environmental Variables, Metafrontier, Water Industry |
| JEL: | C14 C61 D24 L95 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0804&r=env |
| By: | Jeffery Connor; Mac Kirby; Anna Lukasiewicz; David Kaczan (CSIRO Land and Water, Australia) |
| Abstract: | This article evaluates irrigated agriculture sector response and resultant economic impacts of climate change for a part of the Murray Darling Basin in Australia. A water balance model is used to predict reduced basin inflows for mild, moderate and severe climate change scenarios involving 10, 20, 40 Celcius warming, and predict 13%, 38% and 63% reduced inflows. Impact on irrigated agricultural production and profitability are estimated with a mathematical programming model using a two-stage approach that simultaneously estimates short and long-run adjustments. The model accounts for a range of adaptive responses including: deficit irrigation, temporarily fallowing some areas, and permanently reducing irrigated area and changing the mix of crops. The results suggest that relatively low cost adaptation strategies are available for moderate reduction in water availability and thus costs of such reduction are likely to be relatively small. In more severe climate change scenarios greater costs are estimated, adaptations predicted include a reduction in total area irrigated, investments in efficient irrigation, and a shift away from perennial to annual crops as the latter can be managed more profitably when water allocations in some years are very low. |
| Keywords: | water availability, irrigation, Murray Darling Basin, climate change |
| JEL: | Q1 Q2 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cse:wpaper:2008-02&r=env |
| By: | Judith M. Dean; Mary E. Lovely |
| Abstract: | Trade growth for a relatively poor country is thought to shift the composition of industrial output towards dirtier products, aggravating environmental damage. China's rapidly growing trade and serious environmental degradation appear to be no exception. However, much of China's trade growth is attributable to the international fragmentation of production. This kind of trade could be cleaner, if fragmented production occurs in cleaner goods, or if China specializes in cleaner stages of production within these goods. Using Chinese official environmental data on air and water pollution, and official trade data, we present evidence that (1) China's industrial output has become cleaner over time, (2) China's exports have shifted toward relatively cleaner, highly fragmented sectors, and (3) the pollution intensity of Chinese exports has fallen dramatically between 1995 and 2004. We then explore the role of fragmentation and FDI in this trend toward cleaner trade. Beginning with a standard model of the pollution intensity of trade, we develop a model that explicitly introduces production fragmentation into the export sector. We then estimate this model using pooled data on four pollutants over ten years. Econometric results support the view that increased FDI and production fragmentation have contributed positively to the decline in the pollution intensity of China's trade, as has accession to the WTO and lower tariff rates. |
| JEL: | F1 F14 F18 F2 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13860&r=env |
| By: | Kassie, Menale; Pender, John; Yesuf, Mahmud; Kohlin, Gunnar; Bluffstone, Randy; Mulugeta, Elias |
| Abstract: | "Land degradation, in the form of soil erosion and nutrient depletion, threatens food security and the sustainability of agricultural production in many developing countries. Governments and development agencies have invested substantial resources in promoting soil conservation practices, in an effort to improve environmental conditions and reduce poverty. However, very limited rigorous empirical work has examined the economics of adopting soil conservation technology. This paper investigates the impact of stone bunds on crop production value per hectare in low and high rainfall areas of the Ethiopian highlands using cross-sectional data from more than 900 households having multiple plots per household. We use modified random effects models, stochastic dominance analysis (SDA) and matching methods to ensure robustness. The parametric regression and SDA estimates are based on matched observations obtained from nearest neighbor matching using propensity score estimates. This is important because conventional regression and SDA estimates are obtained without ensuring the existence of comparable conserved and non-conserved plots within the distribution of covariates. Here, we use matching methods, random effects and Mundlak's approach to control for selection and endogeneity biases that may arise due to correlation of unobserved heterogeneity and observed explanatory variables. The three methods used herein consistently show that plots with stone bunds are more productive than those without such technologies in semi-arid areas but not in higher rainfall areas, apparently because the moisture-conserving benefits of this technology are more beneficial in drier areas. This implies that the performance of stone bunds varies by agro-ecological type, suggesting a need for the design and implementation of appropriate site-specific technologies." from Authors' Abstract |
| Keywords: | Soil conservation, Crop production, Agro-ecology, Matching method, Stochastic dominance, Modified random effects model, Land management, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:733&r=env |
| By: | Siddig, El Fatih Ali; El-Harizi, Khalid; Prato, Bettina |
| Abstract: | "Despite the 2005 Comprehensive Peace Agreement, which brought to an end 20 years of civil war in the Sudan, this country continues to experience smaller-scale conflicts, particularly around access to and control of natural resources. Some observers lay the blame for this on ethnopolitical or tribal divisions. However, this paper argues that there are a variety of factors at play behind these conflicts, notably the combination of resource scarcity with a crisis of governance that is particularly evident in transitional areas like the Kordofan region. To gain a sense of the range of conflicts around natural resources in Kordofan, the authors reviewed existing records such as government archives; conducted interviews with politicians, federal and state government officials, farmers, pastoralists, and Native Administration leaders; and investigated findings in the field. Interviews also served to examine people's knowledge about government natural resource policies and their perceptions of the roles played by government and the Native Administration in conflict management and resolution. The paper presents 20 cases of stalemate competition or open conflict over natural resources in Kordofan. The cases center on (1) conflicts between farmers and herders over stock routes, gum arabic forests, gardens, watering points, and the use of dars (tribal homelands); (2) conflicts between herders and small farmers and government agents or large private investors over mechanized farming areas, oil infrastructure, and other private investments. In their analysis of natural resource governance in Sudan, the authors find that natural resources policies have often been weak foundations for sustainable resource use, and in some cases they have actually contributed to conflict. In addition, the volatile path of government devolution efforts concerning natural resources has undermined governance of these resources. While conflicts between farmers and herders were managed relatively successful in the past through customary land tenure systems, this is less and less the case today as a result of larger herds, reduced water and pasture, instability and prejudices stirred up by the war, and a proliferation of arms among herders. In addition, patron–client politics, weak natural resource management and development policies, and top-down government institutions have encouraged ethnic polarization and social divisions. The authors find that measures are needed to reform the process of natural resource management, making land use planning more comprehensive, building on local livelihood systems, and increasing public spending on infrastructure. In addition, sustainable property rights on farmland and on mobile resources should be redefined, and informal conflict management mechanisms restored to the extent that this is possible." Authors' Abstract |
| Keywords: | Conflict management, Natural resource management, Small farmers, Land use, Livelihoods, Public spending, infrastructure, Property rights, Governance, Sustainability, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:711&r=env |
| By: | Solveig Glomsrød, Gang Liu, Taoyuan Wei and Jens B. Aune (Statistics Norway) |
| Abstract: | This paper studies the effect of a CDM tree-planting project on carbon sequestration and urban and rural income distribution, taking economy-wide impacts into account. Carbon sequestration in agricultural soil is considered in addition to the carbon in the tree farm itself. The study points to that project designs that raise the general investment level may add substantially to the project's carbon capture by stimulating the productivity of agriculture, thus binding more carbon in soil. As demand for crops is rising, the mode of agricultural production turns more intensive and improved plant growth leaves more plant residues for uptake as soil organic carbon. As for the income effect, the non-poor benefit more than the poor in economic terms, except when the project is hosted by the rural poorest. Foreign owned projects withdrawing the project surplus may turn out to reduce the income of urban poor and does not enhance agricultural productivity and beyond-project carbon sequestration. |
| Keywords: | CDM; afforestation; poverty reduction; CGE; Tanzania |
| JEL: | D58 O13 Q52 Q56 Q58 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:534&r=env |
| By: | Carriquiry, Miguel A.; Osgood, Daniel E. |
| Abstract: | Index insurance and probabilistic seasonal forecasts are becoming available in developing countries to help farmers manage climate risks in production. Although these tools are intimately related, work has not been done to formalize the connections between them. We investigate the relationship between the risk management tools through a model of input choice under uncertainty, forecasts, and insurance. While it is possible for forecasts to undermine insurance, we find that when contracts are appropriately designed, there are important synergies between forecasts, insurance, and effective input use. Used together, these tools overcome barriers preventing the use of imperfect information in production decision making. |
| Keywords: | basis risk, climate forecast, index insurance, input decisions, insurance, risk management. |
| Date: | 2008–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12884&r=env |
| By: | Miguel Carriquiry; Daniel E. Osgood |
| Abstract: | Index insurance and probabilistic seasonal forecasts are becoming available in developing countries to help farmers manage climate risks in production. Although these tools are intimately related, work has not been done to formalize the connections between them. We investigate the relationship between the risk management tools through a model of input choice under uncertainty, forecasts, and insurance. While it is possible for forecasts to undermine insurance, we find that when contracts are appropriately designed, there are important synergies between forecasts, insurance, and effective input use. Used together, these tools overcome barriers preventing the use of imperfect information in production decision making. |
| Keywords: | basis risk, climate forecast, index insurance, input decisions, insurance, risk management. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:08-wp465&r=env |
| By: | Diao, Xinshen; Sarpong, Daniel B. |
| Abstract: | "An economywide, multimarket model is constructed for Ghana and the effects of agricultural soil erosion on crop yields are explicitly modeled at the subnational regional level for eight main staple crops. The model is used to evaluate the aggregate economic costs of soil erosion by taking into account economywide linkages between production and consumption, across sectors and agricultural subsectors. To fill a gap in the literature regarding economic cost analysis of soil erosion, this paper also analyzes the poverty implications of land degradation. The model predicts that land degradation reduces agricultural income in Ghana by a total of US$4.2 billion over the period 2006–2015, which is approximately five percent of total agricultural GDP in these ten years. The effect of soil loss on poverty is also significant at the national level, equivalent to a 5.4 percentage point increase in the poverty rate in 2015 compared to the case of no soil loss. Moreover, soil loss causes a slowing of poverty reduction over time in the three northern regions, which currently have the highest poverty rates in the country. Sustainable land management (SLM) is the key to reducing agricultural soil loss. The present findings indicate that through the adoption of conventional SLM practices, the declining trend in land productivity can be reversed, and that use of a combination of conventional and modern SLM practices would generate an aggregate economic benefit of US$6.4 billion over the period 2006–2015. SLM practices would therefore significantly reduce poverty in Ghana, particularly in the three northern regions." Authors' Abstract |
| Keywords: | Land degradation, Costs, Agricultural soil loss, Economywide modeling, Modeling cost of land degradation, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:698&r=env |
| By: | Gérard Gaudet; Pierre Lasserre |
| Abstract: | Uncertainties as to future supply costs of nonrenewable natural resources, such as oil and gas, raise the issue of the choice of supply sources. In a perfectly deterministic world, an efficient use of multiple sources of supply requires that any given market exhausts the supply it can draw from a low cost source before moving on to a higher cost one; supply sources should be exploited in strict sequence of increasing marginal cost, with a high cost source being left untouched as long as a less costly source is available. We find that this may not be the efficient thing to do in a stochastic world. We show that there exist conditions under which it can be efficient to use a risky supply source in order to conserve a cheaper non risky source. The benefit of doing this comes from the fact that it leaves open the possibility of using it instead of the risky source in the event the latter’s future cost conditions suddenly deteriorate. There are also conditions under which it will be efficient to use a more costly non risky source while a less costly risky source is still available. The reason is that this conserves the less costly risky source in order to use it in the event of a possible future drop in its cost. <P>L’incertitude sur le coût futur d’une ressource non renouvelable telle le pétrole ou le gaz pose la question du choix des sources d’approvisionnement. Dans un monde déterministe, l’utilisation efficace de sources multiples exige que tout marché épuise une source de coût relativement faible avant de passer à une source de coût plus élevé; l’utilisation des sources d’approvisionnement doit se faire strictement par ordre de coût marginal croissant; on ne touchera à aucune source de coût élevé tant qu’existe une source moins coûteuse. Nous montrons que cette règle n’est pas forcément efficace en univers stochastique. Il existe des conditions sous lesquelles il peut être efficace de recourir à une source risquée pour conserver une ressource moins coûteuse non risquée. Une telle stratégie permet de se réserver la possibilité d’utiliser cette dernière au cas où les conditions d’accès à la source risquée se détérioreraient subitement. Il existe également des conditions sous lesquelles il sera efficace d’utiliser une source plus coûteuse mais non risquée alors qu’une source risquée mais meilleur marché est toujours disponible. Dans ce cas, il s’agit d’économiser la source bon marché dans l’éventualité d’une baisse possible de son coût, qui la rendrait encore plus intéressante. |
| Keywords: | Security of supply, uncertainty, nonrenewable resources, order of use, sécurité d’approvisionnement, incertitude, ordre d’utilisation |
| JEL: | Q31 D81 D90 |
| Date: | 2008–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2008s-08&r=env |
| By: | Bianco Gianni (University of Turin) |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:200803&r=env |