nep-env New Economics Papers
on Environmental Economics
Issue of 2008‒05‒05
nine papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Moving Toward A Consensus on Climate Policy: The Essential Role of Global Public Disclosure By David Wheller
  2. Crossroads at Mmamabula: Will the World Bank Choose the Clean Energy Path? By David Wheeler
  3. The Contingent Valuation Method: Retrospect and Prospect By Clive L. Spash
  4. How Do the BRICs Stack Up? Adding Brazil, Russia,India, and China to the Environment Component of the Commitment to Development Index By David Roodman
  5. Ecosystems Services Valuation By Clive L. Spash
  6. Changing Configuration of Alternative Energy Systems By Bhuyan, Radhika; Mytelka, Lynn K.
  7. From theory to implementation of the best instrument to protect human health: a brief overview By Di Novi, Cinzia
  8. Stimulating Renewable Energy Technologies by Innovation policy By Simona O. Negro; Marko P. Hekkert; Ruud Smits
  9. Promoting clean technologies: The energy market structure crucially matters. By Azomahou, Théophile; Boucekkine, Raouf; Nguyen-Van, Phu

  1. By: David Wheller
    Abstract: Among climate scientists, there is no longer any serious debate about whether greenhouse gas emissions from human activity are altering the earth’s climate. There is also a broad consensus on two issues related to reducing emissions. First, developing countries must be full participants in global emissions control, because they will be most heavily impacted by global warming, and because they are rapidly approaching parity with developed countries in the scale of their emissions. Second, efficient emissions control will require carbon pricing via market-based instruments (charges or cap-and-trade). These points of consensus are sufficient to establish a clear way forward, despite continued disagreements over the choice of specific instrument and the appropriate carbon charge level. Since all market-based systems that regulate emissions sources require the same emissions information, the international community should immediately establish an institution mandated to collect, verify and publicly disclose information about emissions from all significant global carbon sources. Its mandate should extend to best-practice estimation and disclosure of emissions sources in countries that initially refuse to participate. This institution will serve four purposes. First, it will lay the necessary foundation for implementing any market-based system of emissions source regulation. Second, it will provide an excellent credibility test, since a country’s acceptance of full disclosure will signal its true willingness to participate in globally-efficient emissions reduction. Third, global public disclosure will itself reduce carbon emissions, by focusing stakeholder pressure on major emitters and providing reputational rewards for clean producers. Fourth, disclosure will make it very hard to cheat once market-based instruments are implemented. This will be essential for preserving the credibility of an international agreement to reduce emissions.
    Keywords: climate change
    Date: 2007–11
  2. By: David Wheeler
    Abstract: At the recent UN climate change conference in Bali, UN Secretary General Ban Ki-moon called for a revolutionary change in the world’s energy mix to minimize the risk of catastrophic global heating. This paper explores the implications for the World Bank and other donor institutions, employing proposed Bank financing of the Mmamabula coal-fired power project in Botswana as an illustrative case. Using the latest estimates of generating costs for coal-fired and low-carbon power options, I compute the CO2 accounting charges that would promote switching to the low-carbon options. In all cases, I find that that the switching charges are at the low end of the range that is compatible with safe atmospheric limits on carbon loading. Among the low-carbon options that I have considered for Botswana, solar thermal power seems to dominate carbon capture and storage. My results suggest that the World Bank and other donor institutions will adopt a transformational energy policy if they use appropriate accounting charges for carbon emissions. The Mmamabula example indicates that this approach will select low-carbon options in many cases, and grants from the Bank’s Clean Technology Fund and other sources can finance the market-cost gap between clean and fossil-fired technologies. Clean energy projects should proliferate, as donors learn about the new approach and more funds are devoted to meeting the global emissions reduction mandate.
    Keywords: World Bank, climate change, Botswana
    Date: 2008–02
  3. By: Clive L. Spash (CSIRO Sustainable Ecosystems, Australia)
    Abstract: This paper explores the contingent valuation method for environmental valuation. Issues are raised over the validity of the approach as a method of assessing the underlying preferences of individuals. An alternative interpretation is given to the method as a means of exploring underlying motivation in a rich vein of social psychological research.
    Keywords: stated preferences, environmental values, social psychology
    JEL: B4 D46 D11 D6 Q26
    Date: 2008–04
  4. By: David Roodman
    Abstract: The Commitment to Development Index (CDI) ranks 21 of the world’s richest countries on their dedication to policies that benefit the five billion people living in poorer nations. Moving beyond simple comparisons of foreign aid, the CDI ranks countries on seven themes: quantity and quality of foreign aid, openness to developing-country exports, policies that influence investment, migration policies, stewardship of the global environment, security policies and support for creation and dissemination of new technologies. This year for the first time, CGD research fellow David Roodman extended the environment component of the Index to cover four of the biggest developing countries: Brazil, Russia, India and China, a group Goldman Sachs dubbed the “BRICs.” This working paper explores the indicators that make up the environment component (global climate, sustainable fisheries, and biodiversity and global ecosystems) and explains how the BRIC countries stack up to their right-country counterparts. He finds that the BRICs score remarkably well compared to the 21 rich countries covered by the Index: when thrown in with the usual 21, they rank second, fourth, fifth, and eleventh. They generally perform well on the greenhouse gas emissions, consumption of ozone-depleting substances, and tropical timber imports. And the BRICs have joined important international environmental accords. As a group, their major weakness is low gas taxes. In addition, Amazon deforestation and heavy fossil fuel use pull Brazil and Russia, respectively, below the CDI 21 average on greenhouse emissions per capita. China’s abstention from the U.N. fisheries agreement puts it a half point below the other BRICs.
    Keywords: environment, Commitment to Development Index (CDI)
    Date: 2007–10
  5. By: Clive L. Spash (CSIRO Sustainable Ecosystems, Australia)
    Abstract: Ecosystems are being characterised as goods and services to allow their valuation in monetary terms. This follows an orthodox economic approach to environmental values, but is also being undertaken by ecologists and conservation biologist. There appears a lack of clarity and debate as to the model of human behaviour, specific values and decision process being adopted. Arguments for ecosystems service valuation are critically appraised and the case for a model leading to value pluralism is presented. The outcome is to identify the need for value articulating processes which involve open deliberative judgment. In discussion of human motivations and judgement I make specific appeal to the works of philosopher Alan Holland.
    Keywords: stated preferences, environmental values, judgment
    JEL: A13 D46 D6 D78 Q26 Q2
    Date: 2008–04
  6. By: Bhuyan, Radhika (UNU-MERIT); Mytelka, Lynn K. (UNU-MERIT)
    Abstract: Recent and rampant regulatory changes for sustainable development are seeking to transform current energy systems towards cleaner and greener forms of energy sources. In this scenario, alternative energy technologies are considered the building blocks towards this transformed energy system. This chapter will show how the alternative energy market since the 1970s changed, in response to external oil price shocks and to other selective pressures and institutions. It will observe that the configuration of the market has been changing since 1970s, in terms of firm-composition, size and types of technologies considered in the green energy mix. It will further provide three explanations explaining why there are changes between firms, policies and these energy technologies. These three processes are considered important in determining technological innovation among firms in clean and green energy technologies.
    Keywords: Renewable Energy, New Technologies, Firm Competition, Technology Policy, Energy Technologies
    JEL: O19 O13 O33 N70 Q01 Q55
    Date: 2008
  7. By: Di Novi, Cinzia
    Abstract: This paper presents a survey of methods of regulations with focus on pollution abatement and of various approaches to the issue of measuring quantities such as the marginal benefit of improved health that are crucial in view of implementing the regulation. Since pollution is a public bad, in general the efficient level of pollution can only be reached by way of some sort of public intervention. The paper's focus is on so-called marketbased mechanisms, which in turn are classified into price-based mechanisms (pollution taxes) and quantity-based mechanisms (tradeable permits). The basic framework for addressing the comparison between the two types of mechanisms is Weitzman (1974). In order to actually choose between regulation methods and to eventually implement chosen methods, estimates are needed of some crucial quantities, in particular of marginal costs and benefits of pollution abatement. The most problematic one is of course marginal benefit. Therefore the paper considers various approaches to the measurement of marginal benefits.
    Keywords: marginal costs, marginal benefits, pollution regulation, health
    JEL: Q51 I18
    Date: 2008–04
  8. By: Simona O. Negro; Marko P. Hekkert; Ruud Smits
    Abstract: In this paper we analyse the dynamics of three emerging innovation systems by using the system functions approach in which the underlying key activities that contribute to the build up of an innovation system are identified. The insights gained with respect to the dynamic functional patterns specific for each emerging innovation system will allow us to identify system failures and develop policy and policy measures that start out from an innovation systems’ perspective. We will present initial ideas on the building blocks for a more systemic policy aiming to support the development of new emerging innovation systems (and in doing so break down parts of the old innovation systems).
    Keywords: Innovation policy, Technological Innovation Systems, Emerging technologies, Renewable Energy System Functions
    Date: 2008–04
  9. By: Azomahou, Théophile (UNU-MERIT); Boucekkine, Raouf (CORE, Universite Catholique de Louvain); Nguyen-Van, Phu (CNRS, Université de Cergy-Pontoise,)
    Abstract: We develop a general equilibrium vintage capital model with embodied energy-saving technological progress and an explicit energy market to study the impact of investment subsidies on investment and output. Energy and capital are assumed to be complementary in the production process. New machines are less energy consuming and scrapping is endogenous. It is shown that the impact of investment subsidies heavily depends on the structure of the energy market, the mechanism explaining this outcome relying on the tight relationship between the lifetime of capital goods and energy prices via the scrapping conditions inherent to vintage models. In particular, under a free entry structure for the energy sector, investment subsidies boost investment, while the opposite result emerges under natural monopoly if increasing returns in the energy sector are not strong enough.
    Keywords: Energy-saving, Technological change, Vintage capital, Energy market, Natural monopoly, Investment subsidies
    JEL: E22 O40 Q40
    Date: 2008

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