nep-env New Economics Papers
on Environmental Economics
Issue of 2008‒05‒24
thirteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  2. Valuing environmental impacts of coastal development projects: a choice modelling application in Spain. By David Hoyos Ramos; Pere Riera Micaló; Javier Fernández Macho; Carmen Gallastegui; Dolores García
  3. Why the Climate Change Debate has not Created more Cleantech Funds in Sweden By Hamilton, Ian
  4. International emissions trading in a non-cooperative equilibrium By Bjart J. Holtsmark and Dag Einar Sommervoll
  5. Measuring the Impacts of Sea Level Rise on Marine Recreational Shore Fishing in North Carolina By John C. Whitehead; Ben Poulter; Christopher F. Dumas; Okmyung Bin
  6. Efficient and Optimal Capital Accumulation and Non Renewable Resource Depletion: The Hartwick Rule in a Two Sector Model By AMIGUES Jean-Pierre; MOREAUX Michel
  7. A short analysis on the stricter European regulations on tropical hardwood imports and their side effects By Jean-Marc Roda; Eric J.M.M. Aretz; Hin Fui Lim
  8. Study on the scope for reconstruction of the grazing livestock sector of Xinjiang based on organic farming methods By Chai Jun; Bill Slee; Maurizio Canavari; Chen Tong; Huliyeti Hasimu
  9. Environmental Regulation as a Coordination Device for the Introduction of a Green Product: The Porter’s Hypothesis Revisited By Philippe Barla; Christos Constantatos; Markus Herrmann
  10. The Behavioural Economics of Climate Change By Brekke, Kjell Arne; Johansson-Stenman, Olof
  11. Portfolio performance and environmental risk By Olsson, Rickard
  12. How Bad is Bad News? Assessing the Effects of Environmental Incidents on Firm Value By Lundgren, Tommy; Olsson, Rickard
  13. A Study of the Provision of Environmental Information in Financial Analysts Reports By Cunningham, Gary; Hassel , Lars; Nilsson, Henrik

  1. By: Al-Amin, Abul Quasem; Jaafar, Abdul Hamid; Siwar, Chamhuri
    Abstract: Environmental pollution is now a serious problem in many developing countries. One approach to mitigate the problem is to implement various pollution control policies. However, due to a lack of adequate quantitative models, the economic impacts and effectiveness of many pollution control policies are still unknown. Therefore, there is a greater need to know whether economic liberalization, trade, environment and social welfare can be joined in one direction under environmental taxation and policies. Empirical studies for developed countries reveal that imposition of a carbon tax would decrease CO2 emissions significantly and might not dramatically reduce economic growth. To our knowledge there has not been any research done to simulate the economic impact of emission control policies in Malaysia. Studying the potential economic impact of emission control policies is very important because inappropriate policies that reduce carbon emission may at the same time reduce highly economic growth. It is thus important to find the correct pollution tax that could be imposed such that environmental pollution is reduced at the same time does not dampen economic growth. The method developed for this study is applied computable general equilibrium model (MYCGE) for imposing environmental taxation policies in the Malaysian economy. Three simulations were carried out using a Malaysian Social Accounting Matrix. The first simulation is related to the trade based and the last two are carbon based simulations. The model results indicate that further trade liberalization is not sensitive in the Malaysian economy. Particularly, the reasons could be attributed to the fact that Malaysian export duty is already low and Malaysian trade policy already highly liberalized. The carbon tax policy illustrates that a 1.21 percent reduction of carbon emission (via carbon tax) reduces the nominal GDP by 0.82 percent and exports by 2.08 percent; a 2.34 percent reduction of carbon emission reduces the nominal GDP by 1.90 percent and exports by 3.97 percent and a 3.40 percent reduction of carbon emission reduces the nominal GDP by 3.17 percent and exports by 5.707 percent.
    Keywords: Trade; Air Emission; Environmental General Equilibrium; Malaysian Economy
    JEL: C68 Q5 B22
    Date: 2008–05–16
  2. By: David Hoyos Ramos (Unidad de Economía Ambiental - Instituto de Economía Pública); Pere Riera Micaló (Universidad Autónoma de Barcelona); Javier Fernández Macho (Departamento de Economía Aplicada III); Carmen Gallastegui (Institute for Public Economics. University of the Basque Country); Dolores García (Departament d’Economia Aplicada. Universitat de les Illes Balears)
    Abstract: Developmental monetary benefits of coast artificialisation projects are rarely confronted with the environmental benefits that its conservation may entail. As a consequence, policy-makers often face decision making processes in which monetary benefits have to be balanced with physical impacts ending up in undervaluation or overvaluation of environmental aspects. Non-market valuation of coastal and marine resources is thus a growing concern in the assessment of cost-benefit analysis of coastal developmental projects. This paper attempts to estimate the effects on people’s utility of the potential environmental impacts of a new seaport in Pasaia, Spain. A choice modelling technique is proposed as a means of estimating marginal impacts for different environmental attributes of mount Jaizkibel, namely its landscape, flora, avifauna and seabed. The results from a multinomial logit model reveal that, on average, individuals would pay 1.39 euros for a one percentage protection of its landscape; 0.87 euros for protecting its flora; 0.68 euros for protecting its avifauna; and 0.63 euros for protecting its seabed.
    Keywords: choice modelling; environmental valuation; social welfare
    JEL: Q51
    Date: 2008–05–19
  3. By: Hamilton, Ian (Umeå School of Business)
    Abstract: There are a number of long-term global trends driving the demand for more environmentally friendly technologies. This area, referred as “cleantech”, was coined in the United States during this century and described as “new technology and related business models offering competitive returns for investors and customers while providing solutions to global challenges” ( Cleantech Network, 2007). This and others like it represent broad definitions of technology that can replace old technology with new and improved solutions that offer a reduced impact on the environment. <p> Urbanization and growing world population are strong drivers for technologies that offer solutions in the area of transportation, water supply and treatment, air pollution and energy (Nutek, 2006). As mentioned in reports by Stern and International Panel of Climate Change (IPCC) the consequences of over 150 years of mainly western industrialization have resulted in imbalances of the global ecosystem. The unsustainable production and consumption of non-renewable energies have caused a global increase in green house gas emissions and the emerging threat of climate change (Stern, 2006). The depletion of energy resources calls for a need to develop even more effective ways of combustion of fossil fuels or renewable energies. The uncertainty of global fossil fuel supply is causing non-renewable energy price to move up. This has a destabilizing effect on national security as governments grow dependent on oil & natural gas imports (Nutek, 2006). <p> For these reasons there are strong incentives for investors to receive attractive returns for investments in cleantech industries. So far the interest from the investment community has been by far greater in the United States than in Europe and especially Scandinavia. This by itself is remarkable as US is many times portrayed as unwilling to take on and bare responsibility for its contribution towards climate change. In spite global trends driving demand for cleantech companies this paper looks at reasons why Swedish fund managers have not until now launched a few products for private investors on the Swedish fund market.
    Keywords: No; Keywords
    Date: 2007–11–20
  4. By: Bjart J. Holtsmark and Dag Einar Sommervoll (Statistics Norway)
    Abstract: Linkage of different countries’ domestic permit markets for pollution rights into a single international market alters governments’ incentives, and may trigger adjustments of the number of allocated permits. First, this work finds that in a non-cooperative equilibrium, international emissions trading is likely to increase the total emissions. Second, although trading will give a more efficient cross-country allocation of emissions, efficiency may nevertheless fall, because an already inefficiently low abatement level is likely to be further reduced. Third, we find that large countries are likely to experience losses from linking their permit markets to the permit markets of smaller countries.
    Keywords: Emissions trading; efficiency; non-cooperative games
    JEL: C72 F53 Q54
    Date: 2008–05
  5. By: John C. Whitehead; Ben Poulter; Christopher F. Dumas; Okmyung Bin
    Abstract: We develop estimates of the economic effects of sea level rise on marine recreational shore fishing in North Carolina. We estimate the relationship between angler behavior and spatial differences in beach width using the Marine Recreational Fishing Statistics Survey and geospatial data. We exploit the empirical relationship between beach width and site choice by simulating the effects of (1) sea level rise on beach width and (2) beach width on angler site choice. We find that the welfare losses are potentially substantial, ranging up to a present value of $1.26 billion over 75 years. Key Words: marine recreational fishing, travel cost method, climate change, sea level rise
    JEL: Q51
    Date: 2008
  6. By: AMIGUES Jean-Pierre; MOREAUX Michel
    Date: 2008–05
  7. By: Jean-Marc Roda (CIRAD); Eric J.M.M. Aretz (Alterra); Hin Fui Lim (FRIM)
    Abstract: This paper analyses the side effects of the stricter regulation on tropical hardwood or timber imports. It considers the place of Europe within the global timber market, where Europe accounts only for a very limited share. It also explains the high selectivity of European markets, with its consequences. While tropical wooden furniture and other secondary processed products are not considered as timber here, their question is also discussed. The number of empirical studies specifically dealing with the side effects of EU regulations is limited, but the results are converging, showing that these regulations have a general adverse effect, contrary to the initial aim of promoting the sustainability of tropical timbers. These side effects are essentially to divert the trade towards countries with lower standards, and to add a burden on most of the producing countries which have already a set of comparative disadvantages for the production of legal or sustainable timber. The effects are positive on a limited number of companies which markets are very dependent of Europe. The question is then analysed from a broader perspective, replacing the effects of the EU regulations as an incidental factor compared to the increasing consumption of tropical timber by the three developing giants: Brazil, India and China.
    Keywords: timber trade, trade regulation, environmental regulation, Europe, tropical timber, tropical hardwwod, side effect, adverse effect
    JEL: L73 O13
    Date: 2007–03
  8. By: Chai Jun (Xinjiang Agricultural University); Bill Slee (The Macaulay Institute); Maurizio Canavari (Alma Mater Studiorum University of Bologna); Chen Tong (Xinjiang Agricultural University); Huliyeti Hasimu (Xinjiang Agricultural University)
    Abstract: This paper explores the feasibility of developing organic livestock farming in the pastoral area of Xinjiang, in order to address the problems of grassland degradation and to promote the sustainable development of the grazing livestock sector. Research shows that organic grazing farming may reduce the stocking rate of grassland and relieve the strained relationship between animal and grassland, as well between man and nature. As a result, the value of multifunctional grazing systems may be more widely recognized. As well as including production and economic objectives, cultural, social and environmental implications will also be taken into account. Additionally, herders may also have an improved source of income to poor rural people. The potential markets for organic products are very big and the traditional ruminant livestock husbandry systems in Xinjiang are very close to organic livestock farming. It is considered necessary to change from a production-oriented approach to farming system research to a wider consideration of the systems and policies needed to support the development of organic grazing livestock alongside consideration of how to fund the relevant research and training and establish the systems of quality guarantee associated with organic production.
    Keywords: Grazing Livestock, Organic Farming, Xinjiang
    JEL: Q56
    Date: 2008–04
  9. By: Philippe Barla (Department of Economics, Universite Laval); Christos Constantatos (Department of Economics, University of Macedonia); Markus Herrmann (Department of Economics, Universite Laval)
    Abstract: According to Porter’s hypothesis, environmental regulation increases the regulated firms’ profits. However, if a “greener” strategy is more profitable why does it need regulatory intervention in order to be implemented? Let a greener product increase the adopter’s marginal cost while providing no additional benefits during the first period. In the second period, when the product's environmental attributes become known and appreciated by consumers, the adopter enjoys higher demand. By adopting the green product alone, a firm loses profits in the first period due to a) its increased costs, and b) its reduced market share; in the second period, it enjoys additional profits due to c) its increased quality, and d) its increased market share. If both firms adopt the green product market shares remain unaffected, therefore b) and d) disappear. While simultaneously adopting the green product can be profitable for both firms, for a single firm to pioneer adoption may not be so. Environmental regulation acts, therefore, as a co-ordination device reducing market inertia. By inducing both firms to act simultaneously it allows them to pass from one Nash equilibrium to another one with higher profits.
    Keywords: Porter’s hypothesis, environmental regulation, differentiated products, coordination
    JEL: Q20 Q28 L13 L50
    Date: 2008–05
  10. By: Brekke, Kjell Arne (Department of Economics, University of Oslo); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper attempts to bring some central insights from behavioural economics into the economics of climate change. In particular, it discusses (i) implications of prospect theory, the equity premium puzzle and time inconsistent preferences in the choice of discount rate used in climate change cost assessments, and (ii) the implications of various kinds of social preferences for the outcome of climate negotiations. Several reasons are presented for why it appears advisable to choose a substantially lower social discount rate than the average return on investments. It also seems likely that taking social preferences into account increases the possibilities of obtaining international agreements, compared to the standard model. However, there are also effects going in the opposite direction, and the importance of sanctions is emphasised.<p>
    Keywords: Behavioural economics; prospect theory; equity premium puzzle; social preferences; climate negotiations.
    JEL: D63 Q54
    Date: 2008–05–19
  11. By: Olsson, Rickard (Umeå School of Business)
    Abstract: This paper examines the performance of US stock portfolios constructed and rebalanced to have different environmental (EV) risk. EV risk is proxied by EV risk ratings from GES Investment Services. Portfolios with high EV risk generate higher raw returns than low EV risk portfolios, but when risk and other factors are controlled for using the three Fama-French factors and a momentum factor, the risk-adjusted returns of both high and low EV risk portfolios are not statistically different from zero. The evidence thus indicate that a portfolio of stocks with low EV risk, intended to be more responsible, neither underperform or outperform on a risk-adjusted basis.
    Keywords: Socially responsible investment; environmental risk; portfolio performance evaluation
    Date: 2007–11–24
  12. By: Lundgren, Tommy (Umeå School of Business); Olsson, Rickard (Umeå School of Business)
    Abstract: Based on a formal model of how investments in corporate social responsibility act upon .rm value through goodwill, we derive the hypothesis that under uncertainty, bad news are detrimental to good-will, and subsequently have a negative impact on value. We examine by event study methodology whether bad news in the form of environmental (EV) incidents a¤ect .rm value negatively as measured by abnormal returns using a global data set. An EV incident is a company incident allegedly in violation of international norms on environmen-tal issues. We analyze 142 EV incidents 2003-2006. The incidents are generally associated with negative cumulative abnormal returns, but which are not statistically signi.cant, except for incidents for .rms in the EURO zone. The results are robust with respect to a number of variations in test methodology.
    Keywords: No; keywords
    Date: 2008–01–30
  13. By: Cunningham, Gary (Umeå School of Business); Hassel , Lars (Umeå School of Business); Nilsson, Henrik (Umeå School of Business)
    Abstract: Reporting of environmental information along with financial information has become an important research topic. Research to date has focused on the nature of the information reported by companies. This study extends prior research by examining the inclusion of environmental information by financial analysts in their research reports of companies in the chemical and in the oil and gas industries. Both companies and the financial analysts are divided into subsets by geographic region, Europe and North America. Results show that only 35 per cent of financial analysts’ reports have environmental information. Those reports that do have such information have more environmental information for North American companies than for European companies and analysts tend to report more information for companies in their regions. The chemical industry receives more attention, especially for downside information.
    Keywords: Environmental information; financial analysts’ reports; equity valuation; content analysis
    Date: 2007–11–27

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