nep-env New Economics Papers
on Environmental Economics
Issue of 2008‒06‒13
fourteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. The Health Costs of Inaction with Respect to Air Pollution By Pascale Scapecchi
  3. Hot Issue and Burning Options in Waste Management: A Social Cost Benefit Analysis of Waste-to-Energy in the UK. By Jamasb, T.; Kiamil, H.; Nepal, R.
  4. Wide and Narrow Approaches in Climate Change Policies: The Case of Spain By Miguel Rodríguez; Xavier Labandeira
  5. Carbon Labelling and Low Income Country Exports: An Issues Paper By Brenton, Paul; Edwards-Jones, Gareth; Jensen, Michael
  6. Incorporating GHG Emission Costs in the Economic Appraisal of Projects Supported by State Development Agencies By Richard S. J. Tol; Seán Lyons
  7. A Moral Approach to Global Warming Policy By Seo, S. Niggol
  8. Financing Capture Ready Coal-Fired Power Plants In China By Issuing Capture Options By Liang, X.; Reiner, D.; Gibbins, J.; Li, J.
  9. Modelling the costs of non-conventional oil: A case study of Canadian bitumen By Méjean, A.; Hope, C.
  10. Localized Innovation, Localized Diffusion and the Environment: An Analysis of CO2 Emission Reductions by Passenger Cars, 2000-2007 By Los, Bart; Verspagen, Bart
  11. The Efficiency of Direct Public Involvement in Environmental Policymaking: An Experimental Test By Christopher Bruce; Jeremy Clark
  12. A Carbon Tax for Ireland By Richard S. J. Tol; Tim Callan; Thomas Conefrey; John Fitz Gerald; Seán Lyons; Laura Malaguzzi Valeri; Susan Scott
  13. When is some number really better than no number? On the optimal choice between non-market valuation methods By Munro, Alistair
  14. Promoting clean technologies: The energy market structure crucially matters By Théophile T. Azomahou; Raouf Boucekkine; Phu Nguyen-Van

  1. By: Pascale Scapecchi
    Abstract: How much does the environment affect human health? Is air pollution shortening our lives and those of our children? These questions are fundamental to environmental policies. Air pollution is a major environmental health threat in OECD countries, contributing to a number of illnesses, such as asthma, cancer and premature deaths. Despite national and international interventions and decreases in major emissions, the health impacts of air pollution are not likely to decrease in the years ahead, unless appropriate action is taken. This report presents estimates of the costs and benefits of environmental policies aiming at reducing air pollution and provides policy recommendations in order to better address environmental health issues. <BR>Dans quelle mesure l'environnement influe-t-il sur la santé humaine ? La pollution de l'air va-t-elle restreindre notre espérance de vie et celle de nos enfants ? Ces questions sont fondamentales pour les politiques environnementales. Dans les pays de l'OCDE, la pollution atmosphérique constitue une menace pour la santé, puisqu'elle joue un rôle dans nombre d'affections, telles que l'asthme, certains cancers et de décès prématurés. En dépit des actions engagées à l'échelle nationale et internationale et de la baisse des principales émissions, il est peu probable que les effets de la pollution de l'air sur la santé diminuent dans les années à venir à moins que ne soient prises les mesures qui s'imposent. Ce rapport présente des estimations des coûts et bénéfices de politiques environnementales visant à réduire la pollution atmosphérique et propose des recommandations politiques afin de mieux traiter les questions de santé environnementale.
    JEL: D61 D62 H43 I18 Q51 Q53
    Date: 2008–06–06
  2. By: Juan P. Chousa,; Artur Tamazian; Krishna Chaitanya Vadlamannati
    Abstract: The paper investigates whether the decline in environmental quality in BRIC economies is due to high energy consumption level which is a resultant of rapid economic growth. We answer this using environmental, macroeconomic and financial variables along with Kyoto Protocol indicators based on panel data from 1992 to 2004.
    Keywords: CO2 Emissions, Energy Consumption, Economic Growth, BRIC economies.
    JEL: Q40 Q41 Q43 O13 O14
    Date: 2008–02–01
  3. By: Jamasb, T.; Kiamil, H.; Nepal, R.
    Abstract: The growing stream of municipal solid waste requires a sustainable waste management strategy. Meanwhile, addressing climate change and security of energy supply concerns require increased use of low-carbon and domestic sources of energy. This paper assesses the economic and policy aspects of waste management options focusing on waste to energy (WtE). We conclude that high levels of WtE and recycling are compatible as waste treatment options. We also present a social cost-benefit analysis of waste management scenarios for the UK focusing on specific waste management targets and carbon price. The results indicate that meeting the waste management targets of the EU Directive are socially more cost effective than the current practice. The cost effectiveness improves substantially with higher carbon prices. The findings show that WtE can be an important part of both waste management strategy and renewable energy policy. However, achieving the full potential of WtE requires development of heat delivery networks.
    Keywords: Electricity, renewable energy, waste to energy (WtE), waste management, municipal solid waste (MSW).
    JEL: Q01 Q28 Q42
    Date: 2008–01
  4. By: Miguel Rodríguez; Xavier Labandeira
    Abstract: This paper deals with the effects of emissions trading, a standard economic instrument to control greenhouse gas emissions, in a particular country. After distributing the Kyoto-mandated allocation among member states, the European Commission introduced a rather conventional emissions trading scheme in 2005. The extent of application of the market is limited, with only certain sectors being subject to it (mostly industries), and tradable permits are freely allocated. Both facts have important consequences in efficiency and distributional terms, also raising (normative) concerns on the actual and desirable regulatory approximation. The paper mainly focuses on the (positive) efficiency and distributional effects of the EU emissions trading system, with the use of a static general equilibrium model for the Spanish economy, also incorporating some hypothetical simulations (broader scope of the market, carbon taxation). The results indicate that the narrow scope of the EU emission trading market generates efficiency costs and relevant distributional effects.
    Date: 2007–12
  5. By: Brenton, Paul; Edwards-Jones, Gareth; Jensen, Michael
    Abstract: In response to growing concerns over climate change, consumers and firms in developed countries are considering their carbon footprint. Carbon labelling is being explored as a mechanism for greenhouse gas emission reduction primarily by private actors. This paper discusses the carbon accounting activities and carbon labelling schemes that are being developed to address these concerns with a view to their impact on small stakeholders, especially low income countries. This discussion centres on transportation, and the common presumption that products produced locally in the country of consumption will have an advantage in terms of carbon emissions, and on size. Exports from low income countries typically depend on long distance transportation and are produced by relatively small firms and tiny farms who will find it difficult to participate in complex carbon labelling schemes. However, the popular belief that trade by definition is problematic since it necessitates transportation, which is a major source of emissions, is generally not true. The scientific evidence shows that carbon efficiencies elsewhere in the supply chain may more than offset the emissions associated with transportation. Indeed, the effective inclusion of low income countries in labelling schemes may offer important opportunities for carbon emission reductions due to their favourable climactic conditions and their current use of low energy intensive production techniques. The disadvantages of small size can be reduced by carbon labelling schemes that use innovative solutions to low cost data collection and certification.
    Keywords: carbon labelling; exports; low income countries;
    JEL: F18 Q56
    Date: 2008–05–31
  6. By: Richard S. J. Tol (Economic and Social Research Institute (ESRI)); Seán Lyons (Economic and Social Research Institute (ESRI))
    Abstract: This paper sets out a methodology for updating an economic appraisal model to ensure that it takes appropriate account of costs arising from greenhouse gas emissions. While the analysis is based on the appraisal model used in Ireland, it should be broadly applicable to circumstances in any EU Member State; indeed, many features will be relevant in any jurisdiction subject to a carbon tax or participating in a carbon permit trading system.
    Date: 2008–06
  7. By: Seo, S. Niggol
    Abstract: This paper examines a widespread public belief on designing a global climate policy, that is, climate change is a moral issue and should be approached with an ethical standpoint. In this paper, I pose a question of whether a global public goods such as the control of greenhouse gases can be provided efficiently with the adoption of an ethical standard. This paper finds that a global climate policy cannot rely on ethics. The main reasons are existing knowledge gaps in climate change science and economics, heterogeneous economic agents and asymmetric information among them, and the economic reality of winners and losers from the implementation of a climate policy. For a policy to work individuals should be forced to pay an optimal carbon tax regardless of one being ethical or selfish. I relate the discussions to the examples of ‘faith based initiative’, ‘voluntary approach’, and ‘zero discounting’ analysis.
    Keywords: Climate Change, Global Public Goods, Carbon Tax, Morality.
    JEL: Q5 Q54
    Date: 2008–04–07
  8. By: Liang, X.; Reiner, D.; Gibbins, J.; Li, J.
    Abstract: ‘Capture Ready’ is a design concept enabling fossil fuel plants to be retrofitted more economically with carbon dioxide capture and storage (CCS) technologies, however financing the cost of capture ready can be problematic, especially in the developing world. We propose that fossil fuel plants issue tradable Capture Options to acquire financing. The Capture Option concept could move CCS forward politically in countries such as China, speed up CCS technology development, help Capture Ready investors diversify risk, and offer global warming investors an alternative investment opportunity. As a detailed case study, we assess the value of a Capture Option and Capture Ready plant for a 600 MW supercritical pulverized coal power plant in China, using a cash flow model with Monte-Carlo simulations. The gross value of Capture Ready varies from CNY3m ($0.4m) to CNY633m ($84.4m) at an 8% discount rate and the Capture Option is valued at CNY113m ($15.1m) to CNY1255m ($167.3m) for two of the four scenarios analyzed.
    Keywords: Capture Option, Capture Ready, Carbon Capture and Storage, Climate Change, Coal-fired Electricity, China.
    JEL: O1 O3 Q5
    Date: 2007–12
  9. By: Méjean, A.; Hope, C.
    Abstract: High crude oil prices, uncertainties about the consequences of climate change and the eventual decline of conventional oil production raise the issue of alternative fuels, such as non-conventional oil and biofuels. This paper describes a simple probabilistic model of the costs of non-conventional oil, including the role of learning-by-doing in driving down costs. This forward-looking analysis quantifies the effects of both learning and production constraints on the costs of supplying alternative fuels. The results show large uncertainties in the future costs of supplying synthetic crude oil from bitumen deposits, with a 90% confidence interval of $7 to $11 in 2025, and $6 to $13 in 2050. The influence of each parameter on the supply costs is examined, with the minimum supply cost, the learning rate, and the depletion curve exponent having the largest influence. Over time, the influence of the learning rate on the supply costs decreases, while the influence of the depletion curve exponent increases.
    Keywords: Climate change; Non-conventional oil; Exhaustible resources; Technological change; Uncertainty
    JEL: C15 Q55 Q42 Q32
    Date: 2008–02
  10. By: Los, Bart (Groningen Growth and Development Centre, and University of Groningen); Verspagen, Bart (UNU-MERIT, and Maastricht University)
    Abstract: We investigate technological change with regard to CO2 emissions by passenger cars, using a Free Disposal Hull methodology to estimate technological frontiers. We have a sample of cars available in the UK market in the period 2000 – 2007. Our results show that the rates of technological change (frontier movement) and diffusion (distance to frontier at the car brand level) differ substantial between segments of the car market. We conclude that successful policies should be aimed at diffusion of best-practice technology, and take account of the different potential for further progress between different segments of the market (e.g., diesel and gasoline engines, and small vs. large engines).
    Keywords: CO2 emissions by cars, technological change, diffusion of innovations
    JEL: Q55 O31 O33
    Date: 2008
  11. By: Christopher Bruce; Jeremy Clark (University of Canterbury)
    Abstract: In one of the most ambitious forms of environmental decision-making, representatives of interested parties – environmentalists, developers, farmers, loggers, miners, etc. - are charged with the responsibility of developing a set of public policies that is acceptable to all of them. Although this approach has become increasingly popular, and has been widely discussed in the academic literature, little is known about the characteristics of the outcomes that are reached in this type of negotiation. We do not know, for example, whether these outcomes meet the standard criteria for efficiency or equity. In this paper, we use laboratory experiments to test whether a number of axiomatic models of bargaining can predict the behavior of the parties to environmental decision making. In recognition of the multi-dimensional aspect of most public land use conflicts, we ask pairs of subjects to negotiate over two goods, without the possibility of cash side payments. We thus provide one of the first experimental tests of a prediction associated with the Edgeworth Box: that parties with an initial endowment that is Pareto inefficient will make trades until they reach a Pareto efficient allocation. We further test whether parties in particular reach the Nash bargain when it coincides with or conflicts with outcomes that maximise the parties’ joint payoffs and with outcomes at which the parties’ receive equal payoffs. Finally, the effect of providing parties with full or partial information regarding payoffs is also examined.
    Keywords: Axiomatic models of bargaining; Experimental tests; Land use conflicts; Collaborative policymaking
    JEL: C92 D74 H41 J52 Q51
    Date: 2008–05–05
  12. By: Richard S. J. Tol (Economic and Social Research Institute (ESRI)); Tim Callan (Economic and Social Research Institute (ESRI)); Thomas Conefrey (Economic and Social Research Institute (ESRI)); John Fitz Gerald (Economic and Social Research Institute (ESRI)); Seán Lyons (Economic and Social Research Institute (ESRI)); Laura Malaguzzi Valeri (Economic and Social Research Institute (ESRI)); Susan Scott (Economic and Social Research Institute (ESRI))
    Date: 2008–06
  13. By: Munro, Alistair
    Abstract: Decision-makers have a wide variety of competing and complementary methods for non-market valuation, but there is little formal advice on the choice of method. I offer a formal approach, using a loss function (the mean square error) to compare contingent valuation, Citizens'Jury and methods where by intention only a portion of total value is estimated, when a) preferences vary across the population and b) methods are more or less susceptible to framing effects. Illustrative simulations suggest con-ditions under which the Citizens'Jury may dominate contingent valuation when framing effects are significant.
    Keywords: contingent valuation; Citizens' Jury; optimal decisions; framing effects; cost-benefit analysis
    JEL: D61 Q51 D01
    Date: 2007–09–20
  14. By: Théophile T. Azomahou (UNU-MERIT, Maastricht University, The Netherlands); Raouf Boucekkine (UCLouvain, Belgium; and University of Glasgow, UK); Phu Nguyen-Van (THEMA-CNRS, Université de Cergy-Pontoise, France)
    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 progress; vintage capital; energy market; natural monopoly; investment subsidies
    JEL: E22 O40 Q40
    Date: 2008

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