nep-env New Economics Papers
on Environmental Economics
Issue of 2008‒06‒27
twelve papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Justifiability of Littering: An Empirical Investigation By Benno Torgler; Maria A. Garcia-Valinas; Alison Macintyre
  2. Optimal CO2 abatement and technological change. Should emission taxes start high in order to spur R&D? By Mads Greaker and Lise-Lotte Pade
  3. The Design of Permit Schemes and Environmental Innovation By Grischa Perino
  4. A Comparison of Results From MRIO and Interregional Computable General Equilibrium (CGE) Analyses of the Impacts of a Positive Demand Shock on the ‘CO2 Trade Balance’ Between Scotland and the Rest of the UK By Michelle Gilmartin; Kim Swales; Karen Turner
  5. Pigouvian Taxation in a Ramsey World By Robin Boadway; Jean-Francois Trembley
  6. Why Catalonia will see its energy metabolism increase in the near future: an application of MuSIASEM By Jesús Ramos Martín; S. Cañellas-Bolta
  7. Household Incidence of Pollution Control Policies: a Robust Welfare Analysis Using General Equilibrium Effects By Abdelkrim Araar; Yazid Dissou; Jean-Yves Duclos
  8. Estimation of semiparametric stochastic frontiers under shape constraints with application to pollution generating technologies By Kortelainen, Mika
  9. Mixed Taxation, Public Goods and Transboundary Externalities: A Model with Large Jurisdictions By Aronsson, Thomas; Persson, Lars; Sjögren, Tomas
  11. Energy Tax Incentives and the Alternative Minimum Tax By Curtis Carlson; Gilbert E. Metcalf
  12. Insuring Against Losses from Transgenic Contamination: The Case of Pharmaceutical Maize By David Ripplinger; Dermot J. Hayes; A. Susana Goggi; Kendall Lamkey

  1. By: Benno Torgler; Maria A. Garcia-Valinas; Alison Macintyre
    Abstract: The paper investigates the relationship between environmental participation and littering. Previous empirical work in the area of littering is scarce as is evidence regarding the determinants of littering behavior. We address these deficiencies, demonstrating a strong empirical link between environmental participation and reduced public littering using European Values Survey (EVS) data for 30 Western and Eastern European countries. The results suggest that membership in environmental organizations strengthens commitment to anti-littering behaviour, thereby supporting improved environmental quality.
    Keywords: littering, environmental participation, environmental preferences, environmental outcomes
    JEL: H26 H73 D64
    Date: 2008–06–17
  2. By: Mads Greaker and Lise-Lotte Pade (Statistics Norway)
    Abstract: Many European politicians argue that since technological development is needed to solve the climate problem, the EU should take the lead and set tougher emission targets than what is required by the Kyoto protocol. Moreover, emission trading with other countries outside EU should be limited so as to keep emission quota prices high. However, the policy of spurring R&D by setting high emission taxes today is not suggested by the literature on climate change and R&D. In this paper we investigate this result further by modeling innovation activity explicitly. In our model both the amount of R&D and the amount of CO2 abatement are decided in a decentralized way by the market as a response to an emission tax. Moreover, we introduce three distinct failures in the market for new innovations; monopolistic pricing behavior, insufficient patent protection and dynamic knowledge spillovers. Our findings suggest that governments should under some circumstances set a higher carbon tax today if we have technological change driven by R&D than if we have pure exogenous technological change. Based on numerical simulations these circumstances are i) "a standing on shoulders" type of externality in R&D or ii) weak patent protection.
    Keywords: Climate policy; technological change; emission tax
    JEL: Q28 D21 C68
    Date: 2008–06
  3. By: Grischa Perino (University of Heidelberg, Department of Economics)
    Abstract: Most real world emission permit schemes are in effect hybrid instruments that feature both quantity and price controls. While the effects of price bounds are well understood for issues such as uncertain abatement costs it has not been investigated how such bounds affect time-consistency of environmental regulation and research incentives. The present paper analyzes these issues for two types of innovation. While price bounds increase static efficiency they reduce incentives to innovate. Commitment on details of a scheme’s design might be necessary to avoid the latter.
    Keywords: Environmental Regulation, Hybrid Instruments, Innovation, Time-inconsistency
    JEL: Q55 H23 O33 L51
    Date: 2008–06
  4. By: Michelle Gilmartin (Department of Economics, University of Strathclyde); Kim Swales (Department of Economics, University of Strathclyde); Karen Turner (Department of Economics, University of Strathclyde)
    Abstract: In previous work we have applied the environmental multi-region input-output (MRIO) method proposed by Turner et al (2007) to examine the ‘CO2 trade balance’ between Scotland and the Rest of the UK. In McGregor et al (2008) we construct an interregional economy-environment input-output (IO) and social accounting matrix (SAM) framework that allows us to investigate methods of attributing responsibility for pollution generation in the UK at the regional level. This facilitates analysis of the nature and significance of environmental spillovers and the existence of an environmental ‘trade balance’ between regions. While the existence of significant data problems mean that the quantitative results of this study should be regarded as provisional, we argue that the use of such a framework allows us to begin to consider questions such as the extent to which a devolved authority like the Scottish Parliament can and should be responsible for contributing to national targets for reductions in emissions levels (e.g. the UK commitment to the Kyoto Protocol) when it is limited in the way it can control emissions, particularly with respect to changes in demand elsewhere in the UK. However, while such analysis is useful in terms of accounting for pollution flows in the single time period that the accounts relate to, it is limited when the focus is on modelling the impacts of any marginal change in activity. This is because a conventional demand-driven IO model assumes an entirely passive supply-side in the economy (i.e. all supply is infinitely elastic) and is further restricted by the assumption of universal Leontief (fixed proportions) technology implied by the use of the A and multiplier matrices. In this paper we argue that where analysis of marginal changes in activity is required, a more flexible interregional computable general equilibrium approach that models behavioural relationships in a more realistic and theory-consistent manner, is more appropriate and informative. To illustrate our analysis, we compare the results of introducing a positive demand stimulus in the UK economy using both IO and CGE interregional models of Scotland and the rest of the UK. In the case of the latter, we demonstrate how more theory consistent modelling of both demand and supply side behaviour at the regional and national levels affect model results, including the impact on the interregional CO2 ‘trade balance’.
    Keywords: CGE modelling, MRIO, CO2 trade balance, environmental responsibility
    JEL: D57 D58 R15 Q56
    Date: 2008–06
  5. By: Robin Boadway (Queen's University); Jean-Francois Trembley (University of Ottawa)
    Abstract: This paper studies the optimal Pigouvian tax for correcting pollution when the government also uses distortionary taxes to raise revenues. When preferences are quasilinear in leisure and additive, the Pigovian tax can be separated from the Ramsey revenue-raising tax. We characterize the relationship between the Pigouvian tax and marginal social damages in a variety of circumstances. In a setting with homogeneous households, the Pigouvian tax exceeds marginal damages if goods have inelastic demands, and vice versa. When households are heterogeneous so taxes can be redistributive, the Pigouvian tax gives more weight to damages suffered by low-income persons. The analysis is extended to allow for costly abatement. In general corrective taxes have to be applied to both emissions and output of the polluting good.
    Keywords: Pigouvian tax, optimal taxes, pollution tax
    JEL: H21 H23
    Date: 2008–06
  6. By: Jesús Ramos Martín (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); S. Cañellas-Bolta (Consell Assessor per al Desenvolupament Sostenible, Generalitat de Catalunya)
    Abstract: This paper applies the so-called Multi-Scale Integrated Analysis of Societal and Ecosystem Metabolism (MuSIASEM) to the economy of the Spanish region of Catalonia. By applying Georgescu-Roegen’s fund-flow model, it arrives at the conclusion that within a context of the end of cheap oil, the current development model based on the growth of low productivity sectors such as services and construction must change. The change is needed not only because of the increasing scarcity of affordable energy carriers, or because of the increasing environmental impact that the present development represents, but also because of an ageing population that demands labour productivity gains. This will imply industry requiring more energy consumption per worker in order to increase its productivity, and therefore its competitiveness. Thus, we conclude that energy intensity, and exosomatic energy metabolism of Catalonia will increase dramatically in the near future unless major conservation efforts are implemented in both the household and transport sectors.
    Keywords: Catalonia, exosomatic energy, energy metabolism, economic development, hierarchical levels, multi-scale, integrated analysis
    JEL: O11 O13 O52 Q01 Q57 Q58
    Date: 2008–06
  7. By: Abdelkrim Araar; Yazid Dissou; Jean-Yves Duclos
    Abstract: This study assesses the incidence of pollution control policies on households. In contrast to previous studies, we employ an integrated framework combining a multisector general equilibrium model with a stochastic dominance analysis using household-leved data. We consider three policy instruments in a domestic emission trading system: (i) an output-based allocation of permits (OBA); (ii) the use of the proceeds of permit sales to reduce payroll taxes (RPT); (iii) and the use of these proceeds to reduce consumption taxes instead (UCS). The general equilibrium results suggest that the return to capital is more negatively affected than the wage rate in all simulations, since polluting industries are capital intensive. Abstracting from pollution externalities, the dominance analysis allows us to conclude that all three policies have a normatively robust negative (positive) impact on welfare (poverty). Formal dominance tests indicate that RPT first-order welfare dominates OBA over all values of household incomes. UCS also first-order poverty dominates RPT for any choice of poverty line below $CAN 18,600, and poverty dominates for any poverty line (and thus welfare dominates) at the second order. Finally, while the three pollution control policies do not have a numerically large impact on inequality (in comparison to the base run), statistical tests indicate that inequality increases significantly more with OBA and RPT than with UCS.
    Keywords: Pollution control policies, household incidence, stochastic dominance, general equilibrium effects
    JEL: C68 D31 D58 D63 H23 Q52 Q56
    Date: 2008
  8. By: Kortelainen, Mika
    Abstract: A number of studies have explored the semi- and nonparametric estimation of stochastic frontier models by using kernel regression or other nonparametric smoothing techniques. In contrast to popular deterministic nonparametric estimators, these approaches do not allow one to impose any shape constraints (or regularity conditions) on the frontier function. On the other hand, as many of the previous techniques are based on the nonparametric estimation of the frontier function, the convergence rate of frontier estimators can be sensitive to the number of inputs, which is generally known as “the curse of dimensionality” problem. This paper proposes a new semiparametric approach for stochastic frontier estimation that avoids the curse of dimensionality and allows one to impose shape constraints on the frontier function. Our approach is based on the singleindex model and applies both single-index estimation techniques and shape-constrained nonparametric least squares. In addition to production frontier and technical efficiency estimation, we show how the technique can be used to estimate pollution generating technologies. The new approach is illustrated by an empirical application to the environmental adjusted performance evaluation of U.S. coal-fired electric power plants.
    Keywords: stochastic frontier analysis (SFA); nonparametric least squares; single-index model; sliced inverse regression; monotone rank correlation estimator; environmental efficiency
    JEL: C51 Q52 C14 D24
    Date: 2008–06–20
  9. By: Aronsson, Thomas (Department of Economics, Umeå University); Persson, Lars (Department of Economics, Umeå University); Sjögren, Tomas (Department of Economics, Umeå University)
    Abstract: This paper concerns income taxation, commodity taxation, production taxation and public good provision in a multi-jurisdiction framework with transboundary environmental damage. We assume that each jurisdiction is large in the sense that its government is able to influence the world-market producer price of the externality-generating commodity. The decision-problem facing the government in each such jurisdiction is represented by a two-type model (with asymmetric information between the government and the private sector). We show how the possibility to influence the world-market producer price adds mechanisms of relevance for redistribution and externality-correction which, in turn, affect the domestic use of taxation and public goods. Finally, with the noncooperative Nash equilibrium as a reference case, we consider the welfare effects of policy coordination.
    Keywords: Trade and Environment; Optimal Taxation; Externalities
    JEL: F18 H21 H23
    Date: 2008–06–17
    Abstract: On the basis of a step-by-step procedure (see Hinkin, 1998), this article discusses the design and evaluation of a self-report questionnaire (Change Climate Questionnaire) that can be used to gauge the internal context of change, the process factors of change, and readiness for change. The authors describe four studies used to develop a psychometric sound 42-item assessment tool that can be administered in organizational settings. In all, more than 3,000 organizational members from public and private sector companies participated in the validation procedure of the CCQ. The information obtained from the analyses yielded five internal context dimensions, three change process dimensions, and three facets of readiness for change.
    Keywords: change climate assessment, scale development, readiness for change
    Date: 2008–04
  11. By: Curtis Carlson; Gilbert E. Metcalf
    Abstract: We take a first look at limitations on the use of energy-related tax credits contained in the General Business Credit (GBC) due to limitations within the regular corporate income tax as well as the AMT. Between 2000 and 2005, firms were unable to use all energy-related tax credits due to GBC limitations in the regular tax. The AMT has a smaller but still pronounced impact on the ability of firms to use these credits. Finally, we provide some illustrative calculations to demonstrate how the AMT can lead to very different levelized costs of producing electricity from a wind power project.
    JEL: H20 H23 Q48
    Date: 2008–06
  12. By: David Ripplinger; Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); A. Susana Goggi; Kendall Lamkey
    Abstract: Concerns about the risk of food supply contamination and the resulting financial losses have limited the development and commercialization of certain pharmaceutical plants. This article develops an insurance pricing model that helps translate these concerns into a cost-benefit analysis. The model first estimates the physical dispersal of maize pollen subject to a number of weather parameters. This distribution is then validated with the limited amount of currently available field trial data. The physical distribution is then used to calculate the premium for a fair-valued insurance policy that would fund the destruction of possibly contaminated fields. The flexible framework can be readily adapted to other crops, management practices, and regions.
    Keywords: contemporaneous fertility, costs and benefits, insurance, pharmaceutical maize, pollen dispersal, risks and benefits, stochastic model.
    Date: 2008–06

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