nep-env New Economics Papers
on Environmental Economics
Issue of 2008‒11‒04
34 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Is Fuel-Switching a No-Regrets Environmental Policy? VAR Evidence on Carbon Dioxide Emissions, Energy Consumption and Economic Performance in Portugal By Alfredo M. Pereira; Rui Manuel Marvão Pereira
  2. Embodied pollution in Spanish household consumption: a disaggregate analysis By Jordi Roca; Monica Serrano
  3. Greenhouse-gas Emission Controls and International Carbon Leakage through Trade Liberalization By Jota ISHIKAWA; Toshihiro OKUBO
  4. Environmental Taxes and Industry Monopolization By de Vries, Frans P.; Schoonbeek, Lambert
  5. How long can excess pollution persist? The non-cooperative case By Pierre-Yves Hénin; Katheline Schubert
  6. The Dematerialization Potential of the Australian Economy By Heinz Schandl; Graham M Turner
  7. Coalition Formation and the Ancillary Benefits of Climate Policy By Rübbelke, Dirk T.G.; Finus, Michael
  8. Life expectancy and the environment By Fabio Mariani; Agustin Pérez-Barahona; Natacha Raffin
  9. Are there income effects on global willingness to pay for biodiversity conservation? By Hanley, Nick; Jacobsen, Jette Bredahl
  10. A combinatorial optimisation approach to non-market environmental benefit aggregation By O'Donoghue, Cathal; Hanley, Nick; Hynes, Stephen
  11. Using contests to allocate pollution rights By Kornienko, Tatiana; Hanley, Nick; MacKenzie, Ian A
  12. The impact of climate variability and climate change on water and food outcomes: A framework for analysis By Ringler, Claudia
  13. Hartwick's rule and maximin paths when the exhaustible resource has an amenity value By Antoine D'Autume; Katheline Schubert
  14. Micro-level analysis of farmers' adaptation to climate change in Southern Africa: By Nhemachena, Charles; Hassan, Rashid M.
  15. Measuring Ethiopian farmers' vulnerability to climate change across regional states: By Deressa, Temesgen; Hassan, Rashid M.; Ringler, Claudia
  16. Perceptions of stakeholders on climate change and adaptation strategies in Ethiopia: By Admassie, Assefa; Adenew, Berhanu; Tadege, Abebe
  17. Growth and convergence in a model with renewable and nonrenewable resources By Manh Hung NGUYEN; Phu Nguyen-Van
  18. Integrated management of the Blue Nile Basin in Ethiopia under climate variability and climate change hydropower and irrigation modeling: Hydropower and irrigation modeling By Block, Paul J.; Strzepek, Kenneth; Rajagopalan, Balaji
  19. Measuring Ethiopian farmers' vulnerability to climate change across regional states: By Deressa, Temesgen; Hassan, Rashid M.; Ringler, Claudia
  20. Analysis of the determinants of farmers' choice of adaptation methods and perceptions of climate change in the Nile Basin of Ethiopia: By Deressa, Temesgen T.; Hassan, Rashid M.; Ringler, Claudia; Alemu, Tekie; Yesuf, Mahmud
  21. Does Lax Environmental Regulation Attract FDI when accounting for "third-country" effects? By Kukenova, Madina; Monteiro, Jose-Antonio
  22. Direct vs Indirect Payments for Environmental Services: The Role of Relaxing Market Constraints By Ben Groom; Charles Palmer
  23. Resource Conflict in Vulnerable Environments: Three Models Applied to Darfur By Olsson, Ola
  24. Willingness-to-Pay for Energy Conservation and Free-Ridership on Subsidization – Evidence from Germany By Peter Grösche; Colin Vance
  25. The impacts of knowledge of the past on preferences for future landscape change By Bergmann, E. Ariel; Stewart, Mairi; Watson, Fiona; Colombo, Sergio; Ready, Richard; Hanley, Nick
  26. The Impact of Socio-economics and Climate Change on Tropical Cyclone Losses in the USA By Silvio Schmidt; Claudia Kemfert; Peter Höppe
  27. Impacts of considering climate variability on investment decisions in Ethiopia: By Block, Paul J.; Strzepek, Kenneth; Rosegrant, Mark; Diao, Xinshen
  28. Vulnerability and the impact of climate change in South Africa's Limpopo River Basin: By Shewmake, Sharon
  29. Tourism and Regional Competitiveness: the Case of the Portuguese Douro Valley By Argentino Pessoa
  30. Accounting for Negative, Zero and Positive Willingness to Pay for Landscape Change in a National Park By Watson, Fiona; Kriström, Bengt; Colombo, Sergio; Hanley, Nick
  31. A Water Accounting System for Strategic Water Management By Graham M Turner; Timothy M Baynes; Bertram C. McInnis
  32. Relationship Between Natural Resources and Institutions By Mathieu Couttenier
  33. Vulnerability and the impact of climate change in South Africa's Limpopo River Basin: By Shewmake, Sharon
  34. El Sistema Europeo de Comercio de Emisiones: Diseño, Funcionamiento y Perspectivas By Pablo del Río González; Xavier Labandeira

  1. By: Alfredo M. Pereira (Department of Economics, College of William and Mary); Rui Manuel Marvão Pereira (Thomas Jefferson Program in Public Policy, College of William and Mary)
    Abstract: The objective of this paper is to estimate the impact of carbon dioxide emissions from fossil fuel combustion activities on economic activity in Portugal in order to evaluate the economic costs of policies designed to reduce carbon dioxide emissions. We find that energy consumption has a significant impact on macroeconomic activity. In fact, a one ton of oil equivalent permanent reduction in aggregate energy consumption reduces output by €6,340 over the long term, an aggregate impact which hides a wide diversity of effects for different fuel types. More importantly, and since carbon dioxide emissions are linearly related to the amounts of fuel consumed, our results allow us to estimate the costs of reductions in carbon dioxide emissions from different energy sources. We estimate that marginal abatement costs for carbon dioxide are €45.62 per ton of carbon dioxide per year for coal, €66.52 for oil, €91.07 for gas, €191.13 for electricity and €254.23 for biomass. An important policy implication is that, once the overall economic costs of reducing carbon dioxide emissions are considered, fuel switching is a no-regrets environmental policy capable of reducing carbon dioxide emissions without jeopardizing economic activity and indeed with the potential for generating favorable economic outcomes.
    Keywords: carbon dioxide emissions, energy and the economy, environmental policy, fuel-switching, vector autoregressive model
    JEL: C32 O13 Q43
    Date: 2008–10–26
  2. By: Jordi Roca; Monica Serrano (Universitat de Barcelona)
    Abstract: In this paper we apply an environmentally extended input-output model to analyse a specific issue related to the Environmental Kuznets Curve hypothesis. The purpose is to study whether the consumption structure ofwealthier households has a positive effect on the reduction of environmental pressures. Combining information from different databases, we analysed the impact of the consumption of Spanish households in 2000 on atmospheric pollution. We considered nine gases: the six greenhouse gases (CO2, CH4, N2O, SF6, HFCs, and PFCs) and three other gases (SO2, NOx, and NH3). We classified households by quintiles of per capita expenditure and equivalent expenditure. We found that there was a positive and very high relationship between the level of expenditure and direct and indirect emissions generated by household consumption; however, the emission intensities tended to decrease with the expenditure level for the various atmospheric pollutants, with the exception of SF6, HFCs and PFCs.
    Keywords: input-output analysis, atmospheric pollution, environmental, consumption patterns, kuznets curve, spain
    JEL: Q51 C67
    Date: 2008
  3. By: Jota ISHIKAWA (Hitotsubashi University and RIETI); Toshihiro OKUBO (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: This paper studies greenhouse-gas (GHG) emission controls in the presence of carbon leakage through international firm relocation. The Kyoto Protocol requires developed countries to reduce GHG emissions by a certain amount. Comparing emission quotas with emission taxes, we show that taxes coupled with lower trade costs facilitate more firm relocations than quotas do, causing more international carbon leakage. Thus, if a country is concerned about global emissions, emission quotas would be adopted to mitigate the carbon leakage. Firm relocation entails a trade-off between trade liberalization and emission regulations. Emission regulations may be hampered by trade liberalization, and vice versa.
    Keywords: trade liberalization, global warming, Kyoto Protocol, emission tax, emission quota, carbon leakage
    JEL: F18 Q54
    Date: 2008–10
  4. By: de Vries, Frans P.; Schoonbeek, Lambert
    Abstract: This paper considers a market with an incumbent monopolistic firm and a potential entrant. Production by both firms causes polluting emissions. The government selects a tax per unit emission by maximizing social welfare. The size of the tax rate affects whether or not the potential entrant enters the market. We identify the conditions that create a market structure where the preferences of the government and the incumbent firm coincide. Interestingly, there are cases where both the government and incumbent firm prefer a monopoly. Hence, the government might induce profitable monopolization by using a socially optimal tax policy instrument.
    Keywords: market structure; taxes; monopoly; environmental pollution
    Date: 2008–09
  5. By: Pierre-Yves Hénin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Katheline Schubert (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper describes a world composed of two (groups of) countries, which derive their utility from a polluting activity and from the enjoyment of a common environmental quality. The initial situation is both suboptimal and unsustainable: pollution leads to a continuous deterioration of environmental quality. The two countries have heterogeneous preferences for the environment, which are private knowledge. This prevents the adoption of abatement policies negotiated between the two countries, because each one has a strong incentive to announce in every negotiation an arbitrarily low preference for the environment. The two countries then engage in a war of attrition, each of them postponing abatement policies, in the hope that the other will concede …rst and abate more. We study for how long the adjustment is postponed, according to initial conditions, the greenness of the greenest country, the possible range of preferences and the rates of discount and natural regeneration.
    Keywords: war of attrition, environmental negotiations, climate change
    Date: 2008–05
  6. By: Heinz Schandl; Graham M Turner (CSIRO Sustainable Ecosystems, Australia)
    Abstract: In this paper we test the long term dematerialization potential for Australia in terms of materials, energy, and water use as well as CO2 emissions, by introducing concrete targets for major sectors. Major improvements in the construction and housing, transport and mobility, and food and nutrition sectors in the Australian economy, if coupled with significant reductions in the resource export sectors, would substantially improve the current material, energy and emission intensive pattern of Australia’s production and consumption system. Using the Australian Stocks and Flows framework we model all system interactions to understand the contributions of large scale changes in technology, infrastructure and lifestyle to decoupling the economy from the environment. The modelling shows a considerable reduction in natural resource use, while energy and water use decrease to a much lesser extent because a reduction in natural resource consumption creates a trade-off in energy use. It also shows that trade and economic growth may continue, but at a reduced rate compared with a business-as-usual scenario. The findings of our modelling are discussed in light of the large body of literature on dematerialization, eco-efficiency and rebound effects that may occur when efficiency is increased. We argue that Australia cannot rely on incremental efficiency gains but has to undergo a sustainability transition to achieve a low carbon future to keep in line with the international effort to avoid climate change and resource use conflicts. We touch upon the institutional changes that would be required to guide a sustainability transition in the Australian economy, such as, for instance, an emission trading scheme.
    Keywords: dematerialization, physical accounting, stocks and flows, resource productivity, material flows, Australia
    JEL: Q01 Q57 N57
    Date: 2008–10
  7. By: Rübbelke, Dirk T.G.; Finus, Michael
    Abstract: Several studies found ancillary benefits of environmental policy to be of considerable size. These additional private benefits imply not only higher cooperative but also noncooperative abatement targets. However, beyond these largely undisputed important quantitative effects, there are qualitative and strategic implications associated with ancillary benefits: climate policy is no longer a pure but an impure public good. In this paper, we investigate these implications in a setting of non-cooperative coalition formation. In particular, we address the following questions. 1) Do ancillary benefits increase participation in international environmental agreements? 2) Do ancillary benefits raise the success of these treaties in welfare terms?
    Keywords: impure public goods; game theory; coalition formation; climate policy; ancillary benefits
    Date: 2008–07
  8. By: Fabio Mariani (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Agustin Pérez-Barahona (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Natacha Raffin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: We present an OLG model in which life expectancy and environmental quality dynamics are jointly determined. Agents may invest in environmental quality, depending on how much they expect to live, but also in order to leave good environmental conditions to future generations. In turn, environmental conditions affects life expectancy. The model produces multiple steady states development regimes) and initial conditions do matter. In particular, some countries may be trapped in a low life expectancy /low environmental quality trap. This outcome is consistent with stylized facts relating life expectancy and environmental performance measures. Possible strategies to escape from this kind of trap are also discussed. Finally, this result is robust to the introduction of human capital through parental education expenditures.
    Keywords: Environmental quality; life expectancy; poverty traps.
    Date: 2008–09
  9. By: Hanley, Nick; Jacobsen, Jette Bredahl
    Abstract: This paper is concerned with the empirical relationship between biodiversity conservation values and income. We use random effects panel models to examine the effects of income, and then GDP per capita, on willingness to pay for habitat and biodiversity conservation. In a meta-analysis, 145 Willingness To Pay estimates for biodiversity conservation where existence value plays a major role were collected from 46 contingent valuation studies across six continents. Other effects included in the meta-analysis were the study year; habitat type; continent; scope as presented to respondents; whether WTP bids were for preventing a deterioration or gaining an improvement in conservation, whether a specific species or specific habitat was protected; whether the questionnaire used a dichotomous choice or an open-ended format; distribution format; and the choice of payment vehicle. GDP per capita seemed to perform as well as an explanatory variable as respondent's mean stated income, indicating that it is wealth in society as a whole which determines variations in WTP. Our main conclusion is that the demand for biodiversity conservation rises with a nation's wealth, but the income elasticity of demand is less than one.
    Keywords: Environmental Kuznets Curve; existence values; contingent valuation; income effects; meta-analysis
    Date: 2008–03
  10. By: O'Donoghue, Cathal; Hanley, Nick; Hynes, Stephen
    Abstract: This paper considers the use of spatial microsimulation in the aggregation of regional environmental benefit values. The developed spatial microsimulation model uses simulated annealing to match the Irish Census of Agriculture data to a Contingent Valuation Survey that contains information on Irish farmers' willingness to pay (WTP) to have the corncrake restored as a common sight in the Irish countryside. We then use this matched farm survey and Census information to produce regional and national total WTP figures, and compare these to figures derived using more standard approaches to calculating aggregate environment benefit values. The main advantage of the spatial microsimulation approach for environmental benefit value aggregation is that it allows one to account for the heterogeneity in the target population. Results indicate that the microsimulation modelling approach provides aggregate WTP estimates of a similar magnitude as those produced using the usual sample mean WTP aggregation at the national level, but yields regional aggregate values which are significantly different.
    Keywords: corncrake conservation; willingness to pay; aggregation spatial microsimulation; Environmental benefit value
    Date: 2008–06
  11. By: Kornienko, Tatiana; Hanley, Nick; MacKenzie, Ian A
    Abstract: In this paper we advocate a new initial allocation mechanism for a tradable pollution permit market. We outline a Permit Allocation Contest (PAC) that distributes permits to …rms based on their rank relative to other …rms. This ranking is achieved by ordering …rms based on an observable 'external action' where the external action is an activity or characteristic of the …rm that is independent of their choice of emissions in the tradeable permit market. We argue that this mechanism has a number of bene…ts over auctioning and grandfathering. Using this mechanism e¢ ciently distributes permits, allows for the attainment of a sec- ondary policy objective and has the potential to be more politically appealing than existing alte rnatives.
    Keywords: initial allocation; pollution permits; Rank-order contests
    Date: 2008–10
  12. By: Ringler, Claudia
    Abstract: "Over the coming decades, global change will have an impact on food and water security in significant and highly uncertain ways, and there are strong indications that developing countries will bear the brunt of the adverse consequences, particularly from climate change. This is largely because poverty levels are high, and developing-country capacity to adapt to global change is weak. Furthermore, the rural populations of developing countries—for whom agricultural production is the primary source of direct and indirect employment and income—will be most affected due agriculture's vulnerability to global change processes. The agricultural sector is the largest consumer of water resources, and variability in water supply has a major influence on health and welfare in poor areas. With water scarcity and extreme weather events expected to increase under climate change, water security could decline significantly in rural areas. Consequently, it is important to understand the impacts of global change (in terms of climate, demography, technology, and so on) on agriculture and natural resources in developing countries and to develop adaptive capacity to respond to these impacts. Moreover, there is a need to develop informed and effective adaptation measures and investment options that can be taken now to alleviate adverse impacts of global change in the future." from text
    Keywords: Climate change, food security, Climate variability, Global change, Water security,
    Date: 2008
  13. By: Antoine D'Autume (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Katheline Schubert (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper studies the maximin paths of the canonical Dasgupta-Heal-Solow model when the stock of natural capital is a direct argument of well-being, besides consumption. Hartwick's rule then appears as an efficient tool to characterize solutions in a variety of settings. We start with the case without technical progress. We obtain an explicit solution of the mmaximin problem in the case where production and utility are Cobb-Douglas. When the utility function is CES with a low elasticity of substitution between consumption and natural capital, we show taht it is optimal to preserve forever a critical level of natural capital, determined endogeneously. We then study how technical progress affects the optimal maximin paths, in the Cobb-Douglas utility case. On the long run path of the economy capital, production and consumption grow at a common constant rate, while the resource stock decreases at a constant rate and is therefore completely depleted in the very long run. A higher amenity value of the resource stock leads to faster economic growth, but to a lower long run rate of depletion. We then develop a complete analysis of the dynamics of the maximin problem when the sole source of well-being is consumption, and provide a numerical resoultion of the model with resource amenity. The economy consumes, produces and invests less in the short run if the resource has an amenity value than if doesn't whereas it is the contrary in the medium and long runs. However, and without surprise, the resource stock remains for ever higher with resource amenity than without.
    Keywords: Exhaustible resources, sustainability, Hartwick's rule.
    Date: 2008–04
  14. By: Nhemachena, Charles; Hassan, Rashid M.
    Abstract: "Agricultural production remains the main source of livelihood for rural communities in Sub-Saharan Africa, providing employment to more than 60 percent of the population and contributing about 30 percent of gross domestic product. With likely long-term changes in rainfall patterns and shifting temperature zones, climate change is expected to significantly affect agricultural production, which could be detrimental to the region's food security and economic growth. An assessment of the factors influencing farm-level adaptation can facilitate the formation of policies and investment strategies that help moderate potential adverse consequences of long-term climate change. Because smallholder farmers tend to have a low capacity to adapt to changes in climatic conditions, policies that help these farmers adapt to global warming and associated climatic extremes are particularly important. This brief is based on a study that assesses smallholder farmers' adaptation to climate change in southern Africa. The study identifies farmers' perceptions of climate change and the determinants of farm-level adaptation strategies, and recommends policies that could help stabilize national and regional food production given the anticipated adverse effects of climate change." from text
    Keywords: Climate change, Small farmers, farm-level adaptation strategies, credit policies, barriers to research information,
    Date: 2008
  15. By: Deressa, Temesgen; Hassan, Rashid M.; Ringler, Claudia
    Abstract: "This study analyzes the vulnerability of Ethiopian farmers to climate change based on the integrated vulnerability assessment approach using vulnerability indicators. The vulnerability indicators consist of the different socioeconomic and biophysical attributes of Ethiopia's seven agriculture-based regional states. The different socioeconomic and biophysical indicators of each region collected have been classified into three classes, based on the Intergovernmental Panel on Climate Change's (IPCC 2001) definition of vulnerability, which consists of adaptive capacity, sensitivity, and exposure. The results indicate that the relatively least-developed, semiarid, and arid regions—namely, Afar and Somali—are highly vulnerable to climate change. The Oromia region—a wide region characterized both by areas of good agricultural production in the highlands and midlands and by recurrent droughts, especially in the lowlands—is also vulnerable. The Tigray region, which is characterized by recurrent drought, is also vulnerable to the negative impacts of climate change in comparison with the other regions. Thus, investing in the development of the relatively underdeveloped regions of Somali and Afar, irrigation for regions with high potential, early warning systems to help farmers better cope in times of drought, and production of drought-tolerant varieties of crops and species of livestock can all reduce the vulnerability of Ethiopian farmers to climate change." from authors' abstract
    Keywords: Climate change, Vulnerability, adaptive capacity, regional states of Ethiopia,
    Date: 2008
  16. By: Admassie, Assefa; Adenew, Berhanu; Tadege, Abebe
    Abstract: "The potential adverse effects of climate change on Ethiopia's agricultural sector are a major concern, particularly given the country's dependence on agricultural production. Securing Ethiopia's economic and social well-being in the face of climate change requires that policymakers and stakeholders work together to integrate climate change adaptation into the country's development process. Three stakeholder discussion forums held in 2006 in Addis Ababa, Awassa, and Bahir Dar as part of the project, “Food and Water Security under Global Change: Developing Adaptive Capacity with a Focus on Rural Africa,” were attended by representatives of the government, civil society, business sector, and local communities. The forums elicited information to enable policymakers to make more informed decisions related to climate change adaptation. The forums complemented ongoing efforts to develop the National Adaptation Program of Action (NAPA), which is overseen by a steering committee representing government, nongovernment, academic, and research institutions. Under NAPA, multidisciplinary technical working groups have been formed to assess the country's vulnerability to the adverse consequences of climate change, gauge current adaptation efforts, and identify ways in which public agencies could assist in minimizing the adverse impacts of climate change. In addition, two national and eight regional workshops were conducted involving nearly 500 participants with various areas of expertise. Like the stakeholder forums, the workshops solicited information to create greater awareness of climate change, assess the extent of the area's vulnerability, and help identify adaptation options. This brief is based on a paper that presents findings from the stakeholder discussion forums, as well as NAPA's technical working groups and workshops. These meetings explored stakeholders' perceptions of vulnerability to climate change and considered ways in which adaptation measures could be further integrated into Ethiopia's development process." from text
    Keywords: Climate change, Vulnerability, Policy recommendations, Adaptation measures,
    Date: 2008
  17. By: Manh Hung NGUYEN; Phu Nguyen-Van
    Date: 2008–10
  18. By: Block, Paul J.; Strzepek, Kenneth; Rajagopalan, Balaji
    Abstract: "Ethiopia possesses abundant water resources and hydropower potential, yet less than 5 percent of irrigable land in the Blue Nile basin has been developed for food production, and more than 80 percent of Ethiopians lack access to electricity. Consequently, the Ethiopian government is pursuing plans to develop hydropower and irrigation along the Blue Nile River in an effort to tap into this underused potential. Although approximately 84 percent of the inflow to Lake Nasser at Aswan, Egypt, initiates from Ethiopia through the Blue Nile and Atbara Rivers, Ethiopia has limited rights to use these resources. Egypt and Sudan, through the Agreement of 1959, are allotted 55.5 and 18.5 billion cubic meters each year, respectively, with no allotment to Ethiopia. In 1998 the Nile Basin Initiative was created to stimulate cooperation among all countries in the Nile basin and work toward amicable alternatives and solutions for water resources benefits. This brief is based on a paper that analyzes potential hydropower generation and irrigation supply for four large-scale dams and reservoirs along the Blue Nile River within Ethiopia—Karadobi, Mabil, Mendaia, and Border—as proposed by the United States Bureau of Reclamation in 1964. The total installed hydropower capacity would be 5,570 megawatts of power, about 2.5 times the potential of the Aswan High Dam in Egypt. Irrigation associated with the Mendaia and Border reservoirs could expand by 250,000 hectares or 35 percent of the estimated total irrigable land in the Blue Nile basin. The challenges of implementation, however, are not inconsequential. The proposed reservoirs not only raise financing, investment, political, and institutional challenges, but may also require many years to fill, which will affect downstream flows depending on variable climate and climate change conditions. Using a model for hydropower and irrigation analysis, the paper explores dam implementation viability under various policy options." from text
    Keywords: Integrated water resource management, Irrigation, Hydropower, Climate variability, Climate change,
    Date: 2008
  19. By: Deressa, Temesgen; Hassan, Rashid M.; Ringler, Claudia
    Abstract: "Ethiopia's agricultural sector, which is dominated by smallscale, mixed crop, and livestock farming, is the mainstay of the country's economy. It constitutes more than half the nation's gross domestic product (GDP), generates more than 85 percent of the foreign exchange earnings, and employs about 80 percent of the population. Ethiopia's dependence on agriculture makes the country particularly vulnerable to the adverse impacts of climate change on crop and livestock production. This brief is based on a paper that analyzes the vulnerability of Ethiopian farmers to climate change by creating a vulnerability index and comparing vulnerability indicators across regions. A regional vulnerability index can assist in identifying the areas of Ethiopia that are most vulnerable to climate change and guide policymakers in determining where investments in adaptation may be most effective in reducing the future adverse effects of climate change." from text
    Keywords: Climate change, Vulnerability, Adaptive capacity, Regional states of Ethiopia,
    Date: 2008
  20. By: Deressa, Temesgen T.; Hassan, Rashid M.; Ringler, Claudia; Alemu, Tekie; Yesuf, Mahmud
    Abstract: "Ethiopia's agricultural sector, which is dominated by smallscale, mixed-crop, and livestock farming, is the mainstay of the country's economy. It constitutes more than half of the country's gross domestic product, generates more than 85 percent of foreign exchange earnings, and employs about 80 percent of the population. Unfortunately, Ethiopia's dependence on agriculture makes the country particularly vulnerable to the adverse impacts of climate change on crop and livestock production. Thus, a deeper understanding of the complex interdependence between changing climatic conditions and Ethiopia's agricultural sector— together with adaptation options—is crucial. Additional information about farmers' awareness of climate change and current adaptation approaches would assist policymakers in their efforts to decrease the country's vulnerability to the adverse impacts of climate change. This brief is based on a study that endeavors to guide policymakers on ways to promote greater adaptation by identifying the household characteristics that increase farmers' awareness of climate change and influence farmers' decision to adapt." from text
    Keywords: Climate change, Small farmers, farm-level adaptation strategies,
    Date: 2008
  21. By: Kukenova, Madina; Monteiro, Jose-Antonio
    Abstract: This paper investigates if differences in environmental regulations can influence FDI flows in a multi-country setting taking into account the so-called "third-country" effects. We examine bilateral FDI flows using a new extended OECD investment database which covers great number of host countries and a long sample period (1981-2005). The findings based on a spatial gravity-like model are largely plausible across specifications and confirm the existence of a negative relationship between FDI and environmental stringency, once we correct for endogeneity and spatial dependence. The evidence of a positive "third-country" effect for FDI suggests the prevalence of complex FDI from developed to developing countries. The spatial structure of the model allows also to underline the possible existence of competition in environmental standards between countries to attract FDI.
    Keywords: Complex FDI; Pollution Haven; Spatial Econometrics
    JEL: F18 Q56 C31 F1 F21
    Date: 2008–04
  22. By: Ben Groom (Department of Economics, School of Oriental and African Studies); Charles Palmer (Institute for Environmental Decisions, ETH Zurich)
    Abstract: Ferraro and Simpson (2002) argue that when markets are competitive, direct payments for environmental services are more cost effective in achieving environmental goals than indirect payments, say, for capital. However, when eco-entrepreneurs face non-price rationing in input or output markets, as is typical for e.g. credit in developing countries for, we show that interventions which relax constraints can be more cost-effective than direct payments. One corollary of this is that such indirect payments can be preferred to direct payments by interveners (e.g. NGOs) and eco-entrepreneurs alike. Both of these outcomes are more likely when constraints are severe.
    Date: 2008
  23. By: Olsson, Ola (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: A recurring argument in the global debate is that climate deterioration is likely to make social conflicts over dwindling natural resources more common in the future. In this paper, we present a modelling framework featuring three potential mechanisms for how the allocation and dynamics of scarce renewable resources like land might cause social conflict in vulnerable environments. The rst model shows how decreasing resources make cooperative trade between two groups collapse. The second mechanism introduces a Malthusian subsistence level below which disenfranchised members of one community start to prey on the resources of another community in an appropriative coflict-setting. The third scenario explores how the long-run dynamics of resources and population levels interact to cause cycles of stagnation and recovery. Predictions from the models are then applied to the ongoing conflict in the Darfur region of Sudan. Our analysis suggests that effective resources per capita in the region appear to have declined by about 5/6 since the 1970s, which at least partially explains the observed disintegration of markets, the recent intensity of conflicts, and the current depopulation of large parts of Darfur.<p>
    Keywords: Market integration; resource conflict; vulnerable environments; appropriative conflict; long-run resource and population dynamics; Darfur
    JEL: O41 P16
    Date: 2008–10–23
  24. By: Peter Grösche; Colin Vance
    Abstract: Understanding the determinants of home-efficiency improvements is significant to a range of energy policy issues, including the reduction of fossil fuel use and environmental protection.This paper analyzes retrofit choices by assembling a unique data set merging a nationwide household survey from Germany with regional data on wages and construction costs. To explore the influence of both heterogeneous preferences and correlation among the utility of alternatives, conditional-, random parameters-, and error components logit models are estimated that parameterize the influence of costs, energy savings,and household-level socioeconomic attributes on the likelihood of undertaking one of 16 renovation options.We use the model coefficients to derive household-specific marginal willingness-to-pay estimates, and with these assess the extent to which free-ridership may undermine the effectiveness of recently implemented programs that subsidize the costs of retrofits.
    Keywords: Heterogenous preferences, residential sector, revealed-preference data
    JEL: C25 D12 Q4
    Date: 2008–08
  25. By: Bergmann, E. Ariel; Stewart, Mairi; Watson, Fiona; Colombo, Sergio; Ready, Richard; Hanley, Nick
    Abstract: In this paper, we investigate whether people's knowledge of the past influences their preferences and values towards future landscape change. "Knowledge of the past" is one aspect of the information set held by individuals, and a well-established finding in economics is that changes in information can change preferences and values. The particular aspects of knowledge of the past we work with here are (i) awareness of past landuse, as represented by woodland cover and (ii) awareness of differing and sometimes contradictory literary impressions of this past landscape. The case studies used here relate to prospective changes in woodland cover in two UK national parks, the Lake District and the Trossachs. We find that people who are made aware that the landscape has changed over time, or that perceptions of the landscape have changed over time, are more likely to favour changes to the current landscape (are less likely to favour the status quo). Knowledge of the past therefore seems to have an impact on preferences for future landscapes. We also investigate the impacts on preferences of how "special", how "wild" and how "worked in" people perceive the landscapes of these two national parks to be.
    Keywords: woodland management; landscape preferences; landscape change; national parks; environmental history
    Date: 2008–04
  26. By: Silvio Schmidt; Claudia Kemfert; Peter Höppe
    Abstract: Tropical cyclones that make landfall on the coast of the USA are causing increasing economic losses. It is assumed that the losses are largely due to socio-economic developments, i.e. growing wealth and greater settlement of exposed areas. However, it is also thought that the rise in losses is caused by increasing frequency of severe cyclones resulting from climate change. The object of this paper is to investigate how sensitive the losses are to socio-economic changes and climate changes and how these factors have evolved over the last 50 years. We will then draw conclusions about the part the factors concerned play in the observed increase in losses. For analysis purposes, storm loss is depicted as a function of the value of material assets affected by the storm (the capital stock) and storm intensity. The findings show the increase in losses due to socio-economic changes to have been approximately three times greater than that due to climate-induced changes.
    Date: 2008
  27. By: Block, Paul J.; Strzepek, Kenneth; Rosegrant, Mark; Diao, Xinshen
    Abstract: "Numerous studies indicate that agricultural production is sensitive to climate variability, and lack of infrastructure in developing countries increases vulnerability to extreme climate events. In Ethiopia, the historical climate record indicates frequent droughts and floods, which can devastate agricultural production and existing infrastructure. Too much precipitation can flood crops, rot or suffocate roots, and wash out roads, creating similar economic conditions to those resulting from drought. With 85 percent of the population living in rural areas, and most people depending on rainfed agriculture, Ethiopia's social and economic welfare depends heavily on climatic conditions. This brief is based on a paper that uses an economywide, multi-sector, and multi-regional model to assess the impact of climate variability on the outcomes of prospective investment strategies for Ethiopia, as well as on the country's gross domestic product growth rates and poverty rates." from text
    Keywords: Climate variability, infrastructure, Investment,
    Date: 2008
  28. By: Shewmake, Sharon
    Abstract: "With likely long-term changes in rainfall patterns and shifting temperature zones, climate change is expected to increase the frequency of climate-related shocks, such as floods and droughts in Sub-Saharan Africa. For farm households, an increase in the frequency of climate-related income shocks could lead not only to lower expected income, but also to higher income variance, which in turn can cause them to pursue costly risk-coping strategies and to fall below poverty trap thresholds. For this reason, it is important to understand how a changing distribution of risk will lead to increased vulnerability, not just decreased expected income. This brief is based on a paper that uses farm households' responses to climate-related shocks in South Africa's Limpopo River Basin to gauge how farmers are likely to respond to future climate change shocks. The increased frequency and severity of droughts associated with global warming may induce farmers to change their behavior to reduce their risk of negative impacts from future climaterelated shocks. While it is difficult to predict farmers' behavior and how it will affect welfare, coping strategies used in response to shocks today can be used to predict whether and how rural South Africans will cope in the future. The study examines household responses to droughts in 2005 and household vulnerability to future climate change by assessing their probability of falling below an income threshold as a result of future climate-related shocks. Assessing household vulnerability is important because efficient social policy needs to go beyond poverty alleviation in the present to prevent poverty in the future. A poverty reduction strategy that does not distinguish between transient and structural poverty leads to inefficient use of resources, in that it focuses on those who are temporarily poor but may be able to escape poverty on their own, at the expense of those who have a high probability of becoming chronically poor." from text
    Keywords: Vulnerability, Climate change, drought,
    Date: 2008
  29. By: Argentino Pessoa (Faculdade de Economia, Universidade do Porto)
    Abstract: Using a framework that articulates the most important factors of competitiveness to evaluate the regional economic strategies, and applying this framework to the Portuguese NUT III Douro, we show that this region is relatively weak in terms of internal linkages, subject to ageing and out-migration and lacking in innovation and entrepreneurship, apart from being isolated from mass markets. With these characteristics, to define only the priority to tourism is clearly insufficient for convergence. So, after assessing the results of such strategy, the paper ends with a conclusion that is extensive to other regions: the lagging regions, which are trying to converge with the more developed ones based on tourism, cannot only rely on a combination of environmental resources and marketing, but have to attend to other factors of competitiveness as well.
    Keywords: Douro Valley, environmental resources, regional competitiveness, tourism
    JEL: Q25 Q28 R19 R58
    Date: 2008–10
  30. By: Watson, Fiona; Kriström, Bengt; Colombo, Sergio; Hanley, Nick
    Abstract: In contingent valuation, despite the fact that many externalities manifest themselves as costs to some and benefits to others, most studies restrict willingness to pay to being non-negative. In this paper, we investigate the impact of allowing for negative, zero and positive preferences for prospective changes in woodland cover in two UK national parks, the Lake District and the Trossachs. An extended spike model is used to accomplish this. The policy implications of not allowing for negative values in terms of aggregate benefits are also investigated, by comparing the extended spike model with a simple spike making use of only zero and positive bids, and a model which considers positive bids only. We find that ignoring negative values over-states the aggregate benefits of a woodland planting project by up to 44%.
    Keywords: spike models; negative WTP; national parks; contingent valuation
    Date: 2008–06
  31. By: Graham M Turner; Timothy M Baynes; Bertram C. McInnis (CSIRO Sustainable Ecosystems, Australia)
    Abstract: This paper describes a water accounting system (WAS) that has been developed as an innovative new tool for strategic long-term water management. The WAS incorporates both disaggregated water use and availability, provides a comprehensive and consistent historical database, and can integrate climate and hydrological model outputs for the exploration of scenarios. It has been established and tested for the state of Victoria in Australia, and can be extended to cover other or all regions of Australia. The WAS is implemented using stock-and-flow dynamics, currently employing major river basins as the spatial units and a yearly time step. While this system shares features with system dynamics, learning is enhanced and strategic management of water resources is improved by application of a Design Approach and the structure of the WAS. We compare the WAS with other relevant accounting systems and outline its benefits, particularly the potential for resolving tensions between water supply and demand. Integrated management is facilitated by combination with other stocks and flows frameworks that provide data on key drivers such as demography, land-use and electricity production.
    Keywords: water accounts, stocks and flows, water budgets, decision support systems, strategic management
    JEL: C61 Q25
    Date: 2008–10
  32. By: Mathieu Couttenier (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This article analyses through a rent seeking model, the relationship between institutions' quality and natural resources. Depending on the institutions quality, each country has a specific structural capacity to stand natural resources dependency. It is shown that for each country, a threshold exists, such that beyond this point, any additional amounts of natural resources begin to have a negative impact on institutions. As the stock of natural resources increases, this improves the expected profitability of rent seeking, which in turn lowers the quality of institutions. The mechanism comes from a new balance of power within the country. However, the institutional degradation's intensity is determined by social interactions and depends on both the resources nature and their appropriability level. The inverse U-shaped curve obtained from empirical studies presented in this article supports the natural resources non-monotonic effect on institutions found in the model.
    Keywords: Natural resources, institutions, rent seeking.
    Date: 2008–10
  33. By: Shewmake, Sharon
    Abstract: "This paper uses farmers' responses to exogenous weather shocks in South Africa's Limpopo River Basin to gauge how farmers are apt to respond to future climate change-induced shocks, in particular drought. Droughts are expected to increase in both frequency and intensity as a result of climate change. This study examines the costs of drought today and who it affects the most, in an effort to guide policy adaptations in the future. A combination of descriptive statistics and econometric analysis is used to approximate the potential impact of droughts on rural South African households. This paper also estimates household vulnerability. After controlling for household heterogeneity using propensity score matching, it is noted that there is no statistically significant impact of droughts on income, thus suggesting households have already adapted to living in a drought-prone environment. The types of households that were more vulnerable to climate shocks are analyzed using two measures of vulnerability: the probability of falling below income of 7,800 South African Rand (R), and the probability of income falling below 16,000 R. Residents of the Limpopo province were the least vulnerable under both metrics. Setswana and SeSwati households were more vulnerable than other ethnic groups. Households that do not own livestock and households that rely on rainfed agriculture were also more vulnerable than other households." from authors' abstract
    Keywords: Vulnerability, Climate change, drought,
    Date: 2008
  34. By: Pablo del Río González; Xavier Labandeira
    Abstract: Los economistas han manifestado desde siempre su preferencia por el uso de los denominados instrumentos o de mercado en las políticas ambientales. Estos mecanismos reciben ese nombre porque, de acuerdo con la teoría económica, permiten precisamente emular el funcionamiento del mercado, reduciendo considerablemente los problemas de información asimétrica y facilitando así el cumplimiento del objetivo ambiental a mínimo coste (además de fomentar una reducción de emisiones continua en el tiempo). En este contexto, la Directiva 87/2003/EC implantó un Sistema de Comercio de Emisiones (SECE) en la Unión Europea (UE) con la intención fundamental de facilitar el cumplimiento de los objetivos del Protocolo de Kioto de una forma coste-eficiente. La primera fase de este sistema ha tenido lugar durante el período 2005-2007, recibiendo una considerable atención por parte de los economistas académicos. La mayoría de los estudios se concentran en uno de los siguientes dos aspectos: elementos de diseño del sistema (análisis a priori o ex-ante) y evaluación del funcionamiento del mismo (análisis a posteriori o ex-post). Este capítulo trata de combinar ambas perspectivas, apuntando posibles ventajas e inconvenientes de los elementos de diseño del sistema elegidos y evaluando distintos aspectos del funcionamiento del mismo de acuerdo a una serie de criterios comúnmente aceptados por la literatura. La conclusión fundamental es que, a pesar de ciertos aspectos negativos de diseño y funcionamiento del SECE y teniendo en cuenta de que se trataba de una fase de prueba, éste ha conseguido buena parte de sus objetivos. En particular, el SECE ha dado pie a un importante cambio institucional al crear un precio por la emisión de dióxido de carbono (CO2) y a su internalización por las empresas en sus estructuras de costes. No obstante, apuntamos que el SECE puede y debe mejorarse para acentuar su eficacia ambiental y la promoción del cambio tecnológico.
    Date: 2008–09

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