nep-env New Economics Papers
on Environmental Economics
Issue of 2009‒01‒03
35 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Asian Energy and Environmental Policy: Promoting Growth While Preserving the Environment By Zhang, ZhongXiang
  2. The Economics of Climate Change Mitigation: Policies and Options for the Future By Jean-Marc Burniaux; Jean Château; Romain Duval; Stéphanie Jamet
  3. Forecasting Economic Impact of Climate Policy (in Finnish with an English abstract/summary) By Olavi Rantala
  4. Revenue-Neutral Tax-Subsidy Policy for Carbon Emission Reduction By Gregmar I. Galinato; Jon K. Yoder
  5. Is it fair to treat China as a Christmas tree to hang everybody’s complaints? putting its own energy saving into perspective By Zhang, ZhongXiang
  6. Thermodynamics and the Economic Process By John Bryant
  7. Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile By Coria, Jessica; Sterner, Thomas
  8. Environmental diversity in recreational choice modelling By Angel Bujosa Bestard; Antoni Riera Font
  9. Rethinking Global Climate Change Governance By Barrett, Scott
  10. Environmental innovation and industrial dynamics: the contributions of evolutionary economics By Vanessa OLTRA (GREThA UMR CNRS 5113)
  11. Pricing Strategies under Emissions Trading: An Experimental Analysis By Wråke, Markus; Myers, Erica; Mandell, Svante; Holt, Charles; Burtraw, Dallas
  12. Interface between economic development, health and environment in India: An econometric investigation. By Nagar, A.L.; Shovon Ray, Amit; Sawhney, Aparna; Samanta, Sayan
  13. Agent Heterogeneity in Adoption of Anaerobic Digestion Technology: Integrating Economic, Diffusion and Behavioral Innovation Theory By Clark P. Bishop; C. Richard Shumway; Philip R. Wandschneider
  14. Organic Farming Technologies and Agricultural Productivity: The case of Semi-Arid Ethiopia By Kassie, Menale; Zikhali, Precious; Pender, John; Köhlin, Gunnar
  15. Sustainable growth in a resource-based economy: the extraction-saving relationship By Bazhanov, Andrei
  16. Auctioning of CO2 Emission Allowances in Phase 3 of the EU Emissions Trading Scheme By Benz, Eva; Löschel, Andreas; Sturm, Bodo
  17. Cenários de mudanças climáticas e agricultura no Brasil: impactos econômicos na Região Nordeste By Edson Paulo Domingues; Aline Souza Magalhães; Ricardo Machado Ruiz
  18. Environmental Tax and the Distribution of Income with Heterogeneous Workers By Mireille Chiroleu-Assouline; Mouez Fodha
  19. Emissions Trading: Impact on Electricity Prices and Energy-Intensive Industries By Manuel Frondel; Christoph M. Schmidt; Colin Vance
  20. Institutions and preferences determine resilience of ecological-economic systems By Martin F. Quaas; Stefan Baumgärtner; Sandra Derissens; Sebastian Strunz
  21. Modern Management: Good for the Environment or Just Hot Air? By Nick Bloom; Christos Genakos; Ralf Martin; Raffaella Sadun
  22. The impact of weather variability on British outbound flows By Jaume Rosselló Nadal; Antoni Riera Font; Vivian Cardenas
  23. How far can developing country commitments go in an immediate post-2012 climate regime? By Zhang, ZhongXiang
  24. Global Manufacturing SO2 Emissions: Does Trade Matter? By Jean Marie Grether; Nicole A. Mathys; Jaime de Melo
  25. An Overview of the OECD ENV-Linkages Model By Jean-Marc Burniaux; Jean Château
  26. Managing the environment and the economy in the presence of hysteresis and irreversibility By Heijnen, P.; Wagener, F.O.O.
  27. Adoption of Organic Farming Technologies: Evidence from Semi-Arid Regions of Ethiopia By Kassie, Menale; Zikhali, Precious; Manjur, Kebede; Edwards, Sue
  28. A Real Option Approach to the Protection of a Habitat Dependent Endangered Species By Skander Ben Abdallah; Pierre Lasserre
  29. The change climate questionnaire: scale development By Bouckenooghe, D.; Devos, G.; Van den Broeck, H.
  30. Incentives for merger in a noncompetitive permit market By Cathrine Hagem
  31. The Hartwick rule as a conservation law By Heijnen, P.
  32. Optimal Nuclear Waste Burial Policy under Uncertainty By Alain Ayong Le Kama; Mouez Fodha
  33. Impact of Carbon Price Policies on U.S. Industry By Ho, Mun S.; Morgenstern, Richard; Shih, Jhih-Shyang
  34. Forecasting British Tourist Arrivals to Balearic Islands Using Meteorological Variables and Artificial Neural Networks By Marcos Álvarez Díaz; Jaume Rosselló Nadal
  35. Representing GASPEC with the World Gas Model By Ruud Egging; Franziska Holz; Christian von Hirschhausen; Steven A. Gabriel

  1. By: Zhang, ZhongXiang
    Abstract: Asia has truly experienced spectacular economic growth over the past 15 years. However, this economic progress has come at a high cost. It has led to unprecedented environmental consequences. The ecological footprint shows that, despite the fact that one-fifth of the population in Asia still lives on less than US$ 1 per day (PPP-adjusted), the region is already living beyond its ecological carrying capacity. The region is facing a dilemma. On the one hand, continued economic growth is needed to alleviate the poverty of the two-thirds of the world’s poor living in this region. On the other hand, that economic growth will further place tremendous strains on the natural environment. In order to extricate itself from this difficult position, the region needs to shift the conventional pattern of “develop first and then treat the pollution” to a different trajectory of sustainable development. To that end, this paper examines a variety of policy responses at national, regional and international levels to deal with growing concerns about the environmental challenges in Asia in order to help to put the region on a more sustainable development path. In the context of national responses, special attention is paid to the following issues: coordination between the central and local governments, market-based environmental instruments and industrial policies, tougher emissions standards for mobile and stationary sources and for fuel quality, policies to promote energy efficiency and the use of clean energy and biofuels, the integration of environmental policies with economic and sectoral policies, and engagement of the private sector through e.g., ecolabelling, green government procurement, corporate ratings and disclosure programs, and drawing the support of financial institutions to promote improved corporate environmental performance. It is concluded that having the right policy mix, coupled with strengthened cooperation at national, local and regional levels, will ensure continuing economic growth in the region without compromising its limited ecological carrying capacity and environmental quality.
    Keywords: Energy policy; Market-based environmental instruments; Asia
    JEL: Q48 Q28 Q42 Q43 Q58
    Date: 2008–01
  2. By: Jean-Marc Burniaux; Jean Château; Romain Duval; Stéphanie Jamet
    Abstract: Considering the costs and risks of inaction, ambitious action to reduce greenhouse gas emissions is economically rational. However, success in abating world emissions will ultimately require a least-cost set of policy instruments that is applied as widely as possible across all emission sources (countries, sectors and greenhouse gases). The main purpose of this paper is to explore feasible ways to meet these two basic requirements for successful future climate policies. Using a range of modelling frameworks, it analyses cost-effective policy mixes to reduce emissions, the implications of incomplete coverage of policies for the costs of mitigation action and carbon leakage, the role of technology-support policies in lowering future emissions and policy costs, as well as the incentives –and possible options to enhance them – for emitting countries to take action against climate change. <P>L’économie de l’atténuation du changement climatique : : Politiques et options futures <BR>Eu égard aux coûts et aux risques de l’inaction, une action ambitieuse visant à réduire les émissions de gaz à effet de serre est économiquement rationnelle. Cependant, tout succès en matière de réduction des émissions nécessitera in fine qu’un ensemble d’instruments de politiques à moindre coût s’applique à un ensemble aussi vaste que possible de sources d’émissions (pays, secteurs et gaz à effet de serre). L’objectif principal de cet article est d’explorer les moyens concrets de satisfaire à ces deux conditions de base d’un succès des futures politiques climatiques. Sur la base d’un éventail de modèles, il analyse différents ensembles de politiques à moindre coût, l’impact d’une couverture incomplète des politiques sur les coûts de la réduction des émissions et les fuites carbone, la contribution des politiques de soutien à la technologie à la baisse des émissions futures et au coût des politiques, ainsi que les incitations – et les options possibles pour les améliorer – des pays émetteurs à agir contre le changement climatique.
    Keywords: climate change, changement climatique, burden sharing, carbon Leakage, climate policy, co-benefits, energy R&D, bénéfices annexes, fuites de carbone, partage de la charge, politique climatique
    JEL: H23 H41 O13 O3 Q32 Q43 Q54
    Date: 2008–12–17
  3. By: Olavi Rantala
    Abstract: ABSTRACT : This paper describes the main features of a model developed for forecasting economic developments, energy demand and greenhouse gas emissions in the EU area and Finland as well as for simulating the economic impacts of EU climate policy. Climate policy analysis necessitates a model of the whole EU area, because CO2 emissions of the EU area emission trading sector determine the demand and price of emission allowances. The main conclusion from model simulations is that output and employment losses induced by EU climate policy in 2008-2012 will be more severe in a small open energy intensive economy like Finland than in the rest of the EU area. The negative impacts of EU climate policy on export competitiveness, exports and output volume in Finland will be strongest in the energy intensive industrial sec-tors which belong to the EU emission trading sector.
    Keywords: greenhouse gas emissions, economic impacts of emission reduction
    JEL: C5 E3 Q4 Q5
    Date: 2008–12–19
  4. By: Gregmar I. Galinato; Jon K. Yoder (School of Economic Sciences, Washington State University)
    Abstract: The most widely used policies for promoting biofuels as a component of motor fuels are (1) renewable fuel standards requiring a minimum biofuel consumption level or blend rate and (2) tax credits (subsidies) for biofuels. Although one of the primary potential benefits of biofuel use is a reduction in greenhouse gas emissions relative to fossil fuels, carbon-based instruments have been slow to develop. In light of the political unpopularity of carbon taxes, we consider a twist on this idea by developing a model for a revenue neutral price instrument that taxes high net-carbon fuels (e.g. unfinished gasoline blendstock) and subsidizes lower net-carbon renewable blendstock (e.g. pure ethanol) such that the net revenues are fixed. This approach has the capacity to substantially change the relative price of the low-carbon and high-carbon components of blended fuel, while limiting increases in taxes and reducing motor fuel price increases relative to pure carbon taxes.
    Keywords: Non-renewable resources, carbon tax, carbon dioxide emissions
    JEL: Q32 Q54 D62 H21
    Date: 2008–11
  5. By: Zhang, ZhongXiang
    Abstract: China has been the world’s second largest carbon emitter for years. Recent studies show that China had overtaken the U.S. as the world’s largest emitter in 2007. This has put China on the spotlight, just at a time when the world community starts negotiating a post-Kyoto climate regime under the Bali Roadmap. China seems to become such a Christmas tree on which everybody can hang his/her complaints. This paper will first discuss whether such a critics is fair by examining China’s own efforts towards energy saving, the widespread use of renewable energy and participation in clean development mechanism. Next, the paper puts carbon reductions of China’s unilateral actions into perspective by examining whether the estimated greenhouse gas emission reduction from meeting the country’s national energy saving goal is achieved from China’s unilateral actions or mainly with support from the clean development mechanism projects. Then the paper discusses how far developing country commitments can go in an immediate post-2012 climate regime, thus pointing out the direction and focus of future international climate negotiations. Finally, emphasizing that China needs to act as a large and responsible developing country and take due responsibilities and to set a good example to the majority of developing countries, the paper articulates what can be expected from China to illustrate that China can be a good partner in combating global climate change.
    Keywords: Energy saving; Post-Kyoto climate negotiations; Clean development mechanism; China; USA
    JEL: Q48 Q53 Q42 Q54 Q58
    Date: 2008–10–10
  6. By: John Bryant (Vocat International)
    Abstract: This paper develops further a model of the economic process, first set out as part of a paper by the author in 2007, concerning the application of thermodynamic laws to economics. The paper sets out relationships between economic output and capital, labour, resource and waste stocks, with specific reference to energy, and is backed up analysis of data of world energy resources and climate change. The paper conculdes that both energy resource availability and climate change will have significant, limiting effects on the forward path of world economic developoment.
    Keywords: Thermodynamics, economics, entropy, energy, exergy, peak oil, gas, coal, climate change
    Date: 2008–12
  7. By: Coria, Jessica; Sterner, Thomas
    Abstract: Santiago was one of the first cities outside the OECD to implement a tradable permit program to control air pollution. This paper looks closely at the program’s performance over the past ten years, stressing its similarities and discrepancies with trading programs implemented in developed countries, and analyzing how it has reacted to regulatory adjustments and market shocks. Studying Santiago’s experience allows us to discuss the drawbacks and advantages of applying tradable permits in less developed countries.
    Keywords: air pollution, environmental policy, tradable permits, developing countries
    JEL: Q53 Q58
    Date: 2008–12–18
  8. By: Angel Bujosa Bestard (Centre de Recerca Econòmica (UIB · Sa Nostra)); Antoni Riera Font (Centre de Recerca Econòmica (UIB · Sa Nostra))
    Abstract: The accuracy of environmental valuation studies relies, to a great extent, on the suitability of the proxy measures used to capture individuals’ preferences. While important advances have been achieved in last years concerning the characterization of the physical background in which recreational choices are made, Travel Cost Method applications have failed to consider the heterogeneity of landscape and the spatial configuration of land use. This paper presents an empirical application to forest recreation in Mallorca (Spain), implementing a random parameter logit model to evaluate —in terms of goodness-of-fit, model predictions and welfare measurements— the effects of environmental diversity on the recreational site-choice process.
    Keywords: Travel Cost Method, random parameter logit, recreation demand, environmental diversity, forests
    Date: 2008
  9. By: Barrett, Scott
    Abstract: This paper explains why the approach taken so far to mitigate global climate change has failed. The central reason is an inability to enforce targets and timetables. Current proposals recommending even stricter emission limits will not help unless they are able to address the enforcement deficit. Trade restrictions are one means for doing so, but trade restrictions pose new problems, particularly if they are applied to enforce economy-wide emission limitation agreements. This paper sketches a different approach that unpacks the climate problem, addressing different gases and sectors using different instruments. It also explains how a failure to address the climate problem fundamentally will only create incentives for different kinds of responses, posing different challenges for climate change governance
    Keywords: Climate change, Kyoto protocol, enforcement, trade restrictions, R&D
    JEL: F18 F51 F53 Q54
    Date: 2008
  10. By: Vanessa OLTRA (GREThA UMR CNRS 5113)
    Abstract: The purpose of this article is to discuss the contributions of the evolutionary theory of innovation on the micro and meso dynamics of environmental innovations. We argue that the evolutionary literature on innovation, and more particularly on technological regimes, provides a relevant framework in order to analyse the various determinants of environmental innovations and the double externality problem in an industrial dynamics context. The article starts with an overview of the empirical literature on environmental innovations with a focus on their determinants and specificities. In section 3, we discuss the contributions of the evolutionary literature on technological regimes and argue that it can provide a relevant framework for a sectoral approach of environmental innovations. In section 4, we concentrate on the role of demand side dynamics and highlight the implications of technological competition models on the role of demand conditions in the diffusion of environmental technologies. Finally, section 5 is devoted to the implications of the evolutionary theory of innovation on the question of the transition towards more sustainable technological systems.
    Keywords: Environmental innovations, industrial dynamics, evolutionary theory, technological regimes
    JEL: Q55 O31
    Date: 2008
  11. By: Wråke, Markus; Myers, Erica; Mandell, Svante; Holt, Charles; Burtraw, Dallas (Resources for the Future)
    Abstract: An important feature in the design of an emissions trading program is how emissions allowances are initially distributed into the market. In a competitive market the choice between an auction and free allocation should, according to economic theory, not have any influence on firms’ production choices nor on consumer prices. However, many observers expect the method of allocation to affect product prices. This paper reports on the use of experimental methods to investigate behavior with respect to how prices will be determined under a cap-and-trade program. Participants initially display a variety of pricing strategies. However, given a simple economic setting in which earnings depend on this behavior, we find that subjects learn to consider the value of allowances and overall behavior moves toward that predicted by economic theory.
    Keywords: carbon dioxide, climate change, emissions trading, distributional effects, electricity, allocation, auctions
    JEL: C91 D44
    Date: 2008–12–23
  12. By: Nagar, A.L. (National Institute of Public Finance and Policy); Shovon Ray, Amit; Sawhney, Aparna; Samanta, Sayan
    Abstract: This paper analyses interrelationships between `economic development', `health', and `environment' in a simultaneous equations framework. Four structural equations have been postulated to explain changes in four endogenous variables in terms of several predetermined variables. The endogenous variables chosen for the model are GDPPC (per capita gross domestic product), LE (life expectancy), NOCRD (number of cases of respiratory diseases) and PM10 (respirable suspended particulate matter). We assume that GDPPC describes economic development prominently and, therefore, use it as one of the endogenous variables in lieu of economic development. LE and NOCRD are assumed to reflect health effects in the economy, and PM10 is used as a proxy of environmental stress. The four endogenous variables are supposed to be jointly determined in terms of several exogenous variables represented through indices of physical infrastructure (PI), social infrastructure (SI) and air pollution index (API). We construct the three indices by the principal components method and thus effectively use only these three predetermined (exogenous) variables to simultaneously determine changes in the four endogenous variables listed above. The model is postulated in loglinear form and estimated by the two-stage least-squares method using data from the Indian economy 1980-81 to 2004-05. It follows from the estimated structural equations that while physical infrastructure is significant in determining GDPPC, the GDPPC is also directly influenced by improved health outcomes like longevity (LE) and lower morbidity from respiratory diseases (NOCRD). The long term health outcome (LE) is determined by the level of per capita GDP and it is positively affected by social infrastructure. The third structural equation shows that the immediate, or short run, health outcomes like morbidity from respiratory disorders are influenced by environmental stress (PM10) besides the level of GDPPC. Finally, the environmental stress (PM10) is determined by the level of per capita GDP and the air pollution index (API) representing various sources of air pollution. It is true that our simplified model illustrates the effects of specific type of air pollutant, viz., respirable particulate matter, however, it is among the most significant environmental problems threatening human health in India. Nevertheless, there is scope to build more comprehensive environmental stress indices which reflect surface water quality, ground water quality, soil pollution etc. which have feedback effects with health and economic development. Also many of the components of PI, SI and API may not be truly exogenous in a larger model (e.g. transport and communication in PI, education and health care systems in SI, and industrial production, vehicular traffic, urbanisation in API.) The two weaknesses of our model stem from data limitation and a concern to simplify the model. Although our model is highly simplified, nonetheless, it provides key insights into the nature of economic development in India during the last 25 years: First, the environmental stress has had a high cost on income and health . from the derived reduced form, a 1 percent increase in the air pollution index leads to a decrease of about 8 percent in the per capita income, a decrease of about 0.7 percent in the life expectancy, and an increase of about 19 percent in the number of cases of respiratory diseases. Second, the social infrastructure plays a more vital role in economic development, health, and environment than the physical infrastructure, since the absolute values of elasticities of endogenous variables with respect to SI are invariably greater than those with respect to PI. Although physical infrastructure is important for economic development, it comes in the last of our preference order. In the final run-up, there is need to pay more attention to provide better social infrastructure and to reduce air pollution.
    Date: 2008–10
  13. By: Clark P. Bishop; C. Richard Shumway; Philip R. Wandschneider (School of Economic Sciences, Washington State University)
    Abstract: Anaerobic digestion technology addresses environmental issues of waste disposal and greenhouse gas emission reduction. This paper examines attitudes toward adoption of this conservation technology on dairy farms. To specify an appropriate dependent variable without a large number of adopters, an ordered probit model is constructed. The empirical analysis uses data from a 2006 survey of Northwest dairy farms. Aggregate variables are constructed based on behavioral economics and conservation adoption literature. Variables include private and social costs, social motives, capacity, innovation receptivity, and opportunity costs, most of which are found to be highly related to the decision to seriously consider adoption.
    Keywords: adoption, anaerobic digestion, behavioral economics, conservation, dairy, environment, meta-utility, Northwest
    JEL: Q55 Q53 Q54
    Date: 2008–08
  14. By: Kassie, Menale (Department of Economics, School of Business, Economics and Law, Göteborg University); Zikhali, Precious (Department of Economics, School of Business, Economics and Law, Göteborg University); Pender, John (International Food Policy Research Institute, (IFPRI)); Köhlin, Gunnar (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Organic farming practices, in as far as they rely on local or farm renewable resources, present desirable options for enhancing agricultural productivity for resource-constrained farmers in developing countries. In this paper we use plot-level data from semi-arid area of Ethiopia to investigate the impact of organic farming practices on crop productivity, with a particular focus on conservation tillage. Specifically we seek to investigate whether conservation tillage results in more or less productivity gains than chemical fertilizer. Our results reveal a clear superiority of organic farming practices over chemical fertilizers in enhancing crop productivity. Thus our results underscore the importance of encouraging resource-constrained farmers in developing countries to adopt organic farming practices, especially since they enable farmers to reduce production costs, provide environmental benefits, and as our results confirm, enhance crop productivity.<p>
    Keywords: Conservation tillage; Chemical fertilizer; Crop productivity; Matched observations; Ethiopia
    JEL: C21 Q12 Q15 Q16 Q24
    Date: 2008–12–16
  15. By: Bazhanov, Andrei
    Abstract: The paper presents two new results for the Dasgupta-Heal-Solow-Stiglitz model with an essential nonrenewable resource: (1) the pattern of resource extraction can be more important for sustainable growth than the pattern of saving when the Hotelling Rule modifier is not small enough; (2) the qualitative behavior of the long-run per capita output can be examined along any smooth enough path of extraction for any variable saving rate using the "index of sustainable extraction" introduced in the paper.
    Keywords: modified Hotelling Rule; imperfect economy; sustainable growth; index of sustainable extraction; Hubbert curve consumption
    JEL: Q38 Q32 O47 O13
    Date: 2008–12–03
  16. By: Benz, Eva; Löschel, Andreas; Sturm, Bodo
    Abstract: The “Climate action and renewable energy package” proposed by the European Commission in the beginning of 2008 suggests auctioning as basic principle for allocation for the upcoming third trading phase of the EU Emissions Trading Scheme that runs from 2013 to 2020. Overall, it is estimated that at least two third of the total quantity of allowances will be auctioned in 2013, to be increased to 100 % by 2020. In this paper, we emphasize the importance of a properly chosen auction design as the significantly higher auction share, compared to the past and current trading phase, is expected to yield a thin secondary market for CO2 allowances. We elaborate main criteria that a viable auction design is supposed to fulfil and propose a specific auction design for the third trading phase. The auction we recommend is a simultaneous dynamic uniform double auction. Die Europäische Kommission hat in ihrem „Klima- und Energiepaket“ vom Januar 2008 eine Weichenstellung für den europäischen Emissionshandel vorgeschlagen. Bislang wurden die Zertifikate an die betroffenen Unternehmen aus den energieintensiven Sektoren kostenfrei vergeben. Nach den Plänen der Kommission sollen Stromproduzenten ab 2013 alle benötigten Zertifikate ersteigern müssen. Unternehmen aus anderen energieintensiven Branchen sollen zunächst nur 20 % ersteigern, in 2020 dann 100 %. Da insgesamt mindestens zwei Drittel aller Zertifikate versteigert werden, ist zu erwarten, dass der freie Markt für Zertifikate ab 2013 deutlich dünner sein wird als dies bisher der Fall ist. Aus diesem Grund gewinnt das Design der Auktion an Bedeutung, denn vom Auktionspreis, der die Knappheit an Zertifikaten signalisieren soll, werden wichtige Investitionsentscheidungen in CO2-arme Technologien abhängen. Eventuelle Fehler im Auktionsdesign können, wenn die Zertifikate überwiegend versteigert werden, nicht mehr durch einen liquiden freien Markt „geheilt“ werden.
    Keywords: climate policy, emissions trading, auction design
    JEL: D44 Q48 Q54 Q58
    Date: 2008
  17. By: Edson Paulo Domingues (Cedeplar-UFMG); Aline Souza Magalhães (Cedeplar-UFMG); Ricardo Machado Ruiz (Cedeplar-UFMG)
    Abstract: This article examines the impact of climate change in the Northeast from estimates of the availability of land suitable for agricultural activity in a range of cultures. This information, based on global warming scenarios from the International Panel of Climate Change (IPCC), are introduced in an inter-regional computable general equilibrium model for Brazil, which allows analysis on various aspects of regional economic implications of this phenomenon. Our results indicate a high potential for economic losses in the Northeast, especially in poorer states, pointing to the need for policies to mitigate and control Greenhouse Gases (GHG) emissions. In the absence of such policies, the effects on employment can cause significant impacts on migratory flows, creating, for example, more pressure on infrastructure urban services in the metropolitan areas on the Northeast and other regions of the country.
    Keywords: climate change, general equilibrium, regional economics Brazil
    JEL: Q54 R13
    Date: 2008–10
  18. By: Mireille Chiroleu-Assouline (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); Mouez Fodha (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 analyzes the environmental tax policy issues within an overlapping generations models framework. The objective is to analyze whether an environmental tax policy can respect the two equity principles simultaneously, the vertical as well the horizontal one. We characterize the necessary conditions for the obtaining of a Pareto improving shift when the revenue of the pollution tax is recycled by a change in the labor tax rate or by a change in the distributive properties of the labor tax. We show that, depending on the production function elasticities and on the heterogeneity characteristics of labor supply, an appropriate policy mix could be designed in order to leave each workers' class unharmed by the environmental tax reform. It will consist in an increase of the progressivity of the labor tax together with a decrease of the minimal wage tax rate.
    Keywords: Environmental tax, double dividend, tax progressivity, overlapping generations model.
    Date: 2008–12
  19. By: Manuel Frondel; Christoph M. Schmidt; Colin Vance
    Abstract: The EU-wide Emission Trading Scheme (ETS), established in 2005, is a key pillar of Europe’s strategy to attain compliance with the Kyoto Protocol. Under this scheme, CO2 allowances have thus far been allocated largely free of charge. This paper demonstrates that such cost-free allocation, commonly called grandfathering, implies an increase in electricity prices even when strong competition prevails on electricity markets.As our estimations for Germany’s power sector show, these price increases result in substantial windfall profits, giving rise to public skepticism and calls for an auctioning of certificates in the future.While empirical evidence on the ETS’ impacts is scant, the findings reviewed here indicate that even in the absence of certificate auctioning, energy-intensive industry sectors, such as primary aluminum production, may suffer heavily from the ETS-induced electricity price increases.We therefore argue that an abrupt transition to a complete auctioning system may endanger the competitive position of energy-intensive industries in Europe, unless all other major industrial and transition countries are integrated into a global emissions trading system.
    Keywords: Grandfathering, auctioning, competition
    JEL: Q41 Q48
    Date: 2008–12
  20. By: Martin F. Quaas (Department of Economics, University of Kiel); Stefan Baumgärtner (Department of Sustainability sciences, University of Lüneburg); Sandra Derissens (Department of Economics, University of Kiel); Sebastian Strunz (Department of Sustainability sciences, University of Lüneburg)
    Abstract: We perform a model analysis to study the origins of limited resilience in ecological-economic systems. We demonstrate that the resilience properties of the ecosystem are essentially determined by the management institutions and consumers’ preferences for ecosystem services. In particular, we show that complementarity of ecosystem services in human well-being and open access of the ecosystem to profit-maximizing harvesting firms may lead to limited resilience of the ecosystem. We conclude that the role of human preferences and management institutions is not just to facilitate adaptation to, or transformation of, some natural dynamics of ecosystems. Rather, human preferences and management institutions are themselves important determinants of the fundamental dynamic characteristics of the ecological-economic system, such as limited resilience.
    Keywords: ecological-economic systems, ecosystem services, institutions, natural resource management, preferences, resilience
    JEL: Q01 Q20 Q57
    Date: 2008–12
  21. By: Nick Bloom; Christos Genakos; Ralf Martin; Raffaella Sadun
    Abstract: We use an innovative methodology to measure management practices in over 300 manufacturingfirms in the UK. We then match this management data to production and energy usage information forestablishments owned by these firms. We find that establishments in better managed firms aresignificantly less energy intensive. They use less energy per unit of output, and also in relation toother factor inputs. This is quantitatively substantial: going from the 25th to the 75th percentile ofmanagement practices is associated with a 17.4% reduction in energy intensity. This negativerelationship is robust to a variety of controls for industry, location, technology and other factor inputs.Better managed firms are also significantly more productive. One interpretation of these results is thatwell managed firms are adopting modern lean manufacturing practices, which allows them to increaseproductivity by using energy more efficiently. This suggests that improving the management practicesof manufacturing firms may help to reduce greenhouse gas emissions.
    Keywords: management, energy efficiency, energy intensity and productivity
    JEL: L2 M2 O32 O33 Q40 Q50
    Date: 2008–10
  22. By: Jaume Rosselló Nadal (Centre de Recerca Econòmica (UIB · Sa Nostra)); Antoni Riera Font (Centre de Recerca Econòmica (UIB · Sa Nostra)); Vivian Cardenas (PhD student of the Program of Tourism and Environmental Economics)
    Abstract: Climate can be understood both as a resource and a motivation for tourism. This study focuses on the second issue trying to establish the sensitivity to weather anomalies of the outbound flows from United Kingdom, the third biggest international tourist spender country. Using transfer function models it is possible to analyze the significance of the short-term weather conditions in the determination of outbound British flows and simulate the effects of different climate change scenarios. Results show how mean temperature, heat waves, air frost and sunshine days are the weather variables that can be significantly related to the dynamics of the outbound British flows.
    Keywords: Tourism, weather anomalies, climate change, transfer function modeling, United Kingdom.
    Date: 2008
  23. By: Zhang, ZhongXiang
    Abstract: To point out the direction and focus of future international climate negotiations, this paper discusses how far developing country commitments can go in an immediate post-2012 climate regime. The paper argues that developing country commitments are most unlikely to go beyond the defined polices and measures in this timeframe. On this basis, the paper suggests that, rather than attempting the unrealistic goal, international climate negotiations may instead need to initially frame the post-2012 developing country participation in terms of certain policies and policies that I envisioned a decade ago. This conclusion does not change, as Barack Obama becomes the U.S. President and the Democrats have regained control of both U.S. House of Representatives and Senate. However, it should be emphasized that his stance on climate issues and how ambitious U.S. commitments would be under his administration are going to be critical for developing countries to take bold steps themselves and to even agree to reflect those national commitments in a global deal.
    Keywords: Post-Kyoto climate negotiations; Policies and measures; Developing countries
    JEL: Q48 Q42 Q53 Q54 Q58
    Date: 2008–10–28
  24. By: Jean Marie Grether (University of Neuchatel); Nicole A. Mathys (University of Neuchatel); Jaime de Melo (University of Geneva, CERDI and CEPR)
    Abstract: A growth-decomposition (scale, technique and composition effect) covering 62 countries and 7 manufacturing sectors over the 1990-2000 period shows that trade, through reallocations of activities across countries, has contributed to a 2-3 percent decrease in world SO2 emissions. However, when compared to a constructed counterfactual no-trade benchmark, depending on the base year, trade would have contributed to a 3-10 percent increase in emissions. Finally adding emissions coming from trade-related transport activities, global emissions are increased through trade by 16 percent in 1990 and 13 percent in 2000, the decline being largely attributable to a shift of dirty activities towards cleaner countries.
    Keywords: embodied emissions in trade, environment, growth decomposition, transport, world trade
    JEL: F18 Q56
    Date: 2008–10–27
  25. By: Jean-Marc Burniaux; Jean Château
    Abstract: This Working Paper presents a summary description of the OECD ENV-Linkages General Equilibrium model. This model has been developed by the Environment Directorate of the OECD Secretariat in order to assess the economic impact of abating Greenhouse Gases using several different economic instruments. The paper is divided into two parts. The first provides a brief description to the structure of the ENV-Linkages model and of its main equations. The second section describes the calibration method, first to fit the model on base year data, and second to dynamically produce a baseline emissions projection. <P>Description synthétique du modèle ENV-Linkages de l’OCDE <BR>Ce document de travail contient une description simplifiée du modèle d’Équilibre Général ENV-Linkages de l’OCDE. Ce modèle a été développé par la Direction de l’Environnement afin de quantifier les impacts économiques des réductions d’émissions de gaz à effet de serre en utilisant plusieurs instruments différents. Ce document contient deux sections. La première est une description simplifiée de la structure du modèle ENV-Linkages et de ses principales équations. La seconde section décrit la méthode de calibration utilisée, d’abord, pour ajuster le modèle aux données pour l’année initiale et, ensuite, pour produire une projection des émissions de référence.
    Keywords: computable and other applied general equilibrium models, exhaustible resources and economic development, energy and macroeconomy, modèle d'équilibre général appliqué et calculable, ressources non renouvelables et développement économique, énergie et macroéconomie
    JEL: D58 Q32 Q43
    Date: 2008–12–17
  26. By: Heijnen, P. (Universiteit van Amsterdam); Wagener, F.O.O. (Universiteit van Amsterdam)
    Abstract: The shallow lake optimal management problem is one of the simplest ecological-economic interest conflict models for which several qualitatively different long run outcomes are possible. We extend the original model by adding the capital stock of an industry as a second state variable. A government can mitigate the effects of pollution arising from industrial activities by imposing the requirement to abate emissions. Within this framework two scenarios are examined. In the social optimal benchmark, the social planner optimally allocates investment. In the competitive equilibrium, market forces determine the investment in capital, but the social planner can still abate emissions. We show that in the case of irreversibilities catastrophes are avoided in the competitive equilibrium when it is socially optimal to do so. However, in the competitive equilibrium, either the catastrophe is avoided in an inefficient way or the catastrophe is badly managed. In case of hysteresis, catastrophes are almost always avoided. Moreover, the decision to avoid catastrophes does not depend on long-term considerations.
    Date: 2008
  27. By: Kassie, Menale (Department of Economics, School of Business, Economics and Law, Göteborg University); Zikhali, Precious (Department of Economics, School of Business, Economics and Law, Göteborg University); Manjur, Kebede (Tigray Agricultural Research Institute); Edwards, Sue (Institute for Sustainable Development,)
    Abstract: In the wake of resource constraints faced by farmers in developing countries in using external farm inputs, sustainable agricultural production practices that rely on local or farm renewable resources present desirable options for enhancing agricultural productivity. In this paper we use plot-level data from the semi-arid region of Ethiopia, Tigray, to investigate the factors influencing farmers' decisions to adopt sustainable agricultural production practices, with a particular focus on conservation tillage and compost. While there is heterogeneity with regards to factors influencing the choice to use either practice, results from a multinomial logit analysis underscore the importance of both plot and household characteristics on adoption decisions. In particular we find that poverty, and access to information, among other factors, impact the choice of farming practices significantly. We also find evidence that the impact of gender on technology adoption is technology specific while the significance of plot characteristics indicate the decision to adopt specific technologies is location-specific. Furthermore the use of stochastic dominance analysis supports the contention that sustainable farming practices enhance productivity -they even prove to be superior to the use of chemical fertilizers- justifying the need to investigate factors that influence adoption of these practices and use this knowledge to formulate policies that encourage adoption.<p>
    Keywords: Sustainable agriculture; Adoption; Productivity; Compost; Conservation tillage; Ethiopia
    JEL: Q12 Q16 Q24
    Date: 2008–12–16
  28. By: Skander Ben Abdallah; Pierre Lasserre
    Abstract: We use a real option approach to determine optimally when a social planner has to stop or resume logging in situations where an endangered species relies on forest habitat for its survival, and that habitat evolves stochastically. The model incorporates economic, ecological and social features, and is calibrated to generate an optimal forest management rule that balances the benefits from commercial forest exploitation with the risks of extinction facing the endangered species. For the reasonable parameters used in our application to the Rangifer tarandus caribou, an endangered species in Central Labrador (Canada), the policy of banning logging temporarily is quite attractive as it does not require long banning periods while it drastically reduces the extinction risk and increases forest value. <P>Nous utilisons la méthode des options réelles pour déterminer quand un planificateur social doit interrompre ou reprendre l’exploitation d’une forêt, lorsque celle-ci constitue l’habitat stochastique d’une espèce menacée d’extinction. Le modèle présente des aspects économiques, écologiques et sociaux; il établit une règle optimale de gestion forestière qui fait l’arbitrage entre les bénéfices commerciaux de l’exploitation forestière et les risques d’extinction de l’espèce. Pour des paramètres correspondant au cas du Rangifer tarandus caribou, une espèce du centre du Labrador (Canada) menacée d’extinction, la politique optimale d’interruption et reprise de l’exploitation forestière est attractive; elle n’exige pas de longs arrêts dans l’exploitation, alors qu’elle réduit significativement le risque d’extinction et augmente la valeur de la forêt.
    Keywords: real options, biodiversity, endangered species, extinction, forestry., options réelles, biodiversité, extinction, espèces menacées, aménagement forestier.
    JEL: C61 C63 D81 Q23 Q28
    Date: 2008–12–01
  29. By: Bouckenooghe, D.; Devos, G.; Van den Broeck, H. (Vlerick Leuven Gent Management School)
    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: 2008–10–28
  30. By: Cathrine Hagem (Statistics Norway)
    Abstract: A group of small competitive permits traders facing an imperfectly competitive permit market may consider cooperation (merger) to act strategically in the permit market. It is a well-known result in the literature that the horizontal merger of Cournot players may be unprofitable because of the response of nonmerging agents (a negative strategic effect). We show that the strategic effect of a merger among competitive agents substantially differs from the strategic effect of a merger among Cournot players. Furthermore, we show how the profitability of a merger depends on whether the merged agents are on the same side of the market as the preexisting dominant agent(s). These results show how the expected competitive environment in the permit market may determine how potentially large traders such as the US, and group of small, competitive traders, such as the EU countries, organize their permit trade in any follow-up agreement to the Kyoto protocol.
    Keywords: Emission permits; strategic permit trading; mergers; climate agreement; market power.
    JEL: D43 Q54
    Date: 2008–12
  31. By: Heijnen, P. (Universiteit van Amsterdam)
    Abstract: Using conservation laws, we provide a new proof of the Hartwick result, i.e. there is intergenerational equity if and only if net investment is constant. Subsequently, the technique is used to show that constant net investment does not indicate intergenerational equity if consumers value the existence of an essential non-renewable resource.
    Date: 2008
  32. By: Alain Ayong Le Kama (EQUIPPE - Université de Lille I); Mouez Fodha (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: The aim of this paper is to study the optimal nuclear waste burial policy under an uncertainty : the possibility that an accident might occur in the future. The framework is an optimal growth model with pollution disutility. We show, under some conditions on the waste burial policy, that nuclear power may be a long-term solution for the world energy demand. Under uncertainty on the future safety of the buried waste, the social planner will decide to decrease the rate of waste burying, but the evolution of consumption and hence the evolution of the level of buried waste, are ambiguous. Depending on some simple conditions on the balanced growth rate of the economy and on the preference parameters of the households, the optimal amount of buried waste may increase, even if there is a risk of accident in the future.
    Keywords: Nuclear waste, pollution, growth, uncertainty.
    Date: 2008–07
  33. By: Ho, Mun S.; Morgenstern, Richard (Resources for the Future); Shih, Jhih-Shyang (Resources for the Future)
    Abstract: This paper informs the discussion of carbon price policies by examining the potential for adverse impacts on domestic industries, with a focus on detailed sector-level analysis. The assumed policy scenario involves a unilateral economy-wide $10/ton CO2 charge without accompanying border tax adjustments or other complementary policies. Four modeling approaches are developed as a proxy for the different time horizons over which firms can pass through added costs, change input mix, adopt new technologies, and reallocate capital. Overall, we find that a readily identifiable set of industries experience particularly adverse impacts as measured by reduced output and that the relative burdens on different industries are remarkably consistent across the four time horizons. Output rebounds considerably over longer time horizons, and the adverse impacts on profits diminish even more rapidly in most cases. Over the short term employment losses mirror output declines, while gains in other industries fully offset the losses over the longer horizons. At the same time, leakage abroad is considerable in some sectors, particularly when reductions in exports are considered.
    Keywords: carbon price, competitiveness, input-output analysis
    JEL: F14 D D57 D58 H23
    Date: 2008–12–15
  34. By: Marcos Álvarez Díaz (Centre de Recerca Econòmica (UIB · Sa Nostra)); Jaume Rosselló Nadal (Centre de Recerca Econòmica (UIB · Sa Nostra))
    Abstract: There is a clear understanding of the benefits of getting accurate predictions that allow diminishing the uncertainty inherent to the tourism activity. Managers, entrepreneurs, politicians and many other agents related to the tourism sector need good forecasts to plan an efficient use of tourism-related resources. In spite of the consensus on this need, tourism forecasters must make an even greater effort to satisfy the industry requirements. In this paper, the possibility of improving the predictive ability of a tourism demand model with meteorological explanatory variables is investigated using the case study of monthly British tourism demand to the Balearic Islands (Spain). For this purpose, a transfer function model and a causal artificial neural network are fitted. Meanwhile, the results are compared with those obtained by non-causal methods: an ARIMA model and an autoregressive neural network. The results seem to indicate that adding meteorological variables can increase the predictive power but, however, the most accurate prediction is obtained using a non-causal model, specifically an autoregressive neural network.
    Keywords: Tourism, weather anomalies, climate change, transfer function modeling, United Kingdom.
    Date: 2008
  35. By: Ruud Egging; Franziska Holz; Christian von Hirschhausen; Steven A. Gabriel
    Abstract: This paper presents results of simulating a more collusive behavior of a group of natural gas producing and exporting countries, sometimes called GASPEC. We use the World Gas Model, a dynamic, strategic representation of world gas production, trade, and consumption between 2005 and 2030. In particular, we simulate a closer cooperation of the GASPEC countries when exporting pipeline gas and liquefied natural gas; we also run a more drastic scenario where GASPEC countries deliberately withhold production. The results shows that compared to a Base Case, a gas cartel would reduce total supplied quantities and induce price increases in gas importing countries up to 22%. There is evidence that the natural gas markets in Europe and North America would be affected more than other parts of the world. Lastly, the vulnerability of gas importers worldwide on gas exporting countries supplies is further illustrated by the results of a sensitivity case in which price levels are up to 87% higher in Europe and North America, but non-GEC countries increase production by a mere 10%.
    Keywords: natural gas, trade, cartel, collusion, World Gas Model
    Date: 2008

This nep-env issue is ©2009 by Francisco S.Ramos. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.