nep-env New Economics Papers
on Environmental Economics
Issue of 2009‒01‒31
nineteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Collusion Inducing Taxation of a Polluting Oligopoly By Benchekroun, H.; Ray Chaudhuri, A.
  2. Equity and Justice in Global Warming Policy By Kverndokk, Snorre; Rose , Adam
  3. Benefits of Organic Agriculture as a Climate Change Adaptation and Mitigation Strategy in Developing Countries By Muller, Adrian
  4. A Case-Study on Project-Level CO2 Mitigation Costs in Industrialised Countries - The Climate Cent Foundation in Switzerland By Kunz, Laura; Muller, Adrian
  5. Environmental Taxes in an Economy with Distorting Taxes and a Heterogeneous Population By Hoel , Michael
  6. Linking Environmental and Innovation Policy By Gerlagh , Reyer; Kverndokk, Snorre; Rosendahl, Knut Einar
  7. The pollution haven hypothesis : a geographic economy model in a comparative study. By Sonia Ben Kheder; Natalia Zugravu
  8. Transboundary Pollution, Trade Liberalization, and Environmental Taxes By Baksi, S.; Ray Chaudhuri, A.
  9. Climate change and radical energy innovation: the policy issues By Keith Smith
  10. Greening Development Planning: A Review of Country Case Studies for Making the Economic Case for Improved Management of Environment and Natural Resources By Olof Drakenberg; Sandra Paulsen; Jessica Andersson; Emelie Dahlberg; Kristoffer Darin Mattsson; Elisabeth Wikstrom
  11. Do Economic, Financial and Institutional Developments Matter for Environmental Degradation? Evidence from Transitional Economies By Tamazian, Artur; Rao, B. Bhaskara
  12. Estimating the Effect of a Gasoline Tax on Carbon Emissions By Lucas W. Davis; Lutz Kilian
  13. Transports, mobilité et climat : l'impératif du "Facteur 4" ! Vers une "tyranie climatique" By Yves Crozet
  14. Sales Tax: Specific or Ad Valorem Tax for a Non-renewable Resource? By Nguyen Manh Hung; Nguyen Van Quyen
  15. Can Domestication of Wildlife Lead to Conservation? The Economics of Tiger Farming in China By Brant Abbott; G. Cornelis van Kooten
  16. Green goods: are they good or bad news for the environment? Evidence from a laboratory experiment on impure public goods By Munro, Alistair; Valente, Marieta
  17. China’s Energy Situation and Its Implications in the New Millennium By Hengyun Ma; Les Oxley; John Gibson
  18. The influence of decision-making rules on individual preference for ecological restoration: Evidence from an experimental survey By Nobuyuki Ito; Kenji Takeuchi; Koichi Kuriyama; Yasushi Shoji; Takahiro Tsuge; Yohei Mitani
  19. L’hostilité aux OGM survit-elle à des produits attractifs ? By Elsa Kassardjian; Stéphane Robin; Bernard Ruffieux

  1. By: Benchekroun, H.; Ray Chaudhuri, A. (Tilburg University, Center for Economic Research)
    Abstract: We show that an environmental regulation such as a tax on pollution can act as a collusive device and induce stable cartelization in an oligopolistic polluting industry. We consider a dynamic game where pollution is allowed to accumulate into a stock over time and a cartel that includes all the firms in the industry. We show that a tax on pollution emissions can make it unprofitable for any firm to leave the cartel. Moreover the cartel formation can diminish the welfare gain from environmental regulation. We provide an example where social welfare under environmental regulation and collusion of firms is below social welfare under a laisser-faire policy.
    Keywords: pollution tax;oligopoly;cartel formation;coalition formation;differential game
    JEL: H41 L51 Q58
    Date: 2008
  2. By: Kverndokk, Snorre (Ragnar Frisch Centre for Economic Research); Rose , Adam (Energy Institute and School of Policy, Planning, and Development)
    Abstract: Many countries are implementing or at least considering policies to counter increasingly certain negative impacts from climate change. An increasing amount of research has been devoted to the analysis of the costs of climate change and its mitigation, as well as to the design of policies, such as the international Kyoto Protocol, post-Kyoto negotiations, regional initiatives, and unilateral actions. Although most studies on climate change policies in economics have considered efficiency aspects, there is a growing literature on equity and justice. Climate change policy has important dimensions of distributive justice, both within and across generations, but in this paper we survey only studies on the intragenerational aspect, i.e.., within a generation. We cover several domains including the international, regional, national, sectoral and inter-personal, and examine aspects such as the distribution of burdens from climate change, climate change policy negotiations in general, implementation of climate agreements using tradable emission permits, and the uncertainty of alternatives to emission reductions.
    Keywords: Economics of climate change; intragenerational equity; distributive justice
    JEL: D62 D63 H23 H41 Q00
    Date: 2008–09–25
  3. By: Muller, Adrian (Socioeconomic Institute, University of Zurich)
    Abstract: Organic Agriculture (OA) as an adaptation strategy (AS) to Climate Change (CC) is a concrete and promising option for adaptation in rural communities. OA has additional potential as a mitigation strategy (MS). This text is a short review note on this topic. Adaptation and mitigation based on OA can build on well-established practice as OA is a sustainable livelihood strategy with decades of experience in several climate zones and under a wide range of specific local conditions. Given the large fraction of rural population living on farming, the potential of this strategy to adapt to the adverse effects of CC and at the same time contribute to the reduction of greenhouse gas emissions and to carbon sequestration is huge. The scope of the approach ranges from local to national – depending on the policy context it is embedded in. Finally, the financial requirements of OA as an AS or MS are low.<p>
    Keywords: adaptation; climate change; mitigation; organic agriculture; rural development; sustainable livelihoods; vulnerability
    JEL: Q10 Q54 Q56
    Date: 2009–01–20
  4. By: Kunz, Laura; Muller, Adrian (Socioeconomic Institute, University of Zurich)
    Abstract: We analyse CO2 emissions reduction costs based on project data from the Climate Cent Foundation (CCF), a climate policy instrument in Switzerland. We draw four conclusions. First, for the projects investigated, the CCF on average pays € 63/t. Due to the Kyoto Protocol, the CCF buys reductions until 2012 only. This cutoff increases reported per ton reduction costs, as the additional lifetime project costs are set in relation to reductions until 2012 only, rather than to reductions realised over the whole lifetime. Lifetime reduction costs are € 45/t. Second, correlation between CCF’s payments and lifetime reduction costs per ton is low. Projects with low per ton reduction costs should thus be identified based on lifetime per ton reduction costs. Third, the wide range of project costs per ton observed casts doubts on the widely used identification of the merit order of reduction measures based on average per ton costs for technology types. Finally, the CCF covers only a fraction of additional reduction costs. Decisions to take reduction efforts thus depend on additional, non-observable and/or non-economic motives. Any generalisation of results has to consider that this analysis is based<p>
    Keywords: abatement cost curve; Climate Cent Foundation; climate policy; emissions reduction; mitigation costs
    JEL: D24 Q40 Q52 Q54
    Date: 2009–01–20
  5. By: Hoel , Michael (Dept. of Economics, University of Oslo)
    Abstract: During the last couple of decades, there has been a large literature discussing how the properties of emission taxes are affected by the existence of distortionary taxes. Most of this literature ignores distributional aspects of environmental taxes and other types of environmental policy instruments. The present paper considers a very simple model with heterogeneous households, differing in income earning ability. The tax system i s not necessarily fully optimal. Instead, a tax function is assumed the be exogenously given, but the parameters of this tax function are opmtimally chosen. The rule for the second-best opmtimal environmental tax is derived and compared with the Pigovian rule. The results derived in the present paper are related to the results from the literature on public goods provision under distortionary taxes.
    Keywords: Environmental taxes; public goods; distortionary taxation
    JEL: H23 H41 Q58
    Date: 2008–02–01
  6. By: Gerlagh , Reyer (University of Manchester); Kverndokk, Snorre (Ragnar Frisch Centre for Economic Research); Rosendahl, Knut Einar (Research Department, Statistics Norway)
    Abstract: This paper addresses the timing and interdependence between innovation and environmental policy in a model of research and development (R&D). On a first-best path the environmental tax is set at the Pigouvian level, independent of innovation policy. With infinite patent lifetime, the R&D subsidy should be constant and independent of the state of the environment. However, with finite patent lifetime, optimal innovation policy depends on the stage of the environmental problem. In the early stages of an environmental problem, abatement research should be subsidized at a high level and this subsidy should fall monotonically over time to stimulate initial R&D investments. Alternatively, with a constant R&D subsidy, patents’ length should initially have a very long life-time but this should be gradually shortened. In a second-best situation with no deployment subsidy for abatement equipment, we find that the environmental tax should be high compared to the Pigouvian levels when an abatement industry is developing, but the relative difference falls over time. That is, environmental policies will be accelerated compared to first-best.
    Keywords: Environmental policy; research and development; innovation studies; patents
    JEL: H21 O30 Q42
    Date: 2008–06–10
  7. By: Sonia Ben Kheder (Centre d'Economie de la Sorbonne); Natalia Zugravu (Centre d'Economie de la Sorbonne)
    Abstract: Although based on theoretical foundations, the pollution haven hypothesis stating that heterogenous environmental regulations between countries influence multinational firms' location decisions, has never been clearly proven empirically. In this study, we reexamine this hypothesis by a fresh take on both its theoretical and empirical aspects. While applying a geographic economy model on French firm-level data, we confirm the pollution haven hypothesis for a global sample. Through sensitivity analysis, we validate it for Central and Eastern European countries, emerging and high-income OECD countries, but not for the major part of the Commonwealth of Independent States countries. Finally, we show that the pollution haven hypothesis is confirmed in the strongest manner for emerging economies.
    Keywords: FDI, environmental regulation, economic geography, pollution haven hypothesis.
    JEL: F12 F18 Q28
    Date: 2008–04
  8. By: Baksi, S.; Ray Chaudhuri, A. (Tilburg University, Center for Economic Research)
    Abstract: In a bilateral trade framework, we examine the impact of tari¤ reduction on the op- timal pollution tax and social welfare when pollution is transboundary. Strategic considerations lead countries to distort their pollution tax in the non-cooperative equilibrium. Trade liberalization changes the distortion, and consequently the pol- lution tax and welfare, in ways that depend on the extent to which pollution is transboundary. We find that when the pollution damage parameter is sufficiently small (large), bilateral tariff reduction always decreases (increases) the pollution tax, irrespective of the value of the transboundary pollution parameter. However, when the pollution damage parameter takes intermediate values, bilateral tari¤ reduction decreases the pollution tax if and only if the transboundary pollution parameter is sufficiently large (or even sufficiently small, in certain cases). More- over, with pollution being transboundary, the impact of trade liberalization on welfare is non-monotonic and concave. The greater the extent to which pollution crosses borders, the more likely is trade liberalization to reduce welfare.
    Keywords: Transboundary pollution; Strategic trade; Bilateral tariff reduction; Pollution tax
    JEL: F18 Q58 H23 D43
    Date: 2008
  9. By: Keith Smith (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: Although the impacts of greenhouse gas build-up remain uncertain, they have the potential to be very serious and possibly catastrophic. If the outcomes are serious then neither improving energy efficiency nor adaptation policies will cope with the problems of warming. Reducing climate impacts without impeding economic development will require new low or zero emissions energy carriers and associated technologies. This paper argues that current innovation policy initiatives aim at only limited dimensions of energy technology: they either promote incremental change in existing technologies, or improving performance in existing renewable alternatives. They will neither induce fundamental innovation in carrier technologies, nor change the basic technological regime of hydrocarbon production, distribution and use. For this, more radical „mission-oriented? programmes are necessary. In turn, these will require new policy instruments and methods, new roles for government, and new dimensions of international collaboration and global governance of innovation strategies.
    Date: 2009–01
  10. By: Olof Drakenberg; Sandra Paulsen; Jessica Andersson; Emelie Dahlberg; Kristoffer Darin Mattsson; Elisabeth Wikstrom
    Abstract: Different approaches to making the economic case for improved management of natural capital in national planning are reviewed in this report. In many low-income countries natural resources sectors (agriculture, mining, forestry, fishery, nature-based tourism) are identified as the engines of economic growth. However, a majority of the ecosystems on which human well-being depends are being degraded. The difficulties in providing economic and policy-relevant information about sustainable economic management of natural capital are often seen as an important reason for inadequate integration of the environment in macroeconomic and sector polices. The report concludes that the analysed country studies (Lao People's Democratic Republic, Mozambique, Peru, Tajikistan and Uganda) mainly relied on existing domestic or international analytical work, used relatively basic calculations/data (such as the market value of fisheries, the value of timber sold etc.) and often formed part of a broader analytical effort.<BR>Ce rapport examine différentes approches pour défendre du point de vue économique l’amélioration de la gestion du capital naturel dans le cadre de la planification du développement national. Dans beaucoup de pays à faible revenu, les secteurs fondés sur les ressources naturelles (agriculture, activités extractives, foresterie, pêche, tourisme de nature) sont les moteurs de la croissance économique. Pourtant, la majorité des écosystèmes dont dépend le bien-être humain subissent des dégradations. On considère souvent que si l’environnement n’est pas convenablement pris en compte dans les politiques macro-économiques et sectorielles, c’est en grande partie parce qu’il est difficile de produire des informations économiques utiles à l’action des pouvoirs publics sur la gestion économique durable du capital naturel. Les études de cas par pays analysées pour ce rapport (qui concernent le Mozambique, l’Ouganda, le Pérou, la République démocratique populaire lao et le Tadjikistan) reposent principalement sur des travaux analytiques menés précédemment au niveau national ou international, font appel à des calculs et des données relativement simples (comme la valeur marchande des pêcheries, la valeur des ventes de bois, etc.) et s’inscrivent souvent dans une démarche analytique plus vaste.
    Keywords: sustainable development, politique gouvernementale (énergie), développement durable, government policy, development co-operation, coopération pour le développement, environmental economics, économie de l'environnement, natural resources management, gestion des ressources naturelles
    JEL: O13 O19 O29 Q1 Q56 Q58
    Date: 2009–01–26
  11. By: Tamazian, Artur; Rao, B. Bhaskara
    Abstract: Several studies have examined the relationship between environmental degradation and economic growth. However, most of them did not take into account financial developments and institutional quality. Moreover, Stern (2004) noted that there are important econometric weaknesses in the earlier studies, such as endogeneity, heteroscedasticity, omitted variables, etc. The purpose of this paper is to fill this gap in the literature by investigating the linkage between not only economic development and environmental quality but also financial development and institutional quality. We employ the standard reduced-form modelling approach to control for country-specific unobserved heterogeneity and GMM estimation to control for endogeneity. Our study considers 24 transition economies and panel data for 1993-2004. Our results support the EKC hypothesis while confirming the importance of both institutional quality and financial development for environmental performance. We also found that financial liberalization may be harmful for environmental quality if it is not accomplished in a strong institutional framework.
    Keywords: Environmental Degradation; Economic Development; Financial Development; Institutional Quality; EKC.
    JEL: Q56 Q53 O13 P28
    Date: 2008–01–24
  12. By: Lucas W. Davis; Lutz Kilian
    Abstract: Several policymakers and economists have proposed the adoption of a carbon tax in the United States. It is widely recognized that such a tax in practice must take the form of a tax on the consumption of energy products such as gasoline. Although a large existing literature examines the sensitivity of gasoline consumption to changes in price, these estimates may not be appropriate for evaluating the effectiveness of such a tax. First, most of these studies fail to address the endogeneity of gasoline prices. Second, the responsiveness of gasoline consumption to a change in tax may differ from the responsiveness of consumption to an average change in price. We address these challenges using a variety of methods including traditional single-equation regression models, estimated by least squares or instrumental variables methods, and structural vector autoregressions. We compare the results from these approaches, highlighting the advantages and disadvantages of each. Our preferred approach exploits the historical variation in U.S. federal and state gasoline taxes. Our most credible estimates imply that a 10 cent per gallon increase in the gasoline tax would reduce U.S. gasoline consumption by 4% and reduce total U.S. carbon emissions by about 1%. We conclude that there is no statistical evidence that a gasoline tax increase of the magnitude recently contemplated by policymakers would reduce carbon emissions enough to reach the targets described by the United Nation’s Intergovernmental Panel on Climate Change in 2007.
    JEL: C53 Q41 Q48
    Date: 2009–01
  13. By: Yves Crozet (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat)
    Abstract: « La mobilité des personnes et des marchandises va-t-elle se trouver contrainte par une « tyrannie des grandes décisions », une « tyrannie climatique » remettant en cause nos modes de vie ? ». La réponse va sans dire eu égard à l’objectif fixé à l’horizon 2050 de diviser par quatre les émissions de gaz à effet de serre par rapport au niveau de 1990. De telles ambitions semblent a priori démesurées compte tenu de la progression prévisible de la mobilité des biens et des personnes à l’horizon 2050. Est-il réaliste de se donner de telles contraintes ? Le prix à payer sous forme de remise en cause des comportements de mobilité ne sera-t-il pas trop élevé ? Sans prétendre à clore le débat, les lignes qui suivent cherchent à donner, dans le secteur des transports, un contenu concret à l’objectif général de division par quatre des émissions de CO2. Cette contrainte globale peut-elle être satisfaite par les seuls progrès techniques que nous annoncent les ingénieurs ? Ou serons-nous obligés de modifier nos comportements de mobilité ? Et si oui, dans quelle proportion ?-----------------------------------------------Cet article vous est proposé avec l'aimable autorisation de l’auteur et de l'éditeur, l’Institut de la Décentralisation. La présente version en PDF est sous le copyright de l’Institut de la Décentralisation ( - 2008. Ce document est protégé en vertu de la loi du droit d'auteur.
    Keywords: comportement de mobilité ; comportement de déplacement ; réduction des émissions de gaz à effet de serre ; changement climatique ; facteur 4 ; études 2050 ; scénarios
    Date: 2008
  14. By: Nguyen Manh Hung (Département économique, Université Laval, Quebec, Canada G1W 4R9); Nguyen Van Quyen (Département de science économique, Université d'Ottawa, 55 Laurier E, Ottawa, Ontario, Canada K1N 6N5)
    Abstract: This paper shows that for a time-independent specific tax and a time-independent ad valorem tax that induce the same competitive equilibrium in the Hotelling model of resource extraction, the ad valorem tax yields a higher level of discounted tax revenues than the specific tax. Moreover, given the same level of discounted tax revenues, the ad valorem tax also yields a higher level of social welfare. Finally, for the time-dependent schedules of optimal ad valorem tax and optimal specific tax, we show that when appropriately set, they are equivalent in implementing the dynamic social optimum and providing the same discounted tax revenues.
    Keywords: Non-renewable Resources, Ad Valorem Tax, Specific Tax, Welfare
    JEL: H21 Q30
    Date: 2009
  15. By: Brant Abbott; G. Cornelis van Kooten
    Abstract: Tigers are a threatened species that might soon disappear in the wild. Not only are tigers threatened by deteriorating and declining habitat, but poachers continue to kill tigers for traditional medicine, decoration pieces and so on. Although international trade in tiger products has been banned since 1987 and domestic trade within China since 1993, tigers continue to be poached and Chinese entrepreneurs have established tiger farms in anticipation of their demise. While China desires to permit sale of tiger products from captive-bred tigers, this is opposed on the grounds that it likely encourages illegal killing. Instead, wildlife conservationists lobby for more spending on anti-poaching and trade-ban enforcement. In this study, a mathematical bioeconomic model is used to investigate the issue. Simulation results indicate that, unless range states are characterized by institutions (rule of law, low corruption) similar to those found in the richest countries, reliance on enforcement alone is insufficient to guarantee survival of wild tigers. Likewise, even though conservation payments could protect wild tigers, the inability to enforce contracts militates against this. Our model indicates that wild tigers can be protected by permitting sale of products from tiger farms, although this likely requires the granting of an exclusive license to sellers. Finally, it is possible to tradeoff enforcement effort and sale of products from captive-bred animals, but such tradeoffs are worsened by deteriorating tiger habitat.
    Keywords: endangered species, extinction, wildlife farming and bioeconomics
    JEL: Q57 Q27 C61 F13
    Date: 2008–12
  16. By: Munro, Alistair; Valente, Marieta
    Abstract: An impure public good is a commodity that combines public and private characteristics in fixed proportions. Green goods such as dolphin-friendly tuna or green electricity programs provide increasings popular examples of impure goods. We design an experiment to test how the presence of impure public goods affects pro-social behaviour. We set parameters, such that from a theoretical point of view the presence of the impure public good is behaviorally irrelevant. In a baseline setting, where the impure public good provides only small contributions to the public good. We observe that on aggregate pro-social behaviour, defined as total contributions to the public good, is lower in the presence of the impure good. Some individuals do not alter their decisions, but roughly two fifths of subjects make a lower contribution to the public good in the presence of the impure public good. On the contrary, in the case where the impure public good favours the public good component at the expense of private earnings, individuals are unaffected in their behaviour. We conclude that the presence of green goods which have only a small environmental component may reduce pro-environmental behaviour.
    Keywords: green goods; impure public goods; pro-social behaviour; social norms; experimental economics
    JEL: Q50 H41 D64 C91
    Date: 2008–10–30
  17. By: Hengyun Ma; Les Oxley (University of Canterbury); John Gibson
    Abstract: Many are interested in China’s energy situation, however, numerous energy related issues in China still remain unanswered, for example, what are the potential forces driving energy demand and supply? Previous reviews focused only on fossil fuel based energy and ignored other important elements including renewable and ‘clean’ energy sources. The work presented here is intended to fill this gap by bringing the research on fossil-based and renewable energy economic studies together and identifying the potential drivers behind both energy demand and supply to provide a complete picture of China’s energy situation in the new millennium. This will be of interest to anyone concerned with the development of China’s economy in general and the energy economy, in particular.
    Keywords: China; Energy; Fossil fuels; Renewable Energy
    JEL: D24 O33 Q41
    Date: 2009–01–15
  18. By: Nobuyuki Ito (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University); Koichi Kuriyama (School of Political Science and Economics, Waseda University); Yasushi Shoji (Graduate School of Agriculture, Hokkaido University); Takahiro Tsuge (Faculty of Economics, Konan University); Yohei Mitani (School of Political Science and Economics, Waseda University)
    Abstract: We conduct an experimental survey to analyze how rules for collective decision-making influence individual preferences concerning nature restoration projects. Our study compares two decision-making rules - a consensus rule and a majority rule - wherein participants decide on a plan concerning nature restoration in the Kushiro Wetland, Japan. Our main finding is that the difference between the individual preferences and collective decision-making is less significant under the consensus rule than the majority rule. Furthermore, there is a larger disparity with regard to the marginal willingness to pay between collective and individual decisions when participants are unsatisfied with the results of collective choice.
    Date: 2008–10
  19. By: Elsa Kassardjian (HortResearch, Auckland); Stéphane Robin (University of Lyon, Lyon, F-69003, France; CNRS, UMR 5824, GATE, Ecully, F-69130, France; ENS LSH, Lyon, F-69007, France ; Centre Leon Berard, Lyon, F-69003, France); Bernard Ruffieux (GAEL, UMR INRA et Grenoble Universités)
    Abstract: Nous testons ici les dispositions à payer des consommateurs pour des aliments transgéniques de seconde génération, c’est-à-dire ayant des caractéristiques innovantes attractives pour le consommateur par rapport au produit conventionnel. Nous testons également les dispositions à payer de tels produits lorsqu’ils sont obtenus avec des technologies alternatives aux biotechnologies transgéniques. Les résultats indiquent que la disposition à payer positive pour une caractéristique désirable obtenue grâce à un organisme génétiquement modifié compense la perte de disposition à payer qu'entraine, pour le consommateur, l'usage d'une telle technologie. Pour un même produit amélioré pour le consommateur, le recours à la technologie transgénique conduit à une disposition à payer toujours inférieure à celles proposée pour les autres technologies. L’écart est néanmoins d’une ampleur réduite, même si les OGM continuent à subir le coût d’une image négative.
    Keywords: Value Elicitation, Genetically-Modified Foods, Biotechnology, Experimental Economics
    JEL: D1 C9
    Date: 2008

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