nep-env New Economics Papers
on Environmental Economics
Issue of 2009‒07‒11
twenty papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Green House Gases and Carbon Trading By Massey, Ray
  2. How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve? By Karen Turner; Nick Hanley
  3. Cost Containment in Climate Change Policy: Alternative Approaches to Mitigating Price Volatility By Gilbert E. Metcalf
  4. Economics of Managing Green House Gasses In Agriculture (PowerPoint) By Gustafson, Cole R.
  5. The EU's Emissions Trading Scheme: A Proto-Type Global System? By Denny Ellerman
  6. An Economic and Environmental Assessment of Carbon Capture and Storage (CCS) Power Plants – A Case Study for the City of Kiel By Sören Lindner; Sonja Peterson; Wilhelm Windhorst
  7. Household Adoption of Water-Efficient Equipment: The Role of Socio-economic Factors, Environmental Attitudes and Policy By Katrin Millock; Céline Nauges
  8. Joint water quantity/quality management analysis in a biofuel production area: Using an integrated economic-hydrologic model By de Moraes, Marcia Maria Guedes Alcoforado; Cai, Ximing; Ringler, Claudia; Albuquerque, Bruno Edson; da Rocha, Sérgio P. Vieira; Amorim, Carlos Alberto
  9. Measuring Biodiversity â an axiomatic evaluation of measures based on genetic data By Gerber, Nicolas
  10. Cooperation in transboundary water sharing under climate change By Bhaduri, Anik; Manna, Utpal; Barbier, Edward; Liebe, Jens
  11. La politique de l’eau : approche économique et application à la pollution des élevages By Philippe Le Goffe
  12. Valuing Public Goods Using Happiness Data: The Case of Air Quality By Arik Levinson
  13. How the European Union is preparing the 'Third Industrial Revolution' with an innovative energy policy By Andris Piebalgs
  14. The health impact of extreme weather events in Sub-Saharan Africa By Wang, Limin; Kanji, Shireen; Bandyopadhyay, Sushenjit
  15. The Incentives to Participate in and the Stability of International Climate Coalitions: A Game-Theoretic Approach Using the WITCH Model By Valentina Bossetti; Carlo Carraro; Enrica De Cian; Romain Duval; Emanuele Massetti; Massimo Tavoni
  16. Avoiding Extinction: Equal Treatment of the Present and the Future By Graciela Chichilnisky
  17. Linking a Dynamic CGE Model and a Microsimulation Model: Climate Change Mitigation Policies and Income Distribution in Australia By Hielke Buddelmeyer; Nicolas Hérault; Guyonne Kalb; Mark van Zijll de Jong
  18. La gestion du sanglier : modèle bioéconomique, dégâts agricoles et prix des chasses en forêt domaniale By Carole Ropars-Collet; Philippe Le Goffe
  19. Forestland Reform in China: What do the Farmers Want? A Choice Experiment on Farmers’ Property Rights Preferences By Qin, Pin; Carlsson, Fredrik; Xu, Jintao
  20. Green Management Matters Only If It Yields More Green: An Economic/Strategic Perspective By Donald Siegel

  1. By: Massey, Ray
    Abstract: Presented to USDA Economists Group, Washington DC
    Keywords: cap and trade, agriculture, offsets, credits, sequestration, Agribusiness, Agricultural and Food Policy, Environmental Economics and Policy, Farm Management, Livestock Production/Industries, Resource /Energy Economics and Policy, Q,
    Date: 2009–05–27
  2. By: Karen Turner (Department of Economics, University of Strathclyde); Nick Hanley (Department of Economics, University of Stirling)
    Abstract: The Environmental Kuznets Curve (EKC) hypothesis focuses on the argument that rising prosperity will eventually be accompanied by falling pollution levels as a result of one or more of three factors: (1) structural change in the economy; (2) demand for environmental quality increasing at a more-than-proportional rate; (3) technological progress. Here, we focus on the third of these. In previous work we have used single region/nation models of the Scottish and UK economies to simulate the impacts of increased labour and energy efficiency on the domestic economy’s position on the EKC, with a specific focus on CO2 emissions. There we find that, while the impacts of an increase in energy efficiency are difficult to predict, mainly due to the potential for ‘rebound’ effects, while increasing CO2 emissions, improved labour productivity is likely to move an economy along its EKC through more rapid GDP growth. However, recent developments in the EKC literature have raised the issue of whether this will still be the case if emissions are accounted for from a consumption rather than a production perspective (the ‘pollution leakage’ hypothesis) – i.e. taking account of indirect pollution generation embodied in trade flows rather than just domestic emissions generation. Here we extend our earlier single region analysis for Scotland by using an interregional CGE model of the UK economy to examine the likely impacts of an increase in Scottish labour productivity on the rest of the UK and on a national EKC through interregional labour migration and trade flows.
    Keywords: computable general equilibrium; technological progress; environmental kuznets curve; pollution leakage
    JEL: D58 F16 F18 O13
    Date: 2009–06
  3. By: Gilbert E. Metcalf
    Abstract: Cap and trade systems are emerging as the front-running policy choice to address climate change concerns in many countries. One of the apparent attractions of this approach is the ability to achieve hard limits on emissions over a control period. The cost of achieving this certainty on emission limits is price volatility. I discuss and evaluate various approaches within cap and trade systems to reduce price volatility. A fundamental trade-off exists between certainty of emission limits and price volatility. A pure carbon tax sacrifices certainty of emission limits in favor of price stability. I discuss how a hybrid carbon tax can be designed to achieve a balance between price stability and emissions certainty. This hybrid, dubbed the Responsive Emissions Autonomous Carbon Tax (REACT), combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period.
    JEL: H23 Q4 Q54
    Date: 2009–07
  4. By: Gustafson, Cole R.
    Abstract: Presented to USDA Economists Group,Washington, DC
    Keywords: greenhouse gasses, agriculture, forestry, regulation, economic alternatives, Agricultural and Food Policy, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q,
    Date: 2009–05–27
  5. By: Denny Ellerman
    Abstract: The European Union's Emission Trading Scheme (EU ETS) is the world's first multinational cap-and-trade system for greenhouse gases. As an agreement between sovereign nations with diverse historical, institutional, and economic circumstances, it can be seen as a prototype for an eventual global climate regime. Interestingly, the problems that are often seen as dooming a global trading system - international financial flows and institutional readiness - haven't appeared in the EU ETS, at least not yet. The more serious problems that emerge from the brief experience of the EU ETS are those of (1) developing a central coordinating organization, (2) devising side benefits to encourage participation, and (3) dealing with the interrelated issues of harmonization, differentiation, and stringency. The pre-existing organizational structure and membership benefits of the European Union provided convenient and almost accidental solutions to the need for a central institution and side benefits, but these solutions will not work on a global scale and there are no obvious substitutes. Furthermore, the EU ETS is only beginning to test the practicality of harmonizing allocations within the trading system, differentiating responsibilities among participants, and increasing the stringency of emissions caps. The trial period of the EU ETS punted on these problems, as was appropriate for a trial period, but they are now being addressed seriously. From a global perspective, the answers that are being worked out in Europe will say a great deal about what will be feasible on a broader, global scale.
    Keywords: energy policy; environmental policy
    Date: 2009–02–15
  6. By: Sören Lindner; Sonja Peterson; Wilhelm Windhorst
    Abstract: In the next years several power plants throughout Europe have to be replaced and the questions is whether to build coal fired power plants with carbon capture and storage (CCS). In a study for the city of Kiel in northern Germany only a 800 MW coal power plant reaches a required minimum rentability. We use the study for an additional economic and environmental evaluation of a coal plant with CCS. We find that integrated gasification combined cycle (IGCC) plants with CCS have in two out of three carbon and energy price scenarios the largest rentability. Pulverized coal (PC) plants with CCS can only compete with other options under very favourable assumptions. Life-cycle emissions from CCS are less than 70% of a coal plant – compared to at least more than 80% when only considering direct emissions from plants. Still, life-cycle emissions are lower than in any other assessed option
    Keywords: coal fired power plants, carbon capture and storage (CCS), cash flow analysis, life cycle analysis
    JEL: Q49 Q54 Q59
    Date: 2009–06
  7. By: Katrin Millock; Céline Nauges
    Date: 2009–06
  8. By: de Moraes, Marcia Maria Guedes Alcoforado; Cai, Ximing; Ringler, Claudia; Albuquerque, Bruno Edson; da Rocha, Sérgio P. Vieira; Amorim, Carlos Alberto
    Abstract: "Water management in the Pirapama River Basin in northeastern Brazil is affected by both water quantity and water quality constraints. The region is known for significant sugarcane-based ethanol production—which is key to the Brazilian economy and expected to grow dramatically under recent global changes in energy policy. Sugarcane production in the region goes hand in hand with controlled fertirrigation practices with potentially significant adverse impacts on the environment. To assess sustainable water allocation in the basin, an integrated hydrologic-economic basin model is adapted to study both water quantity and water quality aspects. The model results show that incorporating water quality aspects into water allocation decisions leads to a substantial reduction in application of vinasse to sugarcane fields. To enforce water quality restrictions, the shadow price for maintaining water in the reservoir could be used as a pollution tax for fertirrigated areas, which are currently not subject to pollution charges." from authors' abstract
    Keywords: Water quality, River basin model, Integrated economic-hydrologic modeling, Nonlinear optimization, Biofuels, Water resources, Environmental impacts,
    Date: 2009
  9. By: Gerber, Nicolas
    Abstract: Biodiversity measurement is necessary to evaluate conservation alternatives and understand how to maximize biodiversity returns on conservation budgets. In the economics literature, most studies focus on species level diversity. Existing measures based on species'pairwise genetic differences do not perform optimally. This paper develops two new biodiversity measures within the same genetic framework. An axiomatic diagnosis for this class of measures is proposed and four biodiversity measures are then compared. Though the axiomatic comparison points towards a single "best" measure, it also indicates that the choice of measure should be dependent on the conservation problem at hand.
    Keywords: Biodiversity, Measurement, Axiomatic approach, Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2009–06
  10. By: Bhaduri, Anik; Manna, Utpal; Barbier, Edward; Liebe, Jens
    Abstract: As multiple countries share a river, the likelihood of a water resource conflict from climate change could be higher between countries. In this paper, we demonstrate how countries can cooperate in transboundary water sharing in a sustainable way, given the impacts of climate change. We illustrate the case of water sharing of the Volta River between the upstream and downstream country, Burkina Faso and Ghana respectively, where the latter country faces a tradeoff of water use between agriculture in the north and production of hydro energy in the south. In the framework of a stochastic Stackelberg differential game, we have shown how the issue of water sharing could be linked to hydropower export that can make water sharing between the countries sustaining in the event of climate change. Our results indicate that during cooperation, Ghana will have an opportunity to increase its water abstraction for agriculture, which has remained largely restricted. We also find that the equilibrium strategies in the long run steady state distribution are stable even with increasing variances of water flow.
    Keywords: Climate Change, Water sharing, Resource /Energy Economics and Policy, Risk and Uncertainty,
    Date: 2009–06
  11. By: Philippe Le Goffe
    Abstract: [paper in French] In Brittany, water policy give little results compared to the money involved. Compared to northern European countries the French government don’t enforce the economic principles of the water framework directive (WFD). WFD defines the environmental target as an economic optimum which maximizes the collective value or minimizes social costs. Further, WFD says that water policy has to enforce cost recovery and polluter-pay principle (PPP). WFD economic principles are compared to the French policy for reducing animal pollution which is based on hypertrophic set of regulation and reject of PPP. This explains why producers don’t have incentives to reduce pollution by using least cost solutions like manure spreading. We suggest to limit the state’s paper to defining and enforcing standards via the PPP and to suppress the obstacles to manure spreading.
    Keywords: water, policy, economics, framework directive, polluter-pay, pollution, agriculture, animal production, manure
    JEL: Q53 Q58
    Date: 2009
  12. By: Arik Levinson
    Abstract: This paper describes and implements a method for estimating the average marginal value of a time-varying local public good: air quality. It uses the General Social Survey (GSS), which asks thousands of people in various U.S. locations how happy they are, along with other demographic and attitude questions. These data are matched with the Environmental Protection Agency's Air Quality System (AQS) to find the level of pollution in those locations on the dates the survey questions were asked. People with higher incomes in any given year and location report higher levels of happiness, and people interviewed on days when air pollution was worse than the local seasonal average report lower levels of happiness. Combining these two concepts, I derive the average marginal rate of substitution between income and air quality – a compensating variation for air pollution.
    JEL: H41 Q51 Q53
    Date: 2009–07
  13. By: Andris Piebalgs
    Abstract: It is clear that we are at the beginning of what has correctly been called the 'third industrial revolution' - the rapid development of an entirely new energy system. We can expect a massive shift towards a carbon-free electricity system, huge pressure to reduce energy consumption and transport on the basis of renewable electricity. To make this shift in a manner that maintains, and in fact increases the EU's competitiveness, means that stimulating rapid technological development in these areas has to be a central part of the EU's energy policy. Indeed, this is at the heart of the question: how can the EU turn the challenges of climate change and energy security into an opportunity?
    Keywords: energy policy; electricity; electricity
    Date: 2009–03–15
  14. By: Wang, Limin; Kanji, Shireen; Bandyopadhyay, Sushenjit
    Abstract: Extreme weather events are known to have serious consequences for human health and are predicted to increase in frequency as a result of climate change. Africa is one of the regions that risks being most seriously affected. This paper quantifies the impact of extreme rainfall and temperature events on the incidence of diarrhea, malnutrition and mortality in young children in Sub-Saharan Africa. The panel data set is constructed from Demographic and Health Surveys for 108 regions from 19 Sub-Saharan African countries between 1992 and 2001 and climate data from the Africa Rainfall and Temperature Evaluation System from 1980 to 2001. The results show that both excess rainfall and extreme temperatures significantly raise the incidence of diarrhea and weight-for-height malnutrition among children under the age of three, but have little impact on the long-term health indicators, including height-for-age malnutrition and the under-five mortality rate. The authors use the results to simulate the additional health cost as a proportion of gross domestic product caused by increased climate variability. The projected health cost of increased diarrhea attributable to climate change in 2020 is in the range of 0.2 to 0.5 percent of gross domestic product in Africa.
    Keywords: Health Monitoring&Evaluation,Population Policies,Climate Change,Disease Control&Prevention,Global Environment Facility
    Date: 2009–06–01
  15. By: Valentina Bossetti; Carlo Carraro; Enrica De Cian; Romain Duval; Emanuele Massetti; Massimo Tavoni
    Abstract: This paper uses WITCH, an integrated assessment model with a game-theoretic structure, to explore the prospects for, and the stability of broad coalitions to achieve ambitious climate change mitigation action. Only coalitions including all large emitting regions are found to be technically able to meet a concentration stabilisation target below 550 ppm CO2eq by 2100. Once the free-riding incentives of non-participants are taken into account, only a “grand coalition” including virtually all regions can be successful. This grand coalition is profitable as a whole, implying that all countries can gain from participation provided appropriate transfers are made across them. However, neither the grand coalition nor smaller but still environmentally significant coalitions appear to be stable. This is because the collective welfare surplus from cooperation is not found to be large enough for transfers to offset the free-riding incentives of all countries simultaneously. Some factors omitted from the analysis, which might improve coalition stability, include the co-benefits from mitigation action, the costless removal of fossil fuel subsidies, as well as alternative assumptions regarding countries’ bargaining behaviour.<P>Incitations à participer à des coalitions internationales de lutte contre le changement climatique et stabilité de ces coalitions : Une analyse en théorie des jeux à l’aide du modèle WITCH<BR>Cet article utilise WITCH, un modèle d’évaluation intégré doté d’une structure en théorie des jeux, pour explorer les perspectives et la stabilité de larges coalitions de lutte contre le changement climatique. Il ressort que seules des coalitions incluant toutes les principales régions émettrices ont la capacité technique d’atteindre une cible de stabilisation des concentrations inférieure à 550 ppm CO2eq à l’horizon 2100. Une fois pris en compte les comportements de passager clandestin des régions non-participantes, seule une « grande coalition » regroupant pratiquement toutes les régions du monde est susceptible d’atteindre une telle cible. Cette grande coalition est profitable, impliquant qu’il est toujours possible de mettre en place un ensemble de transferts entre pays tel que tous gagnent à participer. Cependant, ni la grande coalition, ni des coalitions de moindre de taille mais néanmoins significatives d’un point de vue environnemental, n’apparaissent stables. Ceci tient au fait que le surplus collectif engendré par la coopération n’est pas suffisant pour permettre des transferts offrant à tous les pays simultanément les gains qu’ils tireraient d’un comportement de passager clandestin. Certains facteurs non pris en compte ici pourraient améliorer la stabilité des coalitions, tels les bénéfices connexes de la lutte contre le changement climatique, la possibilité de supprimer sans coût les subventions aux énergies fossiles, ou encore des hypothèses alternatives concernant le comportement de négociation des pays.
    Keywords: climate policy, politique climatique, climate coalition, coalition climatique, game theory, théorie des jeux, free riding, passager clandestin
    JEL: C68 C72 D58 Q54
    Date: 2009–06–30
  16. By: Graciela Chichilnisky
    Abstract: Equal treatment for the present and the future was required in two ax- ioms introduced in Chichilnisky [12] [15]. We provide a characterization of the decision criterion that satisfy the axioms and show that the two axioms are equivalent to physical limits in the long run future. We prove that maximizing discounted utility with a long run survival constraint is equivalent to maximizing a criterion that treats equally the present and the future. The equal treatment axioms are therefore the essence of sustainable development. The "weight" given to the long run future is here identi…ed with the marginal utility of the environmental asset along a path that narrowly misses extinction. An existence theorem is also pro- vided for optimizing according to the welfare criterion that treats equally the present and the future. We show that no prior welfare criteria satisfy the axioms for sustainable development introduced in [12].
    Date: 2009–06
  17. By: Hielke Buddelmeyer (Institute of Applied Economic and Social Research, The University of Melbourne); Nicolas Hérault (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Guyonne Kalb (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Mark van Zijll de Jong (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: This paper extends the 'top-down' framework, introduced by Robilliard et al. (2001), to link a computable general equilibrium (CGE) model to a microsimulation model. The proposed approach allows the linking of a microsimulation model to a dynamic, and not simply a static, CGE model by enabling the microsimulation model to reproduce the predicted long-term changes in the base population. The approach relies on altering the sample weights in order to reproduce population projections and the changes in employment as estimated by the CGE model. A particular effort is made to discuss the limitations arising from the various assumptions made in both models as well as in the linking process. As an illustrative example, the approach is applied to assess the effects of climate-change mitigation policies in Australia from 2005 to 2030 at five-yearly intervals.
    Date: 2009–03
  18. By: Carole Ropars-Collet; Philippe Le Goffe
    Abstract: [paper in French] Wild-boar can be considered both as a resource and as a pest. It causes collective damages and is also valued resource for recreative activity as hunting. The paper treats the economy of controlling a hunting game. A bio-economic model is presented and used for the analysis. The optimal population of big game is the one minimizing the present value of the hunter willingness to pay less agricultural damages with an infinite time horizon. We take into consideration the loss of the hunter welfare from a decrease in game population. For the empirical analysis, we used data on agricultural damages caused by wild-boar in order to reconstruct their population dynamics. Hunter marginal implicit prices for game hunting were estimated using the hedonic price method on a sample of hunting lease prices in eastern French forests. The long term equilibrium solutions can provide elements for optimal control strategies of wild-boar
    Keywords: bio-economic model, management, hunting, agricultural damages, hedonic approach
    JEL: Q2 Q57
    Date: 2009
  19. By: Qin, Pin (College of Environmental Sciences and Engineering, Peking University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Xu, Jintao (College of Environmental Sciences and Engineering, Peking University)
    Abstract: Various decentralization experiments are currently underway in the Chinese forestry sector. However, a key question often ignored by researchers and policy makers is what farmers really want from reform. This paper addresses this question using a survey-based choice experiment. We investigated farmers’ preferences for various property-rights attributes of a forestland contract. We found that farmers are highly concerned with what types of rights a contract provides. Reducing perceived risks of contract termination and introducing a priority right in the renewal of an old contract significantly increase farmers’ marginal willingness to pay (MWTP) for a forest contract. An extended waiting time for rights to harvest the forest reduces a farmer’s perceived value of a contract. Farmers are also concerned with the tenure length. In one region, the annual willingenss to pay for a 50-year contract is even higher than the annual willingness to pay for 25-year contract.<p>
    Keywords: China; Choice experiment; Forest; MWTP; Property rights
    JEL: D61 Q15 Q23 Q50 Q51
    Date: 2009–06–30
  20. By: Donald Siegel (School of Business University at Albany, SUNY)
    Abstract: This essay was written in response to the theme of this years Academy of Management Meeting, Green Management Matters. I assert that firms should adopt green management practices only if such activities complement the organizations business and corporate-level strategies and ultimately, enhance profitability or shareholder wealth. To illustrate this, I outline an economic/strategic perspective on green management practices, focusing on the strategic benefits and competitive dynamics associated with this activity. I also identify specific tactics firms can employ to achieve such strategic goals, as well as the functional areas affected by these decisions.
    Keywords: Green Management, Corporate-level Strategies, Profitability, Shareholder Wealth
    Date: 2009–05

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