nep-env New Economics Papers
on Environmental Economics
Issue of 2009‒10‒17
sixteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Health-enhancing activities and the environment:How competition for resources make the environmental policy beneficial By Xavier Pautrel
  2. The Place of Nature in Economic Development By Partha Dasgupta
  3. The Complexities of Decentralization in a Globalizing World By Stefanie Engel; Charles Palmer
  4. Environmental policy, education and growth: A reappraisal when lifetime is finite By Xavier Pautrel
  5. The dynamics of delinking in industrial emissions: The role of productivity, trade and R&D By Marin, Giovanni; Mazzanti, Massimiliano
  6. Environmental options and technological innovation: an evolutionary game model By Angelo Antocii; Simone Borghesi; Marcello Galeotti
  7. Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules By Raouf Boucekkine; Jacek B. Krawczyk; Thomas Vallée
  8. Paradox for Agro-Environmental Land Policy, A By Hennessy, David A.; Feng, Hongli
  9. Rights on what is left By Laurent-Lucchetti, Jérémy
  10. Over-exploitation of open-access natural resources and global indeterminacy in an economic growth model By Angelo Antocii; Marcello Galeotti; Paolo Russu
  11. The design of the Internal Energy Market in relation energy supply security and climate change By Vincent Rious
  12. Valutazione economica della biodiversità marina e costiera nel Nord Adriatico: situazione socio-economica dell’area considerata e trasferimento del beneficio By Marin, Giovanni
  13. Incentives for innovation and adoption of new technology under emissions trading By Mandell, Svante
  14. Les déterminants du prix du carbone sur le marché européen des quotas By Emilie Alberola; Julien Chevallier
  15. Bt Brinjal: Introducing Genetically Modified Brinjal (Eggplant/Aubergine) in Bangladesh By Mst. Meherunnahar; D. N. R. Paul
  16. Measuring the Social Recreation Per-Day Net Benefit of Wildlife Amenities of a National Park: A Count-Data Travel Cost Approach By Isabel Mendes; Isabel Proença

  1. By: Xavier Pautrel (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: In a two-period overlapping generations model, this paper demonstrates that the relationship between environmental taxation and economic activity (output level and output growth) becomes inverted-U shaped when the detrimental impact of pollution on health and the private decision of each working-age agent to improve her health are taken into account. In particular, a tighter environmental tax is more likely to promote (rather than to harm) output-level and -growth when health is very sensitive to pollution, the weight of health in preferences is high, the polluting capacity of the production technology is high and the rate of natural purification of pollutants is low. The inverted-U shaped relationship between environmental tax and economic activity is due to a positive effect arising from the competition for resources between the final output sector and the health-enhancing activities. This offsets the conventional detrimental “drag-down effect” for low values of the environmental tax. We also demonstrate that the link between environmental tax and lifetime welfare is inverted-U shaped as well. Finally, we investigate the social optimum and the determinants of the optimal environmental tax.
    Date: 2009
  2. By: Partha Dasgupta
    Abstract: Review of the most salient issues in ecological economics when the subject is applied to the field of economic development. The aim here has not been to be scholastic but to examine the lives of the world's poor so as to unearth the role of natural capital there. An account here of the processes that characterise human-nature interactions reads differently from the accounts in recent surveys of both development economics and environmental and resource economics are given. [SANDEE]
    Keywords: rural institutions, pollute, ecological economics, economic development, natural capital, human, nature, development econmics, environmental, resource, poor,
    Date: 2009
  3. By: Stefanie Engel (IED Institute for Environmental Decisions, ETH Zurich); Charles Palmer (Department of Geography and Environment, London School of Economics and Political Science (LSE), London, UK)
    Abstract: In many developing countries, decentralization programmes for natural resource management aim to induce incentives for sustainable resource management at the local level. The effectiveness of such programmes has, however, suffered from weak property rights to the resource and by the presence of externalities. Growing economic integration among countries has exacerbated these problems by increasing the exposure of local user groups to commercial actors interested in resource extraction. In this paper, the interplay of decentralization and globalization in affecting environmental outcomes and community welfare is analysed through a game-theoretic model of community-firm interactions. The results highlight the complexities of policy design. First, by raising the extractive value of the resource, globalization may lead to communities negotiating resource extraction agreements with firms. Second, with a lack of effective state enforcement of community resource rights, communities may be unable to assume de facto ownership over the resource, while commercial actors succeed in exploiting resources without community consent. No single policy option provides a panacea to counteracting these negative effects. Instead, a mix of policies, combining incentive payments along with the provision of more secure property rights and poverty alleviation is shown to have the potential to improve both environmental outcomes and community welfare.
    Keywords: Bargaining, decentralization, globalization, natural resources, poverty, property rights, self-enforcement
    Date: 2009–09
  4. By: Xavier Pautrel (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: This article demonstrates that when finite lifetime is introduced in a Lucas (1988) growth model where the source of pollution is physical capital, the environmental policy may enhance the growth rate of a market economy, while pollution does not influence educational activities, labor supply is not elastic and human capital does not enter the utility function. The result arises from the “generational turnover effect” due to finite lifetime. It remains valid under conditions when the education sector uses final output besides time to accumulate human capital. Nevertheless, it does no longer hold when the source of pollution is output. Furthermore, this article demonstrates that ageing reduces the positive influence of the environmental policy when growth is driven by human capital accumulation à la Lucas (1988) and lifetime is finite. It also confirms for finite lifetime the result found by Vellinga (1999) with a single representative agent: environmental care does not influence optimal growth when utility is additive and pollution does not influence the ability of agents to be educated.
    Date: 2009
  5. By: Marin, Giovanni; Mazzanti, Massimiliano
    Abstract: This paper provides new empirical evidence on delinking / Environmental Kuznets Curves (EKC) for greenhouse gases and other air pollutant emissions in Italy. We analysed a panel dataset based on the Italian NAMEA for 1990-2005 with a specific focus on industry. We integrated the emission-income NAMEA with data on trade openness and R&D expenditures. The highly disaggregated dataset provides a large heterogeneity and can help to overcome the shortcomings of the usual approach to EKC based on cross-country data. We use in this paper CO2, SOx, NOx and PM10 as objects of investigation. We use as empirical models of reference both a standard EKC model and a STIRPAT/IPAT model. Our results show that looking at sector evidence, both decupling and then eventually re-coupling trends could emerge along the path of economic development. The analysis of how stagnation periods affect environmental performances is also of interest.
    Keywords: NAMEA; trade openness; labour productivity; EKC; STIRPAT
    JEL: Q55 C23 Q56 O40
    Date: 2009
  6. By: Angelo Antocii (Universita' degli Studi di Sassari); Simone Borghesi (Universita' degli Studi di Siena); Marcello Galeotti (Dipartimento di Matematica per le Decisioni, Universita' degli Studi di Firenze)
    Abstract: This paper analyzes the effects on economic agents’ behaviour of an innovative environmental protection mechanism that the Public Administration of a tourist region may adopt to attract visitors while protecting the environment. On the one hand, the Public Administration sells to the tourists an environmental call option that gives them the possibility of being (partially or totally) reimbursed if the environmental quality in the region turns out to be unsatisfactory (i.e. below a given threshold level). On the other hand, it offers the firms that adopt an innovative, non-polluting technology an environmental put option that allows them to get a reimbursement for the additional costs imposed by the new technology if the environmental quality is sufficiently good (i.e. above the threshold level).The aim of the paper is to study the dynamics that arises with this financial mechanism from the interaction between the economic agents and the Public Administration in an evolutionary game context.
    Keywords: environmental bonds, call and put options, technological innovation, evolutionary dynamics
    JEL: C73 H23 Q55
    Date: 2009–10
  7. By: Raouf Boucekkine (Department of economics and CORE - Université Catholique de Louvain); Jacek B. Krawczyk (Victoria University of Wellington - University of Wellington); Thomas Vallée (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: Consider a country with two regions that have developed differently so that their current levels of energy efficiency differ. Each region's production involves the emission of pollutants, on which a regulator might impose restrictions. The restrictions can be related to pollution standards that the regulator perceives as binding the whole country (e.g., imposed by international agreements like the Kyoto Protocol). We observe that the pollution standards define a common constraint Upon the joint strategy space of the regions. We propose a game theoretic model with a coupled constraints equilibrium as a solution to the regulator's problem of avoiding excessive pollution. The regulator can direct the regions to implement the solution by using a political pressure, or compel them to employ it by using the coupled constraints' Lagrange multipliers as taxation coefficients. We specify a stylised model of the Belgian regions of Flanders and Wallonia that face a joint constraint, for which the regulator wants to develop a sharing rule. We analytically and numerically analyse the equilibrium regional production levels as a function of the pollution standards and of the sharing rules. We thus provide the regulator with an array of equilibria that he (or she) can select for implementation. For the computational results, we use NIRA, which is a piece of software designed to min-maximise the associated Nikaido-Isoda function.
    Date: 2009
  8. By: Hennessy, David A.; Feng, Hongli
    Abstract: A regulator with a fixed budget to spend on securing environmental benefits from farmed land has to choose between how many acres to enroll and the extent of benefits to require of each enrolled acre. Here we consider, given heterogeneous land, what properties of the environmental benefit-to-cost ratio imply for the choice of optimal program as the available budget varies. Conditions are found such that a program of high benefits on few acres is preferred for any budget level. It is also possible that a program delivering low benefits per acre at low cost is preferred on each land type, and yet a high benefit program is optimal policy, a variant of Simpson’s paradox.
    Keywords: benefit-to-cost ratio, environmental policy, land heterogeneity, Simpson’s paradox.
    Date: 2009–10–05
  9. By: Laurent-Lucchetti, Jérémy
    Abstract: Allocating property rights on an open access resource which has been freely exploited in the past is often very problematic. Involved agents typically rely on one of two competing principles to determine future allocation: grandfathering or historical accountability. One prominent example is the case of allocating property rights over $CO_2$ emissions: developed countries typically argue that they should not be penalized for their high volumes of past emissions, because it simply translates their more intense economic development history (claim for a "grandfathering" allocation) while developing countries typically argue that they should obtain more property rights because of their future needs (claim for "historical accountability"). We construct a simple model inspired by the claims problem literature to show that these two positions are in fact compatible: they define bounds to the set of possible allocations. We explicit a family of methods which meets these bounds and characterize the two extreme points of this family: the equal sharing and the uniform gains methods.
    Keywords: Property rights allocation; environmental economics; climate change; international agreement; distributive justice.
    JEL: D3 D6 Q3 Q2
    Date: 2009–09
  10. By: Angelo Antocii (Universita' degli Studi di Sassari); Marcello Galeotti (Dipartimento di Matematica per le Decisioni, Universita' degli Studi di Firenze); Paolo Russu (Universita' degli Studi di Sassari)
    Abstract: In this paper we use global analysis techniques to investigate an economic growth model with environmental negative externalities, giving rise to a three-dimensional dynamic system (the framework is the one introduced by Wirl (1997)). The dynamics of our model admits a locally attracting steady state which is, in fact, a poverty trap, coexisting with another steady state possessing saddle-point stability. Global dynamical analysis shows that, under some conditions on the parameters, if the economy state variables are close enough to those of the attractive point, then there exists a continuum of equilibrium orbits approaching the poverty trap and one orbit approaching the saddle-point.
    Keywords: environmental externalities, indeterminacy, history versus expectations, global analysis of dynamic systems
    JEL: C61 C62 E13 E32 O13
    Date: 2009–10
  11. By: Vincent Rious (SUPELEC-Campus Gif - SUPELEC)
    Abstract: The Clingendael International Energy Programme (CIEP), the Loyola de Palacio Chair on EU Energy Policy of the Robert Schuman Centre of Advanced Studies (European University Institute), the Fondazione Eni Enrico Mattei (FEEM) and Wilton Park Conferences (WPC) organize a four-tier program for discussing the potential for a smart EU Energy Policy. The Florence workshop is then the first one in a series of four where academics will discuss the various interactions between the three objectives of the EU Energy Policy with stakeholders from governments, regulators and the industry. This workshop adressed the internal energy market design and its consequences for energy supply security and climate change policies. The workshop gathered over on day and a half 42 experts to discuss current problems and possible solutions for a smart EU Energy Policy.
    Keywords: Smart energy policy; 3rd EU directive; Market design; Renewable energy; gas reform
    Date: 2009–07–31
  12. By: Marin, Giovanni
    Abstract: This report assess the monetary valuation of non-use values of marine and coastal biodiversity in North Adriatic Sea by using the technique of the benefit transfer. In addition to non-use values, it is possible to infer to use values through the analysis of economic activities and phenomena linked to marine and coastal biodiversity.
    Keywords: Biodiversity; benefit transfer
    JEL: Q51 Q57
    Date: 2009–07
  13. By: Mandell, Svante (vti - Swedish National Road & Transport Research Institute)
    Abstract: A common claim in both the public and academic debate is that a tradable emission permits scheme does not provide sufficient incentives for R&D investments. The present paper addresses R&D investments and penetration rates of new technology focusing on the specific characteristics of a tradable permits market. It is showed that a complex dependency between the emissions cap, the market price for emission permits, the price for technology once it is developed and the R&D investment decision add an additional layer to the ‘traditional’ market failures associated with R&D. Even though the cap and how it is calibrated in response to the introduction of new technology is shown to be of importance both for the level of R&D investment and the technology’s penetration rate, we argue that the policy maker’s ability to use the cap to counter market failures in the R&D stage is limited. This is due to a dynamic inconsistency problem where the policy maker is unable to credibly commit to a future policy that is more stringent than motivated by efficiency concerns given the then existing technology. Such a policy may not be stringent enough to cover the necessary R&D investments.
    Keywords: Tradable permits; Innovation; R&D; Policy; Dynamic inconsistency
    JEL: L51 O31 Q55 Q58
    Date: 2009–10–09
  14. By: Emilie Alberola (Mission Climat Caisse des Dépôts - Université Panthéon-Sorbonne - Paris I); Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: L'article examine le développement du prix du carbone en Europe de 2005 à 2009 et ses fondamentaux, avant de fournir les préceptes essentiels pour les négociations de Copenhague. L'expérience unique du marché européen du CO2 éclairera les négociations sur un point majeur : la fixation du prix du carbone. Les négociateurs doivent retenir trois éléments : la liquidité du marché est soutenue par les acteurs financiers ; les prix du carbone s'ajustent à la contrainte relative qui pèse sur les acteurs ; et un signal-prix de long terme est indispensable pour les décisions d'investissement des industriels.
    Keywords: Prix du CO2; Marchés de l'énergie; EU ETS
    Date: 2009–10–08
  15. By: Mst. Meherunnahar (Coastal and Bio-diversity Project, Department of Environment (DoE)); D. N. R. Paul (Atish Dipankar University of Science & Technology (ADUST))
    Abstract: Brinjal, also known as eggplant and aubergine, is Bangladesh’s third most important vegetable in terms of both yield and area cultivated. It is only surpassed by potatoes and onions. However, the yield of brinjal could be much higher would it not be decimated by the brinjal shoot and fruit borer, which is the most destructive insect pest in South and South East Asia. Genetically modified brinjal (Bt brinjal) has the potential to bump up agricultural productivity in Bangladesh and other countries. This paper provides a brief overview of Bangladesh’s vegetable sector and reviews the key issues of introducing Bt brinjal in Bangladesh. It summarizes the results of recent research undertaken in Bangladesh on the environmental safety of Bt brinjal and concludes that Bt brinjal could make a significant contribution to Bangladesh’s agricultural sector and more broadly, Bangladesh’s economy and living standards.
    Keywords: brinjal, GM food, agriculture, Bangladesh, eggplant
    Date: 2009–10
  16. By: Isabel Mendes; Isabel Proença
    Abstract: We applied count-data travel cost methods to a truncated sample of visitors, to estimate the average CS per each day of visit of an individual, visiting the Peneda-Gerês National Park to enjoy their natural facilities for recreation purposes. As the recreation demand was measured in number of days of stay in the park the behaviour of the dependent variable is very specific. To overcome this situation, we propose the use of altered truncated count data models or truncated count data models on grouped data because we found they were better adjusted to our data set. The average individual CS per day is estimated to be €194 varying between €116 and €448, with Simulated Limits. This information is useful in the formulation of government policy relating directly to national parks and conservation and the determination of future natural park management. To our knowledge this is the first attempt to measure the average recreation net benefits per each day of stay supported by a national park, by using truncated altered and truncated grouped count data Travel Cost Model based on the observation of individual (not household) number of days of stay.
    Keywords: Social Recreation Benefits; Wildlife Amenities; Count Data Models; Travel Cost.
    JEL: C3 D1 D4 Q2
    Date: 2009–10

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