nep-env New Economics Papers
on Environmental Economics
Issue of 2009‒10‒31
seventeen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Eastern Europe and the former Soviet Union since the fall of the Berlin Wall: Review of the changes in the environment and natural resources By Markandya, Anil; Chou, Wan Jung
  2. The Environment and Directed Technical Change By Daron Acemoglu; Philippe Aghion; Leonardo Bursztyn; David Hemous
  3. Evaluation of post Kyoto GHG emission reduction paths By Ciscar, Juan Carlos; Paroussos, Leonidas; Van Regemorter, Denise
  4. Price Floors for Emissions Trading By Peter J Wood; Frank Jotzo
  5. Unilateral Measures and Emissions Mitigation By Shurojit Chatterji; Sayantan Ghosal; Sean Walsh; John Whalley
  6. The European Union’s Emission Trading Scheme: Political Economy and Bureaucratic Rent-Seeking By Mallard, Graham
  7. European Policies towards Palm Oil - Sorting Out some Facts By Gernot Pehnelt; Christoph Vietze
  8. Renewable Resource Management with Alternative Sources: the Case of Multiple Aquifers and a "Backstop" Resource By James Roumasset; Christopher Wada
  9. Mega projects in India Environmental and Land Acquisition Issues in the Road Sector By G. Raghuram,Samantha Bastian,Satyam Shivam Sundaram
  10. Institutions and the environment: the case for a historical political economy By Ali DOUAI (GREThA UMR CNRS 5113); Matthieu MONTALBAN (GREThA UMR CNRS 5113)
  11. Patents as a Measure for Eco-Innovation By Vanessa OLTRA (GREThA UMR CNRS 5113); René KEMP (University of Maastrich); Frans P. de VRIES (University of Stirling)
  12. Climate Change and China: Technology, Market and Beyond By Dale Jiajun Wen
  13. The Values of Natural and Constructed Wetlands: A Meta-Analysis By Andrea Ghermandi; Jeroen C.J.M. van den Bergh; Luke M. Brander; Henri L.F. de Groot; Paulo A.L.D. Nunes
  14. Costing Water Quality Improvements with auction mechanisms: case studies for the Great Barrier Reef in Australia By John Rolfe; Jill Windle
  15. Valuation of Marine Ecosystem Threshold Effects: Application of Choice Experiments to Value Algal Bloom in the Black Sea Coast of Bulgaria By Taylor, Timothy; Longo, A.
  16. Managing Knowledge, Creating Networks andTriggering Innovations for Sustainable Agriculture By Anil K Gupta
  17. On the Theory of Exhaustible Resources: Ricardo vs. Hotelling By Heinz D. Kurz; Neri Salvadori

  1. By: Markandya, Anil; Chou, Wan Jung
    Abstract: This paper reviews the environmental record of the transition countries of Eastern Europe and Central Asia since the fall of the Berlin Wall, with a focus on areas of key concern to public policy at the present time. With the impacts of environment on public health being given the highest priority, we examined several associated health indicators at the national level, as well as looking at important environmental issues at the local level. In this respect, we focus on environmental problems related to air and water quality, land contamination, and solid waste management. Despite showing a highly differentiated performance across the region, the results suggest that inadequate environmental management seen in several of the transition countries in the past 20 years has put people’s health and livelihood under huge threats. Moreover, this paper looks at the development of policy responses and resources, i.e. environmental expenditures, in these countries, during the process of transiting from centrally planned economies to market-based one. Similarly, we identify various degrees of progress across the region. The findings reinforce the need for better coherence between national environmental expenditure and international environmental assistance, as well as the actual enforcement of national regulations and international agreements in those non-EU transition countries.
    Keywords: transition countries; environmental issues; public health; land contamination; air pollution; water pollution; policy; environmental expenditure
    Date: 2009
  2. By: Daron Acemoglu; Philippe Aghion; Leonardo Bursztyn; David Hemous
    Abstract: This paper introduces endogenous and directed technical change in a growth model with environmental constraints and limited resources. A unique final good is produced by combining inputs from two sectors. One of these sectors uses "dirty" machines and thus creates environmental degradation. Research can be directed to improving the technology of machines in either sector. We characterize dynamic tax policies that achieve sustainable growth or maximize intertemporal welfare, as a function of the degree of substitutability between clean and dirty inputs, environmental and resource stocks, and cross-country technological spillovers. We show that: (i) in the case where the inputs are sufficiently substitutable, sustainable long-run growth can be achieved with temporary taxation of dirty innovation and production; (ii) optimal policy involves both "carbon taxes" and research subsidies, so that excessive use of carbon taxes is avoided; (iii) delay in intervention is costly: the sooner and the stronger is the policy response, the shorter is the slow growth transition phase; (iv) the use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire when the two inputs are substitutes. Under reasonable parameter values (corresponding to those used in existing models with exogenous technology) and with sufficient substitutability between inputs, it is optimal to redirect technical change towards clean technologies immediately and optimal environmental regulation need not reduce long-run growth. We also show that in a two-country extension, even though optimal environmental policy involves global policy coordination, when the two inputs are sufficiently substitutable environmental regulation only in the North may be sufficient to avoid a global disaster.
    JEL: C65 O30 O31 O33
    Date: 2009–10
  3. By: Ciscar, Juan Carlos; Paroussos, Leonidas; Van Regemorter, Denise
    Abstract: Climate change has become a critical issue in the international policy making agenda. At the UNFCC conference in Bali 2007, countries decided on a roadmap to achieve a ‘secure climate future’. Given the commitment to limit the temperature increase to 2° Celsius relative to the preindustrial levels, the EU decided in March 2007, as a first step, a 20% reduction of its GHG emissions by 2020, going to 30% if a comprehensive international agreement can be reached. This study uses the multi-sector multi-region world model GEM-E3 in order to identify the world economic implications of different participation schemes for post Kyoto. The scenarios reported in this paper have contributed to the EU communication on ‘Limiting Global Change to 2° Celsius the way ahead to 2020 and beyond’.
    Keywords: Climate change; Computable general equilibrium modeling; Emission reduction;
    JEL: D58 Q54 Q43
    Date: 2009–04
  4. By: Peter J Wood (Research School of Pacific and Asian Studies,College of Asia and Pacific, Australian National University); Frank Jotzo (Research School of Pacific and Asian Studies,College of Asia and Pacific, Australian National University)
    Abstract: Price floors in greenhouse gas emissions trading schemes can have advantages for technological innovation, price volatility, and management of cost uncertainty, but implementation has pitfalls. We argue that the best mechanism for implementing a price floor is by way of firms paying an extra fee or tax. This has budgetary advantages and is more compatible with international permit trading than alternative approaches that dominate the academic and policy debate. The fee approach can also be used to implement more general hybrid approaches to emissions pricing.
    Keywords: Price floor; price ceiling; carbon tax; emissions trading; carbon pricing; price and quantity controls; Waxman-Markey Bill.
    Date: 2009–10
  5. By: Shurojit Chatterji; Sayantan Ghosal; Sean Walsh; John Whalley
    Abstract: We discuss global climate mitigation that builds on existing unilateral measures to cut emissions. We document and discuss the rationale for such unilateral measures argue that such measures have the potential to generate positive spillover effects both within and across countries. In a simple dynamic model of learning we show that while single countries on their own may never get to the point of switching completely to low emission activities, a learning process with positive spillovers across nations is more likely to deliver a global switch to low emissions. We discuss the key features of a new global Intellectual Property (IP) regime that builds on the positive spillovers inherent in unilateral initiatives and accelerates global convergence to low emissions.
    JEL: F53 Q50 Q54
    Date: 2009–10
  6. By: Mallard, Graham
    Abstract: A political economy model is presented that proposes an effective explanation as to why national allocation plans in the emissions trading scheme of the European Union have taken the form they have. The influence of the national bureaucracy, which is omitted in the majority of the related political economy literature, is shown to be potentially significant and costly – particularly through its interaction with the influence of the affected industrialists. The analysis suggests that the role of the national bureaucracy in the design of environmental policy should be carefully considered and structured, and suggests an avenue of potentially important and fruitful future research.
    Date: 2009
  7. By: Gernot Pehnelt (GlobEcon); Christoph Vietze (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: This paper analyses the role of palm oil and its sustainability from different perspectives. We consider the role of palm oil within the GHG context. We discuss the impact of palm oil on biodiversity and analyse how palm oil can contribute to economic growth and development in tropical countries. Finally, based on this analysis, we assess the current concerns about and politics towards palm oil with special focus on the EU. Palm oil is a low-energy and low-fertilizer crop that offers much higher yields per hectare than other oil crops. Furthermore, if the energy obtained by the residuals in the production process is used properly, the energy balance of palm oil production is much more favourable compared to other biofuels. Overall, palm oil turns out to be much more efficient than other oil crops and therefore offers significant advantages within the context of GHG savings. Contrary to some recent campaigns and the perception among European citizens, oil palm plantings are not a major contributor to deforestation in tropical countries. Deforestation associated with oil palm plantings is much less significant than postulated by some recent campaigns. Furthermore, biodiversity in oil palm plantations is much higher than in most monocultures in the EU. Palm oil is an important driver of economic development and growth in tropical countries and contributes to the reduction of poverty and hunger in the developing world. The EU Renewable Energy Directive is discriminatory from the outset and the GHG saving values and their interpretation are based on wrong assumptions and faulty calculations. Therefore, the EU should reshape its policies towards palm oil, conduct objective and non-discriminatory calculations regarding the GHG emissions saving values and support palm oil imports from developing countries rather than restricting them. Together with certain initiatives to further enhance energy efficiency and to protect precious habitats combined with strategies to strengthen property rights and encourage efficient land use and successful strategies of agricultural development, this would not only prevent political conflicts and trade disputes in conjunction with the issue of palm oil but also foster economic growth and development, reduce poverty and - not least - contribute to the ambitious GHG emissions savings goals on a fair and reasonable basis.
    Keywords: Renewable Energy, Palm Oil, Biodiversity, Sustainable Development, Environmental Policy
    JEL: F14 F18 O13 Q01 Q15 Q27 Q56 Q57
    Date: 2009–10–28
  8. By: James Roumasset (Department of Economics, University of Hawaii at Manoa); Christopher Wada (Department of Economics, University of Hawaii at Manoa)
    Abstract: While renewable resource economics is typically confined to one source and one aggregate demand, resource managers must often decide how to manage multiple sources of a resource simultaneously. In addition, studies of extraction sequencing are typically confined to non-renewable resources. We propose a dynamic optimization model to determine the efficient allocation of groundwater when two coastal aquifers are available for exploitation. We find that Herfindahl’s least-cost-first result for nonrenewable resources does not necessarily apply to renewable resources, even when there is only one demand. Along the optimal trajectory extraction may switch from single to simultaneous use, depending on how the marginal opportunity cost of each resource evolves over time. A numerical simulation for the South Oahu aquifer system, which allows for differentiation of users by elevation and hence distribution costs, illustrates the switching behavior.
    Keywords: Renewable resources, dynamic optimization, multiple resources
    JEL: Q25 Q28 C61
    Date: 2009–10–14
  9. By: G. Raghuram,Samantha Bastian,Satyam Shivam Sundaram
    Abstract: Mega projects (primarily infrastructure) receive a sizable investment (~10%) of the gross fixed capital formation in India. Environmental clearances and land acquisitions have been the two major reasons for delays in the projects. However, there has been a steady increase in the proportion of projects running on schedule and a sharp decline in the proportion of projects with cost overruns. These accomplishments have been achieved due to better financing, project management, and reform in the regulatory frameworks related to environmental and land acquisition aspects.
    Date: 2009–03–16
  10. By: Ali DOUAI (GREThA UMR CNRS 5113); Matthieu MONTALBAN (GREThA UMR CNRS 5113)
    Abstract: This paper provides a critical review of the ‘state of the art’ of institutional analysis applied essentially by social-ecological economists in the environmental domain. It highlights both areas of strength and issues where there is still room for improvement in analytical terms, by construing these approaches in the context of a general taxonomy of institutionalisms – widely used in politics and applied here in the economic realm. This provides the rationale for re-construing a number of related issues drawn from the core insights of a historical institutionalist approach to human-nature.
    Keywords: Ecological economics, institutional analysis, socio-economy, regulation
    JEL: Q01 Q57 B52 P16
    Date: 2009
  11. By: Vanessa OLTRA (GREThA UMR CNRS 5113); René KEMP (University of Maastrich); Frans P. de VRIES (University of Stirling)
    Abstract: This paper examines the usefulness of patent analysis for measuring eco-innovation. The overall conclusion is that patents are a useful means for measuring environmentally motivated innovations, such as pollution control technologies and green energy technologies, and for general purpose technologies with environmental benefits. For these types of innovations it is acceptable to use patent analysis, provided they are carefully screened. Patent analysis may be used for measuring five attributes of eco-innovation: (1) eco-inventive activities in specific technology fields, (2) international technological diffusion, (3) research and technical capabilities of companies, (4) institutional knowledge sources of eco-innovation, and (5) technological spillovers and knowledge flows. Up until now it is mainly used for measuring eco-inventive activity.
    Keywords: Eco-innovation, patents
    JEL: C81
    Date: 2009
  12. By: Dale Jiajun Wen
    Abstract: The paper discusses the impacts of climate change to the environment of China and most especially to the livelihood of Chinese people there. It analyzed the Chinese government’s position and enumerates the measures that China has taken so far, as well as the commitments and concrete targets that it pledged to undertake. It explains China’s stance on the climate change negotiations; its arguments and considerations concerning its role to the international community; and its responsibilities to address its many domestic pressures in relation to geopolitics, the financial crisis, as well as global trade and technology issues. [FGS OP No. 6].
    Keywords: china, climate change, chinese, negotiations, international community, global trade, financial crisis, geopolitics, livelihood
    Date: 2009
  13. By: Andrea Ghermandi (Zuckerberg Institute for Water Research, Ben-Gurion University of the Negev, Israel); Jeroen C.J.M. van den Bergh (Universitat Autonoma de Barcelona); Luke M. Brander (Institute for Environmental Studies); Henri L.F. de Groot (VU University Amsterdam); Paulo A.L.D. Nunes (Fondazione Eni Enrico Mattei)
    Abstract: The values of goods and services provided by natural and constructed wetlands are examined through a meta-analysis of 418 observations of the economic value of 186 wetlands. Water quality improvement, non-consumptive recreation, and provision of natural habitat and biodiversity turn out to be highly valued services. Substitution effects are observed through the negative correlation between values and proximity to other wetlands. Values are found to increase with anthropogenic pressure. Constructed wetlands are highly valued for biodiversity enhancement, water quality improvement, and flood control. This study provides a substantially new contribution in relation to previous meta-analyses of the wetland valuation literature.
    Keywords: constructed ecosystems; economic valuation; constructed wetlands; meta-regression; wetland values
    JEL: C81 Q24
    Date: 2009–09–17
  14. By: John Rolfe (Faculty of Business and Informatics, Central Queensland University.); Jill Windle (Centre for Environmental Management at Central Queensland University)
    Abstract: Australian governments continue to commit significant resources to the protection of the Great Barrier Reef, with funding for Reef Rescue aimed at reducing the impacts of agricultural production on water quality. A key challenge for policy makers is to identify where funding can be efficiently allocated, as information about both the costs and benefits of different proposals is limited. While there is adequate information about the costs of different inputs for reducing water quality, there is much more limited information about the costs of achieving different outputs.The use of water quality tenders to reveal the opportunity costs of changing agricultural practices can help policy makers to understand the potential costs of misallocating public resources and to design better ways of achieving water quality improvements. This role of water quality tenders to reveal opportunity costs is demonstrated by reporting four pilot applications to improve water quality into the Great Barrier Reef in Australia. The results demonstrate the potential for opportunity costs to vary substantially between agricultural producers, and across industries, catchments and pollutants.
    Keywords: auctions, conservation tenders, market based instruments, water quality
    Date: 2009–08
  15. By: Taylor, Timothy; Longo, A.
    Abstract: Algal bloom arises in part from anthropogenic emissions of nutrients into the coastal zone. Increased interest in water quality in coastal and marine areas stemming from the Water Framework Directive and the Marine Strategy Framework Directive leads to important questions in terms of policies to address nutrient loadings. This paper presents the results from a choice experiment for the valuation of algal blooms in Varna Bay, Bulgaria. Varna Bay is an important tourist destination and a large port city on the Black Sea coast of Bulgaria. Algal bloom events have been experienced frequently in this area. A choice experiment questionnaire was developed to be applied in Varna Bay. The key attributes used were visibility, duration of bloom and the amount of congestion on the beach. The amount of bloom is found to be important - respondents are willing to pay for a program that entails 1 week of algal bloom about 33 Leva (s.e. 8.09) when there is high visibility; 21 Leva (s.e. 5.75) with medium visibility and 9 Leva (s.e. 3.48) with low visibility. Respondents are willing to pay more for programs that offer shorter duration of algal bloom. The marginal price for one metre of extra space between the respondent and the nearest person is equal to 0.38 Leva.
    Keywords: marine ecosystem; threshold effects;
    Date: 2009
  16. By: Anil K Gupta
    Abstract: Conventional agricultural extension approaches have ceased to be of much effect in transforming agricultural productivity and meeting the goals of sustainable natural resource management. Multi agency approach using multimedia, multi language and multi channel is imperative. Ministry of Agriculture has realized the need for transition but the models for the purpose remain to be developed.
    Date: 2009–03–12
  17. By: Heinz D. Kurz; Neri Salvadori
    Abstract: The paper compares, and eventually combines, the approaches of Harold Hotelling and David Ricardo to the theory of exhaustible resources. It is argued that Hotelling and Ricardo had in mind worlds that differ in important respects. According to Ricardo the exploitation of deposits of resources is typically subject to capacity constraints which necessitate the working of differently fertile mines side by side and which imply that the classical theory of differential rent applies. Hotelling on the other hand assumed that the amount of the resource that can be extracted in a given period of time is only constrained by the amount of it left over from the preceding period; his emphasis was therefore on royalties and not differential rent. A model is then elaborated which brings together the insights of both authors and allows one to trace relative prices and income distribution over time.
    Date: 2009–09

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.