nep-env New Economics Papers
on Environmental Economics
Issue of 2010‒01‒30
twenty papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Market-Based Approaches to Environmental Management: A Review of Lessons from Payment for Environmental Services in Asia By Bhim Adhikari
  4. Carbon Emission Values in Cost Benefit Analyses By Mandell, Svante
  5. Incentives to invest in abatement technology. A tax versus emissions trading under imperfect competition By Halvor Briseid Storrøsten
  6. Pursuing Green Growth- Some Conflicts and Necessary Conditions for a Pragmatic Environmental Policy By Euston Quah
  7. Testing Value vs Waiting Value in Environmental Decisions under Uncertainty By Giuseppe Attanasi; Aldo Montesano
  8. Environmental and Resource Management under Myopia By Tomoki Fujii
  9. On the Relation Between the Endogenous Growth Rate of the Economy and the Dynamics of Renewable Resources By José Manuel Madeira Belbute; Paulo Brito
  10. Mapping drought patterns and impacts: a global perspective By Eriyagama, Nishadi; Smakhtin, Vladimir; Gamage, Nilantha
  11. Can Global De-Carbonization Inhibit Developing Country Industrialization? By Aaditya Mattoo
  12. Climate Variability, SCF, and Corn Farming in Isabela, Philippines- a Farm and Household Level Analysis By Celia M. Reyes; Sonny N. Domingo; Christian D. Mina; Kathrina G. Gonzales
  13. Eco-innovation - putting the EU on the path to a resource and energy efficient economy By Bleischwitz, Raimund
  14. Assessing the Value of SCFs on Farm-level Corn Production through Simulation Modeling By Celia M. Reyes; Kathrina G. Gonzales; Canesio D. Predo; Rosalina G. de Guzman
  15. Profitable Use of SCF in a Policy Context- the Case of Rice Stockholding in the Philippines By Celia M. Reyes; Christian D. Mina
  16. Willingness to Pay for Biodiversity Conservation By Amit K. Bhandari; Almas Heshmati
  17. Stochastic Switching Games and Duopolistic Competition in Emissions Markets By Michael Ludkovski
  18. Policy Study on the National and Local Government Expenditures for Millennium Development Goals, 2000–2005 By Rosario G. Manasan
  19. Jump-diffusion modeling in emission markets By K. Borovkov; G. Decrouez; J. Hinz
  20. Improving the Business Climate in NTT- The Case of Agriculture Trade in West Timor By Widjajanti Isdijoso Suharyo; Sudarno Sumarto; Nina Toyamah; Adri Poesoro; Bambang Sulaksono; Syaikhu Usman; Vita Febriany; Harry D.J. Foenay; Rowi Kaka Mone; Thersia Ratu Nubi; Yakomina W. Nguru

  1. By: Bhim Adhikari
    Abstract: Market-based approaches to environmental management, such as payment for environmental services (PES), have attracted unprecedented attention during the past decade. PES policies, in particular, have emerged to realign private and social benefits such as internalizing ecological externalities and diversifying sources of conservation funding as well as making conservation an attractive land-use paradigm. In this paper, we review several case studies from Asia on payment for environmental services to understand how landowners decide to participate in PES schemes. [WP 134].
    Keywords: market-based, Aisa, ecological externalities, conservation, landowners, payment, environmental services, management, transaction costs, household, community, communications, PES, local inhabitant, livelihoods
    Date: 2010
  2. By: Yan Dong; John Whalley (Institute of World Economics & Politics)
    Abstract: This paper discusses both the potential contribution that trade policy initiatives can make towards the achievement of significant global carbon emissions reduction and the potential impacts of proposals now circulating for carbon reduction motivated geographical trade arrangements, including carbon free trade areas. We first suggest that trade policy is likely to be a relatively minor consideration in climate change containment. The dominant influence on carbon emissions globally for next several decades will be growth more so than trade and its composition, and in turn, the size of trade seemingly matters more than its composition given differences in emission intensity between tradables and nontradables. We also note that differences in emissions intensity across countries are larger than across products or sectors and so issues of country discrimination in trade policy (and violations of MFN) arises. We next discuss both unilateral and regional carbon motivated trade policy arrangements, including three potential variants of carbon emission reduction based free trade area arrangements. One is regional trade agreements with varying types of trade preferences towards low carbon intensive products, low carbon new technologies and inputs to low carbon processes. A second is the use of joint border measures against third parties to counteract anti-competitive effects from groups of countries taking on deeper emission reduction commitments. A third is third country trade barriers along with free trade or other regional trade agreements as penalty mechanisms to pressure other countries to join emission reducing environmental agreements. We differentiate among the objectives, forms and possible impacts of each variant. We also speculate as to how the world trading system may evolve in the next few decades as trade policy potentially becomes increasingly dominated by environmental concerns. We suggest that the future evolution of the trading system will likely be with environmentally motivated arrangements acting as an overlay on prevailing trade and financial arrangements in the WTO and IMF, and eventually movement to linked global trade and environmental policy bargaining.
    Keywords: carbon, trade policy, WTO, regional trade agreements, trade barriers, anti-competitive effects
    JEL: F13 F14 F10
    Date: 2010–01
  3. By: Huifang Tian; John Whalley (Institute of World Economics & Politics)
    Abstract: In the paper we discuss China's participation in both the 2009 Copenhagen negotiations on a post-Kyoto global climate change regime currently under way and out beyond Copenhagen in further negotiations likely to follow. China is now both the largest and most rapidly growing carbon emitter, and has much higher emission intensity relative to GDP than OECD countries. In the Copenhagen negotiation, there will be strong pressure on China to take on emissions reduction commitments and China's concern will be to do so in ways that allow continuation of a high growth rate and fast development. Central to this will be maintaining access to OECD markets for manufactured exports in face of potential environmental protectionism. Thus the broad approach seems likely to be to take on environmental commitments in part in return for stronger guarantees of access to export markets abroad. This involves directly linked trade and environmental commitments although how linkage can be made explicit is a major issue. More narrowly, the issues that seem likely to dominate the climate change negotiating agenda from China's viewpoint are the interpretation of the common but differentiated responsibilities (CBDR) principle adopted in Kyoto, the choice of negotiating instruments and form of emission commitments, and the size (and form) of accompanying financial funds for adaptation and innovation. We suggest that a possible interpretation of CBDR reflecting China's desire to leave room to grow when undertaking emission reduction commitments might be for China to take on emission intensity commitments while OECD countries take on emission level commitments. Larger funds and flexibility in their use will also raise China's willingness to make commitments.
    Keywords: post-Kyoto, emissions reduction, Copenhagen negotiation, China,
    JEL: Q54 Q56
    Date: 2010–01
  4. By: Mandell, Svante (vti – Swedish National Road and Transport Research Institute)
    Abstract: New infrastructure projects may affect CO2 emissions and, thus, cost benefit analyses for these projects require a value to apply for CO2. The value may be based on the marginal social cost associated with emissions or on the shadow price resulting from present and future policies geared towards CO2 emissions. In the present paper it is argued that the social cost approach should be seen as preceding the shadow price approach. Both are thus necessary, but for cost benefit analysis of infrastructure projects we argue for the shadow price approach as the primary tool. There is a series of complications involved when applying this principle in practice. Several of these are discussed in the paper, including non-marginal projects that affect permit prices, non-transparent permit markets, different instruments capturing different aspects of a CO2-value, multiple policies present simultaneously etc.
    Keywords: Climate change; policy; cost-benefit analysis; carbon value
    JEL: H54 Q51 R42
    Date: 2010–01–20
  5. By: Halvor Briseid Storrøsten (Statistics Norway)
    Abstract: In the longer run, effects on R&D and the implementation of advanced abatement technology may be at least as important as short-run cost effectiveness when we evaluate public environmental policy. In this paper, we show that the number of firms that adopt advanced abatement technology could be higher with emissions trading than with a tax if there is imperfect competition in the permits market. Under perfect competition, the number would always be higher with a tax, given that the regulator is myopic. If we allow for environmental policy response, the ranking is still ambiguous under imperfect competition, while the regimes become equal with perfect competition.
    Keywords: Auctioned permits; Emissions taxes; technology adoption; Cournot competition
    JEL: H23 Q55 Q58
    Date: 2010–01
  6. By: Euston Quah (Singapore Centre for Applied and Policy Economics)
    Abstract: This paper focusses narrowly on three areas of public policy concerning the environment deemed necessary for sustainable economic growth. It has relevance to Asian nations as they continue to demand for higher growth and at the same time keeping environmental degradation in check. The three areas are- (1) the issue of siting environmentally unfriendly but nationally required facilities, otherwise known as the NIMBY syndrome, (2) the waste generation problem, and (3) the need to price green goods. In addition to the above three areas for public policy, the paper also discusses a number of pragmatic principles for use in environmental management. Such things as cost-benefit analysis and project appraisal; the pursuit of clean and advanced technologies and inherent conflicts; exploring market solutions; understanding multiple stakeholders; and last but not least the need to establish data baselines for environmental quantity and quality.
    Keywords: environmental management, NIMBY syndrome, waste generation, green goods
    JEL: Q51 Q50
    Date: 2010–01
  7. By: Giuseppe Attanasi; Aldo Montesano
    Date: 2010–01
  8. By: Tomoki Fujii (Singapore Management University)
    Abstract: Myopia is important in environmental and resource management problems because they often involve inter temporal decisions over a long time horizon. We present a parsimonious extension of a standard dynamic programming equation in a continuous time and continuous state setting, which enables rich description of myopic behavior. In our model, the process of planning future controls and choosing current controls are clearly distinguished. We illustrate the behavior of various types of myopic agents with a simple example of non-renewable resource extraction, and discuss the policy relevance of the expiry of extraction permits to resource management under myopia.
    Keywords: non-constant discounting, resource management, myopia, time-consistency, observational equivalence
    JEL: C61 Q30 Q50
    Date: 2010–01
  9. By: José Manuel Madeira Belbute (Department of Economics, University of Évora; CEFAGE-UE); Paulo Brito (Department of Economics, Technical University of Lisbon; UECE)
    Abstract: In this paper we study a simple endogenous growth model in which the two engines of growth are the exogenous technical progress in dematerialization and the accumulation of a renewable natural resource. The model is also labeled as been "endogenous" as the rate of growth of natural capital is endogenously determined and should lie between zero and the rate of technical progress. In this context, it is possible to combine permanent economic growth with permanent growth of the environmental asset. the endogenous rate of growth of the stock of natural resources is a positive function of the physical rate of regeneration (which will occur if consumption would be zero) and of the rate of technical progress. However, in order to assure sustainability, the former growth rate should be larger than zero but smaller than the later. Second, the output growth rate (which in our model is equal to the rate of consumption) should lie between the rate of technical progress and the sum of the rate of technical progress and the natural rate of regeneration. Therefore, even in the case in which the physical rate of renewal is mall, this will allow for unbounded growth. Third, in our simple model, there is no transitional dynamics.
    Keywords: Endogenous growth, environmental preservation, habit-formation
    JEL: C61 Q56 O39 O40
    Date: 2009
  10. By: Eriyagama, Nishadi; Smakhtin, Vladimir; Gamage, Nilantha (International Water Management Institute; International Water Management Institute; International Water Management Institute)
    Keywords: Drought / Impact assessment / Indicators / Hydrology / Mapping / Climate change / River basins / Dams / Water scarcity / Disasters / Risks / Precipitation / Runoff / Soil degradation
    Date: 2009
  11. By: Aaditya Mattoo
    Abstract: In this paper, we seek to make a twofold contribution. On outcomes, we focus on manufacturing exports as well as on manufacturing output both in the aggregate and in selected sectors. On policy, the impact of three distinct actions—emissions reductions per se; emissions tradability; and transfers are isolated. [WP No. 188].
    Keywords: manufacturing, India, exports, industrialization, developing country, output, tradability, climate change, development, public private transfers, growth externalities, financial globalization
    Date: 2010
  12. By: Celia M. Reyes; Sonny N. Domingo; Christian D. Mina; Kathrina G. Gonzales (Philippine Institute for Development Studies)
    Abstract: Seasonal Climate Forecast (SCF) is one of the tools, which could help farmers and decision makers better prepare for seasonal variability. Using probabilistic principles in projecting climatic deviations, SCF allows farmers to make informed decisions on the proper choice of crop, cropping schedule, levels of input and use of mitigating measures. However, a cloud of uncertainty looms over the true value of SCF to its target users. To shed light on the true value of SCF in local agricultural decision making and operations, farm and household level survey was conducted. A total of 85 corn farmers from the plains and highlands of Echague and Angadanan, Isabela were interviewed. Results showed that climate and climate-related information were undoubtedly among the major factors being considered by farmers in their crop production activities. All aspects explored on the psychology of corn growers pointed to the high level of importance given to climatic conditions and SCF use. This was evident on the farmers’ perceptions, attitudes, and decision-making processes. Though the high regard of farmers on climate forecast and information cannot be questioned, actual application of such information seemed still wanting. Most corn farmers still started the season by “feel�— relying on the coming of rains and usual seasonal cropping schedules when commencing key farm operations. Reliable indigenous knowledge on climate forecasting was scarce. With corn farmers in Isabela still thirsting for climate-related information, the delivery of appropriate information and accurate forecasts should be addressed through proper extension and provision of support. Overall, SCF still has to solidify its role in the decision making process. Reliable SCFs remain the key to answer the riddle of seasonal variability and allow farmers to securely harness the goodness of the changing seasons. Ultimately, a holistic approach is necessary to truly elevate the productivity in Isabela’s corn lands.
    Keywords: Seasonal climate forecast, corn productivity, Isabela corn industry, climate variability, climate information and corn farming
    JEL: Q12 Q10 Q54
    Date: 2010–01
  13. By: Bleischwitz, Raimund
    Abstract: The objective of this study is to support the European Parliament’s ITRE Committee in its work on the EU's industrial and energy policy and to give advice on the following issues: Why is the issue of resource scarcity back on the agenda? What are the strategic conclusions for the EU? What can the EU expect from eco-innovation in a large range of industrial sectors? Are existing measures meeting the EU aims and expectations, and what new policy initiatives should be set forward? To meet these objectives, this study is structured as follows: Chapter 2 will give an overview on resource scarcities. Chapter 3 elaborates on ecoinnovation, including trends, barriers and driving forces. Chapter 4 outlines proposals for future EU policies. Chapter 5 sketches out a possible vision for the future. Chapter 2 reveals recent findings on resource scarcity: Global extraction of natural resource is steadily increasing. Since 1980, global extraction of abiotic (fossil fuels, minerals) and biotic (agriculture, forestry, fishing) resources has augmented from 40 to 58 billion tonnes in 2005. Scenarios anticipate a total resource extraction of around 80 billion tonnes in 2020 (200 % of the 1980-value), necessary to sustain the worldwide economic growth. On average, a European consumes per year around three times the amount of resources of a citizen in the emerging countries while producing twice as much. Analysis on patterns of current resource use (direct and indirect use) is still in its infancy and shows data gaps. Based on country studies, however, one can arrive at tentative conclusions. A recent study on Germany reveals that ten production sectors account for more than 50 % of German Total Material Requirements (TMR). Industries of three areas are of strategic importance because here a huge number of technological interactions among production sectors take place: • Stones, construction, and housing = housing • Metals and car manufacturing = mobility • Agriculture, food and nutrition = food. The rapidly increasing demand for resources has led to an unprecedented boost in resource prices, especially during the last five years until the breakout of the financial crisis in Fall 2008. The EU is the world region that outsources the biggest part of resource extraction. In comparison to the overall global growth rate (45 % over the last 25 years), Europe’s resource extraction grew only by 3 %, but studies show that these domestic raw materials are increasingly substituted by imports from other world regions. World reserves in fossil fuels and metals are unevenly distributed across the world regions. Additionally, for various commodities, the peak of extraction has already been reached or is currently about to be reached. Not only for oil and gas, but also for critical metals such as Antimon, Gallium, Indium, Platinum and others the supply for European industry is at risk. Natural gas cannot replace oil as main energy source, once the latter is depleted. From this, the following main conclusions are derived: • The European economy is increasingly dependent on resource imports from other world regions. • Scarcity of ‘Critical metals’ will affect the European economy more subtle, but furtherreaching. High-tech industries, in particular the electronic industry, will be affected by deWuppertal Institute et al. Eco-Innovation iv clining availability of precious metals. Also the development of new eco-technologies, such as photovoltaic electricity generation, could be slowed down by resource scarcity. • It can be expected that worldwide competition for these resources will significantly increase in the near future, potentially leading to serious conflicts related to the access to resource reserves. • In order to deal with this increased scarcity of natural resources, a significant reduction of the worldwide resource use will be necessary. Chapter 3 gives a definition of eco-innovation as well as an overview of different types of eco-innovation and deals with measurement issues. Furthermore, it illustrates selected ecoinnovations in key areas, and highlights also trends, drivers and barriers analysed for these examples and illustrated by fishbone diagrams. The scrutinised eco-innovations and the regarding key conclusions are (1) In the area of housing a. “Deep Renovation”, which enables a minimisation of negative impacts on environment and health by system design and choice of components and is possible in nearly every building, though standardisation is limited, and b. “Smart Metering”, for which there is worldwide evidence that giving consumers appropriate, relevant information on their energy and water use is an important basis for additional measures leading to a reduction in this use and thus in GHG emissions. (2) In the area of mobility a. the “Green Electric Car” and b. “Car sharing”; (3) In the area of food and drink (a) the “Community Supported Agriculture” (CSA) and (b) “Sustainable Sourcing of Retailers”. The chapter concludes that eco-innovation has a crucial role to play in putting the EU on the path to a resource and energy efficient economy and thus significantly reducing the environmental impacts in each of the areas, housing, mobility and food and drink. Experts estimate that this is likely to become an $800 billion market worldwide by 2015 and a $ trillion market afterwards. Overcoming the barriers and building up eco-industries for energy and resource efficiency however calls for an active European Union. It requires the engagement of many different actors in society, and strategies should be implemented from many different sides. For an ecoinnovation to be fully accepted and diffused into wider society, a concerted effort must be made to engage people and target the emotional and psychological aspects required to reinforce its uptake. Chapter 4 (How to speed up eco-innovation in the EU) undertakes an attempt to analyse existing EU policies and initiatives; selected member states’ efforts are also considered. This is done via a comparative methodology with a joint format. The annex to this study contains three further briefing notes on this issue written by other authors. The following policies, initiatives and instruments are considered in this study: • The Eco-design Directive (2005/32/EU) – focuses on energy use for a number of products and neglects other environmental dimensions, functional innovation and system innovation are not yet covered; Wuppertal Institute et al. Eco-Innovation v • The Competitiveness and Innovation Framework Programme (CIP) – first experience suggests a bias in favour of recycling technologies and energy along existing technology trajectories, less visibility of resource efficiency and new pathways; • The Seventh Framework Programme for research and technological development (FP7); • The Environmental Technology Action Plan (ETAP) – Despite many achievements, environmental technologies still remain a niche market; further green procurement, greater financial investments, the establishment of technology verification and performance targets systems, and focussing on sectors with high gains is needed; • The Directive on the energy performance of buildings (EPBD) – good ambitions, but a lack of implementation in many Member states, implementation requires both a speeding up and a scaling up, addressing the resource efficiency of buildings is desirable; • The European Union Action Plan on Sustainable Consumption and Production and Sustainable Industrial Policy • The European Directive on Waste from Electrical and Electronic Equipment (WEEE) • The UK Aggregates Levy and Aggregates Levy Sustainability Fund (ALSF) • Environment-driven Business Development in Sweden • The European Union Energy Label. The analysis identifies specific gaps in the areas of entrepreneurship, pre-commercialisation and mass market development; in addition, the opportunities to refurbish buildings in Europe have not fully been deployed yet (see Figure 1). Based on this and supported by an expert workshop conducted by the ITRE on 12 November 08, the study formulates proposals that could support the EU to speed up eco-innovation. They promote market-based incentives and the reform of existing initiatives; in addition, new proposals are presented that address specific gaps in the areas of entrepreneurship, pre-commercialisation as well as the opportunities to refurbish buildings in Europe. Bearing in mind the importance of construction as a driving forces of resource use, the relevance of the construction industry in the EU Lead market Strategy and current deficits, and the overall success of market-based instruments, this study proposes to extend the existing eco-tax base in Europe by establishing a minimum tax directive on construction minerals. It is expected to drive up eco-innovation because it gives incentives to improve resource efficiency and to refurbish old buildings. In addition, it generates revenues, which can be utilized for specific eco-innovation programmes. A greening of the EU budget would be the material basis for speeding up eco-innovation beyond 2009. This would have to follow two strategic lines: on the one hand unsustainable spending would have to be cut, on the other hand the money saved by this activity could be shifted to support investments in structural eco-innovation. A budgetary strategy could include the following elements: • Further redirecting CAP from direct payments towards integrated rural development schemes, which support eco-innovation in the area of sustainable production of highquality food and biomass. These integrated rural development schemes should include integrated logistical, economic and technological strategies for adapted sustainable natural resource management in the landscape (food, water, soil, biodiversity and closed-loop biomass production and use). These strategies would have to be highly adapted to local economies and landscape conditions thus inducing local eco-innovation and employment schemes. Wuppertal Institute et al. Eco-Innovation vi • Rigorous environmental appraisal and reduction of Regional Policy schemes for large infrastructure projects which could support long-term unsustainable development paths, shifting towards funding for eco-innovation e.g. in the area of decentralized electricity grids (supporting green electric cars and renewable energies) and lighthouse projects on resource efficient construction and resource recovery. • Redirection of Regional Funds from end-of-pipe technologies towards integrated solutions and eco-innovation (e.g. decentralized water treatment) • More advanced schemes for improving energy and material productivity of economies would require an implementation of the CREST guidelines for improved coordination between Structural Funds, the Research Framework Program and the Competitiveness and Innovation Programme (CIP). Only such a concentration of forces could achieve a measurable improvement of resource productivity in Europe by means of regional eco-innovation clusters and a European network of regional resource efficiency agencies. • Integration spending of the European Investment Bank (EIB) for improved cofinancing of eco-innovation Figure 1: Gaps of current EU programmes on eco-innovation Engaging industry in developing eco innovation for sustainable ways of living is considered to be essential. The study identifies six strategy areas where industry can act: 1. Strategy Area 1: Creating and satisfying demand for green and fair products 2. Strategy Area 2: Communicating for low impact product use 3. Strategy Area 3: Innovative after sales services 4. Strategy Area 4: Product and service innovations Wuppertal Institute et al. Eco-Innovation vii 5. Strategy Area 5: Service-oriented business models 6. Strategy Area 6: Leadership for social change and socially responsible business The study formulates proposals to strengthen the SCP Action Plan accordingly, with a special focus on a framework for smarter consumption and leaner production. green public procurement and international processes. Following the gaps identified above, the study also proposes to establish three new initiatives: • A European Trust Funds for Eco-Entrepreneurship, intended to support system innovation driven by new companies; • A Technology Platform for Resource-light industries, intended to develop new markets for European manufacturing industries; • A Programme to foster energy and resource efficiency in the building sector, intended to foster • The deployment of existing opportunities in that area. Finally, a few thoughts are given to the international dimension of eco-innovation and a possible vision of an eco-innovative Europe.
    Keywords: Eco-Inovation; Energy efficiency; EU Policy
    JEL: Q55
    Date: 2009–03
  14. By: Celia M. Reyes; Kathrina G. Gonzales; Canesio D. Predo; Rosalina G. de Guzman (Philippine Institute for Development Studies)
    Abstract: Rainfall variability greatly influences corn production. Thus, an accurate forecast is potentially of value to the farmers because it could help them decide whether to grow their corn now or to delay it for the next cropping opportunity. A decision tree analysis was applied in estimating the value of seasonal climate forecast (SCF) information for corn farmers in Isabela. The study aims to estimate the value of SCF to agricultural decision makers under climate uncertainty. Historical climatic data of Isabela from 1951 to 2006 from PAGASA and crop management practices of farmers were used in the Decision Support System for Agrotechnology Transfer (DSSAT) to test the potential impact of climate change on corn. The approach is developed for a more accurate SCF and to be able to simulate corn yields for wet and dry seasons under different climatic conditions -- El Niño (poor year), La Niña (good year) and Neutral (neutral year) conditions. In order for the forecast to have value, the “with forecast� scenario should lead to better decision making for farmers to eventually get increase production over the “without forecast� scenario. While SCF may potentially affect a number of decisions including crop management practices, fertilizer inputs, and variety selection, the focus of the study was on the effect of climate on corn production. Improving SCF will enhance rainfed corn farmers’ decisionmaking capacity to minimize losses brought about by variable climate conditions.
    Keywords: decision tree analysis, seasonal climate forecast (SCF), climate uncertainty, Decision Support System for Agrotechnology Transfer (DSSAT)
    JEL: Q54 Q12 Q10
    Date: 2010–01
  15. By: Celia M. Reyes; Christian D. Mina (Philippine Institute for Development Studies)
    Abstract: This paper documents the activities of the National Food Authority (NFA), particularly on rice marketing, in realizing its mandates of buying high and selling low. Because the Philippine agriculture is greatly affected by extreme climate events such as El Niño and La Niña, this paper highlights the importance of seasonal climate forecast (SCF) information as input to the formulation of various policy decisions of the NFA. Among these important policy decisions are- how much volume of paddy rice to procure from farmers to be able to defend its support price; how much volume of rice to maintain in order to achieve stability in the supply and consumer price, and; how much volume of rice, as well as when is the best time, to import to be able to position the optimal level of stocks in time for the lean season. It is also argued in the paper that importation has been playing a significant role in the rice supply-demand situation of the country since 1990, making it one of the most significant government interventions in the rice sector. Based on historical data assessment, some of the worst events in the past such as the 1995 rice crisis and over-importation during the 1997-1998 El Niño could have been avoided if policy decisions, particularly on the volume and timing of rice importation, were linked to SCF. Indeed, linking crop production and import decisions more systematically with SCF would enhance the usefulness of these forecasts at a more practical level.
    Keywords: National Food Authority (NFA), Seasonal Climate Forecast (SCF), rice, importation, storage, distribution
    JEL: Q18 Q17 Q10
    Date: 2010–01
  16. By: Amit K. Bhandari; Almas Heshmati (IISWBM, Management House, College Square West, Kolkata-700 073, India)
    Abstract: Nature based tourism is the fastest growing tourism in many parts of the world. The attitude towards conservation of nature is measured by individuals¡¯willingness to pay. This study has made an attempt to investigate the determinants of tourists¡¯willingness to pay (WTP) for biodiversity conservation. The determinants include a combination of socio-economic and site-specific characteristics of tourists. The study was conducted in Sikkim, which is India¡¯s prime nature based tourism destination. Results show that willingness to pay is determined by the level of education and income of tourists. Among site-specific characteristics length of stay and number of spots are the significant determinants of willingness to pay. This empirical research is a valuable input to identify market segment among tourists, which might help to generate more revenue for biodiversity conservation in Sikkim.
    Keywords: Willingness to pay, conservation, tourism, logit model, tobit model
    JEL: Q26 Q57 L83 C25
    Date: 2009–12
  17. By: Michael Ludkovski
    Abstract: We study optimal behavior of energy producers under a CO_2 emission abatement program. We focus on a two-player discrete-time model where each producer is sequentially optimizing her emission and production schedules. The game-theoretic aspect is captured through a reduced-form price-impact model for the CO_2 allowance price. Such duopolistic competition results in a new type of a non-zero-sum stochastic switching game on finite horizon. Existence of game Nash equilibria is established through generalization to randomized switching strategies. No uniqueness is possible and we therefore consider a variety of correlated equilibrium mechanisms. We prove existence of correlated equilibrium points in switching games and give a recursive description of equilibrium game values. A simulation-based algorithm to solve for the game values is constructed and a numerical example is presented.
    Date: 2010–01
  18. By: Rosario G. Manasan (Philippine Institute for Development Studies)
    Abstract: In line with the commitment of the Philippine government to adopt the Millennium Declaration, there have been efforts geared towards the achievement of the millennium development goals (MDGs) particularly the specific targets set for each of the eight MDGs. The MDGs include eradication of extreme poverty and hunger; universal primary education; gender equality and women empowerment; reduction of child mortality; improvement of maternal health; control of HIV/AIDS, malaria and other diseases; environmental sustainability; and global partnership for development. Maintaining the country’s current rate of progress in achieving the MDGs for the reduction of poverty incidence, the reduction of the infant mortality rate and the under-5 mortality rate, the reduction in HIV/AIDS prevalence, and the increase in access to sanitary toilet facilities is sufficient to meet the targets set in 2015. Such is not the case for the MDG targets with respect to the under-5 malnutrition rate, the per capita dietary energy intake requirement, malaria morbidity, access to safe drinking water, the elementary participation rate, the elementary cohort survival rate, gender equality in education, the maternal mortality rate and the contraceptive prevalence rate. The country has to do better in certain aspects of all of the seven quantifiable goals, namely- Goal 1 (poverty and hunger), Goal 2 (education), Goal 3 (gender equality), Goal 5 (maternal health), Goal 6 (control of communicable diseases), and Goal 7 (environmental sustainability). In this regard, it is critical that Philippines exercises greater vigilance and exerts increased effort in addressing the requirements of achieving the millennium development goals (MDGs). The study aims to support this initiative by tracking and analyzing the trend in MDG expenditures of both the central and local governments. It specifically attempts to analyze trends on MDG expenditures of the national and local governments, including ODA commitments for the period 2000-2005; relate the trends in MDG expenditures with human development outcomes and related outputs/ services and recommend policy actions on how to a) increase government revenues in the aggregate; b) increase the allocation of resources for MDG related programs and projects by improving both intersectoral and intrasectoral allocation, and c) identify ways of increasing the efficiency and effectiveness of the delivery of MDG-related programs.
    Keywords: Millennium Development Goals, MDGs, poverty reduction, education, health, MDG expenditures, government/public expenditures, human development
    JEL: O15 H51 I0
    Date: 2010–01
  19. By: K. Borovkov; G. Decrouez; J. Hinz
    Abstract: Mandatory emission trading schemes are being established around the world. Participants of such market schemes are always exposed to risks. This leads to the creation of an accompanying market for emission-linked derivatives. To evaluate the fair prices of such financial products, one needs appropriate models for the evolution of the underlying assets, emission allowance certificates. In this paper, we discuss continuous time diffusion and jump-diffusion models, the latter enabling one to model information shocks that cause jumps in allowance prices. We show that the resulting martingale dynamics can be described in terms of non-linear partial differential and integro-differential equations and use a finite difference method to investigate numerical properties of their discretizations. The results are illustrated by a small numerical study.
    Date: 2010–01
  20. By: Widjajanti Isdijoso Suharyo; Sudarno Sumarto; Nina Toyamah; Adri Poesoro; Bambang Sulaksono; Syaikhu Usman; Vita Febriany; Harry D.J. Foenay; Rowi Kaka Mone; Thersia Ratu Nubi; Yakomina W. Nguru (SMERU Research Institute)
    Abstract: Efforts to improve the business climate in East Nusa Tenggara (NTT) Province are still facing significant obstacles. Moreover, a healthy business climate is needed to create conditions conducive to hastening development, increasing the employment field, and adding to local revenue. In June-August 2006, SMERU conducted a study of the business climate in NTT, concentrating on four districts and one city in West Timor. The study aims to identify various government policies at the central, provincial, and district/city level, which are directly and indirectly related to market structure, the flow of goods, fee structures, and prices received by producers and traders of agricultural products. The study also examines the impact of various agricultural product charges on provincial and district/city local revenue. The information and data was gathered from various respondents, including producers (farmers, livestock producers, fishermen, and home industry operators); traders (intermediate traders to exporters); as well as relevant government offices and agencies. The main finding of the research is that district/city local governments in West Timor are still attempting to increase local revenue by imposing various charges on the trade of agricultural commodities, although the total charges are currently lower than the period prior to 1997. Forestry products and large livestock (mainly cattle) attract the most charges. The study made several other findings. Firstly, in an effort to avoid a central government regulation that limits the total charges, the NTT local government has endeavored to reinvent charges as third party contributions or administration fees. Secondly, although the impact of official charges on the local budget (APBD) is relatively small, it can trigger the emergence of various unofficial charges, or bribes. Thirdly, agricultural producers generally have small-scale enterprises and weak bargaining powers as selling prices are still determined by several big inter-island traders�thus forming a monopsony environment.
    Keywords: business climate, charges, commodities, agriculture, local government, permits
    JEL: O13 Q13 R58
    Date: 2010–01

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