nep-env New Economics Papers
on Environmental Economics
Issue of 2010‒05‒08
fifteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Options for International Financing of Climate Change Mitigation in Developing Countries By Mark Hayden; Paul J.J. Veenendaal; Žiga Žarnić
  2. Carbon price and optimal esxtraction of a polluting fossil fuel with restricted carbon capture By Renaud Coulomb; Fanny Henriet
  3. Climate Change Mitigation Potential in South Africa: A National to Sectoral Analysis By Witi Jongikhaya; Chaturvedi Vaibhav
  4. Analysing the Environmental Content of Financial Analyst Reports by developing an ESG Framework that incorporates Business Opportunities and the Product Perspectives By Cerin, Pontus
  5. Strategic investment in climate friendly technologies: the impact of permit trade By Mads Greaker and Cathrine Hagem
  6. Paris: a Desire Named Streetcar By Martin Koning; Rémy Prud'Homme; Pierre Kopp
  7. An indicator-based assessment framework to identify country-specific challenges towards greener grow By Joan Canton; Ariane Labat; Anton Roodhuijzen
  8. A closed form solution to Stollery's global warming problem with temperature in utility By Bazhanov, Andrei
  9. Environmental Control in Greenhouse and Animal Houses with Earth-Tube-Heat-Exchangers in Hot Semi-arid North-West India By Girja Sharan; Madhavan T
  10. This paper discusses the level and features of support schemes used to promote renewable electricity By Joan Canton; Åsa Johannesson Lindén
  11. Economics and Efficiency of Organic Farming vis-à-vis Conventional Farming in India By Charyulu Kumara D.; Biswas Subho
  12. Efficiency of Organic Input Units under NPOF Scheme in India By Charyulu Kumara D.; Biswas Subho
  13. Ownership concentration and audit fees: do auditors matter most when investors are protected least? By Ben Ali Chiraz; Cédric Lesage
  14. A Perspective on Fisheries Sector Interventions for Livelihood Promotion By Datta Samar K; Singh Srijan Pal; Chakrabarti Milindo; Biswas Subho; Bittu Sah
  15. Impact of CCS on the Economics of Coal-Fired Power Plants: Why Investment Costs Do and Efficiency Doesn’t Matter By Lohwasser, Richard; Madlener, Reinhard

  1. By: Mark Hayden; Paul J.J. Veenendaal; Žiga Žarnić
    Abstract: This paper provides a model-based analysis of the potential macro-economic impacts of different options for international financing of climate change mitigation in developing countries. The model used is the multi-region and multi-sector climate change version of the WorldScan model. Following the outcome of the UNFCCC conference in Copenhagen, it makes no specific assumptions about the future international climate regime. The analysis shows that the environmental prospects systematically improve in a transition from the Clean Development Mechanism projects towards a global carbon market, while the opposite is foreseen for the economic costs. The more of a carbon market we have when moving from the project-based CDM to sectoral crediting mechanisms and internationally linked cap-and-trade, the more finance the carbon market will channel to developing countries.
    Keywords: european union eu annex I non-annex I climate conference in Copenhagen climate change mitigation clean development mechanism emission trading system the US brazil china india own participation of developing countries sectoral crediting mechanisms hayden Veenendaal Zarnic
    JEL: D58 Q40 Q50 Q51
    Date: 2010–03
  2. By: Renaud Coulomb; Fanny Henriet
    Abstract: Among technological options to mitigate greenhouse gas (GHG) emissions, Carbon Capture and Storage technology (CCS) seems particularly promising. This technology allows to keep on extracting polluting fossil fuels without drastically increasing CO2 atmospheric concentration. We examine here a two-sector model with two primary energy resources, a polluting exhaustible resource and an expensive carbon-free renewable resource, in which an environmental regulation is imposed through a cap on the atmospheric carbon stock. We assume that only the emissions from one sector can be captured. Previous literature, based on one-sector models in which all emissions are capturable, finds that CCS technology should not be used before the threshold has been reached. We find that, when technical constraints make it impossible to capture emissions from both sectors, this result does not always hold. CCS technology should be used before the ceiling is reached if non capturable emissions are large enough. In that case, we find that energy prices paths must differ between sectors reflecting the difference of social cost of the resource according to its use. Numerical exercise show that, when the ceiling is set at 450ppm CO2, the initial carbon tax should equal 52$/tCO2 and that using CCS before the ceiling is optimal.
    Date: 2010
  3. By: Witi Jongikhaya; Chaturvedi Vaibhav
    Abstract: This paper discusses some of the impacts attributed to climate change that are likely to hit Southern Africa as a result of increasing global greenhouse gas emissions into the atmosphere. As South Africa is a significant contributor to greenhouse gas emissions and currently ranked first in Africa, the paper assesses the country.s greenhouse gas emissions profile and possible future projections of emissions and their implications. It then discusses the strategic interventions proposed by South Africa in reducing the gap in emissions between what is required by science and what would happen if development continues at current rates without abating greenhouse gas emissions. Given that the majority of emissions are a result of energy consumption, the paper provides practical solutions to themes such as energy efficiency mostly for the industrial and commercial sectors. With international treaties on the reduction of greenhouse gas emissions (e.g. Kyoto protocol), there are business opportunities in the area of climate change mitigation. Thus, the paper finally discusses the Clean Development Mechanism (CDM) scenario in South Africa and how the country can benefit from other emission trading schemes being practiced in different regions of the world.
    Date: 2009–10–24
  4. By: Cerin, Pontus (Umeå School of Business at Umeå University)
    Abstract: Unlike most previous research that merely looks at the perceptions of analysts, this report examines the environmental information financial analysts actually use in their analyst reports. Out of almost 4,500 analyst reports about 36 percent contain environmental information, varying between 3 to 79 percent depending on industry sector where, in general, analyst reports in sectors with more severe environmental aspects to a larger degree contain environmental information. The type of environmental information that the analysts foremost focus on in their reports are on how firms’ products and product portfolios are adopted to Environmental regulations facing customers/markets, Customer demands and Eco-Efficiency. This product perspective is strongly related to discussions of business opportunities of the firm. In fact, a good 77 % of the financial analyst reports containing environmental information dealt with opportunities linked to environmental aspects. To a lower extent, financial analysts write about company specific risk issues like emissions and litigation. The financial analyst reports, furthermore, practically lacks environmental preparedness aspects – like environmental strategies, policies, management systems, reporting and auditing – that are core issues of the ethical and SRI analyses. The financial analysts, hence, focus on different environmental aspects than the ethically specialised analysts. For analysing the environmental content in the analyst reports in this study an ESG framework was developed that, unlike previous research, also detects the environmental performance in the product dimension.
    Keywords: Financial Analyst Reports; ESG Framework; Environmental Information; Responsible Investments; Business Opportunities; Product Perspectives
    Date: 2010–04–30
  5. By: Mads Greaker and Cathrine Hagem (Statistics Norway)
    Abstract: Our point of departure is that a group of developed countries invest in the development of greenhouse gas (GHG) abatement technologies both at home and in developing countries. Such investments reduce the cost of future GHG abatement, and influence the future GHG abatement choices of both developed and developing countries. We show how a common permit market affects the industrialized countries' strategic investment decisions. As opposed to a situation without a permit market, the industrialized countries may want to overinvest in new GHG abatement technologies both at home and abroad. That is, they increase their R&D investment to such an extent that the cost reductions from the least profitable project actually fall short of the R&D costs. Earlier research has only pointed to overinvestment abroad. Moreover, the effects of investment abroad may be tougher emission reduction targets at home, which is not possible without permit trade.
    Keywords: greenhouse gas abatement technologies; climate policy; strategic investments; permit trade.
    JEL: D62 H41 O38 Q58
    Date: 2010–04
  6. By: Martin Koning (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Rémy Prud'Homme (Université Paris XII - Université Paris XII Val de Marne); Pierre Kopp (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: On the southern part of the Parisian Maréchaux' boulevards, the old bus line Petite Ceinture has been replaced by a modern tramway (T3). Simultaneously, the road-space has been narrowed by about a third. A survey conducted on 1,000 users of the T3 shows that the tramway hardly generated any modal report from the private cars (PC) towards the public transit (PT). However, it did generate important intra-modal transfers: from bus and subways towards tramway concerning the PT, surely from Maréchaux' boulevards towards the Parisian Ring-Road (boulevard périphérique, PRR) and/or adjacent streets for the PC. The various benefits and costs of these changes are evaluated in this research. The welfare gains made by PT users are more than compensated by the time losses of the motorists, and in particular, by the additional cost of road congestion on the PRR. The same conclusion applies with regard to CO2 emissions: the reductions saved with the replacement of the busses and some (few) PC are less important than the increased pollution induced by the lengthening of the automobile trips and the increased congestion on the PRR. Even if one ignores the initial investment of 350 M€, the social impact of the T3 project, illustrated by its Clear Discount Value (CDV), is strongly negative. This is especially true for suburbanites. Concerning the lonely inhabitants (electors) of Paris, our analysis shows that they pocket the main part of the benefits while supporting a weak fraction of the costs.
    Keywords: Tramway, Costs-Benefits Analysis, Road Congestion, CO2 Emissions
    Date: 2010–01–14
  7. By: Joan Canton; Ariane Labat; Anton Roodhuijzen
    Abstract: The paper sets the basis for an indicator-based analytical framework to assess Member States' policies to promote "green growth".An illustrative application of this new analytical framework reveals that it can be used to provide a nuanced economic assessment of Member States' environmental performance. This framework can serve to highlight country-specific strengths in addressing environmental challenges in a way that best fosters growth and jobs. To prepare for future economic policy monitoring at the EU level, a test was also run to analyse performance in various dimensions of environmental policy in combination with information about macroeconomic performance.Overall, this framework can contribute to identify country-specific challenges to create new sources of green growth; it may therefore serve to encourage relevant structural reforms bringing about a competitive greener economy.
    Keywords: europa european commission institutions news calendar organisation commissioners president recruitment contact services european union eu
    JEL: E66 Q52 Q58
    Date: 2010–02
  8. By: Bazhanov, Andrei
    Abstract: Stollery (1998) studied a polluting oil extracting economy governed by the constant utility criterion. The pollution caused the growth of temperature, negatively affecting production and utility. Stollery provided a closed form solution for the case with the Cobb-Douglas production function and temperature affecting only production. This paper offers a closed form solution to a non-trivial example of this economy with utility affected by temperature.
    Keywords: essential nonrenewable resource; polluting economy; sustainable development; special function representation
    JEL: Q32 Q38 O13
    Date: 2010–04–29
  9. By: Girja Sharan; Madhavan T
    Abstract: A program was initiated in 1998 to develop technology to improve water and land productivity in Kutch, a vast semi-arid and hot region in north-west India. Greenhouse cultivation was identified as basic approach. A new experimental facility was designed consisting of a greenhouse coupled to ETHE in closed.loop with added provisions for shading, natural ventilation and supplementary evaporative cooling via the foggers. ETHE was placed in a trench 20 m long, 6 m wide and 3 m deep and back-filled with excavated soil. The greenhouse, a single span saw-tooth (20 X 6 X 3.5 m) structure was erected directly above. ETHE provided 40 air changes per hour. There are three continuous (closable) vents - two laterals along base of long sides, one near top of taller wall. A retractable cover with 60 % shading was provided on top over the cladding. There are 39 overhead foggers placed overhead. The facility was installed in late 2001, at Kothara (j 23° 14 N, l 68° 45 E) and investigations carried out to determine (a) the extent to which new facility improves yields, extends cropping season, conserves water compared to open- field in the area, and (b) the extent to which environmental control is achieved. By using control measures in sequence and in conjunction, it was possible to crop the greenhouse over a span of ten months (July to April), long enough to raise two crops. Hybrid tomato has been raised three times, with mean single crop yield of 62 t / ha, and crop water use 245 mm. Additional 50 mm water was used in supplementary cooling. Yield was nearly two times that of open-fields and water used (for irrigation and cooling) less than half. Natural ventilation along with top shading was effective till the end of February, limiting greenhouse temperature to 34°C. Subsequently, ETHE and foggers were operated. With adult tomato crop inside (4 plants / m2), operating the ETHE (vents closed, top shaded) for six hours with evaporative supplement from foggers restricted greenhouse temperature to 37 . 38°C. Water used by foggers, 100-108 liters over the day was one third to one fifth of what fan and pad would need to service a facility of this size. ETHE used 20-24 kWh over a day, about 25% more than estimated for fan and pad system. It was found economical to crop till the end of April or fist week of May and keep the house closed till the end of June. In heating mode - ETHE was able to heat the greenhouse easily from 9°C to 22-23°C in half hour in the cold winter nights and keep it at that till morning. The new facility appears promising for improving yields, making better use of water and extending the growing season in this hot semi-arid region. Work is ongoing, to find ways to reduce installation cost of the ETHE and to develop a more easily scalable design than the present one.
    Date: 2009–11–13
  10. By: Joan Canton; Åsa Johannesson Lindén
    Abstract: This paper discusses the level and design of support schemes used to promote renewable electricity in Europe. A theoretical model is presented to determine optimal renewable energy policies. Policies that solely aim to address environmental externalities and energy security risks are unlikely to make renewable power technologies competitive. Learning effects and spillovers are necessary to justify the need for support schemes. The analysis suggests that feed-in premiums guaranteed in addition to the electricity market price should be preferred over feed-in tariffs, which provide the eligible power producer with a guaranteed price. The premiums should be time limited and frequently reviewed. Once the technology becomes competitive, tradable green certificates would be a more suitable support instrument. As regards wind energy, the available estimates of externalities suggest that levels are probably too high in many Member States. In addition, the current promotion of photovoltaics could possibly be more cost-efficient if it targeted technology development more directly.
    Keywords: european union eu setzer wolff van den Noord euro area money heterogeneity money holdings
    JEL: Q42 Q48 H23
    Date: 2010–04
  11. By: Charyulu Kumara D.; Biswas Subho
    Abstract: Organic farming systems have attracted increasing attention over the last one decade because they are perceived to offer some solutions to the problems currently besetting the agricultural sector. Organic farming has the potential to provide benefits in terms of environmental protection, conservation of non-renewable resources and improved food quality. India is bestowed with lot of potential to produce all varieties of organic products due to its diverse agro-climatic regions. In several parts of the country, the inherited tradition of organic farming is an added advantage. This holds promise for the organic producers to tap the market which is growing steadily in the domestic market related to the export market. In India, the land under certification is around 2.8 million ha. But, there is considerable latent interest among farmers in conversion to organic farming. However, some farmers are reluctant to convert because of the perceived high costs and risks involved in organic farming. Despite the attention which has been paid to organic farming over the last few years, very little accessible information actually exists on the costs and returns of organic farming in India. The empirical evidences of efficiency analysis of organic and conventional farming systems are scarce or even absent. So, the present paper focuses mainly on the issues like economics and efficiency of organic farming vis-à-vis conventional farming in India. Four states namely Gujarat, Maharashtra, Punjab and U.P were purposively selected for the present study. Similarly, four major crops i.e., cotton, sugarcane, paddy and wheat were chosen for comparison. A model based non-parametric Data Envelopment Analysis (DEA) was used for analyzing the efficiency of the farming systems. The crop economics results showed a mixed response. Overall, it is concluded that the unit cost of production is lower in organic farming in case of cotton and sugarcane crops where as the same is lower in conventional farming for paddy and wheat crops. The DEA efficiency analysis conducted on different crops indicated that the efficiency levels are lower in organic farming when compared to conventional farming, relative to their production frontiers. The results conclude that there is ample scope for increasing the efficiency under organic farms.
    Date: 2010–04–20
  12. By: Charyulu Kumara D.; Biswas Subho
    Abstract: India had developed a vast and rich traditional agricultural knowledge since ancient times and presently finding solutions to problems created by over use of agrochemicals. Todays’ modern farming is not sustainable in consonance with economics, ecology, equity, energy and socio-cultural dimensions. The entire agricultural community is trying to find out an alternative sustainable farming system, which is ecologically sound, economically and socially acceptable. Sustainable agriculture is unifying concept, which considers ecological, environmental, philosophical, ethical and social impacts, balanced with cost effectiveness.The answer to the problem probably lies in returning to our own roots. Traditional agricultural practices, which are, based on natural and organic methods of farming offer several effective, feasible and cost effective solutions to most of the basic problems being faced in conventional farming system. With having such a due importance of organic farming in India, the government has initiated the programs like National Programme for Organic Production (NPOP) in 2000 and National Project on Organic Farming (NPOF) in 2004. Availability of quality organic inputs is critical for success of organic farming in the country. Setting up of organic input units are being financed as credit-linked and back-ended subsidy through NABARD and NCDC under NPOF Capital investment subsidy scheme. Three types of organic input production units namely; fruit/vegetable waste units, bio-fertilizer unit and vermi-hatchery units are being subsidized @ 25 per cent of their total project costs respectively. Around 455 vermi-hatchery units, 31 bio-fertilizer units and 10 fruit and vegetable waste units were sanctioned across different states by NABARD till May, 2009. But, NCDC has so far sanctioned only two bio-fertilizer units in Maharashtra state. This paper made a humble attempt to know the present status of these units, capacity utilization and their efficiency. A sample of 40 vermi-hatchery units were selected for the present study from four states namely; Gujarat, Maharashtra, Punjab and U.P respectively based on their weights in total population. A model based non-parametric Data Envelopment Analysis (DEA) was used for analyzing the efficiency of organic input units. Multiple regression models are also used to estimate the drivers for efficiency in vermi-hatchery units. The average installed capacity of the sample unit was 150 TPA. But, the mean production was around 76.2 TPA. The average capacity utilization rate was only 50.8 per cent which indicates nearly half of its full potential. Across different states, this value was the highest in Maharashtra (124.6%) followed by U.P (70.0%), Punjab (22.0%) and Gujarat (16.1%). The main reasons for low capacity utilization were lack of demand, poor production skills and insufficient infrastructure. The estimated mean technical, allocative and economic efficiencies of sample vermi-hatchery units under DEA-CRS model were 63.7, 50.95 and 32.95 per cent respectively. The results clearly indicate the low technical, allocative and economic efficiency of sample units. Correspondingly, the mean values for DEA-VRS model were 83.39, 59.42 and 50.24 per cent. These values conclude that organic inputs are suffering from both allocative inefficiency as well as scale inefficiency. Factors like size of the unit, contribution of family labor have shown positive relation with technical as well as scale-efficiencies. Participation in the training programs was also enhancing technical efficiency. The age of the unit and subsidies discouraged the scale-efficiency.
    Date: 2010–04–01
  13. By: Ben Ali Chiraz (ESC Amiens - ESC Amiens); Cédric Lesage (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959)
    Abstract: Minority expropriation could result when controlling shareholders can expropriate minority shareholders and profit from private benefits of control. This agency conflict (named Type II) has been rarely studied, as the most commonly assumed agency conflict resides between managers and shareholders (Type I). We want to study the role of the auditors in reducing the type II agency conflict. Using an audit fees model derived from Simunic (1980), we study the impact of type I and type II agency conflicts on audit fees in code law vs common law countries. We then focus two civil law countries (Germany and France) providing a lower investor protection level, and two common law countries (the USA and UK) providing a higher investor protection level (La Porta et al. 1998, 2000). Our results show 1) a negative relation between audit fees and managerial shareholding, which is stronger for common law than for civil law countries; 2) a curvilinear (concave) relation between audit fees and controlling shareholding for civil law countries; 3) no Type II conflict in the common law countries. These results illustrate the mixed effects of the legal environment and of each agency conflict on audit fees.
    Date: 2010
  14. By: Datta Samar K; Singh Srijan Pal; Chakrabarti Milindo; Biswas Subho; Bittu Sah
    Abstract: The distinctive features of fisheries resources, fishers and their geographic contexts, on the one hand, and broad stylized features of the existing lacklustre performance of this sector, on the other, call for specialized and sustained efforts to promote livelihood of usually poor, backward and unorganized fisher communities, which are nevertheless and often the most intimate stakeholder of this sector and its underlying resources. To develop a perspective on intervention strategies for livelihood promotion of most intimate stakeholders – that is, the fisher folk, in a sustainable manner, this paper uses clues from recent economic theories and management tools on property rights, Coase Theorem, stakeholder cooperation and public-private-community partnership in an effort towards resolving the multi-dimensional problems of this sector. It stratifies and brings out the pros and cons of the existing fishing efforts into four categories of models – the traditional marketing model, state-led models of livelihood promotion and fisheries development (including cases of para-statal cooperatives), entrepreneur or leader-driven models, and technology-driven models, through selected illustrations from different parts of the country and covering both marine and inland (including brackish water) segments of fisheries. The paper, after identifying the major ingredients for sustainable livelihood development around fisheries, finally articulates Dr. APJ Kalam’s concept of PURA to recommend a rural entrepreneur-led hybrid model of fisheries development to solicit sustainable and growth oriented cooperation among the suppliers of land (i.e., stakeholders to fishery resources, which are available through Nature), labor (including fishers) and capital (including professionals). The ultimate goal of this paper is to derive inspiration from Coase Theorem and the Japanese model of Keiretsu to empower the producers and suppliers of fish – namely, the fisher folk and to place them at the centre stage of control of rural entrepreneur-led private organizations, wherein the fisher community will not be deemed as mere consumers or vendors of fish, but will enter as dignified co-producer partners with significant shares in residual claim and residual control in those organizations.
    Date: 2010–02–15
  15. By: Lohwasser, Richard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: In this paper we analyze how development of the economics related to CCS technology in coal-fired power plants affects market diffusion. Specifically, we (1) show the (significant) variance in economic expectations for commercial-grade CCS hard coal power plants observed in selected recent scientific publications; (2) analyze the impact of economic factors related to CCS on electricity generation costs; and (3) study possible deployment of CCS technology in Europe using the bottom-up electricity sector model HECTOR. Simulation results show that investment costs strongly influence the market deployment of coal-fired CCS power plants, leading to a share of 16% in European generation capacity by 2025 with the lowest observed investment costs of 1400 €/kW, but only 2% with the highest of 3000 €/kW. A variation of conversion efficiency between 37% and 44%, the minimum and maximum observed values, only leads to a share of CCS-equipped power plants between 13 and 15%. These findings are robust for the Base Case with a CO2 price of 43 €/t and also for sensitivities with 30 and 20 €/t CO2, but with a lower effect, as the overall share of CCS is significantly reduced at these prices.
    Keywords: Electricity market; simulation; model; CCS; power plant economics; technology adoption
    JEL: O33
    Date: 2009–11

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