nep-env New Economics Papers
on Environmental Economics
Issue of 2010‒06‒04
thirty-one papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Environmental Governance, Globalisation and Economic Performance By Tisdell, Clem
  2. What is the best environmental policy? Taxes, permits and rules under economic and environmental uncertainty By Konstantinos Angelopoulos; George Economides; Apostolis Philippopoulos
  3. Climate Policy as Expectation Management? By Daiju Narita
  4. What Really Matters: Discounting, Technological Change and Sustainable Climate By Georg Müller-Fürstenberger; Gunter Stephan
  5. International carbon emissions trading and strategic incentives to subsidize green energy By Thomas Eichner; Rüdiger Pethig
  6. Eco-governance in Bulgarian Agriculture By Bachev, Hrabrin
  7. Managing Forests for Sustainable Economic Development: Optimal Use and Conservation of Forests By Tisdell, Clement Allan
  8. Environmental Performance and Regional Innovation Spillovers By Valeria Costantini; Massimiliano Mazzanti; Anna Montini
  9. Geography, environmental efficiency and Italian economic growth: a spatially-adapted Environmental Kuznets Curve By Ciriaci, Daria; Palma, Daniela
  10. Carbon Capture by Fossil Fuel Power Plants: An Economic Analysis By Islegen, Ozge; Reichelstein, Stefan
  11. Risk Management and Regulation Compliance with Tradable Permits under Dynamic Uncertainty By Pasquale Lucio Scandizzo; Odin K Knudsen
  12. Comparative Costs and Conservation Policies for the Survival of the Oranutan and Other Species: Includes an Example By Tisdell, Clem; Swarna Nantha, Hemanath
  13. The Effect of Allowance Allocations on Cap-and-Trade System Performance By Hahn, Robert W.; Stavins, Robert N.
  15. Notes on the Economics of Control of Wildlife Pests By Tisdell, Clem
  16. Modelling the convenience yield in carbon prices using daily and realized measures By Julien Chevallier
  17. Regulatory zoning and coastal housing prices: a bayesian hedonic approach (In French) By Monique DANTAS (GREThA UMR CNRS 5113); Frédéric GASCHET (GREThA UMR CNRS 5113); Guillaume POUYANNE (GREThA UMR CNRS 5113)
  18. Climate change data for Austria and the period 2008-2040 with one day and km^2 resolution By Franziska Strauss; Herbert Formayer; Veronika Asamer; Erwin Schmid
  19. How Volatile is ENSO? By LanFen Chu; Chi-Chung Chen; Michael McAleer
  20. Deals versus rules : policy implementation uncertainty and why firms hate it By Hallward-Driemeier, Mary; Khun-Jush, Gita; Pritchett, Lant
  21. The Proximity of High Volume Developmental Neurotoxin Polluters to Schools: Vulnerable Populations at Risk By Cristina Legot; Bruce London; John Shandra
  22. Expected fatalities for one wedge of CCS mitigation: Actuarial risk assessment of carbon capture and storage at the global scale in 2050 By Minh Ha-Duong; Rodica Loisel
  23. Trading Off Generations: Infinitely-Lived Agent Versus OLG By Maik T. Schneider; Christian Traeger; Ralph Winkler
  24. Climate, population and famine in Northern Italy: General tendencies and Malthusian crisis, ca. 1450-1800 By Guido Alfani
  25. The Relationships between Economic, Environmental, Social and Corporate Governance Performance – The Moderating effect of Cultural Belongings of the MSCI 3000 Companies By Cerin, Pontus; Reynisson, Sindri
  26. Building Blocks: Investment in Renewable and Non-Renewable Technologies By Bushnell, James
  27. Company Car Taxation By Copenhagen Economics
  28. Catastrophic Natural Disasters and Economic Growth By Eduardo Cavallo; Sebastian Galiani; Ilan Noy; Juan Pantano
  29. Corruption, Conflict and the Management of Natural Resources By Horatiu Rus
  30. The Illusory Leader: Natural Resources, Taxation and Accountability By Eoin F. McGuirk; Eoin F. McGuirk
  31. Economics and Efficiency of Organic Farming vis-à-vis Conventional Farming in India By D. Kumara Charyulu; Subho Biswas

  1. By: Tisdell, Clem
    Abstract: Increasing globalisation of economic activity and accompanying economic growth have been factors in the worldwide loss of natural environments and biodiversity loss, and these losses have accelerated since the beginning of the Industrial Revolution, Emissions of many types of pollutants and wastes from human activity are rising globally and are exceeding the capacity of natural environments to absorb and neutralize them. This problem is exacerbated by the fact that the quality and size of some natural sinks for neutralizing them (such as forests) are declining. Consequently, these wastes are accumulating in many environments and pose a growing threat to human welfare and to sustainable economic development. There are, for instance, global concerns about greenhouse gas emissions, about the release of ozone-depleting substances and about the worldwide loss of existing biodiversity. Many new transboundary and local environmental issues have also emerged as a result of global economic growth. After considering such matters, arguments for global governance and the international harmonization of rules for regulating environmental use are examined. Reasons why the global spread of the Western evolved economic system reduces moral responsibility for environmental damage and increases the need for greater and more effective global and international environmental governance are outlined. Subsequently, several important global and international environmental problems are identified and shortcomings in their governance are highlighted. Further analysis is then completed to discover reasons why as economic globalisation increases, there are continuing failures in market and political systems to provide adequate governance of global and international environmental problems.
    Keywords: environmental economics, environmental governance, environmental law, environmental regulation, globalisation, global warming, greenhouse gases, transboundary pollution, transboundary natural resources., Environmental Economics and Policy,
    Date: 2009–11
  2. By: Konstantinos Angelopoulos; George Economides; Apostolis Philippopoulos
    Abstract: We welfare rank different types of second-best environmental policy. The focus is on the roles of uncertainty and public finance. The setup is the basic stochastic neoclassical growth model augmented with the assumptions that pollution occurs as a by-product of output produced and environmental quality is treated as a public good. To compare different policy regimes, we compute the welfaremaximizing value of the second-best policy instrument in each regime. In all cases studied, pollution permits are the worst recipe, even when their revenues are used to finance public abatement. When the main source of uncertainty is economic, the best recipe is to levy taxes (on pollution or output) and use the collected tax revenues to finance public abatement. However, when environmental uncertainty is the dominant source of extrinsic uncertainty, Kyoto-like rules for emissions, being combined with tax-financed public abatement, are better than taxes. Finally, comparing pollution and output taxes, the latter are better
    Keywords: General equilibrium; uncertainty; environmental policy.
    JEL: C68 D81 H23
    Date: 2010–04
  3. By: Daiju Narita
    Abstract: It is believed that the primary economic solution to climate change is an introduction of a carbon pricing system anchored to the social cost of carbon, either as a form of tax or tradable permits. Potentially significant externalities accompanying the introduction of emission-reducing technologies, however, imply that the standard argument does not capture some important aspects for the designing of climate policy such as expectation-driven technology adoption. By using a simple model, we show some possible cases where carbon emission reduction progresses in a self-fulfilling prophecy by firms expecting others’ future actions. In such circumstances, the carbon pricing system does not have much influence on determining the final outcome of economy-wide emission reduction. This highlights the danger of overemphasis on finding the “right” carbon price in policy making and the role of climate policy as expectation management
    Keywords: climate policy, technology choice, expectations, multiple equilibria
    JEL: Q54 O33
    Date: 2010–05
  4. By: Georg Müller-Fürstenberger; Gunter Stephan
    Abstract: This paper discusses the interplay between the choice of the discount rate, greenhouse gas mitigation and endogenous technological change. Neglecting the issue of uncertainty it is shown that the green golden rule stock of atmospheric carbon is uniquely determined, but is not affected by technological change. More general it is shown analytically within the framework of a reduced model of integrated assessment that optimal stationary stocks of atmospheric carbon depend on the choice of the discount rate, but are independent of the stock of technological knowledge. These results are then reinforced numerically in a fully specified integrated assessment analysis.
    Keywords: Integrated Assessment; discount rate; endogenous technological change; climate change
    JEL: Q40 O13
    Date: 2010–05
  5. By: Thomas Eichner; Rüdiger Pethig
    Abstract: This paper examines strategic incentives to subsidize green energy in a group of countries that operates an international carbon emissions trading scheme. Welfare-maximizing national governments have the option to discriminate against energy from fossil fuels by subsidizing green energy, although in our model green energy promotion is not efficiency enhancing. The cases of small and large countries turn out to exhibit significantly differences. While small countries refrain from subsidizing green energy and thus implement the efficient allocation, large permit-importing countries subsidize green energy in order to influence the permit price in their favor.
    Keywords: emissions trading, black energy, green energy, energy subsidies
    JEL: H21 Q42 Q48
    Date: 2010
  6. By: Bachev, Hrabrin
    Abstract: This paper presents the evolution of diverse modes of environmental management in Bulgarian agriculture, and assesses their efficiency and likely prospects of development. First, it analyzes the pace of development and the impact(s) on individual behavior of the major modes of environmental governance - institutional environment (distribution and enforcement of property, user, trading etc. rights and rules); private and collective modes (diverse private initiatives, and contractual and organizational arrangements); market modes (various decentralized initiatives governed by “free” market price movements and market competition); public modes (different forms of Government, community, international etc. intervention). Second, it assesses the impact(s) of dominating system of governance on the state of environment and identifies major eco-challenges, conflicts and risks – increased competition for natural resources, degradation and contamination of farmland, pollution of surface and ground waters, loss of biodiversity, deterioration of (agro)eco-systems services etc. Third, it projects likely evolution of environmental management in the specific “Bulgarian” economic, institutional and natural environment, and estimates its probable effect on environmental security, and suggests recommendations for institutional modernization and public policies improvement.
    Keywords: environmental management; market; private; public and hybrid modes; Bulgarian agriculture
    JEL: Q50 Q28 Q24 Q25 Q57 Q18 Q38 Q26 Q34 Q13 Q15 Q58
    Date: 2010–05–26
  7. By: Tisdell, Clement Allan
    Abstract: The conservation of natural forests contributes significantly to the goal of achieving sustainable economic development. There is, however, growing concern that natural forests (which provide tangible and intangible economic benefits to humankind) are being lost at a rate which (combined with other factors) seriously threatens sustainable economic development because of the environmental and social impacts of such loss. There is little doubt that in order to achieve sustainable development, multifunctional forest ecosystems (as well as other important ecosystems) need to be managed appropriately. However, determining the socially optimal level of conservation and use of forests is a challenging task. From a human point of view, it is clearly not optimal to conserve all natural forests. In other words, only some conservation of natural forest is socially optimal. The extent to which (traditional) neoclassical economics elucidates the matter is explored. It is found that due to market failures, a larger amount of forest conversion occurs than is socially optimal as determined by the application of traditional welfare economics. Nevertheless, neoclassical economics fails to address adequately the requirements for sustainable economic development. When the goal of economic sustainability is taken into account, even less forest conversion than recommended by neoclassical economics is socially optimal. Some economists (for example, Ramsey and Pigou) claim that the sustainability shortcoming of neoclassical economics can be overcome by applying a zero discount rate in making decisions about resource use. This, however, does not solve the problem because it does not give enough weight to the welfare of future generations and may result in too much forest conversion from an economic sustainability viewpoint. In general, variations in the discount rate are ineffective as a means for determining measures that ensure sustainable economic development. This finding seriously undermines established economic theory.
    Keywords: Discount rates, ecosystem services, environmental conservation, forests, intergenerational equity, multifunctionality, resource economics, sustainable development, Community/Rural/Urban Development, Environmental Economics and Policy, Q20, Q23, Q56, Q57,
    Date: 2010–02
  8. By: Valeria Costantini; Massimiliano Mazzanti; Anna Montini
    Abstract: The achievement of positive environmental performance at national level could strongly depend on differences in local capabilities of both institutions and the private business sector. Environmental regulation alone is a weak instrument if the institutional and business environment cannot transform regulation strengths into opportunities. In this paper, we use the new environmental accounting matrix for polluting emissions now available for the 20 Italian Regions that covers 24 sectors and combines a shift-share approach with spatial econometric modelling. We provide evidence of the role played by internal innovation, innovation spillovers and regional policies in shaping the geographical distribution of environmental performance achievements.
    Keywords: Environmental Performance, Technological Innovation, Regional Spillovers, Polluting Emissions, Italian Regions
    JEL: Q53 Q55 Q56 R15
    Date: 2010–05
  9. By: Ciriaci, Daria; Palma, Daniela
    Abstract: The present paper tests the hypothesis that environmental degradation and per capita income follow an inverted-U-shaped relationship (the so-called Environmental Kuznets Curve) at the Italian Nut3 level over the period 1990-2005. We adopt a spatial econometric approach to account for the localised nature of environmental damage. In this spatially-adapted EKC, we explicitly introduced the role of energy intensive sectors to control for local industrial structure. The experiment brought to light the existence of significant heterogeneity at the Italian Nut3 level and highlighted major differences between geographical clusters from the point of view of “ecological efficiency”.
    Keywords: Environmental Kuznets curves; Spatial econometrics; global and local pollutants; Geographically Weighted Regression Model.
    JEL: Q56 O13 Q53 C21
    Date: 2010–05–25
  10. By: Islegen, Ozge (Stanford University); Reichelstein, Stefan (Stanford University)
    Abstract: For fossil fuel power plants to be built in the future, carbon capture and storage (CCS) technologies offer the potential for significant reductions in CO2 emissions. We examine the break-even value for CCS adoptions, that is, the critical value in the charge for CO2 emissions that would justify investment in CCS capabilities. Our analysis takes explicitly into account that the supply of electricity at the wholesale level (generation) is organized competitively in some U.S. jurisdictions, while in others a regulated utility provides integrated generation and distribution services. For either market structure, we find that emissions charges in the range of $25-$30 per tonne of CO2 would be the break-even value for adopting CCS capabilities at new coal-fired power plants. The corresponding break-even values for natural gas plants are substantially higher, near $60 per tonne. Our break-even estimates serve as a basis for projecting the change in electricity prices once carbon emissions become costly. CCS capabilities effectively put an upper bound on the rise in electricity prices. We estimate this bound to be near 30% at the retail level for both coal and natural gas plants. In contrast to the competitive power supply scenario, however, these price increases materialize only gradually for a regulated utility. The delay in price adjustments reflects that for regulated firms the basis for setting product prices is historical cost, rather than current cost.
    Date: 2009–12
  11. By: Pasquale Lucio Scandizzo (Faculty of Economics, University of Rome "Tor Vergata"); Odin K Knudsen (JPMorgan Chase & Co)
    Abstract: In this paper, we explore the effects of dynamic uncertainty on the risk management of regulated industries and emission market. We consider as major sources of uncertainty the stochastic growth of demand for the industry output (e.g. electric energy) and the ensuing lack of information on the pollution levels of individual firms, their behavior and the behavior of the regulator. These sources of uncertainty are common in pollution permit trading as not only does the market respond to the volatility of fundamentals but also to the vagaries of the institutional structure, created by public policy and enforced through regulation. The paper shows that in the presence of strategic behavior on the part of the agents involved, even though both the level and the volatility of output increases over time, trading of permits is a highly effective instrument of risk management, since it allows the firms to pool the risks arising from the volatile environment, thereby simplifying enforcement, reducing emissions and improving resource allocation. Moreover, uncertainty plays a subtle influencing role, since on one hand it broadens the regulator’s deterrent power over potential polluters, while on the other it reduces the expected value of the sanction for the individual firm.
    Keywords: risk; permits; regulation; enforcement; dynamic uncertainty; option; pricing; equilibrium
    JEL: K34 H40 Q52
    Date: 2010–05–28
  12. By: Tisdell, Clem; Swarna Nantha, Hemanath
    Abstract: The extent to which conservation is feasible is constrained by budgets and the financial sacrifice stakeholders are willing to bear. Therefore a possible objective for conserving a species is to minimise the cost of achieving that stated aim. For example, if a minimum viable population (MVP) of a species is to be conserved, the size and type of habitats reserved for this could be selected to minimise cost. This requires consideration of the comparative (relative) opportunity costs of reserving different land types for conservation. A general model is developed to demonstrate this and is applied to the case of the orangutan. In the ecological literature, recommendations for reserving different types of land for conservation have been based on comparisons of either the absolute economic returns they generate if converted to commercial use or on differences in the density of a species they support. These approaches are shown to be deficient because they ignore relative trade-offs between species population and economic conversion gains at alternative sites. The proposed model for orangutan conservation shows that where land conversion may be impending, the selection of habitats (peat forests or dryland forests or combinations of both) for securing an MVP may in fact be different when comparative costs are factored in than if only absolute values are considered.
    Keywords: Comparative costs, Conservation in situ, costs of conservation, environmental policy, minimum viable populations, opportunity costs, orangutan (Pongo pygmaeus), Community/Rural/Urban Development, Environmental Economics and Policy, Q01, Q13, Q57, Q58.,
    Date: 2010–05
  13. By: Hahn, Robert W. (Sustainable Consumption Institute, University of Manchester and Georgetown Center for Business and Public Policy, Georgetown); Stavins, Robert N. (Harvard U and Resources for the Future)
    Abstract: We examine an implication of the "Coase Theorem" which has had an important impact both on environmental economics and on public policy in the environmental domain. Under certain conditions, the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights. That is, the overall cost of achieving a given aggregate emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation. We call this the independence property. This property is very important because it allows equity and efficiency concerns to be separated in a relatively straightforward manner. In particular, the property means that the government can establish the overall pollution-reduction goal for a cap-and-trade system by setting the cap, and leave it up to the legislature--such as the U.S. Congress--to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs. Our primary objective in this paper is to examine the conditions under which the independence property is likely to hold--both in theory and in practice. A number of factors can call the independence property into question theoretically, including market power, transaction costs, non-cost-minimizing behavior, and conditional allowance allocations. We find that, in practice, there is support for the independence property in some, but not all cap-and-trade applications.
    JEL: H11 L51 Q58
    Date: 2010–03
  14. By: Ashenfelter, Orley; Storchmann, Karl
    Abstract: In this paper we measure the effect of year to year changes in the weather on wine prices and winery revenue in the Mosel Valley in Germany in order to determine the effect that climate change is likely to have on the income of wine growers. A novel aspect of our analysis is that we compare the estimates based on auction, retail, and wholesale prices. Although auction prices are based on actual transactions, they provide a thick market only for high quality, expensive wines and may overestimate climateâs effect on farmer revenues. Wholesale prices, on the other hand, do provide broad coverage of all wines sold and probably come closest to representing the revenues of farmers. Overall, we estimate a 1°C increase in temperature would yield an increase in farmer revenue of about 30 percent.
    Keywords: wine, global warming, auction prices, retail prices, wholesale prices, Demand and Price Analysis, Environmental Economics and Policy,
    Date: 2010–05
  15. By: Tisdell, Clem
    Abstract: Some wildlife species are agricultural pests but these populations are often valued by other than agriculturalists. For non-farmers, the population levels of such wildlife are frequently pure public goods. This is one source of market failure in the economically optimal social control of an agricultural pest of this type. Secondly, if the species is geographically mobile, externalities occur between farmers in the control of the species, and this reduces the incentives of farmers as individuals to control the pest species. It is shown that depending on the relative strength of these opposing types of market failure, farmers may excessively reduce or insufficiently decrease the population of a species from a social economic point of view.
    Keywords: agriculture, market failure, mobility of pests, pest control, pure public goods., Environmental Economics and Policy, Q57,
    Date: 2010–05
  16. By: Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: This article investigates the modelling of the convenience yield in the European carbon market by using daily and intradaily measures of volatility. The convenience yield stems from differences in spot and futures prices, and can explain why firms hold inventories. The main findings are that (i) a simple AR(4) process best describes the 2008 convenience yield, and (ii) there exists a non linear relation between spot and futures prices. The approach developed in this article captures 74% of the explanatory power for the 2008 convenience yield variable in an autoregressive framework, with carbon spot price levels, moving averages and carbon futures realized volatility measures as exogenous regressors. These results are of interest for energy utilities, risk-managers, and traders exposed to the variation of carbon prices.
    Keywords: Convenience Yield; Carbon Price; EU ETS; High frequency Data; Realized Volatility
    Date: 2010–03–15
  17. By: Monique DANTAS (GREThA UMR CNRS 5113); Frédéric GASCHET (GREThA UMR CNRS 5113); Guillaume POUYANNE (GREThA UMR CNRS 5113)
    Abstract: The priority for France’s “Grenelle II” environmental legislation is to reduce the consumption of space caused by urbanisation. The best tool for achieving this goal is zoning within a territorial planning framework. Yet zoning also tends to increase property values, due to the scarcity effects it provokes (restricting the supply of land) as well as its amenity effects (the capitalisation of land use externalities in housing pricing).\r\nThe present article studies the impact on property prices of the distance to regulated zones located on Arcachon Bay near Bordeaux in Southwest France – a region that is particularly conducive to this kind of analysis because it combines exceptional landscape quality and strong urban pressures. We have estimated a hedonic model corrected for spatial self-correlation. Heteroscedasticity is corrected using Bayesian simulation methods, as suggested by Le Sage and Parent (2006).\r\nThe findings reveal tension between urban and natural amenities in the determination of property prices. Proximity to facilities and coastal amenities increase prices. The impact on housing prices of zoning materialising through Land Use Plans (LUP) is corroborated. Protected natural zones tend to raise prices as long as long they are not used for agricultural or forestry activities. Conversely, proximity to zones of future urbanisation tends to lower housing prices.
    Keywords: LUP zoning, Hedonic price method, Bayesian spatial econometrics, Coastal
    JEL: Q15 Q24 Q51 R14
    Date: 2010
  18. By: Franziska Strauss (Department of Economics and Social Sciences, University of Natural Resources and Applied Life Sciences, Vienna); Herbert Formayer (Institute of Meteorology, University of Natural Resources and Applied Life Sciences, Vienna); Veronika Asamer (Department of Economics and Social Sciences, University of Natural Resources and Applied Life Sciences, Vienna); Erwin Schmid (Department of Economics and Social Sciences, University of Natural Resources and Applied Life Sciences, Vienna)
    Abstract: We have developed climate change data for Austria and the period from 2008 to 2040 with temporal and spatial resolution of one day and one km^2 based on historical daily weather station data from 1975 to 2007. Daily data from 34 weather stations have been processed to 60 spatial climate clusters with homogeneous climates relating to mean annual precipitation sums and mean annual temperatures from the period 1961-1990. We have performed regression model analysis to compute a set of daily climate change data for each climate cluster. The integral parts of our regression models are i) the extrapolation of the observed linear temperature trend from 1975 to 2007 using an average national trend of ~0.05 °C per year derived from a homogenized dataset, and ii) the repeated bootstrapping of temperature residuals and of observations for solar radiation, precipitation, relative humidity, and wind to ensure consistent spatial and temporal correlations. The repeated bootstrapping procedure has been performed for all weather parameters based on the observed climate variabilities from the period 1975-2007. To account for a wider range of precipitation patterns, we have also developed precipitation scenarios including higher or lower annual precipitation sums as well as unchanged annual precipitation sums with seasonal redistribution. These precipitation scenarios constitute together with the bootstrapped scenarios of temperature, solar radiation, relative humidity and wind our climate change spectrum for Austria until 2040. These climate change data are freely available and we invite users to apply and comment on our high resolution climate change data.
    Keywords: regional climate change data; statistical climate change model; uncertainty spectrum; temperature trend; Austria.
    JEL: Y1 Y9 Z0
    Date: 2010–05
  19. By: LanFen Chu; Chi-Chung Chen; Michael McAleer (University of Canterbury)
    Abstract: The El Niños Southern Oscillations (ENSO) is a periodical phenomenon of climatic interannual variability, which could be measured through either the Southern Oscillation Index (SOI) or the Sea Surface Temperature (SST) Index. The main purpose of this paper is to analyze these two indexes in order to capture the volatility inherent in ENSO. The empirical results show that both the ARMA(1,1)-GARCH(1,1) and ARMA(3,2)-GJR(1,1) models are suitable for modelling ENSO volatility accurately. The empirical results show that 1998 is a turning point, which indicates that the ENSO strength has increased since 1998. Moreover, the increasing ENSO strength is due to the increase in greenhouse gas emissions. The ENSO strengths for SST are predicted for the year 2030 to increase from 29.62% to 81.5% if global CO2 emissions increase by 40% to 110%, respectively. This indicates that we will be faced with an even stronger El Nino or La Nina in the future if global greenhouse gas emissions continue to increase unabated.
    Keywords: ENSO; SOI; SOT; Greenhouse Gas Emissions; Volatility; GARCH; GJR; EGARCH
    Date: 2010–04–01
  20. By: Hallward-Driemeier, Mary; Khun-Jush, Gita; Pritchett, Lant
    Abstract: Firms in Africa report"regulatory and economic policy uncertainty"as a top constraint to their growth. This paper argues that often firms in Africa do not cope with policy rules, rather they face deals: firm-specific policy actions that can be influenced by firm actions (such as bribes) and characteristics (such as political connections). Using Enterprise Surveydata, the paper demonstrates huge variability in reported policy actions across firms notionally facing the same policy. The within-country dispersion in firm-specific policy actions is larger than the cross-national differences in average policy. The analysis shows that variability in this policy implementation uncertainty within location-sector-size cells is correlated with firm growth rates. These measures of implementation variability are more strongly related to lower firm employment growth than are measures of"average"policy action. The paper shows that the de jure measures such as Doing Business indicators are virtually uncorrelated with ex-post firm-level responses, further evidence that deals rather than rules prevail in Africa. Strikingly, the gap between de jure and de facto conditions grows with the formal regulatory burden. The evidence also shows more burdensome processes open up more space for making deals; firms may not incur the official costs of compliance, but they still pay to avoid them. Finally, measures of institutional capacity and better governance are closely associated with perceived consistency in implementation.
    Keywords: Environmental Economics&Policies,Microfinance,Public Sector Corruption&Anticorruption Measures,Climate Change Policy and Regulation,Climate Change Economics
    Date: 2010–05–01
  21. By: Cristina Legot; Bruce London; John Shandra
    Abstract: A substantial amount of environmental justice research has taken the form of “proximity studies” that analyze the race and class composition of populations living in close proximity to general sources of pollution. Such studies often find disproportionate minority, poverty, and low-income populations proximate to the pollution source. This proximity study has a different starting point. We begin by locating nearly 700 of the nation’s highest volume polluters of specific toxins that put children’s health and learning abilities at risk: developmental neurotoxins. We then examine (a) the numbers of schools and children located within two miles of each polluter, and (b) the race and class compositions of the populations within two miles. The result is a study of the proximity of vulnerable populations to pollution that highlights the vulnerability of children, not just that of minorities and the poor. We find thousands of schools and hundreds of thousands of children at risk. We also find that a substantial proportion of the high volume polluters studied are surrounded by disproportionate minority, poverty, and low-income populations.
    Keywords: proximity studies; environmental inequality; developmental toxins; neurotoxins; high-volume polluters; vulnerable populations: race and class, schools and children
    JEL: Q53 I19 I29 J15
    Date: 2010
  22. By: Minh Ha-Duong (CIRED - Centre international de recherche sur l'environnement et le développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Nationale des Ponts et Chaussées - Ecole Nationale du Génie Rural des Eaux et Forêts); Rodica Loisel (CIRED - Centre international de recherche sur l'environnement et le développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Nationale des Ponts et Chaussées - Ecole Nationale du Génie Rural des Eaux et Forêts)
    Abstract: This study estimates the human cost of failures in the CCS industry in 2050, using the actuarial approach. The range of expected fatalities is assessed for all steps of the CCS : additional coal production, carbon capture, transport, injection and storage, based on empirical evidence from technical or social analogues. The main finding is that a few hundred fatalities per year should be expected if the technology is used to avoid emitting 1 GtC yr-1 in 2050 at 1 500 baseload coal power plants. Implementing the CCS would arguably save several tens of thousands of lives in 2050 by mitigating climate change. Thus, in terms of expected life saved, CCS benefits outweigh its costs. The large majority of fatalities are attributable to mining more coal, next would be shipping casualties. These risks compare to today's industrial hazards : technical, knowable and occupational dangers for which there are socially accepted non-zero risk levels. If storage sites perform at safety levels socially tolerated today in analogue installations, expected fatalities per year due to leakage, while an important concern for the local public, should have a minor contribution in the total expected fatalities per year : less than one. But that condition on storage site performance will be disproved if a single fatality occurs before 2030.
    Keywords: CCS, risk, analogue, storage safety, mortality, actuarial approach.
    Date: 2010–05
  23. By: Maik T. Schneider; Christian Traeger; Ralph Winkler
    Abstract: The prevailing literature discusses intergenerational trade-offs predominantly in infinitely-lived agent models despite the finite lifetime of individuals. We discuss these trade-offs in a continuous time OLG framework and relate the results to the infinitely-lived agent setting. We identify three shortcomings of the latter: First, underlying normative assumptions about social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies. Regarding the recent debate on climate change, we conclude that it is indispensable to explicitly consider the generations' life cycles.
    Keywords: climate change; discounting; infinitely-lived agents; intergenerational equity; overlapping generations; time preference
    JEL: D63 H23 Q54
    Date: 2010–03
  24. By: Guido Alfani
    Abstract: This article provides a picture of long-term developments in the relationship between population and resources in Northern Italy that takes fully into account climate. It analyzes both the slow underlying development of climatic conditions over the centuries (in the theoretical framework of the Little Ice Age) and the consequences of short-term periods of heightened instability. The most severe famines are shown to be events triggered by climatic and environmental factors operating at a time when the maximum carrying capacity of the system had been reached or, at least, when the population was exerting considerable pressure on the potential for food production. This is the case of the famine of the 1590s, the greatest demographic catastrophe of a non-epidemic nature to strike Northern Italy since the Black Death and up to the end of the eighteenth century. The article also analyzes long-term paths of agrarian innovation, suggesting that most (but not all) of this was consistent with Boserup’s idea of chain-reactions of innovations induced by demographic pressure. These processes, though, were too slow to compensate for a rapidly growing population. Finally, the article provides a periodization in which the period between the famine of the 1590s and the great plague pandemic of 1630 is shown to be the crucial turning point in how population dynamics, climate and agrarian innovation interacted.
    Keywords: history of climate, plague, famine, Little Ice Age, Malthusian crisis, Early Modern Italy, agrarian innovation
    Date: 2010–05
  25. By: Cerin, Pontus (Umeå School of Business at Umeå University); Reynisson, Sindri (Royal Institute of Technology (KTH))
    Abstract: Increasingly, information on environmental, social and corporate governance has experienced attention around the world permeating into the focus of not only the general public but corporations, accountants, analysts, investors as well as policy makers. This paper investigates how corporate environmental, social and corporate governance aspects influence economic performance and how they differ between cultural groups. We find a positive relation between a firm's economic performance and it i) having a well functioning and structured board of directors with a fair compensation policy, ii) it being committed and effective in maintaining the company's reputation within the general community and iii) its capacity to increase its workforce loyalty and productivity. Furthermore, once the firms in the sample have been divided into sub-samples according to business culture and geographical position, we find differences in the effects of corporate environmental, social and corporate governance aspects on the financial performance of firms belonging to different sub-samples.
    Keywords: Economic environmental social and corporate governance performance; regional corporate governance cultures; ASSET4 data; MSCI 3000 firms
    Date: 2010–05–22
  26. By: Bushnell, James
    Abstract: Over the last several years, there has been a nation-wide intensification of policies directed at increasing the level of renewable sources of electricity.  These environmental policy changes have occurred against a backdrop of shifting economic regulation in power markets that has fundamentally redefined the mechanisms through which investors in power plants earn revenues. Rather than base payments upon costs, revenues in many regions are now based upon fluctuating energy prices and, in some cases, supplemental payments for installed capacity. This paper studies the interaction between these two major forces that are currently dominating the economic landscape of the electricity industry.  Using data from the western U.S., we examine how the large-scale expansion of intermittent resources of generation could influence long-run equilibrium prices and investment decisions under differing wholesale power market designs.  We find that as the level of wind penetration increases, the equilibrium investment mix of other resources shifts towards less baseload and more peaking capacity.  As wind penetration increases, an “average” wind producer earns increasingly more revenue under markets with capacity payments than those that base compensation on energy revenues.   
    Keywords: Investment; Renewable Energy; Capacity Markets
    Date: 2010–05–25
  27. By: Copenhagen Economics
    Abstract: This study presents new, nearly EU wide estimates of the level of subsidies to company cars. In addition, it also provides some preliminary rough illustrations of the possible effects of such subsidies on economic welfare and environment and discusses the policy implications.
    Keywords: taxation, car taxation, subsidies, environment
    JEL: H22 H23 H25 H31 H32 H54
    Date: 2010–06
  28. By: Eduardo Cavallo (Inter-American Development Bank, Research Department); Sebastian Galiani (Washington University in St. Louis); Ilan Noy (University of Hawaii, Department of Economics); Juan Pantano (Washington University in St. Louis)
    Abstract: We examine the short and long run average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies. We assess the counterfactual of the cases studied by constructing synthetic control groups taking advantage of the fact that the timing of large sudden natural disasters is an exogenous event. We ?find that only extremely large disasters have a negative effect on output both in the short and long run. However, we also show that this result from two events where radical political revolutions followed the natural disasters. Once we control for these political changes, even extremely large disasters do not display any signi?cant effect on economic growth. We also fi?nd that smaller, but still very large natural disasters, have no discernible effect on output in the short run or in the long run.
    Keywords: Natural Disasters, Political Change, Economic Growth and Causal Effects.
    JEL: O40 O47
    Date: 2010–04–28
  29. By: Horatiu Rus (Department of Economics, University of Waterloo)
    Abstract: The documented link between natural resources and civil conflict is not well understood. This paper uses a political economy framework to explore the emergence of resource-based civil conflict driven by group-level discontent. Previous models of resource conflicts are premised on the idea that the desire of enrichment by appropriating resources is the driving force for insurgents. This approach,however, treats the management of the contentious resources as exogenous, while also failing to account for the grassroots dissatisfaction that is often reported to spark and/or sustain rebellions. The proposed theoretical model offers a policy-based alternative -- under conditions related to the quality of governance, discontent about resource management can be instrumental in increasing the likelihood of an insurgency. While influential contributions in the literature tell the ‘resource abundance implies opportunity, implies greed-based conflict’ story, this paper focuses on relative scarcity to justify discontent and prompt a ‘grievance-based’ rebellion. The resource policy arises endogenously as the corrupt government trades off industry contributions and the cost induced by manifestations of resource-related discontent. Conservation effects of both internal pressure, in the form of civil unrest, and external pressure in the form of international trade and aid measures are analyzed in turn, and regulator corruption is shown to be an important ingredient of conflict. The last part presents some empirical evidence in support of the model’s predictions.
    JEL: Q27 Q56 D74 H56
    Date: 2010–05
  30. By: Eoin F. McGuirk (Institute for International Integration Studies, Trinity College Dublin); Eoin F. McGuirk
    Abstract: This paper proposes and tests a mechanism through which the natural resource curse can operate. I posit that, in the presence of high natural resource rents, leaders lower the burden of taxation on citizens in order to reduce the demand for democratic accountability. The theory is tested using micro-level data from public opinion surveys across 15 sub-Saharan countries, in addition to country-level data on natural resource rents, taxation and election proximity. It is found that an increase in natural resource rents decreases perceived tax enforcement, which in turn reduces the demand for regular, open and honest elections. Results are robust to alternative specifications. A supplementary analysis reveals that, consistent with the two-period model proposed, the effects are more acute closer to national elections. The findings support political-economy explanations of how natural resources affect economies, in which resource rents are purported to influence the decisions of the political elite through increased returns to staying in power.
    Keywords: Democracy; Political Economy; Natural Resources; Curses; Africa
    JEL: D73 O13 O55
    Date: 2010–05
  31. By: D. Kumara Charyulu; Subho Biswas
    Abstract: The present paper focuses mainly on the issues like economics and efficiency of organic farming visà- 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 nonparametric Data Envelopment Analysis (DEA) was used for analyzing the efficiency of the farming systems.
    Keywords: India, cotton, data, Gujarat, maharashtra, punjab, UP, padday, non-parametric, economics, efficiency, organic farming, conventional farming, DEA analysis,
    Date: 2010

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