nep-env New Economics Papers
on Environmental Economics
Issue of 2010‒07‒10
eighteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Climate Policy and Profit Efficiency By Lundgren, Tommy; Marklund, Per-Olov
  2. Spillovers from Climate Policy By Stephen P. Holland
  3. Willingness to pay for environmental attributes of non-food products : a real choice experiment By Michaud, C.; Llerena, D.; Joly, I.
  4. Willingness to pay for sustainable housing By Mandell, Svante; Wilhelmsson, Mats
  5. The indirect effect of fine particulate matter on health through individuals' life-style By Di Novi, Cinzia
  6. Follow the Sun! How investments in solar power plants in Sicily can generate high returns of investments and help to prevent global warming By Jan Christian Schinke
  7. Climate Policy under Fat-Tailed Risk: An Application of FUND By Tol, Richard S. J.; Anthoff, David
  8. Conservation Auctions in Manitoba: A Summary of a Series of Workshops By Packman, Katherine; Boxall, Peter
  9. A Net Present Value Model of Natural Gas Exploitation in Northern Alberta: An Analysis of Land Values in Woodland Caribou Ranges By Hauer, Grant; Adamowicz, Wiktor; Jagodinski, Robert
  10. Copenhagen and Beyond: Reflections on China's Stance and Responses By ZhongXiang Zhang; ;
  11. Social and environmental filters to market incentives: common land persistence in 19th century Spain By Francisco J. Beltrán Tapia
  12. Responsible Investment: A Vehicle for Environmentally Sustainable Economic Growth in South Africa By Giamporcaro, Stephanie; Pretorius, Lise; Visser, Martine
  13. Dynamic Econometric Testing of Climate Change and of its Causes By Travaglini, Guido
  14. Latvijas energosektora sistēmdinamikas prognozēšanas modeļa izstrāde By Skribans, Valerijs
  15. Does Scarcity Exacerbate the Tragedy of the Commons? Evidence from Fishersâ Experimental Responses By Maldonado, Jorge Hignio; Moreno-Sanchez, Rocio del Pilar
  16. Limiting Emissions and Trade: Some Basic Ideas By Kala Krishna
  17. The management of agricultural estates in Catalonia in the 19th and early 20th centuries. An approach through bookkeeping By Ramón Garrabou; Jordi Planas; Enric Saguer
  18. Quelle intégration des pays en développement dans le régime climatique ? Le mécanisme de développement propre en Asie By Pauline Lacour; Jean-Christophe Simon

  1. By: Lundgren, Tommy (Umeå School of Business at Umeå University, Umeå, Sweden); Marklund, Per-Olov (Centre for Environmental and Resource Economics (CERE), Umeå University and Swedish University of Agricultural Science, Umeå Sweden)
    Abstract: As widely recognized, human mankind stands before the most challenging problem of preventing anthropogenic climate change. As a response to this, the European Union advocates an ambitious climate policy mix. However, there is no consensus concerning the impact of stringent environmental policy on firms’ competitiveness and profitability. From the traditional ‘static’ point of view there are productivity losses to be expected. On the other hand, the so called Porter hypothesis suggests the opposite; i.e., due to ‘dynamic’ effects, ambitious climate and energy policies within the EU could actually be beneficial to firms in terms of enhanced profitability and competitiveness. Based on Sweden’s manufacturing industry, our main purpose is to specifically assess the impact of the CO2 tax scheme of Sweden on firms’ profit efficiency. The empirical methodology is based on stochastic frontier estimations and, in general, the results suggest we can neither reject nor confirm the Porter hypothesis across industry sectors. Therefore, we do not generally confirm the argument of stringent environmental policies having positive dynamic effects that potentially offset costs related to environmental policy.
    Keywords: CO2 tax; efficiency; stochastic frontier analysis; Swedish industry
    Date: 2010–06–28
  2. By: Stephen P. Holland
    Abstract: Climate policy spillovers can be either positive or negative since firms change their production processes in response to climate policies, which may either increase or decrease emissions of other pollutants. Understanding these ancillary benefits or costs has important implications for climate policy design, modeling, and benefit-cost analysis. This paper shows how spillovers can be decomposed into output effects (which have ancillary benefits) and substitution effects (which may have ancillary benefits or ancillary costs). The ambiguous net effect highlights the importance of polluters' responses to climate policy. I then test for climate policy spillovers in electricity power generation. The estimates are consistent with ancillary benefits from climate policy arising primarily from reductions in output (primarily at older plants) rather than from changes in emissions rates.
    JEL: H23 Q0
    Date: 2010–07
  3. By: Michaud, C.; Llerena, D.; Joly, I.
    Abstract: The supply and demand of products associated with environmental characteristics have grown considerably over the last decade. We propose to study how consumers value the environmental attributes of a product when no private health benefits are at stake. Individual willingness to pay for roses are measured by means of an economic experiment using the discrete choice frame and real economic incentives. The estimates from a mixed logit model show that consumers are willing to pay not only for an eco-label certifying environmentally sound cultivation practices but also for a lower carbon footprint.Classification-JEL: D12;C25;C91
    Date: 2010
  4. By: Mandell, Svante (vti – Swedish National Road and Transport Research Institute); Wilhelmsson, Mats (b) Center for Banking and Finance, Royal Institute of Technology, KTH)
    Abstract: Over the last decades there has been an increasing focus on how to build a sustainable society and in particular on how to design policies that pushes the society into a more sustainable direction. The present paper aims at analysing differences between house buyers when valuing environmental characteristics associated with the house as such. The theoretical framework used is based on the hedonic modelling, but we are also estimating the second stage by assuming a translog utility function. In doing that we are able to estimate the non-marginal willingness to pay for environmental housing attributes and whether environmental aware household have a higher willingness to pay or not. The conclusion to be drawn from the analysis is that there is a positive willingness to pay for environmental attributes. Hence, there may be room for policy measures such as information campaigns. However, it seems to be more effective concerning environmental housing attribute that do not require large investment.
    Keywords: Sustainability; housing; willingness to pay
    JEL: Q58 R21
    Date: 2010–07–05
  5. By: Di Novi, Cinzia
    Abstract: Limited literature has been published on the association between environmental health indicators, life-style habits and ambient air pollution. We have examined the association of asthma prevalence and the amount of health investment with daily mean concentrations of particulate matter (PM) with a mass median aerodynamic diameter less than 2.5 mm (PM2.5) in 16 metropolitan areas in U.S. using the Behavioral Risk Factor Surveillance System (2001) data in conjunction with the Air Quality System data collected by the Environmental Protection Agency. A multivariate probit approach has been used to estimate recursive systems of equations for environmental health outcomeand life-styles. A piecewise linear relationship has been postulated to describe the association between health outcome, health investment and pollution using the procedure mkspline from STATA 10. This model has allowed for fitting a "breakpoint" in the probit functions. We have assumed one change point at AQI value of 100 which corresponds to the US national air quality standard. The most interesting result concerns the influence of pollution on health-improving life-style choices: below a specified threshold concentration (AQI=100) a positive linear association exists between exposure to PM2.5 and health investments; above the threshold the association becomes negative. Hence, only if ambient pollution is in the 'satisfactory range' (AQI level at or below 100), individuals will have incentive to invest in health.
    Keywords: health production, multivariate probit, mkspline, lifestyle, fine particulate, asthma
    JEL: I12 C31 D13 D81 Q25
    Date: 2010–06
  6. By: Jan Christian Schinke
    Abstract: Germany could have reached Kyoto protocol obligations earlier if German solar investments would be relocated to Sicily. Additional benefits of emission savings and energy production should rise up to 72%. Nevertheless German solar power plants 2008 counted for 20 % of the financial benefits through support mechanisms EEG for renewable energies while the share at produced green energy was not more than 4,8%. The system seems absurd from an economical view, but is adopted in many other countries. Firstly, the paper will analyse general economic theories to underline the importance of financial supports for renewable energies and why policy maker can justify the subsidies for selected technologies through social costs effected by carbon exhaust. Secondly, place does matter and physics are the limit: the following chosen approach for expected final yield shrinks the additional benefits of the theoretical relocated south solar investments to +37%. Thirdly, the conclusions give political recommendations for the design of further subsidies of solar energies in Europe.
    Keywords: Photovoltaics; Renewable energies, feed in tariffs; Carbon exhausts; global warming; European energy policies
    JEL: Q42 Q48 Q54 L51 H23
    Date: 2010–06–28
  7. By: Tol, Richard S. J.; Anthoff, David
    Abstract: We apply four alternative decision criteria, two old ones and two new, to the question of the appropriate level of greenhouse gas emission reduction. In all cases, we consider a uniform carbon tax that is applied to all emissions from all sectors and all countries; and that increases over time with the discount rate. For a one per cent pure rate of the time preference and a rate of risk aversion of one, the tax that maximises expected net present welfare equals $120/tC in 2010. However, we also find evidence that the uncertainty about welfare may well have fat tails so that the expectation exists only by virtue of the finite number of runs in our Monte Carlo analysis. This confirms Weitzman's Dismal Theorem. We therefore consider minimax regret as a decision criterion. As regret is defined on the positive real line, we in fact consider large percentiles instead of the ill-defined maximum. Depending on the percentile used, the recommended tax lies between $100 and $170/tC. Regret is a measure of the slope of the welfare function, while we are in fact concerned about the level of welfare. We therefore minimise the tail risk, defined as the expected welfare below a percentile of the probability density function without climate policy. Depending of the percentile used, the recommended tax lies between $20 and $330/tC. We also minimise the fatness of the tails, as measured by the p-value of the test of the hypothesis that recursive mean welfare is stationary in the number of Monte Carlo runs. We cannot reject the null hypothesis of non-stationary at the 5% confidence level, but come closest for an initial tax of $50/tC. All four alternative decision criteria rapidly improve as modest taxes are introduced, but gradually deteriorate if the tax is too high. That implies that the appropriate tax is an interior solution. In stark contrast to some of the interpretations of the Dismal Theorem, we find that fat tails by no means justify arbitrarily large carbon taxes.
    Keywords: Climate change/integrated assessment/decision making under uncertainty/deep uncertainty/fat-tailed risk/dismal theorem
    Date: 2010–07
  8. By: Packman, Katherine; Boxall, Peter
    Abstract: Currently, the effect of human impact on the environment is becoming increasingly apparent. The encroachment of human activity has inevitably resulted in the loss or impairment of ecological goods and services (EG&S) around the globe as well as in our own backyard. EG&S include features such as wildlife habitat, biodiversity, soil renewal, or nutrient cycling. The loss of such features has become a sobering reality for Manitobans in the face of the utrophication of Lake Winnipeg as a result of practices contributing to nutrient loading into the lake. Since EG&S are very important to Manitobans, efforts are being made to explore different vehicles to encourage their provision. In order to address some of the environmental issues transpiring in Manitoba, there has been discussion on the usefulness of Market Based Instruments (MBIs). In the past, a number of programs focused on the environment in agriculture have been put forward and administered, however these have not been overly successful in incenting producers or providing significant levels of EG&S. This report will provide a summary of a series of workshops developed to bring awareness to stakeholders on an MBI known as a conservation auction (which may also be referred to as reverse auction, procurement auction, or tender).
    Keywords: Market based instruments, Conservation auction, Tender, Wetland restoration, Environmental Economics and Policy, D44, Q20, Q57,
    Date: 2010
  9. By: Hauer, Grant; Adamowicz, Wiktor; Jagodinski, Robert
    Abstract: This report was prepared for the purpose of providing background documentation of inputs to be used in mathematical programming models and papers, which are being prepared for our research project: Ecological and economic tradeoff analysis of conservation strategies for woodland caribou. The report presents a simple net present value model of resource and land value for natural gas in northern Alberta. The variables in the model include costs (drilling, seismic, operating and capital); geological variables (stratigraphic intervals, booked reserves, future reserves); drilling variables (well densities, drilling success rates, and drilling depths); production data and prices. Each variable is described in detail and methods of derivation are provided. A map of net present values for natural gas at a spatial resolution of 250ha sections is provided and overlaid on top of caribou ranges to provide a spatial representation of where the most valuable reserves are in relation to caribou ranges.
    Keywords: Net present value, energy reserves, natural gas, caribou, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy, Q49, Q32, Q57,
    Date: 2010
  10. By: ZhongXiang Zhang (East-West Center); ;
    Abstract: China had been singled out by Western politicians and media for dragging its feet on international climate negotiations at Copenhagen, the accusations previously always targeted on the U.S. To put such a criticism into perspective, this paper provides some reflections on China's stance and reactions at Copenhagen. While China's reactions are generally well rooted because of realities at home, some reactions could have been handled more effectively for a better image of China. The paper also addresses the reliability of China's statistics on energy and GDP, the issue crucial to the reliability of China's carbon intensity commitments. The paper discusses flaws in current international climate negotiations and closes with my suggestion that international climate negotiations need to focus on 2030 as the targeted date.
    JEL: Q41 Q43 Q48 Q52 Q54 Q58 Q53
    Date: 2010–06
  11. By: Francisco J. Beltrán Tapia (Departamento de Estructura e Historia Económica y Economía Pública, Universidad de Zaragoza)
    Abstract: The regional diversity of communal persistence in 19th century Spain has been well documented by historiography. Although the explanation of this divergence has been attributed to the social and environmental context, together with the prevailing market incentives that characterized the different rural societies of this period, there has been no clear assessment of the role played by each. Through a comparative study of the historical data at the provincial level, this paper analyzes the relative contribution of these elements to that divergence. The results diminish the significance of market signals and show how the social and environmental conditions of these communities interacted to limit, or promote, the dismantling of the common lands.
    Keywords: Spain, 19th Century, common lands, privatization, socio-ecological context
    JEL: N43 N53 P48 P14
    Date: 2010–05
  12. By: Giamporcaro, Stephanie; Pretorius, Lise; Visser, Martine
    Abstract: This paper explores whether any investment products or strategies in South Africa take environmental sustainability into account. By looking at how environmental, social, and governance (ESG) criteria are used in investment decision making, we found that most socially-responsible investment products and responsible investment strategies largely focus on infrastructure, development, and black economic empowerment. Environmental criteria do not yet receive comparable attention from South African asset managers and owners. Mainstreaming responsible investment principles will need to come from either an increase in demand for such practices by asset owners or from company positions on ESG issues.
    Keywords: responsible investment, socially responsible investment, pension funds, asset managers, screening, active share ownership
    JEL: G23 G28 H23
    Date: 2010–06–18
  13. By: Travaglini, Guido
    Abstract: The goal of this paper is to empirically test for structural breaks of world mean temperatures that may have ignited at some date the phenomenon known as “Climate Change” or “Global Warming”. Estimation by means of the dynamic Generalized Method of Moments is conducted on a large dataset spanning the recordable period from 1850 until present, and different tests and selection procedures among competing model specifications are utilized, such as Principal Component and Principal Factor Analysis, instrument validity, overtime changes in parameters and in shares of both natural and anthropogenic forcings. The results of estimation unmistakably show no involvement of anthropogenic forcings and no occurrence of significant breaks in world mean temperatures. Hence the hypothesis of a climate change in the last 150 years, suggested by the advocates of Global Warming, is rejected. Pacific Decadal Oscillations, sunspots and the major volcanic eruptions play the lion’s share in determining world temperatures, the first being a dimmer and the others substantial warmers.
    Keywords: Generalized Method of Moments; Global Warming; Principal Component and Factor Analysis; Structural Breaks.
    JEL: C51 C22 Q54
    Date: 2010–06–30
  14. By: Skribans, Valerijs
    Abstract: One of the most pressing problems in the Latvian economy is related to the energy sector. The most characteristic feature is coupled with the low efficiency of thermal energy consumption of households as a result of poor insulation of existing buildings in Latvia. Solving energy sector problems requires a comprehensive decision, both in energy production and consumption. It is therefore necessary to develop energy sector model to be able to evaluate not only the energy consumption growth and the factors affecting it directly, but also the feedback caused by the increase of the efficiency growth. The model shown in the article has been developed using system dynamic method. Latvian energy sector model consists of resources, production and consumption blocks. A separate place is taken by electricity generation hydroelectric power plants (HPP), net imports of electricity and so on. Resource blocks consist of primary energy resource blocks: petroleum products, solid fuel, wood and gas blocks. Primary energy resources are used for production of other energy forms, i.e. heat or electricity production, they are shown in the production blocks. Both the primary energy and produced energy (and electricity generated by HPP) are passed on to final consumers, who make consumer unit blocks. It consists of: transport, agriculture, households and other (industrial and services sectors) blocks. The model key role is to forecast energy consumption by separate groups, both consumers and energy resources groups; to estimate energy sector impact on environment. The model has been developed to estimate the impact of buildings thermo insulation program on Latvian economy.
    Keywords: energoefektivitāte; patēriņš; sistēmdinamika; modelēšana un imitācija; ēku siltināšana un renovācija; CO2 emisijas un kvotas
    JEL: Q00 C68 Q41 C00 Q01 C60 Q30 C53 Q52 C50 Q40 C30 Q20
    Date: 2010
  15. By: Maldonado, Jorge Hignio; Moreno-Sanchez, Rocio del Pilar
    Abstract: Economic Experimental Games (EEGs), focused to analyze dilemmas associated with the use of common pool resources, have shown that individuals make extraction decisions that deviate from the suboptimal Nash equilibrium. However, few studies have analyzed whether these deviations towards the social optimum are affected as the stock of resource changes. Performing EEG with local fishermen, we test the hypothesis that the behavior of participants differs under a situation of abundance versus one of scarcity. Our findings show that under a situation of scarcity, players over-extract a given resource, and thus make decisions above the Nash equilibrium; in doing so, they obtain less profit, mine the others-regarding interest, and exacerbate the tragedy of the commons. This result challenges previous findings from the EEG literature. When individuals face abundance of a given resource, however, they deviate downward from the prediction of individualistic behavior. The phenomenon of private, inefficient overexploitation is corrected when management strategies are introduced into the game, something that underlines the importance of institutions.
    Keywords: tragedy of the commons intensified, economic experimental games, resource abundance, resource scarcity, dynamic effects, Community/Rural/Urban Development, Environmental Economics and Policy, Institutional and Behavioral Economics, Land Economics/Use, Public Economics, D01, D02, D03, O13, O54, Q01, Q22, C93, C72, C73, C23,
    Date: 2009–10–05
  16. By: Kala Krishna
    Abstract: The computable general equilibrium models used in the literature tend to be a bit of a black box. This paper provides some intuition behind what goes on in these black boxes by laying out a simple general equilibrium model and intuitively explaining what lies behind the demand for emissions. It traces out how a reduction in total emissions allowed in one country aspects the general equilibrium and the determinants of the extent of leakage in the model as well as more generally. It concludes with some implications for policy.
    JEL: F18
    Date: 2010–07
  17. By: Ramón Garrabou (Universitat Autònoma de Barcelona); Jordi Planas (Universitat de Barcelona); Enric Saguer (Universitat de Girona)
    Abstract: The aim of this study is to analyse the management of rural estates during the 19th century and the first half of the 20th century using basically the expenditure registered in bookkeeping records. The information collected proceeds from eight private archives, and from them we have reconstructed a total of ten series of bookkeeping records which describe a group of farms spread throughout the main agricultural zones of Catalonia (Spain). The changes in the quantities provided by the landowners towards the running costs can help us to understand their role in the processes of growth and intensification of agricultural production. We show that, while the level of investment they made was modest, the landownwers did not behave like absentee landlords or idly live off their rents. The examples analysed give us some insight into the rationale behind some of the landowners' decisions and the diverse responses that they adopted according to the circumstances and the prevailing social and environmental conditions on their estates. The accounting records have proved to be a valuable source in this sense.
    Keywords: landowners, sharecropping, management of rural estates, bookkeeping records, agriculture, Catalonia
    JEL: O13 Q12 Q15 R14
    Date: 2010–06
  18. By: Pauline Lacour (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II); Jean-Christophe Simon (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: A partir d'une analyse de la mise en œuvre du Mécanisme de Développement Propre, ce papier vise à préciser les modalités d'intégration des pays en développement dans le régime climatique, et en particulier à mettre en évidence une différenciation entre les pays, entre les grandes régions (première partie). Ceci permet de s'interroger sur deux aspects peu évoqués jusqu'à présent : d'une part la possible dimension régionale dans les politiques climatiques nationales et internationales (deuxième partie) et d'autre part la pertinence des projets MDP face au défi d'une bonne articulation entre les efforts des politiques climatiques et la soutenabilité des stratégies de développement. Ces aspects sont analysés plus particulièrement dans le cas de pays d'Asie orientale. (troisième partie). Finalement, on s'interroge sur les enjeux de la transition du régime climatique dans une perspective post-2012.
    Keywords: pays en développement ; pays émergent ; régime climatique ; politique climatique ; politique d'atténuation ; mécanisme de développement propre
    Date: 2010–06–02

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