nep-env New Economics Papers
on Environmental Economics
Issue of 2010‒10‒02
fifty papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Implementing Carbon Tariffs: A Fool's Errand? By Michael Owen Moore
  2. The Optimal Climate Policy Portfolio when Knowledge Spills Across Sectors By Emanuele Massetti; Lea Nicita
  3. Liberalizing Climate-Friendly Goods and Technologies in the WTO: Product Coverage, Modalities, Challenges and the Way Forward By ZhongXiang Zhang
  4. In What Format and under What Timeframe Would China Take on Climate Commitments? A Roadmap to 2050 By ZhongXiang Zhang
  5. Sharing the Cost of Global Warming By Leroux, Justin; de Villemeur, Étienne
  6. The Problem of the Commons: Still Unsettled After 100 Years By Stavins, Robert N.
  7. A Tale of Two Externalities: Environmental Policy and Market Structure By Ana Espinola-Arredondo; Felix Munoz-Garcia
  8. Improving Quality of Ecotourism through Advancing Education and Training for Eco-tourism Guides By Skanavis, Constantina; Giannoulis, Christos
  9. Optimal capture and sequestration from the carbon emission flow and from the atmospheric carbon stock with heterogeneous energy consuming sectors By Amigues, Jean-Pierre; Lafforgue, Gilles; Moreaux, Michel
  10. Copenhagen and Beyond: Reflections on China’s Stance and Responses By ZhongXiang Zhang
  11. Oil Shortages, Climate Change and Collective Action By Newbery, D.
  12. Controlling Urban Air Pollution Caused by Households: Uncertainty, Prices, and Income By Carlos A. Chavez; John K. Stranlund; Walter Gomez
  13. A Numerical Analysis of Optimal Extraction and Trade of Oil under Climate Policy By Emanuele Massetti; Fabio Sferra
  14. The Impact of Unilateral Climate Policy with Endogenous Plant Location and Market Size Asymmetry By Francesca Sanna-Randaccio; Roberta Sestini
  15. Assessing China’s Energy Conservation and Carbon Intensity: How Will the Future Differ from the Past? By ZhongXiang Zhang
  16. Enviromental Performance and Regional Innovation Spillovers By Valeria Costantini; Massimiliano Mazzanti; Anna Montini
  17. Three Key Elements of Post-2012 International Climate Policy Architecture By Sheila M. Olmstead; Robert N. Stavins
  18. Interactions between State and Federal Climate Change Policies By Lawrence H. Goulder; Robert N. Stavins
  19. Why Green Parties Should Fear Successful International Climate Agreements By Patrick Laurency; Dirk Schindler
  20. Alternative Paths toward a Low Carbon World By Valentina Bosetti; Carlo Carraro; Massimo Tavoni
  21. Eastern Europe and the Former Soviet Union since the Fall of the Berlin Wall: Review of the Changes in the Environment and Natural Resources By Anil Markandya; Wan-Jung Chou
  22. Transporting goods and damages. The role of trade on the distribution of climate change costs By Schenker, Oliver
  23. Economic Assessment of Forest Ecosystem Services Losses: Cost of Policy Inaction By Aline Chiabai; Chiara Travisi; Anil Markandya; Helen Ding; Paulo Nunes
  24. The Economic Impact of the Green Certificate Market through the Macro Multiplier Approach By Maurizio Ciaschini; Francesca Severini
  25. On the Green Side of Trade Competitiveness? Environmental Policies and Innovation in the EU By Valeria Costantini; Massimiliano Mazzanti
  26. Biodiversity Valuation in Developing Countries: A Focus on Small Island Developing States (SIDS) By Sonja S. Teelucksingh; Paulo A.L.D. Nunes
  27. Environmental Regulation in the Presence of an Informal Sector By Soham Baksi; Pinaki Bose
  28. An Experimental Analysis of Compliance in Dynamic Emissions Markets By John K. Stranlund; James J. Murphy; John M. Spraggon
  29. Improving the Energy-Efficiency of Buildings: The Impact of Environmental Policy on Technological Innovation By Joëlle Noailly
  30. Technological greening, eco-efficiency, and no-regret strategy By BRECHET, Thierry; LY, Sylvette
  31. Proximity to Industrial Releases of Toxins and Childhood Respiratory, Developmental, and Neurological Diseases: Environmental Ascription in East Baton Rouge Parish By Cristina Legot; Bruce London; John Shandra
  32. Uncertain long-run emissions targets, CO2 price and global energy transition : a general equilibrium approach By DURAND-LASSERVE, Olivier; PIERRU, Axel; SMEERS, Yves
  33. International Cooperation on Climate Change Adaptation from an Economic Perspective By Kelly C. de Bruin; Rob B. Dellink; Richard S.J. Tol
  34. Cost pass-through in strategic oligopoly: Sectoral evidence for the EU ETS By Alexeeva-Talebi, Victoria
  35. The Effects of Conservation Reserve Program Participation on Later Land Use By Sarah Jacobson
  36. Polluters and Abaters By Alain-Désiré Nimubona; Bernard Sinclair-Desgagné
  37. North-South Convergence and the Allocation of CO2 Emissions By Humberto Llavador; John E. Roemer; Joaquim Silvestre
  38. The DICER Model: Methodological Issues and Initial Results By Ramon Arigoni Ortiz; Alexander Golub; Oleg Lugovoy; Anil Markandya; James Wang
  39. On the Optimal Taxation of Common-Pool Resources By Georgios Kossioris; Michael Plexousakis; Anastasios Xepapadeas; Aart de Zeeuw
  40. Forecasting the Path of USS CO2 Emissions Using State-Level Information By Maximillian Auffhammer; Ralf Steinhauser
  41. Pollution externalities in a Schumpeterian growth model By Koesler, Simon
  42. O cerrado brasileiro: notas para estudo By Mauro Augusto dos Santos; Alisson Flávio Barbieri; José Alberto Magno de Carvalho; Carla Jorge Machado
  43. The Value of the Trout Fishery at Rhodes, North Eastern Cape, South Africa, A Travel Cost Analysis Using Count Data Models By M Du Preez; S G Hosking
  44. Testing Value vs Waiting Value in Environmental Decisions under Uncertainty By Attanasi, Giuseppe; Montesano, Aldo
  45. Valuation of CCS-Ready Coal-Fired Power Plants: A Multi-Dimensional Real Options Approach By Rohlfs, Wilko; Madlener, Reinhard
  46. Corruption as a form of extreme individualism: An economic explanation based on geography and climate conditions By Arghyrou, Michael G
  47. Risky Activities and Strict Liability Rules: Delegating Safety By Gérard Mondello
  48. Classifying Ecosystem Services for Economic Valuation: The case of forest water services By Elena Ojea; Julia Martin-Ortega; Aline Chiabai
  49. la responsabilité globale des entreprises du service public marchand : vers un élargissement de la notion de responsabilité sociale et environnementale By Céline MERLIN-BROGNIART1; Marc-Hubert DEPRET

  1. By: Michael Owen Moore (Department of Economics/Institute for International Economic Policy, George Washington University)
    Abstract: Some governments are considering taxes on imports based on carbon content from countries that have not introduced climate change policies. Such carbon border taxes appeal to domestic industries facing higher charges for their own carbon emissions. This research demonstrates that there are enormous practical difficulties surrounding such plans. Various policies are evaluated according to World Trade Organization compliance, administrative plausibility, help in meeting environmental goals, and ability to deal with domestic pressures. The steel industry is used as a case study in this analysis. All considered policies arguably fail to meet at least one of these constraints, bringing into question the plausibility that a carbon border tax can be practical policy.
    Keywords: carbon tariffs, climate change, environmental policy
    JEL: F13 F18 H23
    Date: 2010–06
  2. By: Emanuele Massetti (Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change); Lea Nicita (Fondazione Eni Enrico Mattei)
    Abstract: This paper studies the implications for climate policy of the interactions between environmental and knowledge externalities. Using a numerical analysis performed with the hybrid integrated assessment model WITCH, extended to include mutual spillovers between the energy and the non-energy sector, we show that the combination between environmental and knowledge externalities provides a strong rationale for implementing a portfolio of policies for both emissions reduction and the internalisation of knowledge externalities. Moreover, we show that implementing technology policy as a substitute for stabilisation policy is likely to increase global emissions.
    Keywords: Technical Change, Climate Change, Development, Innovation, Spillovers
    JEL: C72 H23 Q25 Q28 O31 O41 Q54
    Date: 2010–07
  3. By: ZhongXiang Zhang (enior Fellow Research Program East-West Center)
    Abstract: The Doha Round Agenda (paragraph 31(3)) mandates to liberalize environmental goods and services. This mandate offers a good opportunity to put climate-friendly goods and services on a fast track to liberalization. Agreement on this paragraph should represent one immediate contribution that the WTO can make to fight against climate change. This paper presents the key issues surrounding liberalized trade in climate-friendly goods and technologies in WTO environmental goods negotiations. It begins with what products to liberalize and how. Clearly, WTO environmental goods negotiations to date show that WTO member countries are divided by this key issue. Focusing on the issue, the paper explores options available to liberalize trade in climate-friendly goods and technologies, both within and outside the WTO, and along with these discussions, discusses how to serve the best interests of developing countries.
    Keywords: Environmental Goods and Services, Low-Carbon Goods and Technologies, Doha Round, WTO
    JEL: F18 F13 Q56 Q54 Q58 Q48
    Date: 2010–09
  4. By: ZhongXiang Zhang (Senior Fellow Research Program East-West Center)
    Abstract: In what format and under what timeframe China would take on climate commitments is of significant relevance to China because it is facing great pressure both inside and outside international climate negotiations to exhibit greater ambition and is being confronted with the threats of trade measures. It is of significant global relevance as well because when China’s emissions peak is crucial to determine when global emissions would peak and because what China is going to do in what format has significant implications for the level and ambition of commitments from other countries. In response to these concerns and to put China in a positive position, this paper maps out the roadmap for China’s specific climate commitments towards 2050. Taking many factors into consideration, the paper argues that China needs to take on absolute emissions caps around 2030. While this date is later than the time frame that the U.S. and other industrialized countries would like to see, it would probably still be too soon from China’s perspective. However, it is hard to imagine how China could apply the brakes so sharply as to switch from rapid emissions growth to immediate emissions cuts, without passing through several intermediate phases. To that end, the paper envisions that China needs the following three transitional periods of increasing climate obligations before taking on absolute emissions caps that will lead to the global convergence of per capita emissions by 2050: First, further credible energy-conservation commitments starting 2013 and aimed at cutting China’s carbon intensity by 45-50% by 2020; second, voluntary “no lose” emission targets starting 2018; and third, binding carbon intensity targets as its international commitment starting 2023. Overall, this proposal is a balanced reflection of respecting China’s rights to grow and recognizing China’s growing responsibility for increasing greenhouse gas emissions as China is approaching the world’s largest economy.
    Keywords: Carbon Intensity Target, Binding Emissions Caps, Post-Copenhagen Climate Negotiations, Energy Saving; Renewable Energy, Clean Development Mechanism, China, USA, India
    JEL: Q42 Q48 Q52 Q54 Q58
    Date: 2010–09
  5. By: Leroux, Justin (HEC Montréal, CIRANO and CIRPEE); de Villemeur, Étienne (Toulouse School of Economics (IDEI & GREMAQ))
    Abstract: Due to meteorological factors, the distribution of the environmental damage due to climate change bears no relationship to that of global emissions. We argue in favor of offsetting this discrepancy, and propose a "global insurance scheme" to be fincanced according to countries responsibility for climate change. Because GHG decay very slowly, we argue that the actual burden of global warming should be shared on the basis of cumulated emissions, raher than sharing the expected costs of actual emissions as in a Pigovian taxation scheme. We characterize new versions of two well-known cost-sharing schemes by adapting the responsibility theory of Bossert and Fleurbaey (1996) to a context with externalities.
    JEL: D62 D63 Q54
    Date: 2010–07
  6. By: Stavins, Robert N.
    Abstract: The problem of the commons is more important to our lives and thus more central to economics than a century ago when Katharine Coman led off the first issue of the American Economic Review. As the U.S. and other economies have grown, the carrying-capacity of the planet — in regard to natural resources and environmental quality — has become a greater concern, particularly for common-property and open-access resources. The focus of this article is on some important, unsettled problems of the commons. Within the realm of natural resources, there are special challenges associated with renewable resources, which are frequently characterized by open access.An important example is the degradation of open-access fisheries. Critical commons problems are also associated with environmental quality. A key contribution of economics has been the development of market-based approaches to environmental protection. These instruments are key to addressing the ultimate commons problem of the twenty-first century — global climate change.
    Keywords: common-property resource, open-access resource, fisheries, global climate change
    JEL: Q22 Q28 Q50 Q54 Q58
    Date: 2010–09–22
  7. By: Ana Espinola-Arredondo; Felix Munoz-Garcia (School of Economic Sciences, Washington State University)
    Abstract: This paper examines the two externalities that a country's environmental regulation imposes on other country's welfare: an environmental externality, due to transboundary pollution, and a competitive advantage externality, as regulations affect domestic firms' abatement costs, which impact the profits of their foreign competitors. We first analyze the emission standards that countries independently set under different market structures and then compare them with the standards set under international environmental agreements that internalize one or both types of externalities. The paper hence disentangles the effect of each externality. We show that firms’ profits increase when countries participate in international treaties if the environmental damage from pollution is relatively low and such pollution is not significantly transboundary. We hence demonstrate that international environmental agreements can serve as cooperative devices firms use to ameliorate overproduction and increase profits, without the need to form collusive agreements.
    Keywords: Transboundary pollution, strategic environmental policy, international environmental agreement, market structure
    JEL: C72 F12 H23 Q28
    Date: 2010–05
  8. By: Skanavis, Constantina; Giannoulis, Christos
    Abstract: Environmental interpretation in Greece is in its infancy as an academic field. There are no nature guides or specific conservation objectives, and there is no professional training for non formal environmental educators and/or interpreters. The a of this paper is to reveal the necessity of integrating environmental interpretation in training of Greek Ecotour guides.The focus is on developing abilities which could enable Greek Ecotour guides to communicate and interpret the significance of the environment, promote minimal impact practices, ensure the sustainability of the natural and cultural environment, and motivate visiting tourists to evaluate the quality of life in relation to larger ecological or cultural concerns. The rationale underpinning this objective is that by providing accurate and effective interpretation of ecotourism sites as well as monitoring and modelling environmental responsible behaviour, the outcome will be to promote positive impacts of tourism and alleviate negative ones Local community will be encouraged to participate in environmental management of ecotourism settings. Furthermore, connecting ecotourism commitment to returning benefits, particularly economic and employment ones to local communities, it stresses that training local people to be interpretive guides, helps achieving not only ecological sustainability but also economic sustainability. Once trained, guides may encourage conservation action amongst both tourists and the local community.
    Keywords: Environmental Educators’ training; Environmental Interpretation; non formal Environmental Education; eco-tour guides; Greece
    JEL: O1 M1 L83
    Date: 2009–12–05
  9. By: Amigues, Jean-Pierre (Toulouse School of Economics (INRA and LERNA)); Lafforgue, Gilles (Toulouse School of Economics (INRA-LERNA)); Moreaux, Michel (Toulouse Business School and Toulouse School of Economics (INRA-LERNA))
    Abstract: We characterize the optimal exploitation paths of two primary energy resources. The first one is a non-renewable polluting resource, the second one a pollution-free renewable resource. Both resources can supply the energy needs of two sectors. Sector 1 is able to reduce the potential carbon emissions generated by its non-renewable energy consumption at a reasonable cost while sector 2 cannot. Another possibility is to capture the carbon spread in the atmosphere but at a significantly higher cost. We assume that the atmospheric carbon stock cannot exceed some given ceiling and that this constraint is effective. We show that there may exist paths along which it is optimal to begin by fully capturing the sector 1's potential emission flow before the ceiling constraint begins to be effective. Also there may exist optimal paths along which both capture devices have to be activated, in which case the potential emission flow of sector 1 is firrst fully abated and next the society must resort to the atmospheric carbon reducing device.
    JEL: Q31 Q32 Q41 Q42 Q54
    Date: 2010–02–11
  10. By: ZhongXiang Zhang (Research Program 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.
    Keywords: Copenhagen Climate Negotiations, Emissions Reductions, Carbon Intensity Target, Binding Emissions Caps, Statistics on Energy and GDP, Coal and Energy Consumption, China, USA
    JEL: Q41 Q43 Q48 Q52 Q54 Q58 O53
    Date: 2010–07
  11. By: Newbery, D.
    Abstract: Concerns over future oil scarcity might not be so worrying but for the high carbon content of substitutes, and the limited capacity of the atmosphere to absorb additional CO2 from burning fuel. The paper argues that the tools of economics are helpful in understanding some of the key issues in pricing fossil fuels, the extent to which pricing can be left to markets, the need for, and design of, international agreements on corrective carbon pricing, and the potential prisoners’ dilemma in reaching such agreements, partly mitigated in the case of oil by current taxes and the likely incidence of carbon taxes on the oil price. The ‘Green Paradox’ in which carbon pricing exacerbates climate change is theoretically possible, but empirically unlikely.
    Keywords: exhaustible resources, climate change, carbon prices, prisoners’ dilemma, international agreement, Green Paradox
    JEL: Q32 Q54 H23 L71
    Date: 2010–09–22
  12. By: Carlos A. Chavez (Departamento de Economia, Universidad de Concepcion Chile); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst); Walter Gomez (Departamento de Ingenieria Matematica, Universidad de la Frontera Chile)
    Abstract: We examine the control of air pollution caused by households burning wood for heating and cooking in the developing world. Since the problem is one of controlling emissions from nonpoint sources, regulations are likely to be directed at household choices of wood consumption and combustion technologies. Moreover, these choices are subtractions from, or contributions to, the pure public good of air quality. Consequently, the efficient policy design is not independent of the distribution of household income. Since it is unrealistic to assume that environmental authorities can make lump sum income transfers part of control policies, efficient control of air pollution caused by wood consumption entails a higher tax on wood consumption and a higher subsidy for more efficient combustion technologies for higher income households. Among other difficulties, implementing a policy to promote the adoption of cleaner combustion technologies must overcome the seemingly paradoxical result that efficient control calls for higher technology subsidies for higher income households.
    Keywords: efficiency, urban air pollution, nonpoint pollution, environmental policy, uncertainty
    JEL: L51 H23 Q28
    Date: 2010–07
  13. By: Emanuele Massetti (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center for Climate Change); Fabio Sferra (Fondazione Eni Enrico Mattei)
    Abstract: We introduce endogenous investments for increasing conventional and non-conventional oil extraction capacity in the integrated assessment model WITCH. The international price of oil emerges as the Nash equilibrium of a non-cooperative game. When carbon emissions are not constrained, oil is used throughout the century, with unconventional oil taking over conventional oil from mid-century onward. When carbon emissions are constrained, oil consumption drops dramatically and the oil price is lower than in the BaU. Unconventional oil is not extracted. Regional imbalances in the distribution of stabilisation costs are magnified and the oil-exporting countries bear, on average, costs three times larger than in previous estimates.
    Keywords: Climate Policy, Integrated Assessment, Oil Production, Oil Revenues, Oil Trade
    JEL: E17 F17 Q32 Q43 Q54
    Date: 2010–09
  14. By: Francesca Sanna-Randaccio (Sapienza Università di Roma); Roberta Sestini (Sapienza Università di Roma)
    Abstract: This paper analyses the impact of unilateral climate policy on firms’ international location strategies in emission-intensive sectors, when countries differ in terms of market size. The cases of partial and total relocation via foreign direct investment are separately considered. A simple international duopoly model highlights the differences between short-term and long-term effects. In the short-term no change in location is a likely outcome in very capital-intensive sectors, and when there is a strategy shift this takes the form of partial instead of total relocation. In the long-run total relocation becomes a feasible outcome. However we found that, when tighter mitigation measures are introduced by the larger country and unit transport cost is high, with a pronounced market asymmetry the probability of firms not relocating abroad is high even in the long-term. The welfare implications of unilateral environmental measures are assessed considering global industrial pollution and accounting for shifts in location strategy.
    Keywords: Foreign Direct Investment, Carbon Leakage, Climate Policy, Relocation, Transport Costs, Welfare
    JEL: F12 F23 Q58
    Date: 2010–09
  15. By: ZhongXiang Zhang (Research Program East-West Center)
    Abstract: As an important step towards building a “harmonious society” through “scientific development”, China has incorporated for the first time in its five-year economic plan an energy input indicator as a constraint. While it achieved a quadrupling of its GDP while cutting its energy intensity by about three quarters between 1980 and 2000, China has had limited success in achieving its own 20% energy-saving goal set for 2010 to date. Despite this great challenge at home, just prior to the Copenhagen climate summit, China pledged to cut its carbon intensity by 40-45% by 2020 relative its 2005 levels to help to reach an international climate change agreement at Copenhagen or beyond. This raises the issue of whether such a pledge is ambitious or just represents business as usual. To put China’s climate pledge into perspective, this paper examines whether this proposed carbon intensity goal for 2020 is as challenging as the energy-saving goals set in the current 11th five-year economic blueprint, to what extent it drives China’s emissions below its projected baseline levels, and whether China will fulfill its part of a coordinated global commitment to stabilize the concentration of greenhouse gas emissions in the atmosphere at the desirable level. Given that China’s pledge is in the form of carbon intensity, the paper shows that GDP figures are even more crucial to the impacts on the energy or carbon intensity than are energy consumption and emissions data by examining the revisions of China’s GDP figures and energy consumption in recent years. Moreover, the paper emphasizes that China’s proposed carbon intensity target not only needs to be seen as ambitious, but more importantly it needs to be credible. Given that China has shifted control over resources and decision making to local governments as the result of the economic reforms during the past three decades, the paper argues the need to carefully examine those objective and subjective factors that lead to the lack of local official’s cooperation on the environment, and concludes that their cooperation, and strict implementation and coordination of the policies and measures enacted are of paramount importance to meeting China’s existing energy-saving goal in 2010, its proposed carbon intensity target in 2020 and whatever climate commitments beyond 2020 that China may take.
    Keywords: Energy Saving, Renewable Energy, Carbon Intensity, Post-Copenhagen Climate Negotiations, Climate Commitments, China
    JEL: Q42 Q43 Q48 Q52 Q53 Q54 Q58
    Date: 2010–07
  16. By: Valeria Costantini (University of Roma III); Massimiliano Mazzanti (University of Ferrara, University of Bologna and CERIS-CNR); Anna Montini (University of Bologna)
    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: 2010–09
  17. By: Sheila M. Olmstead (chool of Forestry and Environmental Studies, Yale University, Resources for the Future); Robert N. Stavins (John F. Kennedy School of Government, Harvard University, Resources for the Future, National Bureau of Economic Research)
    Abstract: We describe three essential elements of an effective post-2012 international global climate policy architecture: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change.
    Keywords: Global Climate Change, Global Warming, Policy Architecture, Kyoto Protocol
    JEL: Q54 Q58 Q48 Q39
    Date: 2010–07
  18. By: Lawrence H. Goulder (Stanford University National Bureau of Economic Research Resources for the Future); Robert N. Stavins (John F. Kennedy School of Government, Harvard University, Resources for the Future National Bureau of Economic Research)
    Abstract: Federal action addressing climate change is likely to emerge either through new legislation or via the U.S. EPA’s authority under the Clean Air Act. The prospect of federal action raises important questions regarding the interconnections between federal efforts and state-level climate policy developments. In the presence of federal policies, to what extent will state efforts be cost-effective? How does the co-existence of state- and federal-level policies affect the ability of state efforts to achieve emissions reductions? This paper addresses these questions. We find that state-level policy in the presence of a federal policy can be beneficial or problematic, depending on the nature of the overlap between the two systems, the relative stringency of the efforts, and the types of policy instruments engaged. When the federal policy sets limits on aggregate emissions quantities, or allows manufacturers or facilities to average performance across states, the emission reductions accomplished by a subset of U.S. states may reduce pressure on the constraints posed by the federal policy, thereby freeing facilities or manufacturers to increase emissions in other states. This leads to serious “emissions leakage” and a loss of cost-effectiveness at the national level. In contrast, when the federal policy sets prices for emissions or does not allow manufactures to average performance across states, these difficulties are usually avoided. Even in circumstances involving problematic interactions, there may be other attractions of state-level climate policy. We evaluate a number of arguments that have been made to support state-level climate policy in the presence of federal policies, even when problematic interactions arise.
    Keywords: Global Climate Change, Federalism, Cap-And-Trade, Carbon Tax, Regulation
    JEL: H11 H77 K32 L51 Q48 Q54
    Date: 2010–07
  19. By: Patrick Laurency; Dirk Schindler
    Abstract: In recent years, differences between traditional and green parties have been leveled with respect to climate protection. We show that this convergence in party platforms can be explained by successful international climate agreements. We set up a voting model where political parties differ in their preferences for climate protection and where climate protection causes both resource costs and distortions in the international allocation of production. Successful international agreements, which increase climate protection, reduce effective abatement costs and affect traditional parties in a different way than green parties, since a lower preference for climate protection implies a higher price (cost) elasticity of demand. Furthermore, we point out that increasing flexibility and efficiency in abatement mechanisms is preferable to forming a climate coalition that focuses directly on emission reduction commitments.
    Keywords: Climate Protection, Political Economy, Platform Convergence
    Date: 2010
  20. By: Valentina Bosetti (Fondazione Eni Enrico Mattei, CESifo and CMCC); Carlo Carraro (Fondazione Eni Enrico Mattei, University of Venice, CEPR, CESifo and CMCC); Massimo Tavoni (Fondazione Eni Enrico Mattei, Princeton University and CMCC)
    Abstract: This paper analyzes the economic and investment implications of a series of climate mitigation scenarios, characterized by different levels of ambition in terms of long term stabilization goals and the transition to attain them. In particular, the implications of fairly ambitious scenarios are investigated for the first time by means of the model WITCH. Although milder climate objectives can be achieved at moderate costs, our results show that stringent stabilization paths, compatible with the target of the European Union and the G8, might have important economic repercussions. The timing of mitigation action influences the cost of meeting a target as well the stringency of the targets we can aspire to. To contain costs it is crucial to rely on a wide mitigation portfolio. Strong reductions in energy consumption through enhanced energy efficiency and life style changes are needed to achieve stringent climate policies. The analysis carried out in the present paper contains several idealistic assumptions that could be violated in the real world where some technologies may not be fully available, technology transfers and diffusion are imperfect, some world regions may not accept to reduce their GHG emissions, trading might be limited to some sectors or to a fraction of the total abatement effort, etc. This would increase the challenge of climate protection and the costs of reducing GHG emissions.
    Keywords: Climate Policy, Stabilization Costs
    JEL: C72 H23 Q25 Q28
    Date: 2010–05
  21. By: Anil Markandya (University of Bath, UK and Basque Centre for Climate Change); Wan-Jung Chou (University of Bath)
    Abstract: This paper reviews the environmental record of the transition countries of Eastern Europe and Central Asia since the fall of the Berlin Wall, with a focus on areas of key concern to public policy at the present time. With the impacts of environment on public health being given the highest priority, we examined several associated health indicators at the national level, as well as looking at important environmental issues at the local level. In this respect, we focus on environmental problems related to air and water quality, land contamination, and solid waste management. Despite showing a highly differentiated performance across the region, the results suggest that inadequate environmental management seen in several of the transition countries in the past 20 years has put people’s health and livelihood under huge threats. Moreover, this paper looks at the development of policy responses and resources, i.e. environmental expenditures, in these countries, during the process of transiting from centrally planned economies to market-based one. Similarly, we identify various degrees of progress across the region. The findings reinforce the need for better coherence between national environmental expenditure and international environmental assistance, as well as the actual enforcement of national regulations and international agreements in those non-EU transition countries.
    Keywords: Eastern Europe, Environmental Record, Public Health
    JEL: N34 N54 I18
    Date: 2010–05
  22. By: Schenker, Oliver
    Abstract: Impacts from climate change vary signicantly across world regions. Whereas regions in tropical and subtropical areas will sufer severely from the eects of climate change, are the impact estimates for regions in more northern latitudes relative moderate. But regions can not be considered as independent from each others exposure. In this paper we examine the spillover of climate change impacts between regions through international trade within a climate sensitive, dynamic CGE model with international trade. Under the emission scenario SRES A1B we observe at the end of the twenty-first century regional losses between 2 and 13 % GDP relative to a scenario without climate change. By means of a decomposition method we show that such a spillover of damages through international trade has a signicant influence, positive or negative, on the total costs of climate change for a region. For regions with low exposure to climate change and high adaptive capacities, spillover effects are responsible for a third of total costs from climate change.
    Keywords: Climate Change; Multi-regional Dynamic CGE Model; International Trade; Decomposition of General Equilibrium Effects.
    JEL: C68 O41 F47 D58
    Date: 2010–07–19
  23. By: Aline Chiabai; Chiara Travisi; Anil Markandya; Helen Ding; Paulo Nunes
    Abstract: This paper presents a bottom-up methodological framework for estimating some of the key ecosystem services provided by forests biomes worldwide. We consider the provision of wood and non-wood forest products, recreation and passive use, and the forests’ contribution to climate regulation in terms of carbon sequestration capacity. The valuation framework derives per hectare estimates by applying meta-analysis, value transfer and scaling up procedures in order to control for the existing heterogeneities across world regions and forest biomes. The first part of the study estimates stock values per hectare for each forest ecosystem service in the baseline year 2000 and in the year 2050. Carbon stocks represent, in general, the highest value per hectare, followed by provisioning services, passive use and recreational values. The second part provides an estimation of the welfare loss (or gain) associated with policy inaction in the period 2000-2050 leading to a change in the forest area. Welfare results are mixed and require a careful interpretation. In different world regions, no policy initiative can results in both gains and losses, which appear to be sensitive to the use of lower or upper bounds values per hectare.<br />
    Keywords: forest ecosystem goods and services; Millennium Ecosystem Assessment; value-transfer, meta-analysis; market and non-market valuation
    Date: 2010–09
  24. By: Maurizio Ciaschini (University of Macerata); Francesca Severini (University of Macerata)
    Abstract: In the last decade, as many other European countries, the Italian Government adopted several reforms in order to increase the use of Renewable Energy Sources (RES). The liberalization of the electricity market that represents one of these reforms aims to reach environmental benefits from the substitution of fossil fuel with renewable sources. The Italian Green Certificate market was introduced in 2002 in order to accomplish this objective and represents a mechanism where a quota of renewable electricity is imposed to suppliers in proportion to their sales. The electricity industries are obliged to meet this condition by producing the quantity of renewable electricity by means of a change in their production process, otherwise they must buy a number of certificates corresponding to the quota. This mechanism changes the importance of the electricity industry first in promoting climate protection, then in terms of the impact on the economy as a whole. A policy aimed to develop the market of green certificates may lead to environmental improvement by switching the energy production process to renewable resources. But above all an increase in demand for green certificates, resulting from a reform on the quota of renewable electricity, can generate positive change in all components of the industrial production. For this purpose, the paper aims to quantify the economic impact of a reform on Green Certificate market for the Italian system by means of the Macro Multiplier (MM) approach. The analysis is performed through the Hybrid Input-Output (I-O) model that allows expressing the energy ows in physical terms (GWh) while all other ows are expressed in monetary terms (€). Moreover, through the singular value decomposition of the inverse matrix of the model, which reveals the set of key structures of the exogenous change of final demand, we identify the appropriate key structure able to obtain both the expected positive total output change and the increase of electricity production from RES.
    Keywords: Environmental Policy, Hybrid I-O model, Macro Multiplier
    JEL: C67 E23 Q43 Q48
    Date: 2010–09
  25. By: Valeria Costantini (University of Roma Tre); Massimiliano Mazzanti (University of Ferrara, and CERIS-CNR)
    Abstract: This paper aims to explore how the competitiveness of the EU economy, here captured by export dynamics over the medium run (1996-2007), has been affected by environmental regulation both on the public and private sector side. The strong and weak versions of the Porter hypothesis are tested by specifying the export dynamics of five aggregated manufacturing sectors classified by their technological or environmental content using a dynamic panel data estimator applied to a theoretically-based gravity model. When testing the strong version on export performances of manufacturing sectors, the overall effect of environmental policies does not conflict with export competitiveness. When testing the weak version using export flows of environmental goods, environmental policies, as well as innovation activities, all foster competitive advantages of green exports. Public policies and private innovation patterns trigger higher efficiency in the production process, thus turning the perception of environmental protection actions as a production cost into a net benefit. These results constitute useful advice for policy makers involved in the new wave of environmental tax reforms and green recovery packages currently debated at European Union level.
    Keywords: Environmental Policies, Porter Hypothesis, Technological Innovation, Export Performances, Gravity Model, European Union
    JEL: F14 O14 Q43 Q56
    Date: 2010–07
  26. By: Sonja S. Teelucksingh (Fondazione Eni Enrico Mattei and University of the West Indies); Paulo A.L.D. Nunes (Fondazione Eni Enrico Mattei and Ca’ Foscari University of Venice)
    Abstract: The Millennium Development Goals explicitly recognise “sustainable development” as a target. A step towards this is a greater understanding of the significant role of biodiversity in rural communities of developing countries who depend most on the ecosystem goods and services and who as a result may suffer most from its continued degradation. Understanding the input of biodiversity in developing countries to the provision of the ecosystem goods and services (EGS) that are essential to their human well-being is seen as a significant first step in sustainable development, and environmental valuation is a necessary tool for achieving this objective. However, valuing biodiversity in a developing country context can be an intricate affair. While economic valuation literature yields a range of tried and tested methodological techniques for measuring biodiversity, the question remains as to whether these generalised techniques are capable of revealing the complexities of local environmental use in developing countries. A heterogeneous group, “developing countries” can be characterised by a range of factors existing in different intensities that can (1) impact the ways in which local communities interact with their environmental resources (2) impact the efficacy of the methodological and data collection process (3) impact the values obtained from the application of valuation techniques and (4) impact the implementation, success and sustainability of policy and management prescriptions. This paper attempts to address these issues by discussing the main characteristics of developing countries that can impact the biodiversity valuation process and, with specific reference to Small Island Developing States (SIDS), discussing how knowledge of these characteristics can assist the valuation process to better reveal the complex interaction between biodiversity and human welfare in a developing country context.
    Keywords: Biodiversity, Developing Countries, Small Island Developing States
    JEL: Q01 Q57
    Date: 2010–09
  27. By: Soham Baksi; Pinaki Bose (Department of Economics, The University of Winnipeg)
    Abstract: We analyze the e¢ cacy of environmental regulation in the presence of an endoge- nous informal sector. Firms in an imperfectly competitive formal sector produce a .nal good using a polluting intermediate good. The .rms can either produce the intermediate good or purchase it from a price-taking informal sector. An en- vironmental regulator sets the emission intensity of the intermediate good that all formal sector .rms implement honestly but informal sector .rms seek, and are sometimes able, to evade. We show that, depending on the stringency of the reg- ulation and its enforcement, the informal sector can act as a source of pollution leakage. Stricter regulation can increase (when the .composition e¤ect.of regula- tion dominates its .scale e¤ect.) or decrease total pollution, and may even have a non-monotonic impact. Further, price discrimination by the formal sector, when it purchases the intermediate good from the informal sector, can worsen regulatory compliance by the informal sector and lead to lower welfare.
    JEL: Q56 O17 K42
    Date: 2010–05
  28. By: John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst); James J. Murphy (Department of Economics, University of Alaska Anchorage); John M. Spraggon (Department of Resource Economics, University of Massachusetts Amherst)
    Abstract: Two important design elements for emission trading programs are whether and to what extent firms are able to bank emissions permits, and how these programs are to be enforced. In this paper we present results from laboratory emissions markets designed to investigate enforcement and compliance when these markets allow permit banking. Banking is motivated by a decrease in the aggregate permit supply in the middle of multi-period trading sessions. Consistent with theoretical insights, our experiments suggest that high permit violation penalties have little deterrence value in dynamic emissions markets, and that the main challenge of enforcing these programs is to motivate truthful self-reports of emissions.
    Keywords: compliance, enforcement, emissions trading, laboratory experiments, permit markets, permit banking
    JEL: C91 L51 Q58
    Date: 2010–08
  29. By: Joëlle Noailly (CPB Netherlands Bureau for Economic Policy Analysis The Hague)
    Abstract: This paper investigates the impact of alternative environmental policy instruments on technological innovations aiming to improve energy-efficiency in buildings. The empirical analysis focuses on three main types of policy instruments, namely regulatory energy standards in buildings codes, energy taxes as captured by energy prices and specific governmental energy R&D expenditures. Technological innovation is measured using patent counts for specific technologies related to energy-efficiency in buildings (e.g. insulation, high-efficiency boilers, energy-saving lightings). The estimates for seven European countries over the 1989-2004 period imply that a strengthening of 10% of the minimum insulation standards for walls would increase the likelihood to file additional patents by about 3%. In contrast, energy prices have no significant effect on the likelihood to patent. Governmental energy R&D support has a small positive significant effect on patenting activities.
    Keywords: Innovation, Technological Change, Patents, Energy-Efficiency, Buildings, Environmental Policy
    JEL: O31 O34 Q55
    Date: 2010–09
  30. By: BRECHET, Thierry (Université catholique de Louvain, CORE and Chair Lhoist Berghamns in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium.); LY, Sylvette (Université catholique de Louvain, CORE and Chair Lhoist Berghamns in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium.)
    Abstract: In this paper we analyze the relationship between technological greening, eco-efficiency and no- regret strategies. By using a simple theoretical model, we evaluate the effects of technological greening on creation value, pollution level, and eco-efficiency. We show three contrasting effects of technological greening. First, technological greening may increase the pollution of a firm, and also of the whole industry. Second, the indicator of eco-efficiency can be misleading because it may improve in situations where pollution increases and/or profit decreases after technological greening. Third, technological greening that induces an improvement of the eco-efficiency indicator does not necessarily lead to a no-regret strategy. As a result, the indicator should not be used for decision making.
    Keywords: technological greening, clean technology, eco-efficiency, environmental performance, rebound effect
    JEL: L8 M2 Q5
    Date: 2010–06–01
  31. By: Cristina Legot; Bruce London; John Shandra
    Abstract: Recent research by Legot et al. (2010a, 2010b) has identified East Baton Rouge Parish (EBR) as a locus of particularly high volumes of emissions of developmental neurotoxins, i.e., those toxins that put children’s health and, especially, learning abilities at greatest risk. Many developmental neurotoxins are also classified as respiratory toxins, which are also linked to the sorts of childhood diseases (e.g., asthma) that impact school performance. This case study specifies the degree to which proximity to the main sources of these toxins in EBR is associated with high rates of neurodevelopmental diseases and childhood asthma. We also examine the relationship between proximity to toxins and race and class.<span>  </span>We find very strong patterns: disease rates are significantly higher in zip codes close to pollution “hot spots” than in more distant zip codes, as are percent minority and percent poverty.<span>  </span>This is evidence of “environmental ascription”, the existence of multiple, overlapping ascriptions based on race, class, and “place”.<span>  </span>Vulnerable populations are disproportionately exposed to the sorts of toxins that limit their life chances.<p></p>
    Keywords: environmental ascription; developmental neurotoxins; respiratory toxins; childhood diseases; vulnerable populations
    JEL: Q53 I19 J15
    Date: 2010
  32. By: DURAND-LASSERVE, Olivier (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium; IFP, Economics Department, Rueil- Malmaison, France.); PIERRU, Axel (IFP, Economics Department, Rueil- Malmaison, France.); SMEERS, Yves (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)
    Abstract: The persistent uncertainty about mid-century CO2 emissions targets is likely to affect not only the technological choices that energy-producing firms will make in the future but also their current invest- ment decisions. We illustrate this effect on CO2 price and global energy transition within a MERGE-type general-equilibrium model framework, by considering simple stochastic CO2 policy scenarios. In these scenarios, economic agents know that credible long-run CO2 emissions targets will be set in 2020, with two possible outcomes: either a ”hard cap” or a ”soft cap”. Each scenario is characterized by the relative probabilities of both possible caps. We derive consistent stochastic trajectories - with two branches after 2020 - for prices and quantities of energy commodities and CO2 emissions permits. The impact of uncertain long-run CO2 emissions targets on prices and technological trajectories is discussed. In addition, a simple marginal approach allows us to analyze the Hotelling rule with risk premia observed for certain scenarios
    JEL: C68 Q41 Q43 Q52
    Date: 2010–06–01
  33. By: Kelly C. de Bruin (Environmental Economics and Natural Resources Group Wageningen University); Rob B. Dellink (Environmental Economics and Natural Resources Group, Wageningen University); Richard S.J. Tol (Institute for Environmental Studies, Vrije Universiteit Economic and Social Research Institute, and Department of Spatial Economics, Vrije Universiteit)
    Abstract: This paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects.
    Keywords: Climate Change, Adaptation Funding, Integrated Assessment Modeling
    JEL: H41 Q4 Q54
    Date: 2010–05
  34. By: Alexeeva-Talebi, Victoria
    Abstract: Price adjustments, particularly the cost pass-through relationships, are at the core of the analysis on how asymmetric climate change policy initiates two channels of carbon leakage: (decreasing) market shares and profit margins. Using advanced time-series techniques, this paper explores the pass-through relationships in an oligopoly setting. Under the condition of oligopolistic competition with strategic interactions, the cost pass-through of domestic firms is restricted by strategic interactions with foreign competitors. The empirical section demonstrates that strategic pricing in the presence of the incomplete cost pass-through is by far the prevailing behaviour of German energy-intensive sectors participating in the EU Emissions Trading Scheme (ETS). The relatively low cost pass-through rates in the long-run in most sectors in our sample - in comparison to studies which do not account for strategic interactions - are consistent with earlier findings. Additional costs induced by the EU ETS are therefore likely to be absorbed through a reduction of profit margin, creating incentives to relocate business abroad. Policy implications of the results are that strategic interactions between domestic and foreign firms could be a critical factor in applying offsetting instruments to address carbon leakage domestically. Accounting for oligopolistic structures - with and without strategic interactions - should therefore be a central issue within the broader context of how market structure affects climate change policies. -- Die vorliegende Arbeit untersucht das Kostenüberwälzungsverhalten deutscher Unternehmen (d.h. die Anpassung der Outputpreise an die Inputpreisveränderungen), welche am EU-Emissionshandel (EU EHS) teilnehmen. Die Analyse ist so umfassend wie die vorhandenen Daten für Deutschland es erlauben und betrachtet die Industriezweige Papier und Zellstoff, Chemie, Gummi und Kunststoff sowie die nicht-metallischen Mineralstoffe. Obwohl strategische Interaktionen von inländischen energieintensiven Sektoren mit ausländischen Wettbewerbern relevant sind, werden diese typischerweise von der empirischen Literatur zur Kostenweitergabe nicht berücksichtigt. Der stilisierte theoretische und empirische Rahmen des Papiers wendet daher eine Variante des Mark-up-Modells zur Preisbestimmung in strategischen Oligopolen an, wobei die strategischen Interaktionen zwischen inländischen und ausländischen Firmen das Kostenüberwälzungsverhalten deutscher Produzenten einschränkt. Der empirische Teil zeigt auf, dass die Mehrheit der deutschen Produzenten mit den ausländischen Wettbewerbern interagiert und somit eine unvollständige Kostenüberwälzung aufweist. Unsere Ergebnisse zeigen, dass hohe Marktmacht bei heimischen Produzenten auf relativ homogenen Produktmärkten zu geringeren Kostenüberwälzungsraten und einer stärkeren Ausrichtung auf die ausländischen Preise führt. Hingegen gilt: Je höher die Marktmacht bei heimischen Produzenten auf relativ heterogenen Produktmärkten ist, umso höher sind die Kostenüberwälzungsraten und umso weniger relevant sind die strategischen Interaktionen mit der ausländischen Konkurrenz.
    Keywords: cost pass-through,strategic oligopoly,emissions trading scheme
    JEL: F18 C22 L11
    Date: 2010
  35. By: Sarah Jacobson (Williams College)
    Abstract: I use a treatment effect framework to investigate whether participation in the Conservation Reserve Program (CRP) changes a parcel’s later land use. The CRP, which pays farmers to retire agricultural land, is the United States’ largest conservation program. The program has several goals, including protecting the environment and improving the long-term productivity of farmland. I compare samples of CRP land to samples of non-CRP land to find the causal effect of CRP participation on land use outcome, using regression and matching techniques. By comparing land that exits the CRP to the best counterfactual land (land that faced similar transition costs and probably had similar unobservable qualities), I find that CRP participation makes land 21-28% more likely to be farmed after program exit than it would otherwise have been. This is unsurprising if the CRP improves low-quality land, because that makes the land more attractive to farm. This long-term effect comports with the agricultural goals of the program, but may counteract the environmental benefits of the program. I also find that farmed ex-CRP land is more likely to adopt conservation practices than the most similar land that had not been in the CRP. However, this may not be a result of CRP participation.
    Keywords: Conservation Reserve Program, land use, environmental policy, farm policy
    Date: 2010–04
  36. By: Alain-Désiré Nimubona (Department of Economics, University of Waterloo); Bernard Sinclair-Desgagné (International Economics and Governance Chair, HEC Montreal)
    Abstract: To comply with laws, regulations and social demands, polluting firms increasingly purchase the needed means from specialized suppliers. This paper an- alyzes this relatively recent phenomenon. We show how environmental regulation, the size of the output market, the elasticity of demand for abatement goods and services, and the fact that in-house and outsourced abatement expenses are substitutes or complements can influence a polluter's make-or-buy decision. Specific features of abatement outsourcing are highlighted, qualifications and refinements of the theory of vertical integration are then proposed, and some consequences for environmental policy are briefly discussed.
    JEL: L23 L24 Q52
    Date: 2010–09
  37. By: Humberto Llavador; John E. Roemer; Joaquim Silvestre
    Abstract: We postulate a two-region world, comprised of North (calibrated after the US) and South (calibrated after China). Our optimization results show the compatibility of the following three desiderata: (1) Global CO2 emissions follow a conservative path that leads to the stabilization of concentrations at 450 ppm. (2) North and South converge to a path of sustained growth at 1% per year (28.2% per generation) in 2075. (3) During the transition to the steady state, North also grows at 1% per year while South’s rates of growth are markedly higher. The transition paths require a drastic reduction of the share of emissions allocated to North, large investments in knowledge, both in North and South, as well as very large investments in education in South. Surprisingly, in order to sustain North’s utility growth rate, some output must be transferred from South to North during the transition. Although undoubtedly subject to many caveats, our results support a degree of optimism by providing prima facie evidence of the possibility of tackling climate change in a way that is fair both across generations and across regions while allowing for positive rates of human development.
    Keywords: Convergence, CO2 emissions, North-South, climate change, sustainability, growth.
    JEL: D62 D63 D90 O40 O40 Q54 Q55 Q56 Q58
    Date: 2010–08
  38. By: Ramon Arigoni Ortiz; Alexander Golub; Oleg Lugovoy; Anil Markandya; James Wang
    Abstract: This paper introduces DICER, a model for the integrated assessment of climate – economy interactions within an optimal growth framework developed upon the structure of the DICE2007 model. We present the methodological differences introduced so far in DICER and some preliminary results of its deterministic version. We observe interesting results when comparing to other IAMs, such as (i) lower peak temperatures; (ii) radiative forcing differences; (iii) differences in control rates; and (iv) sensitivity of results to parameters such as climate sensitivity. A further innovation of this work has been to account for uncertainty and risk through an application of option pricing. The method allows for a simple representation of the risks through measures of volatility in the damages and abatement costs and shows that taking these factors into account lowers maximum mean temperatures by about 0.5oC. We also present some methodological issues that need to be dealt with in the near future in DICER.<br />
    Keywords: Climate change, Integrated Impact Assessment Model (IAM), damage function
    Date: 2010–07
  39. By: Georgios Kossioris (Department of Mathematics, University of Crete); Michael Plexousakis (Department of Applied Mathematics, University of Crete); Anastasios Xepapadeas (Athens University of Economics and Business and Beijer Fellow); Aart de Zeeuw (TSC, Tilburg University and Beijer Fellow)
    Abstract: Recent research developments in common-pool resource models emphasize the importance of links with ecological systems and the presence of non-linearities, thresholds and multiple steady states. In a recent paper Kossioris et al. (2008) develop a methodology for deriving feedback Nash equilibria for non-linear differential games and apply this methodology to a common-pool resource model of a lake where pollution corresponds to benefits and at the same time affects the ecosystem services. This paper studies the structure of optimal state- dependent taxes that steer the combined economic-ecological system towards the trajectory of optimal management, and provides an algorithm for calculating such taxes.
    Keywords: Differential Games, non-linear Feedback Nash Equilibria, Ecosystems, Optimal State-dependent Tax
    JEL: Q25 C73 C61
    Date: 2010–09
  40. By: Maximillian Auffhammer; Ralf Steinhauser
    Abstract: In this paper we compare the most common reduced form models used for emissions forecasting, point out shortcomings and suggest improvements. Using a U.S. state level panel data set of CO2 emissions we test the performance of existing models against a large universe of potential reduced form models. Our preferred measure of model performance is the squared out-of-sample prediction error of aggregate CO2 emissions. We find that leading models in the literature, as well as models selected based on an emissions per capita loss measure or different in-sample selection criteria, perform significantly worse compared to the best model chosen based directly on the out-of-sample loss measure defined over aggregate emissions. Unlike the existing literature, the tests of model superiority employed here account for model search or ‘data snooping’ involved in identifying a preferred model. Forecasts from our best performing model for the United States are 100 million tons of carbon lower than existing scenarios predict.
    JEL: Q43 C53
    Date: 2010–08
  41. By: Koesler, Simon
    Abstract: This paper extends a standard Schumpeterian growth model to include an environmental dimension. Thereby, it explicitly links the pollution intensity of economic activity to technological progress. In a second step, it investigates the effect of pollution on economic growth under the assumption that pollution intensities are related to technological progress. Several conclusions emerge from the model. In equilibrium, the economy follows a balanced growth path. The effect of pollution on the economic growth rate vitally depends on the households' degree of pollution aversion and on the link between pollution intensity and the technology level. The decentralized solution does not meet the social optimum, though the social optimum can be implemented through the introduction of subsidies and pollution permits. Expectedly, the introduction of a pollution threshold stalls growth if pollution is not decoupled from economic growth and the possibility of pollution abatement allows the economy to grow at a higher rate. -- Der Klimawandel, die Verschmutzung der Meere oder eine zunehmende Lärmbelastung sind nur einige wenige Beispiele für Umweltprobleme, die die Öffentlichkeit in jüngster Zeit alarmiert haben. Infolge dessen gewinnt die Frage, ob Umweltverschmutzung als eine Begleiterscheinung der modernen wirtschaftlichen Aktivität möglicherweise den außergewöhnlichen Wachstumspfad der letzten eineinhalb Jahrhunderte gefährdet, zunehmend an Bedeutung. Um dieser Frage auf den Grund zu gehen wird ein schumpeterisches Wachstumsmodell erweitert und Umweltverschmutzung in das Kalkül der ökonomischen Agenten integriert. Dabei wird die Verschmutzungsintensität der wirtschaftlichen Aktivität explizit mit dem Niveau des technischen Fortschritts verknüpft. Im Rahmen des Modells hat Umweltverschmutzung verschiedene Auswirkungen auf die Agenten. Im Basismodell sind zunächst nur die privaten Haushalte von der Verschmutzung betroffen. In einer ersten Erweiterung wird das Modell um einen Verschmutzungsgrenzwert ergänzt, jenseits dessen die Innovationsfähigkeit des Forschungssektors abnimmt. Eine weitere Variante vergrößert die Handlungsmöglichkeiten der Haushalte und gibt ihnen die Möglichkeit zur aktiven Verschmutzungsminderung. In dem beschriebenen Modellrahmen bewegt sich die Ökonomie im Gleichgewicht auf einem Balanced Growth Path. Dementsprechend steigen die Mengen an produzierten Gütern, die Investitionen in Forschung, der private Konsum und das Niveau des technischen Fortschritts im Gleichgewicht mit einer konstanten und positiven Rate. Der Effekt von Umweltverschmutzung auf das Wirtschaftswachstum ist nicht trivial. Er wird maßgeblich von dem Grad der Verschmutzungsaversion der Haushalte sowie der Art und Weise wie die Verschmutzungsintensität mit dem technischen Fortschritt verknüpft ist beeinflusst. Alles in allem wirkt Umweltverschmutzung dämpfend auf das Wirtschaftswachstum, sofern ein Anstieg des technologischen Fortschritts nicht mit einer ausreichend schnellen Absenkung der Verschmutzungsintensität einhergeht. Verschmutzung begünstigt Wachstum, wenn die Verschmutzungsintensität bei steigendem technischem Wissen überproportional schnell fällt. Das Ausmaß der Umweltverschmutzung wächst proportional zum Wirtschaftswachstum und wird auch maßgeblich davon beeinflusst, wie die Verschmutzungsintensität mit dem technischen Fortschritt verknüpft ist. Wenn diese schnell genug fällt, sinkt die Menge an Umweltverschmutzung. Andernfalls bleibt sie konstant oder steigt kontinuierlich an. Aufgrund von monopolistischer Preissetzung, dem Appropriations-Effekt, dem Business-Stealing-Effekt und der Verschmutzungsexternalität ist die dezentrale Lösung des Modells nicht Pareto-optimal. Das soziale Optimum kann jedoch durch die Einführung von Subventionen für den Forschungssektor und den Endproduktsektor sowie durch handelbare Emissionszertifikate erreicht werden. Wird das Modell um einen Verschmutzungsgrenzwert erweitert, bei dessen erreichen die Innovationsfähigkeit des Forschungssektors nachlässt, ist anhaltendes Wirtschaftswachstum nur möglich, wenn die Menge der Umweltverschmutzung nicht im Zeitverlauf steigt. Dies setzt voraus, dass die Verschmutzungsintensität vom technischen Fortschritt entkoppelt ist. Ist dies nicht der Fall, so verhindert Umweltverschmutzung, ab dem Erreichen des Grenzwertes, weiteres Wirtschaftswachstum. Aktive Verschmutzungsbeseitigung wiederum erlaubt es den Haushalten besser mit der Umweltverschmutzung aus der Produktion umzugehen und ermöglicht allgemein größere Wachstumsraten.
    Keywords: economic growth,endogenous pollution intensity,Schumpeter
    JEL: O41 Q51 Q55 Q56
    Date: 2010
  42. By: Mauro Augusto dos Santos (Univale); Alisson Flávio Barbieri (Cedeplar-UFMG); José Alberto Magno de Carvalho (Cedeplar-UFMG); Carla Jorge Machado (Cedeplar-UFMG)
    Abstract: This paper presents a short literature review on the Brazilian Cerrado, with emphasis on the following aspects: (1) characterization of the area, (2) environmental degradation and population occupation, (3) history of regional occupation (4) role of immigration; the use of technology; and the land market.
    Keywords: Brazilian Cerrado, literature review, environment, inmigration
    JEL: Y80
    Date: 2010–06
  43. By: M Du Preez; S G Hosking
    Abstract: The National Environmental Management: Biodiversity Act, no.10 of 2004) makes provision for the presence of alien trout in South African waters by means of a zoning system, partly in recognition of the significant income generating potential of trout fishing in South Africa. This paper reports the first formal recreational valuation of a trout fishery in South Africa, the one in and around Rhodes village, North Eastern Cape. The valuation is carried out by applying the individual travel cost method using several count data models. The zero truncated negative binomial model yielded the most appealing results. It accounts for the non-negative integer nature of the trip data, for truncation and over-dispersion. The paper finds that in 2007 consumer surplus per day visit to the Rhodes trout fishery was R2 668, consumer surplus per trip visit was R13 072, and the total consumer surplus generated was R18 026 288.
    Date: 2010
  44. By: Attanasi, Giuseppe; Montesano, Aldo
    Abstract: This paper introduces the concept of the Testing Value into the analysis of environmental decisions under uncertainty and irreversibility. This value emerges in situations where the probability of receiving information concerning future economic benefits and costs of development depends on the level of development carried out. We show that when information may be acquired also exogenously, the Testing Value could push a risk-neutral decision maker to preserve more in the present and eventually in the future. The reason is that the Testing Value often leads to a only partial development of the environmental asset; on the contrary, the Waiting Value (a generalization of the quasi-option value à la Arrow and Fisher (1974)) always leads to corner solutions. Althoughits existence stems from endogenous information, surprisingly enough, the Testing Value is positively related to the probability of acquiring information exogenously.
    Keywords: Testing value, waiting value, exogenous and endogenous information, irreversibility
    JEL: D61 D81 Q32
    Date: 2010–04
  45. By: Rohlfs, Wilko (Chair of Heat and Mass Transfer, Faculty of Mechanical Engineering, RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: In this paper, we develop a multi-factor real options model for a two-stage investment problem where a coal-fired power plant is later retrofitted with carbon capture and storage (CCS). A capture-ready power plant with lower retrofit costs is compared with a conventional one and higher CCS retrofit costs. The stochastic variables considered are the price of electricity, the price of CO2 permits, capturing, transporting and storing (CTS) costs and CCS retrofit investment costs. Fuel costs are disregarded due to the constant boiler size in case of a retrofit, resulting in constant fuel consumption but lower electricity output of the CCS plant. Two retrofit options that reduce the power plant’s net efficiency from 46% to 30% and 35%, respectively, and an integrated CCS power plant with an efficiency of 38.5% are investigated. <p>In a numerical simulation with realistic parameterization, we find a low probability for a retrofit even after fifteen to twenty years, caused by the high uncertainty and the adverse impact of the electricity price and the CO2 permit price. This renders the capture-ready option unattractive and calls for investments in conventional coal-fired power plants with later CCS investments at higher costs than for the case of a capture ready pre-installation.
    Keywords: CCS; Real options; Capture-ready; Coal; Power generation; Retrofit
    JEL: C63 O30
    Date: 2010–07
  46. By: Arghyrou, Michael G (Cardiff Business School)
    Abstract: We present a simple model explaining corruption on geography and climate conditions. We test the model's validity in a cross-section of 115 countries. Controlling for all other corruption's determinants we find evidence supporting the model's predictions. Corruption increases with temperature and declines with precipitation and non-cultivatable land. Corruption also declines with per capita GDP, democracy, median age and British colonial heritage; and increases with natural resources, bureaucracy and communist past. Finally, corruption declines with the ratio of internet users to total population. This new finding is interpreted as capturing the beneficial interaction of economic development, human capital/education and independent news.
    Keywords: individualism; fairness; corruption; geography and climate conditions
    JEL: D73 H11
    Date: 2010–09
  47. By: Gérard Mondello (University of Nice Sophia Antipolis, CREDECO, GREDEG, UMR 6727, CNRS)
    Abstract: This paper studies the delegation of activities that pose serious risks to health and the environment in an economy regulated by strict liability schemes. Strict liability induces judgment-proof possibilities. Two civil liability regimes are then compared: a strict liability scheme and a capped strict liability one. The argument is led under a twofold asymmetric information assumption between the principal and the agent: the efficiency level in effort for safety and the agent’s level of wealth. The paper shows that standard strict liability under information asymmetries deters the efficient agent to compete and favors adverse selection. Then, under conditions, a capped strict liability regime is a better regime than a standard strict liability one because it induces the efficient agent to supply the level of safety effort equivalent to the first best solution. The counterpart is the perception of an informational rent by the efficient agent. At the optimum, this rent is minimized by the efficient contract supplied by the principal.
    Keywords: Environment, Strict Liability, Ex-Ante Regulation, Ex-Post Liability, Judgment-Proof, Environment Law, CERCLA, Environmental Liability
    JEL: K0 K32 Q01 Q58
    Date: 2010–09
  48. By: Elena Ojea; Julia Martin-Ortega; Aline Chiabai
    Abstract: Since the release of the Millennium Ecosystem Approach (MEA), studies valuing ecosystem services have grown in the literature. As a consequence of this growing literature, different interpretations exist on the classification of services as derived from MEA, and several studies have argued that this may not be the most appropriate framework when the aim of the analysis is economic valuation. The present work contributes to this debate by reviewing and comparing these critical views in order to: firstly, to clarify the existing confusion in the terminology and interpretations; and secondly, shed some light into a desirable classification and conceptualization of ecosystem services for valuation. To illustrate this, we present an examination of existing primary valuation studies of water related services provided by tropical forests, that we analyze under the MEA classification framework and compare it with an output-based classification, in which the service is defined in terms of their benefits (outputs) to humans. Our results support the idea that an output-based classification should provide with more accurate values and could contribute avoid certain problems such as double counting and potential underestimation of services values.<br />
    Keywords: ecosystem services, Millennium Ecosystems Approach, water services, tropical forests
    Date: 2010–09
  49. By: Céline MERLIN-BROGNIART1 (RRI); Marc-Hubert DEPRET (RRI)
    Abstract: Ce document cherche à identifier les pratiques responsables des services publics marchands (SPM), prémisses d’une responsabilité plus « globale » des entreprises (au sens plus large du terme). Ces entreprises du SPM, qui ont eu l’habitude de gérer des conflits contradictoires entre leurs missions de service public et leurs impératifs de rentabilité, développent aujourd’hui des solutions innovantes pour coordonner les intérêts divergents de leurs parties prenantes. Cet article met ainsi en évidence l’existence d’une autre conception de la RSE (responsabilité sociale et environnementale de l’entreprise) relativement peu (voire pas du tout) traitée par la littérature étudiant cette question " This paper tries to identify French for-profit public services’ sustainable business strategies which could lead to a “global” responsibility (i.e. an economical, social and environmental responsibility). These organizations have always managed contradictory aims between their public missions and their profitability. They try to develop new solutions in order to coordinate the contradictory objectives of their stakeholders. This paper highlights the existence of another conception of Corporate Social Responsibility (CSR).
    Keywords: public sector, enterprise, social, environmental responsability
    JEL: H00 Q50
    Date: 2010
  50. By: Jennifer Lorena Gómez Contreras
    Abstract: En el presente documento se abordará la pregunta ¿Qué parámetros, concepciones y lineamientos deberían tenerse en cuenta en la contabilidad, con el fin de incorporar en la información contable mediciones y valoraciones de lo medio ambiental, bajo una visión alternativa a la de acumulación de capital? Para ello se presentaran algunos de los vacios del marco teórico presente hoy en día en la economía convencional en lo correspondiente al tratamiento de lo medio ambiental, y cómo en respuesta a estos vacios han aparecido propuestas de enfoques ecológicos alternativos, entre los cuales se destaca la economía ecológica. Este documento se divide en tres partes: en la primera se presentan algunas de las críticas que se le han hecho al modelo neoclásico preponderante hoy en día. En la segunda, se habla sobre la economía ambiental y la economía ecológica, mostrando las falencias de la primera y resaltando las bondades de la segunda. Y por último, se habla del poder constitutivo de la contabilidad y los diversos avances en el campo de los medio ambiental, tanto los que se encuentran enmarcados en la óptica predominante como los provenientes de enfoques alternativos. Como conclusión del escrito se tiene que resulta imperativo la adopción por parte de la contabilidad de los parámetros, las concepciones y los lineamientos propios de la economía ecológica, los cuales representan un avance muy valioso, tanto para el pensamiento económico como para el pensamiento contable, pues se configura una mirada más social y ecológica de la contabilidad medioambiental.
    Date: 2010–09–22

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