nep-env New Economics Papers
on Environmental Economics
Issue of 2010‒10‒30
27 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Towards an Emissions Trading Scheme for Air Pollutants in India By Esther Duflo; Michael Greenstone; Rohini Pande; Nicholas Ryan
  2. The Global Effects of Subglobal Climate Policies By Böhringer, Christoph; Fischer, Carolyn; Rosendahl, Knut Einar
  3. Subsidizing Renewable Energy under Capital Mobility By Marco Runkel; Thomas Eichner
  4. Environmental and Trade Policies for Oligopolistic Industry in the Presence of Consumption Externalities By Jota Ishikawa; Toshihiro Okubo
  5. Atmospheric Pollution, Environmental Justice and Mortality Rate : a Spatial Approach. By Emmanuelle Lavaine
  6. Incorporating jurisdiction issues into regional carbon accounts under production and consumption accounting principles By Christa D. Jensen; Max Munday; Stuart Mcintyre; Karen Turner
  7. The Porter Hypothesis and Hyperbolic Discounting By Prabal Roy Chowdhury
  8. A panel estimation of the relationship between income, electric power consumption and CO2 emissions By Bellla, Gianni; Massidda, Carla; Etzo, Ivan
  9. Local and Global Externalities, Environmental Policies and Growth By Karen Pittel; Dirk Rübbelke
  10. The Health Effects of Climate Change: A Survey of Recent Quantitative Research By Margherita Grasso; Matteo Manera; Aline Chiabai; Anil Markandya
  11. Free Trade, Autarky and the Sustainability of an International Environmental Agreement By BENCHEKROUN, Hassan; MURAT YILDIZ, Halis
  12. What Are the Costs of Meeting Distributional Objectives for Climate Policy? By Ian W.H. Parry; Roberton C. Williams III
  13. Adapting to Climate Change An Integrated Biophysical and Economic Assessment for Mozambique By Arndt, Channing; Strzepeck, Kenneth; Tarp, Finn; Thurlow, James; Fant, Charles; Wright, Len
  14. The Effects of the Length of the Period of Commitment on the Size of Stable International Environmental Agreements By NKUIYA MBAKOP, R. Bruno; GAUDET, Gérard
  15. The Benefits of Environmental Improvement: Estimates From Space-time Analysis By Carruthers, John I; Clark, David; Renner, Robert N
  16. Fat Tails, Thin Tails, and Climate Change Policy By Robert S. Pindyck
  17. Can carpooling clean the air? The economics of HOV lanes, hybrid cars and the Clean Air Act. By Shewmake, Sharon
  18. Waterfowl Harvest Benefits in Northern Aboriginal Communities and Potential Climate Change Impacts By Emina Krcmar; G. Cornelis van Kooten; Ann Chan-McLeod
  19. Agro-Ecosystem Services – Governance Needs and Efficiency By Bachev, Hrabrin
  20. Carbon Prices and Automobile Greenhouse Gas Emissions: The Extensive and Intensive Margins By Christopher R. Knittel; Ryan Sandler
  21. The Quest for Hegemony Among Countries and Global Pollution By KAKEU, Johnson; GAUDET, Gérard
  22. Statistical evidence of tax fraud on the carbon allowances market. By Marius-Cristian Frunza; Dominique Guegan; Antonin Lassoudière
  23. Missing trader fraud on the emissions market. By Marius-Cristian Frunza; Dominique Guegan; Fabrice Thiebaut
  24. Analysing Bioenergy and Land Use Competition in a Coupled Modelling System: The Role of Bioenergy in Renewable Energy Policy in Germany By Ruth Delzeit; Horst Gömann; Karin Holm-Müller; Peter Kreins; Bettina Kretschmer; Julia Münch; Sonja Peterson
  25. First nature vs. second nature causes: industry location and growth in the presence of an open-access renewable resource By Rafael González-Val; Fernando Pueyo
  26. Second best ? investment climate and performance in Africa's special economic zones By Farole, Thomas
  27. Bioeconomic modeling of wetlands and waterfowl in Western Canada: Accounting for amenity values By G. Cornelis van Kooten; Patrick Withey; Linda Wong

  1. By: Esther Duflo; Michael Greenstone; Rohini Pande; Nicholas Ryan
    Abstract: Emissions trading schemes have great potential to lower pollution while minimizing compliance costs for firms in many areas now subject to traditional command-and-control regulation. This paper connects experience with emissions trading, from programs like the U.S. Acid Rain program, to lessons for implementation of a Trading Pilot Scheme in India. This experience suggests that four areas are especially important for successful implementation of an emissions trading scheme: setting the cap, allocating permits, monitoring and compliance. The introduction of emissions trading would position India as a clear leader in environmental regulation amongst emerging economies.
    Date: 2010–08
  2. By: Böhringer, Christoph; Fischer, Carolyn (Resources for the Future); Rosendahl, Knut Einar
    Abstract: Individual countries are in the process of legislating responses to the challenges posed by climate change. The prospect of rising carbon prices raises concerns in these nations about the effects on the competitiveness of their own energy-intensive industries and the potential for carbon leakage, particularly leakage to emerging economies that lack comparable regulation. In response, certain developed countries are proposing controversial trade-related measures and allowance allocation designs to complement their climate policies. Missing from much of the debate on trade-related measures is a broader understanding of how climate policies implemented unilaterally (or subglobally) affect all countries in the global trading system. Arguably, the largest impacts are from the targeted carbon pricing itself, which generates macroeconomic effects, terms-of-trade changes, and shifts in global energy demand and prices; it also changes the relative prices of certain energy-intensive goods. This paper studies how climate policies implemented in certain major economies (the European Union and the United States) affect the global distribution of economic and environmental outcomes, and how these outcomes may be altered by complementary policies aimed at addressing carbon leakage.
    Keywords: cap-and-trade, emissions leakage, border carbon adjustments, output-based allocation, general equilibrium model
    JEL: Q2 Q43 H2 D61
    Date: 2010–10–18
  3. By: Marco Runkel (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Thomas Eichner (Department of Economics, University of Hagen)
    Abstract: This paper provides a rationale for subsidizing green (renewable) energy production. Within a multi-country model where energy is produced with mobile capital in green and dirty production, we investigate the countries' decentralized choice of emissions taxes and green energy subsidies. Without green subsidies, the emissions tax is set inefficiently low, since each country ignores the environmental externality in icted on other countries and since the emissions tax leads to a capital out ow to other countries. When the green subsidy is available, countries choose a positive subsidy rate since this reduces the overall distortion of the tax-subsidy system. In doing so, each country internalizes a larger part of the environmental externality. As consequence capital is relocated from the dirty into the clean sectors and reduces global pollution. Hence, the subsidy is not only bene cial for the country which imposes it but for all countries.
    Keywords: renewable energy, capital mobility, green subsidy, emissions regulation
    JEL: H71 Q42 Q58
    Date: 2010–09
  4. By: Jota Ishikawa (Hitotsubashi University, and RIETI); Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: We explore the effects of environmental and trade policies with negative consumption externalities when a domestic firm and a foreign rival produce imperfect substitutes and compete in the domestic market. Consumption of the foreign product generates more emissions than that of the domestic product. Emission taxes reduce emissions, harm the foreign firm, but may benefit the domestic firm. Tariffs could mitigate externalities more "effectively" than emission taxes. Consumption subsidies provided to the domestic product may raise emissions and worsen domestic welfare. Stringent environmental policies may induce the foreign firm to produce an environmentally friendly good, though environmental damages may increase.
    Keywords: environmental policies, trade policies, consumption externalities, international oligopoly, differentiated products
    JEL: F13 F18
    Date: 2010–10
  5. By: Emmanuelle Lavaine (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: This paper presents the first study of environmental inequality related to health in France at the national scale. Through an econometric analysis based on a panel data from 2000 to 2004 at a department level, we investigate total mortality rate in relation to socioeconomic status and air pollution. Concentration level of CO, SO2, NO2, NO, O3 and PM10 are estimated by spatial interpolation from local observations of a network of monitoring stations. By running a multivariate model, we first investigate the relationship between socioeconomic factors and total mortality rate ; then, we make the link with environmental air quality measured within the department. Unemployment plays an important role in affecting the mortality rate. Pollutant concentration level are divided into two risk categories (low and high) at the median. We find a positive and significative relationship between NO2 and mortality rate especially at high concentration level of NO2 with a relative risk more important for women. Besides, NO2 level tends to modify the effect of unemployment on mortality rate. These results not only confirm the existence of short term relationships between current air pollution levels and mortality but also raise questions about environmental justice in France.
    Keywords: Inequality, air pollution, air quality, environmental economics, environmental health and safety, environmental impact, environmental equity, mortality rate, spatial auto-correlation.
    JEL: R12 Q5 I12 R15 C1
    Date: 2010–09
  6. By: Christa D. Jensen (West Virginia Univeristy); Max Munday (Cardiff University); Stuart Mcintyre (University of Strathclyde); Karen Turner (Univeristy of Strathclyde)
    Abstract: Despite increased public interest, policymakers have been slow to enact targets based on limiting emissions under full consumption accounting measures (such as carbon footprints). This paper argues that this may be due to the fact that policymakers in one jurisdiction do not have control over production technologies used in other jurisdictions. The paper uses a regional input-output framework and data derived on carbon dioxide emissions by industry (and households) to examine regional accountability for emissions generation. In doing so, we consider two accounting methods that permit greater accountability of regional private and public (household and government) final consumption as the main driver of regional emissions generation, while retaining focus on the local production technology and consumption decisions that fall under the jurisdiction of regional policymakers. We propose that these methods permit an attribution of emissions generation that is likely to be of more use to regional policymakers than a full global footprint analysis.
    Keywords: pollution attribution; regional economy; input-output analysis; Wales
    JEL: C67 Q01 Q53 R15
    Date: 2010–08
  7. By: Prabal Roy Chowdhury
    Abstract: We examine pollution-reducing R&D by a monopoly firm producing a dirty product. In a dynamic framework with hyperbolic discounting, we establish conditions under which the Porter hypothesis goes through, i.e. environmental regulation increases R&D, thus reducing pollution, as well as increasing firm profits. This is likely to hold whenever R&D costs are at an intermediate level, and the planning horizon of the firms is large.
    Keywords: Porter hypothesis, abatement tax, R&D, hyperbolic discounting.
    JEL: H2 L1 L2 L5
    Date: 2010–10–22
  8. By: Bellla, Gianni; Massidda, Carla; Etzo, Ivan
    Abstract: This paper aims to give a contribution on the still questioned bell-shaped relationship between carbon dioxide polluting emissions and economic growth, which is commonly known in the literature as the Environmental Kuznets Curve hypothesis. In particular, it develops a panel analysis for a group of 77 countries, including 22 OECD and 55 NON-OECD units, over the period 1971-2006. We specify the estimated model by taking into account the role of electric power consumption and compare the performance of alternative panel estimators for a quadratic and cubic specification of the empirical model. Our findings seem to go in favor of the EKC relationship for the entire sample. However, this outcome is not confirmed when moving the analysis at sub-sample level where results highlight a non homogeneous picture across different groups of nations.
    Keywords: Panel analysis; Environmental Kuznets Curve; CO2 emissions and Energy use
    JEL: C33 Q54 Q43
    Date: 2010–09
  9. By: Karen Pittel; Dirk Rübbelke
    Abstract: The paper analyzes the implications of local and global pollution when two types of abatement activities can be undertaken. One type reduces solely local pollution (e.g., use of particulate matter filters) while the other mitigates global pollution as well (e.g., application of fuel saving technologies). In the framework of a 2-country endogenous growth model, the implications of different assumptions about the degree to which global externalities are internalized are analyzed. Subsequently, we derive policy rules adapted to the different scenarios. Special attention is paid to pollution, growth and optimal policy in the case of asymmetric internalization.<br />
    Keywords: economic growth, global and local externalities, government policies
    Date: 2010–10
  10. By: Margherita Grasso; Matteo Manera; Aline Chiabai; Anil Markandya
    Abstract: In recent years there has been a large scientific and public debate on climate change and its direct as well as indirect effects on human health. According to World Health Organization (WHO, 2006), some 2.5 million people die every year from non-infectious diseases directly attributable to environmental factors such as air pollution, stressful conditions in the workplace, exposure to chemicals such as lead, and exposure to environmental tobacco smoke. Changes in climatic conditions and climate variability can also affect human health both directly and indirectly, via changes in biological and ecological processes that influence the transmission of several infectious diseases (WHO, 2003). In the past fifteen years a large amount of research on the effects of climate changes on human health has addressed two fundamental questions (WHO, 2003). First, can historical data be of some help in revealing how short-run or long-run climate variations affect the occurrence of infectious diseases? Second, is it possible to build more accurate statistical models which are capable of predicting the future effects of different climate conditions on the transmissibility of particularly dangerous infectious diseases? The primary goal of this paper is to review the most relevant contributions which have directly tackled those questions, both with respect to the effects of climate changes on the diffusion of non-infectious and infectious diseases. Specific attention will be drawn on the methodological aspects of each study, which will be classified according to the type of statistical model considered. Additional aspects such as characteristics of the dependent and independent variables, number and type of countries investigated, data frequency, temporal period spanned by the analysis, and robustness of the empirical findings are examined. <br />
    Keywords: Climate change; Health; Statistical models; Non-infectious diseases; Infectious diseases; Malaria; Cardiovascular diseases
    Date: 2010–10
  11. By: BENCHEKROUN, Hassan; MURAT YILDIZ, Halis
    Abstract: We determine the impact of free trade on the sustainability of an international environmental agreement (IEA) and incorporate it into the assessment of the net benefits of opening up to free trade. We show that such an analysis can reverse the conclusions reached within a standard one-shot game framework. First, we examine a one-shot game and argue that the benefits from an increase in economic activity due to free trade outweigh the extra cost of free trade associated with larger environmental damage. Then, we analyze the infinite repetition of the one-shot game where countries can use trigger strategies and show that there exist circumstances where an IEA is sustainable under autarky but not under free trade. This aggravates the environmental damages caused by free trade and leads to the possibility that autarky may welfare dominate free trade. This conclusion remains valid even when countries adopt the most cooperative environmental policy when the "fully cooperative" environmental policy is not sustainable.
    Keywords: -
    JEL: F12 Q56
    Date: 2010
  12. By: Ian W.H. Parry; Roberton C. Williams III
    Abstract: This paper develops an analytical model to quantify the costs and distributional effects of various fiscal options for allocating the (large) rents created under prospective cap-and-trade programs to reduce domestic, energy-related CO2 emissions. The trade-off between cost effectiveness and distribution is striking. The welfare costs of different policies, accounting for linkages with the broader fiscal system, range from negative $6 billion/year to $53 billion/year in 2020, or between minus $12 to almost $100 per ton of CO2 reductions! The least costly policy involves auctioning all allowances with revenues used to cut proportional income taxes, while the most costly policies involve recycling revenues in lump-sum dividends or grandfathering emissions allowances. The least costly policy is regressive, however, while the dividend policy is progressive, and grandfathering permits is both costly and regressive. A distribution-neutral policy entails costs of $18 to $42 per ton of CO2 reductions.
    JEL: H22 H23 Q48 Q54 Q58
    Date: 2010–10
  13. By: Arndt, Channing; Strzepeck, Kenneth; Tarp, Finn; Thurlow, James; Fant, Charles; Wright, Len
    Abstract: Mozambique, like many African countries, is already highly susceptible to climate variability and extreme weather events. Climate change threatens to heighten this vulnerability. In order to evaluate potential impacts and adaptation options for Mozambique, we develop an integrated modelling framework that translates atmospheric changes from general circulation model projections into biophysical outcomes via detailed hydrologic, crop, hydropower and infrastructure models. These sector models simulate a historical baseline and four extreme climate change scenarios. Sector results are then passed down to a dynamic computable general equilibrium model, which is used to estimate economy-wide impacts on national welfare, as well as the total cost of damages caused by climate change. Potential damages without changes in policy are significant; our discounted estimates range from US$2.3 to US$7.4 billion during 2003– 50. Our analysis identifies improved road design and agricultural sector investments as key ‘no-regret’ adaptation measures, alongside intensified efforts to develop a more flexible and resilient society. Our findings also support the need for cooperative river basin management and the regional coordination of adaptation strategies.
    Keywords: entrepreneurship, gender, women entrepreneurs, Africa
    Date: 2010
  14. By: NKUIYA MBAKOP, R. Bruno; GAUDET, Gérard
    Abstract: This paper extends the standard model of self-enforcing dynamic international environmental agreements by allowing the length of the period of commitment of such agreements to vary as a parameter. It analyzes the pattern of behavior of the size of stable coalitions, the stock of pollutant and the emission rate as a function of the length of the period of commitment. It is shown that the length of the period of commitment can have very significant effects on the equilibrium. Three distinct intervals for the length of the period of commitment are identified, across which the equilibrium and its dynamic behavior differ considerably. Whereas for sufficiently high values of the period of commitment only self-enforcing agreements of two countries are possible, for sufficiently low such values full cooperation can be generated. Lengths of periods of commitment between those two thresholds are characterized by an inverse relationship between the length of commitment and the membership size of the agreement. This suggests that considerable attention should be given to the determination of the length of such international agreements.
    Keywords: International environmental agreements, global pollution, stock pollution, dynamic games
    JEL: Q5 C73 F53
    Date: 2010
  15. By: Carruthers, John I (U.S. Department of Housing and Urban Development); Clark, David (Department of Economics Marquette University); Renner, Robert N (U.S. Department of Housing and Urban Development)
    Abstract: This paper develops estimates of environmental improvement based on a two-stage hedonic price analysis of the single family housing market in the Puget Sound region of Washington State. The analysis — which focuses specifically on several EPA-designated environmental hazards and involves 226,918 transactions for 177,303 unique properties that took place between January 2001 and September 2009 — involves four steps: (i) ten hedonic price functions are estimated year-by-year, one for each year of the 2000s; (ii) the hedonic estimates are used to compute the marginal implicit price of distance from air release, superfund, and toxic release sites; (iii) the marginal implicit prices, which vary through time, are used to estimate a series of implicit demand functions describing the relationship between the price of distance and the quantity consumed; and, finally (iv) the demand estimates are compared to those obtained in other research and then used evaluate the potential scale of benefits associated with some basic environmental improvement scenarios. Overall, the analysis provides further evidence that it is possible to develop a structural model of implicit demand within a single housing market and suggests that the benefits of environmental improvement are substantial.
    Keywords: hedonic housing model, benefits, environmental improvement, Economics
    JEL: R31 Q51
    Date: 2010–05
  16. By: Robert S. Pindyck
    Abstract: Climate policy is complicated by the considerable compounded uncertainties over the costs and benefits of abatement. We don’t even know the probability distributions for future temperatures and impacts, making cost-benefit analysis based on expected values challenging to say the least. There are good reasons to think that those probability distributions are fat-tailed, which implies that if social welfare is based on the expectation of a CRRA utility function, we should be willing to sacrifice close to 100% of GDP to reduce GHG emissions. I argue that unbounded marginal utility makes little sense, and once we put a bound on marginal utility, this implication of fat tails goes away: Expected marginal utility will be finite even if the distribution for outcomes is fat-tailed. Furthermore, depending on the bound on marginal utility, the index of risk aversion, and the damage function, a thin-tailed distribution can yield a higher expected marginal utility (and thus a greater willingness to pay for abatement) than a fat-tailed one.
    Date: 2010–09
  17. By: Shewmake, Sharon
    Abstract: Private vehicles are a significant source of air pollution in many areas of the United States. Areas with already high levels of air pollution are required by the Clean Air Act to take steps to reduce automobile use and the associated emissions. The behavioral implications of many travel demand management techniques are poorly understood. In this dissertation I focus on carpooling. Policy makers encourage commuters to carpool through High Occupancy Vehicle (HOV) Lanes, free parking for carpoolers, attempts to connect carpoolers, and casual carpoolers (often called slugging). Despite these e
    Keywords: hybrid cars; HOV Lanes; Clean Air Act; Economics
    JEL: Q50 Y40 L91 Q53 R41
    Date: 2010–09–02
  18. By: Emina Krcmar; G. Cornelis van Kooten; Ann Chan-McLeod
    Abstract: Migratory waterfowl are important to the diets of residents in Canada’s northern communities. Contrary to recreational hunters, indigenous peoples have rights to harvest wildlife for subsistence needs without permits. As a result, migratory waterfowl are an important component of diets of Aboriginal peoples in northern Canada, substituting for expensive beef transported from the south. Wild geese and duck provide many benefits to native people, including improved nutrition and health. In this paper, scaled-down data from global climate models are used in a wildlife model to project potential migratory waterfowl abundance in the Northwest Territories for three future periods up to 2080. The models project potential future harvests of geese and ducks by Aboriginal hunters and the financial and nutritional benefits. It turns out that northern Aboriginal peoples can benefit significantly as a result of climate change that affects migratory waterfowl, but likely at the expense of hunters and recreationists in other regions of North America.
    Keywords: subsistence harvests by indigenous peoples; diet and nutrition; climate change
    JEL: Q54 O13
    Date: 2010–10
  19. By: Bachev, Hrabrin
    Abstract: This paper incorporates the interdisciplinary New Institutional and Transaction Costs Economics and suggests a holistic framework for analysis of management agro-ecosystem services. That new approach for analyses and assessment of management of agro-ecosystem services includes: definition of the agro-ecosystem services and the governance; specification of governance needs of agro-ecosystem services and the spectrum of available governing modes (formal and informal institutions, market, private, public and hybrid forms); assessment of efficiency of different modes of governance in terms of their potential to protect diverse eco-rights and investments, assure a socially desirable level of agro-ecosystem services, minimize overall costs, coordinate and stimulate eco-activities, meet individual and social preferences and reconcile conflicts of related agents etc.
    Keywords: ecosystem services; mechanisms of governance; environmental management; market; private; public and hybrid governance
    JEL: D86 Q28 Q57 R58 Q38 Q26 Q13 Q15 Q20 D73 D21 D02 Q24 Q01 Q12 Q25 Q18 D23 D74 Q34 Q56 Q27 Q58
    Date: 2010–10
  20. By: Christopher R. Knittel; Ryan Sandler
    Abstract: The transportation sector accounts for nearly one third of the United States' greenhouse gas emissions. While over the past number of decades, policy makers have avoided directly pricing the externalities from vehicles, both in terms of global and more local pollutants and Corporate Average Fuel Standards have changed little since the mid-1980s, there is now considerable interest in reducing greenhouse gas emissions form the transportation sector. Many have argued that the unique features of the sector imply that pricing mechanisms would have little affect on emissions. This paper analyzes how pricing carbon through either a cap and trade system or carbon tax might affect greenhouse gas emissions from the transportation sector by estimating how changes in gasoline prices alter consumer behavior. We analyze their effect on both the intensive (e.g., vehicle miles travelled) and extensive (e.g., vehicle scrapping) margins. We find large effects on both margins.
    JEL: L0 Q5
    Date: 2010–10
  21. By: KAKEU, Johnson; GAUDET, Gérard
    Abstract: This paper builds on the assumption that countries behave in such a way as to improve, via their economic strength, the probability that they will attain the hegemonic position on the world stage. The quest for hegemony is modeled as a game, with countries being differentiated initially only by some endowment which yields a pollution free ow of income. A country's level of pollution is assumed directly related to its economic strength, as measured by its level of production. Two types of countries are distinguished: richly-endowed countries, for whom the return on their endowment is greater than the return they can expect from winning the hegemony race, and poorly-endowed countries, who can expect a greater return from winning the race than from their endowment. We show that in a symmetric world of poorly-endowed countries the equilibrium level of emissions is larger than in a symmetric world of richly-endowed countries: the former, being less well endowed to begin with, try harder to win the race. In the asymmetric world composed of both types of countries, the poorly-endowed countries will be polluting more than the richly endowed countries. Numerical simulations show that if the number of richly-endowed countries is increased keeping the total number of countries constant, the equilibrium level of global emissions will decrease; if the lot of the poorly-endowed countries is increased by increasing their initial endowment keeping that of the richly-endowed countries constant, global pollution will decrease; increasing the endowments of each type of countries in the same proportion, and hence increasing the average endowment in that proportion, will decrease global pollution; redistributing from the richly-endowed in favor of the poorly-endowed while keeping the average endowment constant will in general result in an increase in the equilibrium level of global pollution.
    Keywords: Hegemony, global pollution, dynamic games
    JEL: Q54 Q50 F5
    Date: 2010
  22. By: Marius-Cristian Frunza (Centre d'Economie de la Sorbonne et Sagacarbon - Caisse des Dépôts); Dominique Guegan (Centre d'Economie de la Sorbonne - Paris School of Economics); Antonin Lassoudière (Sagacarbon - Caisse des Dépôts)
    Abstract: The aim of this paper is to show evidence and to quantify with forensic econometric methods the impact of the Value Added Tax fraud on European carbon allowances markets. This fraud mainly occurred at the beginning of between the end of 2008 and the beginning of 2009. In this paper, we explore the financial mechanisms of the fraud and the impact on the market behavior as well as the reflexion on its econometric features. In a previous work, we showed that the European carbon market is strongly influenced by fundamentals factors as oil, energy, gas, coal and equity prices. Therefore, we calibrated Arbitrage Pricing Theory-like models and showed that they have a good forecast capacity. Those models enabled us to quantify the impact of each factor on the market. In this study, we focused more precisely on the benchmark contract for European carbon emissions prices over 2008 and 2009. We observed that during the first semester of 2009, there is a significant drop in our model performances and robustness and that the part of market volatility explained by fundamentals reduced. Therefore, we identified the period where the market was driven by VAT fraud movements and we were able to measure the value of this fraud. Soon after governments passed a law that cut the possibility of fraud occurrence the performance of the model improved rapidly. We estimate the impact of the VAT extortion on the carbon market at 1.3 billion euros.
    Keywords: Carbon, EUA, energy, arbitrage pricing theory, switching regimes, hidden Markov Chain Model, forecast.
    Date: 2010–07
  23. By: Marius-Cristian Frunza (Centre d'Economie de la Sorbonne et Sagacarbon - Caisse des Dépôts); Dominique Guegan (Centre d'Economie de la Sorbonne - Paris School of Economics); Fabrice Thiebaut (Sagacarbon - Caisse des Dépôts)
    Abstract: The aim of this paper is to show evidence and to quantify with forensic econometric methods the impact of the missing trader fraud on European carbon allowances markets. This fraud occurred mainly between the end of 2008 and the beginning of 2009. In this paper, we explore the financial mechanisms of the fraud and the impact on the market behaviour as well as the consequences on its econometric features.
    Keywords: COE, Econometrie, fraud.
    Date: 2010–08
  24. By: Ruth Delzeit; Horst Gömann; Karin Holm-Müller; Peter Kreins; Bettina Kretschmer; Julia Münch; Sonja Peterson
    Abstract: In the context of energy security and climate protection, biomass is given high importance. Nevertheless, land-use conflicts resulting from the cultivation of biomass and their economy-wide effects are yet to be fully understood. To shed light on this issue we link three distinctive models; a global, multi-regional general equilibrium model (DART), a regionalised agricultural sector model for Germany (RAUMIS) and a location model for biogas plants. The DART model allows capturing international and national feedback effects of an increased use of bioenergy such as increased agricultural prices. The interaction of DART and RAUMIS links global markets and connects them to the detailed specification of agricultural land use in Germany. Finally, we link this system to the newly developed location model ReSI-M that accounts for the location choices of biogas plants in Germany and the resulting regional markets for energy crop demand. As a first application of the modelling system we analyse the effects of the German Renewable Energy Source Act on German biogas production and of the EU 10%-biofuel target on German agriculture and world agricultural prices. A main result of the simulations is that accounting for existing land-use restrictions and land-use competition has a significant effect on model results
    Keywords: Bioenergy, land use, renewable energy policy, coupled models, agricultural-sector models, CGE
    JEL: C61 C68 Q15 Q42 Q48
    Date: 2010–10
  25. By: Rafael González-Val (Universitat de Barcelona & IEB); Fernando Pueyo (Universidad de Zaragoza)
    Abstract: In this paper we present a model integrating characteristics of the New Economic Geography, the theory of endogenous growth and the economy of natural resources. This theoretical framework enables us to study explicitly the effect of “first nature causes” in the concentration of economic activity, more specifically, the consequences of an asymmetrical distribution of natural resources. The natural resource we consider appears as a localized input in one of the two countries, giving firms located in that country a cost advantage. In this context, after a decrease in transport costs, firms decide to move to the country with the greatest domestic demand and market size, where they can take more advantage of increasing returns, despite the cost advantage of locating in the South, due to the presence of the natural resource.
    Keywords: Industrial location, endogenous growth, renewable resource, geography
    JEL: F43 O30 Q20 R12
    Date: 2010
  26. By: Farole, Thomas
    Abstract: As an instrument of trade and investment policy, special economic zones have played a catalytic role in processes of industrialization, diversification, and trade integration in many countries, particularly in East Asia. However, in the African context, anecdotal evidence suggests the experience has been disappointing on the whole. Among the reasons why many zones underperform may be that they fail to establish a high quality investment environment -- this is, after all, one of the main promises that economic zones hold for investors. Drawing on original survey research, this paper presents a systematic analysis of the outcomes and the investment climate of economic zones programs in six African countries and four developing countries outside the region. The analysis finds that although performance across zones is mixed -- with Ghana and Lesotho in particular performing well on some measures -- African zones programs on the whole are underperforming in terms of attracting investment, facilitating exports, and creating jobs. Economic zones in Africa offer an improved business environment relative to what is available to firms based outside the zones; however, in comparison with the non-African countries in the survey, both absolute investment climate performance and relative improvements fall well short.
    Keywords: Environmental Economics&Policies,Emerging Markets,Debt Markets,Investment and Investment Climate,ICT Policy and Strategies
    Date: 2010–10–01
  27. By: G. Cornelis van Kooten; Patrick Withey; Linda Wong
    Keywords: bioeconomic modelling; wetland protection; wildlife management; nonmarket values; Prairie pothole region
    JEL: Q57 C61 Q25
    Date: 2010–04

This nep-env issue is ©2010 by Francisco S.Ramos. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.