nep-env New Economics Papers
on Environmental Economics
Issue of 2010‒12‒11
thirty-one papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Some Basic Economics of Carbon Taxes By Harry Clarke
  2. Cutting Costs of Catching Carbon. Intertemporal effects under imperfect climate policy By Michael Hoel and Svenn Jensen
  3. ChinaÕs Low Carbon Transformation: Drivers, Challenges, and Paths By Jiahua Pan
  4. Behavioral economics, neuroeconomics, and climate change policy: baseline review for the garrison institute initiative on climate change By John M. Gowdy
  5. A Role for the G-20 in Addressing Climate Change? By Trevor Houser
  6. Environmental Policy Design Characteristics and Technological Innovation: Evidence from Patent Data By Nick Johnstone; Ivan Hascic; Margarita Kalamova
  7. Do environmental benefits matter? A choice experiment among house owners in Germany By Achtnicht, Martin
  8. The Economic Geography of European Carbon Market Trading By Eric Knight
  10. Climate Change and India: A 4*4 Assessment: A Sectoral and Regional Analysis for 2030s By Ministry of Environment and Forests GOI
  11. Tajikistan : key priorities for climate change adaptation By Barbone, Luca; Reva, Anna; Zaidi, Salman
  12. Responding to Threats of Climate Change Mega-Catastrophes By Kousky, Carolyn; Rostapshova, Olga; Toman, Michael; Zeckhauser, Richard J.
  13. Comparing the Copenhagen Emissions Targets By Frank Jotzo
  14. Does partial privatization improve the environment? By Rupayan Pal; Bibhas Saha
  15. Policy Diffusion in a simple Stackelberg Game By Peter Michaelis; Thomas Ziesemer
  16. Outcome Performance Measures of Environmental Compliance Assurance: Current Practices, Constraints and Ways Forward By Eugene Mazur
  17. Cost-effectiveness Analysis of CO2 Reduction in the Automobile Sector By Shigeru Suehiro; Ryoichi Komiyama; Yuji Matsuo; Yu Nagatomi; Yuji Morita; Zhongyuan Shen
  18. Climate Change and Game Theory: A Mathematical Survey By Peter J. Wood
  19. Is there a more effective way to reduce carbon emissions? By Lynette Molyneaux; John Foster; Liam Wagner
  20. CO2 Emissions and Economic Activity: heterogeneity across countries and non stationary series By Matías Piaggio; Emilio Padilla
  21. The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations. By John M. Gowdy; Richard Howarth; Clem Tisdell
  22. Use of wood fuels from boreal forests will create a biofuel carbon debt with a long payback time By Bjart Holtsmark
  23. Is Regulation by Milestones Efficiency Enhancing? - An Experimental Study of Environmental Protection - By Andreas Freytag; Werner Güth; Hannes Koppel; Leo Wangler
  24. Pollution exposure and infant health: Evidence from Germany By Coneus, Katja; Spiess, C. Katharina
  25. Cost pass-through of the EU emissions allowances: Examining the European petroleum markets By Alexeeva-Talebi, Victoria
  26. Split Incentives and Energy Efficiency in Canadian Multi-Family Dwellings By Young, Denise; Maruejols, Lucie
  27. Notes on Applying ÔReal OptionsÕ to Climate Change Adaptation Measures, with Examples from Vietnam By Leo Dobes
  28. Comprehending environmental and economic sustainability: Comparative analysis of stability principles in the biosphere and free market economy By Victor G. Gorshkov; Anastassia M. Makarieva; Bai-Lian Li
  29. Natural disasters and household welfare : evidence from Vietnam By Thomas, Timothy; Christiaensen, Luc; Do, Quy Toan; Trung, Le Dang
  30. New Buyback Program for Photovoltaic Generation: Issues in the view of Electric Utilities Industry Policy By Yoko Ito
  31. Is the Environment a Luxury? An Empirical Investigation using Revealed Preferences and Household Production By Chiara Martini; Silvia Tiezzi

  1. By: Harry Clarke (School of Economics and Finance, La Trobe University, Melbourne)
    Abstract: This paper asks three questions. First, how do carbon taxes drive economic and environmental outcomes? Second, what is the appropriate economic base on which carbon taxes should be levied? Finally, how well does a carbon tax deliver economic-environmental outcomes compared to a comparable emissions trading scheme.
    Keywords: Climate change, tax, carbon
    JEL: Q54 H23
    Date: 2010–10
  2. By: Michael Hoel and Svenn Jensen (Statistics Norway)
    Abstract: We use a two-period model to investigate intertemporal effects of cost reductions in climate change mitigation technologies for the power sector. With imperfect climate policies, cost reductions related to carbon capture and storage (CCS) may be more desirable than comparable cost reductions related to renewable energy. The finding rests on the incentives fossil resource owners face. With regulations of emissions only in the future, cheaper renewables speed up extraction (the `green paradox'), whereas CCS cost reductions make fossil resources more attractive for future use and lead to postponement of extraction.
    Keywords: climate change; exhaustible resources; carbon capture and storage; renewable energy; green paradox
    JEL: Q30 Q42 Q54
    Date: 2010–12
  3. By: Jiahua Pan (Institute of Urban and Environmental Studies Chinese Academy of Social Science, Beijing)
    Abstract: National climate change mitigation actions and objectives could be taken from both active and passive considerations. China has multiple objectives to develop a low carbon economy and to decrease carbon dioxide emission per unit of GDP, including mitigation of global climate change, security of energy supply, promotion of sustainable development (environmental protection, poverty alleviation, employment and natural conservation). In this regard, ChinaÕs actions are more at the active side than from a pressure outside. However, there are some suspicions in the international society about whether China has the determination and efficiency in mitigation actions. The author demonstrates that ChinaÕs low carbon transformation is largely driven from domestic considerations. For china the question is not to make the transformation into a low carbon economy, but how to accelerate the process. In the meantime, low carbon transformation in China has to face many serious challenges. A dilemma exists that a higher carbon may actually help raise necessary resources for promoting low carbon solutions. Understanding and international cooperation are essential for ChinaÕs low carbon transformation.
    Keywords: low carbon transformation, sustainable development, mitigation of climate change, carbon dilemma, China
    JEL: Q54 Q56 O53
    Date: 2010–10
  4. By: John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)
    Abstract: In spite of the increasing scientific certainty that the earth's climate is warming and that human activity is partially responsible, public willingness to take steps to reduce greenhouse gas emissions seems to be decreasing. How can the scientific consensus as to the urgency of the climate change problem be conveyed to the general public in such a way as to support greenhouse gas abatement policies and to actually change behavior? This essay explores the standard economic approach to environmental pollution and discusses findings from behavioral economics and neuroscience that could lead to a more fruitful understanding of the relationship between economic policy and human psychology. This essay is a background paper prepared for the Garrison Institute's "Climate, Mind and Behavior" initiative.
    JEL: A10 A11 P48
    Date: 2010–11
  5. By: Trevor Houser (Peterson Institute for International Economics)
    Abstract: Following the chaotic Copenhagen conference of the UN Framework Convention on Climate Change (UNFCCC), policymakers and pundits have discussed the G-20 as an alternative forum for advancing climate change diplomacy. This paper assesses the risks and rewards of tackling climate change in the G-20 and finds that despite its seeming attractiveness, the G-20, as structured, is not a suitable replacement for the UN-led process and has limited ability, at present, to advance climate change negotiations. There is much, however, that the G-20 can do to contribute to the goals of the climate negotiations outside of wading into the negotiations themselves. Building on its existing agenda the G-20 has the power to significantly reduce global greenhouse gas emissions, accelerate the deployment of clean energy technology, and help vulnerable countries adapt to a warmer world through the mobilization of public and private finance. Following through on the existing G-20 pledge to phase out and rationalize inefficient fossil fuel subsidies, establishing new green guidelines for multilateral development banks, coordinating green stimulus exit strategies, promoting open markets for environmental goods and services, and rebalancing global economic growth all fall well within the G-20's mandate and help meet the climate challenge.
    Keywords: climate change, carbon, climate finance, UNFCCC, G20, green stimulus, macroeconomic imbalances, environmental goods and services, multilateral development banks, climate finance, fossil fuel subsidies
    JEL: Q00 Q27 Q48 Q54 F18 F35 F50 F51 F52 F53
    Date: 2010–10
  6. By: Nick Johnstone; Ivan Hascic; Margarita Kalamova
    Abstract: This paper focuses on the issue of innovation and technology transfer in the areas of air pollution abatement, wastewater effluent treatment, solid waste management, and climate change mitigation. The paper describes the trends in innovative activity related to selected areas of pollution abatement and control technologies and their transfer internationally. It also discusses characteristics of environmental policy regimes that are amenable to encouraging innovation of environmental technologies, and provides empirical evidence on the role of various determinants (including general characteristics of countries' environmental policy regimes) in encouraging innovation.<BR>Ce document se concentre sur la question du transfert d’innovation et de technologie dans les domaines de la réduction de pollution atmosphérique, du traitement d’effluent d’eau usagée, de la gestion de déchets solides, et de l’atténuation de changement climatique. Il décrit les tendances dans l’activité innovatrice relative aux technologies de réduction de la pollution et de leur transfert international. Il identifie également les caractéristiques des régimes de politique environnementale favorables à l’innovation environnementale, et établit le lien empirique sur le rôle des diverses causes déterminantes (y compris les caractéristiques générales de la politique environnementale des pays) dans l’innovation environnementale.
    Keywords: environmental policy, innovation, technology, politique environnementale, innovation, technologie
    JEL: O31 O33 Q55 Q56 Q58
    Date: 2010–03–16
  7. By: Achtnicht, Martin
    Abstract: Residential buildings strongly contribute to global CO2 emissions due to the high energy demand for electricity and heating, particularly in industrialised countries. Within the EU, decentralised heat generation is of particular relevance for future climate policy, as its emissions are not covered by the EU ETS. We conducted a choice experiment concerning energy retrofits for existing houses in Germany. In the experiment, the approximately 400 sampled house owners could either choose a modern heating system or an improved thermal insulation for their home. We used standard and mixed logit specifications to analyse the choice data. We found environmental benefits to have a significant impact on choices of heating systems. However, they played no role in terms of insulation choices. Based on the estimated mixed logit model, we further obtained WTP measures for CO2 savings. --
    Keywords: Choice experiment,CO2 emissions,Energy efficiency,Energy saving,Mixed logit,Residential buildings,Willingness to pay
    JEL: C25 D12 Q40 Q51
    Date: 2010
  8. By: Eric Knight (Department of Geography and the Environment, University of Oxford)
    Abstract: The European Union Emissions Trading Scheme (EU ETS) is the world’s first regional 10 carbon trading market. This article is a quantitative attempt to examine the temporal and spatial geography of European carbon trading. We show that carbon markets are especially sensitive to two factors: staging across time (Phase I versus II of the EU ETS) and across space (energy market structures in Europe). Carbon markets serve as a vehicle to better understand the economic geography of financial markets. Building on the theoretical vocabulary of the geography of finance, the article suggests that certain national factors (market structure) and institutional factors (regulatory phases) better explain how carbon markets operate than company level differences. These findings indicate that geographers have a key role to play in highlighting the local ramifications of carbon markets if and when the world moves towards its ambition for a global carbon market.
    Keywords: Climate change, tradable permits, European Union
    JEL: Q54 R12
    Date: 2010–10
  9. By: B.Sudhakara Reddy; Hippu Salk Kristle Nathan (Indira Gandhi Institute of Development Research)
    Abstract: Presently India is facing the twin challenge of energy universalization as well as emission reduction. Nearly 0.4 billion people in India– mostly residing in rural areas– do not have access to electricity and more than 0.8 billion people do not use modern cooking fuels. Provision of energy services however needs to take into account the global temperatures rise, which if to be limited to 2°C more from its pre-industrial value, Green House Gas (GHG) emissions must be halved by 2050 from its 1990 level. Energy infrastructure plays a key role to meet this dual challenge of universalization of energy services and reduction of energy-induced emissions. Assessing India’s infrastructure, this study presents the high humane (Energy universalization) and low carbon scenarios and discusses investment needs, financing mechanisms and the key policy issues.
    Keywords: Energy climate nexus, Energy universalization, Infrastructure Investments, Financing mechanisms, Energy efficiency.
    JEL: P28 Q41 Q42 Q48
    Date: 2010
  10. By: Ministry of Environment and Forests GOI
    Abstract: The report provides an assessment of impact of climate change in 2030s on four key sectors in four climate sensitive regions of India.
    Keywords: environment, economy, forests, climae change, India, himalayan region, water resources,
    Date: 2010
  11. By: Barbone, Luca; Reva, Anna; Zaidi, Salman
    Abstract: How should Tajikistan adapt to ongoing and future climate change, in particular given the many pressing development challenges it currently faces? The paper argues that for developing countries like Tajikistan, faster economic and social development is the best possible defense against climate change. It presents some key findings from a recent nationally representative household survey to illustrate the strong public support for more climate change related spending on better management of water resources, disaster management, agriculture, and public health--four key sectors that the government's latest poverty reduction strategy identifies as being especially important from a climate change perspective. Finally, the paper argues that, as important as project-based adaptation measures may be, it is imperative that they be supported by an overall policy framework that provides a truly enabling environment to facilitate faster climate change adaptation.
    Keywords: Science of Climate Change,Climate Change Mitigation and Green House Gases,Climate Change Economics,Water Supply and Sanitation Governance and Institutions,Population Policies
    Date: 2010–11–01
  12. By: Kousky, Carolyn; Rostapshova, Olga; Toman, Michael; Zeckhauser, Richard J.
    Abstract: There is a low but uncertain probability that climate change could trigger “mega-catastrophes,” severe and at least partly irreversible adverse effects across broad regions. This paper first discusses the state of current knowledge and the defining characteristics of potential climate change mega-catastrophes. While some of these characteristics present difficulties for using standard rational choice methods to evaluate response options, there is still a need to balance the benefits and costs of different possible responses with appropriate attention to the uncertainties. To that end, we present a qualitative analysis of three options for mitigating the risk of climate mega-catastrophes—drastic abatement of greenhouse gas emissions, development and implementation of geoengineering, and large-scale ex ante adaptation—against the criteria of efficacy, cost, robustness, and flexibility. We discuss the composition of a sound portfolio of initial investments in reducing the risk of climate change mega-catastrophes.
    Date: 2010–11
  13. By: Frank Jotzo (Crawford School of Economics and Government, The Australian National University)
    Abstract: Following the Copenhagen climate Accord, developed and developing countries have pledged to cut their greenhouse gas emissions, emissions intensity or emissions relative to baseline. This analysis puts the targets for the major countries on a common footing, and compares them across different metrics. Targeted changes in absolute emissions differ markedly between countries, with continued strong increases in some developing countries but significant decreases in others including Indonesia, Brazil and South Africa, provided reasonable baseline projections are used. Differences are smaller when emissions are expressed in per capita terms. Reductions in emissions intensity of economies implicit in the targets are remarkably similar across developed and developing countries, with ChinaÕs emissions intensity target spanning almost the same range as the implicit intensity reductions in the United States, EU, Japan, Australia and Canada. Targeted deviations from business-as-usual are also remarkably similar across countries, and the majority of total global reductions relative to baselines may originate from China and other developing countries. The findings suggest that targets for most major countries are broadly compatible in important metrics, and that while the overall global ambition falls short of a two degree trajectory, the targets by key developing countries including China can be considered commensurate in the context of what developed countries have pledged.
    Keywords: Climate Change, mitigation, developing countries, emissions intensity
    JEL: Q54
    Date: 2010–10
  14. By: Rupayan Pal; Bibhas Saha (Indira Gandhi Institute of Development Research)
    Abstract: This paper shows that, in case of differentiated products mixed duopoly, environmental damage increases (decreases) with the level of privatization, if the level of privatization is less (more) than certain level. It also shows that partial privatization is optimal from the social welfare point of view. However, the social welfare maximizing level of privatization damages the environment most.
    Keywords: Privatization, mixed duopoly, environmental damage, environmental tax, social welfare
    JEL: H23 Q50 Q58 L13
    Date: 2010
  15. By: Peter Michaelis (University of Augsburg, Department of Economics); Thomas Ziesemer (University of Augsburg, Department of Economics)
    Abstract: Strategic environmental policy games are usually based on simultaneous decision making and reach the conclusion that the policy choices are strategic substitutes. Empirical evidence, however, shows that the introduction of a regulatory instrument usually follows a consecutive pattern that is best described as policy diffusion. To introduce policy diffusion into to a strategic environmental policy game we transform the typical model setup into a Stackelberg game in which we analyze the policy decisions of two governments when one can commit to its choice. We find that the well-known trade-off between rent-seeking and the internalisation of negative externalities from pollution is mitigated when policy diffusion takes place.
    Keywords: strategic environmental policy, policy diffusion, emission tax
    JEL: F18 D62 Q58
    Date: 2010–12
  16. By: Eugene Mazur
    Abstract: This report analyses the experience of ten OECD countries in the design and implementation of quantitative indicators used to assess the outcomes of environmental enforcement authorities’ efforts to ensure compliance with pollution prevention and control regulations. To respond to the growing demand for results-oriented work methods and the need for performance management and accountability at the time of severe budget constraints, more and more environmental enforcement authorities are working to develop indicators to characterise improvements in behaviour of the regulated community (intermediate outcomes) or environmental conditions (final outcomes) stemming from their activities. The report considers six types of intermediate and final outcome performance measures, including compliance rates and indicators of improved environmental management practices and reduced risk. Based on the OECD criteria for the evaluation of environmental indicators – measurability, analytical soundness and policy relevance – the paper identifies key challenges for developing and using specific categories of compliance assurance outcome indicators and suggests several ways to improve their effectiveness. The review of a “toolbox” of existing outcome indicators and the analysis of their respective strengths and weaknesses suggests that it is not possible to identify a “best practice” approach or a universal optimal set of indicators. The functionality of individual outcome measures ultimately depends on their purpose (e.g. internal performance assessment or external accountability) and suitability for joint analysis with the enforcement authority’s resource (input) and activity (output) indicators. The report identifies several issues for further analysis.
    Keywords: environmental regulations, compliance assurance, compliance and enforcement, environmental authorities, environmental inspections, performance measurement, outcome indicators
    JEL: K32 K42 O57 Q56
    Date: 2010–06–10
  17. By: Shigeru Suehiro; Ryoichi Komiyama; Yuji Matsuo; Yu Nagatomi; Yuji Morita; Zhongyuan Shen (The Institute of Energy Economics, Japan)
    Abstract: Various problems relating to energy and the environment clearly exist, such as global warming and a steep rise in the price fossil fuels, and resources. These problems should be addressed in the medium term or long run. As for the abatement of greenhouse gas emission, active discussions have been held on the stage of world politics to achieve the long-term goal. Although various approaches have been proposed by several research institutions and countries, sufficient studies have not yet been conducted on the roles of individual countries and sectors. Specifically, in the automotive transportation sector wherein oil demand and CO2 emissions are estimated to rise in the future with the marked progress of motorization in developing countries, it is increasingly important to study these subjects. We focused on the automotive transportation sector and studied the CO2 abatement potential and its cost performance in this sector. This article reports the results of the study.
    Keywords: energy and the environment, climate change, automotive transportation
    JEL: Q40 Q52 Q54
    Date: 2010
  18. By: Peter J. Wood (Resource Management in Asia-Pacific Program, Crawford School of Economics and Government, The Australian National University)
    Abstract: This paper examines the problem of achieving global cooperation to reduce greenhouse gas emissions. Contributions to this problem are reviewed from noncooperative game theory, cooperative game theory, and implementation theory. We examine the solutions to games where players have a continuous choice about how much to pollute, and games where players make decisions about treaty participation. The implications of linking cooperation on climate change with cooperation on other issues, such as trade, is also examined. Cooperative and non-cooperative approaches to coalition formation are investigated in order to examine the behaviour of coalitions cooperating on climate change. One way to achieve cooperation is to design a game, known as a mechanism, whose equilibrium corresponds to an optimal outcome. This paper examines some mechanisms that are based on conditional commitments, and their policy implications. These mechanisms could make cooperation on climate change mitigation more likely.
    Keywords: Climate change, negotiations, game theory, implementation theory
    JEL: Q54 C70
    Date: 2010–10
  19. By: Lynette Molyneaux (School of Economics, The University of Queensland); John Foster (School of Economics, The University of Queensland); Liam Wagner (School of Economics, The University of Queensland)
    Abstract: Whilst emissions trading systems are widely held to be able to deliver lowest-cost abatement, uncertainty reduces their effectiveness. We consider a new scheme, the Tender-Price Allocation Mechanism, which focuses carbon factor cost expenditure on abatement rather than just revenue transfers. It is a scheme that reduces uncertainty and the costs of uncertainty for both firms and regulators. It also incorporates a suite of incentives that compensates for the externalities associated with abatement investment.
    Date: 2010
  20. By: Matías Piaggio (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); Emilio Padilla (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: This paper explores the homogeneity of the functional form, the parameters, and the turning point, when appropriate, of the relationship between CO2 emissions and economic activity for 31 countries (28 OECD, Brazil, China, and India) during the period 1950 to 2006 using cointegration analysis. With a sample highly overlapped over time between countries, the result reveals that the homogeneity across countries is rejected, both in functional form and in the parameters of long term relationship. This confirms the relevance of considering the heterogeneity in exploring the relationship between air pollution and economic activity to avoid spurious parameter estimates and infer a wrong behavior of the functional form, which could lead to induce that the relationship is reversed when in fact it is direct.
    Keywords: Bound testing, cointegration, CO2 emissions, environmental Kuznets curve, heterogeneity
    JEL: C32 O13 Q53 Q56
    Date: 2010–12
  21. By: John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA); Richard Howarth (Dartmouth College); Clem Tisdell (University of Queensland)
    Abstract: This chapter presents the economic logic behind the concept of discounting the future and discusses how it applies to biodiversity conservation. How should economists account for the effects of biodiversity and ecosystem losses in the immediate and distant future? We discuss how to integrate traditional cost-benefit analysis with other approaches to understand and measure, where possible, environmental values. We conclude that losses of biodiversity and ecosystems have properties that make it difficult to apply standard welfare analysis including discounting the future. Difficulties include: (1) it is a phenomenon having global as well as local consequences, (2) its impacts are long-term and irreversible, (3) pure uncertainty is pervasive, (4) changes are non-marginal and non-linear. And (5) questions of inter- and intra-generational equity are central. This paper will be published as Chapter Six in Pushpam Kumar (ed.). An output of TEEB: The Economics of Ecosystems and Biodiversity. London: Earthscan. 2010.
    JEL: A10 A11 P48
    Date: 2010–11
  22. By: Bjart Holtsmark (Statistics Norway)
    Abstract: Owing to the extensive critique of food-crop-based biofuels, attention and hopes have turned toward second-generation wood-based biofuels. An important question is therefore whether wood from boreal forests could serve as a source for biofuels. However, in a typical boreal forest, it takes 70–120 years before a stand of trees is mature. If this time lag and the real dynamics of the carbon stock of boreal forests more generally are taken into account, it becomes necessary to reconsider the potential mitigation effects of the increased use of wood fuels from boreal forests. This paper finds that the increased harvest of a boreal forest creates a biofuel carbon debt that takes 150–230 years to repay.
    Keywords: forestry; greenhouse gas emissions; bioenergy; carbon neutrality
    JEL: Q23 Q42 Q54 Q58
    Date: 2010–11
  23. By: Andreas Freytag (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Hannes Koppel (Max Planck Institute of Economics, Jena); Leo Wangler (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: Viewing individual contributions as investments in emission reduction we rely on the familiar linear public goods- game to set global reduction targets which, if missed, imply that all payoffs are destroyed with a certain probability. Regulation by milestones does not only impose a final reduction target but also intermediate ones. In our leading example the regulating agency is Mother Nature but our analysis can, of course, be applied to other regulating agencies as well. We are mainly testing for milestone effects by varying the size of milestones in addition to changing the marginal productivity of individual contributions and the probability to lose.
    Keywords: Cumulative Public Goods, Milestones, Climate Change, Experiment.
    JEL: C92 D78 H41 Q54
    Date: 2010–12–02
  24. By: Coneus, Katja; Spiess, C. Katharina
    Abstract: This paper examines the impact of outdoor and indoor pollution on children's health from birth until the age of three years in Germany. We use representative data from the German Socio-Economic Panel (SOEP), combined with five air pollution levels. These data come from the Federal Environment Agency and cover the years 2002-2007. Our work offers three important contributions. Firstly, we use accurate measures for five different pollutants (CO, NO2, SO2, O3, and PM10) on a (half-)hourly basis. Secondly, we are able to follow the effect of pollution exposure on a child's health during the first three years of life, accounting for time-invariant and unobserved neighborhood and mother-specific characteristics. Thirdly, we calculate different pollution intensity measures. Instead of relying solely on mean pollution levels, we are able to use (half-)hourly pollution levels as well as indoor pollution as measurements for the total latent pollution exposure. Our results suggest a significantly negative impact for some pollutants on infant health during early childhood. In comparison to outdoor pollution, indoor pollution seems to be more harmful directly after birth, while the relationship between indoor and outdoor pollution changes later in childhood. Since smoking is one source of producing carbon monoxide and thus affects child health negatively, our results further support the advice to parents of young children not to smoke. --
    Keywords: indoor and outdoor pollution,health,early childhood
    JEL: I12 Q53 J13
    Date: 2010
  25. By: Alexeeva-Talebi, Victoria
    Abstract: This paper explores the ability of European refineries to pass-through costs associated with the introduction of the EU Emissions Trading Scheme (EU ETS). We estimated a sequence of vector error correction models (VECM) within a multi-national setting which covers 14 EU member states. Using weekly data at the country level, this paper finds a significant influence of prices for European Union Allowances (EUAs) on unleaded petrol retail prices during the trial phase of the EU ETS from 2005 to 2007. Petrol prices are found to be elastic with respect to crude oil prices and exchange rates but rather inelastic with respect to carbon costs. The long-run elasticity of petrol prices with respect to the EUA prices typically ranges between 0.01% and 0.09%. Furthermore, by computing the variance decomposition our analysis shows that a significant fraction of petrol price changes in Austria, Germany, France and Spain can be explained by changes in allowances prices (between 10% and 20%). --
    Keywords: Cost Pass-Through,Emissions Trading Scheme,Refineries
    JEL: F18 C22 L11
    Date: 2010
  26. By: Young, Denise (University of Alberta, Department of Economics); Maruejols, Lucie (University of Alberta, Department of Economics)
    Abstract: This paper examines the energy-related behaviour of occupants and owners of multi-family dwellings in Canada, some of whom do not pay directly for electricity or heat, but instead have these costs included in their rent or condo fees. Using data from the 2003 Survey of Household Energy Use, we look at the extent to which split incentives that result from bill-paying arrangements effect a variety of activities including the setting of temperatures at various times of the day and the use of eco-friendly options in basic household tasks. Findings suggest that these split incentives do indeed impact some aspects of occupant behaviour, with households who do not pay directly for their heat opting for increased thermal comfort and being less sensitive to whether or not somebody is at home and the severity of the climate when deciding on temperature settings. Regardless of who pays for utilities, Canadian households who live in multi-family dwellings are generally unresponsive to fuel prices. Our empirical results suggest that the possibility of environmental benefits from policies aimed at improving energy-efficiency in this sector, especially if targeted at reducing the impacts of the behaviour of those who do not pay directly for energy use.
    Keywords: energy efficiency; agency effects; household behaviour
    JEL: D12 Q41
    Date: 2010–11–01
  27. By: Leo Dobes (Crawford School of Economics and Government, The Australian National University)
    Abstract: A factor common to all adaptation measures is the uncertainty that is the hallmark of climate change. The timing, intensity and location of climate change impacts is not known to any degree of precision. Because most deterministic analyses and policy prescriptions ignore this uncertainty, their recommendations are likely to waste community resources. Except by chance, adaptation measures will either be over-engineered, or they will be inadequate and result in harm. Applying real options thinking allows an incremental and flexible approach. Adaptation measures are implemented only as better knowledge becomes available over time. Several examples are given of real options in the Mekong Delta, with a comparison of net present values of two housing alternatives. It is essential to undertake net present value calculations when comparing different projects to ensure that the value of any options is weighed against other costs and benefits.
    Keywords: real options, Vietnam, climate change, adaptation
    JEL: Q54 Q56
    Date: 2010–11
  28. By: Victor G. Gorshkov; Anastassia M. Makarieva; Bai-Lian Li
    Abstract: Using the formalism of Lyapunov potential function it is shown that the stability principles for biomass in the ecosystem and for employment in economics are mathematically similar. The ecosystem is found to have a stable and an unstable stationary state with high (forest) and low (grasslands) biomass, respectively. In economics, there is a stable stationary state with high employment, which corresponds to mass production of conventional goods sold at low cost price, and an unstable stationary state with lower employment, which corresponds to production of novel goods appearing in the course of technological progress. An additional stable stationary state is described for economics, the one corresponding to very low employment in production of life essentials such as energy and raw materials. In this state the civilization currently pays 10% of global GDP for energy produced by a negligible minority of the working population (currently ~0.2%) and sold at prices greatly exceeding the cost price by 40 times. It is shown that economic ownership over energy sources is equivalent to equating measurable variables of different dimensions (stores and fluxes), which leads to effective violation of the laws of energy and matter conservation.
    Date: 2010–11
  29. By: Thomas, Timothy; Christiaensen, Luc; Do, Quy Toan; Trung, Le Dang
    Abstract: As natural disasters hit with increasing frequency, especially in coastal areas, it is imperative to better understand how much natural disasters affect economies and their people. This requires disaggregated measures of natural disasters that can be reliably linked to households, the first challenge this paper tackles. In particular, a methodology is illustrated to create natural disaster and hazard maps from first hand, geo-referenced meteorological data. In a second step, the repeated cross-sectional national living standard measurement surveys (2002, 2004, and 2006) from Vietnam are augmented with the natural disaster measures derived in the first phase, to estimate the welfare effects associated with natural disasters. The results indicate that short-run losses from natural disasters can be substantial, with riverine floods causing welfare losses of up to 23 percent and hurricanes reducing welfare by up to 52 percent inside cities with a population over 500,000. Households are better able to cope with the short-run effects of droughts, largely due to irrigation. There are also important long-run negative effects, in Vietnam mostly so for droughts, flash floods, and hurricanes. Geographical differentiation in the welfare effects across space and disaster appears partly linked to the functioning of the disaster relief system, which has so far largely eluded households in areas regularly affected by hurricane force winds.
    Keywords: Natural Disasters,Hazard Risk Management,Disaster Management,Climate Change Mitigation and Green House Gases,Adaptation to Climate Change
    Date: 2010–12–01
  30. By: Yoko Ito (The Institute of Energy Economics, Japan)
    Abstract: This paper examines the background, the anticipated effects and the issues raised with regards to the New Buyback Program for Photovoltaic Generation, which was introduced based on the enactment of the "Bill on the Promotion of the Use of Nonfossil Energy Sources and Effective Use of Fossil Energy Source Materials by Energy Suppliers" and "Bill to Amend the Act on the Promotion of the Development and Introduction of Alternative Energy"(passed in August 2009). The New Buyback Program is a system whereby general electric power companies are required to purchase excess electric power generated by photovoltaic generating equipment installed mainly in domestic buildings for a period of 10 years at a fixed tariff. Reducing the cost of power generation is the key to achieve the widespread adoption of photovoltaic generation in Japan. This paper therefore pays attention to the acceleration of cost reductions accompanying the introduction of the new Program, and the subsequent anticipated increase in international competitiveness within related industries. It also touches upon a recent trend that the negative impact of the financial crisis may imply the perspective for the photovoltaic industry is not always positive. Against this background, this paper seeks to consider, with regard to the introduction of the new Program, the problems arising from changes in policy focus from reducing dependence on oil and the liberalization of the utilities, to the climate change mitigations. It argues that the implementation of the new Program requires a well-defined policy coordination considering the compatibility with existing policies and frameworks. Namely, those issues such as the passing on of the cost of the buyback tariff against the liberalization policy as well as energy competition in ever increasing environmental pressures need to be reviewed in a wider picture of long-term utility policy that are to be build upon a balance between the three pillars of energy, economy and the environment.
    Keywords: photovoltaic energy, buyback, energy policy, Japan
    JEL: Q42 Q48
    Date: 2010
  31. By: Chiara Martini; Silvia Tiezzi
    Abstract: This paper addresses the issue of whether environmental quality is a luxury good meaning that its demand increases more than proportionally with respect to income. We use demand analysis and household production to estimate the marginal willingness to pay for improvements in air quality in Italy and the income elasticity of WTP. Only market data on Italian households’ current consumption expenditures from January 1999 to December 2006 merged with a unique air quality index are used. We consistently find that the income elasticity of WTP for environmental quality is very close to one across income groups and WTP decreases as a percentage of income as income increases with interesting implications for environmental policy. Besides contributing to a strand of literature where there is very scant empirical evidence, this paper provides the first attempt at estimating WTP and its income elasticity using revealed preferences and household production.
    Keywords: household production, conditional and mixed demand systems, integrability, income elasticity of willingness to pay
    JEL: H22 H23 D63
    Date: 2010–08

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