nep-env New Economics Papers
on Environmental Economics
Issue of 2011‒01‒23
twenty-six papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Essays on the Economics of Environmental Management and Green Reputation By Komarek, Timothy
  2. Carbon Prices Required to Make Digesters Profitable on U.S. Dairy Farms of Different Sizes By Lazarus, William F.; Goodkind, Andrew; Gallagher, Paul; Conway, Roger
  3. Natural Resource Management: Challenges and Policy Options By Coria, Jessica; Sterner, Thomas
  4. Is Democracy Good for the Environment? Quasi-Experimental Evidence from Regime Transitions By Laura Policardo
  5. Trade-off between Bioenergy and Emissions When Land Is Scarce, The By Nathan S. Kauffman; Dermot J. Hayes
  6. Uncertain climate policy and the green paradox. By Smulders, Sjak A.; Tsur, Y; Zemel, A.
  7. Biomass Supply from Alternative Cellulosic Crops and Crop Residues: A Preliminary Spatial Bioeconomic Modeling Approach By Egbendewe-Mondzozo, Aklesso; Swinton, Scott M.; Izaurralde, R. César; Manowitz, David H.; Zhang, Xuesong
  8. Decision-making and Action Taking: Fisheries Management in a Changing Climate By David Fluharty
  9. Towards a Sustainable Global Energy Supply Infrastructure: Net Energy Balance and Density Considerations By Ioannis N. Kessides; David C. Wade
  10. Spatial Structure and CO2 Emissions Due to Commuting: an Analysis on Italian Urban Areas By Andrea CIRILLI; Paolo VENERI
  11. Synergy effects of international policy instruments to reduce deforestation: a cross-country panel data analysis By Solenn Leplay; Sophie Thoyer
  12. Does Environmental Economics Produce Aeroplanes Without Engines? - On the Need for an Environmental Social Science By Folmer, Henk; Johansson-Stenman, Olof
  13. How Emission Certificate Allocations Distort Fossil Investments: The German Example By Michael Pahle; Lin Fan; Wolf-Peter Schill
  14. Keeping Negotiations in the Dark: Environmental Agreements under Incomplete Information By Ana Espinola-Arredondo; Felix Munoz-Garcia
  15. Price versus tradable quantity regulation. Uncertainty and endogenous technology choice By Halvor Briseid Storrøsten
  16. Policies and Measures to Mitigate Potential Environmental Impacts of Cross Border Infrastructure Projects in Asia By Zhang, ZhongXiang
  17. Will Biofuel Mandates Raise Food Prices? By Chakravorty, Ujjayant; Hubert, Marie-Helene; Moreaux, Michel; Nostbakken, Linda
  18. Network Regulation under Climate Policy Review By Per J. Agrell; Peter Bogetoft
  19. Common and private property to exhaustible resources: theoretical implications for economic growth By Kirill Borissov; Alexander Surkov
  20. Discounting when income is stochastic and climate change policies By Boyarchenko, Svetlana; Levendorskii, Sergei
  21. Statistics of natural resources as a part of national wealth By Yulia Raskina
  22. Path dependence: Biofuels policy under uncertainty about greenhouse gas emissions By Jussila Hammes, Johanna
  23. Anticipating correlations between EUAs and CERs : a dynamic conditional correlation GARCH model. By Chevallier, Julien
  24. Implementation of national and international REDD mechanism under alternative payments for environemtal services: theory and illustration from Sumatra By Solenn Leplay; Jonah Busch; Philippe Delacote; Sophie Thoyer
  25. Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management By Gary. D. Libecap; Terry Anderson; Ragnar Arnason
  26. Évaluer la biodiversité et les services écosystémiques : pour quoi faire ? By Jean-Michel Salles

  1. By: Komarek, Timothy
    Abstract: Many governments, firms, institutions and individuals have become increasingly cognizant of their impact on the environment, most notably with respect to global climate change. This coupled with a threat of future regulation and a desire for a âgreenâ image, among other reasons, has led firms and institutions to begin critically evaluating and managing their own âcarbon footprintâ. Effective programs to manage greenhouse gas emissions (GHG) benefit from understanding the preferences of the constituents the program intends to serve. This study uses a survey at Michigan State University to examine the preferences of constituents (students, faculty and staff) for attributes of alternative greenhouse gas (GHG) reduction strategies. The first essay examines how much respondents were willing to pay for GHG reduction program attributes and the welfare implications of several alternative policies. The second essay examines how the attributes of alternative GHG management plans influence the universityâs âgreenâ reputation.
    Keywords: 'Green' reputation, pro-environmental behavior, conjoint analysis, climate change policy, choice experiment, institution, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q40, Q42, Q51,
    Date: 2010
  2. By: Lazarus, William F.; Goodkind, Andrew; Gallagher, Paul; Conway, Roger
    Abstract: The objective of this analysis is to evaluate the impacts of three factors: 1) methane emission differences related to climate and manure storage type, 2) digester economies of size, and 3) electricity values on the minimum breakeven carbon dioxide (CO2) âequivalent methane (CH4) destruction prices that differentâsized dairy farms in different U.S. states would require to make anaerobic digester installation profitable. The number of digesters that would be installed at different prices, and the resulting emission reductions and electrical generation are also estimated. Dairy cows are a significant source of the greenhouse gas methane, so anaerobic digesters are receiving policy attention as a climate change mitigation strategy. Dairy farm methane emissions by state are calculated in this study using the methods used in the U.S. Environmental Protection Agencyâs annual greenhouse gas inventories. While all of the farms with 2,500âplus cows would install digesters at prices of less than $6 per metric tonne, prices of $39â55 would be required to justify digesters on the 100â199âcow farms. Supply curves are generated empirically for number of digesters, CH4 emission reductions, and digesterâgenerated electricity as a function of a carbon dioxide (CO2)âequivalent CH4 destruction prices ranging from zero to $100/metric tonne. Modeled electricity generation and CH4 destruction are complementary goods in that higher values on the destroyed CH4 encourage generation of more electricity. For example, a price of $40 would encourage as many as 4,138 digester installations with 24 teragrams of CO2âequivalent methane reductions and 468 megawatts of electrical generation. Digester CH4 destruction revenues may exacerbate consolidation in the dairy industry somewhat because digesters are not financially feasible below around 200 cows in most states. Methane destruction revenues under a $40 CO2 price will reduce the milk production cost by between $2.19 and $2.83 per 100 kilograms ($0.99 and $1.28 per 100) pounds on farms of 2,500 cows or more. On farms of 200 to 499 cows, CH4 destruction revenues would have less impact on milk production costs, from 70 cents to $1.32 per 100 kilograms (32 to 60 cents per 100 pounds).
    Keywords: anaerobic digester, biogas plant, livestock manure, electricity, methane, carbon offset value, Environmental Economics and Policy, Livestock Production/Industries,
    Date: 2011–01
  3. By: Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University); Sterner, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Much of the improvement in living standards in developed and developing countries alike is attributable to the exploitation of nonrenewable and renewable resources. The problem is to know when the exploitation occurs at rates and with technologies that are sustainable. If they are not sustainable, this state of affairs presents a serious problem for the future. A long-term management perspective is needed in order to avoid irreversible degradation of renewable resources. This paper examines major challenges to natural resource management as well as policy options.<p>
    Keywords: Natural resources; policy instruments; property rights; environmental regulations; tradable quotas; taxes; voluntary agreements; liability; subsidies; subsidy reduction; deposit-refunds.
    JEL: Q50
    Date: 2011–01–12
  4. By: Laura Policardo
    Abstract: This paper tests the hypothesis that democratisation is conducive to less environmental depletion due to human activity. Using Interrupted Time Series (ITS) design for a panel of 47 transition countries and two indexes of pollution, CO2 emissions and PM10 concentrations, I find that democracies and dictatorships have two different targets of environmental quality, with those of democracies higher than those of dictatorships. Income inequality may as well alter this targets, but with opposite effects in the two different regimes
    Keywords: Democracy; Environment; Cointegration; Interrupted Time Series; Segmented Regression
    JEL: C23 D31 H23 Q58 Q51
    Date: 2010–12
  5. By: Nathan S. Kauffman; Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: Agricultural biofuels require the use of scarce land, and this land has opportunity cost. We explore the objective function of a social planner who includes a land constraint in the optimization decision to minimize environmental cost. The results show that emissions should be measured on a per acre basis. Conventional agricultural life cycle assessments for biofuels report carbon emissions on a per gallon basis, thereby ignoring the implications of land scarcity and implicitly assuming an infinite supply of the inputs needed for production. Switchgrass and corn are then modeled as competing alternatives to show how the inclusion of a land constraint can influence life cycle rankings and alter policy conclusions.
    Keywords: biofuels, biomass, energy policy, land use, life cycle analysis. JEL codes: Q16, Q48, Q58
    Date: 2011–01
  6. By: Smulders, Sjak A. (Tilburg University); Tsur, Y; Zemel, A.
    Date: 2010
  7. By: Egbendewe-Mondzozo, Aklesso; Swinton, Scott M.; Izaurralde, R. César; Manowitz, David H.; Zhang, Xuesong
    Abstract: This paper introduces a spatial bioeconomic model for study of potential cellulosic biomass supply at regional scale. By modeling the profitability of alternative crop production practices, it captures the opportunity cost of replacing current crops by cellulosic biomass crops. The model draws upon biophysical crop input-output coefficients, price and cost data, and spatial transportation costs in the context of profit maximization theory. Yields are simulated using temperature, precipitation and soil quality data with various commercial crops and potential new cellulosic biomass crops. Three types of alternative crop management scenarios are simulated by varying crop rotation, fertilization and tillage. The cost of transporting biomass to a specific demand location is obtained using road distances and bulk shipping costs from geographic information systems. The spatial mathematical programming model predicts the supply of biomass and implied environmental consequences for a landscape managed by representative, profit maximizing farmers. The model was applied and validated for simulation of cellulosic biomass supply in a 9-county region of southern Michigan. Results for 74 cropping systems simulated across 39 sub-watersheds show that crop residues are the first types of biomass to be supplied. Corn stover and wheat straw supply start at $21/Mg and $27/Mg delivered prices. Perennial bioenergy crops become profitable to produce when the delivered biomass price reaches $46/Mg for switchgrass, $118/Mg for grass mixes and $154/Mg for Miscanthus giganteus. The predicted effect of the USDA Biomass Conversion Assistance Program is to sharply reduce the minimum biomass price at which miscanthus would become profitable to supply. Compared to conventional crop production practices in the area, the EPIC-simulated environmental outcomes with crop residue removal include increased greenhouse gas emissions and reduced water quality through increased nutrient loss. By contrast, perennial cellulosic biomass crops reduced greenhouse gas emissions and improved water quality compared to current commercial cropping systems.
    Keywords: biomass production, bioenergy supply, biofuel policy, bioenergy, cellulosic ethanol, agro-ecosystem economics, ecosystem services economics, agro-environmental trade-off analysis, mathematical programming, EPIC, Agricultural and Food Policy, Crop Production/Industries, Environmental Economics and Policy, Land Economics/Use, Production Economics, Resource /Energy Economics and Policy, Q16, Q15, Q57, Q18,
    Date: 2010–12
  8. By: David Fluharty
    Abstract: Decision-makers in fisheries management are confronted with the challenge of how to respond to existing and predicted changes in ocean conditions that are likely to affect the stocks of fish they manage. In order to address climate change most research and thinking advises decision-makers to ensure that fisheries are well-managed and abundant in an ecosystem context. These policies can best allow fisheries to adapt to changing climate. To address climate change, decision-makers should carefully monitor changing conditions and potential changes in factors affecting fish stock abundance. An adaptive approach to fisheries management under conditions of climate change requires that decision-makers engage with fishing interests in a transparent manner and in ways that respect the input of fishing interests and in ways that acknowledge the levels of uncertainty. This approach implies a governance approach to management that is closer to co-management or shared management responsibility than in most hierarchical processes that characterize fishery management to date. The answer to the question of when fishery decision-makers should begin to incorporate climate change into decision making processes is that they should have started yesterday. The justification for this is that even today, climate variability can affect fishery management decisions and the sooner this is understood and incorporated into the management process the better. In economic terms, a conservative decision relative to fisheries management is likely to produce a positive long term benefit whereas the failure to recognize the need to act in time may have serious immediate negative consequences especially when compounded by inadequate management. While climate change can also produce positive consequences for some species a note of caution is still advised in anticipating and responding to such opportunities.
    Keywords: governance, climate change, global warming, fishery policy, international fisheries, Fisheries management
    JEL: Q22 Q54 Q58
    Date: 2011–01
  9. By: Ioannis N. Kessides; David C. Wade
    Abstract: This paper employs a framework of dynamic energy analysis to model the growth potential of alternative electricity supply infrastructures as constrained by innate physical energy balance and dynamic response limits. Coal- red generation meets the criteria of longevity (abundance of energy source) and scalability (ability to expand to the multi-terawatt level) which are critical for a sustainable energy supply chain, but carries a very heavy carbon footprint. Renewables and nuclear power, on the other hand, meet both the longevity and environmental friendliness criteria. However, due to their substantially di¤erent energy densities and load factors, they vary in terms of their ability to deliver net excess energy and attain the scale needed for meeting the huge global energy demand. The low power density of renewable energy extraction and the intermittency of renewable ows limit their ability to achieve high rates of indigenous infrastructure growth. A signi cant global nuclear power deployment, on the other hand, could engender serious risks related to proliferation, safety, and waste disposal. Unlike renewable sources of energy, nuclear power is an unforgiving technology because human lapses and errors can have ecological and social impacts that are catastrophic and irreversible. Thus, the transition to a low carbon economy is likely to prove much more challenging than early optimists have claimed.
    Keywords: dynamic energy analysis; alternative electricity supply; coal; nuclear energy
    Date: 2010–09–22
  10. By: Andrea CIRILLI (Universita' Politecnica delle Marche, Dipartimento di Economia); Paolo VENERI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The aim of this paper is to investigate whether and to what extent the spatial configuration of an urban area affects its level of environmental externalities. Starting from previous contributions to this field of research, it examines several features of urban spatial structure - such as compactness, monocentricity, concentration and functional diversity - and attempts to gauge their environmental implications in terms of per capita CO2 emissions associated with a given pattern of commuting (i.e., mode of commuting and distance travelled). The main finding of the analysis on the 111 largest Italian urban areas is that urban spatial configuration is an important determinant of travel patterns and the associated level of per capita CO2 emissions. In particular, smaller, more compact and less monocentric areas are associated with lower levels of CO2 per commuter, with socio-demographic characteristics also playing a role.
    Keywords: CO2 emissions, commuting, environmental costs, urban spatial structure
    JEL: Q56 R14 R41
    Date: 2010–12
  11. By: Solenn Leplay; Sophie Thoyer
    Abstract: Safeguarding tropical rainforests is one of the most important challenges for the future, particularly to mitigate climate change. The international community has actively sought international policy solutions to curb deforestation in tropical countries. Debt-for-nature swaps and certification of sustainable forest management have been implemented by NGOs. Some states are currently negotiating the implementation of the REDD (Reduced Emissions from Deforestation and Degradation) mechanism, a North-South financial transfer to compensate countries for avoided deforestation. However, little is known about the efficiency of these instruments. We argue that they may have a double effect: an expected direct impact on deforestation linked to the conditionalities of instruments, and an indirect impact due to their feedback effects on macroeconomic variables, affecting in turn the drivers of deforestation. The second effect is often overlooked by policy makers [...].
    Date: 2011–01
  12. By: Folmer, Henk (Department of Spatial Sciences, University of Groningen); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: In this paper we first critically review conventional environmental economics. We conclude that the standard theory offers too narrow a perspective for many real world problems and that many theories are not empirically tested. Consequently, environmental economics is at risk of producing aeroplanes without engines. Next, we welcome and discuss some recent trends, particularly the rapid developments of behavioural and new institutional economics as well as the increased interest in empirical analysis. Yet, we conclude that more „logical duels between competing theories, more interaction between theory and empirics, and more integration between the social sciences are needed to achieve a better understanding of real world environmental problems and the development of adequate policy handles. Finally, we present an outline of steps towards the development of an environmental social science and briefly present the papers that make up this special issue as important building stones of such a discipline.<p>
    Keywords: economic methodology; environmental economics; experiments; logical duels; moral philosophy; political science; psychology; sociology; spatial sciences; surveys
    JEL: A12 B41 Q50
    Date: 2011–01–12
  13. By: Michael Pahle; Lin Fan; Wolf-Peter Schill
    Abstract: Despite political activities to foster a low-carbon energy transition, Germany currently sees a considerable number of new coal power plants being added to its power mix. There are several possible drivers for this "dash for coal", but it is widely accepted that windfall profits gained through free allocation of ETS certificates play an important role. Yet the quantification of allocation-related investment distortions has been limited to back-of-the envelope calculations and stylized models so far. We close this gap with a numerical model integrating both Germany's particular allocation rules and its specific power generation structure. We find that technology specific new entrant provisions have substantially increased incentives to invest in hard coal plants compared to natural gas at the time of the ETS onset. Expected windfall profits compensated more than half the total capital costs of a hard coal plant. Moreover, a shorter period of free allocations would not have turned investors' favours towards the cleaner natural gas technology because of preexisting economic advantages for coal. In contrast, full auctioning of permits or a single best available technology benchmark would have made natural gas the predominant technology of choice.
    Keywords: Emissions trading; Allocation rules; Power markets; Investments
    JEL: Q48 Q54 Q58
    Date: 2011
  14. By: Ana Espinola-Arredondo; Felix Munoz-Garcia (School of Economic Sciences, Washington State University)
    Abstract: This paper investigates the role of uncertainty as a tool to support cooperation in international environmental agreements. We consider two layers of uncertainty. Under unilateral uncertainty treaties become successful with positive probability in the signaling game, even under parameter conditions for which no agreement is reached under complete information. Under bilateral uncertainty, a separating equilibrium emerges where the leader participates in the treaty only when its environmental concerns are high. We show that the agreement is signed for larger sets of parameter values under unilateral uncertainty. We then show that further layers of uncertainty might enhance social welfare.
    Keywords: Signaling games; Unilaterial uncertainty; Bilateral uncertainty; Non-binding negotiations
    JEL: C72 D62 Q28
    Date: 2010–12
  15. By: Halvor Briseid Storrøsten (Statistics Norway)
    Abstract: This paper shows that tradable emissions permits and an emissions tax have a risk-related technology choice effect. We first examine the first- and second-order moments in the probability distributions of optimal abatement and production under the two instruments. The two instruments will, in general, lead to different expected aggregate production levels when technology choice is endogenous, given that regulation is designed to induce equal expected aggregate emissions. Moreover, either regulatory approach may induce larger variance in optimal production and optimal abatement levels, depending on the specification of the stochastic variables. Finally, because firms’ valuation of a flexible technology increases if the variance in abatement is inflated and vice versa, either of the two instruments may induce the most flexible technology. Specifically, a tax encourages the most flexibility if and only if abatement costs and the equilibrium permit price have sufficiently strong positive covariance compared with the variance in the price on the good produced.
    Keywords: Regulation; Technology choice; Uncertainty; Investment.
    JEL: H23 Q55 Q58
    Date: 2011–01
  16. By: Zhang, ZhongXiang (Asian Development Bank Institute)
    Abstract: While bringing positive impacts and benefits, cross-border infrastructure projects face additional challenges relative to national projects. Moreover, such projects involve a variety of technical, regulatory, institutional, and legal factors, and their obstacles constrain the development of cross-border infrastructure projects. This paper argues that proper technical specifications and well-functioning regulatory, institutional and legislative/legal frameworks with clearer lines of oversight are crucial to getting such projects off the ground in the first place and to ensure that they operate properly and reliably while minimizing their environmental impacts. It is pointed out that many issues in theses areas need to be addressed at the national level. The paper concludes that such domestic efforts, coupled with regional frameworks and arrangements wherever necessary, will promote the further development of cross-border infrastructure projects.
    Keywords: asia cross-border infrastructure; environmental impact; asia regional integration
    JEL: O13 Q01 Q43 Q48 Q53 Q54 Q56 Q58 R48
    Date: 2011–01–10
  17. By: Chakravorty, Ujjayant (University of Alberta, Department of Economics); Hubert, Marie-Helene (University of Rennes); Moreaux, Michel (Toulouse School of Economics); Nostbakken, Linda (University of Alberta, School of Business)
    Abstract: Biofuels have received a lot of attention as a substitute for gasoline in transportation. They have also been blamed for recent increases in food prices. Both the United States and the European Union have adopted mandatory blending policies that require a sharp increase in the use of biofuels. In this paper, we examine the effect of these mandates on food prices and carbon emissions. The model we use considers future world population growth and income-driven changes in dietary preferences towards higher meat and dairy consumption as well as heterogenous land quality. We find that food prices increase anyway because of increased demand for food, especially due to the higher consumption of meat products, and scarcity of fertile arable lands. The contribution of the biofuel mandates to food prices is quite small, about 5% at most. However, biofuel mandates actually increase global emissions due to land conversion and terms of trade effects, undermining the main reason for imposing the mandates.
    Keywords: agriculture; energy policy; global warming; land quality; renewable fuel standards
    JEL: Q24 Q32 Q42
    Date: 2011–01–01
  18. By: Per J. Agrell; Peter Bogetoft
    Abstract: Climate change policy, in particular in Europe, will a¤ect the energy sector through the exposure to massive penetration of distributed energy resources or decentralized generation into electricity distribution and transmission grids. As the prerequisites for infrastructure regulation still prevail in the future, the question arises whether the current regulatory model is still valid. In this paper, we chararcterize some of the e¤ects of climate change policy on the network tasks, assets and costs and contrast this with the assumptions implicit or explicit in current economic network regulation. The resulting challenge is identi ed as the change in the direction of higher asymmetry of information and higher capital intensity, combined with ambiguities in terms of task separation. Methodolog- ically, we argue that this may require a mobilization of the litterature related to delegated and hierarchical systems, e.g. team performance, as the externalities are joint products from multiple independent stages where individual regulation may introduce distortions. To provide guidance, we present a model of investment provision under regulation between a distribution system operator (DSO) and a potential investor-generation. The results from the model con rm the hypothesis that network regulation should nd a focal point, should integrate externalities in the performance assessment and should avoid wide delegation of contracting-billing for climate change technologies.
    Keywords: network regulation; climate change; investments; distributed generation
    Date: 2010–09–16
  19. By: Kirill Borissov; Alexander Surkov
    Abstract: We develop two models of economic growth with exhaustible natural resources and consumers heterogeneous in time preferences. The first model assumes private ownership of natural resources. In the second model, natural resources are commonly owned and the resource extraction rate is chosen by voting. We show that if discount factors are given exogenously, the long-run rate of growth under private property is higher than or equal to that under common property. If the discount factors are formed endogenously, under some circumstances common property can result in a higher rate of growth than private property.
    Keywords: economic growth, taxation, voting
    JEL: Q32 E13 D91 O40
    Date: 2010–08–18
  20. By: Boyarchenko, Svetlana; Levendorskii, Sergei
    Abstract: We introduce stochastic income into the standard exponential discounting model and study dependence of effective discount rates on the type of the underlying stochastic process and agent's current income level. If the income follows a process with i.i.d. increments effective discounting is exponential. If the income follows a mean reverting process, the shape of discount rate curves depends on the margin between the agent's current income and the long-run average. The model is used to study how the willingness to pay for investments in abatement technologies depends on the current wealth of a country.
    Keywords: time preference; discounted utility anomalies; uncertainty; willingness to pay
    JEL: D81 D91
    Date: 2010–11–02
  21. By: Yulia Raskina
    Abstract: This paper is following lectures given in 2010 at the Department of Economics of the European University at St. Petersburg in frameworks of the course Socio-economic statistics (module Natural resource statistics).
    Keywords: statistics, natural resources
    JEL: O13 E3
    Date: 2010–12–16
  22. By: Jussila Hammes, Johanna (Statens väg- och transportforskningsinstitut, VTI and Centre for Transport Studies Stockholm, CTS)
    Abstract: We study the effect of uncertainty about the greenhouse gas emissions arising from the production of biofuels on trade policy, in the presence of lobby groups and two policy instruments, trade policy and biofuels mandates. We show that in the presence of biofuels mandates it would be optimal from a societal point of view to lower the trade tariff on biofuels when the emissions from their production are shown to be 'high' as compared to when they are believed to be 'low'. If the government is susceptible to lobbying, the tariff may be raised instead. We further show that at subsequent time periods, the biofuels sector's marginal lobbying effort will not fall compared to previous periods, and that consequently, its political contribution also does not fall. Finally we show how policy may be path dependent, i.e., that earlier tariff rates in part determine future tariff rates if the government is susceptible to lobbying and given that the domestic price of biofuels does not fall. The model can, e.g., shed light on why the EU does not lower the tariffs on Brazilian ethanol in the face of new information.
    Keywords: path dependence; trade policy; biofuels mandate; political economics
    JEL: D72 F18 H23 H25 P16 Q42
    Date: 2011–01–12
  23. By: Chevallier, Julien
    Abstract: Previous literature has studied the empirical characteristics of European Union Allowances (EUAs) and Certified Emissions Reductions (CERs) time series by using vector autoregression, impulse response function, and cointegration analysis (Chevallier (2010)). This paper extends the analysis by modelling the interrelationships between EUAs and CERs in a multivariate GARCH econometric framework, so as to reflect the dynamics of the correlations between the variables overtime. Using the DCC MGARCH model by Engle and Sheppard (2001) and Engle (2002) on daily data from March 09, 2007 to January 26, 2010, we confirm the presence of strong ARCH and GARCH effects. Besides, we provide strong empirical evidence of time-varying correlations in the range of [0.01;0.90] between EUAs and CERs that have not been considered by previous studies. Thus, our study shows that the correlations between EUAs and CERs extracted from the DCC MGARCH model appear as a useful tool to comprehend the nature of the interrelationships between these two markets, and to reach optimal risk management, portfolio selection, and hedging as called by Engle (2009).
    Keywords: Certified Emissions Reductions; European Union Allowances; Multiple Equation Models; Time-Series Models; econometric framework;
    JEL: Q56 C32
    Date: 2011–01
  24. By: Solenn Leplay; Jonah Busch; Philippe Delacote; Sophie Thoyer
    Abstract: This paper develops an analytical model of a REDD+ mechanism with an international payment tier and a national payment tier, and calibrate land users' opportunity cost curves based on data from Sumatra. We compare the avoided deforestation and cost-eciency of government purchases across the two types of contracts fixed price and opportunity cost, and across two government types "benevolent" and "budget maximizing". Our paper shows that a fixed-price scheme is likely to be more efficient than an opportunity-cost compensation scheme at low international carbon prices, when the government is "benevolent" or when variation in opportunity cost within land users is high relative to variation in opportunity cost across land users. Thus, a PES program which pays local communities or land users based on the value of the service provided by avoided deforestation may not only distribute REDD revenue more equitably than an opportunity cost-based payment system, but may be more cost-efficient as well.
    Date: 2011–02
  25. By: Gary. D. Libecap; Terry Anderson; Ragnar Arnason
    Abstract: We show that grandfathering fishing rights to local users or recognizing first possessions is more dynamically efficient than auctions of such rights. It is often argued that auctions allocate rights to the highest-valued users and thereby maximize resource rents. We counter that rents are not fixed in situ, but rather depend additionally upon the innovation, investment, and collective actions of fishers, who discover and enhance stocks and convert them into valuable goods and services. Our analysis shows how grandfathering increases rents by raising expected rates of return for investment, lowering the cost of capital, and providing incentives for collective action.
    Keywords: Fishing rights, property rights, allocating fishing rights, grandfathering fishing rights, auctions of fishing rights, fisheries rent
    JEL: N Q0 Q22 K11 D23
    Date: 2010–12
  26. By: Jean-Michel Salles
    Abstract: L’évaluation de la biodiversité et des services liés aux écosystèmes est actuellement l’objet de nombreux travaux et d’un large débat. Pour dépasser des blocages de principe, il importe de comprendre ce que signifie vraiment l’évaluation économique pour en cerner l’intérêt et les limites. Le nécessaire élargissement de la notion de valeur qu’implique une analyse appropriée de ces services a donné lieu à une pluralité de méthodes, parfois durement contestées. L’objet de cet article est de préciser certains termes de ces débats, tant conceptuels que méthodologique, ainsi que sur le choix des objets à évaluer, en les resituant par rapport aux objectifs très différents que peuvent poursuivre les évaluations.
    Date: 2010

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