nep-env New Economics Papers
on Environmental Economics
Issue of 2011‒02‒26
27 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. The Option Value of Investments in Energy-Efficient and Renewable Energy Technologies By Gerd Nicodemus
  2. International Environmental Agreements in the Presence of Adaptation By Walid Marrouch; Amrita Ray Chaudhuri
  3. The Economics of Population Policy for Carbon Emissions Reduction in Developing Countries - Working Paper 229 By David Wheeler and Dan Hammer
  4. Confronting the American Divide on Carbon Emissions Regulation - Working Paper 232 By David Wheeler
  5. International Support of Climate Change Policies in Developing Countries: Strategic, Moral and Fairness Aspects By Dirk Rübbelke
  6. Greenhouse Gas Regulation under the Clean Air Act: A Guide for Economists By Burtraw, Dallas; Fraas, Arthur G.; Richardson, Nathan
  7. Emission Trading Systems and the Optimal Technology Mix By Zöttl, Gregor
  8. Is there really a Green Paradox? By Frederick van der Ploeg; Cees Withagen
  9. Competing Recombinant Technologies for Environmental Innovation By Paolo Zeppini; Jeroen C.J.M. van den Bergh
  10. Minimum Quality Standards in Hedonic Markets with Environmental Externalities By G. Ecchia; L. Lambertini; A. Tampieri
  11. The Relationship between Common Management and Ecotourism Development: Tragedy or Triumph of the Commons? A Law and Economics Answer By Samà, Danilo
  12. Designing climate change adaptation policies : an economic framework By Hallegatte, Stephane; Lecocq, Franck; de Perthuis, Christian
  13. Clean energy technology and the role of non-carbon price based policy: an evolutionary economics perspective By Eric Knight; Nicholas Howarth
  14. Splitting an Uncertain (Natural) Capital By Jérémy Laurent-Lucchetti; Justin Leroux; Bernard Sinclair-Desgagné
  15. Incorporating Vehicular Emissions into an Efficient Mesoscopic Traffic Model: An Application to the Alameda Corridor By Gan, Qijian; Sun, Jielin; Jin, Wenlong; Saphores, Jean-Daniel
  16. Differential treatment of intentional and accidental violators By Thomas BLONDIAU; Sandra ROUSSEAU
  17. "China's increasing policy shift towards more sustainable growth" By Prud'homme, Dan
  18. Global Prospects for Utility-Scale Solar Power: Toward Spatially Renewable Energy Systems - Working Paper 235 By Kevin Ummel
  19. Output-based allocation and investment in clean technologies By Knut Einar Rosendahl and Halvor Briseid Storrøsten
  20. Optimal Control of Externalities in the Presence of Income Taxation By Louis Kaplow
  21. Zur Architektur globaler Governance des Klimaschutzes By Winter, Gerd
  22. A Generalized Nash-Cournot Model for the European NaturalGas markets with a Fuel Substitution Demand Function: The GaMMES Model By Ibrahim Abada; Vincent Briat; Steve A. Gabriel; Olivier Massol
  23. Reexamining the waste-income relationship By Daisuke Ichinose; Masashi Yamamoto; Yuichiro Yoshida
  24. A Triptych Inquiry: Rethinking Sustainability, Innovation, and Financial Performance By Timo Busch; Bryan T. Stinchfield; Matthew S. Wood
  25. Optimal Management with Potential Regime Shifts By Stephen Polasky; Aart de Zeeuw; Florian Wagener
  26. Nonrenewable Resources, Strategic Behavior and the Hotelling Rule: An Experiment By Roel van Veldhuizen; Joep Sonnemans
  27. Integrating scientific assessment of wetland areas and economic evaluation tools to develop an evaluation framework to advise wetland management By Jackie Robinson; Jared Dent; Gabriella Schaffer

  1. By: Gerd Nicodemus (Department of Economics of the Duesseldorf University of Applied Sciences)
    Abstract: This paper takes up the need to engage in substantial investments in the energy producing capital stock to attack the climate change problem, caused by rising carbon dioxide concentrations in the atmosphere. However, the precise magnitudes of economic impacts of global warming as well as abatement and mitigation costs of climate change are not known and may be learned after time. Thus preferences to restrict or to loosen environmental objectives and related emission levels might change and are reflected in an uncertain “price” for environmental usage (e.g. emission tax, marketable permits). As a consequence investors face some uncertainty and need to take the option value of their investments in the energy producing capital stock into account and tend to delay their investment. Considering long usage periods and indivisibilities of power production investments adequate environmental policy has to be designed in a way to reduce uncertainty for investors.
    Keywords: Climate Change, Option Value, Investment Uncertainty, Renewable Energy, Klimawandel, Optionswerte, Investitionsunsicherheit, Erneuerbare Energien
    JEL: Q42 Q43
    Date: 2010–11
  2. By: Walid Marrouch; Amrita Ray Chaudhuri
    Abstract: We show that adaptive measures undertaken by countries in the face of climate change, apart from directly reducing the damage caused by climate change, may also indirectly mitigate greenhouse gas emissions by increasing the stable size of international agreements on emission reductions. Moreover, we show that the more effective the adaptive measure in terms of reducing the marginal damage from emissions, the larger the stable size of the international environmental agreement. In addition, we show that larger coalitions may lead to lower global emission levels and higher welfare. <P>Nous montrons que les mesures d’adaptation aux changements climatiques vont réduire directement les dommages causés par les changements climatiques. En plus, ces mesures peuvent aussi, indirectement, réduire les émissions des gaz à effet de serre puisqu’ils vont augmenter le nombre des participants dans les accords internationaux sur la réduction des émissions. En outre, nous montrons que la taille stable des accords internationaux sur l’environnement augmente avec l’efficacité des mesures d’adaptation. Par ailleurs, nous établissons que les grandes coalitions peuvent mener à des niveaux inférieurs d’émissions globales, et en plus ces grandes coalitions augment le bien-être mondial.
    Keywords: international environmental agreements, adaptation, coalition formation, climate change, accords environnementaux internationaux, adaptation, formation de coalitions, changements climatiques
    JEL: Q54 Q59
    Date: 2011–02–01
  3. By: David Wheeler and Dan Hammer
    Abstract: Female education and family planning are both critical for sustainable development, and they obviously merit expanded support without any appeal to global climate considerations. However, even relatively optimistic projections suggest that family planning and female education will suffer from financing deficits that will leave millions of women unserved in the coming decades. Since both activities affect fertility, population growth, and carbon emissions, they may also provide sufficient climate-related benefits to warrant additional financing from resources devoted to carbon emissions abatement. This paper considers the economic case for such support. Using recent data on emissions, program effectiveness and program costs, we estimate the cost of carbon emissions abatement via family planning and female education. We compare our estimates with the costs of numerous technical abatement options that have been estimated by Naucler and Enkvist in a major study for McKinsey and Company (2009). We find that the population policy options are much less costly than almost all of the options Naucler and Enkvist provide for low-carbon energy development, including solar, wind, and nuclear power, second-generation biofuels, and carbon capture and storage. They are also cost-competitive with forest conservation and other improvments in forestry and agricultural practices. We conclude that female education and family planning should be viewed as viable potential candidates for financial support from global climate funds. The case for female education is also strengthened by its documented contribution to resilience in the face of the climate change that has already become inevitable.
    Keywords: Population Policy, Carbon Emissions Reduction
    Date: 2010–11
  4. By: David Wheeler
    Abstract: The failure of carbon regulation in the U.S. Congress has undermined international negotiations to reduce carbon emissions. The global stalemate has, in turn, increased the likelihood that vulnerable developing countries will be severely damaged by climate change. This paper asks why the tragic American impasse has occurred, while the EU has succeeded in implementing carbon regulation. Both cases have involved negotiations between relatively rich "Green" regions and relatively poor "Brown" (carbon-intensive) regions, with success contingent on two factors: the interregional disparity in carbon intensity, which proxies the extra mitigation cost burden for the Brown region, and the compensating incentives provided by the Green region. The European negotiation has succeeded because the interregional disparity in carbon intensity is relatively small, and the compensating incentive (EU membership for the Brown region) has been huge. In contrast, the U.S. negotiation has repeatedly failed because the interregional disparity in carbon intensity is huge, and the compensating incentives have been modest at best. The unsettling implication is that an EU-style arrangement is infeasible in the United States, so the Green states will have to find another path to serious carbon mitigation. One option is mitigation within their own boundaries, through clean technology subsidies or emissions regulation. The Green states have undertaken such measures, but potential free-riding by the Brown states and international competitors seems likely to limit this approach, and it would address only the modest Green-state portion of U.S. carbon emissions in any case. The second option is mobilization of the Green states’ enormous market power through a carbon added tax (CAT). Rather than taxing carbon emissions at their points of production, a CAT taxes the carbon embodied in products at their points of consumption. For Green states, a CAT has four major advantages: It can be implemented unilaterally, state-by-state; it encourages clean production everywhere, by taxing carbon from all sources equally; it creates a market advantage for local producers, by taxing transport-related carbon emissions; and it offers fiscal flexibility, since it can either offset existing taxes or raise additional revenue.
    Keywords: Carbon Emissions, Regulation, CAT
    Date: 2010–12
  5. By: Dirk Rübbelke
    Abstract: International transfers in climate policy channeled from the industrialized to the developing<br /> world either support the mitigation of climate change or the adaptation to global warming.<br /> From an allocative efficiency point of view, transfers supporting mitigation tend to be Pareto-improving<br /> whereas this is not very likely in the case of adaptation support. We illustrate this<br /> by regarding transfer schemes currently applied under the UN Framework Convention on<br /> Climate Change (UNFCCC) and the Kyoto framework.<br /> However, if we enrich the analysis by integrating distributional aspects, we find that<br /> international adaptation funding may help both developing and developed world. Interestingly<br /> this is not due to altruistic incentives, but due to follow-up effects on international<br /> negotiations on climate change mitigation. We argue that the lack of fairness perceived by<br /> developing countries in the international climate policy arena can be reduced by the support<br /> of adaptation in these countries. As we show – taking into account different fairness concepts<br /> – this might raise the prospects of success in international negotiations on climate change.<br /> Yet, we find that the influence of transfers may induce different fairness effects on climate<br /> change mitigation negotiations to run counter.<br /> We discuss whether current transfer schemes under the UNFCCC and the Kyoto framework<br /> adequately serve the distributive and allocative objectives pursued in international climate<br /> policy.<br />
    Keywords: adaptation, climate change, fairness, Global Environmental Facility, international climate policy, mitigation, reciprocity, transfers
    Date: 2011–02
  6. By: Burtraw, Dallas (Resources for the Future); Fraas, Arthur G. (Resources for the Future); Richardson, Nathan (Resources for the Future)
    Abstract: Until recently, most attention to U.S. climate policy has focused on legislative efforts to introduce a price on carbon through cap and trade. In the absence of such legislation, the Clean Air Act is a potentially potent alternative. Decisions regarding existing stationary sources will have the greatest effect on emissions reductions. The magnitude is uncertain, but plausibly 10 percent reductions in greenhouse gas emissions from 2005 levels could be achieved at moderate costs by 2020. This is comparable to the reductions that would have been achieved under the Waxman-Markey legislation in the domestic economy. These measures do not include the switching of fuels, which could yield further reductions. The ultimate cost of regulation under the act hinges on the stringency of standards and the flexibility allowed. A broad-based tradable performance standard is legally plausible and would provide incentives comparable to the proposed legislation, at least in the near term.
    Keywords: climate policy, efficiency, EPA, Clean Air Act, NAAQS, coal
    JEL: K32 Q54 Q58
    Date: 2011–02–09
  7. By: Zöttl, Gregor
    Abstract: Cap and trade mechanisms enjoy increasing importance in environmental legislation worldwide. The most prominent example is probably given by the European Union Emission Trading System (EU ETS) designed to limit emissions of greenhouse gases, several other countries already have or are planning the introduction of such systems.2 One of the important aspects of designing cap and trade mechanisms is the possibility of competition authorities to grant emission permits for free. Free allocation of permits which is based on past output or past emissions can lead to inefficient production decisions of firms’ (compare for example B¨ohringer and Lange (2005), Rosendahl (2007), Mackenzie et al. (2008), Harstad and Eskeland (2010)). Current cap and trade systems grant free allocations based on installed production facilities, which lead to a distortion of firms’ investment incentives, however.1 It is the purpose of the present article to study the impact of a cap and trade mechanism on firms’ investment and production decisions and to analyze the optimal design of emission trading systems in such an environment.
    Keywords: Emissions Trading; Free Allocation; Investment Incentives; Technology Mix
    JEL: H21 H23 Q55
    Date: 2011–02–16
  8. By: Frederick van der Ploeg (University of Oxford, University of Amsterdam); Cees Withagen (VU University Amsterdam)
    Abstract: The Green Paradox states that, in the absence of a tax on CO2 emissions, subsidizing a renewable backstop such as solar or wind energy brings forward the date at which fossil fuels become exhausted and consequently global warming is aggravated. We shed light on this issue by solving a model of depletion of non-renewable fossil fuels followed by a switch to a renewable backstop, paying attention to timing of the switch and the amount of fossil fuels remaining unexploited. We show that the Green Paradox occurs for relatively expensive but clean backstops (such as solar or wind), but does not occur if the backstop is sufficiently cheap relative to marginal global warming damages (e.g., nuclear energy) as then it is attractive to leave fossil fuels unexploited and thus limit CO2 emissions. We show that, without a CO2 tax, subsidizing the backstop might enhance welfare. If the backstop is relatively dirty and cheap (e.g., coal), there might be a period with simultaneous use of the non-renewable and renewable fuels.If the backstop is very dirty compared to oil or gas (e.g., tar sands), there is no simultaneous use. The optimum policy requires an initially rising CO2 tax followed by a gradually declining CO2 tax once the dirty backstop has been introduced. We also discuss the potential for limit pricing when the non-renewable resource is owned by a monopolist.
    Keywords: Green Paradox; Hotelling rule; non-renewable resource; renewable backstop; global warming; carbon tax; limit pricing
    JEL: Q30 Q42 Q54
    Date: 2010–02–12
  9. By: Paolo Zeppini (University of Amsterdam); Jeroen C.J.M. van den Bergh (Autonomous University of Barcelona, and VU University Amsterdam)
    Abstract: This article presents a model of sequential decisions about investments in environmentally dirty and clean technologies, which extends the path-dependence framework of Arthur (1989). This allows us to evaluate if and how an economy locked into a dirty technology can be unlocked and move towards the clean technology. The main extension involves the inclusion of the effect of recombinant innovation of the two technologies. A mechanism of endogenous competition is described involving a positive externality of increasing returns to investment which are counterbalanced by recombinant innovation. We determine conditions under which lock-in can be avoided or escaped. A second extension is "symmetry breaking" of the the system due to the introduction of an environmental policy that charges a price for polluting. A final extension adds a cost of environmental policy in the form of lower returns on investment implemented through a growth-depressing factor. We compare cumulative pollution under different scenarios, so that we can evaluate the combination of environmental regulation and recombinant innovation.
    Keywords: externalities; hybrid technology; lock-in; R&D; sequential decisions
    JEL: O33 Q55
    Date: 2010–10–26
  10. By: G. Ecchia; L. Lambertini; A. Tampieri
    Abstract: We investigate the introduction of a minimum quality standard (MQS) in a vertically differentiated duopoly with an environmental externality. We establish that the MQS bites only if the hedonic component of consumer preferences is sufficiently strong. Then, we illustrate an underlying tradeoff between the beneficial effects of quality enhancement on prices and the associated undesirable increase in the environmental externality.
    JEL: L13 L51 Q50
    Date: 2011–02
  11. By: Samà, Danilo
    Abstract: Since its origin, ecotourism development has been at the centre of controversial and heated debates within the environmental and scientific society. On one hand, it has been considered as a model of responsible and sustainable tourism with the capacity to guarantee the conservation of the current biodiversity level and cultural identity, to educate the tourists about preservation and to improve the economic activity and the standard of living of the populations affected. On the other hand, it has been criticized for actually being a mere instrument in the hands of capitalist and western firms to commercially exploit the natural resources available in the less developed countries. Thus, are the ecotourism projects more likely to be profitable and successful in territories where the common resources are controlled by the state or managed by private firms? Considered the most frequent and spontaneous solution noticed in the ordinary daily life of the emerging countries, meaning natural resources owned communally by local institutions, does ecotourism impede or reinforce this management function of coordinating and controlling? The empirical researches conducted in literature tried to answer to some of the above-mentioned questions and offered the opportunity for a Law and Economics assessment of the problem related to the common-pool resources.
    Keywords: Common-Pool Resources; Commons Management; Development; Ecology; Environment; Governance; Property Rights; Sustainability; Tragedy of the Commons
    JEL: K32 K11 Q57
    Date: 2011
  12. By: Hallegatte, Stephane; Lecocq, Franck; de Perthuis, Christian
    Abstract: Adaptation has long been neglected in the debate and policies surrounding climate change. However, increasing awareness of climate change has led many stakeholders to look for the best way to limit its consequences and has resulted in a large number of initiatives related to adaptation, particularly at the local level. This report proposes a general economic framework to help stakeholders in the public sector to develop effective adaptation strategies. To do so, it lays out the general issues involved in adaptation, including the role of uncertainty and inertia, and the need to consider structural changes in addition to marginal adjustments. Then, it identifies the reasons for legitimate public action in terms of adaptation, and four main domains of action: the production and dissemination of information on climate change and its impacts; the adaptation of standards, regulations and fiscal policies; the required changes in institutions; and direct adaptation actions of governments and local communities in terms of public infrastructure, public buildings and ecosystems. Finally, the report suggests a method to build public adaptation plans and to assess the desirability of possible policies.
    Keywords: Climate Change Economics,Wetlands,Climate Change Mitigation and Green House Gases,Adaptation to Climate Change,Science of Climate Change
    Date: 2011–02–01
  13. By: Eric Knight (Department of Geography and the Environment, University of Oxford, Oxford, UK); Nicholas Howarth (Department of Geography and the Environment, University of Oxford, Oxford, UK)
    Abstract: Much academic attention has been paid to the role of carbon pricing in developing a market-led response to low carbon energy innovation. Taking an evolutionary economics perspective this paper makes the case as to why price mechanisms alone are insufficient to support new energy technologies coming to market. In doing so, we set out the unique investment barriers in the clean energy space. For guidance on possible approaches to non-carbon price based policies that seek to tackle these barriers we turn to case studies from Asia, a region which has experienced a strong uptake in climate policy in recent years.
    JEL: Q48 Q42 Q55
    Date: 2011–02
  14. By: Jérémy Laurent-Lucchetti; Justin Leroux (IEA, HEC Montréal); Bernard Sinclair-Desgagné (IEA, HEC Montréal)
    Abstract: Most natural commons are subject to discontinuities and threshold effects, so their gradual depletion may result in a sudden irreversible loss of the associated ecological services. Yet, it is often impossible to locate these thresholds with certainty. We analyze this context using a variant of the divide-the-dollar game, in which the amount to be split among players follows a discrete or multimodal probability distribution. ‘Cautious equilibria’ – where agents collectively behave as if the worst-case scenario were certain - are found to coexist with ‘dangerous equilibria’ - where overall demand for ecological services might lead to their collapse - and ‘dreadful equilibria’ - where agents collectively request so much natural capital that a collapse of ecological services is certain, even if all agents are risk averse. Communication/cooperation among agents, however, which raises the possibility of coordinated group deviations, would eliminate dreadful equilibria and reduce the occurrence of dangerous equilibria, while cautious equilibria are robust to such deviations. A direct corollary is that dangerous equilibria are Pareto-dominated by any cautious equilibrium in which all agents claim less natural capital. These results shed light on the management of common-pool resources, international climate change negotiations, and the implementation of precautionary policies.
    Keywords: Common-pool resources, Ecological thresholds, Divide-the-dollar game, Coalition-proof Nash equilibrium
    JEL: Q50 C72 D74
    Date: 2011–01
  15. By: Gan, Qijian; Sun, Jielin; Jin, Wenlong; Saphores, Jean-Daniel
    Abstract: We couple EMFAC with a dynamic mesoscopic traffic model to create an efficient tool for generating information about traffic dynamics and emissions of various pollutants (CO2, PM10, NOX, and TOG) on large scale networks. Our traffic flow model is the multi-commodity discrete kinematic wave (MCDKW) model, which is rooted in the cell transmission model but allows variable cell sizes for more efficient computations. This approach allows us to estimate traffic emissions and characteristics with a precision similar to microscopic simulation but much faster. To assess the performance of this tool, we analyze traffic and emissions on a large freeway network located between the ports of Los Angeles/Long Beach and downtown Los Angeles. Comparisons of our mesoscopic simulation results with microscopic simulations generated by TransModeler under both congested and free flow conditions show that hourly emission estimates of our mesoscopic model are within 4 to 15 percent of microscopic results with a computation time divided by a factor of 6 or more. Our approach provides policymakers with a tool more efficient than microsimulation for analyzing the effectiveness of regional policies designed to reduce air pollution from motor vehicles.
    Date: 2011–02–01
  16. By: Thomas BLONDIAU; Sandra ROUSSEAU
    Abstract: We investigate whether environmental sanctions should increase with the degree of intentionality of the violation. To this end we develop a simple model which is used to make predictions concerning the effect of the degree of intentionality, the amount of illegal gain obtained and the harm caused by the offense on the level of the optimal fine. These predictions are then used to learn more about the objectives pursued by enforcing authorities. We empirically test our theoretical predictions for firms as well as individuals using data on criminal environmental sanctions in Flanders and administrative environmental fines in Brussels. We find that judges and administrative officers aim at a mixture of social welfare maximization and regulation compliance maximization. Also, we find that in practice intentionality of a violation is always a factor which makes the sanction level increase. This is in contrast to a result from our theoretical analysis, in which we demonstrate that more intentional violations can lead to lower optimal fines.
    Date: 2011–02
  17. By: Prud'homme, Dan
    Abstract: Many have increasingly questioned if and how Chinese policy has evolved or will evolve to ensure that the country’s development is not only focused on immediate economic growth, but also economically, socially and environmentally sustainable. This paper addresses this question by tracing key issues in China’s past and current path to development. It finds that China is clearly increasingly shifting its policies to foster more sustainable growth, which provides a good indication that its upcoming policies will head in the same positive direction.
    Keywords: China's sustainable development; China's development policy; China's economic policy; China's social policy; China's environmental policy; China's trade policy; Dan Prud'homme; China's Five Year Plans; China's quality and balanced growth
    JEL: P11 H11 O53 P21 Q56 I38 F14
    Date: 2010–04
  18. By: Kevin Ummel
    Abstract: In this paper, Kevin Ummel provides high-resolution estimates of the global potential and cost of solar power technologies while identifying deployment patterns that minimize the cost of greenhouse gas abatement. His findings are based on a global simulation of providing 2,000 TWh of solar power (about 7 percent of total consumption) in 2030, taking into account least-cost siting of facilities and transmission lines and the effect of diurnal variation on profitability and required subsidies. The American southwest, the Tibetan Plateau, the Sahel, and the Middle East are identified as major supply areas. Consumption of solar power concentrates in the United States over the next decade, diversifies to Europe and India by the early 2020’s, and focuses in the second half of the decade in China, often relying long-distance, high-voltage transmission lines. Cost estimates suggest that deployment on this scale is likely to be competitive with other prominent greenhouse gas abatement options in the energy sector. Further development of spatially explicit energy models could help guide infrastructure planning and financing strategies both nationally and globally, elucidating a range of important questions related to renewable energy policy.
    Keywords: solar power, green energy, greenhouse gas
    Date: 2010–12
  19. By: Knut Einar Rosendahl and Halvor Briseid Storrøsten (Statistics Norway)
    Abstract: Allocation of emission allowances may affect firms' incentives to invest in clean technologies. In this paper we show that so-called output-based allocation tends to stimulate such investments as long as individual firms do not assume the regulator to tighten the allocation rule as a consequence of their investments. The explanation is that output-based allocation creates an implicit subsidy to the firms' output, which increases production, leads to a higher price of allowances, and thus increases the incentives to invest in clean technologies. On the other hand, if the firms expect the regulator to tighten the allocation rule after observing their clean technology investment, the firms' incentives to invest are moderated. If strong, this last effect may outweigh the enhanced investment incentives induced by increased output and higher allowance price.
    Keywords: Emissions trading; allocation of quotas; abatement technology.
    JEL: H21 Q58
    Date: 2011–02
  20. By: Louis Kaplow
    Abstract: A substantial literature examines second-best environmental policy, focusing particularly on how the Pigouvian directive that marginal taxes should equal marginal external harms needs to be modified in light of the preexisting distortion due to labor income taxation. Additional literature is motivated by the possibility that distributive concerns should amend the internalization prescription. It is demonstrated, however, that simple first-best rules - unmodified for labor supply distortion or distribution - are correct in a natural, basic formulation of the problem. Specifically, setting all commodity taxes equal to marginal harms (and subsidies equal to marginal benefits) can generate a Pareto improvement. Likewise, a marginal reform in the direction of the first-best can yield a Pareto improvement. Qualifications and explanations for differences from previous work are also presented.
    Keywords: Allocative Efficiency,Externalities, Equity, Justice, Inequality, labor supply
    JEL: D61 D62 D63 H21 H23 K32
    Date: 2010–05
  21. By: Winter, Gerd
    Abstract: Der Klimawandel mit seinen Folgen für das Erdsystem lässt sich nur mit einer globalen Rechtsarchitektur bewältigen. Diese integriert eine Vielfalt von Steuerungsarrangements von lokaler und transnationaler Selbstregulierung in Gesellschaft und Wirtschaft über innerstaatliches Recht und horizontaler Rechtsdiffusion bis zu transnationaler Administration, internationalem Recht und Recht internationaler Organisationen. Mit einem funktions-strukturellen Ansatz ist zu untersuchen, was die einzelnen Formationen zum Klimawandel beitragen und wie sie auf klimafreundliche Ziele eingestellt werden können. Dafür sind Wechselwirkungen zwischen ihnen zu optimieren sowie geeignete Strategien und Instrumente auszuwählen. Die Realisierbarkeit wirksamer Klima-Governance hängt jedoch von den gesellschaftlichen und wirtschaftlichen Einsichten und Kräfteverhältnissen ab, die vermutlich nur aus Krisen lernen. Zudem wirft sie Legitimationsprobleme auf, die sich durch Einführung prozeduraler und inhaltlicher Anforderungen an nicht-staatliche Formationen mit verfassungsrechtlichen Geboten in Einklang bringen lassen. -- Climate change and its effects on the earth system can only be managed if the law is conceived as a global architecture. This means to integrate the multitude of governance arrangements reaching from local and transnational self-regulation through domestic law and horizontal law transfer up to transnational administration, international law and the law of international organisations. Applying a functional-structural approach it should be explored in what way the various arrangements contribute to climate change and how they could be alerted to more climate friendly goals. For that purpose mutual effects between them must be adjusted and appropriate strategies and instruments identified. Whether this will be effective depends on the societal and economic attidudes and power constellations which most likely will be willing to learn but through crises. Moreover, the formation of a climate friendly governance architecture poses problems of legitimation. In particular, arrangements detached from the inner-state electorate will have to develop their peculiar modes of legitimation, both procedural and material, in order to cope with constitutional principles.
    Date: 2011
  22. By: Ibrahim Abada; Vincent Briat; Steve A. Gabriel; Olivier Massol
    Abstract: This article presents a dynamic Generalized Nash-Cournot model in order to describe the evolution of the natural gas markets. We tried to represent most of the gas chain actors, from the producers to the consumers, passing by the storage and pipeline operators and the intermediate local traders. Our economic structure description takes into account market powers and the demand representation tries to capture the possible fuel substitution that can be made between the consumption of oil, coal and natural gas in the overall fossil energy consumption. We also take into account the long-term aspects inherent to some markets, in an endogenous way. This particularity of our description makes the model a Generalized Nash Equilibrium problem that needs to be solved using specific mathematical techniques. Our model has been applied to represent the European natural gas market and forecast, till 2030, after a calibration process, consumptions, prices, productions and natural gas dependence. A comparison between our model, a more standard one that does not take into account energy substitution, and the European Commission natural gas forecasts is carried out to analyse our results. Finally, in order to illustrate the possible use of fuel substitution, we studied the evolution of the natural gas price over the coal and oil prices.
    Keywords: Energy markets modelling, Game theory, Generalized Nash-Cournot equilibria, Quasi-Variational Inequality
    Date: 2011
  23. By: Daisuke Ichinose (Tohoku University); Masashi Yamamoto (University of Toyama); Yuichiro Yoshida (National Graduate Institute for Policy Studies)
    Abstract: Even though many studies on Environmental Kuznets curve (EKC), are following a seminal work by Grossman and Krueger (1991), limited studies are available for municipal solid waste's cases (WKC). Mazzanti and Montini eds. (2009) is a first comprehensive study of WKC with European data. More importantly, they define a absolute decoupling as 'descending side of an inverted U shape' and relative decoupling as 'ascending path of an inverted U shape. In this paper, we add a new evidence for WKC by using municipal solid waste's data in Japan. The successful result was derived due to highly disaggregated data as was suggested by Mazzanti and Zoboli (2009) as well as the richness of data set.
    Date: 2011–02
  24. By: Timo Busch (ETH Zuerich, Switzerland); Bryan T. Stinchfield (Franklin & Marshall College, Lancaster, Carbondale); Matthew S. Wood (Cameron School of Business, University of North Carolina Wilmington)
    Abstract: Management scholars have sought to answer the question: is there a financial payoff for ad-dressing ecological and social issues? We move beyond this question and include a time com-ponent for corporate financial performance (CFP) and a firm’s innovativeness in order to ask: when does it pay? Combining a contingency perspective with the resource-based view of the firm clarifies the positive relationship between corporate environmental and social perform-ance (ESP) and CFP, which only holds in the long-term but not in the short-term. Further, we find support for a moderating effect of innovation on the relationship between the ESP and short-term CFP as suggested by the literature. However, we empirically show that in the long-term, innovation mediates the ESP-CFP relationship suggesting that innovation should be considered as a long-term investment required to unlock the full potential of ESP initiatives.
    Keywords: Sustainable development; innovation; firm performance; Tobin’s q; moderation and mediation
    JEL: G30 M14 L20 Q01
    Date: 2011–02–10
  25. By: Stephen Polasky (University of Minnesota); Aart de Zeeuw (Tilburg University); Florian Wagener (University of Amsterdam)
    Abstract: We analyze how the threat of a potential future regime shift affects optimal management. We use a simple general growth model to analyze four cases that involve combinations of stock collapse versus changes in system dynamics, and exogenous versus endogenous probabilities of regime shift. Prior work has focused on stock collapse with endogenous probabilities and reaches ambiguous conclusions about the effect of potential regime shift on optimal management. We show that all other cases yield unambiguous results. In particular, with endogenous probability of regime shift that affects system dynamics the potential for regime shift causes optimal management to become precautionary.
    Keywords: optimal management; growth; renewable resources; regime shift
    JEL: E61 O40 Q20 C61
    Date: 2010–11–04
  26. By: Roel van Veldhuizen (University of Amsterdam); Joep Sonnemans (University of Amsterdam)
    Abstract: This study uses the methods of experimental economics to investigate possible causes for the failure of the Hotelling rule for nonrenewable resources. We argue that as long as resource stocks are high enough, producers may choose to (partially) ignore the dynamic component of their production decision, shifting production to the present and focusing more on strategic behavior. We experimentally vary stock size in a nonrenewable resource duopoly setting and find that producers with high stocks indeed pay significantly less attention to variables related to dynamic optimization, leading to a failure of the Hotelling rule.
    Keywords: Experiments; Nonrenewable Resources; Dynamic Oligopoly
    JEL: C90 Q31 Q41 L13
    Date: 2011–01–21
  27. By: Jackie Robinson (School of Economics, The University of Queensland); Jared Dent; Gabriella Schaffer
    Abstract: Wetland ecosystems provide society with a range of valuable ecosystem services. However, wetlands worldwide are experiencing increasing pressure from a number of sources, caused by an interrelated combination of market failure and policy intervention failure. Whatever the cause, the result is massive degradation and loss of these ecosystems and ultimately, loss of their services. To better manage wetlands the availability of sufficient relevant and reliable scientific information is required together with an assessment tool capable of providing meaningful evaluations of the consequences of management. Current assessments of wetlands are often biased towards either economic or scientific issues, with limited attempts at integration. Evaluations that neglect integration overlook the complexity of wetland ecosystems and have failed to sufficiently protect these areas. This paper reviews the literature to propose an evaluation framework which combines a scientific assessment of wetland function with cost utility analysis (CUA) to develop a meaningful trade-off matrix. A dynamic approach to wetland assessment such as the hydro geomorphologic method (HGM), developed by the US Army Corps of Engineers, offers the opportunity to consider interrelationships between ecosystem process and functions and the resulting ecosystem services. CUA facilitates the evaluation of projects where the consequences of investment or no investment are complex and difficult to value in monetary terms. The evaluation framework described in this paper has the potential to deliver an integrated wetland management tool. However, for this potential to be realised, targeted interdisciplinary research by scientists and economists is required.
    Date: 2011

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