nep-env New Economics Papers
on Environmental Economics
Issue of 2011‒03‒19
34 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. How Should Environmental Policy Respond to Business Cycles? Optimal Policy under Persistent Productivity Shocks By Heutel, Garth
  2. A Paradox of Environmental Awareness Campaigns By Christos Koulovatianos
  3. Mountain-pine beetle outbreaks and shifting social preferences for ecosystem services By Sims, Charles; Aadland, David; Finnoff, David
  4. Threshold cointegration and nonlinear adjustment between CO2 and income: the environmental Kuznets curve in Spain, 1857-2007 By Vicente Esteve; Cecilio Tamarit
  5. Does tendering conservation contracts with performance payments generate additional benefits? By Schilizzi, Steven; Breustedt, Gunnar; Latacz-Lohmann, Uwe
  6. Disposition of precipitation: Supply and Demand for Water Use by New Tree Plantations By Nordblom, T.L.; Finlayson, J.D.; Hume, I.H.
  8. Energy, Agriculture, and GHG Emissions: The Role of Agriculture in Alternative Energy Production and GHG Emission Reduction in North Dakota By Aravindhakshan, Sijesh; Koo, Won W.
  10. Exploring environmental urban policies: a methodological proposal to build a composite indicator measuring urban environmental virtuosity By Ercolano, Salvatore; Romano, Oriana
  11. Embedding the drivers of emission efficiency at regional level Analyses of NAMEA data By Massimiliano Mazzanti; Anna Montini
  12. Eco-efficiency Assessment of Olive Farms in Andalusia By José A. Gómez-Limón; Andrés J. Picazo-Tadeo; Ernest Reig-Martínez
  13. A note on the performance measure of conservation auctions By Latacz-Lohmann, Uwe; Schilizzi, Steven
  14. Incorporating jurisdiction issues into an analysis of carbon attributable to Welsh final consumption under different economic conditions: an integrated IO and CGE analysis By De Fence, Janine; McGregor, P. G. (Peter Gregor); Munday, Max; Swales, J. Kim; Turner, Karen
  15. Impacts of Population and Income Growth Rates on Threatened Mammals and Birds By Pandit, Ram; Laband, David
  16. Evaluating conservation auctions with limited information:the policy makerâs predicament By Schilizzi, Steven; Latacz-Lohmann, Uwe
  17. Income and time related effects in EKC By Massimiliano Mazzanti; Antonio Musolesi
  18. Environmental Performance, Innovation and Regional Spillovers By Massimiliano Mazzanti; Valeria Costantini; Anna Montini
  19. Using Collaborative Bargaining to Develop Environmental Policy when Information is Private By Christopher Bruce; Jeremy Clark
  20. Attributing Benefits to Voluntary Programs in EPA’s Office of Resource Conservation and Recovery: Challenges and Options By Boyd, James; Manson, Cynthia
  21. The Impact of Modified EU ETS Allocation Principles on the Economics of CHP-based District Heating Networks By Westner, Günther; Madlener, Reinhard
  22. Environmental innovations, local networks and internationalization By Giulio Cainelli; Massimiliano Mazzanti; Sandro Montresor
  23. Equity judgments and context dependence: Knowledge, efficiency and incentives By Schilizzi, Steven
  24. Are compact cities environmentally friendly? By Gaigné, Carl; Riou, Stéphane; Thisse, Jacques-François
  25. La corporate governance nei servizi pubblici locali a rilevanza economica: strumenti per la gestione del consenso sociale By Francesco Badia
  26. Empirical methods for determining a reserve price in conservation auctions By Eigenraam, Mark; Chua, Joselito J.; Edwards, Claire
  27. Impacts of global change on the Nile basin: Options for hydropolitical reform in Egypt and Ethiopia By Martens, Anja Kristina
  28. More water for everything? The problem of bogus water savings in northern Victoria, Australia By Gyles, Oliver
  29. Nature or Nurture? A Note on the Misinterpreted Twin Decomposition By Stenberg, Anders
  30. A Multi-Scalar Analysis of European Cities By Enrico Giovannetti; Francesco Pagliacci
  31. Does foreign environmental policy influence domestic innovation ? Evidence from the wind industry By Antoine Dechezleprêtre; Matthieu Glachant
  32. Green Certificates and Market Power on the Nordic Power Market By Amundsen, Eirik Schrøder; Bergman, Lars
  33. The Incentive Structure of Impure Public Good Provision – The Case of International Fisheries By Michael Finus; Raoul Schneider; Pedro Pintassilgo
  34. Elementos de política, riesgos ante el cambio climático, complementariedad entre las FNCE y el sin, y costos indicativos de las FNCE By Humberto Rodríguez Murcia, Eduardo Afanador Iriarte, Pedro Guevara, Fabio González Benítez; Ernesto Torres; José Maria Rincón; Edinson Lozano

  1. By: Heutel, Garth (University of North Carolina at Greensboro, Department of Economics)
    Abstract: How should environmental policy respond to economic fluctuations caused by persistent productivity shocks? This paper answers that question using a dynamic stochastic general equilibrium real business cycle model that includes a pollution externality. I first estimate the relationship between the cyclical components of carbon dioxide emissions and US GDP and find it to be inelastic. Using this result to calibrate the model, I find that optimal policy allows carbon emissions to be procyclical: increasing during expansions and decreasing during recessions. However, optimal policy dampens the procyclicality of emissions compared to the unregulated case. A price effect from costlier abatement during booms outweighs an income effect of greater demand for clean air. I also model a decentralized economy, where government chooses an emissions tax or quantity restriction and firms and consumers respond. The optimal emissions tax rate and the optimal emissions quota are both procyclical: during recessions, the tax rate and the emissions quota both decrease.
    Keywords: Climate change; Environmental policy
    JEL: E32 Q54 Q58
    Date: 2011–03–08
  2. By: Christos Koulovatianos
    Date: 2011–03–11
  3. By: Sims, Charles; Aadland, David; Finnoff, David
    Abstract: Conventional wisdom appears to implicate climate change as the root cause of the unprecedented mountain pine beetle (MPB) outbreak currently underway in the western United States. While climate change is undoubtedly a factor, historic changes in public forest management have resulted in greater numbers of large-diameter host trees in MPB habitat. We present a model that integrates standard economic and ecological principles in an attempt to clarify the roles of climate change and public forest management in the current MPB outbreak. Using data on timber sales, climate change and MPB populations, model simulations illustrate how an increased emphasis on non-timber ecosystem services induced a regime shift from climate-independent to climate-dependent disturbance processes, amplifying the current MPB outbreak.
    Keywords: mountain pine beetle; climate change; forests
    JEL: Q23
    Date: 2011–01–01
  4. By: Vicente Esteve (Universidad de Valencia and Universidad de La Laguna, Spain); Cecilio Tamarit (Universidad de Valencia, Spain)
    Abstract: In this paper we model the long-run relationship between per capita CO2 and per capita income for the Spanish economy over the period 1857-2007. According to the Environmental Kuznets Curve (ECK) the relationship between the two variables has an inverted-U shape. However, previous studies for the Spanish economy only considered the existence of linear relationships. Such an approach may lack flexibility to detect the true shape of the relationship. Our empirical methodology accounts for a possible non-linear relationship through the use of threshold cointegration techniques. Our results confirm the non-linearity of the link between the two above-mentioned variables pointing to the existence of an Environmental Kuznets Curve for the Spanish case.
    Keywords: Environmental Kuznets curve, CO2 emissions, nonlinear relationship, threshold cointegration
    JEL: C2 Q4
    Date: 2011–03
  5. By: Schilizzi, Steven; Breustedt, Gunnar; Latacz-Lohmann, Uwe
    Abstract: Policy makers aiming to get private landholders to supply non-marketed environmental services may need to provide efficient economic incentives. Two ideas have been explored to achieve this: linking contract payments to environmental outcomes and submitting the contracts to competitive tender. This paper investigates whether there are any gains to be had by combining the potential benefits of both approaches. Landholdersâ risk aversion to only partially controlled outcomes may offset incentive effects if the fall in participation outweighs any increases in individual effort. Controlled lab experiments were designed on the basis of a theoretical model and were run in two countries, with varying rates of payments linked to environmental outcomes. Results suggest that it can be counterproductive in terms of expected environmental outcomes to combine tenders with incentive payments, especially when the target population is known to be risk-averse.
    Keywords: Conservation tenders, auctions, incentive contracts, agricultural policy, environmental policy, market-based instruments, experimental economics, Environmental Economics and Policy, Land Economics/Use, C92, D44, D82, D86, H57, Q24, Q28,
    Date: 2011–02–18
  6. By: Nordblom, T.L.; Finlayson, J.D.; Hume, I.H.
    Abstract: As the greatest rainwater users among all vegetative land covers, tree plantations have been employed strategically to mitigate salinity and water-logging problems. However, largescale commercial tree plantations in high rainfall areas reduce fresh water inflows to river systems supporting downstream communities, agricultural industries and wetland environmental assets. A bio-economic model was used to estimate economic demand for water by future upstream plantations in a sub-catchment (the 2.8 million ha Macquarie valley in NSW) of the Murray-Darling Basin, Australia. Given four tree-product values, impacts were simulated under two settings: without and with the requirement that permanent water entitlements be purchased from downstream entitlement holders before establishing a tree plantation. Without this requirement, gains in economic surplus from expanding tree plantations exceeded economic losses by downstream irrigators, and stock and domestic water users, but resulted in reductions of up to 154 GL (gigalitres) in annual flows to wetland environments. With this requirement, smaller gains in upstream economic surplus, added to downstream gains, could total $330 million while preserving environmental flows. Extending downstream water markets to new upstream tree plantations, to equilibrate marginal values across water uses, helps ensure water entitlements are not diminished without compensation. Outcomes include better economicefficiency, social-equity and environmental-sustainability.
    Keywords: Environmental Economics and Policy, forest, environmental services, catchment, water sources, interception, entitlement, supply, demand, market, economic surplus, evapo-transpiration, urban water, irrigation, wetlands.,
    Date: 2011
  7. By: Hector G. Lopez-Ruiz (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat); Hector G. Lopez-Ruiz (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat); Hector G. Lopez-Ruiz (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat)
    Abstract: Today, numerous works conclude that transport seems to be completely coupled to economic growth. Therefore, as a direct consequence of economic development, transport sits today as one of the major final energy consumers and one of the most important sources of carbon dioxide emissions. Furthermore, in the absence of major technological change, this unsustainable situation will most undoubtedly get worse in the future. In this paper we analyze what different types of public policies aiming at sharp reductions in GHG emissions imply on passenger transport and how they can be linked to new behavior patterns affecting time use and consumption. For this, we use the TILT (Transport Issues in the Long Term) model's core microeconomic choice model IT-UP (Integrated Tools for Utility-based Planning). Through this analysis, we explain the interest of adaptive strategies for GHG mitigation.
    Keywords: Greenhouse gas, long term, scenario, transport, sustainable development.
    Date: 2010–08–15
  8. By: Aravindhakshan, Sijesh; Koo, Won W.
    Abstract: Energy, agriculture, and GHG emissions are highly interrelated. Several agricultural commodities are currently used as feedstock for biofuel production to replace fossil fuels. As the largest consumer of energy, the U.S. has taken several initiatives to reduce the use of fossil fuels, achieve energy security, and reduce GHG emissions. The industrial community of the U.S. invested heavily in biofuel and wind energy production. North Dakota has highest potential in producing wind energy and biomass from dedicated energy crops. Unfortunately these resources are not fully utilized for producing renewable energy. North Dakota is an energy intensive economy and per capita energy consumption is higher than other states. This technical bulletin provides a comprehensive report on the energy production and related emissions in the United States with special emphasis on North Dakota. The bulletin also discusses various alternative methods to reduce GHG emissions to meet the regulatory standards with a special emphasis on North Dakota. The study found that North Dakota produces the cheapest electricity and a major share is consumed outside the state. The price of electricity does not include negative externalities associated with burning lignite coal. North Dakota uses its potential to produce wind and corn ethanol to a great extent. The state level policies and financial supports are directed to wind industry and energy efficiency measures. The current renewable portfolio standards and non-compliance adversely affect the renewable energy industry in North Dakota.
    Keywords: Renewable energy, Wind power, Ethanol, Greenhouse gas emissions, Agriculture, Agribusiness, Resource /Energy Economics and Policy,
    Date: 2011–02
  9. By: Patrick Himmes; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen)
    Abstract: The stylized model presented in this paper extends the approach developed by Fischer and Newell (2008) by analysing the optimal policy design in a context with more than one externality while taking explicitly into account uncertainty surrounding future emission damage costs. In the presence of massive uncertainties and technology spillovers, well-designed sup-port mechanisms for renewables are found to play a major role, notably as a means for compensating for technology spillovers, yet also for reducing the investors’ risks. How-ever, the design of these support mechanisms needs to be target-aimed and well-focused. Besides uncertainty on the state of the world concerning actual marginal emission damage, we consider the technological progress through R&D as well as learning-by-doing. A portfolio of three policy instruments is then needed to cope with the existing externalities and optimal instrument choice is shown to be dependent on risk aversion of society as a whole as well as of entrepreneurs. To illustrate the role of uncertainty for the practical choice of policy instruments, an em-pirical application is considered. The application is calibrated to recent global data from IEA and thus allows identifying the main drivers for the optimal policy mix. In addition to assumptions on technology costs and uncertainty of emission damage cost, the impor-tance of technology spillover clearly plays a key role. Yet under some plausible parame-ter settings, direct subsidies to production are found to be of lower importance than very substantial R&D supports.
    Keywords: Externality, technology, learning, uncertainty, climate change, spillover, renewable energy, policy
    JEL: O38 Q21 Q28 Q48
    Date: 2011–03
  10. By: Ercolano, Salvatore; Romano, Oriana
    Abstract: Synthesizing the complex phenomenon of “environment” into a single indicator could leads to a loss of information, which inhibit his use as a reference for the resolution of several issues such as, for example, the allocation of resources. On the other hand it allows to represent the overall environmental performance of cities and to highlight relationships between different sectors. We consider “process oriented” variables instead of aggregated and “outcome oriented” ones, generally used to measure environmental sustainability strictu sensu. In this sense we refers specifically to the concept of “environmental virtuosity”, that allows to rank statistical units (i.e. Italian main municipalities), considering their policy efforts for improving urban environmental quality. Generally an indicator of environmental quality should combine partial information to summarize the main subject. This paper proposes to measure urban environmental virtuosity by multivariate analysis, following OECD (2008) procedure. This methodology will try to overcome the main methodological issues in building up indicators, consisting in the choice of weights and in the common practice of simply adding sub-indicators.
    Keywords: Composite indicators; multivariate analysis; environmental policies
    JEL: Q5 R38
    Date: 2011–01–31
  11. By: Massimiliano Mazzanti; Anna Montini
    Abstract: This paper provides new empirical evidence on regional-national disparities in environmental efficiency, based on analyses of NAMEA data referring to Italy and the Lazio region, where Rome is the main city. Shift-share analyses provide evidence on the drivers of environmental efficiency and on sector specificity. This confirms the usefulness of this method, in order to investigate structural and efficiency factors at the level of within country environmental efficiency performance. Our evidence shows that although the region around Rome has achieved higher environmental performance compared to Italy mainly thank to its being less industry based, some critical points in the energy sector and in some services should be taken into account in shaping the future development of the region. In addition, the use of regional NAMEA for econometric investigations of emission efficiency drivers at national level shows that though north south disparities favour northern and richer regions, in accordance with development oriented dynamics, environmental hot spots driven by specialization and efficiency related issues also appear in some northern industrial regions. Further, the role of public ad private R&D is of main relevance in enhancing emission on economic value ratios.
    Date: 2010–07–01
  12. By: José A. Gómez-Limón (Instituto Andaluz de Investigación y Formación Agraria y Pesquera. Departamento de Economía Agraria. Córdoba, Spain.); Andrés J. Picazo-Tadeo (Universidad de Valencia. Departamento de Economía Aplicada II. Valencia, Spain.); Ernest Reig-Martínez (Universidad de Valencia. Departamento de Economía Aplicada II. Instituto Valenciano de Investigaciones Económicas.)
    Abstract: Olive farming represents an important source of income and employment in the rural areas of Andalusia (Spain), which is the most important olive oil-producing region in the world. Unfortunately, it also exerts important environmental pressures with regard to soil erosion, use of polluting inputs, excessive water consumption and biodiversity reduction. This paper uses Data Envelopment Analysis (DEA) techniques and pressure distance functions to contribute an assessment at the farm level of the ecoefficiency of a sample of 292 Andalusian olive farmers. We distinguish between managerial eco-efficiency and program eco-efficiency; the latter being associated with the different natural conditions prevailing in the three main olive cultivation systems in the region, namely, traditional rain-fed mountain groves, traditional rain-fed plain groves and irrigated intensive groves. Our findings show that eco-inefficient management is a widespread practice across olive farmers, mainly explained by a generalised technical inefficiency. Furthermore, the most eco-efficient production system is the traditional plain growing system. Finally, we find that land productivity strongly influences managerial eco-efficiency in all three aforementioned cultivation systems.
    Keywords: Olive grove; Economic-ecological efficiency; Environmental pressures; Data Envelopment Analysis
    Date: 2011–03
  13. By: Latacz-Lohmann, Uwe; Schilizzi, Steven
    Abstract: We argue that previous assessments of discriminatory-price conservation auctions may have systematically overestimated their performance relative to uniform-payment schemes due to an inappropriate counterfactual comparison. We demonstrate that the cost curve (and not the bid curve) is the relevant supply curve when a uniform payment is offered and provide a theoretically rigorous counterfactual based on that insight. We estimate that the performance of BushTender may have been overrated by more than 50%.
    Keywords: Auctions, procurement, tenders, conservation, economic experiments, model validation, plus: assessment method, agricultural policy, environmental policy, market-based instruments, Environmental Economics and Policy, Research Methods/ Statistical Methods, C91, C92, D44, Q24, Q28,
    Date: 2011–02–18
  14. By: De Fence, Janine; McGregor, P. G. (Peter Gregor); Munday, Max; Swales, J. Kim; Turner, Karen
    Abstract: This paper considers the combined use of regional input-output (IO) and computable general equilibrium (CGE) methods to examine regional pollution problems from different consumption and production orientated perspectives. The first stage of the analysis involves using a regional input-output framework and data derived on direct CO2 (as carbon) generation by industry (and in household final consumption) to examine regional accountability for CO2 generation. In doing we consider an accounting method that permits greater accountability of regional private and public (household and government) final consumption as the main driver of regional carbon generation, while retaining focus on the local production, technology and consumption decisions that fall under the jurisdiction of regional policymakers. However, we go on to argue that a potential issue arising from the increasing focus on consumption-based „carbon footprint‟ type measures is that regional CO2 generation embodied in export production is attributed outside of the region, while regional consumers are likely to benefit from such production. We demonstrate our argument by using a regional CGE model to simulate the impacts of an increase in export demand for regional production on key macroeconomic variables, including GDP, employment and household consumption, as well as on different measures of CO2 attributable to regional consumption. In terms of the latter, we demonstrate how CGE model results may be used to create „post-shock‟ IO accounts to permit the calculation of CO2 generation under the various production and consumption accounting principles considered in the first part of the paper. Our empirical analyses focus on the case example of the Welsh regional economy and an anticipated increase in export demand for the output of one of the biggest polluting sectors, Iron and Steel production.
    Date: 2010–12
  15. By: Pandit, Ram; Laband, David
    Abstract: Per capita income and human population levels in a country have direct influences on its environmental outcomes. Countries with same level of income may have different rate of income growth and vice versa, suggesting that the influence of the rate of income growth on environmental outcomes could be different than that of income level. Similarly, the rate of population growth might have different impact in addition to the impacts of sheer number of population. We explore this empirical question using country-level data on threatened species published by IUCN for the year 2007. Controlling for other factors, our model estimates the influences of the rate of population and income growth on threatened mammals and birds across 113 continental countries. The results suggest that, among other factors, the rate of population growth has significant influences on number of threatened mammals and birds.
    Keywords: income, population, spatial models, spatial autocorrelation, endemic species, biodiversity, Environmental Economics and Policy, C21, Q57,
    Date: 2011
  16. By: Schilizzi, Steven; Latacz-Lohmann, Uwe
    Abstract: Buying environmental services from private landholders using tendering mechanisms are usually subject to a budget constraint. Auction theory has mostly focused on target-constrained auctions and is less well developed for this type of auction. This paper examines a theoretical model specifically developed for budget-constrained tenders and assesses its capacity to predict tendering performance under information limitations typical of those found in field applications. But this assessment cannot be done without complementing the model with controlled laboratory experiments. Subject to their external validity, we find that the model is able to make the correct policy recommendation when comparing the tender to an equivalent fixed price scheme, even when the accuracy of its prediction is far from perfect. However, the study suggests that more than a single point estimate of biddersâ costs is needed for this to happen, indicating that it should be worthwhile for policy administrators to invest in some information acquisition before deciding to run a tender.
    Keywords: Auctions, procurement, tenders, conservation, economic experiments, model validation, Environmental Economics and Policy, Land Economics/Use, C91, C92, D44, Q24, Q28,
    Date: 2011–02–18
  17. By: Massimiliano Mazzanti; Antonio Musolesi
    Abstract: This paper documents the structural differences between climate change leading `actors' as Northern EU countries, and `lagging actors' - southern EU countries and the `Umbrella group' - with regard to their long run carbon-income relationships. We show that such categorization gives relevant policy and methodological insights. We investigate the issue of cross-country heterogeneity and the heterogeneity biases associated to standard panel data estimates but also disentangle time related and income effects. Parametric and semi parametric panel models allowing for time invariant unobserved heterogeneity robustly show that the groups of countries that were in the `Kyoto arena' less in favour of stringent climate policy, have yet to experience a turning point. Northern EU instead shows bell shapes. The key result is however obtained by estimating a semi-parametric random growth model. Country specific time related factors - that may represent latent innovation and policy features of countries - have been relatively more relevant than income effects in explaining the occurrence of such Kuznets curves. Overall, the countries differ more on their carbon-time relation than on the carbon-income relation which is in almost all cases monotonic positive. Just a few Nordic countries show a bell curve in both income and time related factors.
    Keywords: Carbon Kuznets Curves; heterogeneous panels; semi parametric models; random growth; income effect; time related effect
    JEL: C14 C22 C23 Q53
    Date: 2011–02–02
  18. By: Massimiliano Mazzanti; Valeria Costantini; Anna Montini
    Abstract: The achievement of positive Environmental Performance (EP) at national level could strongly depend on differences in regional features, namely economic specialization, regulation stringency and innovation capabilities of both public institutions and the private business sector. We apply both shift-share and econometric analysis on a new NAMEA available for the 20 Italian Regions, in order to provide evidence of the role played by sector innovation, technological spillovers and regional policies in shaping the geographical distribution of EP. The Italian North-South divide regarding industrial development and productive specialisation patterns seems to affect regional EP. Nonetheless, such pattern presents some interesting differences, revealing a more heterogeneous distribution of emissions, which may reflect the role of other driving forces. In particular, agglomerative effects seem to prevail over purely internal factors - environmental efficiency of neighbouring regions strongly influence the internal EP. This means that together with the clustering of specific sectors into restricted areas as a standard result in regional economics, there is also some convergence in the adoption of cleaner or dirtier production process techniques. Finally, regional technological spillovers seem to play a more effective role in improving environmental efficiency than "sector internal innovation", revealing that accounting for spatial features is crucial to understand the key drivers of EP.
    Keywords: Environmental Performance; Technological Innovation; Regional Spillovers; regional NAMEA
    JEL: Q53 Q55 Q56 R15
    Date: 2011–01–05
  19. By: Christopher Bruce; Jeremy Clark
    Abstract: In many cases governments invite interest groups to use collaborative bargaining to resolve environmental conflicts. If the parties fail to reach agreement, the government threatens to impose a backstop policy. Bargaining models have predicted that any agreements will be influenced, variously, by self-interest, equity, or entitlement (to the status quo). Although most such models assume that the parties are well informed about one another’s utility functions, this assumption conflicts with the reality of negotiations over environmental policy. We develop a laboratory experiment to investigate the impact of private information. Subjects who bargain under this constraint are almost as likely to reach (approximately efficient) agreements as those bargaining under full information. We also find that equity plays a less important role, and entitlement a more important role, under private information than under full information. There is only limited evidence to suggest that parties are drawn to the Nash bargain.
    JEL: C92 D74 H44 Q58
    Date: 2011–03–11
  20. By: Boyd, James (Resources for the Future); Manson, Cynthia
    Abstract: This paper reviews the economic justification for voluntary environmental programs to derive defensible measures of their positive social outcomes. We consider ideal experimental and statistical designs to detect and attribute benefits. We also explore a set of more practical approaches to benefit attribution that take into account the data gaps and statistical challenges that often make more rigorous approaches infeasible.
    Keywords: voluntary programs, cost–benefit assessment, program evaluation
    JEL: Q53 Q58 L15 O33
    Date: 2011–03–03
  21. By: Westner, Günther (E.ON Energy Projects GmbH); Madlener, Reinhard (E.ON Energy Research Center, Institute for Future Energy Consumer Needs and Behavior (FCN), RWTH Aachen University)
    Abstract: The economics of large-scale combined heat and power (CHP) generation for district heating (DH) applications are strongly affected by the costs and allocation mechanism of CO2 emission allowances. In the next period of the European emission trading system (EU ETS), from 2013 onwards, the allocation rules for CHP generation will be modified according to the principles announced in EU Directive 2009/29/EC. By means of a discounted cash-flow model we first show that the implementation of the modified allocation mechanism significantly reduces the expected net present value of large-scale CHP plants for DH. In a next step, by applying a spread-based real options model we analyze the decision-making problem of an investor who intends to invest in CHP generation. Our results provide some evidence that the modified EU ETS principles contribute to reducing the attractiveness of investments in energy-efficient large-scale CHP plants that feed into DH networks. In contrast, decentralized small-scale CHP, which is not subject to the EU ETS, may benefit from this development and could, therefore increasingly replace large-scale CHP assets. In other words, European legislation is indirectly promoting the further diffusion of decentralized CHP generation units.
    Keywords: Combined heat & power; Emission trading system; Investment under uncertainty; Spread; Real options
    JEL: C61 D81 Q41 Q43
    Date: 2011–02
  22. By: Giulio Cainelli; Massimiliano Mazzanti; Sandro Montresor
    Abstract: This paper investigates the drivers of the environmental innovations (EI) introduced by firms in local production systems (LPS). The role of firm network relationships, agglomeration economies and internationalization strategies is analysed for a sample of 555 firms in the Emilia-Romagna region, North-East of Italy. Cooperating with 'qualified' local actors - i.e. universities and suppliers - is the most important driver of EI for most firms, along with their training policies and IT innovations. The role of agglomeration economies is less clear and seems to depend on the EI propensity of more locally oriented firms playing in district areas, which might even turn agglomeration into dis-economies. Networking effects and agglomeration economies are instead found to strongly promote the adoption of EI by multinational firms, thus highlighting the importance of local-global interactions. We provide some interesting findings for particular kinds of challenging EI in fields as CO2 abatement and ISO labelling, generally extending the analysis EI driver by joining local and international factors.
    Keywords: Eco-innovation; foreign ownership; networking; district; agglomeration economics; local production systems
    JEL: C21 L60 O13 O30 Q20 Q58 F23
    Date: 2011–01–03
  23. By: Schilizzi, Steven
    Abstract: Distributional equity concerns are often at least as important as economic efficiency and ecological sustainability in environmental and natural resource management policies. Until recently, however, economists have shied away from tackling equity issues, primarily because equity appeared as a slippery concept, varying across people and circumstances. This study takes this context-dependence of equity judgments as a starting point and shows that such dependence, far from being random, is systematic. A series of controlled laboratory treatments with University students were designed to investigate the role on distributional equity judgments of such context factors as knowledge of oneâs position in society, how the existence of equity-efficiency tradeoffs can affect equity judgments, and the importance of material incentives compared with hypothetical situations, where âin principleâ judgments are called for. Key results include the relative discriminating power of context factors, the hierarchy of context-dependence, the dissymmetry between support and opposition to equity principles, and the impact of different wealth endowments on equity judgments. A number of common beliefs are found not to be substantiated by our experimental findings.
    Keywords: Equity, fairness, resource allocation, environmental policy, experimental economics, welfare economics, public choice, Institutional and Behavioral Economics, Public Economics, C92, D03, D63, H23, Q56, Q58,
    Date: 2011–02–23
  24. By: Gaigné, Carl; Riou, Stéphane; Thisse, Jacques-François
    Abstract: There is a large consensus among international institutions and national governments to favor urban-containment policies - the compact city - as a way to improve the ecological performance of the urban system. This approach overlooks a fundamental fact: what matters for the ecological outcome of cities is the mix between the level of population density and the global pattern of activities. As expected, when both the intercity and intraurban distributions of activities are given, a higher population density makes cities more environmentally friendly. However, once we account for the fact that cities may be either monocentric or polycentric as well as for the possible relocation of activities between cities, the relationship between population density and the ecological performance of cities appears to be much more involved. Indeed, because changes in population density affect land rents and wages, firms and workers are incited to relocate, thus leading to new commuting and shipping patterns. We show that policies favoring the decentralization of jobs may be more environmentally desirable.
    Keywords: cities; commuting costs; greenhouse gas; transport costs; urban-containment policy
    JEL: D61 F12 Q54 Q58 R12
    Date: 2011–03
  25. By: Francesco Badia
    Abstract: In this work we consider the link between corporate governance and social responsibility (CSR) in local utilities companies. More specifically, we use the term 'tool of corporate governance' as a tool able to support the governance of a company to reach its strategic aims, reconcile efficiency and effectiveness, verify (and demonstrate) social responsibility. Social 'consensus' considers the necessity (particularly critical for local utilities) for a company to get the external stakeholders' ap-proval. Social consensus and social responsibility are important for every kind of company, but they become critical resources for a local utility company, likewise the concept (and the concrete appli-cation) of accountability. The empirical part of this work considers eight local utilities companies, listed on the Italian Stock Exchange. Specific subjects of the empirical analysis are the level of CSR consideration, through the presence of social/sustainability reporting and its level of 'quality'. We conclude that the corporate governance tools for managing social consensus in local utilities com-panies should consider the environmental effect of the corporate activities, the level of transparency and responsibility in providing services, the capacity to develop confidence within the territory, the satisfaction of expressed and un-expressed needs of the community and the internal satisfaction of the company's human resources.
    Keywords: local utilities; corporate governance; social consensus; sustainability reporting
    JEL: M2
    Date: 2010–12–02
  26. By: Eigenraam, Mark; Chua, Joselito J.; Edwards, Claire
    Abstract: Conservation auctions are increasingly being used to procure public environmental goods on private land. In the absence of demand-side price information, the majority of conservation auctions in Australia have been designed without a reserve price. In these instances bids have been accepted in order of cost-effectiveness until the budget constraint binds. It is widely recognised that in situations where auctions are run repeatedly a reserve price strategy could allow for a more efficient allocation of funds across multiple rounds, both spatially and temporally. This paper provides a brief overview of methods for determining a reserve price for application in conservation auctions. It is concluded that information deficiencies and the high transaction costs involved in the application of these methods to conservation auctions often render them unsuitable for application to real-world auctions. This paper presents an empirical approach to determining a reserve price using data obtained during an auction - the supply curve. The approach stems from the C4.5 algorithm, developed in the field of data mining to construct decision trees from training data using the concept of information entropy. The algorithm establishes a reserve price by determining the cut-off price that results in the âbest fitâ of two normal distributions to the frequency distribution of bid-price per unit environmental benefit. Empirical data from conservation auctions in Victoria is used to demonstrate the algorithm and compare auction results obtained using the algorithm and traditional âbudgetâ methods. The paper presents a discussion on the situations where the algorithm could be appropriately used, and advantages and limitations of the approach are identified. The paper concludes that the use of the algorithm can result in efficiency gains over the traditional budget method in situations where alternative reserve price strategies are impractical.
    Keywords: Land Economics/Use,
    Date: 2011
  27. By: Martens, Anja Kristina
    Abstract: This paper analyzes drivers of global change and their impacts on the current and future availability and accessibility of water resources in the Nile Basin. Drivers include changes in demography, climate, the socioeconomy, and politics, all of which are likely to increase the demand for freshwater and thus competition over its use across riparian countries. As a result of historic bilateral agreements, Egypt, as the most downstream country, uses the lion's share of the Nile's waters, which makes reallocation particularly difficult. Egypt is nearly totally dependent on water from upstream countries but considers any change of the status quo a threat to its national (water) security. Ninety-six percent of Egypt's water originates outside its territory—86 percent in Ethiopia. This paper assesses the special upstream–downstream relationship in the Nile Basin and the potential for change as a result of global change. It hypothesizes that under global change, not only will water availability in the Nile Basin change but so will the current hydropolitical situation in the basin. In any case, meeting the challenges in the Nile Basin depends on cooperation among countries and regulation of competing interests and demands. Avenues for hydropolitical reform, including the Nile Basin Initiative, and the role of China and other donors or investors are discussed. The findings—that global change might well bring down the old hydropolitical regime—are confirmed by recent developments, in particular, the signing by five upstream countries of a new framework agreement for management and development of the Nile Basin.
    Keywords: Nile Basin, hydropolitics, Cooperation, Conflict, global change, Reform,
    Date: 2011
  28. By: Gyles, Oliver
    Abstract: The Victorian Department of Sustainability and Environment (DSE) spent the latter decades of the 20th century fully integrating the surface and sub-surface drainage systems with the water distribution network in northern Victoria, thereby enabling complete recycling of outfalls, leaks and seepage from its channels. Yet in 2007, in repudiation of this recycling capacity, DSE announced a multibillion dollar modernisation project it claims will âcreateâ 450 GL of ânew waterâ by reducing âinefficienciesâ in the channel distribution system. Examination of the northern Victorian irrigation supply system shows it was fully integrated with more than adequate recycling capacity before the project began. In a classic case of double counting, DSE was already delivering the illusory ânew waterâ to regional irrigators and billing them for it. Thus the project cannot deliver real water savings and the Government must effectively reduce irrigation entitlement to increase entitlements for urban consumption and environmental flows. The financial and economic impact of bogus water savings on stakeholders is discussed in terms of the opportunity cost of appropriated irrigation entitlement and of the effect of overcapitalisation of the distribution system on annual capital charges and thus the viability of irrigation and the operating water authority.
    Keywords: double counting, opportunity cost, real water savings, recycling, Political Economy, Public Economics, Resource /Energy Economics and Policy,
    Date: 2011
  29. By: Stenberg, Anders (Swedish Institute for Social Research, Stockholm University)
    Abstract: The classical twin model has often been used to determine whether variation in outcomes such IQ, schooling and other behavioral traits, originate from genetic endowments or environmental factors. Despite some heavy criticism from prominent scholars, the model has recently reappeared in highly ranked economics journals to perhaps spark off a revival of the method. This article seeks to specify the assumptions which generate the apparently profound divide in viewpoints. A general problem is that most authors do not properly discuss the underlying assumptions of the twin model. It has partly led to a disarray of thoughts, concrete examples are provided, since the interpretation of the results and the risk for misleading interpretations are not spelled out. Therefore, perhaps surprisingly, a brief account of the theories behind the main assumptions of the twin model provides a useful contribution.
    Keywords: genes; environments
    JEL: H50 J62
    Date: 2011–03–09
  30. By: Enrico Giovannetti; Francesco Pagliacci
    Abstract: Medium-sized European cities are facing serious problems in terms of the exploitation of local resources (land, water, air). In this article, we observe existing links between sustainable development and cities’ economic and structural features. We adopt a multi-scalar perspective, since the theme of sustainable development involves both urban areas and the wider regions surrounding them. First, we identify clusters of urban areas that are homogenous in structural terms and we then compare these results at different territorial scales. When the sustainable development of the clusters is observed, a clear ‘geography of resource exploitation’ emerges, consistent with both urban economic and environmental indicators. Then, as a possible response to these problems, we suggest a typical tool adopted by planners: that is, polycentrism. Rather than considering it as a simple morphological feature of European urban systems, we look upon it as a possible mode for the governance of networks of medium-sized cities. In the last section of the paper, we analyse the economic and structural drivers that explain potential for polycentric integration
    Keywords: polycentrism; medium-sized cities; sustainable development; cluster analysis;
    JEL: Q01 R10 R58
    Date: 2010–12
  31. By: Antoine Dechezleprêtre (CERNA - Centre d'économie industrielle - Mines ParisTech, Grantham Research Institute on Climate Change and the Environment - London School of Economics and Political Science); Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: This paper examines the relative influence of domestic and foreign renewable energy policies on innovation activity in wind power using patent data from OECD countries from 1994 to 2005. We distinguish between the impact of demand-pull policies (e.g., guaranteed tariffs, investment and production tax credits), as reflected by wind power capacities installed annually, and technology-push policies (government support to R&D). We show that inventors respond to both domestic and foreign new capacities by increasing their innovation effort. However, the effect on innovation of the marginal wind turbine installed at home is 28 times stronger than that of the foreign marginal wind turbine. Unlike demandpull policies, public R&D expenditures only affect domestic inventors. A simple calculation suggests that the marginal million dollars spent on R&D support generates 0.82 new inventions, whereas the same amount spent on the deployment of wind turbines induces, at best, 0.06 new inventions (0.03 locally and 0.03 abroad).
    Keywords: innovation;public R&D;renewable energy policies;wind power
    Date: 2011
  32. By: Amundsen, Eirik Schrøder (University of Bergen); Bergman, Lars (Stockholm School of Economics,)
    Abstract: The purpose of this study is to elucidate under which circumstances, how, and to what extent market power on the TGC market can be used to affect the entire electricity market. There are basically two reasons for being concerned with market power in TGC markets. One is that a small number of companies may have exclusive access to first rate sites for wind power generation. The other is that withdrawal of a small number of TGCs implies a multiple reduction of electricity consumption, with corresponding increases of end user prices. For the purpose of investigating the principles by which market power may be exercised in this setting a simple analytical model is designed and analytical results are derived. To investigate matters further a numerical model, based on the analytical model, is constructed for the Nordic countries. Among the Nordic countries only Sweden has a TGC market but there is a common Nordic electricity market with free trade of electricity. The analysis shows that Swedish companies possessing capacity for green electricity generation, indeed, have the ability to exercise market power on the common Nordic power market by withholding TGCs. However, the analysis reveals that an opening of TGC trade between the the Nordic countries to a large extent achieves the objective of eliminating the use of marketpower that would otherwise be established. Also, this may have a cushioning effect on the volatility of TGC prices.
    Keywords: Renewable energy; electricity; green certificates; market power; Nordic power market.
    JEL: C70 Q28 Q42 Q48
    Date: 2010–12–01
  33. By: Michael Finus (Department of Economics, University of Exeter); Raoul Schneider (Department of Economics, Ulm University); Pedro Pintassilgo (Faculty of Economics, University of Algarve)
    Abstract: We argue that international fisheries are a prime example to study the impact of multiple characteristics on the incentive structure of impure public good provision. The degree of technical excludability is related to the pattern of fish migration, the degree of socially constructed excludability is captured by the design of international law and the degree of rivalry is reflected by the growth rate of the resource. We construct a bioeconomic model, including the high seas and exclusive economic zones in order to study the incentives to form stable fully or partially cooperative agreements. We show that the spatial allocation of property rights is crucial for the success of cooperation as long as technical excludability is sufficiently high. Moreover, we show how economic and ecological factors influence the success of cooperation.
    Keywords: pure and impure public goods, technical and socially constructed nonexcludability, property rights, coalition formation, free-riding, bioeconomic model, shared fish stocks, regional fisheries management organizations.
    JEL: Q34 C72 H87 F53
    Date: 2011
  34. By: Humberto Rodríguez Murcia, Eduardo Afanador Iriarte, Pedro Guevara, Fabio González Benítez; Ernesto Torres; José Maria Rincón; Edinson Lozano
    Abstract: En este documento se presentan y analizan las experiencias internacionales en políticas para el desarrollo de las FNCE en la Unión Europea y en varios países de la Unión (Alemania, España y Croacia). También se presentan y analizan estas experiencias en varios países de América Latina (Méjico, Perú y Brasil). En el capítulo tercero, se analizan elementos de política en FNCE para Colombia considerando las experiencias internacionales, el análisis de los factores determinantes de política para el caso colombiano a la luz de las experiencias internacionales y del taller realizado conjuntamente entre la UPME y Corpoema, y se establece un principio orientador de la política en FNCE y se dan ideas preliminares de política. Posteriormente, en el capítulo cuarto, se desarrollan las valoraciones básicas de los riesgos ante el cambio climático sobre sistema de generación hidroeléctrico del país. Se analiza en primera instancia el impacto del fenómeno del Niño sobre el régimen de precipitación en el país, especialmente sobre las zonas de embalses, y en segunda instancia el comportamiento del precio de generación en bolsa (en $/kWh) tomando como referencia el último Niño de 2009. Luego, partiendo del escenario construido por los modelos de alta resolución por el IDEAM para el período 2011 – 2040 se hacen los análisis preliminares para valorar los riesgos. En el capítulo quinto se discute la complementariedad entre las FNCE y el SIN, así como entre las FNCE y el suministro de energía en las ZNI. En cuanto a las FNCE y el SIN, se parte del hecho de que tanto la energía solar como la eólica por las características de la disponibilidad del recurso, la potencia generada debe ser inyectada de inmediato a la red. En estas condiciones la pregunta es si estas complementan la generación del sistema hidroeléctrico del país durante la estación de verano (diciembre a abril del año siguiente) y si esta complementariedad se da durante los eventos Niño. La complementariedad de las FNCE de energía en las ZNI requiere un enfoque diferente. Se trata entonces de complementar la generación existente convencional con FNCE o diseñar sistemas con una o varias FNCE. Actualmente existe la posibilidad de integrar en un sistema diferentes fuentes de energía (convencionales y renovables) en un sistema denominado híbrido de tal manera que ellas se complementen entre sí para el suministro de energía a nivel de sistemas individuales o mini-redes. El diseño de estos sistemas requiere de información sobre la disponibilidad de los recursos renovables en el sitio de la implementación poniendo de relieve la importancia de mejorar la calidad de la información sobre FNCE en las regiones comprendidas en las ZNI. En el capítulo sexto se desarrolla los costos indicativos para las diferentes tecnologías de las FNCE. Para ellos se consideran los costos de inversión para las tecnologías seleccionadas y sus capacidades propuestas, los costos de operación y mantenimiento, los costos de ingeniería y montaje, y los costos de imprevistos. De esta manera se tiene la totalidad de los costos de inversión. Los costos de generación se han calculado empleando la metodología de los costos nivelados, con una tasa de descuento de 10% anual y un periodo de evaluación (vida útil del proyecto) variable pero del orden de 20 años para la mayoría de las tecnologías. Se han estimado los costos de referencia para las diferentes tecnologías en diferentes capacidades, tanto para costos de capital, obras civiles, ingeniería, costos fijos y variables de O&M, tanto para 2010 como para 2015 y 2020. Más allá hasta 2030 se estiman iguales a los de 2020. En el caso de aplicaciones térmicas, como calentadores solares se estima el costo de producción de calor en forma de agua caliente. En este capítulo también se consideran los precios de la energía en el mercado actual colombiano y se comparan con los costos de generación estimados. En el capítulo de costos se presenta el análisis de las subastas de energía renovable del Perú y de Brasil para tener una referencia de precios de energía renovable en la región. La del Perú incluyó diferentes tecnologías como la solar fotovoltaica, la eólica, PCHs y biomasa. Se otorgaron 26 proyectos con un poco más d 1800 GWh/año. A partir de un precio base de la energía en bloque de cerca de 48.4 c US$/kWh, los topes estuvieron desde 74 cUS$/kWh para PCHs, hasta 110 cUS$/kWh para la eólica, 120 cUS$/kWh para la biomasa y 269 cUS$/kWh para la solar fotovoltaica. El éxito de esta subasta muestra que esta ha sido una alternativa válida para introducir proyectos de FNCE en el Perú, mecanismo que también fue adoptado en el Brasil para la energía eólica este 2010. Finalmente en el anexo se incluye una breve descripción del concepto de costo nivelado, el diseño de un sistema híbrido diesel-solar en la región del Chocó y la simulación de su desempeño así como los cálculos del costo presente neto de la generación teniendo en cuenta costos de equipos y de servicios de instalación basados en información de proveedores locales. También, partiendo de la simulación del desempeño técnico de un sistema eólico, se presenta de manera abreviada los resultados de los costos de generación del sistema. Como variante a la generación eólica, se adiciona un generador eólico y se dan los resultados de costos de generación. El objetivo es demostrar la posibilidad de diseñar sistemas en donde la generación se dé complementariamente entre diferentes fuentes de energía que es una opción válida para las ZNI.
    Date: 2011–01–30

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