nep-env New Economics Papers
on Environmental Economics
Issue of 2011‒06‒25
twenty-two papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Environmental Kuznets curve in Indonesia, the role of energy consumption and foreign trade By Saboori, Behnaz; Soleymani, Abdorreza
  2. Interactions of Policies for Renewable Energy and Climate By Cédric Philibert
  3. Unmasking the Porter hypothesis: Environmental innovations and firm-profitability By Rexhäuser, Sascha; Rammer, Christian
  4. A shapley value approach to pricing climate risks By Cooke, Roger M.
  5. Does financial instability increase environmental pollution in Pakistan? By Shahbaz, Muhammad
  6. Sectoral and Regional Expansion of Emissions Trading By Christoph Bšhringer; Bouwe Dijsktra; Knut Einar Rosendahl
  7. The US government's social cost of carbon estimates after their first year: Pathways for improvement By Kopp, Robert E.; Mignone, Bryan K.
  8. Could environmental policies be enforced without affecting economic growth By Mariam Camarero; Yurena Mendoza; Javier Ordoñez
  9. Innovation and diffusion of clean/green technology: Can patent commons help? By Hall, Bronwyn H.; Helmers, Christian
  10. Electric Vehicles: A Tentative Economic and Environmental Evaluation By Rémy Prud'homme
  11. Cost and Performance of Carbon Dioxide Capture from Power Generation By Matthias Finkenrath
  12. The Impact of a Carbon Tax on Sectors Competitiveness By Nicolas Gonne
  13. Looking backward to look forward: water use and economic growth from a long-term perspective By Rosa Duarte; Vicente Pinilla; Ana Serrano
  14. An Investigation of the Strategic Implications of Environmental Monitoring By Alberto Casagrande; Marco Spallone
  15. Economic Costs of Ocean Acidification: A Look into the Impacts on Shellfish Production By Daiju Narita; Katrin Rehdanz; Richard S.J. Tol
  16. Energy-Efficiency Policy Opportunities for Electric Motor-Driven Systems By Paul Waide; Conrad U. Brunner
  17. Estimating the Impact of Whaling on Global Whale Watching By Hsiao-I Kuo; Chi-Chung Chen; Michael McAleer
  18. Technology Development Prospects for the Indian Power Sector By Uwe Remme; Nathalie Trudeau; Dagmar Graczyk; Peter Taylor
  19. Tradable Immigration Quotas By Fernández-Huertas Moraga, Jesús; Rapoport, Hillel
  20. Nudging Boserup? The impact of fertilizer subsidies on investment in soil and water conservation By Vondolia, Godwin K.
  21. Linking farmers to markets through valorisation of local resources:the case for intellectual property rights of indigenous resources By Bienabe, Estelle; Bramley, Cerkia; Kirsten, Johann; Troskie, Dirk
  22. Los modelos económicos de utilización de recursos naturales en Latinoamérica By Andy Thorpe; Alonso Aguilar Ibarra

  1. By: Saboori, Behnaz; Soleymani, Abdorreza
    Abstract: This study examines the dynamic relationship among carbon dioxide (CO2) emissions, economic growth, energy consumption and foreign trade based on the environmental Kuznets curve (EKC) hypothesis for Indonesia during the period 1971–2007. The Auto regressive distributed lag (ARDL) methodology is used as an estimation technique. The results do not support the EKC hypothesis, which assumes an inverted U-shaped relationship between income and environmental degradation. The long-run results indicate that foreign trade is the most significant variable in explaining CO2 emissions in Indonesia followed by Energy consumption and economic growth. The stability of the variables in estimated models is also examined. The result suggests that the estimated models are stable over the sample period.
    Keywords: Environmental Kuznets curve; CO2 emissions; energy consumption
    JEL: Q53 Q51 Q43
    Date: 2011–06–14
  2. By: Cédric Philibert
    Abstract: This paper explores the relationships between climate policy and renewable energy policy instruments. It shows that, even where CO2 emissions are duly priced, specific incentives for supporting the early deployment of renewable energy technologies are justified by the steep learning curves of nascent technologies. This early investment reduces costs in the longer term and makes renewable energy affordable when it needs to be deployed on a very large scale to fully contribute to climate change mitigation and energy security. The paper also reveals other noteworthy interaction effects of climate policy and renewable policy instruments on the wholesale electricity prices in deregulated markets, which open new areas for future research.
    Date: 2011–03
  3. By: Rexhäuser, Sascha; Rammer, Christian
    Abstract: We examine impacts of different types of environmental innovations on firm profits. Following Porter's (1991) hypothesis that environmental regulation can improve firms' competitiveness we distinguish regulation induced and voluntary environmental innovations. We find that innovations which reduce environmental externalities reduce firms' profits, as long as they are induced by regulations. However, innovation that increases a firm's material or energy efficiency in terms of material or energy consumption has a positive impact on profitability. This positive result holds both for regulation induced and voluntary innovations, although the effect is significantly larger for regulation-driven innovation.We conclude that the Porter hypothesis does not hold in general for its 'strong' version but has to be qualified by the type of environmental innovation. Our finding rest on firm level data from the German part of the Community Innovation Survey in 2009. --
    Keywords: Environmental innovation,environmental regulation,Porter hypothesis,competitiveness
    JEL: Q55 Q58
    Date: 2011
  4. By: Cooke, Roger M.
    Abstract: This paper prices the risk of climate change by calculating a lower bound for the price of a virtual insurance policy against climate risks associated with the business as usual (BAU) emissions path. In analogy with ordinary insurance pricing, this price depends on the current risk to which society is exposed on the BAU emissions path and on a second emissions path reflecting risks that society is willing to take. The difference in expected damages on these two paths is the price which a risk neutral insurer would charge for the risk swap excluding transaction costs and profits, and it is also a lower bound on society's willingness to pay for this swap. The price is computed by (1) identifying a probabilistic risk constraint that society accepts, (2) computing an optimal emissions path satisfying that constraint using an abatement cost function, (3) computing the extra expected damages from the business as usual path, above those of the risk constrained path, and (4) apportioning those excess damages over the emissions per ton in the various time periods. The calculations follow the 2010 US government social cost of carbon analysis, and are done with DICE2009. --
    Keywords: Climate change,insurance premium,Shapley value,DICE
    JEL: C71 Q54
    Date: 2011
  5. By: Shahbaz, Muhammad
    Abstract: The present aims to explore the relationship between financial instability and environmental degradation within multivariate framework using time series data for the period1972-2009 in case of Pakistan. The long run relationship is investigated by ARDL bounds testing approach to cointegration, and error correction method is applied to examine short sun dynamics. The stationarity properties of the variables are tested by applying Saikkonen and Lütkepohl (2002)structural break unit root test. Empirical evidence confirms the existence of long run relationship while financial instability increases environmental pollution in the country.
    Keywords: Financial Instability; Environment; Cointegration
    JEL: A1
    Date: 2011–01–01
  6. By: Christoph Bšhringer (Department of Economics, University of Oldenburg); Bouwe Dijsktra (University of Nottingham); Knut Einar Rosendahl (Research Department, Statistics Norway)
    Abstract: We consider an international emissions trading scheme with partial sectoral and regional coverage. Sectoral and regional expansion of the trading scheme is beneficial in aggregate, but not necessarily for individual countries. We simulate international CO2 emission quota markets using marginal abatement cost functions and the Copenhagen 2020 climate policy targets for selected countries that strategically allocate emissions in a bid to manipulate the quota price. Quota exporters and importers generally have conflicting interests about admitting more countries to the trading coalition, and our results indicate that some countries may lose substantially when the coalition expands in terms of new countries. For a given coalition, expanding sectoral coverage makes most countries better off, but some countries (notably the USA and Russia) may lose out due to loss of strategic advantages. In general, exporters tend to have stronger strategic power than importers.
    Keywords: Emissions Trading; Allocation of Quotas; Strategic Behavior
    JEL: C61 C72 Q25
    Date: 2011–06
  7. By: Kopp, Robert E.; Mignone, Bryan K.
    Abstract: In 2010, the U.S. government adopted its first consistent estimates of the social cost of carbon (SCC) for government-wide use in regulatory cost-benefit analysis. Here, we examine a number of the limitations of the estimates identified in the U.S. government report and elsewhere and review recent advances that could pave the way for improvements. We consider in turn socioeconomic scenarios, treatment of physical climate response, damage estimates, ways of incorporating risk aversion, and consistency between SCC estimates and broader climate policy. --
    Keywords: Climate change,social cost of carbon
    JEL: Q54 Q58
    Date: 2011
  8. By: Mariam Camarero (Departamento de Economía. Universidad Jaume I); Yurena Mendoza (Departamento de Economía Aplicada II. Universidad de Valencia); Javier Ordoñez (Departamento de Economía. Universidad Jaume I)
    Abstract: The aim of this paper is to determine whether constraining the release of CO2 emissions is neutral on economic growth in 59 countries for the period 1950–2007. We test for cointegration in the CO2-GDP relationship using a non-linear methodology, rather than the linear methodology commonly applied in the empirical literature. While there is scarce evidence of cointegration when using the linear approach when a smooth transition autoregressive (STAR) is applied, the results are quite favourable to the existence of a long-run relationship linking the variables.
    Keywords: CO2 emissions, GDP, nonlinear cointegration
    Date: 2011–06
  9. By: Hall, Bronwyn H. (UNU-MERIT, Maastricht University, UC Berkeley, NBER, and IFS); Helmers, Christian (Universidad Carlos III de Madrid, LSE)
    Abstract: This paper explores the characteristics of 238 patents on 94 “inventions” contributed by major multinational innovators to the “Eco-Patent Commons”, which provides royalty-free access to third parties to patented climate change related innovations. By comparing the pledged patents to other patents in the same technologies or held by the same multinationals, we investigate the motives of the contributing firms as well as the potential for such commons to encourage innovation and diffusion of climate change related technologies. This study, therefore, indirectly provides evidence on the role of patents in the development and diffusion of green technologies. More generally, the paper sheds light on the performance of hybrid forms of knowledge management that combine open innovation and patenting.
    Keywords: patent commons, green technology, eco-aptents, diffusion, climate change
    JEL: H23 H42 K11 O33 O34
    Date: 2011
  10. By: Rémy Prud'homme
    Abstract: Electric vehicles are often presented as a green solution to the transport problem. They offer, it is argued, the benefits of the private car without its costs. They make it possible for individuals and families to move around easily, rapidly, comfortably, at any moment in time, which makes them more consumer friendly than public modes of transportation. Yet, unlike classical cars, they do not consume scarce and dwindling fossil fuel resources and do not reject greenhouse gases, nor local pollutants....
    Date: 2010–11
  11. By: Matthias Finkenrath
    Abstract: This working paper evaluates cost and performance trends related to carbon dioxide (CO2) capture from power generation, based on extensive analysis of data from major engineering studies published between 2006 and 2010. Since individual studies use different methodologies and boundary conditions, study estimates for over 50 CO2 capture installations are re-evaluated on a consistent basis and updated to current cost levels. <p>The paper discusses the need for further standardisation of evaluation methodologies and additional data for specific CO2 capture routes. Further analysis for non-OECD countries is considered crucial for global energy scenario models, and for improving the skills and knowledge developing countries need to evaluate the role of CCS in their national energy contexts.
    Date: 2011–03
  12. By: Nicolas Gonne
    Abstract: Asymmetric climate policies are expected to distort the level-playing field regarding international trade, singularly to the detriment of small open economies. The paper develops a flexible method that provides essential input regarding the design of offsetting measures at the sectoral level. It builds on input-output analysis and standard input-output data to provide proxies for both the carbon-intensity and the trade-intensity of production. These are used to reckon the impact that such policies as carbon taxation have on the price-competitiveness of sectors. The method is then applied to the case of Belgium.
    Keywords: Asymmetric climate policies; Carbon taxes; Input-output analysis; Sectors price-competitiveness
    JEL: C67 D57 H23 Q56 Q58
    Date: 2010–10
  13. By: Rosa Duarte (Universidar de Zaragoza); Vicente Pinilla (Universidad de Zaragoza); Ana Serrano (Universidad de Zaragoza)
    Abstract: Recent research has examined the relationship between natural resources and economic growth. Considered vitally important, not only for humanity’s well-being but also for ecosystem integrity, the relationship between water use and economic growth has traditionally garnered little attention by analysts. This paper studies water use trends from 1900 to 2000 throughout the world, and their main determinants. To do this, we first analyse historical water use trajectories. Second, to proceed with the determinants of water use, we reformulate the IPAT equation (Ehrlich and Holdren, 1971; Commoner et al. 1971), decomposing water use trends into changes in economic demands and in water use intensity. Finally, a simple scenario analysis is conducted, to project future water use trends under different economic, demographic and technological assumptions. The empirical evidence shows that economic and population growth have been crucial for explaining the increase in water use over the past 100 years, with significant regional differences. Nevertheless, the decline in water use intensity has been responsible for a significant reduction in the growth of total water use.
    Keywords: Water use, environmental impacts, economic growth, IPAT model, scenario analysis
    JEL: Q56 Q57 N50
    Date: 2011–06
  14. By: Alberto Casagrande (The Core Consulting, Inc., Rome, Italy); Marco Spallone (G. D'Annunzio University of Pescara and LUISS Guido Carli University)
    Abstract: A ÞrmÕs decision of obeying environmental regulatory standards depends crucially on its chances of being detected and on the costs it must bear in case of detection. We investigate the relationship between the amount of resources devoted to environmental monitoring and the extent of non-compliancy, using a game theoretical model to capture the strategic implications of the monitoring process. In our model a population of Þrms, each of whom decides whether or not to be compliant, and a monitoring agency, that can detect non-compliance only by monitoring signals, strategically interact (more precisely, each Þrm interacts both with the monitoring agency and all other Þrms). In particular, each Þrm produces a signal, the distribution of which is (not perfectly) correlated with its behavior, while the agency, that is resource constrained, chooses some (optimal) fraction of the signals to monitor; hence, the probability of being monitored for each Þrm depends crucially on the behavior of both the monitoring agency and all other Þrms. Simply put, if a large fraction of Þrms chooses not to obey regulatory standards, the probability of being monitored for non-compliant Þrms is small. The main consequence of the strategic interaction among Þrms is that a more aggressive monitoring policy may end up relaxing the resource constraint of the monitoring agency as long as enough Þrms, perceiving a higher chance of being detected, become compliant. In fact, while in a framework with no strategic interaction a more aggressive monitoring policy simply induces a larger fraction of Þrms to be compliant (we call this e!ect, recognized by Becker and Stigler in their seminal contributions, Òimpact effectÓ), in our model a more aggressive monitoring policy also implies a higher probability of being monitored for the remaining non-compliant Þrms, and, in turn, implies a further switch to compliancy. We show that this further switch, that we call ÒmagniÞcation effectÓ, can be very relevant; hence, when monitoring policies are to be designed, our advice is to take strategic interaction among Þrms in the right consideration.
    Keywords: Environment, Monitoring, Strategic Interactions.
    JEL: Q50 Q58
    Date: 2011
  15. By: Daiju Narita; Katrin Rehdanz; Richard S.J. Tol
    Abstract: Ocean acidification is increasingly recognized as a major global problem. Yet economic assessments of its effects are currently almost absent. Unlike most other marine organisms, mollusks, which have significant commercial value worldwide, have relatively solid scientific evidence of biological impact of acidification and allow us to make such an economic evaluation. By performing a partial-equilibrium analysis, we estimate global and regional economic costs of production loss of mollusks due to ocean acidification. Our results show that the costs for the world as a whole could be over 100 billion USD with an assumption of increasing demand of mollusks with expected income growths. The major determinants of cost levels are the impacts on the Chinese production, which is dominant in the world, and the expected demand increase of mollusks in today’s low-income countries, which include China, in accordance with their future income rise
    Keywords: Climate Change, Economic Impact, Mollusks, Ocean Acidification
    JEL: Q51 Q54 Q57
    Date: 2011–06
  16. By: Paul Waide; Conrad U. Brunner
    Abstract: This paper is the first global analysis of the potential energy savings which could be found in electric motor- driven system (EMDS). EMDS currently accounts for more than 40% of global electricity consumption. Huge untapped energy efficiency potential was found in EMDS; around 25 % of EMDS electricity use could be saved cost-effectively, which would reduce total global electricity demand by about 10%. To date, energy efficiency opportunities with EMDS have been relatively neglected in comparison with other sustainable energy opportunities. It is crucial to scale up operations and resources committed to realizing the vast potential energy savings and this paper proposes a comprehensive package of policy recommendations to help governments achieve these significant energy savings in EMDS.
    Date: 2011–05
  17. By: Hsiao-I Kuo (Department of Senior Citizen Service Management Chaoyang University of Technology Taichung, Taiwan); Chi-Chung Chen (Department of Applied Economics, National Chung Hsing University, Taichung, Taiwan); Michael McAleer (Econometrisch Instituut (Econometric Institute), Faculteit der Economische Wetenschappen (Erasmus School of Economics), Erasmus Universiteit, Tinbergen Instituut (Tinbergen Institute).)
    Abstract: After the commercial whaling moratorium was enacted in 1986, whale watching became one of the fastest growing tourism industries worldwide. As whaling was regarded as an activity that is incompatible with whale watching, the possible resumption of commercial whaling caused an urgent need to investigate the potential negative effects of whaling on the whale-watching industry. We examine the potential impacts of whaling on the global whale-watching tourism industry using an unbalanced panel data model. The empirical results indicate that the resumption of commercial whaling has the potential for a negative effect on the global whale-watching industry, especially for nations that are engaged in commercial whaling.
    Keywords: Global whale watching, Commercial whaling, Delay-difference equation, Unbalanced panel data.
    Date: 2011
  18. By: Uwe Remme; Nathalie Trudeau; Dagmar Graczyk; Peter Taylor
    Abstract: The Indian power sector will face numerous challenges over the next four decades. More than one third of India's population currently do not have access to electricity. Urgent action is needed to overcome this problem of energy poverty. At the same time rapid economic growth is projected to increase electricity demand by fivefold to sixfold between now and 2050. Massive investments will be needed to meet this increased demand, but this will also create unique opportunities to transform the power sector towards a low-carbon future.<p>This Information Paper presents in more detail the analysis for India published in Energy Technology Perspectives 2010. The paper investigates the best way of achieving deep CO2 emission cuts in the Indian power system while allowing the Indian economy to continue growing and meeting the challenge of alleviating energy poverty. It does so from a techno-economic perspective - building on detailed resource and technology data for India - and identifies the key power sector technologies needed for India to realise such a transition.
    Date: 2011–02
  19. By: Fernández-Huertas Moraga, Jesús (FEDEA, Madrid); Rapoport, Hillel (Bar-Ilan University)
    Abstract: International migration is maybe the single most effective way to alleviate poverty at a global level. When a given host country allows more immigrants in, this creates costs and benefits for that particular country as well as a positive externality for all those (individuals and governments) who care about world poverty. This implies that the existing international migration regime is inefficient as it fails to internalize such externality. In addition, host countries quite often restrict immigration due to its apparently unbearable social and political costs. However these costs are never measured and made comparable across countries. In this paper we first discuss theoretically how tradable immigration quotas (TIQs) can reveal information on such costs and, once coupled with a matching mechanism taking into account migrants’ preferences, generate substantial welfare gains for all the parties involved. We then propose two potential applications: a market for the resettlement of international (e.g., climate change) refugees, and an extension of the US diversity lottery to a larger set of host countries and other immigration targets. Both applications are seen as possible precursors to a full implementation of a TIQs system.
    Keywords: immigration, immigration policy, tradable quotas, refugees, climate change, international public goods
    JEL: F22 F5 H87 I3 K33
    Date: 2011–06
  20. By: Vondolia, Godwin K. (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The new fertilizer subsidies in Sub-Saharan Africa are intended to increase agricultural production and ensure fertilizer market development. Fertilizer adoption requires complementary inputs such as investment in soil and water conservation for efficient and optimal nutrient uptake, and many fertilizer subsidy programmes implicitly assume that fertilizer subsidies crowd in such investments. The present study, therefore, evaluates the impact of fertilizer subsidies on the provision of soil and water conservation efforts in Ghana. The results indicate that beneficiaries of the studied fertilizer subsidy programme do not invest significantly more in soil and water conservation, which advises against excessive reliance on farmers to respond to fertilizer subsidies with substantial investment in soil and water conservation. Thus, in order to achieve increased investment in soil and water conservation for sustainable agricultural development, more comprehensive measures that include these investments explicitly (such as integrated soil fertility management programmes) may be needed.
    Keywords: soil and water conservation; soil fertility; fertilizer subsidy; endogenous switching
    JEL: N57 Q15 Q18
    Date: 2011–06–15
  21. By: Bienabe, Estelle; Bramley, Cerkia; Kirsten, Johann; Troskie, Dirk
    Abstract: This is the scientific report from a research programme which explored the current lack of a suitable public system for protecting GIs in Southern Africa. In contrast to the European Union, the current South African legal framework only provides for the protection of GIs as collective and, in certain circumstances, as certification trademarks. The lack of a public system through which to valorize GIs was identified as excluding resource poor farmers (but also commercial larger scale farmers) from a potentially useful tool for improving their market access. The need for a public system of protection also emanates from the significance of the wild resources found in South Africa and Namibia, which are often the only source of income for resource poor communities and which is threatened by bio‐piracy. It thus appeared important to assess the merits of developing an institutional framework for protecting GIs in Southern Africa and to evaluate the needs for a sui generis legal system. Secondly, an analysis was done of the local dynamics based on specific agro‐food products. Two central questions were therefore addressed in this study: "How can local communities successfully protect their resources and differentiate their production through GIs?" and "What is the nature and extent of the required institutional and legal framework to achieve this objective?”.
    Keywords: Geographical indications; indigenous resources; intellectual property rights; collectivae action; Southern Africa
    JEL: Q13 O13
    Date: 2011–04
  22. By: Andy Thorpe; Alonso Aguilar Ibarra
    Abstract: Se analiza la influencia de los diferentes modelos económicos sobre la utilización de los recursos naturales de Latinoamérica desde una perspectiva histórica, con un énfasis en los productos de exportación. En primer lugar, se aporta una breve mirada histórica al tema: cómo las políticas del modelo exportador y del modelo de substitución de importaciones e industrialización han influido en el crecimiento económico y la explotación de los recursos naturales. Enseguida, el nuevo modelo económico y sus efectos en el uso de los recursos naturales se describe a detalle y, finalmente, se presentan algunas observaciones sobre la crisis global actual y sus posibles implicaciones.
    Date: 2010–05–31

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