nep-env New Economics Papers
on Environmental Economics
Issue of 2011‒10‒01
thirty papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Cost-effective unilateral climate policy design: Size Matters By Christoph Böhringer, Carolyn Fischer, and Knut Einar Rosendahl
  2. When starting with the most expensive option makes sense : use and misuse of marginal abatement cost curves By Vogt-Schilb, Adrien; Hallegatte, Stephane
  3. Regional environmental efficiency and economic growth: NUTS2 evidence from Germany, France and the UK By Halkos, George; Tzeremes, Nickolaos
  4. Carbon Tax Scenarios and their Effects on the Irish Energy Sector By Di Cosmo, Valeria; Hyland, Marie
  5. The interaction between emissions trading and energy and competition policies By Francesco Gullì
  6. Emissions Trading and Social Justice By Farber, Daniel A
  7. The Role of Abatement Technologies for Allocating Free Allowances By Christin, Clémence; Nicolaï, Jean-Philippe; Pouyet, Jerome
  8. Decarbonizing the European Electric Power Sector by 2050: A tale of three studies By Erik Delarue; Leonardo Meeus; Ronnie Belmans; William D'haeseleer; Jean-Michel Glachant
  9. How well did the Kyoto Protocol work? A dynamic-GMM approach with external instruments By Nicole Grunewald; Inmaculada Martínez-Zarzoso
  10. From Global to Polycentric Climate Governance By Daniel H. Cole
  11. A New Institutional Perspective on Environmental Issues By Claude Ménard
  12. A Critique of The Economics of Climate Change in Mexico By Estrada, Francisco; Tol, Richard S. J.; Gay-García, Carlos
  13. EU 2050 low-carbon energy future: visions and strategies By Leonardo Meeus; Isabel Azevedo; Claudio Marcantonini; Jean-Michel Glachant; Manfred Hafner
  14. Does going green pay off? The effect of an international environmental agreement on tropical timber trade By Stefan Borsky; Andrea Leiter; Michael Pfaffermayr
  15. The Impacts of the Climate Change Levy on Manufacturing: Evidence from Microdata By Ralf Martin; Laure B. de Preux; Ulrich J. Wagner
  16. Reforming Competitive Electricity Markets to Meet Environmental Targets By Newbery, D.
  17. Quality and Environmental Regulation: Verifying Compliance along the Supply Chain By Dionisia Tzavara; Adrienne Héritier
  18. Quel rôle pour les scénarios Facteur 4 dans la construction de la décision publique ? By Mathy, Sandrine; Fink, Meike; Bibas, Ruben
  19. Quality and Environmental Regulation: Verifying Compliance along the Supply Chain By Dionisia Tzavara and Adrienne Héritier
  20. Near Real-Time Disturbance Detection in Terrestrial Ecosystems Using Satellite Image Time Series: Drought Detection in Somalia By Jan Verbesselt; Achim Zeileis; Martin Herold
  21. Valuing local environmental amenity: Using discrete choice experiments to control for the spatial scope of improvements By Bruno Lanz; Allan Provins
  22. Mobilizing Cities towards a Low Carbon Future: Tambourines, Carrots and Sticks By Leonardo Meeus; Erik Delarue
  23. Economic models of shifting cultivation: a review By Yoshito Takasaki
  24. Ensuring a Sustainable and Efficient Fishery in Iceland By Gunnar Haraldsson; David Carey
  25. Optimum Commodity Taxation with a Non-Renewable Resource By Julien Daubanes; Pierre Lasserre
  26. Facilitating Low-Carbon Investments: Lessons from Natural Gas By Anne Neumann; Karsten Neuhoff
  27. A dynamic model of extreme risk coverage : resilience and efficiency in the global reinsurance market By Lemoyne de Forges, Sabine; Bibas, Ruben; Hallegatte, Stephane
  28. Eye Disease and Development By Thomas Barnebeck Andersen; Carl-Johan Dalgaard; Pablo Selaya
  29. Information Effects in Valuation of Electricity and Water Service Attributes Using Contingent Valuation By Akcura, E.
  30. Clean Vehicles External Costs Comparison in the Brussels-Capital Region An Attempt with Transfer Techniques By Frédéric Klopfert; Walter Hecq

  1. By: Christoph Böhringer, Carolyn Fischer, and Knut Einar Rosendahl (Statistics Norway)
    Abstract: Given the bleak prospects for a global agreement on mitigating climate change, pressure for unilateral abatement is increasing. A major challenge is emissions leakage. Border carbon adjustments and output-based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own. We assess antileakage measures as a function of abatement coalition size. We first develop a partial equilibrium analytical framework to see how these instruments affect emissions within and outside the coalition. We then employ a computable general equilibrium model of international trade and energy use to assess the strategies as the coalition grows. We find that full border adjustments rank first in global cost-effectiveness, followed by import tariffs and output-based rebates. The differences across measures and their overall appeal decline as the abatement coalition grows. In terms of cost, the coalition countries prefer border carbon adjustments; countries outside the coalition prefer output-based rebates.
    Keywords: emissions leakage; border carbon adjustments; output-based allocation
    JEL: Q2 Q43 H2 D61
    Date: 2011–09
  2. By: Vogt-Schilb, Adrien; Hallegatte, Stephane
    Abstract: This article investigates the use of expert-based Marginal Abatement Cost Curves (MACC) to design abatement strategies. It shows that introducing inertia, in the form of the"cost in time"of available options, changes significantly the message from MACCs. With an abatement objective in cumulative emissions (e.g., emitting less than 200 GtCO2 in the 2000-2050 period), it makes sense to implement some of the more expensive options before the potential of the cheapest ones has been exhausted. With abatement targets expressed in terms of emissions at one point in time (e.g., reducing emissions by 20 percent in 2020), it can even be preferable to start with the implementation of the most expensive options if their potential is high and their inertia significant. Also, the best strategy to reach a short-term target is different depending on whether this target is the ultimate objective or there is a longer-term target. The best way to achieve Europe's goal of 20 percent reduction in emissions by 2020 is different if this objective is the ultimate objective or if it is only a milestone in a trajectory toward a 75 percent reduction in 2050. The cheapest options may be sufficient to reach the 2020 target but could create a carbon-intensive lock-in and preclude deeper emission reductions by 2050. These results show that in a world without perfect foresight and perfect credibility of the long-term carbon-price signal, a unique carbon price in all sectors is not the most efficient approach. Sectoral objectives, such as Europe's 20 percent renewable energy target in Europe, fuel-economy standards in the auto industry, or changes in urban planning, building norms and infrastructure design are a critical part of an efficient mitigation policy.
    Keywords: Climate Change Mitigation and Green House Gases,Climate Change Economics,Environment and Energy Efficiency,Energy and Environment,Transport and Environment
    Date: 2011–09–01
  3. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper by applying nonparametric techniques measures spatial environmental heterogeneities of 98 regions from Germany, France and the UK. Specifically environmental performance indexes are constructed for the 98 regions (NUTS 2 level) identifying their ability to produce higher growth rates and reduce pollution (in the form of municipal waste) generated from regional economic activity. By applying conditional stochastic kernels and local constant estimators it investigates the regional economic activity – environmental quality relationship. The results indicate several spatial environmental heterogeneities among the examined regions. It appears that regions with higher GDP per capita levels tend to have higher environmental performance.
    Keywords: Regional environmental efficiency; directional distance function; conditional stochastic kernel; nonparametric regression
    JEL: Q50 O13 C60
    Date: 2011–09
  4. By: Di Cosmo, Valeria; Hyland, Marie
    Abstract: In this paper we use annual time series data from 1960 to 2008 to estimate the long run price and income elasticities underlying energy demand in Ireland. The Irish economy is divided into five sectors: residential, industrial, commercial, agricultural and transport, and separate energy demand equations are estimated for all sectors. Energy demand is broken down by fuel type, and price and income elasticities are estimated for the primary fuels in the Irish fuel mix. Using the estimated price and income elasticities we forecast Irish sectoral energy demand out to 2025. The share of electricity in the Irish fuel mix is predicted to grow over time, as the share of carbon intensive fuels such as coal, oil and peat, falls. The share of electricity in total energy demand grows most in the industrial and commercial sectors, while oil remains an important fuel in the residential and transport sectors. Having estimated the baseline forecasts, two different carbon tax scenarios are imposed and the impact of these scenarios on energy demand, carbon dioxide emissions, and government revenue is assessed. If it is assumed that the level of the carbon tax will track the futures price of carbon under the EU-ETS, the carbon tax will rise from ?21.50 per tonne CO2 in 2012 (the first year forecasted) to ?41 in 2025. Results show that under this scenario total emissions would be reduced by approximately 861,000 tonnesof CO2 in 2025 relative to a zero carbon tax scenario, and that such a tax would generate ?1.1 billion in revenue in the same year. We also examine a high tax scenario under which emissions reductions and revenue generated will be greater. Finally, in order to assess the macroeconomic effects of a carbon tax, the carbon tax scenarios were run in HERMES, the ESRI's medium-term macroeconomic model. The results from HERMES show that, a carbon tax of ?41 per tonne CO2 would lead to a 0.21 per cent contraction in GDP, and a 0.08 per cent reduction in employment. A higher carbon tax would lead to greater contractions in output.
    Keywords: CO2 emissions/Energy demand/Environmental tax/income distribution
    JEL: Q4 Q52 Q54
    Date: 2011–09
  5. By: Francesco Gullì
    Abstract: Emissions trading is a “cap and trade” regulation aimed at reducing the cost of meeting environmental targets. This paper studies how this regulation interacts with energy and competition policies. Two vertically related and imperfectly competitive markets are investigated: 1) the electricity market (output market); 2) the market for natural gas (input market). The effect of energy policy is simulated by assuming that the supporting scheme is able to improve the competitiveness of the low carbon technologies which are able, at the same time, to increase security of supply. The effect of the competition policy is accounted for by assuming that firms try to meet a profit target rather than to maximize profits, because of the regulatory pressure exerted by the competition and sector-specific authorities. By using the dominant firm model (in both markets) and the auction approach (in the output market), the paper highlights a trade-off between these policies. Without regulatory pressure, the result is ambiguous. Together, environmental and energy policies can lead to an increase in market power and its effects, but this in turn not necessarily amplifies their performances. However the worst case, the absolute increase in pollution in the short-run, is excluded. With regulatory pressure, the environmental and energy policies may imply a decrease in market power and this in turn can lessen their performance. In addition, this time the absolute increase in pollution in the short-run is not only possible but even likely. However this unfavourable effect would happen only if the pollution price is sufficiently low, that is if the environmental policy is rather modest. From the policy implications point of view, the analysis suggests what follows. If the models used to estimate performances and costs of environmental and energy policies ignore the full role of imperfect competition (the impact on prices combined with the strategic use of power capacity), this may induce incorrect estimations of the cost of the public action or may lead to incorrect policy calibrations, depending on how the policy targets are set. Finally, although the results are based on a series of simple assumptions about the operation and the structure of energy markets, they seem to be enough robust. Nevertheless the paper suggests caution in extending to other market structures the outcome of the dominant firm model.
    Keywords: emissions trading; pollution; imperfect competition; energy policy
    Date: 2011–03–31
  6. By: Farber, Daniel A
    Abstract: Cap and trade is controversial in part because of claims that it is unjust, an issue that was highlighted by recent litigation against California’s proposed carbon market. This essay considers an array of fairness issues relating to cap and trade. In terms of fairness to industry, the conclusion is that distributing free allowances overcompensates firms for the cost of compliance, assuming any compensation is warranted. Industry should not receive, in effect, ownership of the atmosphere at the expense of the public. Environmental justice advocates argue that cap-and-trade systems promote hotspots and encourage dirtier, older plants to continue operating to the detriment of some communities. Designers of cap-and-trade systems should be alert to possible hotspots, particularly in disadvantaged communities. Little reason exists, however, to believe that any such hotspots are systematically linked with disadvantage. Finally, any regulation of emissions raises costs, with a disproportionate impact on low-income consumers. This effect can be greatly ameliorated through adroit use of revenue from auctions. The bottom line is that fairness issues are not a deal-breaker for cap and trade, but do deserve thoughtful consideration in designing a system.
    Keywords: Administrative Law, Economics, Energy and Utilities Law, Environmental Law, Social Welfare, Administrative Law, Energy Law, Environmental Law, Law and Economics, Social Welfare Law
    Date: 2011–09–20
  7. By: Christin, Clémence; Nicolaï, Jean-Philippe; Pouyet, Jerome
    Abstract: The issue of how to allocate pollution permits is critical for the political sustainability of any cap-and-trade system. Under the objective of offsetting firms' losses resulting from the environmental regulation, we argue that the criteria for allocating free allowances must account for the type of abatement technology: industries that use process integrated technologies should receive some free allowances, whereas those using end-of-pipe abatement should not. In the long run, we analyze the interaction between the environmental policy and the evolution of the market structure. In particular, a reserve of pollution permits for new entrants may be justified when the industry uses a process integrated abatement technology.
    Keywords: Cap-and-trade system; profit-neutral allocations; abatement technologies
    JEL: L13 Q53 Q58
    Date: 2011–09
  8. By: Erik Delarue; Leonardo Meeus; Ronnie Belmans; William D'haeseleer; Jean-Michel Glachant
    Abstract: If Europe is serious about climate change, it has to reduce its overall greenhouse gas emissions by 80% by 2050, thereby effectively going to a (near-) zero carbon energy and thus, electricity system. The European Climate Foundation, Eurelectric, and the International Energy Agency have consequently published a study elaborating on the final goal of this transition. The studies project scenarios of how such a (near-) zero electricity system would look like and provide recommendations on the policies needed to guide the transition. In this paper, we observe that these studies tell a tale with many similarities. In spite of increased energy efficiency, the electricity demand is projected to increase substantially, with up to 50% from today towards 2050, due to shifts from other sectors towards electricity. This demand will be supplied by a minimum of 40% electricity generation by RES, with the remainder being filled up with nuclear and fossils with CCS. The importance of grid reinforcement, expansion, and planning in this context is emphasized in all three studies. While all three studies further recommend relying on the EU ETS for the transition, the European Climate Foundation and the International Energy Agency consider continuing with targets for RES in combination with a more harmonized EU RES support scheme.
    Keywords: European Energy Policy; Electric power generation; decarbonization
    Date: 2011–01–31
  9. By: Nicole Grunewald (Georg-August-Universität Göttingen / Germany); Inmaculada Martínez-Zarzoso (Georg-August-Universität Göttingen / Germany)
    Abstract: This paper assesses the impact of the Kyoto Protocol on CO2 emissions. With this aim a dynamic panel data model is estimated for a cross-section of 213 countries over the period 1960 to 2009. The model, based on a STIRPAT approach, also integrates the EKC approach and specifically considers the endogeneity of the policy variable. To sort out causality the number of financed CDM projects is used as an external instrument. The main results indicate that obligations from the Kyoto Protocol have a measurable reducing effect on CO2 emissions and indicate that a treaty often seen as "failed" in fact may be producing some non-trivial effects.
    Keywords: Environmental Kuznets Curve, Kyoto Protocol, panel data, Clean Development Mechanism
    JEL: Q54 Q56
    Date: 2011–09–14
  10. By: Daniel H. Cole
    Abstract: Global governance institutions for climate change, such as those established by the United Nations Framework Convention on Climate Change and the Kyoto Protocol, have so far failed to make a significant impact on greenhouse gas emissions. Following the lead of Elinor Ostrom, this paper offers an alternative theoretical framework for reconstructing global climate policy in accordance with the polycentric approach to governance pioneered in the early 1960s by Vincent Ostrom, Charles Tiebout, and Robert Warren. Instead of a thoroughly top-down global regime, in which lower levels of government simply carry out the mandates of international negotiators, a polycentric approach provides for greater experimentation, learning, and cross-influence among different levels and units of government, which are both independent and interdependent. After exploring several of the design flaws of the existing set of global institutions and organizations for greenhouse gas mitigation, the paper explores how those global institutions and organizations might be improved by learning from various innovative policies instituted by local, state, and regional governments. The paper argues that any successful governance system for stabilizing the global climate must function as part of a larger, polycentric set of nested institutions and organizations at various governmental levels.
    Keywords: federalism
    Date: 2011–06–15
  11. By: Claude Ménard (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper focuses on how to deal with environmental problems, through the lenses of the New Institutional Economics. The emphasis is on the intertwined role of organizational solutions and their institutional settings. This is not to say that technological solutions to environmental problems should be dismissed. However, it is argued that 'environmental innovation' is often of organizational nature, deeply embedded in institutions that adapt very slowly, making 'societal transitions' particularly challenging. The New Institutional Economics provides some key concepts to explore these dimensions and their interactions, thus shedding light on alternative solutions and the conditions of their implementation. Most examples come from the water sector.
    Keywords: Organizations, Institutions, Property Rights, Contracts, Regulation, Transaction Costs, Water
    Date: 2011
  12. By: Estrada, Francisco; Tol, Richard S. J.; Gay-García, Carlos
    Abstract: This paper revises some relevant aspects of The Economics of Climate Change in Mexico (ECCM), one of the most important documents for supporting national decisionmaking regarding the climate change international negotiations. In addition to pointing out some important methodological inadequacies, this paper shows that the ECCM's main results are questionable. Even though this study was inspired on the Stern Review and benefited from the support of original members of the Stern team, the ECCM is not consistent with the world portrayed in the Stern Review in many aspects, particularly regarding the importance of climate change impacts. The estimates of the costs of climate change for Mexico are so low that can hardly be considered to be consistent with the previous studies that have been reported in the literature concerning regional and global scales. Furthermore, it is shown that the document's main conclusion is not supported even by the estimates of the costs of the impacts of climate change and of the mitigation strategies that are presented in it. It is argued that this document has important deficiencies that do not make it adequate for supporting decision-making. In addition, the ECCM has inspired other reports regarding the economics of climate change in Central and Latin America, and as is shown here, their results are also questionable. This raises further reasons for concern because these national documents are building a regional view of what climate change could imply for Latin America that severely underestimates the importance of this phenomenon.
    Keywords: Climate change/stern review/impacts/cost/Impacts of climate change
    Date: 2011–09
  13. By: Leonardo Meeus; Isabel Azevedo; Claudio Marcantonini; Jean-Michel Glachant; Manfred Hafner
    Abstract: The aim of this paper is to identify the main challenges regarding the achievement of a low-carbon energy system in the EU by 2050. We analyze the visions presented by stakeholders and existing strategies of member state to achieve this transition. The five main challenges identified are the following: 1// energy efficiency - to ensure ambitious energy savings; 2// GHG emissions - to go towards a nearly zero-carbon electricity system; 3// renewable energy - to push effective technologies into the market; 4// energy infrastructure - to ensure timely investment in the electricity transmission grid capacity across borders; 5// energy markets - to guarantee timely investment in electricity generation back-up capacity. We also find that member states are already pursuing different strategies in dealing with these challenges. This creates risks for a European energy policy fragmentation. It also opens new opportunities for cooperation among member states so that the European Commission could demonstrate how to produce European added value.
    Keywords: climate change; EU energy policy; 2050 energy system; decarbonization
    Date: 2011–03–28
  14. By: Stefan Borsky; Andrea Leiter; Michael Pfaffermayr
    Abstract: Trade-related measures aim to regulate side-effects in international environmental agreements and are expected to positively influence the level of participation in the agreements as well as their degree of stability. In this paper we examine one side-effect of the 1994 International Tropical Timber Agreement - its impact on tropical timber trade. We use a cross-sectional dataset on bilateral trade flows of tropical timber that additionally contains information on trading partners' economic and geographical characteristics. Our empirical specification is based on a gravity equation, which is estimated using Heckman's selection model to address the potentially systematic selection of trading partners. We find significantly positive impacts of the 1994 ITTA on member countries' level of tropical timber trade. Furthermore, poor exporter countries benefit more from this trade enhancing effect than their richer counterparts.
    Keywords: International environmental agreements, side benefits, bilateral trade flows, product quality, sample selection
    JEL: F53 Q23 Q27 F18 L15
    Date: 2011–09
  15. By: Ralf Martin; Laure B. de Preux; Ulrich J. Wagner
    Abstract: We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.
    JEL: D21 Q41 Q48 Q54
    Date: 2011–09
  16. By: Newbery, D.
    Abstract: The UK and other EU countries are concerned to deliver secure, sustainable and affordable electricity, to meet challenging targets for decarbonisation and renewable energy. The UK Government has consulted and concluded that the present electricity market arrangements will not deliver all three goals, and has proposed a major Electricity Market Reform (EMR). This article describes the reasons for, and the nature of, the EMR, pointing to the need for further market and institutional reforms.
    JEL: Q48 Q42 L94
    Date: 2011–09–14
  17. By: Dionisia Tzavara; Adrienne Héritier
    Abstract: Among the factors providing incentives to monitor the behaviour of input suppliers are the regulatory requirements to which downstream firms are subject. We develop a formal economic model to examine the relationship between the strictness of the regulatory environment and downstream firms’ incentives to act as inspectors of their sub-contractors. We consider the interaction between a downstream producer and an upstream input supplier. The downstream chooses the probability with which to monitor the upstream’s compliance and the upstream chooses a compliance level which determines compliance of the end product with quality or environmental regulation. We find that the strictness of regulation affects the downstream’s monitoring strategy in combination with the level of quality or environmental standards. If the standards are sufficiently low then the strictness of regulation increases incentives to monitor the upstream. Contrary, if the standards are sufficiently high then the pressure on the downstream to monitor the upstream is relaxed and the strictness of regulation decreases incentives to monitor. We argue that the strictness of regulation should not be treated in isolation as a factor determining the choice of downstream firms to monitor their input suppliers.
    Keywords: compliance; monitoring; supply chain; quality and environmental regulation
    Date: 2011–03–01
  18. By: Mathy, Sandrine; Fink, Meike; Bibas, Ruben
    Abstract: Seven long-term prospective studies representing the energy trajectories consistent with a Factor Four, i.e. a 75% reduction of greenhouse gases emissions in 2050 in France have been identified. We analyze their methodology and the high dispersion of results. Then we discuss the role of scenario-making. Among them, only one of the scenarios achieves the Factor Four, thereby showing the limitations of these studies. On the methodological side, the engineering models used appear as black boxes, each using their own technological hypotheses and not readily understandable by the non-specialist. Therefore, exchanges between modelers, economists, technologists, sociologists and representatives of the civil society are a key factor for these scenario elaboration as their legitimacy stems from social and politic appropriation of scientific results.
    Keywords: factor Four ; technology Economy models ; carbon price ; climatic policies ; energy mix ; methodology ; energy scenarios ; emissions ; greenhouse gases
    JEL: D7 D78
    Date: 2011
  19. By: Dionisia Tzavara and Adrienne Héritier
    Abstract: Among the factors providing incentives to monitor the behaviour of input suppliers are the regulatory requirements to which downstream firms are subject. We develop a formal economic model to examine the relationship between the strictness of the regulatory environment and downstream firms’ incentives to act as inspectors of their sub-contractors. We consider the interaction between a downstream producer and an upstream input supplier. The downstream chooses the probability with which to monitor the upstream’s compliance and the upstream chooses a compliance level which determines compliance of the end product with quality or environmental regulation. We find that the strictness of regulation affects the downstream’s monitoring strategy in combination with the level of quality or environmental standards. If the standards are sufficiently low then the strictness of regulation increases incentives to monitor the upstream. Contrary, if the standards are sufficiently high then the pressure on the downstream to monitor the upstream is relaxed and the strictness of regulation decreases incentives to monitor. We argue that the strictness of regulation should not be treated in isolation as a factor determining the choice of downstream firms to monitor their input suppliers.
    Date: 2011–03–15
  20. By: Jan Verbesselt; Achim Zeileis; Martin Herold
    Abstract: Near real-time monitoring of ecosystem disturbances is critical for addressing impacts on carbon dynamics, biodiversity, and socio-ecological processes. Satellite remote sensing enables cost-effective and accurate monitoring at frequent time steps over large areas. Yet, generic methods to detect disturbances within newly captured satellite images are lacking. We propose a generic time series based disturbance detection approach by modelling stable historical behaviour to enable detection of abnormal changes within newly acquired data. Time series of vegetation greenness provide a measure for terrestrial vegetation productivity over the last decades covering the whole world and contain essential information related land cover dynamics and disturbances. Here, we assess and demonstrate the method by (1) simulating time series of vegetation greenness data from satellite data with different amount of noise, seasonality and disturbances representing a wide range of terrestrial ecosystems, (2) applying it to real satellite greenness image time series between February 2000 and July 2011 covering Somalia to detect drought related vegetation disturbances. First, simulation results illustrate that disturbances are successfully detected in near real-time while being robust for seasonality and noise. Second, major drought related disturbance corresponding with most drought stressed regions in Somalia are detected from mid 2010 onwards and confirm proof-of-concept of the method. The method can be integrated within current operational early warning systems and has the potential to detect a wide variety of disturbances (e.g. deforestation, flood damage, etc.). It can analyse in-situ or satellite data time series of biophysical indicators from local to global scale since it is fast, does not depend on thresholds or definitions and does not require time series gap filling.
    Keywords: early warning, real-time monitoring, global change, disturbance, time series, remote sensing, vegetation and climate dynamics
    JEL: C22 Q20 Q50
    Date: 2011–09
  21. By: Bruno Lanz (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich); Allan Provins (Economics for the Environment Consultancy (eftec) ltd., London, U.K.)
    Abstract: We report results from a series of discrete choice experiments designed to elicit preferences for environmental improvements brought about by local regeneration initiatives. Amenities we consider are areas of open space, restoration of derelict properties, outdoor recreation facilities, street cleanliness, public areas, and the provision of paths dedicated to cycling and walking. We include a measure for the spatial coverage of the policy as an attribute, making the trade-off between space and other attributes explicit. The experimental design is selected to efficiently estimate the first order interaction effects between the spatial attribute and the nimprovements based on a constrained version of the D-efficiency criteria. We use a mixed logit model to analyse observed choices and derive a second order Taylor approximation for the mean willingness to pay for marginal improvement in the presence of preference heterogeneity and price insensitive respondents. We find evidence that the spatial scope of improvements affects both the intensity and heterogeneity of preferences. Our results suggest significant economic values in dimensions that are difficult to capture in observed market transaction data, thereby contributing to ex-ante assessment of local regeneration policies.
    Keywords: Non-market valuation, Discrete choice experiments, Spatial analysis, Urban planning, Regeneration policy
    JEL: Q Q28 Q51 R R53 R58 C C21 C35 C81
    Date: 2011–08
  22. By: Leonardo Meeus; Erik Delarue
    Abstract: In the transition towards a decarbonized energy system, we need city authorities to lead by example as public actors, to govern the actions of the private urban actors as local policy makers, and to conceive and manage the implementation of an integrated approach as coordinators, which we introduce in this paper as three levels of city smartness. Local governments however have institutional disincentives to act, and if they do act, they are confronted with urban actors that are reluctant to follow. This paper analyzes how city pioneers in Europe have been able to overcome these disincentives thanks to a combination of local circumstances and interventions by higher levels of government. We categorize the state of the art instruments that have been used by higher levels of government into “tambourines”, “carrots”, and “sticks”, and reflect on how the state of the art could be improved.
    Keywords: cities; climate change; governance
    Date: 2011–02–04
  23. By: Yoshito Takasaki
    Abstract: This chapter reviews farm-level economic models of shifting cultivation and those of deforestation and soil conservation related to shifting cultivation. Although economists have made significant progress in modeling shifting cultivation over the last two decades, extant economic models neither clearly distinguish between primary and secondary forests nor address potential roles of on-farm soil conservation in shifting cultivation. Developing a unified farm model of primary forest clearing, forest fallowing, and on-farm soil conservation is needed to examine effective policies for protecting primary forest and maintaining sustainable secondary fallow forest. The chapter points to promising avenues for future modeling.
    Date: 2011–09
  24. By: Gunnar Haraldsson; David Carey
    Abstract: Iceland has managed its large fishing industry in a sustainable and profitable way. The foundations of this success are setting Total Allowable Catches (TACs) based on scientific recommendations of what is biologically sustainable and the Individual Transferable Quota (ITQ) system, which gives each holder the right to catch a certain of the TAC in various species. The efficiency of this system could be under threat from potential policy responses to the perceived unfairness of quotas having initially been given away and by Iceland’s possible accession to the EU. However, there is nothing the government can do now to do undo the unfairness of the initial allocation. Nevertheless, it could be attractive to increase the special fisheries resource rent tax as it is likely to be a more efficient tax than most others, although the increase should not be so great as to damage the fisheries management system. The resource rent could also be increased by reducing TACs from the current, biologically sustainable level to the level that maximizes rent. Provided that Iceland is able to negotiate to maintain the authority to set TACs and to keep the ITQ system, joining the EU, and hence the Common Fisheries Policy (CFP), should not reduce the efficiency of the Icelandic fisheries management system. This Working Paper related to the 2011 OECD Economic Survey of Iceland. (<P>Pour une pêche durable et efficiente en Islande<BR>L’Islande a géré son vaste secteur de la pêche de façon durable et rentable. Ce succès repose sur l’instauration de totaux admissibles de captures (TAC) fondés sur des recommandations scientifiques concernant la durabilité biologique, et sur le système des quotas individuels transférables (QIT) qui confère à chaque détenteur d’un quota le droit de pêcher une part du TAC défini pour chacune des espèces. L’efficience de ce système pourrait être menacée par des mesures publiques possibles en réponse au sentiment d’injustice lié à l’attribution initiale des quotas, et par l’adhésion éventuelle de l’Islande à l’UE. Toutefois, les autorités islandaises ne peuvent rien faire à présent pour remédier au caractère inéquitable de la distribution initiale. Néanmoins, il pourrait être intéressant d’augmenter la taxe spéciale sur la rente halieutique car elle devrait être plus efficiente que la plupart des autres taxes, à condition que cette augmentation ne soit pas trop forte pour ne pas porter atteinte au système de gestion des pêches. On pourrait aussi augmenter la rente halieutique en réduisant les TAC de façon à passer du niveau actuel qui est biologiquement durable à un niveau qui permette de maximiser la rente. Sous réserve que l’Islande soit en mesure de négocier pour conserver le pouvoir de fixer ses TAC et pour maintenir son système de QIT, l’adhésion à l’UE, et donc à la politique commune de la pêche (PCP), ne devrait pas réduire l’efficience du système islandais de gestion des pêches. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l’Islande 2011 (
    Keywords: fisheries management, Total Allowable Catches (TACs), Individual Transferable Quota (ITQ) system, Rights Based Management, resource rents, resource rent tax, EU accession, système de gestion de la pêche, total admissible de captures (TAC), système de quotas individuels transférables (QIT), régime de gestion fondé sur les droits, rentes de ressources, taxe sur la rente des ressources, adhésion à l’UE
    JEL: Q01 Q22 Q28
    Date: 2011–09–19
  25. By: Julien Daubanes (ETH Zurich, Switzerland); Pierre Lasserre (Université du Québec à Montréal, Canada)
    Abstract: Optimum commodity taxation theory asks how to raise a given amount of tax revenue while minimizing distortions. We reexamine Ramsey’s inverse elasticity rule in presence of Hotelling-type non-renewable natural resources. Under standard assumptions borrowed from the non-renewable-resource-extraction and from the optimum-commodity-taxation literatures, a non-renewable resource should be taxed in priority whatever its demand elasticity and whatever the demand elasticity of regular commodities. It should also be taxed at a higher rate than other commodities having the same demand elasticity and, while the tax on regular commodities should be constant, the resource tax should vary over time. There are two basic ways to alleviate resource supply limitations; one is to produce reserves for subsequent extraction; the other one is to rely on imports. When the generation of reserves by exploration is determined by the net-of-tax rents derived during the extraction phase, reserves become a conventional form of capital and royalties tax its income; our results contradict Chamley’s conclusion that capital should not be taxed at all in the very long run. When the economy is autarkic, in the absence of any subsidy to reserve discoveries, the optimal tax rate on extraction obeys an inverse elasticity rule almost identical to that of a commodity whose supply is perfectly elastic. As a matter of fact, there is a continuum of optimal combinations of reserve subsidies and extraction taxes, irrespective of whether taxes are applied on consumption or on production. When the government cannot commit, extraction rents are completely expropriated and subsidies are maximum. In general the optimum Ramsey tax not only causes a distortion of the extraction path, as happens when reserves are given, but also distorts the level of reserves developed for extraction. When that distortion is the sole effect of the tax, it is determined by a rule reminiscent of the inverse elasticity rule applying to elastically-supplied commodities. In an open economy, Ramsey taxes further acquire an optimum-tariff dimension, capturing foreign resource rents. For countries that import the resource, the result that domestic resource consumption is to be taxed at a higher rate than conventional commodities having the same demand elasticity emerges reinforced.
    Keywords: Optimum commodity taxation, Inverse elasticity rule, Non-renewable resources, Hotelling resource, Supply elasticity, Demand elasticity, Capital income taxation.
    JEL: Q31 Q38 H21
    Date: 2011–09
  26. By: Anne Neumann; Karsten Neuhoff
    Abstract: Decarbonisation of energy and transport infrastructure requires significant private sector investments. The natural gas industry has demonstrated such large scale private sector infrastructure investment over the last decades, typically using long-term contractual arrangements. Are therefore institutional frameworks necessary that facilitate long-term contracting or provide regulation reassuring about future resource streams associated with low-carbon infrastructure - or do factors idiosyncratic to natural gas explain the prevalence of long-term contracts in natural gas infrastructure investment? We identify four reasons for the use of long-term contracting arrangements. The transformation of the natural gas industry and regulatory structure has gradually reduced the rational for three of these reasons, suggesting that remaining rational, securing of revenue streams to finance investments has become the main motivation for the use of long-term contracts. This rational is not idiosyncratic to the natural gas industry, and thus suggests that long-term contracting can also play a significant role in facilitating low-carbon infrastructure investment. We furthermore discuss the role of institutional frameworks necessary for long-term contracting, and identify the significant role governments have been playing in sharing the counterparty risk inherent in long-term contracts.
    Keywords: Investment, low-carbon economy, natural gas
    JEL: L78 O13 Q58
    Date: 2011
  27. By: Lemoyne de Forges, Sabine; Bibas, Ruben; Hallegatte, Stephane
    Abstract: This paper presents a dynamic model of the reinsurance market for catastrophe risks. The model is based on the classical capacity-constraint assumption. Reinsurers choose every year the quantity of risk they cover and the level of external capital they raise to cover these risks. The model exhibits time dependency and reproduces a market dynamics that shares many features with the real market. In particular, market price increases and reinsurance coverage decreases after large shocks, and a series of smaller losses may have a deeper impact than one larger loss. There is a significant oligopoly effect reducing reinsurance supply, and the market is segregated into strategic large actors that influence market prices and price-taker smaller firms. A regulation trade-off between market efficiency and resilience is identified and quantified: improving the ability of the market to cope with exceptional events increases the cost of reinsurance. This model provides an interesting basis to analyze further capacity needs for the insurance industry in view of growing worldwide exposure to catastrophic risks and climate change.
    Keywords: Markets and Market Access,Insurance&Risk Mitigation,Climate Change Economics,Debt Markets,Emerging Markets
    Date: 2011–09–01
  28. By: Thomas Barnebeck Andersen (Department of Business and Economics, University of Southern Denmark); Carl-Johan Dalgaard (Institute of Economics, University of Copenhagen); Pablo Selaya (Institute of Economics, University of Copenhagen)
    Abstract: This research advances the hypothesis that cross-country variation in the historical incidence of eye disease has influenced the current global distribution of per capita income. The theory is that pervasive eye disease diminished the incentive to accumulate skills, thereby delaying the fertility transition and the take-off to sustained economic growth. In order to estimate the influence from eye disease incidence empirically, we draw on an important fact from the field of epidemiology: Exposure to solar ultraviolet B radiation (UVB-R) is an underlying determinant of several forms of eye disease; the most important being cataract, which is currently the leading cause of blindness worldwide. Using a satellite-based measure of UVB-R, we document that societies more exposed to UVB-R are poorer and underwent the fertility transition with a significant delay compared to the forerunners. These findings are robust to the inclusion of an extensive set of climate and geography controls. Moreover, using a global data set on economic activity for all terrestrial grid cells we show that the link between UVB-R and economic development survives the inclusion of country fixed effect.
    Keywords: Comparative development, eye disease, climate
    JEL: O11 I00 Q54
    Date: 2011–08–01
  29. By: Akcura, E.
    Abstract: Consumers constantly make decisions on the goods and services they purchase, in most cases with incomplete information. Many products that are available in stores, in catalogues, or over the internet are not presented with a full list of attributes or technical specifications. Lack of information is most apparent in non-market goods such as utility service attributes. This paper examines information effects on consumers' willingness to pay (WTP) for a number of electricity and water attributes using two contingent valuation surveys administered in the UK. The attributes considered include WTP for a carbon cleaner electricity fuel mixture as well as increasing security of supply. The results indicate that the quantity and complexity of information can potentially lead individuals to ignore the information presented. The relevance of the attribute to the respondent is found to be a significant motivator in the processing of the information presented. The survey data also reveal a number of socio-economic, attitudinal and behavioural factors that affect WTP for the attributes considered.
    Date: 2011–09–18
  30. By: Frédéric Klopfert; Walter Hecq
    Date: 2010–07

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