nep-env New Economics Papers
on Environmental Economics
Issue of 2013‒03‒09
25 papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Environmental Macroeconomics: Environmental Policy, Business Cycles, and Directed Technical Change By Fischer, Carolyn; Heutel, Garth
  2. The Role of the Forest in an Integrated Assessment Model of the Climate and the Economy By Eriksson, Mathilda
  3. On The Influence Of Environmental Factors On Harvest: The French Guiana Shrimp Fishery Paradox By Nicolas Sanz; Bassirou Diop; Fabian Blanchard; Luis Lampert
  4. Value of land use for carbon sequestration: An application to the EU climate policy. By Gren, Ing-Marie Gren; Elofsson, Katarina
  5. A note on environmental R&D under time-consistent emission tax By Yasunori Ouchida; Daisaku Goto
  6. Russia's food security and climate change: Looking into the future By Kiselev, Sergey; Romashkin, Roman; Nelson, Gerald C.; Mason-D'Croz, Daniel; Palazzo, Amanda
  7. A Climate Diplomacy Proposal: Carbon Pricing Consultations By Adele C. Morris; Warwick J. McKibbin; Peter J. Wilcoxen
  8. Environmental Regulation Induced Foreign Direct Investment By Robert J R Elliott; Ying Zhou
  9. Comparing models of unobserved heterogeneity in environmental choice experiments By Kragt, Marit Ellen
  10. US food security and climate change: Agricultural futures By Takle, Eugene S.; Gustafson, David; Beachy, Roger; Nelson, Gerald C.; Mason-D'Croz, Daniel; Palazzo, Amanda
  11. Twenty Thousand Sterling Under the Sea: Estimating the value of protecting deep-sea biodiversity By Hanley, Nicholas; Hynes, Stephen; Jobstvogt, Niels; Kenter, Jasper; Witte, Ursula
  12. Economics of Prioritising Environmental Research: An Expected Value of Partial Perfect Information (EVPPI) Framework By Jeffrey, Scott R.; Pannell, David J.
  13. Green Innovation in Tourism Services By OECD
  14. How fit are feed-in tariff policies ? evidence from the European wind market By Zhang, Fan
  15. Some Fallacies in Econometric Modelling of Climate Change By David Hendry; Felix Pretis
  16. Revisiting the porter hypothesis: An empirical analysis of green innovation for the Netherlands By Leeuwen, George van; Mohnen, Pierre
  17. Government Spending and Air Pollution in the US By Islam, Asif M.; Lopez, Ramon E.
  18. Carbon-based Border Tax Adjustments and China’s International Trade: Analysis based on a Dynamic Computable General Equilibrium Model By Ling Tang; Qin Bao; ZhongXiang Zhang; Shouyang Wang
  19. Spatio-Temporal Analysis of Car Distance, Greenhouse Gases and the Effect of Built Environment: a Latent Class Regression Analysis By Zahabi, Seyed Amir H.; Miranda-Moreno, Luis; Patterson, Zachary; Barla, Philippe
  20. Providing Preference-Based Support for Forest Ecosystem Service Management in Poland By Mikołaj Czajkowski; Anna Bartczak; Marek Giergiczny; Stale Navrud; Tomasz Żylicz
  21. Prices vs. Quantities: Incentives for Renewable Power Generation - Numerical Analysis for the European Power Market By Nagl, Stephan
  22. What Drives Natural Gas Prices? - A Structural VAR Approach By Nick, Sebastian; Thoenes, Stefan
  23. Are Natural Disasters Good for Economic Growth? By Ahlerup, Pelle
  24. Open Access to the Resource of Antibiotic Treatment Efficacy Subject to Bacterial Resistance By Bruno Nkuiya; Markus Herrmann
  25. Natural Disasters and Government Turnover By Ahlerup, Pelle

  1. By: Fischer, Carolyn (Resources for the Future); Heutel, Garth (University of North Carolina at Greensboro, Department of Economics)
    Abstract: Environmental economics has traditionally fallen in the domain of microeconomics, but recently approaches from macroeconomics have been applied to studying environmental policy. We focus on two macroeconomic tools and their application to environmental economics. First, real business cycle models can incorporate pollution and pollution policy and be used to answer several questions. How can environmental policy adjust to business cycles? How do different types of policies fare in a context with business cycles? Second, endogenous technological growth is an important component of environmental policy. Several studies ask how policy can be designed to both tackle emissions directly and influence the adoption of clean technologies. We focus on these two aspects of environmental macroeconomics but emphasize that there are many other potential applications.
    Keywords: Real business cycles; Endogenous technological change; Pollution
    JEL: E32 O44 Q50 Q55
    Date: 2013–02–25
  2. By: Eriksson, Mathilda (CERE, Centre for Environmental and Resource Economics)
    Abstract: This paper develops a model to evaluate then potential role of the global forest as an option to reduce climate change. The approach is to assess the forest as both a source of renewable energy and a potential storage of carbon together with non-carbon energy. The analysis shows that the global forest plays a signicant part in the carbon cycle and should be used together with non-carbon energy strategies. The tropical forest carbon storage proves to be especially important and the emphasis is to enlarge the growing stock, rather than increase the use of forest bioenergy. The positive dynamic eects of increasing bioenergy harvest is too weak to overpower the instant and future benets of increasing the growing forest biomass. Reducing tropical deforestation in the near future proves to be important for reducing climate change.
    Keywords: Integrated Assessment Models; Forest
    JEL: Q23 Q54
    Date: 2013–02–12
  3. By: Nicolas Sanz (CEREGMIA, Université des Antilles et de la Guyane); Bassirou Diop (CEREGMIA, Université des Antilles et de la Guyane); Fabian Blanchard (Ifremer, Unité Biodiversité Halieutique de Guyane); Luis Lampert (Ifremer, Unité Biodiversité Halieutique de Guyane)
    Abstract: The purpose of this paper is to investigate the environmental nature of the French Guiana shrimp fishery dynamics through an empirical analysis. In order to do so, we specify a global harvest production function, in which output depends on the number of days at sea and the stock level. In addition, we use some environmental variables representing the "El Niño" and "la Niña" phenomena, the sea surface temperature, and the flow of some amazonian rivers as instruments. This method enables us to correct the well known simultaneaous bias between the harvest and the stock levels and to show that harvest is significantly dependant on the environmental factors analyzed, which may compromise the future of the French Guiana shrimp fishery in the context of climate change.
    Date: 2013–02
  4. By: Gren, Ing-Marie Gren (Department of Economics, Swedish University of Agricultural Sciences); Elofsson, Katarina (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: This paper applies the replacement cost method for calculating the value of stochastic carbon sequestration in the EU climate policy for mitigating carbon dioxide emissions. Minimum costs with and without carbon sequestrations are then derived with a safety-first approach in a chance-constrained framework for two different scenarios; one with the current system for emission trading in combination with national allocation plans and one with a hypothetical system where all sectors trade. The theoretical results show that i) the value of carbon sequestration approaches zero for a high enough risk discount, ii) relatively low abatement cost in the trading sector curbs supply of permits on the ETS market, and iii) large abatement costs in the trading sector create values from carbon sequestration for meeting national targets. The empirical application to the EU commitment of 20% reduction in carbon dioxide emissions shows large variation in carbon sequestration value depending on risk discount and on institutional set up. Under no uncertainty, the value can correspond to approximately 0.45% of total GDP in EU under current policy system, but it is reduced to one third if all sectors are allowed to trade. The value declines drastically under conditions of uncertainty and approaches zero for high probabilities in achieving targets. The allocation of value among countries depends on scenario; under the current system countries make gains from reduced costs of meeting national targets, under a sector-wide trading scheme buyers of permits gain from reductions in permit price and sellers make associated losses.
    Keywords: carbon sequestration value; replacement cost method; uncertainty; safety-first; chance-constrained programming; EU emission target
    JEL: C61 D81 Q40 Q48 Q50
    Date: 2013–02–18
  5. By: Yasunori Ouchida (Faculty of Economics, Hiroshima University); Daisaku Goto (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: In a recent publication in Journal of Economic Behavior and Organization, Poyago-Theotoky (2007) developed a three-stage game model, and also derived theoretical findings and important policy implications for environmental R&D under a time-consistent emission tax. Among the conclusions presented in that paper, it was stated that with inefficient environmental R&D technology and small environmental damage, cooperative environmental R&D engenders larger environmental R&D efforts and greater social welfare than noncooperative environmental R&D does. This note describes that the results of Professor Poyago-Theotoky's (2007, 2010) works are still robust in a relaxed wider parameter range of the environmental damage coefficient. Furthermore, we provide the generalized sufficient condition of damage coefficient to guarantee an interior solution for R&D in an extended framework.
    Keywords: Time-consistent emission tax, Environmental R&D, environmental damage, Cournot duopoly
    JEL: O32 L13 Q55 Q58
    Date: 2011–12
  6. By: Kiselev, Sergey; Romashkin, Roman; Nelson, Gerald C.; Mason-D'Croz, Daniel; Palazzo, Amanda
    Abstract: Global climate change presents long-term risks to agriculture. In general, global climate change is expected to positively affect Russian agriculture. In high and middle latitudes, global warming would expand the growing season. Acreages of agricultural crops may expand toward the north, although yields would likely be lower due to less fertile soil. However, in the south there is a possibility of drier climate, which has a negative impact on crop yields and livestock productivity. In addition, climate change is expected to increase the scarcity of water resources and encourage weed and pest proliferation, and it is expected to increase the short-term risks associated with an increase in extreme weather events and natural disasters. This paper uses data on current conditions to simulate future scenarios and examine possible impacts on crop production in the Russian Federation. It also considers adaptive measures for agriculture in response to climate change. --
    Keywords: climate change,agriculture,food security,IMPACT model
    JEL: Q17 Q18 Q24 Q25 Q54
    Date: 2013
  7. By: Adele C. Morris; Warwick J. McKibbin; Peter J. Wilcoxen
    Abstract: The Doha climate talks in December 2012, wrapped up lines of negotiation that were begun years before in Bali. Negotiators resolved contentious questions about the future of the Kyoto Protocol and finally put the constraints of the Bali agenda behind them. Now they need turn to developing by 2015 a new agreement under the United Nations Framework Convention on Climate Change (UNFCCC) to cover the post-2020 period. In order to make concrete progress on climate policy there is a need to establish a Carbon Pricing Consultation (CPC) process, which would be a detailed, pragmatic, and ongoing discussion of the implementation details of domestic cap-and-trade and GHG taxes. Though carbon pricing generally been considered to be a national-level policy?to be adopted at the discretion of individual governments?the paper argues that a CPC process would provide an opportunity for negotiators, as well as the administrators of national pricing policies, to discuss how to induce, practically and efficiently, the broad economic shifts required to de-couple emissions and economic activity. This paper makes the argument for focusing on carbon pricing in the international negotiations and offers a way forward in that process.
    Keywords: Carbon Pricing, Carbon Tax, UNFCCC, Climate Change, Negotiations
    JEL: F51 F53 Q54
    Date: 2013–02
  8. By: Robert J R Elliott; Ying Zhou
    Abstract: The last decade has witnessed a renewed interest in the relationship between environmental regulations and international capital flows. However, empirical studies have so far failed to find conclusive evidence for this so-called pollution haven or race to the bottom effect where foreign direct investment (FDI) is assumed to be attracted to low regulation countries, regions or states. In this paper we present a simple theoretical framework to demonstrate that greater stringency in environmental standards can lead to a strategic increase in capital inflows which we refer to as environmental regulation induced FDI. Our result reveals a possible explanation for the mixed results in the empirical literature and provides an illustration of the conditions under which environmental regulations in the host country can affect the location decision of foreign firms.
    Keywords: FDI, environmental regulations, pollution halo
    JEL: F2 Q5
    Date: 2013–02
  9. By: Kragt, Marit Ellen
    Abstract: Choice experiments have become a widespread approach to non-market environmental valuation. Given the vast range of public opinions towards environmental management changes, it is desirable that analysis of discrete choice data accounts for the possibility of unobserved heterogeneity amongst the population. There is, however, no consensus about the best way to model individual heterogeneity. This paper presents four approaches to modelling heterogeneity that are increasingly used in the literature. Latent class, mixed logit, scaled multinomial logit and generalised mixed logit (GMXL) models are estimated using case study data for catchment environmental management in Australia. A GMXL model that accounts for preference and scale heterogeneity performs best. I evaluate the impacts of models on welfare estimates and discuss the merits of each modelling approach.
    Keywords: Choice Modelling, Econometrics, Random Parameters, Scale Heterogeneity, Unobserved Preference Heterogeneity, Environmental Economics and Policy, Research Methods/ Statistical Methods, C01, Q51 and Q59,
    Date: 2013–02–10
  10. By: Takle, Eugene S.; Gustafson, David; Beachy, Roger; Nelson, Gerald C.; Mason-D'Croz, Daniel; Palazzo, Amanda
    Abstract: Agreement is developing among agricultural scientists on the emerging inability of agriculture to meet growing global food demands. The lack of additional arable land and availability of freshwater have long been constraints on agriculture. However, the increased frequency of extreme and unpredictable weather events, in a manner consistent with the changes predicted by global climate models, is expected to exacerbate the global food challenge as we move toward the middle of the 21st century. These climate- and constraint-driven crop production challenges are interconnected within a complex global economy, where diverse factors add to price volatility and food scarcity. The present report projects the impact of climate change on food security through the year 2050. The analysis presented here suggests that climate change in the first half of the 21st century does not represent a near-term threat to food security in the US due to the availability of adaptation strategies. However, as climate continues to trend away from 20th century norms current adaptation measures will not be sufficient to enable agriculture to meet growing food demand. High-end projections on carbon emissions will exacerbate the food shortfall, although uncertainty in climate model projections (particularly precipitation) is a limitation to impact studies. --
    Keywords: climate change,food security,crop production,United States
    JEL: Q54 Q17
    Date: 2013
  11. By: Hanley, Nicholas; Hynes, Stephen; Jobstvogt, Niels; Kenter, Jasper; Witte, Ursula
    Abstract: The deep-sea includes over 90% of the world oceans and is thought to be one of the most diverse ecosystems in the World. It supplies society with valuable ecosystem services, including the provision of food, the regeneration of nutrients and the sequestration of carbon. Technological advancements in the second half of the 20th century made large-scale exploitation of mineral-, hydrocarbon- and fish resources possible. These economic activities, combined with climate change impacts, constitute a considerable threat to deep-sea biodiversity. Many governments, including that of the UK, have therefore decided to implement additional protected areas in their waters of national jurisdiction. To support the decision process and to improve our understanding for the acceptance of marine conservation plans across the general public, a choice experiment survey asked Scottish households for their willingness-to-pay for additional marine protected areas in the Scottish deep-sea. This study is one of the first to use valuation methodologies to investigate public preferences for the protection of deep-sea ecosystems. The experiment focused on the elicitation of economic values for two aspects of biodiversity: (i) the existence value for deep-sea species and (ii) the option-use value of deep-sea organisms as a source for future medicinal products.
    Keywords: existence value; option-use value; choice experiment; Deep-sea biodive rsity
    Date: 2013
  12. By: Jeffrey, Scott R.; Pannell, David J.
    Abstract: Significant public funds are spent on projects designed to improve environmental quality. Design and implementation of these initiatives is contingent on knowledge generated from environmental research. Funding agencies have many demands for research dollars while having limited research budgets. A prioritisation process is required for efficient and effective allocation of research funds. A review of research prioritisation literature suggests that ad hoc approaches are often used for ex ante analyses examining the value of environmental research (e.g., Delphi techniques, information gaps from literature reviews). This paper characterises environmental research prioritisation in the form of an economic decision problem, formulated using expected value of information concepts. An implicitly Bayesian modelling approach is developed with research priorities being made based on estimates of expected value of partial perfect information (EVPPI). Considerations and challenges associated with empirical implementation of EVPPI are discussed and a hypothetical example is provided to illustrate use of this approach in informing environmental research funding decisions.
    Keywords: Environmental Research, Research Prioritisation, Value of Information, Expected Value of Partial Perfect Information, Environmental Economics and Policy, Q50, Q51, Q57,
    Date: 2013–02–22
  13. By: OECD
    Abstract: The OECD's Towards Green Growth states that green growth is about fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. To do this it is necessary to foster investment and innovation, which will underpin sustained growth and give rise to new economic opportunities...
    Date: 2013–02–26
  14. By: Zhang, Fan
    Abstract: Feed-in tariffs have become the most widely used policy instrument to promote renewable energy deployment around the world. This paper examines the relation between tariff setting and policy outcome based on wind capacity expansion in 35 European countries over the 1991-2010 period. Using a dynamic panel data model, it estimates the long-run elasticity of wind deployment with respect to the level of feed-in support. The analysis finds that higher subsidies do not necessarily yield greater levels of wind installation. Non-economic barriers and rent-seeking may have contributed to the weak correlation. On the other hand, the length of feed-in contract and guaranteed grid access are important determinants of policy effectiveness. A one-year extension of an original 5-year agreement on average increases wind investment by 6 percent annually, while providing an interconnection guarantee almost doubles wind investment in one year.
    Keywords: Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Carbon Policy and Trading,Climate Change Economics,Markets and Market Access
    Date: 2013–02–01
  15. By: David Hendry; Felix Pretis
    Abstract: We demonstrate major flaws in the statistical analysis of Beenstock, Reingewertz and Paldor (2012), discrediting their initial claims as to the different degrees integrability of CO2 and temperature.
    Keywords: Econometric modelling, location shifts, data measurements, climate change
    JEL: C1 Q5
    Date: 2013–02–08
  16. By: Leeuwen, George van (Centraal Bureau voor Statistiek); Mohnen, Pierre (UNU-MERIT/MGSoG)
    Abstract: Almost all empirical research that has attempted to assess the validity of the Porter hypothesis has started from reduced-form models, e.g. by using single-equation models for estimating the contribution of environmental regulation (ER) to productivity. This paper addresses the Porter Hypothesis within a structural approach that allows us to test what is known in the literature as the "weak" and the "strong" version of the Porter hypothesis. Our "Green Innovation" model includes three types of eco investments and non-eco R&D to explain differences in the incidence of innovation. Besides product and process innovations we recognize eco-innovation as a separate type of innovation output. We explicitly model the potential synergies of introducing the three types of innovations simultaneously and their synergy in affecting total factor productivity (TFP) performance. Using a comprehensive panel of firm-level data built from four surveys we aim to estimate the relative importance of energy price incentives as a market based type of ER and the direct effect of environmental regulation on eco investment and firms' decisions regarding the introduction of several types of innovations. The results of our analysis show a strong corroboration of the weak version of the Porter hypothesis but not of the strong version of the PH, in this case on TFP performance.
    Keywords: Porter Hypothesis, green innovation, environmental regulation, innovation complementarities, productivity
    JEL: H23 L5 O32 O38 Q55
    Date: 2013
  17. By: Islam, Asif M.; Lopez, Ramon E.
    Abstract: This study examines the effect of the composition of federal and state government spending on various important air pollutants in the US using a newly assembled data set of government spending. The results indicate that a reallocation of spending from private goods (RME) to social and public goods (PME) by state and local governments reduces sulfur dioxide concentrations while the composition of federal spending has no effect. A 10% percent increase in the share of state and local social and public goods government spending reduces air pollution concentrations by 3 to 5% for Sulfur Dioxide, 2 to 3% for particulate matter 2.5 and 1 to 2 % for ozone. The results are robust to various sensitivity checks.
    Keywords: air pollution, government spending, public goods, market imperfections, Environmental Economics and Policy, Public Economics, H50, H40, O13, O44, Q53,
    Date: 2013–02
  18. By: Ling Tang; Qin Bao; ZhongXiang Zhang; Shouyang Wang
    Abstract: With large shares in global trade and carbon emissions, China’s international trade is supposed to be significantly affected by the proposed carbon-based border tax adjustments (BTAs). This paper examines the impacts of BTAs imposed by USA and EU on China’s international trade, based on a multi-sector dynamic computable general equilibrium (CGE) model. The simulation results suggest that BTAs would have a negative impact on China’s international trade in terms of large losses in both exports and imports. As an additional border tariff, BTAs will directly affect China’s exports by cutting down exports price level, whereas Chinese exporting enterprises will accordingly modify their strategies, significantly shifting from exports to domestic markets and from regions with BTAs policies towards other regions without them. Moreover, BTAs will affect China’s total imports and sectoral import through influencing the whole economy in an indirect but more intricate way. Furthermore, the simulation results for coping policies indicate that enhancing China’s power in world price determination and improving energy technology efficiency will effectively help mitigate the damages caused by BTAs.
    Keywords: Border carbon tax adjustments; International trade; Dynamic computable general equilibrium model; Price determination power; Technological change
    JEL: D58 F18 Q43 Q48 Q52 Q54 Q56 Q58
    Date: 2013–01
  19. By: Zahabi, Seyed Amir H.; Miranda-Moreno, Luis; Patterson, Zachary; Barla, Philippe
    Abstract: This work examines the temporal-spatial variations of daily automobile distance traveled and greenhouse gas emissions (GHGs) and their association with built environment attributes and household socio-demographics. A GHGs household inventory is determined using link-level average speeds for a large and representative sample of households in three origin-destination surveys (1998, 2003 and 2008) in Montreal, Canada. For the emission inventories, different sources of data are combined including link-level average speeds in the network, vehicle occupancy levels and fuel consumption characteristics of the vehicle fleet. Built environment indicators over time such as population density, land use mix and transit accessibility are generated for each household in each of the three waves. A latent class (LC) regression modeling framework is then implemented to investigate the association of built environment and socio-demographics with GHGs and automobile distance traveled. Among other results, it is found that population density, transit accessibility and land-use mix have small but statistically significant negative impact on GHGs and car usage. Despite that this is in accordance with past studies, the estimated elasticities are greater than those reported in the literature for North American cities. Moreover, different household subpopulations are identified in which the effect of built environment varies significantly. Also, a reduction of the average GHGs at the household level is observed over time. According to our estimates, households produced 15% and 10% more GHGs in 1998 and 2003 respectively, compared to 2008. This reduction is associated to the improvement of the fuel economy of vehicle fleet and the decrease of motor-vehicle usage. A strong link is also observed between socio-demographics and the two travel outcomes. While number of workers is positively associated with car distance and GHGs, low and medium income households pollute less than high-income households.
    Keywords: Greenhouse gas emissions, spatio-temporal variations, built environment, latent class regression, household clusters, Environmental Economics and Policy, R42, R48, Q54, Q58,
    Date: 2013–01
  20. By: Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Anna Bartczak (Faculty of Economic Sciences, University of Warsaw); Marek Giergiczny (Faculty of Economic Sciences, University of Warsaw); Stale Navrud (Norwegian University of Life Sciences); Tomasz Żylicz (Faculty of Economic Sciences, University of Warsaw)
    Abstract: The paper looks at people’s preferences for the changes in selected ecosystem services resulting from new management strategies of forest areas in Poland. It applies a generalized multinomial logit (G-MNL) model to interpret the results of a discrete choice experiment (DCE) study administered to a representative sample of 1001 Poles. The questionnaire included three physical attributes, namely: protecting the most ecologically valuable forest ecosystems, reducing litter in forests, and improving recreation infrastructure. The selection of these attributes was motivated by extensive qualitative research of what indicators of biodiversity, nature protection and recreation possibilities people are the most sensitive to. The fourth attribute was monetary – additional cost of the new programs which would have to be financed out of increased taxes. The results allowed for a robust estimation of implicit prices of the choice attributes and calculating welfare measures of specific forest management scenarios. In addition, the study revealed interesting connections between respondents’ current forest recreation patterns and the importance they place on different attributes of forests. The results make it possible to utilize respondents’ preference heterogeneity, to a large extent determined by their current recreational use patterns, in designing future forest management strategies.
    Keywords: biodiversity, forest recreation, discrete choice modeling, generalized multinomial logit model
    JEL: D12 H44 Q23 Q26 Q51
    Date: 2013
  21. By: Nagl, Stephan (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: This paper outlines the effects of weather uncertainty on investment and operation decisions of electricity producers under a feed-in tariff and renewable quota obligation. Furthermore, this paper tries to quantify the sectoral welfare and investments risks under the different policies. For this purpose, a spatial stochastic equilibrium model is introduced for the European electricity market. The numerical analysis suggests that including the electricity market price in renewable policies (wholesale price + x) reduces the loss of sectoral welfare due to a renewable policy by 11-20 %. Moreover, investors face an only slightly higher risk than under fixed price compensations. However, electricity producers face a substantially larger investment risk when introducing a renewable quota obligation without the option of banking and borrowing of green certi cates. Given the scenario results, an integration of the hourly market price in renewable support mechanisms is mandatory to keep the financial burden to electricity consumers at a minimum. Additionally, following the discussion of a European renewable quota after 2020, the analysis indicates the importance of an appropriate banking and borrowing mechanism in light of stochastic wind and solar generation.
    Keywords: RES-E policy; price and quantity controls; mixed complementarity problem
    JEL: C61 L50 Q40
    Date: 2013–02–18
  22. By: Nick, Sebastian (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Thoenes, Stefan (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: In this study, we develop a structural vector autoregressive model (VAR) for the German natural gas market. Our setup allows us to analyze the determinants of the natural gas price in a comprehensive framework. In particular, we illustrate the usefulness of our approach by disentangling the effects of different fundamental influences on gas prices during three recent supply interruptions: The Russian-Ukrainian gas dispute of January 2009, the Libyan civil war in 2011 and the withheld Russian exports in February 2012. Our results show that the natural gas price is affected by temperature, storage and supply shortfalls in the short term, while the long-term development is closely tied to both crude oil and coal prices, capturing the economic climate and the energy specific demand.
    Keywords: natural gas; structural vector autoregression; SVAR; supply interruption; security of supply
    JEL: Q41
    Date: 2013–02–13
  23. By: Ahlerup, Pelle (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Natural disasters plague the populations of many countries, and the international community often seeks to alleviate the human suffering by means of humanitarian aid. Do natural disasters also have negative effects on aggregate economic growth? This paper shows that natural disasters on average have a positive association with subsequent economic performance. This overall positive association is driven by the experience of democratic developing countries that receive humanitarian aid.<p>
    Keywords: natural disasters; economic growth; humanitarian aid.
    JEL: O11 Q54
    Date: 2013–02–20
  24. By: Bruno Nkuiya; Markus Herrmann
    Abstract: In this paper, we are interested in how a pharmaceutical industry manages existing antibiotic drugs in the context of bacterial resistance. We consider a model based on an epidemiological framework where antibiotic recovery rates, and thus intrinsic qualities, may differ. Antibiotic efficacy is modeled as a common pool of a non-renewable resource to which antibiotic producers have open access. The paper derives antibiotic demands within a vertical differentiation model and characterizes the dynamics of infected individuals, antibiotic efficacy and treatment rates under the open-access and the socially optimal allocation. We show that the high-quality antibiotic drug loses its comparative advantage over time under both allocations, such that the low-quality drug should be used longer. This occurs at a later point of time in the social optimum and allows for a better control of infection in the longer run. In contrast with the ambiguous outcome reported in the literature, the socially optimal steady-state level of antibiotic efficacy is lower than that of the open-access allocation. We also extend our analysis to a strategic, duopolistic context.
    Keywords: Antibiotic management, Non-renewable resource, Open access, Social optimum, Public health
    JEL: L13 Q21 I18
    Date: 2013
  25. By: Ahlerup, Pelle (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Natural disasters have been linked to both violent conflict and, in some settings, poor economic growth, but do they also drive government parties out of office? We study gov- ernment turnover in a global sample of more than 200 elections to the executive. Natural disasters are associated with more frequent turnover, but not in highly democratic countries. The e¤ect of geophysical disasters is especially strong, and even stronger when endogeneity is addressed.<p>
    Keywords: natural disasters; elections
    JEL: D72 P48 Q54
    Date: 2013–02–20

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