nep-env New Economics Papers
on Environmental Economics
Issue of 2013‒03‒16
fifty-four papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Designing an Optimal 'Tech Fix' Path to Global Climate Stability: R&D in a Multi-Phase Climate Policy Framework By Paul A. David; Adriaan van Zon
  2. Can Climate Policy Enhance Sustainability? By Lorenza Campagnolo; Carlo Carraro; Marinella Davide; Fabio Eboli; Elisa Lanzi; Ramiro Parrado
  3. Green Keynesianism: Beyond Standard Growth Paradigms By Jonathan M. Harris
  4. The Economics of Renewable Electricity Policy in Ontario By Donald N. Dewees
  5. Spatial targeting of agri-environmental policy and urban development By Thomas Coisnon; Walid OUESLATI; Julien Salanié
  6. Fiscal limits on first-best climate policy: A CGE analysis for Europe By Richard Tol; Stefano F Verde
  7. Will technological progress be sufficient to effectively lead the air transport to a sustainable development in the mid-term (2025)?. By Chèze, Benoit; Chevallier, Julien; Gastineau, Pascal
  8. Incentivizing China’s Urban Mayors to Mitigate Pollution Externalities: The Role of the Central Government and Public Environmentalism By Siqi Zheng; Matthew E. Kahn; Weizeng Sun; Danglun Luo
  9. Trade of Woody Biomass for Electricity Generation under Climate Mitigation Policy By Alice Favero; Emanuele Massetti
  10. Long-term Transport Energy Demand and Climate Policy: Alternative Visions on Transport Decarbonization in Energy Economy Models By Robert Pietzcker; Thomas Longden; Wenying Chen; Sha Fu; Elmar Kriegler; Page Kyle; Gunnar Luderer
  11. Nonuse values of climate policy: An empirical study in Xinjiang and Beijing By Ahlheim, Michael; Frör, Oliver; Tong, Jiang; Jing, Luo; Pelz, Sonna
  12. Climate Impacts on Agriculture: A Challenge to Complacency? By Frank Ackerman; Elizabeth A. Stanton
  13. Environmental Catastrophes Under Time-inconsistent Preferences By Michielsen, T.O.
  14. Population, Resources, and Energy in the Global Economy: A Vindication of Herman Daly's Vision By Jonathan M. Harris
  15. Short and Long-term Effects of Environmental Tax Reform By Walid Oueslati
  16. Exploring Environmentally Significant Behaviors in a Multidimensional Perspective By Martinangeli, Andrea; Zoli, Mariangela
  17. The Impact of Environmental Taxes on Firms' Technology and Entry Decisions. By Boying Liu; Ana Espinola-Arredondo
  18. Technology Agreements with Heterogeneous Countries By Michael Hoel; Aart de Zeeuw
  19. Climate Change: Risk, Reputation, and Mechanism Design By Prasenjit Banerjee; Jason F. Shogren
  20. The Role of Hedging in Carbon Markets By Anne Schopp; Karsten Neuhoff
  21. A Choice Experiment for the Estimation of the Economic Value of the River Ecosystem: Management Policies for Sustaining NATURA (2000) species and the Coastal Environment By Phoebe Koundouri; Riccardo Scarpa; Mavra Stithou
  22. Learning from disaster: Community-based marine protected areas in Fiji By Yoshito Takasaki
  23. Optimal Health and Environmental Policies in a Pollution-Growth Nexus By Wang, Min; Zhao, Jinhua; Bhattacharya, Joydeep
  24. Optimal pollution control under emission constraitns: switching between regimes. By Enrico Saltari; Giuseppe Travaglini
  25. Extreme weather and civil war in Somalia: Does drought fuel conflict through livestock price shocks? By Maystadt, Jean-Francois; Ecker, Olivier; Mabiso, Athur
  26. Introducing the Case Study, the Asopos River Basin in Greece. By Phoebe Koundouri; Nikos Papandreou; Mavra Stithou; Aris Mousoulides; Yannis Anastasiou; Marianna Mousoulidou; Antonios Antypas; Theodoros Mavrogiorgis; Katerina Vasiliou
  27. Carbon Efficiency, Technology, and the Role of Innovation Patterns: Evidence from German Plant-Level Microdata By Sebastian Petrick
  28. Why might climate change not cause conflict? an agent-based computational response By Hassani Mahmooei, Behrooz; Parris, Brett
  29. Creating the Institutional Background to Support the Implementation of the Policy Manual By Phoebe Koundouri; Nikos Papandreou; Mavra Stithou; Osiel Davila
  30. Willingness to Pay for Solid Waste Management Services: A Case Study of Islamabad By Raheel Anjum
  31. Considering household size in Contingent Valuation studies By Ahlheim, Michael; Schneider, Friedrich
  32. The Welfare Impact of Indirect Pigouvian Taxation: Evidence from Transportation By Christopher R. Knittel; Ryan Sandler
  33. Should Green Jobs Be Outsourced? By Peter Philips
  34. Estimating the cost of air pollution in South East Queensland: An application of the life satisfaction non-market valuation approach By Christoper L Ambrey; Christopher M Fleming; Andrew Yiu-Chung Chan
  35. Climate Change and Extreme Weather Events in Latin America: An Exposure Index By Adrian Garlati
  36. Impact evaluation of free-of-charge CFL bulb distribution in Ethiopia By Costolanski, Peter; Elahi, Raihan; Iimi, Atsushi; Kitchlu, Rahul
  37. Evaluating CO2 reduction policy portfolios in the automotive sector By van der Vooren; Eric Brouillat
  38. Methodology for Integrated Socio-Economic Assessment of Offshore Platforms: Towards Facilitation of the Implementation of the Marine Strategy Framework Directive By Ioannis Anastasiou; Anastasios Xepapadeas; Vassilios Babalos; Marva Stithou; Osiel Davila; Phoebe Koundouri; Antonios Antypas; Nikolaos Kourogenis; Aris Mousoulides; Marianna Mousoulidou; Nick Ahrensberg; Barbara Zanuttigh; Fabio Zagonari; Manfred A. Lange; Carlos Jimenez; Elena Charalambous; Lars Rosen; Andreas Lindhe; Jenny Norrman; Tommy Norberg; Tore Soderqvist; Aksel Pedersen; Dimitris Troianos; Athanasios Frentzos; Yukiko Krontira; Inigo Losada; Pedro Diaz-Simal; Raul Guanche; Mark de Bel; Wei He; Sedat Kabdasli; Nilay Elginoz; Elif Oguz; Taylan Bagci; Bilge Bas; Matteo Cantu�; Matteo Masotti; Roberto Suffredini; Marian Stuiver
  39. Discounting and Relative Consumption By Johansson-Stenman, Olof; Sterner, Thomas
  40. Evaluation of Two Alternative Carbon Capture and Storage Technologies: A Stochastic Model By Luis M. Abadie; Ibon Galarraga; Dirk Rübbelke
  41. Land degradation and trade liberalization: an Indian perspective By Pohit, Sanjib
  42. Is Energy Storage an Economic Opportunity for the Eco-Neighborhood? By Hélène Le Cadre; David Mercier
  43. Piecemeal Reform of Domestic Indirect Taxes toward Uniformity in the Presence of Pollution: with and without a Revenue Constraint By Michael S. Michael; Sajal Lahiri; Panos Hatzipanayotou
  44. A Laboratory Experiment for the Estimation of Health Risks: Policy Recommendations. By Andreas Drichoutis; Phoebe Koundouri; Mavra Stithou
  45. An Econometric Analysis of Agricultural Production, Focusing on the Shadow Price of Groundwater: Policies Towards Socio-Economic Sustainability. By Phoebe Koundouri; Osiel Davila; Yannis Anastasiou; Antonios Antypas; Theodoros Mavrogiorgis; Aris Mousoulides; Marianna Mousoulidou; Katerina Vasiliou
  46. Implementation of the Maximum Sustainable Yield under an Age-Structured Model By Zafer Kanik; Serkan Kucuksenel
  47. A Value Transfer Approach for the Economic Estimation of Industrial Pollution: Policy Recommendations. By Phoebe Koundouri; Nikos Papandreou; Mavra Stithou; Osiel Davila
  48. The Dynamics of Electric Cookstove Adoption: Panel data evidence from Ethiopia By Alem, Yonas; Hassen, Sied; Köhlin, Gunnar
  49. Managing the global waste in the 21st century: As an anthropologist views it By Dipak R. Pant
  50. Sharing the costs of cleaning a river: the Upstream Responsibility rule By Jorge Alcalde-Unzu; Maria Gomez-Rua; Elena Molis
  51. Simulating Residential Water Demand and Water Pricing Issues By Phoebe Koundouri; Mavra Stithou; Philippos Melissourgos
  52. Communication and Output Sharing in Common Pool Resource Environments By Neil J. Buckley; Stuart Mestelman; R. Andrew Muller; Stephan Schott; Jingjing Zhang
  53. Measurement of Environmentally Sensitive Productivity Growth in Korean Industries By Chung, Yeimin; Heshmati, Almas
  54. Rainfall and Temperature Index Insurance in India: Project Documentation By Matsuda, Ayako; Kurosaki, Takashi; Sawada, Yasuyuki

  1. By: Paul A. David (Stanford Economics Department); Adriaan van Zon (SBE Maastricht University & UNU-MERIT (Maastricht, NL))
    Abstract: The research reported here gives priority to understanding the inter-temporal resource allocation requirements of a program of technological changes that could halt global warming by completing the transition to a “green” (zero net CO2- emission) production regime within the possibly brief finite interval that remains before Earth’s climate is driven beyond a catastrophic tipping point. This paper formulates a multi-phase, just-in-time transition model incorporating carbon-based and carbon-free technical options requiring physical embodiment in durable production facilities, and having performance attributes that are amenable to enhancement by directed R&D expenditures. Transition paths that indicate the best ordering and durations of the phases in which intangible and tangible capital formation is taking place, and capital stocks of different types are being utilized in production, or scrapped when replaced types embodying socially more efficient technologies, are obtained from optimizing solutions for each of a trio of related models that couple the global macro-economy’s dynamics with the dynamics of the climate system. They describe the flows of consumption, CO2 emissions and the changing atmospheric concentration of green-house gas (which drives global warming), along with the investment dynamics required for the timely transformation of the production regime. These paths are found as the welfare-optimizing solutions of three different “stacked Hamiltonians”, each corresponding to one of our trio of integrated endogenous growth models that have been calibrated comparably to emulate the basic global setting for the “transition planning” framework of dynamic integrated requirements analysis modeling (DIRAM). As the paper’s introductory section explains, this framework is proposed in preference to the (IAM) approach that environmental and energy economists have made familiar in integrated assessment models of climate policies that would rely on fiscal and regulatory instruments -- but eschew any analysis of the essential technological transformations that would be required for those policies to have the intended effect. Simulation exercises with our models explore the optimized transition paths’ sensitivity to parameter variations, including alternative exogenous specifications of the location of a pair of successive climate “tipping points”: the first of these initiates higher expected rates of damage to productive capacity by extreme weather events driven by the rising temperature of the Earth’s surface; whereas the second, far more serious “climate catastrophe” tipping point occurs at a still higher temperature (corresponding to a higher atmospheric concentration of CO2). In effect, that sets the point before which the transition to a carbon-free global production regime must have been completed in order to secure the possibility of future sustainable development and continued global economic growth.
    Keywords: global warming, tipping point, catastrophic climate instability, extreme weatherrelated damages, R&D based technical change, embodied technical change, optimal sequencing, multi-phase optimal control, sustainable endogenous growth
    JEL: Q54 Q55 O31 O32 O33 O41 O44
    Date: 2013–03
  2. By: Lorenza Campagnolo (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Advanced School of Economics); Carlo Carraro (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and Ca’ Foscari University of Venice); Marinella Davide (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change); Fabio Eboli (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change); Elisa Lanzi (Fondazione Eni Enrico Mattei and Advanced School of Economics); Ramiro Parrado (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change)
    Abstract: Implementing an effective climate policy is one of the main challenges for our future. Even though ambitious mitigation targets are necessarily costly, curbing GHG emissions can prevent future irreversible impacts of climate change on human kind and the environment. Climate policy is therefore crucial for present and future generations. Nonetheless, one may wonder whether the economic and social dimensions of future global development could be harmed by climate policy. This paper addresses this question by examining some recent developments in international climate policy and considering different levels of cooperation that may arise in light of the outcomes of the Conference of the Parties recently held in Doha. Then it explores whether the implementation of various climate policy scenarios would help enhancing sustainability or rather whether there is a trade-off between climate policy and economic development and/or social cohesion. This is done by using a new comprehensive indicator, the FEEM Sustainability Index (FEEM SI), which aggregates several economic, social, and environmental indicators. The FEEM SI index is built into a recursive-dynamic Computable General Equilibrium (CGE) model of the world economy, thus offering the possibility of projecting all indicators into the future, and therefore delivering a perspective assessment of sustainability under different future climate policy scenarios. We find that the environmental component of sustainability improves at the regional and world level thanks to the GHG emission reductions achieved through climate policy. However, the economic and social components are affected negatively yet marginally. Hence, overall sustainability increases in all scenarios. If the USA, Canada, Japan and Russia would not contribute to mitigating future GHG emissions, as envisioned in one of our scenarios, sustainability in these countries would decrease and the overall effectiveness of climate policy in enhancing global sustainability would be offset.
    Keywords: Climate policy, Computable General Equilibrium (CGE) Models, Sustainability, Indicators
    JEL: Q54 Q56 C68
    Date: 2013–01
  3. By: Jonathan M. Harris
    Abstract: In the wake of the global financial crisis, Keynesianism has had something of a revival. In practice, governments have turned to Keynesian policy measures to avert economic collapse. In the theoretical area, mainstream economists have started to give grudging attention to Keynesian perspectives previously dismissed in favor of New Classical theories. This theoretical and practical shift is taking place at the same time that environmental issues, in particular global climate change, are compelling attention to alternative development paths. Significant potential now exists for “Green Keynesianism” -- combining Keynesian fiscal policies with environmental goals. But there are also tensions between the two perspectives of Keynesianism and ecological economics. Traditional Keynesianism is growth-oriented, while ecological economics stresses limits to growth. Expansionary policies needed to deal with recession may be in conflict with goals of reducing resource and energy use and carbon emissions. In addition, long-term deficit and debt problems pose a threat to implementation of expansionary fiscal policies. This paper explores the possibilities for Green Keynesianism in theory and practice, and suggests that these apparent contradictions can be resolved, and that Green Keynesian policies offer a solution to both economic stagnation and global environmental threats.
    Date: 2013–02
  4. By: Donald N. Dewees
    Abstract: Economic evaluation of green or renewable power should compare the cost of renewable power with the cost savings from displaced fossil generation plus the avoided harm from reduced emissions of air pollution and greenhouse gases. We use existing estimates of the values of the harm and we calculate cost savings from renewable power based on wholesale spot prices of power in Ontario and steady-state estimates of the cost of new gas generation to estimate the value or affordability of various forms of renewable power in Ontario. We find that timing matters in evaluating intermittent renewable sources. Considering air pollution and greenhouse gases we find that coal generation is dominated by natural gas, supporting Ontario's policy of ending coal generation by 2014. Renewable power thus displaces gas. Dispatchable renewable generation sources, such as many biogas, biomass and some hydroelectric sites cause savings and reduced harm that can justify some of the Ontario Feed-in-Tariff prices up to $130/MWh; other FIT prices are too high. Wind and solar power are variable, so the value of their power depends on system marginal costs when they generate. Wind's displacement of gas capacity is low because it cannot be depended upon when demand is high and generation is needed, so it justifies prices of only $60 to $95/MWh, less than the FIT price of $115. Solar power justifies higher prices than wind, up to $152/MWh because solar generates in the daytime when prices are higher and when solar can fairly reliably displace gas capacity. Still, solar power falls far short of justifying the 2012 Ontario FIT prices of $347 to $549/MWh. Ontario's Feed-in-Tariff program costs more than necessary to achieve its environmental goals.
    Keywords: renewable energy, green energy, wind power, solar power, air pollution harm, greenhouse gases, feed-in-tariff, electricity generation externalities
    JEL: L94 Q42 Q51 Q52 Q53 Q54 Q58
    Date: 2013–03–05
  5. By: Thomas Coisnon (UMR GRANEM - UMR MA 49 – Université d'Angers et Agrocampus Ouest - Université d'Angers); Walid OUESLATI (UMR GRANEM - UMR MA 49 – Université d'Angers et Agrocampus Ouest - Université d'Angers); Julien Salanié (Granem - Groupe de Recherche ANgevin en Economie et Management - Agrocampus Ouest - Institut national de la recherche agronomique (INRA) : UMR49)
    Abstract: Widespread public support exists for the provision of natural amenities, such as lakes, rivers or wetlands, and for efforts to preserve these from agricultural pollution. Agri-environmental policies contribute to these efforts by encouraging farmers to adopt environmentally friendly practices within the vicinity of these ecosystems. A spatially targeted agri-environmental policy promotes natural amenities and may thereby affect household location decisions. The purpose of this paper is to investigate the extent of these impacts on the spatial urban structure. We extend a monocentric city model to include farmers' responses to an agri-environmental policy. Our main findings are that the implementation of a spatially targeted agri-environmental policy may lead to some additional urban development, which could conflict with the aim of the policy.
    Keywords: Land development; Urban sprawl; Leapfrog; Land rent; Monocentric model; Farming; Agri-environmental policy; Spatial targeting; Agricultural pollution.
    Date: 2013–02
  6. By: Richard Tol (Department of Economics, University of Sussex; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands); Stefano F Verde (Climate Policy Research Unit, European University Institute, Florence, Italy)
    Abstract: We use a standard computable general equilibrium model to explore the fiscal implications of stringent carbon dioxide emission reduction in Europe. Both the immediate targets (20-30% by 2020) and the medium-term targets (80-90% by 2050) for abatement can be met with a carbon tax that is modest to sizeable. Imposing budget neutrality, a carbon tax that would allow all other taxes to fall by 5% (20%) would cut emissions by about 40% (80%). For 80% emission reduction, the carbon tax would only be the third largest tax in terms of revenue. A 40% emission reduction would cost about 1.5% of GDP. Costs are roughly exponential in abatement. The economic impact of emission reduction is minimized if the carbon tax revenue is preferentially used to reduce taxes on intermediates and import tariffs; such taxes, however, bring in little revenue at present. Emission reduction in Europe affects trade patterns across the world. It hampers the economies of West Asia and Africa, but has stimulating effect elsewhere. Economies everywhere outside Europe become more carbon-intensive. About one in four of emissions avoided in Europe are emitted elsewhere.
    Keywords: carbon tax, tax reform, greenhouse gas emission reduction
    JEL: H23 Q54
    Date: 2013–02
  7. By: Chèze, Benoit; Chevallier, Julien; Gastineau, Pascal
    Abstract: The aim of this article is to investigate whether anticipated technological progress can be expected to be strong enough to offset carbon dioxide (CO2)emissions resulting from the rapid growth of air transport. Aviation CO2 emissions projections are provided at the worldwide level and for eight geographical zones until 2025. Total air traffic flows are first forecast using a dynamic panel-data econometric model and then converted into corresponding quantities of air traffic CO2 emissions, through jet fuel demand forecasts, using specific hypothesis and energy factors. None of our nine scenarios appears compatible with the objective of 450 ppm CO2-eq. (a.k.a. “scenario of type I”) recommended by the Intergovernmental Panel on Climate Change (IPCC). None is either compatible with the IPCC scenario of type III, which aims at limiting global warming to 3.2◦C. Thus, aviation CO2 emissions are unlikely to diminish over the next decade unless there is a radical shift in technology and/or travel demand is restricted.
    Keywords: Air transport; CO2 emissions; Forecasting; Climate change;
    JEL: C53 L93 Q47 Q54
    Date: 2013–01
  8. By: Siqi Zheng; Matthew E. Kahn; Weizeng Sun; Danglun Luo
    Abstract: China’s extremely high levels of urban air, water and greenhouse gas emissions levels pose local and global environmental challenges. China’s urban leaders have substantial influence and discretion over the evolution of economic activity that generates such externalities. This paper examines the political economy of urban leaders’ incentives to tackle pollution issues. Based on a principal-agent framework, we present evidence consistent with the hypothesis that both the central government and the public are placing pressure on China’s urban leaders to mitigate externalities. Such “pro-green” incentives suggest that many of China’s cities could enjoy significant environmental progress in the near future.
    JEL: H23 H41 Q48 Q53 R5
    Date: 2013–03
  9. By: Alice Favero (Yale University, FEEM and CMCC); Emanuele Massetti (Yale University, FEEM and CMCC)
    Abstract: Bio-energy has the potential to be a key mitigation option if combined with carbon capture and sequestration (BECCS) because it generates electricity and absorbs emissions at the same time. However, biomass is not distributed evenly across the globe, and regions with a potentially high demand might be constrained by limited domestic supply. Therefore, climate mitigation policies might create the incentive to trade biomass internationally. This paper uses scenarios generated by the integrated assessment model WITCH to study trade of woody biomass from multiple perspectives: the volume of biomass traded, its value, the impact on other power generation technologies and on marginal abatement costs. The policy scenarios consist of three representative carbon tax policies (4.8 W/m2, 3.8 W/m2 and 3.2 W/m2 radiative forcing in 2100) and a cap-and-trade scheme (3.8 W/m2 in 2100). Results show that the incentive to trade biomass is high: at least 50% of biomass consumed globally is from the international market. Regions trade 13-69 EJ/yr of woody biomass in 2050 and 55-81 EJ/yr in 2100. In 2100 the value of biomass traded is equal to US$ 0.7-7.2 Trillion. Trade of woody biomass sensibly reduces marginal abatement costs. In the tax scenarios, abatement increases by 120-323 Gt CO2 over the century. In the cap-and-trade scenario biomass trade reduces the price of emission allowances by 34% in 2100 and cumulative discounted policy costs by 14%.
    Keywords: BECCS, Woody Biomass Trade, IAM, Negative Emissions, Carbon Market
    JEL: Q23 Q56 F18
    Date: 2013–02
  10. By: Robert Pietzcker (Potsdam Institute for Climate Impact Research Thomas Longden, Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change); Thomas Longden (Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change); Wenying Chen (3E (Energy, Environment and Economy) Research Institute, Tsinghua University); Sha Fu (National Center for Climate Change Strategy and International Cooperation (NCSC)); Elmar Kriegler (Potsdam Institute for Climate Impact Research); Page Kyle (Joint Global Change Research Institute, Paci?c Northwest National Laboratory); Gunnar Luderer (Potsdam Institute for Climate Impact Research)
    Abstract: Transportation accounts for a substantial share of CO2 emissions, and decarbonizing transport will be necessary to limit global warming to below 2°C. Due to persistent reliance on fossil fuels, it is posited that transport is more difficult to decarbonize than other sectors. We test this hypothesis by comparing long-term transport energy demand and emission projections for China, USA and the World from five large-scale energy-economy models with respect to three climate policies. We systematically analyze mitigation levers along the chain of causality from mobility to emissions, and discuss structural differences between mitigation in transport and non-transport sectors. We can confirm the hypothesis that transport is difficult to decarbonize with purely monetary signals when looking at the period before 2070. In the long run, however, the three global models achieve deep transport emission reductions by >90% through the use of advanced vehicle technologies and carbon-free primary energy; especially biomass with CCS plays a crucial role. Compared to the global models, the two partial-equilibrium models are relatively inflexible in their reaction to climate policies. Across all models, transportation mitigation lags behind non-transport mitigation by 10-30 years. The extent to which earlier mitigation is possible strongly depends on implemented technologies and model structure.
    Keywords: Transportation Scenarios, Carbon Emission Mitigation, Integrated Assessment, Energy-Economy Modeling, Advanced Light Duty Vehicles, Demand Reduction
    JEL: Q54 R41 R48
    Date: 2013–01
  11. By: Ahlheim, Michael; Frör, Oliver; Tong, Jiang; Jing, Luo; Pelz, Sonna
    Abstract: Climate policy measures can be roughly subdivided into mitigation measures and adaptation measures. Mitigation policy aims at a reduction of greenhouse gas emissions with the overall goal of slowing down climate change and global warming. Since greenhouse gases like CO2, Methane etc. are global pollutants which have the same effect on world climate irrespective of where they are emitted mitigation policy creates benefits for people all over the world. Adaptation policy on the other hand does not seek to influence the world climate but, instead, is meant to reduce the negative consequences of climate change for a specific region. The benefits created by adaptation policy are, therefore, only of local importance while mitigation policy yields global benefits. This difference has, of course, consequences for the welfare economic appraisal of mitigation policy measures as compared to adaptation policy measures. Since the wellbeing of many more people worldwide is affected by mitigation measures than by adaptation measures the former will always appear more attractive in a cost-benefit analysis than the latter, at least from a global perspective. In this paper we want to show that adaption policy measures are often undervalued in cost-benefit analyses because only their so-called use values are considered, while the nonuse values they create are neglected. The use value of a commodity accrues from a direct utilization of that commodity. In an environmental context the use value of e.g. a beautiful landscape is felt by those people who visit this landscape. Beyond this use value the landscape might also have a value for people who never visit it but still enjoy the knowledge that in their country such a beautiful landscape exists and that endangered animals and plants are preserved there. This value that originates from the mere existence of a (market or environmental) good is often called its nonuse value because it is independent of a direct (and empirically observable) utilization of this good. If it can be shown that some adaptation policy measures in the context of climate policy create also nonuse values in addition to the use values this might lead to a new assessment of such measures and it might increase their chances of being approved in the political decision process. It is obvious that the systematic undervaluation of adaptation policy measures resulting from the neglect of the nonuse values they create might have the consequence that they are declined because they do not pass the cost-benefit test, though they create high nonuse values which are not considered in this test. Of course, the existence of nonuse values depends on the cultural background of the people affected by these measures and of the society they live in. Especially in an emerging country like China many people might still underestimate the importance of climate adaptation measures in comparison with economic policy measures triggering the economic growth of the country, especially if the adaptation measures are conducted in faraway regions of the country. In this study we test empirically the hypothesis that also in a growth-oriented economy like China non-materialistic values like the nonuse values of climate policy are perceived and respected by the population. This should especially hold for the better educated people living in big cities like Beijing. Therefore, we conduct a survey in Beijing where we ask people to assess a climate change adaptation project to be implemented in a faraway region, in this case in the Tarim basin in Xinjiang. In this survey we find that also Beijing citizens feel responsible for the environmental conditions in Xinjiang, especially under the impression of climate change. We find that they are even willing to contribute personally to financing a public project for the improvement of the living conditions in this remote (as viewed from Beijing) region. The rest of the paper is organized as follows: the next chapter focuses on the importance of nonuse values in environmental cost-benefit analyses; information concerning the impact of climate change on the Tarim area is provided in chapter three; the survey method and sampling procedure are introduced in chapter four; in chapter five results of the survey in Beijing are presented and analyzed, followed by some concluding remarks. --
    Date: 2013
  12. By: Frank Ackerman; Elizabeth A. Stanton
    Abstract: Recent research paints an ominous picture of climate impacts on agriculture, in contrast to the relative optimism of research from the 1990s. Continued use of the earlier research findings, in economic models and policy analyses, contributes to an unwarranted complacency about the urgency of climate policy. Earlier research concluded that the initial stages of climate change would bring net benefits to global agriculture, thanks to carbon fertilization and longer growing seasons in high-latitude regions. This conclusion has been challenged in at least three respects. First, newer experimental studies have sharply reduced older estimates of carbon fertilization effects. Second, the effect of temperature on many crops has been found to involve thresholds, above which yields rapidly decline; the number of hours above the threshold is typically more important than the average temperature. Third, climate change will bring significant changes in precipitation; in a number of important areas, decreases in precipitation may cause declines in agricultural production. Simple, aggregated economic analyses of climate change have often omitted these crucial effects of precipitation. Adaptation to warmer and often drier conditions is necessary but not sufficient for agriculture. Within a few decades, business-as-usual climate change would reach levels at which adaptation is no longer possible. Emission reduction and climate stabilization are essential to any long-run solution for global agriculture.
    Date: 2013–02
  13. By: Michielsen, T.O. (Tilburg University, Center for Economic Research)
    Abstract: Abstract I analyze optimal natural resource use in an intergenerational model with the risk of a catastrophe. Each generation maximizes a weighted sum of discounted utility (positive) and the probability that a catastrophe will occur at any point in the future (negative). The model generates time-inconsistency as generations disagree on the relative weights on utility and catastrophe prevention. As a consequence, future generations emit too much from the current generation’s perspective and a dynamic game ensues. I consider a sequence of models. When the environmental problem is related to a scarce exhaustible resource, early generations have an incentive to reduce emissions in Markov equilibrium in order to enhance the ecosystem’s resilience to future emissions. When the pollutant is expected to become obsolete in the near future, early generations may however increase their emissions if this reduces future emissions. When polluting inputs are abundant and expected to remain essential, the catastrophe becomes a self-fulfilling prophecy and the degree of concern for catastro- phe prevention has limited or even no effect on equilibrium behaviour.
    Keywords: catastrophic events;decision theory;uncertainty;time consistency
    JEL: C73 D83 Q54
    Date: 2013
  14. By: Jonathan M. Harris
    Abstract: Herman Daly pioneered the concept of environmental macroeconomics. He famously argued that we have moved from an “empty world” of resource abundance to a “full world” of energy and resource limits. His insights, however, have generally been rejected or ignored by most mainstream economic analysts, who argue that resource shortages are remediable through market flexibility and substitution, posing no threat to long-term exponential economic growth. In the absence of immediate crisis, standard economics has been able to maintain this “optimistic” stance, dismissing population, resource, and energy limits. But developments during the first decade of the twenty-first century indicate that it will be Daly’s view, rather than that of the mainstream, that will be most important in shaping economic development in the coming century. As Daly foresaw, an energy economy based on high efficiency and renewable fuels cannot pursue the exponential growth path characteristic of the fossil-fuel dependent economy of the twentieth century. The issues involved go well beyond the energy sector of the economy. Population growth and food supply also become critical. There are many interactions between the agricultural and energy systems; in addition to energy intensification in agriculture, demands for biofuels put pressure on the limited supply of agricultural land. Recent price spikes in food, fuels, and minerals indicate the tremendous stresses placed on the global ecosystem by the combination of population and economic growth in China, India, and elsewhere. They also raise major issues of equity, as high prices for energy and food impact the poor disproportionately. Similar problems affect ecological systems such as forests and fisheries on a global scale. It will not be possible to adjust to such stresses simply through market flexibility. It is already evident that large-scale government intervention will be needed to respond to climate change. In this context, an activist environmental macroeconomics will be required to balance the requirements of equity and ecosystem sustainability. Either through planned adjustment or through crisis, it will be necessary to shift away from a macroeconomics of indefinite growth towards stabilization of population and reduction of resource throughput, as Daly has long advocated.
    Date: 2013–02
  15. By: Walid Oueslati (Centre for Rural Economy, Newcastle University)
    Abstract: This paper examines the macroeconomic effects of an environmental tax reform in a growing economy. A model of endogenous growth based on human capital accumulation is used to numerically simulate the growth effects of different environmental tax reforms and compute their impact on welfare in the short and the long-term. Our results suggest that the magnitude of these effects depends on the type of tax reform. Thus, only environmental tax reform that aims to use the revenue from environmental tax to reduce wage tax and increase the proportion of public spending within GDP, enhances both growth and welfare in the long-term. However, the short-term effect remains negative.
    Keywords: Tax reform, Endogenous Growth, Human Capital, Environmental Externality, Transitional Dynamics, Welfare cost
    JEL: E62 I21 H22 Q28 O41 D62
    Date: 2013–01
  16. By: Martinangeli, Andrea (Department of Economics, School of Business, Economics and Law, Göteborg University); Zoli, Mariangela (SEFEMEQ Department, University of Rome)
    Abstract: This paper contributes to the recent literature exploring the determinants of individual environmental behaviors. Contrary to many previous studies, which consider single items as proxies of individuals' overall environmental responsibility, we adopt a multidimensional perspective and derive composite indicators measuring individual performance on a set of distinct environmental dimensions. These indicators are then used to provide a more comprehensive picture of the complex mechanisms behind the formation of environmentally responsible behaviors. In addition to commonly investigated variables, we consider a richer set of determinants of green behaviors, nding that the level of public environmental protection expenditure, lifestyle satisfaction, individual worldviews and participation of dierent types of social actors all signi cantly aect the degree of environmental responsibility. Our empirical analysis is based on data from the British \Survey of Public Attitudes and Behaviours toward the Environment" for 2009.
    Keywords: public environmental expenditure; green behaviors; multidimensional analysis.
    JEL: A13 Q53
    Date: 2013–03–08
  17. By: Boying Liu; Ana Espinola-Arredondo (School of Economic Sciences, Washington State University)
    Abstract: This paper investigates under which conditions a regulator can strate- gically set an emission fee as a tool to induce a domestic firm to adopt a non-polluting technology and deter entry. We consider a market in which a monopolistic incumbent faces the threat of entry from firms that can choose between a dirty and a green technology. Our results show that, despite the fact of facing a polluting incumbent, an entrant might find it profitable to acquire a clean technology if the environmental tax is strin- gent enough. In addition, we demonstrate that an incumbent that adopts a clean technology is more likely to deter entry than an incumbent that keeps its dirty technology. Finally, we also show that a non-polluting duopoly market, in which all firms acquire clean technology, is socially preferred to a non-polluting monopoly market if the green technology cost is sufficiently low. However, if the clean technology becomes more expensive it may be socially optimal to have a polluting duopoly market in which only one firm adopts the green technology.
    Keywords: Technology Adoption; Market Structure; Emission Tax
    JEL: H23 L12 Q58
    Date: 2013–01
  18. By: Michael Hoel (University of Oslo); Aart de Zeeuw (Tilburg University)
    Abstract: For sufficiently low abatement costs many countries might undertake significant emission reductions even without any international agreement on emission reductions. We consider a situation where a coalition of countries does not cooperate on emission reductions but cooperates on the development of new, climate friendly technologies that reduce the costs of abatement. The equilibrium size of such a coalition, as well as equilibrium emissions, depends on the distribution across countries of their willingness to pay for emission reductions. Increased willingness to pay for emissions reductions for any group of countries will reduce (or leave unchanged) the equilibrium coalition size. However, the effect of such an increase in aggregate willingness to pay on equilibrium emissions is ambiguous.
    Keywords: Technology Agreement, Coalition Stability, Climate, International Agreement
    JEL: F42 O32 Q2 C72
    Date: 2013–01
  19. By: Prasenjit Banerjee; Jason F. Shogren
    Date: 2013
  20. By: Anne Schopp; Karsten Neuhoff
    Abstract: In the European Emissions Trading System, power generators hold CO2 allowances to hedge for future power sales. First, we model their aggregate hedging demand in response to changes in expectations of future fuel, carbon and power prices from forward prices. This partial equilibrium analysis is then integrated into a two period model of the supply and demand of CO2 allowances considering also emissions impact and banking of allowances by speculative investors. We find that hedging flexibility can balance a CO2 allowance surplus in the range of 1.1 - 1.6 billion t CO2 at discount rates of future carbon allowances between 0 - 10%. If the surplus exceeds this level, then the rate at which today's carbon prices discount expected future prices increases. This points to the value of reducing the surplus estimated to be 2.6 billion t CO2 allowances in 2015 by about 1.3 billion t CO2, thus ensuring that hedging makes a significant contribution to stabilise carbon prices.
    Keywords: Emissions trading schemes, banking, power hedging, discount rates
    JEL: D84 G18 Q48
    Date: 2013
  21. By: Phoebe Koundouri; Riccardo Scarpa; Mavra Stithou
    Abstract: The valuation method of Choice Experiments (CEs) is often used for the economic valuation of natural areas with several nonmarket features that are either degraded or under-degradation. This method can be used to obtain estimates of Willingness-to-Pay (WTP) for the sustainability of several features of natural ecosystems. In particular, the CE method is a survey-based nonmarket valuation technique which can be used to estimate the total economic value of an environmental good in the form of a stock or a service flow as well as the value of its component attributes. Particularly, the bundle of improvements that have been valued in the Asopos water catchment and presented in this chapter is a mixture of use and non-use values. These include: (a) environmental conditions described in terms of ecological status in all water bodies of the catchment, (b) impact on the local economy in terms of tourism/recreation, demand for local production and cost of living for households and (c) impact on human health described as availability of water with a quality and quantity sufficient for satisfying different local uses. It should be also noted that the survey has been administered in samples of respondents from both the Asopos catchment area (more rural) and the Athens area (more urban), since there is the belief that residents of the Asopos River Basin (RB) are not the only ones who would benefit from the environmental improvements taking place in Asopos area. From a broader policy perspective the goal is to derive estimates of values to inform a cost-effectiveness analysis for the determination of the optimal program of measures as suggested in the content of Article 11 of Water Framework Directive (WFD).
    Date: 2013–03–06
  22. By: Yoshito Takasaki
    Abstract: This paper empirically examines whether and how experiencing climate-related disasters can improve the rural poorfs adaptation to climate change through community-based resource management. Original household survey data in Fiji capture the unique sequence of a tropical cyclone and the establishment of community-based marine protected areas as a natural experiment. The analysis reveals that household disaster victimization increases its support for establishing marine protected areas for future safety nets. Under Fijian traditional consensual institutions, social learning from disaster experience among community members facilitates their collective decision-making for conservation to enhance community resilience to climate shocks.
    Date: 2013–02
  23. By: Wang, Min; Zhao, Jinhua; Bhattacharya, Joydeep
    Abstract: This paper shows how policies aimed at insuring health risks and those intended to improve the environment are (and should be) deeply intertwined. In the model economy, inspired by recent Chinese experience, pollution raises the likelihood of poor health in the future prompting agents to self insure against anticipated, rising medical expenses. The increased saving generates more capital while capital use by firms generates more pollution. Along the transition, sucha pollution-growth nexus may be attractive from a capital-accumulation perspective; however, rising pollution, via the health channel, definitely hurts welfare. Availability of private health insurance to top up pay-as-you-go coverage of medical bills together with a Pigouvian tax on emissions can replicate the first best.
    Keywords: pollution; health; overlapping generations model; saving
    JEL: E2 O13
    Date: 2013–03–08
  24. By: Enrico Saltari (Department of Economics and Law, Università "La Sapienza" Roma); Giuseppe Travaglini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: In this paper we develop a model of pollution control which maximizes the present value of net social benefits. We show that the presence of an upper constraint on emissions affects the pollution control even when emissions are far below the level where the constraint binds. We get three main results. First, we find that for a society it is optimal to take into account the impact of the latent constraint at the outset and to modify the flow of emissions even when the constraint is still slack. Second, we analyze how the restriction works effectively in the intermediate phases before the constraint binds, comparing the unconstrained and constrained scenarios. Finally, we state the boundary conditions to compute the optimal trajectory of emissions switching between regimes. This trajectory cannot be obtained by simply pasting together the unconstrained and the constrained parts of the trajectories.
    Keywords: Pollution control, inequality constraints, net social benefits
    JEL: E22 L51 H23 Q28
    Date: 2013
  25. By: Maystadt, Jean-Francois; Ecker, Olivier; Mabiso, Athur
    Keywords: civil war, Climate change, Conflict, drought, livestock, Prices,
    Date: 2013
  26. By: Phoebe Koundouri; Nikos Papandreou; Mavra Stithou; Aris Mousoulides; Yannis Anastasiou (Athens University of Economics and Business); Marianna Mousoulidou; Antonios Antypas (Department of Banking and Financial Management, University of Piraeus); Theodoros Mavrogiorgis (Athens University of Economics and Business); Katerina Vasiliou (Athens University of Economics and Business)
    Abstract: The case study area is presented in this chapter. The study area comprises the river and estuary of Asopos and the lagoon of Oropos northeast of Attica. Along the Asopos river human activities, mainly agriculture and industrial take place. Industrial and agricultural effluents pollute the river, the aquifers and the soils of the area, making it a negative example of the impacts to humans and environment that arise from non sustainable use of natural resources. The chapter starts by presenting the geographical distribution of the river system and the water bodies of the catchment. The chapter presents also a review of the related legislation that has contributed to its current situation. Then the current water status of the catchment is described, while the pressures and related impacts in the catchment are examined. Afterwards the focus is on the social and environmental functions and values of Asopos River and Oropos Lagoon. Identifying the main social, economic and environmental impacts of degradation in the area provides the background for the analysis that follows in the subsequent chapters.
    Date: 2013–03–06
  27. By: Sebastian Petrick
    Abstract: We describe the determinants of energy intensity, carbon intensity, and CO2 emissions in the German manufacturing sector between 1995 and 2007, applying the LMDI index decomposition technique not to aggregate but to micro data. We trace back changes in total CO2 emissions from manufacturing to changes in activity level, structural change between sectors, structural change within sectors, energy intensity at the firm level, fuel mix, and emission factors. We use a firm data set on energy use from the AFiD-Panel on German manufacturing plants that allows us to analyze energy use at the firm level with unprecedented accuracy. Our results show that heterogeneity among firms within one sector is a driver of energy intensity, carbon intensity, and CO2 emissions. By stressing the importance of competition between firms for energy efficiency improvements, we highlight a factor that has so far been widely ignored. Firm heterogeneity has so far rarely included in index decomposition analyses. Contrary to wide-spread beliefs, energy intensity improvements at the firm level do not play a significant role in reducing emissions. Based on findings from the decomposition analysis, we use sector-level results on the relative importance of improvements in firm-level energy intensity and intra-sectoral structural change to distinguish two different innovation channels: innovation by technology and by entrants. We show that incumbent firms in a number of sectors, including some of the most energy intensive ones, do not significantly improve their energy efficiency. Innovation takes place via new entrants instead, rendering standard policies targeted at firm-level energy efficiency ineffective
    Keywords: Index decomposition, industrial energy, energy intensity, carbon intensity, structural change
    JEL: Q40 Q41
    Date: 2013–02
  28. By: Hassani Mahmooei, Behrooz; Parris, Brett
    Abstract: In this paper, we first briefly review the recent literature on climate change, resource scarcity and conflict. This is then followed by introducing an agent based computational model based on the theory of production and conflict which is capable of simulating the dynamics of micro-level resource conflicts. The model considers differences in resource attributes, differentiates between conflict subjects, takes into account bounded rationality, non-linearity and feedback loops, and is enriched by a set of scenarios ranging between mild to severe resource shocks. Our results show that agents tend not to get engage in conflict during mild resource scarcity scenarios as they adapt to the changes and since the decreases in returns to resource predation and increases in their protective practices act as negative feedback loops, discouraging resource predators from allocating further effort to predation. The model results also show that scarcity is more likely to encourage product predation rather than resource predation among the agents.
    Keywords: Climate Change, Resource Scarcity, Conflict, Security, Agent-based Model, Social Simulation
    JEL: C61 C63 D74 Q34 Q54
    Date: 2012–11
  29. By: Phoebe Koundouri; Nikos Papandreou; Mavra Stithou; Osiel Davila (AUEB-RC)
    Abstract: Following Water Framework Directive s (WFD) implementation a national water policy that provides the institutional background to achieve the goals of the suggested policy is required. Chapter 10 emphasises on the issues of water policy that should be addressed and provides reform options that could lead to the sustainable use of water resources. Efficient use of water is an important issue in Europe; however poor governance seems to hinder effectiveness of the designed policies. After a review of the Greek experience with water reforms, the state oriented regime in Greece is presented along with the legislative frame and institutions that it entails. Then institutional improvements are discussed. In particular, the institutional reforms move away from water policies that favour fragmentation and lack of coordination among the involved actors in the decision making process. These reforms also embrace and promote the growing concerns on environmental aspects and sustainable water management suggesting integrated approaches. In the suggested framework of action the transfer of competencies from the state to the utility and to other actors, induced by the WFD, makes more imperative the existence and enforcement of a legislative and administrative framework that could accelerate the co-operation among the involved parties. The chapter closes with commenting on how the case of Asopos is related to the other Greek basins that are at risk of failing to meet WFD�s obligations.
    Date: 2013–03–06
  30. By: Raheel Anjum (Pakistan Institute of Development Economics (PIDE) Islamabad.)
    Abstract: Solid waste management remains a serious problem in most of the developing world, although it consumes a larger portion of municipal budgets. In the current project, a number of solid waste management studies were conducted for Islamabad city mostly focusing on the generation, collection and disposal of waste. Moreover, a contingent valuation survey approach was applied for the project. A stratified random sampling technique was applied for sample size selection of five hundred respondents. A double bounded dichotomous choice questions followed by an open ended question format was used to elicit willingness to pay and maximum willingness of the respondents. The logistic regression estimation reveals that 65.4 percent of the total respondents are willing to pay, while multiple regression reveals a monthly mean willingness to pay of Rs 289.15 which is greatly affected by age, household income, education and environmental awareness i.e. respondents with higher levels of education and income show higher willingness to pay. These collected data can specifically help in formulating the solid waste management services while in general can add up its role for the improvement of environmental quality.
    Date: 2013
  31. By: Ahlheim, Michael; Schneider, Friedrich
    Abstract: In many empirical Contingent Valuation studies one finds that household size, i. e. the number auf household members, is negatively correlated with stated household willingness to pay for the realization of environmental projects. This observation is rather puzzling because in larger households more people can benefit from an environmental improvement than in small households. Therefore, the overall benefit should be greater for larger households. A plausible explanation could be that household budgets are tighter for large families than for smaller families with the same overall family income. The fact that larger families can afford only smaller willingness to pay statements in Contingent Valuation surveys than smaller families with the same income and the same preferences might have consequences for the allocation of public funds whenever the realization of an environmental project is made dependent on the outcome of a Contingent Valuation study. In this paper we show how the use of household equivalence scales for the assessment of environmental projects with the Contingent Valuation Method can serve to reduce the discrimination of members of large families. --
    JEL: D61 H43 Q51
    Date: 2013
  32. By: Christopher R. Knittel; Ryan Sandler
    Abstract: A basic tenet of economics posits that when consumers or firms don't face the true social cost of their actions, market outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure, where the optimal tax leads agents to internalize the true cost of their actions. A practical complication, however, is that the level of externality nearly always varies across economic agents and directly taxing the externality may be infeasible. In such cases, policy often taxes a product correlated with the externality. For example, instead of taxing vehicle emissions directly, policy makers may tax gasoline even though per-gallon emissions vary across vehicles. This paper estimates the implications of this approach within the personal transportation market. We have three general empirical results. First, we show that vehicle emissions are positively correlated with vehicle elasticities for miles traveled with respect to fuel prices (in absolute value)—i.e. dirtier vehicles respond more to fuel prices. This correlation substantially increases the optimal second-best uniform gasoline tax. Second, and perhaps more importantly, we show that a uniform tax performs very poorly in eliminating deadweight loss associated with vehicle emissions; in many years in our sample over 75 percent of the deadweight loss remains under the optimal second-best gasoline tax. Substantial improvements to market efficiency require differentiating based on vehicle type, for example vintage. Finally, there is a more positive result: because of the positive correlation between emissions and elasticities, the health benefits from a given gasoline tax increase by roughly 90 percent, compared to what one would expect if emissions and elasticities were uncorrelated.
    JEL: H21 H23 L91 Q48 Q51 Q52 Q53 Q54 Q58
    Date: 2013–02
  33. By: Peter Philips
    Abstract: The proposed Sempra 1250 megawatt (MW) tieline connecting the California grid to envisioned new wind-farms in Mexico is not just about electricity. It is also about foregone opportunities, lost human capital investment, lost worklives, lost tax revenues, and diminished economic development prospects; and also, it is about which regulatory authority, California or Mexico, should oversee the environmental impacts of building green generation capacity for the California grid. Finally, it is about undoing some of the economic benefits and jobs stimulated by the first set of federally subsidized, utilityscale, solar projects fast-tracked by the Interior Department.
    Keywords: renewable energy, construction, Imperial Valley, California, local economic development, photovoltaic solar energy generation, worker training, apprenticeship, local economic development JEL Classification: Q4, Q42, O1, O18
    Date: 2013
  34. By: Christoper L Ambrey; Christopher M Fleming; Andrew Yiu-Chung Chan
    Keywords: Air pollution, happiness, Household Income and Labour Dynamics in Australia (HILDA), Geographic Information Systems (GIS), life satisfaction
    JEL: Q53 Q51 C21
    Date: 2013–02
  35. By: Adrian Garlati
    Abstract: Climate change is changing the frequency and intensity of Extreme Weather Events (EWEs), particularly in poor developing countries, and the international community is increasingly suggesting the design of adaptation funds to resolve this situation. Measures of vulnerability and exposure to EWEs are a critical instrument in guaranteeing a transparent, efficient and equitable allocation process in these funds. Latin American countries, which contribute little to climate change but are hard-hit by EWEs, urgently need new indicators to back up their claims for financial and technical assistance. Using DesInventar data, the paper develops an innovative Disaster Exposure Index (DEI) that encompasses many disasters' impacts. DEI calculations indicate an unexpected scenario where some regions usually considered resilient are found to be exposed. The results call for further development of regional indicators to facilitate the international, national and sub- national allocation of adaptation funds.
    JEL: H12
    Date: 2013–01
  36. By: Costolanski, Peter; Elahi, Raihan; Iimi, Atsushi; Kitchlu, Rahul
    Abstract: Electricity infrastructure is one of the most important development challenges in Africa. While more resources are clearly needed to invest in new capacities, it is also important to promote energy efficiency and manage the increasing demand for power. This paper evaluates one of the recent energy-efficiency programs in Ethiopia, which distributed 350,000 compact fluorescent lamp bulbs free of charge. The impact related to this first phase is estimated at about 45 to 50 kilowatt hours per customer per month, or about 13.3 megawatts of energy savings in total. The overall impact of the compact fluorescent lamp bulb programs, thanks to which more than 5 million bulbs were distributed, could be significantly larger. The paper also finds that the majority of the program beneficiaries were low-volume customers -- mostly from among the poor -- although the program was not targeted. In addition, the analysis determines the distributional effect of the program: the energy savings relative to the underlying energy consumption were larger for the poor. The evidence also supports a rebound effect. About 20 percent of the initial energy savings disappeared within 18 months of the program's completion.
    Keywords: Energy Production and Transportation,Climate Change Economics,Climate Change Mitigation and Green House Gases,Energy and Environment,Environment and Energy Efficiency
    Date: 2013–03–01
  37. By: van der Vooren; Eric Brouillat
    Abstract: This paper presents an agent-based model that simulates the market for passenger cars in which firm strategies, market structure, consumer choices and policy instruments co-evolve. The main contribution of the paper is to show that this type of simulation model can be used to explore interactions and additional effects when different policy measures are combined to reduce CO2 emissions. We show the impact of policy portfolios on economic and technological decisions of firms, on consumer choice and on global CO2 emissions. In particular, we show how the dynamics of the system can lead to a technological lock-in into internal combustion technologies and demonstrate the ways in which policy instruments can help to break this lock-in. We show that policy portfolios can be relevant to achieve the best of different stand-alone policy measures, but not necessarily. Ex ante evaluation is therefore recommended.
    Keywords: agent-based simulation, CO2 emissions, low emission vehicle technologies, policy portfolio, technological change, transition
    Date: 2013–02
  38. By: Ioannis Anastasiou; Anastasios Xepapadeas; Vassilios Babalos; Marva Stithou (University of Stirling, UK); Osiel Davila (AUEB-RC); Phoebe Koundouri; Antonios Antypas (Department of Banking and Financial Management, University of Piraeus); Nikolaos Kourogenis (Department of Banking and Financial Management, University of Piraeus.); Aris Mousoulides; Marianna Mousoulidou; Nick Ahrensberg; Barbara Zanuttigh; Fabio Zagonari; Manfred A. Lange; Carlos Jimenez; Elena Charalambous; Lars Rosen; Andreas Lindhe; Jenny Norrman; Tommy Norberg; Tore Soderqvist; Aksel Pedersen; Dimitris Troianos; Athanasios Frentzos; Yukiko Krontira; Inigo Losada; Pedro Diaz-Simal; Raul Guanche; Mark de Bel; Wei He; Sedat Kabdasli; Nilay Elginoz; Elif Oguz; Taylan Bagci; Bilge Bas; Matteo Cantu�; Matteo Masotti; Roberto Suffredini; Marian Stuiver
    Abstract: In this paper a Methodology for Integrated Socio-Economic Assessment (MISEA) of the viability and sustainability of different designs of Multi-Use Offshore Platforms (MUOPs) is presented. MUOPs are designed for multi-use of ocean space for energy extraction (wind power production and wave energy), aquaculture and transport maritime services. The developed methodology allows identification, valuation and assessment of: the potential range of impacts of a number of feasible designs of MUOP investments, and the likely responses of those impacted by the investment project. This methodology provides decision-makers with a valuable decision tool to assess whether a MUOP project increases the overall social welfare and hence should be undertaken, under alternative specifications regarding its design, the discount rate and the stream of net benefits, if a Cost-Benefit Analysis (CBA) is to be followed or sensitivity analysis of selected criteria in a Multi-Criteria Decision Analysis (MCDA) framework. Such a methodology is also crucial for facilitating of the implementation of the Marine Strategy Framework Directive (MSFD adopted in June 2008) that aims to achieve good environmental status of the EU's marine waters by 2020 and to protect the resource base upon which marine-related economic and social activities depend. According to the MSFD each member state must draw up a program of cost-effective measures, while prior to any new measure an impact assessment which contains a detailed cost-benefit analysis of the proposed measures is required.
    Keywords: Multi-Use Offshore Platforms, Integrated Socio-Economic Assessment, Marine Strategy Framework Directive, Program of Measures, Cost-Benefit Analysis
    JEL: Q25 Q42
    Date: 2013–02–19
  39. By: Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Sterner, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We analyze optimal social discount rates when people derive utility from relative consumption. We compare the social, private, and conventional Ramsey rates. Assuming a positive growth rate, we find that 1) the social discount rate exceeds the private discount rate if the importance of relative consumption increases with consumption and that 2) the social discount rate is smaller than the Ramsey rate given quasi-concavity in own and others’ consumption and risk aversion with respect to others’ consumption. Numerical calculations demonstrate that the latter difference may be substantial and have important implications for long run environmental issues such as global warming.
    Keywords: Environmental discounting; global warming; relative consumption; Ramsey rule; positionality.
    JEL: D63 D90 H43
    Date: 2013–03–08
  40. By: Luis M. Abadie; Ibon Galarraga; Dirk Rübbelke
    Abstract: In this paper we evaluate two alternative CCS technologies of a coal-fired power plant from an investor’s point of view. The first technology uses CO2 for enhanced oil recovery (EOR) paired with storage in deep saline formations (DSP) and the second one just stores CO2 in DSF. For projects of this type there are many sources of risk, and three sources of uncertainty stand out: the price of electricity, the price of oil and the price of carbon allowances. In this paper we develop a general stochastic model that can be adapted to other projects such as enhanced gas recovery (EGR) or industrial plants that use CO2 for either EOR or EGR with CCS. The model is calibrated with UK data and applied to help understand the conditions that generate the incentives needed for early investments in these technologies. Additionally, we analyse the risks of these investments.
    Keywords: carbon capture and storage; enhanced oil recovery; power plants; stochastic model; futures markets; real options.
    Date: 2013–03
  41. By: Pohit, Sanjib
    Abstract: This paper makes an attempt to use GTAP model to understand the interplay between the agricultural trade liberalization and land degradation in India. Like any other developing country, soil erosion happens to be one of the principal environmental problems caused by agricultural production in India. In this paper, our attempt is to simulate the on-site productivity impacts of erosion, along with standard intersectoral and inter-regional economic effects of trade liberalization. The deeper and fuller agricultural trade liberalization opens up opportunities for India’s agriculture. Our result indicates that paddy, wheat, and other agriculture are the sectors in India where production would expand following liberalisation while there would be a fall in production in cereal grain sector and livestock sector. Overall, there is a small increase in India’s welfare to the tune of US $ 360 millions. While India’s agricultural expands due to opening up of opportunities, soil degradation increases with increased use of land. To what extent, the above result would change if we incorporate land degradation feedback mechanism in our analysis? Our results indicates that agricultural trade liberalisation reduces land productivity, but the effects are weak to negate the benefits of India’s welfare from agricultural trade liberalisation.
    Keywords: Land Degradation, Trade Liberalization
    JEL: Q32
    Date: 2013
  42. By: Hélène Le Cadre (CMA - Centre de Mathématiques Appliquées - MINES ParisTech - École nationale supérieure des mines de Paris); David Mercier (CEA, LIST - CEA)
    Abstract: In this article, we consider houses belonging to an eco-neighborhood in which inhabitants have the capacity to optimize dynamically the energy demand and the energy storage level so as to maximize their utility. The inhabitants' preferences are characterized by their sensitivity toward comfort versus price, the optimal expected temperature in the house, thermal loss and heating efficiency of their house. At his level, the eco-neighborhood manager shares the resource produced by the eco-neighborhood according to two schemes: an equal allocation between the houses and a priority based one. The problem is modeled as a stochastic game and solved using stochastic dynamic programming. We simulate the energy consumption of the eco-neighborhood under various pricing mechanisms: flat rate, peak and off-peak hour, blue/white/red day, peak day clearing and a dynamic update of the price based on the consumption of the eco-neighborhood. We observe that economic incentives for houses to store energy depend deeply on the implemented pricing mechanism and on the homogeneity in the houses' characteristics. Furthermore, when prices are based on the consumption of the eco-neighborhood, storage appears as a compensation for the errors made by the service provider in the prediction of the consumption of the eco-neighborhood.
    Keywords: Eco-Neighborhood; Planning; Stochastic game theory; Energy storage; Pricing
    Date: 2013–05–20
  43. By: Michael S. Michael; Sajal Lahiri; Panos Hatzipanayotou
    Abstract: The literature on indirect tax reforms in pollution-ridden economies is quite limited. This paper, using a general equilibrium model of a perfectly-competitive small open economy with both production and consumption generated pollution, considers the welfare implications of tax reforms that take the structure of consumption and production taxes toward uniformity. Specifically, both in the presence and absence of a binding government revenue constraint, we derive sufficient conditions for welfare improvement in the case where we implement (i) reforms in either production or consumption taxes, and (ii) reforms in both consumption and production taxes.
    Keywords: Indirect tax reforms, Production and consumption generated pollution, Welfare, Government tax revenues
    Date: 2013–03
  44. By: Andreas Drichoutis; Phoebe Koundouri; Mavra Stithou
    Abstract: Environmental health hazards in Asopos River Basin (RB) rise concerns on health risk not only for the residents of the catchment but also for the consumers of the area s products across the country. As a result, the focus of this chapter is on the estimation of theses health risks. In order to assess the social cost from consuming products produced in an area where water resources are not in good condition a lab experimental auction has been conducted. According to the details of the experiment presented at the beginning of the chapter all participants were asked to bid to exchange a product from region A (the polluted one) with a similar product from a region in a good ecological status (in the terminology of the European Water Framework Directive (WFD)), region B. After the presentation of the employed methodology econometric analysis was conducted. The output of this analysis is an average Willingness-to-Pay (WTP) for the specific sample of consumers. WTP represents the maximum amount of money a person would be willing to pay in order to receive a good or avoid an undesired impact. The chapter concludes with policy recommendations and suggests that unless an epidemiology study confirms the health hazards from consuming agricultural products cultivated in the area of Asopos (area similar to the characteristics of region A), the estimated amount is a net cost suffered by the local farmers and compensation measures have to be adopted.
    Date: 2013–03–06
  45. By: Phoebe Koundouri; Osiel Davila (AUEB-RC); Yannis Anastasiou (Athens University of Economics and Business); Antonios Antypas (Department of Banking and Financial Management, University of Piraeus); Theodoros Mavrogiorgis (Athens University of Economics and Business); Aris Mousoulides; Marianna Mousoulidou; Katerina Vasiliou (Athens University of Economics and Business)
    Abstract: The focus of Chapter 5 is on the agricultural sector in the Asopos catchment as it has a significant impact on the status of water in the area. In particular, the aim of the chapter is to estimate the farmers valuation of groundwater s shadow price for the region of Asopos. In order to achieve that, an agricultural micro-economic data-set from the catchment has been collected through the use of a detailed agricultural questionnaire. As it will be explained in the chapter, the questionnaire focuses on collecting information regarding cultivations, production structures and use of groundwater for irrigation. The objective of the micro-econometric analysis is to uncover patterns of groundwater use and farm efficiency. The chapter presents the derived estimates that make possible the analysis of the impact of different economic policies, -which will be used for the implementation of an optimal, sustainable and integrated water policy- on farmers profits and social welfare. The chapter finishes with policy recommendations based on the principle of socio-economic sustainability that assures both economic efficiency of farms and concludes with the estimation of groundwater for irrigation shadow price and how this can be used in the design of pumping taxes to reduce pollution and to increase farms efficiency.
    Date: 2013–03–06
  46. By: Zafer Kanik (Department of Economics, METU); Serkan Kucuksenel (Department of Economics, METU)
    Abstract: One of the main goals stated in the proposals for the Common Fisheries Policy (CFP) reform is achieving maximum sustainable yield (MSY) for all European fisheries by 2015. In this paper, we consider the mechanism design problem for allocation of fishing rights to achieve MSY harvesting conditions. We study an age-structured fish population model and apply this model for a fishing environment including two fishermen having perfect or imperfect fishing selectivity. If we assume that fishermen are non-satiated and they fulfill their remaining quotas through capturing untargeted (less revenue-generating) fish after targeted fish population is fully caught, the fix ratio of the catch of targeted fish to untargeted fish, derived from catchability coefficients, is not valid anymore. As a result, we show that not only the age-structure or fishing technology but also the estimated level of MSY is steering the optimal allocation of quotas. Accordingly, we determine technology-based optimal quota shares for each fisherman at particular MSY levels. We also show that the optimal allocation of fishing quotas does not have a bang-bang nature under imperfect fishing selectivity.
    Keywords: Age-structured model, Allocation of quotas, Fishing technology, Maximum sustainable yield, Mechanism design, Rights-based management, Total allowable catch
    JEL: D45 Q22 Q56 Q58
    Date: 2013–03
  47. By: Phoebe Koundouri; Nikos Papandreou; Mavra Stithou; Osiel Davila (AUEB-RC)
    Abstract: In order to make possible an economic estimation of industrial pollution, which is one of the main polluters in the Asopos River Basin (RB), another method that of Benefit Transfer (BT) was applied and is presented in this chapter. The fact that gathering primary site-specific data is costly and time-consuming has made BT a more and more popular alternative for the valuation of ecosystem goods and services and it offers a considerable potential in the light of the EU Water Framework Directive (WFD) implementation. In a broad sense, BT method uses existing economic value estimates from one location to another similar site in another location. In this context, the objective of this chapter is to present an empirical application of the methodology of transfer value. A number of valuation studies in the European territory that have explored the impact of industry on water degradation are reviewed in order for a suitable �match� to be made between the Asopos RB and a suitable existing valuation study from which to source economic value information and hence perform the valuation exercise. The chapter closes with conclusions and recommendations for policy design.
    Date: 2013–03–06
  48. By: Alem, Yonas (School of Business, Economics and Law); Hassen, Sied (School of Business, Economics and Law); Köhlin, Gunnar (School of Business, Economics and Law)
    Abstract: Previous studies on improved cookstove adoption in developing countries use cross-sectional data, which makes it difficult to control for unobserved heterogeneity and investigate what happens to adoption over time. We use robust non-linear panel data and hazard models on three rounds of panel data from urban Ethiopia to investigate the determinants and dynamics of electric cookstove adoption. We find the price of electricity and firewood, and access to credit as major determinants of adoption and transition. Our findings have important implications for policies aiming at promotion of energy transition and reduction of the pressure on forest resources in developing countries.<p>
    Keywords: Cookstoves; Electric Mitad; Firewood; Panel data; Random-Effects Probit
    JEL: Q40 Q41 Q42 Q48
    Date: 2013–02–28
  49. By: Dipak R. Pant
    Abstract: Comprehension of the phenomenon of ‘waste’ in the global arena in general, and as an issue of international cooperation in particular, needs to be analyzed from many different perspectives. The current work is a modest contribution from the interdisciplinary perspective of anthropology and economics which combines an ethnographic approach (field survey) with human ecology and wider (global) strategic considerations oriented towards sustainable solutions.
    Date: 2013–03
  50. By: Jorge Alcalde-Unzu (Public University of Navarre, Department of Economics.); Maria Gomez-Rua (University of Vigo, Department of Statistics and Operations Research.); Elena Molis (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: The cleaning up of waste present in transboundary rivers, which re- quires the cooperation of dierent authorities, is a problematic issue, espe- cially when responsibility for the discharge of the waste is not well-dened. Following Ni and Wang [12] we assume that a river is a segment divided into several regions from upstream to downstream. We show that when the transfer rate of the waste is unknown, the clean-up cost vector provides useful information for estimating some limits in regard to the responsi- bility of each region. We propose a cost allocation rule, the Upstream Responsibility rule, which takes into account these limits in distributing costs \fairly" and we provide an axiomatic characterization of this rule via certain properties based on basic ideas concerning the responsibility of regions.
    Keywords: Cost allocation; waste river; responsibility; characterization
    JEL: C71 D61
    Date: 2013–02–27
  51. By: Phoebe Koundouri; Mavra Stithou; Philippos Melissourgos
    Abstract: This chapter aims to simulate residential water demand in order to explore the importance of water for residential use. In addition, data on the water cost of supplying water in the residents of Asopos area from local distributors were collected. In order to capture the importance of water use specific parameters are examined and are used as indexes of water use. Some of these indexes are the population of the catchment, the number of households connected to the public water distribution system, m3 of water consumption per year to cover household needs etc. The chapter closes with recommendations for designing and applying a program of measures for the efficient water resources management as described by Article 11 of Water Framework Directive (WFD).
    Date: 2013–03–06
  52. By: Neil J. Buckley; Stuart Mestelman; R. Andrew Muller; Stephan Schott; Jingjing Zhang
    Abstract: We study cheap-talk communication in common pool resource environments with and without output-sharing groups. Communication in groups of 12 does not improve efficiency over the non-cooperative Nash outcome without communication. Organizing subjects into output-sharing groups of four players introduces sufficient free-riding incentives to achieve full efficiency. Within-group communication decreases efficiency by countervailing the free-riding incentives induced by output sharing and enhancing between-group competition. The effects are stronger when output-sharing groups have repeated fixed membership. Adding public communication reduces the efficiency-reducing effects of within-group communication. Restricting private communication within social groups that do not share output increases efficiency to almost 100%.
    Keywords: Common pool resources, communication, competition, group behavior, partners and strangers, experiments
    JEL: Q20 C92 C72
    Date: 2013–03
  53. By: Chung, Yeimin (Korea University); Heshmati, Almas (Sogang University)
    Abstract: This study measures productivity growth using the Metafrontier Malmquist-Luenberger productivity growth index (MML index) method and decomposes the index. The results are compared with those obtained from the conventional Malmquist-Luenberger (ML) productivity growth index. MML has two advantages compared with the ML index. The former is able to consider undesirable output as a by-product of production which accounts for producer group heterogeneities. As a result, it enables separation and estimation of changes in the technological gap between regional and global frontier technologies. The proposed index is employed to measure productivity growth and decompose its components in 14 Korean industrial sectors during the period between 1981 and 2007. For the purpose of detailed analysis of policy effects, the study period was divided into three decades. The results show that technology innovation can be regarded as a more important factor of productivity growth, rather than efficiency change. The chemical and Petrochemical, Machinery and Transport equipment industries are treated as global innovators in the whole period. However, the result differs according to decades. It is found that the groups with higher energy efficient technology and profitability obtain a higher productivity growth rate in comparison with their low energy efficient technology industry counterparts. Policy implications of the empirical results are discussed.
    Keywords: CO2 emission, undesirable output, DEA, Malmquist-Luenberger productivity (ML) index, Metafrontier Malmquist-Luenberger productivity (MML) index, productivity change
    JEL: D24 C61 O31 O44
    Date: 2013–02
  54. By: Matsuda, Ayako; Kurosaki, Takashi; Sawada, Yasuyuki
    Abstract: As an empirical research on weather index insurance in developing countries, we conducted surveys on rainfall and temperature index insurance products in Madhya Pradesh, India. The rainfall insurance covers drought and excess rain during the monsoon season, while the temperature insurance covers against excess heat during the dry season. This paper documents the details of surveys implemented under this project and describes the key variables collected from them.
    Date: 2013–02

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