nep-env New Economics Papers
on Environmental Economics
Issue of 2013‒05‒19
seventeen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Intra-Industry Reallocations and Long-run Impacts of Environmental Regulations By Yoshifumi Konishi; Nori Tarui
  2. Curbing emissions through (efficient) carbon liabilities: A note from a climate skeptic's perspective By Billette de Villemeur, Etienne; Leroux, Justin
  3. Optimal Learning on Climate Change: Why Climate Skeptics should reduce Emissions By Sweder van Wijnbergen; Tim Willems
  4. The Green Paradox and Learning-by-doing in the Renewable Energy Sector By Daniel Nachtigall; Dirk Rübbelke
  5. Climate change scepticism and public support for mitigation: evidence from an Australian choice experiment By Sonia Akter; Jeff Bennett; Michael B. Ward
  6. Economic Effects of Global Warming under By Da Rocha, José María; Gutiérrez Huerta, María José; Villasante, Sebastián
  7. What Can be Learned from Behavioural Economics for Environmental Policy? By Markus Pasche
  8. Hydrocarbon liquefaction: viability as a peak oil mitigation strategy By Höök, Mikael; Fantazzini, Dean; Angelantoni, André; Snowden, Simon
  9. How Volatile is ENSO for Global Greenhouse Gas Emissions and the Global Economy? By Lan-Fen Chu; Michael McAleer; Chi-Chung Chen
  10. The Effect of Metro Rail on Air Pollution in Delhi By Deepti Goel; Smriti Sharma
  11. Transboundary Externalities and Property Rights: An International River Pollution Model By Gerard van der Laan; Nigel Moes
  12. Climate change impacts on the water services in Costa Rica: a production function for the hydroenergy sector By Elisa Sainz de Murieta; Aline Chiabai
  13. Corporate Social Responsibility, Negative Externalities, and Financial Risk: The Case of Climate Change By Timo Busch; Nils Lehmann; Volker H. Hoffmann
  14. Integrated assessment of the coastal fishery production systems in French Guiana By Abdoul Ahad Cisse; Fabian Blanchard; Olivier Guyader
  15. Stochastic viability of the coastal fishery in French Guiana By A.A. Cisse; L. Doyen; F. Blanchard; J.C. Pereau
  16. Asymmetric Nash Solutions in the River Sharing Problem By Harold Houba; Gerard van der Laan; Yuyu Zeng
  17. Higher Quality Exhaustible Resource Deposits Receiving Higher or Lower Resource Rents in a Simple Spatial Framework By John Hartwick

  1. By: Yoshifumi Konishi (Faculty of Liberal Arts, Sophia University); Nori Tarui (Department of Economics, University of Hawaii at Manoa)
    Abstract: We investigate the long-run impact of environmental regulations on the intra-industry distribution of firm-level productivity and the resulting aggregate variables. In a general-equilibrium model that accounts for endogenous entry/exit of heterogeneous firms, neither the average productivity of firms nor the mass of firms is independent of the choice of policy instruments (i.e. emissions tax vs. emissions trading) or permit allocation rules. The equilibrium price of permits under emissions trading is lower than the emissions tax rate that would support the same aggregate emissions. An incomplete emissions market results in a net increase in combined aggregate emissions.
    Keywords: Emissions Tax; Emissions Trading; Heterogeneous Firms; Endogenous Entry/Exit; Melitz Model; Incomplete Regulation; Emissions Leakage
    JEL: Q50 Q52 Q58
    Date: 2013–05
  2. By: Billette de Villemeur, Etienne; Leroux, Justin
    Abstract: We propose a new climate policy that is efficient, robust, and asks for payments proportional to realized climate damage. In each period, countries are made liable for their share of the responsibility in the current damage. Efficiency follows from countries' anticipations of climate change, hence of future payments. Robustness is achieved thanks to the introduction of a market for carbon liabilities. Rather than being based on the expected discounted sum of future marginal damage (as with a carbon tax or tradable emission permits) our proposal relies only on observed realized damage and on the well-documented emission history of countries.
    Keywords: Climate Change; Ex-ante vs ex-post approach; Carbon Liability
    JEL: H23 K13 Q54
    Date: 2013–05
  3. By: Sweder van Wijnbergen (University of Amsterdam); Tim Willems (Oxford University)
    Abstract: Climate skeptics argue that the possibility that global warming is exogenous implies that we should not take additional action towards reducing greenhouse gas emissions until we know more. However this paper shows that even climate skeptics have an incentive to reduce emissions: such a change of direction facilitates their learning process on the causes of global warming. Since the optimal policy action depends on these causes, they are valuable to know. Although an increase in emissions would also ease learning, that option is shown to be inferior because emitting greenhouse gases is irreversible. Consequently the policy implications of the different positions in the global warming debate turn out to coincide - thereby diminishing the relevance of this debate from a policy perspective. Uncertainty is no reason for inaction.
    Keywords: climate policy, global warming, climate skepticism, active learning, irreversibilities
    JEL: D83 Q54 Q58
    Date: 2012–08–20
  4. By: Daniel Nachtigall; Dirk Rübbelke
    Abstract: We investigate the effect of climate policies on fossil fuel use in the presence of a clean alternative technology that exhibits learning-by-doing. In a two-period framework, the costs of clean and regenerative energy in the second period are decreasing with the amount of this energy produced in the first one. While a carbon tax on present fossil fuels always reduces the use of the conventional energy source, the effect of a subsidy for regenerative energy is ambiguous and depends on the size of the learning effect. For small learning effects, a subsidy reduces the present use of fossil fuels since their substitute becomes comparatively cheap. However, for larger learning effects, a subsidy leads to the green paradox as the cost reduction in the clean energy sector reduces the future demand for conventional energy and brings forward extraction. We conclude that the best way to reduce present CO2 emissions is the implementation of a carbon tax. If the learning effect is small, the carbon-tax revenues should additionally finance the subsidy for the renewable energy.<br />
    Date: 2013–04
  5. By: Sonia Akter; Jeff Bennett; Michael B. Ward
    Abstract: Public scepticism surrounding climate change is an obstacle for implementing climate change mitigation measures in many countries. However, very little is known about: (1) the nature and sources of climate change scepticism; and (2) its influence on preferences for climate change mitigation policies. In this paper, we investigate these two issues using evidence and analysis from an Australian public survey and choice experiment. The study has three key findings. First, the intensity of scepticism varies depending on its type; we observed little scepticism over the cause, trend and impact of climate change and widespread scepticism over the effectiveness of mitigation measures and global co-operation. Second, cause and mitigation scepticism play significant roles in determining public support for climate change abatement. Respondents who believed in human-induced climate change were significantly more supportive of mitigation. Likewise, respondents who believed that mitigation would be successful in slowing down climate change were significantly more likely to be supportive. Third, the general public tend to give the benefit of the doubt to supporting mitigation. Those who expressed higher uncertainty about climate outcomes were more supportive of mitigation than others with similar expectations but lower uncertainty.
    Keywords: Climate change; Emissions trading scheme; Scepticism; Mitigation; Public opinion; Choice experiment; Australia
    JEL: Q54 Q51
    Date: 2013
  6. By: Da Rocha, José María; Gutiérrez Huerta, María José; Villasante, Sebastián
    Abstract: Global warming of the oceans is expected to alter the environmental conditions that determine the growth of a fishery resource. Most climate change studies are based on models and scenarios that focus on economic growth, or they concentrate on simulating the potential losses or cost to fisheries due to climate change. However, analysis that addresses model optimization problems to better understand of the complex dynamics of climate change and marine ecosystems is still lacking. In this paper a simple algorithm to compute transitional dynamics in order to quantify the effect of climate change on the European sardine fishery is presented. The model results indicate that global warming will not necessarily lead to a monotonic decrease in the expected biomass levels. Our results show that if the resource is exploited optimally then in the short run, increases in the surface temperature of the fishery ground are compatible with higher expected biomass and economic profit.
    Keywords: stock growth uncertainty, European sardine fishery,, global warming
    Date: 2013
  7. By: Markus Pasche (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: Behavioural economics attracted attention from environmental economists: it should help to understand why people do not respond to environmental policy measures, based on neoclassical assumptions, as predicted by theory. Moreover, understanding motives and driving forces behind pro-social, pro-environmental and cooperative behaviour should help to improve environmental policy design. The aim of this paper is a critical discussion of the way how this branch of research is interpreting the explanatory power and the normative (policy) implications of behavioural economics.
    Keywords: Behavioural economics, environmental economics, policy design, methodology
    JEL: B41 D0 D70 Q57 Q58
    Date: 2013–05–08
  8. By: Höök, Mikael; Fantazzini, Dean; Angelantoni, André; Snowden, Simon
    Abstract: Current world capacity of hydrocarbon liquefaction is around 400,000 barrels per day (kb/d), providing a marginal share of the global liquid fuel supply. This study performs a broad review of technical, economic, environmental, and supply chains issues related to coal-to-liquids (CTL) and gas-to-liquids (GTL). We find three issues predominate. First, significant amounts of coal and gas would be required to obtain anything more than a marginal production of liquids. Second, the economics of CTL plants are clearly prohibitive, but are better for GTL. Nevertheless, large scale GTL plants still require very high upfront costs, and for three real world GTL plants out of four, the final cost has been so far approximately three times that initially budgeted. Small scale GTL holds potential for associated gas. Third, CTL and GTL both incur significant environmental impacts, ranging from increased greenhouse gas emissions (in the case of CTL) to water contamination. Environmental concerns may significantly affect growth of these projects until adequate solutions are found.
    Keywords: hydrocarbon liquefaction, gas-to-liquids, CTL, GTL, coal-to-liquids, peak oil
    JEL: Q32 Q38 Q42 Q48
    Date: 2013
  9. By: Lan-Fen Chu (National Science and Technology Center for Disaster, Taiwan); Michael McAleer (Erasmus University Rotterdam, Kyoto University, Complutense University of Madrid); Chi-Chung Chen (National Chung Hsing University, Taiwan)
    Abstract: This paper analyzes two indexes in order to capture the volatility inherent in El Niños Southern Oscillations (ENSO), develops the relationship between the strength of ENSO and greenhouse gas emissions, which increase as the economy grows, with carbon dioxide being the major greenhouse gas, and examines how these gases affect the frequency and strength of El Niño on the global economy. The empirical results show that both the ARMA(1,1)-GARCH(1,1) and ARMA(3,2)-GJR(1,1) models are suitable for modelling ENSO volatility accurately, and that 1998 is a turning point, which indicates that the ENSO strength has increased since 1998. Moreover, the increasing ENSO strength is due to the increase in greenhouse gas emissions. The ENSO strengths for Sea Surface Temperature (SST) are predicted for the year 2030 to increase from 29.62% to 81.5% if global CO2 emissions increase by 40% to 110%, respectively. This indicates that we will be faced with even stronger El Nino or La Nina effects in the future if global greenhouse gas emissions continue to increase unabated.
    Keywords: El Niños Southern Oscillations (ENSO), Greenhouse Gas Emissions, Global Economy, Southern Oscillation Index (SOI), Sea Surface Temperature (SST), Volatility.
    JEL: Q51 Q52 Q53 Q54
    Date: 2013–01–08
  10. By: Deepti Goel (Department of Economics, Delhi School of Economics, Delhi, India); Smriti Sharma (Food and Resource Economics Department, University of Florida, P.O. Box 110240 IFAS Gainesville, FL32611, U.S.A.)
    Abstract: In this paper we investigate the effect of the Delhi Metro, an intra-city mass rail transit system, on air pollution within Delhi. To identify effects on pollution, we exploit the discontinuous jumps in metro ridership, each time the network is extended. Our identifying assumption is that in the absence of the extension there would be a smooth transition in pollution levels. We find strong evidence to show that the Delhi Metro has resulted in reductions of two important vehicular emissions, namely, nitrogen dioxide and carbon monoxide. We estimate a cumulative impact of a 35 percent reduction in CO levels for the region around ITO (a major traffic intersection in Delhi). This is suggestive of a traffic diversion effect, where people are switching from private modes of travel to the Delhi Metro. Given, documented evidence on the adverse health effects of air pollution, our findings suggest that these indirect benefits must be considered in any cost-benefit analysis of a rapid mass transport system.
    Date: 2013–04
  11. By: Gerard van der Laan (VU University Amsterdam); Nigel Moes (VU University Amsterdam)
    Abstract: In this paper we study international river pollution problems. We introduce a model in which the agents (countries) located along a river derive benefit while causing pollution, but also incur environmental costs of experiencing pollution from all upstream agents. We find that total pollution in the model decreases when the agents decide to cooperate. The resulting gain in social welfare can be distributed among the agents based on the property rights over the river. Using principles from international water law we suggest 'fair' ways of distributing the property rights and therefore the cooperative gain.
    Keywords: international river, pollution, externality, property rights, value
    JEL: C70 D60 Q53
    Date: 2012–01–19
  12. By: Elisa Sainz de Murieta; Aline Chiabai
    Abstract: The case study presented in this section aims to estimate the economic value of the water services used for hydropower in tropical forests in Costa Rica, and to assess the expected economic impact due to climate change. The model developed allows estimating the economic impacts of climate change on the hydroelectric sector, using the association between bio-physical data, technical data related to the plants and economic inputs. A production function is used for this purpose which relates the quantity of water available (runoff) with the energy generated by the selected plants, based on a sample of 40 plants. <br /> Results show a significant reduction in the hydropower production in all future scenarios, estimated between 41 and 43% for Costa Rica. This translates in a considerable reduction in the expected revenues of the hydroelectric sector in Costa Rica under all climate change scenarios considered, but with lower reductions in the B1 scenario, which incorporates sustainability criteria. Taking into account future technological changes, the model shows that it would be necessary to double the installed capacity of all plants to get an increase in annual revenue that ranges from 3-18%. With an increase in the installed capacity of about 50%, economic losses would be reduced by 12% in all the scenarios.
    Date: 2013–04
  13. By: Timo Busch (ETH Zuerich, and Duisenberg school of finance); Nils Lehmann (ETH Zuerich); Volker H. Hoffmann (ETH Zuerich)
    Abstract: Certain types of corporate social responsibility (CSR) activities can generate an ‘insurance-like’ benefit for firms (Godfrey, 2005). Thus far, this risk management hypothesis has been verified for the effects of firm-specific negative events. We argue that this insurance-like benefit of CSR-activities can be equally expected in the context of long-term developments which threaten current business models. We develop our arguments for the incremental, long-term process of internalizing negative externalities. For this, we consider the negative externalities resulting from the emission of greenhouse gases (GHG) and perform a panel analysis of a sample of 1699 firms over a period of 7 years. Our results show that firms can reduce their market-based risk by curbing their GHG-emissions. We furthermore propose an opposing effect on accounting-based risk, but do not find empirical support for this. We conclude that CSR-activities aimed at reducing a firm’s exposure to specific long-term developments can be sound corporate risk management, even if such activities may not yet be profitable.
    Keywords: GHG-emissions, negative externalities, financial risk, corporate social responsibility, long-term developments
    JEL: G30 M14 L20 Q20
    Date: 2012–10–01
  14. By: Abdoul Ahad Cisse (CEREGMIA, Université des Antilles et de la Guyane); Fabian Blanchard (IFREMER, Unité Biodiversité Halieutique de Guyane); Olivier Guyader (Ifremer, Unité d'Economie Maritime, Plouzane, France)
    Abstract: Like many cases of tropical small-scale fisheries, the French Guiana coastal fishery is characterized by the high fish biodiversity of its ecosystem, the weak selectivity of the fleets exploiting the resources and the heterogeneity of the vessels in terms of size and fishing techniques. We use Rapfish method [Pitcher & Preikshot, 2001] to assess sustainability within 11 fishery systems in the ecological, economic, social and technological fields through 27 attributes. Overall results point out an average performance in the scale of sustainability. Comparisons made among the FSs show a gradient of sustainability performance from the west coast to the east coast. Several recommendations have been formulated to raise the current ‘sustainability’ status as for example the reduction of discards. This study is postulated as a complementary tool to bioeconomic model in order to define a sustainable management of the French Guiana costal fishery.
    Date: 2013–03
  15. By: A.A. Cisse (CEREGMIA, Université des Antilles et de la Guyane); L. Doyen (CNRS, CERSP, MNHN, Paris, France); F. Blanchard (Ifremer, Unité Biodiversité Halieutique de Guyane); J.C. Pereau (GRETHA UMR 5113n Pessac, France)
    Abstract: This paper presents an application of stochastic viability approach in a tropical small scale fishery context, offering a theoretical and empirical model of ecosystem-based fishery management. A multi-species and multi-fleet bio-economic model integrating Lotka-Volterra trophic dynamics as well as production and profit assessments is applied to the French Guiana coastal fishery. This case study is interesting as consistent time series data are available with data collection system set up since 2006. The dynamic model is calibrated with thirteen species and four fleets using monthly catch and effort data from 2006 to 2010. We compare different management strategies relying on different combinations of fishing effort, from the viewpoints of both biodiversity preservation and socio-economic performance, assuming fixed landing prices and fixed costs. The risk for the fishery to mismatch the potential local fish demand growth is pointed out, as well as the loss of species which cannot be avoided without closure.
    Date: 2013–03
  16. By: Harold Houba (VU University Amsterdam); Gerard van der Laan (VU University Amsterdam); Yuyu Zeng (VU University Amsterdam)
    Abstract: We study multiple agents along a general river structure that is expressed by a geography matrix and who have access to limited local resources, quasi-linear preferences over water and money and cost functions dependent upon river inflow and own extraction. Unanimity bargaining determines the water allocation and monetary transfers. We translate International Water Law into either disagreement outcomes or individual aspiration levels. In the former case, we apply the asymmetric Nash bargaining solution, in the latter case the agents have to compromise in order to agree and we apply the asymmetric Nash rationing solution. In both cases the optimization problem is separable into two subproblems: the efficient water allocation that maximizes utilitarian welfare given the geography matrix; and the determination of the monetary transfers associated with the weights. We show that the Nash rationing solution may result in nonparticipation, therefore we generalize to the case with participation constraints.
    Keywords: River Basin Management, International Water Law, Negotiations, Externalities, Political Economy of Property Rights
    JEL: C70 D60 Q53
    Date: 2013–04–02
  17. By: John Hartwick (Queen's University)
    Abstract: KolstadÂ’'s (1994) model of intertemporal, competitive supply to a linear market from two distinct exhaustible resource deposits admits two different interior solutions - one with the low cost deposit "earning" the higher resource rent and the other with the low cost deposit "earning" the lower resource rent. This latter outcome turns on the initial size of the low cost deposit being significantly larger than the high cost deposit. We infer then that size can trump quality in the determination of the resource rent for a deposit, when geography is explicit.
    Keywords: exhaustible resource extraction, deposit quality, linear market
    JEL: D49 Q31 D21
    Date: 2012–09

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