nep-env New Economics Papers
on Environmental Economics
Issue of 2013‒07‒20
twenty-two papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. CO2 Emissions, Energy Consumption, Income and Foreign Trade: A South African Perspective By Marcel Kohler
  2. Comparing the Clean Air Act and a Carbon Price By Richardson, Nathan; Fraas, Arthur G.
  3. City Silhouette, World Climate By Dascher, Kristof
  4. Emissions pricing, 'complementary policies' and 'direct action' in the Australian electricity supply sector: 'lock-in' and investment By Dr Barry Naughten
  5. Energy Consumption, Financial development and CO2 emissions in Pakistan By Muhammad, Javid; Ghulam Fatima, Sharif
  6. The Social Cost of Carbon Emissions By Duncan Foley; Lance Taylor; Armon Rezai
  7. Analysis of institutional adaptability to redress electricity infrastructure vulnerability due to climate change By John Foster; William Paul Bell; Craig Froome; Phil Wild; Liam Wagner; Deepak Sharma; Suwin Sandu; Suchi Misra; Ravindra Bagia
  8. Leadership in Climate Policy: Is there a case for Early Unilateral Unconditional Emission Reductions? By Eskeland, Gunnar S.
  9. A Measurement of the Carbon Sequestration Potential of Guadua Angustifolia in the Carrasco National Park, Bolivia By Ricardo A. Rojas Quiroga; Tracey Li; Gonzalo Lora; Lykke Andersen
  10. Climate Change Policy: What Do the Models Tell Us? By Robert S. Pindyck
  11. Socio-Economic Context of Saving Biodiversity By Gul, Rjaz
  12. Inter-Generational Thoughtfulness in a Dynamic Public Good Experiment By Jörg Spiller; Friedel Bolle
  13. NGOs and participatory conservation in developing countries: why are there inefficiencies? By Vallino, Elena; Aldahsev,Gani
  14. The New CAFE Standards: Are They Enough on Their Own? By McConnell, Virginia
  15. The effect of globalization on water consumption: a case study of spanish virtual water trade, 1849-1935 By Rosa Duarte; Vicente Pinilla; Ana Serrano
  16. Benchmarking urban sustainability: A Composite index for Mumbai and Bangalore By B. Sudhakara Reddy; P. Balachandra
  17. The tragedy of the park: an agent-based model on endogenous and exogenous institutions for the management of a forest. By Vallino, Elena
  18. Countervailing inequality effects of globalization and renewable energy generation in Argentina By Andrea Vaona
  19. Isolating the corporate reputational risk in environmental oil spill disasters By Jose Manuel Feria-Dominguez; Enrique Jimenez-Rodriguez; Ines Merino Fernandez-Galiano
  20. Eficiencia en la prestación de agua y saneamiento y su vinculación con regiones, propiedad e independencia de los prestadores en Brasil By Ferro, Gustavo; Lentini, Emilio J.; Mercadier, Augusto C.; Romero, Carlos A.
  21. Valuing User Preferences for Improvements in Public Nature Trails Around the Sundays River Estuary, Eastern Cape, South Africa By Deborah E. Lee, Stephen G. Hosking and Mario du Preez
  22. Pricing of National Park Visits in Kenya: The Case of Lake Nakuru National Park By Peter Chacha, Edwin Muchapondwa, Anthony Wambugu and Daniel Abala

  1. By: Marcel Kohler
    Abstract: The effect of trade liberalisation on environmental conditions has yielded significant debate in the energy economics literature. Although research on the relationship between energy consumption, emissions and economic growth is not new in South Africa, no study specifically addresses the role that SA’s foreign trade plays in this context. A surprising fact given trade is one of the most important factors that can explain the Environmental Kuznets Curve. Our research employs recent SA trade and energy data and modern econometric techniques to investigate this. The main finding is the existence of a long run relationship between environmental quality, levels of per capita energy use and foreign trade in SA. As anticipated per capita energy use has a significant long run effect in raising the country’s CO2 emission levels, yet surprisingly higher levels of trade act to reduce these emissions. Granger causality tests confirm the existence of a positive bidirectional relationship between per capita energy use and CO2 emissions. Whilst we also find positive bidirectional causality between trade and income per capita and between trade and per capita energy use, it appears that SA trade liberalisation has not contributed to a long run growth in pollution-intensive activities nor higher emission levels.
    Keywords: CO2 Emissions, Energy, Foreign Trade
    Date: 2013
  2. By: Richardson, Nathan (Resources for the Future); Fraas, Arthur G. (Resources for the Future)
    Abstract: Over the last half decade, a variety of federal legislative proposals for limiting greenhouse gas (GHG) emissions have been put forward, most of which would set a price on carbon. As of early 2013, the one politically plausible policy appears to be a carbon tax, passed as part of a larger fiscal reform package. Meanwhile, the US Environmental Protection Agency has begun regulating GHG emissions from a variety of sources using its authority under the Clean Air Act. It may be necessary to choose between these two policies, however. The Waxman–Markey cap-and-trade bill that failed in 2009 would have preempted much of this authority, and it appears likely that a carbon tax law would do the same. But how can one make this choice? What are the key questions and issues to consider? The purpose of this paper is to compare these policies. Our aim here is therefore not to determine whether an exchange is wise or unwise. Instead, our intention is to give policymakers and other interested readers an impartial assessment of both policies and, in particular, the features that are important to a comparative evaluation. We don’t give answers, but hope at least to give the right questions to ask.
    Keywords: Clean Air Act, carbon pricing, greenhouse gas emissions, cap and trade, climate policy
    JEL: H20 H23 Q50 Q54 Q58
    Date: 2013–05–09
  3. By: Dascher, Kristof
    Abstract: Global emissions of carbon dioxide need to fall lest climate change will accelerate. Any effective climate policy must raise the price of carbon consumption. From an urban perspective, one desirable effect of a carbon tax would be to induce households to move closer to where they work. This paper shows that: If the initial distribution of commuting distances (the city silhouette) is skewed towards the periphery then a carbon tax will leave resident landlords better off - even if these landlords need to shoulder those extra commuting costs themselves, too. If resident landlords are decisive then this insight provides an urban silhouette based explanation of why some governments appear so much more willing to confront their citizens with the true cost of emitting carbon dioxide than others. More briefly, the paper suggests a connection between urban form and climate politics.
    Keywords: Urban Silhouette, Climate Policy, Political Economy, Carbon Tax
    JEL: H41 Q54 R12
    Date: 2013–07–15
  4. By: Dr Barry Naughten
    Abstract: In Australia, carbon emissions pricing is politically contentious. The current Labor government has implemented such a scheme, but the Liberal National Party (LNP) opposition has pledged to repeal the scheme should it be elected. This article accepts the well-established position of emissions pricing as the core and least-cost approach to reducing greenhouse gas emissions. Its main focus is on examining and rebutting some recent LNP arguments to the contrary, notably in regard to the electricity sector under Australian conditions. In so doing, the article considers the problem of ‘locked-in’ carbon-intensive generating capacity, as highlighted by the IEA. As such, it focusses on use of price signals to reduce carbon intensity of electricity generation and also examines the role of passed-on price in encouraging end-use savings of electricity, including more energy-efficient end-use. Both of these mechanisms can be reinforced by well-designed ‘complementary policies’. These two examples of the price mechanism’s effectiveness demonstrate longer run impacts of prices and price expectations on investment decisions. This emphasis is appropriate given the context of catastrophic climate change as a long run phenomenon, albeit one also requiring urgent mitigating action in the shorter run.
    Keywords: Emissions pricing; complementary policies; carbon 'lock-in'; electricity sector; Australian climate policy options;
    JEL: D62 D81 E27 H23 L71 L94 P46 Q41 Q42 Q54 Q58
    Date: 2013–07
  5. By: Muhammad, Javid; Ghulam Fatima, Sharif
    Abstract: In this study, we analyzed the effects of financial development, per capita real income, the square of per capita real income, per capita energy consumption and openness on per capita CO2 emissions in the context of Pakistan during 1971-2011. The bound F-test for cointegration yielded evidence of a long-term relationship among these variables. The results confirm the existence of an environmental Kuznets curve in Pakistan for both the short and long term. This finding indicates that at the initial stage of development, the level of CO2 increases with income, and after some threshold level of income, this relationship may change from positive to negative as more efficient infrastructure and energy-efficient technology are implemented during the development of the country. The findings of this study also reveal a significantly positive sign for the coefficient of financial development, suggesting that financial development has occurred at the expense of environmental quality. The findings of this study indicate that the key contributing factors of carbon emissions in Pakistan are income, energy consumption and financial development. In addition, the openness variable has no significant influence on carbon emission in either the short or long term.
    Keywords: EKC; Energy; CO2
    JEL: Q4 Q56
    Date: 2013
  6. By: Duncan Foley; Lance Taylor; Armon Rezai
    Abstract: Determining the social cost of carbon emissions (SCC) is a crucial step in the economic analysis of climate change policy as the US government's recent decision to use a range of estimates of the SCC centered at $77/tC (or, equivalently, $21/tCO2) in cost-benefit analyses of proposed emission-control legislation underlines. This note reviews the welfare economics theory fundamental to the estimation of the SCC in both static and intertemporal contexts, examining the effects of assumptions about the typical agent's pure rate of time preference and elasticity of marginal felicity of consumption, production and mitigation technology, and the magnitude of climate-change damage on estimates of the SCC. We highlight three key conclusions: (i) an estimate of the SCC is conditional on a specific policy scenario, the details of which must be made explicit for the estimate to be meaningful; (ii) the social discount rate relevant to intertemporal allocation decisions also depends on the policy scenario; and (iii) the SCC is uniquely defined only for policy scenarios that lead to an efficient growth path because marginal costs and benefits of emission mitigation diverge on inefficient growth paths. We illustrate these analytical conclusions with simulations of a growth model calibrated to the world economy.
    Date: 2013–03–12
  7. By: John Foster (Department of Economics, University of Queensland); William Paul Bell (Department of Economics, University of Queensland); Craig Froome; Phil Wild (Department of Economics, University of Queensland); Liam Wagner (Department of Economics, University of Queensland); Deepak Sharma (Centre for Energy Policy, University of Technology, Sydney); Suwin Sandu (Centre for Energy Policy, University of Technology, Sydney); Suchi Misra (Centre for Energy Policy, University of Technology, Sydney); Ravindra Bagia (Centre for Energy Policy, University of Technology, Sydney)
    Abstract: This non-technical summary presents the findings and recommendations from the project called ‘Analysis of institutional adaptability to redress electricity infrastructure vulnerability due to climate change’. The objectives of the project are to examine the adaptive capacity of existing institutional arrangements in the National Electricity Market (NEM) to existing and predicted climate change conditions. Specifically the project: identifies climate change adaptation issues in the NEM; analyses climate change impacts on reliability in the NEM under alternative climate change scenarios to 2030, particularly what adaptation strategies the power generation and supply network infrastructure will need; and assesses the robustness of the institutional arrangements that supports effective adaptation. The project finds that four factors are hindering or required for adaptation to climate change: fragmentation of the NEM, both politically and economically; accelerated deterioration of the transmission and distribution infrastructure due to climate change requiring the deployment of technology to defer investment in transmission and distribution; lacking mechanisms to develop a diversified portfolio of generation technology and energy sources to reduce supply risk; and failure to model and treat the NEM as a national node based entity rather than state based. The project’s findings are primarily to address climate change issues but if these four factors are addressed, the resilience of the NEM is improved to handle other adverse contingences. For instance, the two factors driving the largest increases in electricity prices are investment in transmission and distribution and fossil fuel prices. Peak demand drives the investment in transmission and distribution but peak demand is only for a relatively short period. Exacerbating this effect is increasing underutilisation of transmission and distribution driven by both solar photo voltaic (PV) uptake and climate change. Using demand side management (DSM) to shift demand to outside peak periods provides one method to defer investment in transmission and distribution. Recommendation 2 addresses investment deferment. The commodity boom has increased both price and price volatility of fossil fuels where the lack of diversity in generation makes electricity prices very sensitive to fossil fuel prices and disruptions in supply. A diversified portfolio of generation would ameliorate the price sensitivity and supply disruptions. Furthermore, long term electricity price rises are likely to ensue as the fossil fuels become depleted. A diversified portfolio of generation would also ready the NEM for this contingency. Recommendation 3 addresses diversified portfolios. This project makes four inter-related recommendations to address the four factors listed above. Chapter 10 discusses the justification for these recommendations in more detail.
    Keywords: Climate change adaptation; Climate change mitigation; electricity demand; electricity generation; transmission; distribution; Australian National Electricity Market; Feed-in tariffs; FiT; solar PV; residential solar PV; reverse auction FiT; parity; Levelised cost of energy; LCOE; Diffusion of innovations; dynamic efficiency; allocative efficiency; Sustainable; Social progress; Environmental protection; Social inequity; DUOS; TUOS; smart meters; institutional adaptation;
    JEL: H1 H4 L94 Q2 Q3 Q40 Q5
    Date: 2013–06
  8. By: Eskeland, Gunnar S. (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: One may misread economic theory on climate policy to provide a warning against unilateral mitigation. While important lessons are drawn from ‘global problems require global solutions’, these say little about what to do in a phase before or without a global agreement - or with weak ones. In the literature on cooperation and leadership in provision of public goods, early provision may stimulate provision from others. A key to leadership is signaling; an early mover has private information and is motivated in part by knowing that others will follow. Others will follow if they understand that the early mover demonstrates that emission reductions are feasible and adoptable. Our analysis finds that early movers will be cognizant of what they need to demonstrate, and they will be concerned about and act on carbon leakage. Leadership can be deterred by concerns for free riding, but this is more likely for a country or coalition that is large in terms of emissions and face others who are both large and vulnerable to climate change. We suggest leadership is possible early in this century: numbers indicate that few – if any - need find themselves deterred from early action of some sort.
    Keywords: Climate policy; unilateral mitigation
    JEL: Q00 Q50 Q54
    Date: 2013–06–14
  9. By: Ricardo A. Rojas Quiroga (Centro de Investigación y Promoción del Campesinado (CIPCA)); Tracey Li (Institute for Advanced Development Studies (INESAD)); Gonzalo Lora (Institute for Advanced Development Studies (INESAD)); Lykke Andersen (Institute for Advanced Development Studies (INESAD))
    Abstract: The carbon sequestration potential of an unmanaged and previously unstudied Guadua angustifolia bamboo forest in the Carrasco National Park of Bolivia has been studied, by estimating the total aboveground biomass contained in the forest. It was found that the aboveground biomass consisting of stems, branches, and foliage, contains a total of 200 tons per hectare, leading to an estimated 100 tons of carbon being stored per hectare aboveground, which is comparable to some species of tree such as the Chinese Fir; this bamboo species therefore has the potential to play a significant role in the mitigation of climate change. The relation between the biomass, M, of each component (stems, branches, and foliage) and the diameter, d, of the plant was also studied, by fitting allometric equations of the form M = adß. It was found that all components fit this power law relation very well (R2 > 0.7), particularly the stems (R2 > 0.8) and branches (R2 > 0.9) for which the relation is found to be almost linear.
    Keywords: Climate change, migration, carbon sequestration, bamboo
    JEL: Q23 Q54
    Date: 2013–07
  10. By: Robert S. Pindyck
    Abstract: Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as tools for policy analysis: certain inputs (e.g. the discount rate) are arbitrary, but have huge effects on the SCC estimates the models produce; the models' descriptions of the impact of climate change are completely ad hoc, with no theoretical or empirical foundation; and the models can tell us nothing about the most important driver of the SCC, the possibility of a catastrophic climate outcome. IAM-based analyses of climate policy create a perception of knowledge and precision, but that perception is illusory and misleading.
    JEL: D81 Q5 Q54
    Date: 2013–07
  11. By: Gul, Rjaz
    Abstract: Since the beginning of time mankind has depended upon the available natural resources for survival, although the contribution of biodiversity to the sustainable development has recently been acknowledged. The need for this recognition arose from the fact that biodiversity provides a variety of socio- cultural and economic services for the humankind such as food, water, shelter, medicines, energy and aesthetic value. Despite realization of biodiversity as essential factor for human life and welfare, we are facing problems of global nature. Pakistan is fortunate to have a rich biodiversity and is blessed with more than nine distinct ecological zones. These ecological zones provide a range of habitats to a great variety of flora and fauna, besides a vast variety of plant species having great medicinal and food value. However, deforestation, over development, lack of awareness and control measures have negative effects on biodiversity. These actions are leading to loss of species, habitats and degradation of ecosystems. Presently, the rate of regeneration of resources is much slower than the rate at which these natural assets are being consumed inducing a socio-economical recession. There is a need to adopt a sustainable approach towards biodiversity conservation and establish a balance between gains and loss to bridge this gap between resource generation and consumption. Preservation of biodiversity without sustainability could impact the overall economic conditions leading to further poverty and affect the quality of life of the people. This paper thoroughly reviews significance of biodiversity, its socio-economic benefits and problems currently being faced to save this natural wealth.
    Keywords: Biodiversity, ecological zones, socio-economical gains, sustainability, balance
    JEL: Q23 Q26 Q57
    Date: 2013–07–17
  12. By: Jörg Spiller (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Friedel Bolle (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))
    Abstract: In a laboratory experiment groups of four played a 15-period Public Good game. Each period a player could either invest in a green sector or in a more profitable but polluting brown sector. The pollutant accumulated and decreased the players’ income in all following periods. We conducted several treatments including the existence of a future generation. In the latter case subjects were told that their final stock would be forwarded to another group in a later session. The framework allowed investigating learning, the effects of communication and the possibly different reactions to self-produced and inherited pollution. The most interesting result is that the existence of heirs restricts pollution. We find that the result may be driven partly by thoughtfulness and partly by the induced motivation for longer-term planning.
    Keywords: Experimental Economics, Public Good, Dynamic, Environmental Eco- nomics, Inter Generation
    JEL: H41 C91
    Date: 2013–07
  13. By: Vallino, Elena; Aldahsev,Gani (University of Turin)
    Abstract: Countries, under the label of participatory conservation. This implies the direct involvement of the local communities in conservation. We develop an economic model to explain why participatory conservation has been “invented”, why in many situations it does not function, and why environmental NGOs find it difficult to make it functioning. The occurrence of the tragedy of the commons in a given natural area may justify an NGO intervention. Since there is empirical evidence of failure of a top-down approach in conservation, the effort of the local stakeholders is necessary. Given that there is contract incompleteness, the NGO may apply participatory conservation. However, since local farmers live at subsistence level and are strongly risk averse, they may give priority to Agricultural income with respect to tourism income, which derives from conservation. They may not collaborate with the NGO for conservation activities if the NGO does not allocate some effort to sustain agriculture. However the NGO is funded by donors with environmental motivations.
    Date: 2013–05
  14. By: McConnell, Virginia (Resources for the Future)
    Abstract: New Corporate Average Fuel Economy (CAFE) standards were recently passed in the United States with the twin goals of reducing greenhouse gas emissions and oil use. The new standards represent a dramatic change from recent policy. This paper examines the key features of the new rules, and compares them to previous CAFE standards in terms of flexibility and structure. The importance of consumer preferences and market forces on CAFE outcomes are identified. In the second part of the paper, the perspective of the consumer is explored. Consumer assessments of fuel economy savings with more fuel-efficient vehicles may be biased or incomplete, leading many to argue that there is an “energy efficiency gap” in consumer demand for vehicles. Reasons for such a gap, such as market failures, behavioral responses, and market barriers, are summarized. The implications for policy are discussed, including the role of combining CAFE with other policies.
    Keywords: CAFE, vehicle regulation, energy efficiency, environmental policy
    JEL: Q42 Q48 Q54 Q58
    Date: 2013–05–01
  15. By: Rosa Duarte; Vicente Pinilla; Ana Serrano
    Abstract: This paper aims to analyse the impact on water consumption of the trade expansion of the first globalization era. To that end, we choose the case of Spain, a semi-arid country with significant cyclical water shortages that excelled as an exporter of agricultural and food products in the period of study. More specifically, we are interested in answering the following questions: What was the volume of water embodied in agricultural and food products exports, how did this variable evolve over time, what factors drove this evolution and what was the volume of water incorporated in imports of these products?. In short, we want to know the impact on water resources of Spain’s entry into agriculture and food markets. To explore these issues, we will use the concepts of virtual water and virtual water trade. First, we examine virtual water trade flows in the long run. Further, we attempt to disentangle certain major drivers underlying these trajectories. In order to establish the role played by trade in the final net balance of water, a Structural Decomposition Analysis (SDA) is applied. Finally, an analysis of the implications of the increase in virtual water trade on water resources is carried out.
    Keywords: virtual water trade, environmental history, agricultural trade, water history
    JEL: N53 Q17 Q25 Q56
    Date: 2013–07
  16. By: B. Sudhakara Reddy (Indira Gandhi Institute of Development Research); P. Balachandra (Indian Institute of Science)
    Abstract: The study investigates if the present pattern of urban development in India in the creation of mega cities sustainable. This has been done by comparing the Indian cities Mumbai and Bangalore with sustainable mega cities of developed countries (Shanghai, London, and Singapore) using indicators. The objectives of the study are: (i) developing sustainable urban indicator variables spanning all the relevant sectors of a typical mega city, (ii) developing a benchmark sustainable indicator-base for a selected mega city, (iii) developing the database for Mumbai and Bangalore by adopting the same methodology and same indicators, (iv) comparing and evaluating the indicator data with the benchmark indicator database using "gap analysis" approach, and (v) suggesting appropriate policy measures and implementation strategies to bridge identified gaps to attain the goal of sustainable urban system. Economic, Environmental, social and institutional indicators are proposed to be examined in the context of resource utilization. The indicators represent a primary tool to provide guidance for policy makers and to potentially assist in decision-making and monitoring local strategies/plans. The outcome of the study will contribute to the design of policies, tools, and approaches essential for planning to attain the goal of sustainable development and the social cohesion of metropolitan regions.
    Keywords: Benchmarking, Gap analysis, Indicator, Sustainability, Urban
    JEL: Q4 L94 L95 L98
    Date: 2013–06
  17. By: Vallino, Elena (University of Turin)
    Abstract: Many scholars of common pool resources discovered that institutions may solve the tragedy of the commons. I will address a particular situation of management of natural resources: that of a protected area. In this situation interests differ. Local rural inhabitants care about the quality of their environment, but also need to exploit the resources for livelihood reasons. An external entity, being the State or a donor, or an NGO, or all of them together, decides that there is the need of nature Conservation in that area. Because of some evidence of failure of strictly top-down conservationist approach, the external entity decides to apply the concept of participatory conservation: the local inhabitants become stakeholders in the management of the area and they become collectively responsible for conservation, having in turn the right to exploit the resources up to so me degree. I argue that project designers try to find a solution to nature conservation through the creation of a situation of a commons: creating a community that has rights and duties towards a particular natural area that is endowed with some resources. Many scholars rely mostly on institutions which are endogenously created within the users’ community in order to avoid the “tragedy”. However, what happens if institutions are imposed? In participatory conservation initiatives the community has collective rights over the resources, and in this sense the issue of endogenous rules for the commons management is relevant. However, the level to which the community should exploit the resource is usually i mposed by the external project designers. Using agent-based simulations we develop a theoretical model in order to look at the consequences of an imposed institution on the state of a forest and on the profit of the users, taking into account the possibilities of violating the imposed rules, and that of facing enforcement. We compare the consequences of this imposed institution with those deriving from an endogenously created institution. We will also analyze the interaction between the different kinds of institutions and the individual perceptions of each agent. Many results of the model confirm quantitative and qualitative findings of the literature: the presence of institutions and enforcement improve the management of the resource with respect to an open access situation, with different degree of success depending on the kind of institution in place. The two main counterintuitive findings are the following. First, an exogenous institution imposed by external agents may crowd out agents’ intrinsic environmental motivations. Second, when an imposed exogenous institution is in place, the most effective rule is one allowing sufficient degree of access to the resources for the agents, provided that an adequate rule enforcement is implemented.
    Date: 2013–05
  18. By: Andrea Vaona (Department of Economics (University of Verona))
    Abstract: The present paper assesses the impacts of renewable energy generation and globalization on income inequality in Argentina. We make use of vector autoregression models. We find that globalization and hydroelectric power increase inequality, while the opposite holds true for other renewable energy sources. Several robustness checks are considered. Policy implications are discussed keeping into account the specific Argentinean context.
    Keywords: Argentina, VAR, energy sources, inequality, globalization
    JEL: Q20 Q40 D63
    Date: 2013–07
  19. By: Jose Manuel Feria-Dominguez (Department of Finance and Accounting, Universidad Pablo de Olavide); Enrique Jimenez-Rodriguez (Department of Finance and Accounting, Universidad Pablo de Olavide); Ines Merino Fernandez-Galiano (Department of Finance and Accounting, Universidad Pablo de Olavide)
    Abstract: This paper isolate the corporate reputational risk incurred by Oil and Gas companies, listed in the NYSE, derived from recent medium sized and large oil spill disasters occurred from 2005 to 2011 in the US. For this purpose, we conduct a standard short-horizon daily event study analysis to calibrate the potential impact of such environmental episodes on the market value of the firms analyzed. Since the accidental spillages are proved to have a negative effect on the cumulative abnormal returns (henceforth, CAR) of the firm’s stock, reputational risk can be identified by adjusting abnormal returns by a certain Loss Ratio, in order to capture the difference between the plummeted firm’s market value and the operational loss incurred by the company. The new magnitude, CAR (Rep), is then introduced to disentangle operational losses from reputational damage.
    Keywords: Corporate Reputational Risk; abnormal returns; sevent study; oil spills
    Date: 2013–07
  20. By: Ferro, Gustavo; Lentini, Emilio J.; Mercadier, Augusto C.; Romero, Carlos A.
    Abstract: The purpose of this paper is to assess comparative efficiency in water and sanitation sector in Brazil. We run a Sthocastic Frontier Analysis model for a panel of 127 providers, covering more than 70% of urban population of the country. We search and find an explanation for cost efficiency, and we explore its interrelations with regions, property and independence of the providers. We use a database built on the SNIS (National System of Sanitation Statistics) to run a SFA cost model. We add to the formula, environmental and institutional variables, trying to capture differences in costs and efficiency attributable to the ambience of operation. We achieve a satisfactory model, showing a modest efficiency average, and we could patterns, even not well defined. The study has policy implications, in the discussion state-run versus municipal-run, public versus private, and corporitized versus dependent providers. The optimal industrial organization of the sector can be analyzed since the efficiency perspective.
    Keywords: Efficiency, water and sanitation, Brazil
    JEL: L51 L95
    Date: 2013–07–11
  21. By: Deborah E. Lee, Stephen G. Hosking and Mario du Preez
    Abstract: Many valuations have been made of changes to in-estuary attributes but few have been made of out-of-estuary attributes. From a recreation perspective, an important type of out-of-estuary attribute is the availability of public paths by which to access attractive features of the estuary environment. This paper values an improvement in the level of public access in the form of an additional nature trail along the banks of the Sundays River Estuary in the Eastern Cape, but does not compare this value with the costs. By means of choice experiment modelling analyses it is estimated that in 2010 the marginal willingness-to-pay for an investment in a nature trail was R34 per user per annum. In order to determine whether the development of this trail is efficient, this benefit (R34 per user per annum) needs to be compared to the cost of the development, an analysis that remains to be done. However, this find does serve to provide guidance on how much funding could efficiently be allocated to such a development - about R1.22 million, assuming a social discount rate of 8.38%.
    Keywords: Estuary, willingness to pay, choice experiment, public access, recreational attributes
    Date: 2013
  22. By: Peter Chacha, Edwin Muchapondwa, Anthony Wambugu and Daniel Abala
    Abstract: This study analyses the factors influencing pricing of National Park visits in Kenya. A two step regression procedure is used to develop a pricing mechanism for Lake Nakuru National Park (LNNP). In the first stage, count data models are applied to estimate the Trip generating function to LNNP and in the second, the results from count data models are used to simulate visitation as price varied through an increase in the gate fee to LNNP. The simulated data is used to estimate the demand curves for LNNP. The finding shows that the current price set-up at LNNP of Ksh. 7,050 for international tourists and Ksh. 1,000 for domestic tourists is in fact cost recovery. However, there is greater scope to raise more revenue from an increase in entry fees. The study proposes price increase for international visits from the current Ksh. 7,050 (US$75) to Ksh.20,000 (US$230) in the medium term. This will yield a total revenue estimated at Ksh. 2,823 million (US$33 million) without major decline in visitation days. With regard to domestic visitors, the Kenya Wildlife Service (KWS) can increase the price from the current Ksh. 1,000 (US$11.8) to Ksh. 2,000 (US$ 22) over the same horizon. This price increase will yield revenue equivalent to Ksh. 288 million (US$ 3.4 million) but also lead to a decline in visitation levels from domestic group by 30 percent.
    Keywords: Pricing, protected areas, international and domestic visits, travel costs
    JEL: C24 C25 I31 Q26
    Date: 2013

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