nep-env New Economics Papers
on Environmental Economics
Issue of 2013‒08‒23
eleven papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Economic and Emissions Impacts of Renewable Fuel Goals for Aviation in the US By Winchester, Niven; McConnachie, Dominic; Wollersheim, Christoph; Waitz, Ian A.
  2. Impact of product-related environmental regulations / voluntary requirements on Thai firms By Ramungul, Nudjarin; Michida, Etsuyo; Nabeshima, Kaoru
  3. The Welfare Costs of GHG Reduction with Renewable Energy Policies in the US By Khanna, Madhu; Oliver, Anthony
  4. Emergence of Asymmetric Solutions in the Abatement Game By Yukihiro Nishimura
  5. Spatial Aspects of Firm-level Carbon Dioxide Emissions in Japan (Japanese) By OKUBO Toshihiro; Robert J.R. ELLIOTT; Matthew A. COLE; Ying ZHOU
  6. Estimating the Global Impacts of Climate Variability and Change During the 20th Century By Richard S.J. Tol; Francisco Estrada
  7. Water Scarcity and International Agricultural Trade By Liu, Jing; Hertel, Thomas W.; Taheripour, Farzad; Zhu, Tingju; Ringler, Claudia
  8. Cellulosic Biofuel Supply with Heterogeneous Biomass Suppliers: An Application to Switchgrass-based Ethanol By Rosburg, Alicia; Miranowski, John; Jacobs, Keri
  9. Resource Return on Investment under Markup Pricing By Kemp-Benedict, Eric
  10. Responding to Key Well-being Challenges in Austria By Rauf Gönenç; Oliver Röhn; Christian Beer; Andreas Wörgötter
  11. Local Natural Resource Curse? By Lars-Erik Borge; Pernille Parmer; Ragnar Torvik

  1. By: Winchester, Niven; McConnachie, Dominic; Wollersheim, Christoph; Waitz, Ian A.
    Abstract: The US Federal Aviation Administration (FAA) has a goal that one billion gallons of renewable jet fuel is consumed by the US aviation industry each year from 2018. We examine the economic and emissions impacts of this goal using renewable fuel produced from a Hydroprocessed Esters and Fatty Acids (HEFA) process from renewable oils. Our approach employs an economy-wide model of economic activity and energy systems and a detailed partial equilibrium model of the aviation industry. If soybean oil is used as a feedstock, we find that meeting the aviation biofuel goal in 2020 will require an implicit subsidy from airlines to biofuel producers of $2.69 per gallon of renewable jet fuel. If the aviation goal can be met by fuel from oilseed rotation crops grown on otherwise fallow land, the implicit subsidy is $0.35 per gallon of renewable jet fuel. As commercial aviation biofuel consumption represents less than two per cent of total fuel used by this industry, the goal has a small impact on the average price of jet fuel and carbon dioxide emissions. We also find that, under the pathways we examine, the cost per tonne of CO2 abated due aviation biofuels is between $50 and $400.
    Keywords: Aviation, Biofuels, Climate Change, Emissions abatement, Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2013–08
  2. By: Ramungul, Nudjarin; Michida, Etsuyo; Nabeshima, Kaoru
    Abstract: The rules governing the trade of goods in global markets have shifted toward non-tariff measures related to environmental and chemical safety. Unlike traditional environmental/safety requirements, the scope of modern regulations covers products’ environmental performance and chemical safety. To comply with these modern regulations, production practices along the entire supply chain must be realigned to manage certain chemical substances incorporated into the final product. This paper examines the implications of product-related environmental and chemical safety regulations on different firms operating in Thailand.
    Keywords: Thailand, Environmental law, Environmental protection, Exports, Industrial policy, Environment, Regulation
    JEL: F18 O25 Q56
    Date: 2013–02
  3. By: Khanna, Madhu; Oliver, Anthony
    Abstract: A range of policies have been implemented in the agricultural, transportation, and electric power sectors, which comprise the majority of GHG emissions in the US. Two prominent policy sets are the national RFS and state-level RPSs. The purpose of this research is to examine the GHG implications of the state RPSs and their welfare costs of mitigating GHG emissions. We also analyze the interactions between the RFS and state RPS policies and the extent to which these policies create competition or complementarity in their use of biomass for meeting the standards since the production of cellulosic biofuels also generating renewable electricity as a co-product that can substitute for fossil fuel based grid electricity and contribute to meeting the RPS. We compare the cost effectiveness of these policies implemented jointly to a carbon tax policy that achieves the same level of GHG emissions. We find that while a carbon tax increases social welfare, the RPS imposes a welfare cost on the economy. However, the implementation of the RFS does reduce the welfare costs of the RPSs by substituting co-product electricity for costly biomass electricity and providing a terms of trade benefit in the agricultural and fuel sectors. We find that the RPSs cause an increase in renewable energy based generation, which primarily offsets natural gas based generation rather than coal and increases total electricity consumption. The joint implementation of RFS and RPSs results in reduction in the use of co-firing and dedicated biomass. Coal based generation increases relative to the RPSs only scenario, while natural gas generation decreases relative to the RPSs only scenario. The implication of this is that the effects of jointly implementing the RFS and RPSs on GHG emissions are not additive.
    Keywords: Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2013–08
  4. By: Yukihiro Nishimura (Graduate School of Economics, Osaka University)
    Abstract: This paper explores the outcome of non-cooperative decision making by elected politicians under transnational externalities. We re-examine the extent of a voter’s incentives for supporting politicians who are less green than the median voter, a phenomenon called “political race to the bottom.” We provide a setup in which each country is endowed with the fixed amount of endowment available for consumption, and the part of the endowments can be used for improvement of the environment. When the degree of spillovers of public inputs becomes strong enough, there arises the following equilibrium: one of the elected politicians pays no attention to the environment, but the median voter becomes the elected politician in the other country. This equilibrium is different from the model by Buchholz et al. (2005, “International Environmental Agreements and Strategic Voting”, Scandinavian Journal of Economics 107(1), 175-195), in which countries can choose emissions without an upper bound.
    Date: 2013–07
  5. By: OKUBO Toshihiro; Robert J.R. ELLIOTT; Matthew A. COLE; Ying ZHOU
    Abstract: In this paper, we examine the spatial distribution of Japanese pollution-intensive firms. Employing spatial econometric techniques, our results show that firm-level carbon dioxide emissions are spatially correlated and spatial correlations with our dependent variable are perhaps due to demonstration or imitation effects. We also find evidence of feedback effects where the emissions of firms affect those of other firms located nearby.
    Date: 2013–08
  6. By: Richard S.J. 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; Tinbergen Institute, Amsterdam, The Netherlands); Francisco Estrada (Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Centro de Ciencias de la Atmósfera, Universidad Nacional Autónoma de México, Mexico)
    Abstract: Estimates of the impacts of observed climate change during the 20th century obtained by different integrated assessment models (IAMs) are separated into their main natural and anthropogenic components. The estimates of the costs that can be attributed to natural variability factors and to the anthropogenic intervention with the climate system in general tend to show that: 1) during the first half of the century, the amplitude of the impacts associated to natural variability is considerably larger than that produced by anthropogenic factors and according to most models the effects of natural variability were mainly negative. These non-monotonic impacts are mostly determined by the low-frequency variability and the persistence of the climate system; 2) IAMs do not agree on the sign (nor on the magnitude) of the impacts of anthropogenic forcing but indicate that they steadily grew over the first part of the century, rapidly accelerated since the mid 1970's, and decelerated during the first decade of the 21st century. The economic impacts of anthropogenic forcing range in the tenths of percentage of the world GDP by the end of the 20th century; 3) the impacts of natural forcing are about one order of magnitude lower than those associated to anthropogenic forcing and are dominated by the solar forcing. Human activities became dominant drivers of the infrapolated economic impacts at the end of the 20th century, rivaling in magnitude with those of natural variability. FUNDn3.6 allows to further decompose the natural and anthropogenic contributions into different sectors. The benefits of anthropogenic contribution in agriculture and energy are shown to outweigh the losses in health and water resources.
    Keywords: climate change; impacts; 20th century
    JEL: Q54
    Date: 2013–08
  7. By: Liu, Jing; Hertel, Thomas W.; Taheripour, Farzad; Zhu, Tingju; Ringler, Claudia
    Abstract: Agriculture’s reliance on irrigation and concerns over water scarcity raise the question of how global food output and trade could be affected if the issue of water shortfall needs to be resolved on the back of agriculture. To understand changes in food production and international agricultural trade as the responses to local water shortage, we construct a computable general equilibrium model in which irrigation water supply reliability is perturbed. The results suggest that regions under water stress cut back food production and turn into net food importers, although domestic water productivity improves. The regions’ welfare falls, primarily due to less endowment available for agriculture and decline in the terms of trade.
    Keywords: CGE modeling, water scarcity, irrigated and rainfed agriculture, food security, international agricultural trade, Agricultural and Food Policy, Environmental Economics and Policy, International Relations/Trade, Resource /Energy Economics and Policy, Q25, Q17,
    Date: 2013–08
  8. By: Rosburg, Alicia; Miranowski, John; Jacobs, Keri
    Abstract: The potential of biomass for alternative energy production has attracted considerable attention because of associated implications for energy security, food supply, and climate change. This paper considers the economic impacts of spatial variation and landowner behavior on potential biomass supply for U.S. cellulosic biofuel. We develop and apply a long-run biomass production through bioenergy conversion cost model that incorporates heterogeneity of biomass suppliers within and between local markets. An application to U.S. switchgrass-based cellulosic ethanol production suggests cost-minimizing biofuel production decisions, which include biorefinery size, biomass transportation distance, and price of biomass, vary significantly across locations. An aggregate switchgrass ethanol supply curve developed from local biofuel supply estimates is used to evaluate the potential for and cost of achieving cellulosic biofuel production targets such as the revised Renewable Fuels Standard. Empirical results suggest spatial variation in biomass production conditions plays an important role in the potential supply and distribution of U.S. cellulosic biofuel production. 
    Keywords: biofuel; biomass; cellulosic ethanol; RFS2; switchgrass
    JEL: Q11 Q16 Q41 Q42 Q48
    Date: 2013–08–13
  9. By: Kemp-Benedict, Eric
    Abstract: In the (very) long run, a sustainable economy must rely on renewable resources. Until that time, an economy can be based on either renewable resources alone or a mix of renewable and non-renewable resources, but the particular mix may constrain the types of economic structures that are possible. A particularly important consideration is the quantity of resources required to extract the resources on which the economy is based, whether it is seeds retained for planting or petroleum used to extract oil. In the case of energy this is called “energy return on energy investment”, or EROI. More generally, it can be considered “resource return on resource investment”, or RROI. EROI has drawn attention lately both because the EROI of fossil fuels is falling and because the EROI of some renewable alternatives – especially for liquid fuels – is low compared to fossil fuels. In conventional economic analysis it is not clear what the relation between EROI, energy price, and macroeconomic outcomes might be. However, it raises immediate concerns within an Ecological Economic framework, in which resources – which may contribute only a small amount to GDP – are viewed as essential to the functioning of the economy. Resources are pictured as sitting at the base of an inverted pyramid, with the rest of the economy balanced on top of them. In this paper we show that when prices are set by markup, a standard Post-Keynesian assumption, then the “inverted pyramid” picture of the economy emerges naturally. We use this result to develop a computational framework for a “markup economy”, and apply it to the question of the macroeconomic impact of changes in resource prices and resource return on investment. We use the resulting model to explore several macroeconomic questions, demonstrating that the model is quite useful for exploring the role of natural resources in the macroeconomy. We then show our main result, that RROI has a surprisingly limited effect on real wages until it reaches quite low values.
    Keywords: EROI,macroeconomics,input-output,ecological economics,biophysical economics,Post Keynesian
    JEL: E00 E11 E12 Q01 Q43
    Date: 2013–08–19
  10. By: Rauf Gönenç; Oliver Röhn; Christian Beer; Andreas Wörgötter
    Abstract: Important challenges for the future of Austrian well-being arise from demographic and environmental trends. The ageing of the population calls for a fair balance between life-time pension contributions and entitlements, drawing on the recent pension reform. Such progress will allow Austrians to make more informed choices between the length of their work and contribution periods and retirement length and income according to their preferences, without threatening fiscal sustainability. With female labour force participation rising, family policies should help reconcile equality of opportunity within families by promoting the availability, affordability and quality of support services. A growing share of immigrant groups with low human capital calls for remedial policies to preserve social cohesion. Environmental pressures arise from urban sprawl and the strong expansion of road transport. Turning around these trends will require more appropriate pricing of the externalities and better regional development policies to foster denser settlements that are well connected to public transport. This entails a need to strengthen coordination between different government layers and better integration of regional development with transport and housing policies. This Working Paper relates to the 2013 OECD Economic Survey of Austria (<P>Bien-être en Autriche : les grands défis<BR>Le bien-être des Autrichiens va se heurter à l’avenir à des défis importants liés aux tendances démographiques et environnementales. Le vieillissement de la population nécessite un juste équilibre entre les cotisations et les droits à pension, sur la base de la réforme récente du régime de retraite. Ces progrès vont permettre aux Autrichiens de faire des choix plus éclairés entre la durée de leur vie active et de leurs cotisations et celle de leur retraite ainsi que leurs revenus en fonction de leurs préférences, sans pour autant peser sur la viabilité des finances publiques. Face à l’augmentation du taux d’activité des femmes, les politiques familiales devraient contribuer à l’égalité des chances au sein des familles et favoriser des services de soutien accessibles, abordables et efficaces. La proportion grandissante des groupes immigrés ayant un faible niveau de capital humain exige la mise en place de mesures correctives afin de préserver la cohésion sociale. Les pressions pesant sur l’environnement sont causées par l’étalement urbain et l’expansion rapide du transport routier. Pour contrer ces évolutions, il faudra mettre en place une tarification plus appropriée des externalités et de meilleures politiques de développement régional afin de promouvoir des habitats plus denses et bien desservis par les transports publics. Il faut pour cela renforcer la coordination entre les différents niveaux d’administration et mieux intégrer les politiques de développement régional, de transport et de logement. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l’Autriche, 2013 ( -2013.htm).
    Keywords: ageing, environment, transport, Austria, immigration, well-being, urban sprawl, family, environnement, transport, vieillissement, Autriche, immigration, démographie, bien-être, étalement urbain, famille
    JEL: D60 J10 O52 Q50
    Date: 2013–08–05
  11. By: Lars-Erik Borge; Pernille Parmer; Ragnar Torvik
    Abstract: The large variation in revenues among Norwegian local governments can partly be explained by revenues collected from hydropower production. This revenue variation, combined with good data availability, can be used to extend the literature on the resource curse in two directions. First, to ensure that there is no problem of endogeneity in the analysis we obtain a purely exogenous measure of local revenue by instrumenting the variation in hydropower revenue, and thus total revenue, by topology, average precipitation and meters of river in steep terrain. Second, using data for revenue derived from hydropower production in Norwegian local governments we test the ’Rentier State’ hypothesis; that revenue derived from natural resources should harm efficiency more than revenue derived from other sources such as taxation. Although we do ?nd that higher local government revenue reduces the efficiency in production of public goods, we do not ?nd that this effect is stronger for natural resource revenue than for other revenue.
    Keywords: resource curse, rentier state, identi?cation, local government, political economy.
    JEL: D78 H11 H27 H71 H72 H75 Q2
    Date: 2013–06

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