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on Environmental Economics |
| By: | Zon, Adriaan van (UNU-MERIT/MGSoG, and Maastricht University); David, Paul (SIEPR, and Economics Department, Standford University, and UNU-MERIT/MGSoG) |
| 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, directed technical change, capital-embodied technologies, optimal sequencing, multi-phase optimal control, sustainable endogenous growth |
| JEL: | Q54 Q55 O31 O32 O33 O41 O44 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2013041&r=env |
| By: | Durmaz, Tunç (Dept. of Economics, Norwegian School of Economics and Business Administration); Schroyen, Fred (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | Carbon capture and storage (CCS) is considered a critical technology needed to curb CO2 emissions and is envisioned by the International Energy Agency (IEA) as an integral part of least-cost greenhouse gas mitigation policy. In this paper, we assess the extent to which CCS and R&D in CCS technology are indeed part of a socially efficient solution to the problem of climate change. For this purpose, we extend the intertemporal model of climate and directed technical change developed by Acemoglu et al. (2012, American Economic Review, 102(1): 131{66) to include a sector responsible for CCS. Surprisingly, even for an optimistic cost estimate available for CCS ($60/ton of CO2 avoided), we find that it is not optimal to deploy CCS or devote resources to R&D in CCS technology either in the near or distant future. Indeed, it is only when the marginal cost of CCS is less than $12/ton that a scenario with an active CCS sector (including R&D) becomes optimal, though not in the near future. |
| Keywords: | Carbon capture and storage CCS; climate. |
| JEL: | H23 O31 Q43 Q54 Q55 |
| Date: | 2013–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2013_014&r=env |
| By: | Mads, Greaker (Statistics Norway); Kristoffer, Midttømme (Dept. of Economics, University of Oslo) |
| Abstract: | Network externalities could be present for many low or zero emission technologies. One obvious example is alternative fuel cars, whose use value depends on the network of service stations. The literature has only briefy looked at environmentally benefcial technologies. Yet, the general literature on network effects is mixed on whether governments need to intervene in order to correct for network externalities. In this paper we study implications of network effects on environmental policy in a discrete time dynamic game. Firms sell a durable good. One type of durable is causing pollution when being used, while the other type is "clean". Consumers' utility increase in the number of other users of the same type of durable, which gives rise to the network effect. We find that the optimal tax depends on the size of the clean network. If starting from a situation in which the dirty network dominates, the optimal tax may exceed the marginal environmental damage, thereby charging consumers for more than just their own emissions. Applying a Pigovian tax may, on the contrary, fail to introduce a socially beneficial clean network. |
| Keywords: | Network eects; lock-in; enviromnetal taxes |
| JEL: | H23 Q55 Q58 |
| Date: | 2013–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2013_015&r=env |
| By: | Aline Magalhães (Face-UFMG); Edson Domingues (Cedeplar-UFMG) |
| Abstract: | Economia de baixo carbono no Brasil: alternativas de políticas e custos de redução de emissões de gases de efeito estufa |
| Keywords: | low-carbon economy, climate change, general equilibrium, Brazil |
| JEL: | Q52 Q54 C68 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td491&r=env |
| By: | Athanasios Yannacopoulos; Anastasios Xepapadeas |
| Abstract: | In view of the ambiguities and the deep uncertainty associated with climate change, we study the features of climate change policies that account for spatially structured ambiguity. Ambiguity related to the evolution of the natural system is introduced into a coupled economy-climate model with explicit spatial structure due to heat transport across the globe. We seek to answer questions about how spatial robust regulation regarding climate policies can be formulated; what the potential links of this regulation to the weak and strong version of the precautionary principle (PP) are; and how insights about whether it is costly to follow a PP can be obtained. We also study the emergence of hot spots, which are locations where local deep uncertainty may cause robust regulation to break down for the whole spatial domain, or the weak PP to be costly. |
| Keywords: | Ambiguity, Climate change, space, maxmin expected utility, robust control regulation, hot spots, precautionary principle |
| JEL: | Q54 Q58 D81 R11 |
| URL: | http://d.repec.org/n?u=RePEc:aue:wpaper:1332&r=env |
| By: | Akpalu, Wisdom; Dasmani , Isaac; Normanyo, Ametefee K. |
| Abstract: | In most coastal developing countries, the artisanal fisheries sector is managed as a common pool resource. As a result, such fisheries are overcapitalized and overfished. In Ghana, in addition to anthropogenic factors, there is evidence of rising coastal |
| Keywords: | climate variability, optimal tax, generalized maximum entropy, Ghana |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2013-052&r=env |
| By: | Li, Jun |
| Abstract: | Rapid urbanization, and particularly the associated problems of urban poverty, unsustainable development and environmental degradation, pose an enormous challenge to many developing countries. In the last decade more foreign aid has been diverted to urban |
| Keywords: | developing countries, sustainability, aid effectiveness, scalable, transferable, framework |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2013-051&r=env |
| By: | Daniel Becker (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Magdalena Brezskot (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Wolfgang Peters (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)); Ulrike Will (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder)) |
| Abstract: | ENGLISH SUMMARY This paper examines to what extent the disadvantages of unilateral climate policy can be reduced by border adjustments. The disadvantages are primarily a competitive disadvantage for the domestic industry and the potential (over-) compensation of CO2 savings from increased emissions in other countries (carbon leakage). We investigate a CO2 tax as the climate policy tool that can be supported by a Border Tax Adjustment (BTA). In the economic part of the analysis a partial equilibrium trade model is used to demonstrate the impact on the competitive position and on global CO2 emissions if a CO2 tax and a BTA are analyzed. It is shown that is makes a difference whether these measures are introduced separately or as a package. In the legal part of the analysis, the WTO compatibility of a climate-policy motivated BTA is then examined. One possibility is to design a BTA that is consistent with the national treatment rule. Another one is to claim an exception based on Article XX GATT. The idea of a package solution of a CO2 tax and a BTA is reconsidered in our legal analysis. It may help to ease the justification of the proposed interventions into the world trading system. Finally, based on the economic and legal considerations, different design options to implement a BTA are presented. One proposal is a Carbon Added Tax in combination with a BTA similar to that for the VAT. Alternatively, the calculation of the BTA could be based on the carbon footprint, which would be more ambitious from a climate policy perspective. The advantages and disadvantages of both strategies are discussed. ZUSAMMENFASSUNG Diese Arbeit untersucht, inwieweit die Nachteile unilateraler Klimaschutzpolitik durch Grenzausgleichsinstrumente verringert werden können. Die Nachteile bestehen vor allem in einem Wettbewerbsnachteil für die eigene Industrie und der möglichen (Über-)kompensation von CO2- Einsparungen durch erhöhte Emissionen im Ausland (Carbon Leakage). Als klimaschutzpolitisches Instrument untersuchen wir eine CO2-Steuer, die durch einen Grenzsteuerausgleich (Border Tax Adjustment, BTA) flankiert werden kann. Im ökonomischen Teil der Analyse wird mit Hilfe eines partialanalytischen Handelsmodells gezeigt, wie sich die Wettbewerbsposition und die globalen CO2-Emissionen verändern, wenn eine CO2-Steuer und ein BTA analysiert werden. Hierbei ergibt sich ein wichtiger Unterschied, je nachdem, ob diese Maßnahmen getrennt oder als Paket eingeführt werden. Im juristischen Teil der Analyse wird dann die Kompatibilität mit dem Recht der Welthandelsorganisation (WTO) eines klimapolitisch motivierten BTA geprüft. Eine Möglichkeit ist, ein BTA so auszugestalten, dass das WTO-rechtliche Gebot der Inländergleichbehandung gewahrt ist. Eine weitere ist es, die Ausnahmeklausel des Art. XX GATT in Anspruch zu nehmen. Die Idee einer Paketlösung aus CO2-Steuer und BTA wird in der WTO-rechtlichen Prüfung aufgenommen und kann die Rechtfertigung der Eingriffe in das Handelssystem vereinfachen. Schließlich ergeben sich aus den ökonomischen und WTO-rechtlichen Überlegungen verschiedene Gestaltungsmöglichkeiten für ein BTA. Vorgeschlagen wird zum einen eine Carbon Added Tax in Kombination mit einem BTA ähnlich demjenigen zur Mehrwertsteuer. Alternativ könnte auch die klimapolitisch ambitioniertere Kalkulation des BTA auf Basis des Carbon Footprint verfolgt werden. Für beide Strategien werden die Vor- und Nachteile diskutiert. |
| Keywords: | Leakage, Border Tax Adjustment, Carbon Added Tax, Carbon Footprint, World Trade Organization |
| JEL: | F13 F18 K33 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:euv:dpaper:010&r=env |
| By: | Felix Groba; Barbara Breitschopf |
| Abstract: | Technological changes in renewable energy technologies play an important role in the context of climate change as they contribute to a reduction of technology costs and lead to an increasing market penetration of emission reducing technologies. This paper provides a comprehensive literature review highlighting numerous motivations and necessities underlying the introduction of renewable energy policies. Starting with a brief overview on the induced innovation hypothesis, we show that policy intervention has been an effective tool to change relative prices, thus, incentivizing innovation, but that also various influencing factors are at play. We show that the literature agrees on the need for specific renewable energy policies in order to overcome concomitant market failures and barrier. We highlight that technology specific policies are generally understood as necessary complements to environmental non-technology specific policies in order to generate <br /> <br /> adequate demand in energy markets. However, in that respect, we outline the ongoing debate on the effectiveness of different technology specific policies on the demand-pull side and the role of technology-push policies. Additionally we provide a summary on methodological approaches to measure policy efforts and technological change respecting different impact levels and stages within the technological change process. Finally, by focusing on international competitiveness and technology cost we highlight two aspects of the effects renewable technology innovation and respective policy support. |
| JEL: | N70 O31 O32 O57 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1318&r=env |
| By: | Essam Yassin Mohammed; Shannon Wang; Gary Kawaguchi |
| Abstract: | Developing countries have collectively displayed relatively high growth rates in the last decade. Although large disparities still persist in standards of living, low and middle income countries averaged economic growth of 6.2% between 2000 and 2008, pulling 325 million people out of poverty (World Bank, 2010). Global growth has been accompanied by environmental degradation and in some cases there are growing numbers of people still living in poverty. Key questions for development planning today in countries include: Can developing countries strike a balance between economic growth, societal well-being and environmental protection? Can inclusive, green growth be a way forward? This report presents a case study on Cambodia designed to answer these questions. The case study draws on several sources of information to compile a “snapshot” of the situation today. In particular, qualitative information was gathered through a two-day, multi-stakeholder workshop and through bilateral interviews conducted with relevant actors from both public and private sectors. It also draws on relevant literature to present a balanced picture of the state of play on green growth in Cambodia. |
| Date: | 2013–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envddd:2013/8-en&r=env |
| By: | Daziano, Ricardo A.; Achtnicht, Martin |
| Abstract: | Previous literature on the distribution of willingness to pay has focused on its heterogeneity distribution without addressing exact interval estimation. In this paper we derive and analyze Bayesian confidence sets for quantifying uncertainty in the determination of willingness to pay for carbon dioxide abatement. We use two empirical case studies: household decisions of energy-efficient heating versus insulation, and purchase decisions of ultralow-emission vehicles. We first show that deriving credible sets using the posterior distribution of the willingness to pay is straightforward in the case of deterministic consumer heterogeneity. However, when using individual estimates, which is the case for the random parameters of the mixed logit model, it is complex to define the distribution of interest for the interval estimation problem. This latter problem is actually more involved than determining the moments of the heterogeneity distribution of the willingness to pay using frequentist econometrics. A solution that we propose is to derive and then summarize the distribution of point estimates of the individual willingness to pay under different loss functions. -- |
| Keywords: | Discrete Choice Models,Willingness to Pay,Credible Sets |
| JEL: | C25 D12 Q51 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13059&r=env |
| By: | Anna Bartczak (Faculty of Economic Sciences, University of Warsaw; Warsaw Ecological Economics Center) |
| Abstract: | The purpose of this study is to investigate the impact of an individual trait of altruism on social preferences and hence willingness to pay (WTP) for changes in forest management strategies in the Białowieża Forest in Poland. We used data from a discrete choice experiment (CE), where attributes described changes in the quality of the forest and recreation and were framed to capture the respondents’ non-use and use motivations. Patterns in the individual differences in altruistic behavior were elicited using a self-reported questionnaire developed by Rushton et al. (1981) concerning the frequency of an engagement in different altruistic behaviors. The application of the choice experiment technique allowed for the disentangling of the effect of a trait of altruism with regard to different attributes and their levels. The parameterization we employed in the survey was a WTP-space model (Train and Weeks 2005). Results show that the level of altruism has a significant effect on the valuation of restrictions in the forest visitor numbers; however, the altruism influence on the existence and bequest value from improving nature preservation depends on the current status of the forest. |
| Keywords: | altruism, Choice Experiment, forest naturalness, number of visitors, use and non-use value, WTP-space model |
| JEL: | Q23 Q51 Q56 Q57 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2013-20&r=env |
| By: | Tomás del Barrio Casto (University of the Balearic Islands, Palma de Mallorca); William Nilsson (University of the Balearic Islands, Palma de Mallorca); Andrés J. Picazo-Tadeo (University of Valencia) |
| Abstract: | Discrete choice models such as the conditional logit model are widely used tools in applied econometrics and, particularly, in the eld of environmental valuation and welfare measurement in order to provide policymakers with sound information for making strategic choices. Monte Carlo simulations are used in this study to analyze biases due to omitted relevant variables and functional form misspeci cation in the conditional logit model. Using an easy-to-estimate speci cation test is effective to reduce the risks for large biases. One somewhat discouraging result is, however, that a moderate bias can be found even when the omitted variable is orthogonal to the explanatory variables included. This result is particularly interesting considering the increasing interest in using randomized experiments to obtain causal interpretations of key parameters. Randomization, with independence between included and omitted variables, does not guarantee unbiased estimates in the conditional logit model. |
| Keywords: | Environmental valuation, Welfare measurements, Choice experiments, Monte Carlo analysis, Speci cation tests |
| JEL: | C51 D69 C99 C15 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1318&r=env |
| By: | Stephanie Jones (Maastricht School of Management, Maastricht, the Netherlands) |
| Abstract: | Over the last few years many business schools around the world have responded to the increasing interest in climate change and the expressed need to conserve the resources of the planet. These institutions are offering short certificate courses for executives, electives on Master’s courses, and entire focused MBAs, MAs and MSc programmes – all with the theme of sustainability. A brief study based on internet research on business schools with courses on sustainability produced a huge body of material – and this was only looking at sources in English. Each program considers the subject in a quite different way, suggesting the continuing controversy over the subject and the conflicting areas of priority within the field – for senior leaders and/or for middle managers; for public and/or private sector businesses; as part of strategy and/or operations; as an element or subset of CSR, or as a standalone area of study; as a fundamental way of working or a nice-to-have. Some academic institutions have gone much further than just offering sustainability as an academic discipline to students – they walk the talk and roll out initiatives created by their own staff members for the benefit of their own institutions. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2013/22&r=env |
| By: | Terciane Carvalho (Cedeplar-UFMG); Aline Magalhães (Face-UFMG); Edson Domingues (Cedeplar-UFMG) |
| Abstract: | This paper analyzes the contribution of the forest cleared for the Amazon economy between 2006 and 2011, as well as the effects of a policy of controlling deforestation between 2012 and 2020. For this, we used the interregional computable general equilibrium model (CGE) CGE-AMAZON, built to capture the specificities and heterogeneity of the region. Estimates of the economic contribution of deforestation to the growth of the Amazon would allow assessing the relative cost of public policies, estimating the implicit value of deforestation in economic dynamics. The simulation results indicate a positive contribution of deforestation between 2006 and 2011 for the Amazon economic growth of 0.3% on the total GDP. This result is reinforced by the economic impacts of a hypothetical policy of controlling deforestation, suggesting a marginal loss of economic growth in the regions. |
| Keywords: | computable general equilibrium, Amazon, deforestation |
| JEL: | Q15 C68 Q58 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td494&r=env |
| By: | Abdullah Almansour (Department of Finance and Economics, King Fahd University of Petroleum and Minerals); Margaret Insley (Department of Economics, University of Waterloo) |
| Abstract: | The optimal management of a non-renewable resource extraction project is studied when input and output prices follow correlated stochastic processes. The decision problem is specified by two Bellman equations describing the project when it is currently operating or mothballed. Solutions are determined numerically using the Least Squares Monte Carlo methodology. The analysis is applied to an oil sands project which uses natural gas during extracting and upgrading. The paper takes into account the co-movement between crude oil and natural gas prices and proposes two price models: one incorporates a long-run link between the two while the other has no such link. Incorporating a long-run relationship between oil and natural gas prices has a significant effect on the value of the project and its optimal operation and reduces the sensitivity of the project to the natural gas price process. |
| JEL: | Q30 Q40 C61 C63 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:wat:wpaper:1303&r=env |