nep-env New Economics Papers
on Environmental Economics
Issue of 2013‒09‒26
twelve papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Beyond inducement in climate change: Does environmental performance spur environmental technologies? By Claudia Ghisetti; Francesco Quatraro
  2. How capital-based instruments facilitate the transition toward a low-carbon economy : a tradeoff between optimality and acceptability By Rozenberg, Julie; Vogt-Schilb, Adrien; Hallegatte, Stephane
  3. Does the risk attitude influence the farmers' willingness to participate in agri-environmental measures? – A normative approach to evaluate ecosystem services By Dörschner, Till; Musshoff, Oliver
  4. Using Field Experiments in Environmental and Resource Economics By John A. List; Michael K. Price
  5. Do EPA Regulations Affect Labor Demand? Evidence from the Pulp and Paper Industry By Ronald J. Shadbegian; Wayne B. Gray; Chumbei Wang; Merve Cebi
  6. More than the Sum of their Parts: Valuing Environmental Quality by Combining Life Satisfaction Surveys and GIS Data By Jérôme Silva; Zachary Brown
  7. Free allocations in EU ETS Phase 3: The impact of emissions-performance benchmarking for carbonintensive industry By Stephen Lecourt; Clement Palliere; Oliver Sartor
  8. Carbon Taxes vs. Cap and Trade: A Critical Review By Lawrence H. Goulder; Andrew Schein
  9. Trade Liberalisation and Global-scale Forest Transition By Rafael González-Val; Fernando Pueyo
  10. Indirect Land Use Changes (ILUC): The Seen and the Unseen By Pierre Garello; Pierre Bentata
  11. Synergien zwischen Natur- und Klimaschutz in der Landbewirtschaftung – Öffentliche Güter zwischen Markt und Staat By Bues, Andrea; Krämer, Christine; Schuler, Johannes; Uckert, Götz
  12. Oil price volatility, economic growth and the hedging role of renewable energy By Rentschler, Jun E.

  1. By: Claudia Ghisetti (Département des sciences économiques - Università di Bologna); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: This paper contributes to the debate on the inducement of environmental innovations by analysing the extent to which endogenous inducement mechanisms spur the generation of greener technologies in contexts characterized by weak exogenous inducement pressures. In the presence of a fragile environmental regulatory framework, inducement can indeed be endogenous and environmental innovations may be spurred by firms' reactions to their direct or related environmental performance. Cross-sector analysis focuses on a panel of Italian regions, over the time span 2003-2007, and is conducted by implementing zero-inflated regression models for count data variables. The empirical results suggest that in a context characterized by a weak regulatory framework, such as the Italian one, environmental performance has significant and complementary within- and between-sector effects on the generation of green technologies.
    Keywords: Green technologies; Environmental Performance; Regional NAMEA; Technological innovation; Knowledge production function
    Date: 2013–09–09
  2. By: Rozenberg, Julie; Vogt-Schilb, Adrien; Hallegatte, Stephane
    Abstract: This paper compares the temporal profile of efforts to curb greenhouse gas emissions induced by two mitigation strategies: a regulation of all emissions with a carbon price and a regulation of emissions embedded in new capital only, using capital-based instruments such as investment regulation, differentiation of capital costs, or a carbon tax with temporary subsidies on brown capital. A Ramsey model is built with two types of capital: brown capital that produces a negative externality and green capital that does not. Abatement is obtained through structural change (green capital accumulation) and possibly through under-utilization of brown capital. Capital-based instruments and the carbon price lead to the same long-term balanced growth path, but they differ during the transition phase. The carbon price maximizes social welfare but may cause temporary under-utilization of brown capital, hurting the owners of brown capital and the workers who depend on it. Capital-based instruments cause larger intertemporal welfare loss, but they maintain the full utilization of brown capital, smooth efforts over time, and cause lower immediate utility loss. Green industrial policies including such capital-based instruments may thus be used to increase the political acceptability of a carbon price. More generally, the carbon price informs on the policy effect on intertemporal welfare but is not a good indicator to estimate the impact of the policy on instantaneous output, consumption, and utility.
    Keywords: Climate Change Mitigation and Green House Gases,Economic Theory&Research,Climate Change Economics,Investment and Investment Climate,Emerging Markets
    Date: 2013–09–01
  3. By: Dörschner, Till; Musshoff, Oliver
    Abstract: Agri-environmental measures are often not as accepted among farmers as expected. The present study investigates whether changes in income risks and the individual risk attitudes of farmers may constitute an explanatory approach for the low acceptance of the measures. For this purpose, a normative model is developed that calculates the premia claimed by the farmers for adopting environmental measures under the consideration of income risks and different risk attitudes. We apply this model to environmental measures aiming at an increase of the faunistic diversity of species and show that changes in income risks and the decision makers’ risk attitudes can significantly influence farmers’ minimum compensation claims for the participation in agri-environmental measures.
    Keywords: agri-environmental measures, income risks, minimum compensation claim, premium for ecosystem services, risk attitudes, Environmental Economics and Policy, Risk and Uncertainty,
    Date: 2013
  4. By: John A. List; Michael K. Price
    Abstract: This study showcases the usefulness of field experiments to the study of environmental and resource economics. Our focus pertains to work related to field experiments in the area of ‘behavioral’ environmental and resource economics. Within this rubric, we discuss research in two areas: those that inform i) benefit cost analysis and ii) conservation of resources. Within each realm, we show how field experiments have been able to test the relevant theories, provide important parameters to construct new theories, and guide policymakers. We conclude with thoughts on how field experiments can be used to deepen our understanding of important areas within environmental and resource economics.
    JEL: C9 C93 Q5
    Date: 2013–08
  5. By: Ronald J. Shadbegian; Wayne B. Gray; Chumbei Wang; Merve Cebi
    Abstract: Many believe that environmental regulation must reduce employment, since regulations are expected to increase production costs, raising prices and reducing demand for output. A careful microeconomic analysis shows that this not guaranteed. Even if environmental regulation reduces output in the regulated industry, abating pollution could require additional labor (e.g. to monitor the abatement capital and meet EPA reporting requirements). Pollution abatement technologies could also be labor enhancing. In this paper we analyze how a particular EPA regulation, the “Cluster Rule” (CR) imposed on the pulp and paper industry in 2001, affected employment in that sector. Using establishment level data from the Census of Manufacturers and Annual Survey of Manufacturers at the U.S. Census Bureau from 1992-2007 we find evidence of small employment declines (on the order of 3%-7%), sometimes statistically significant, at a subset of the plants covered by the CR.
    Keywords: Cluster Rule, regulatory costs, multimedia regulation, employment effects
    JEL: Q52 Q53 Q58
    Date: 2013–08
  6. By: Jérôme Silva; Zachary Brown
    Abstract: While environmental economics studies using stated life satisfaction data have been gaining attention, much of this body of work remains exploratory. In this study we contribute to this emerging body of research by combining OECD survey data from four European countries on life satisfaction and perceptions of environmental quality with independent (i.e. mechanical) measurements of air quality and urbanity, from the European Environment Agency, to provide a broad picture of the environmental determinants of life satisfaction, and monetary valuation of air quality improvements. We also estimate that the value of a 1% reduction in air pollution (measured as mean annual PM10 concentrations) is worth the same on average as a 0.71% increase in per capita income. We find that environments which respondents perceive as noisy and lacking in access to green space have a significantly detrimental impact on life satisfaction. However, controlling for these negative factors (air, noise, and lack of green space), we also find a large positive residual impact of urban environments on life satisfaction. The use of independent, GIS-based measures of urbanity (proportion of urban surface area around households), as opposed to survey-based stated perceptions of urbanity, increases the precision of estimated air quality impacts on life satisfaction. Taken as a whole, our analysis highlights the need for conducting LS-based environmental assessment and valuation exercises using a broad array of independent data sources, in order both to obtain unbiased regression estimates and to facilitate interpretation of these estimates. Alors que les études sur l’économie de l’environnement qui font appel à des données sur la satisfaction déclarée à l’égard de l’existence suscitent un intérêt grandissant, ces travaux conservent pour beaucoup d’entre eux un caractère exploratoire. Dans cette étude, nous apportons une contribution à ce domaine de recherche émergent en combinant des données issues d’enquêtes menées par l’OCDE dans quatre pays européens sur la satisfaction à l’égard de la vie et la qualité perçue de l’environnement, avec des mesures indépendantes (mécaniques) de la qualité de l’air et du caractère urbain provenant de l’Agence européenne pour l’environnement, dans le but de dresser un tableau général des déterminants environnementaux de la satisfaction à l’égard de la vie et de produire une évaluation monétaire des améliorations de la qualité de l’air. Nous estimons également qu’une réduction de 1 % de la pollution de l’air (mesurée comme la concentration annuelle moyenne de PM10) a la même valeur en moyenne qu’une hausse de 0.71 % du revenu par habitant. Nous constatons que les milieux perçus par les répondants comme bruyants et manquant de possibilités d’accès à des espaces verts ont un effet négatif sensible sur la satisfaction à l’égard de la vie. Cependant, si nous neutralisons l’effet de ces facteurs négatifs (air, bruit et manque d’espèces verts), nous observons aussi un fort impact résiduel positif des milieux urbains sur la satisfaction à l’égard de la vie. Le fait de recourir à des systèmes d’information géographique pour obtenir des mesures indépendantes du caractère urbain (en l’occurrence, la proportion de surfaces urbanisées autour du foyer), au lieu de s’en remettre aux appréciations sur ce point des répondants aux enquêtes, permet des estimations plus précises de l’impact de la qualité de l’air sur la satisfaction à l’égard de la vie. Dans l’ensemble, notre analyse met en lumière la nécessité de faire appel à un large éventail de sources de données indépendantes pour conduire des évaluations environnementales fondées sur la satisfaction à l’égard de la vie, afin d’obtenir des estimations par régression sans biais et de faciliter l’interprétation de ces estimations.
    Keywords: environmental valuation, life satisfaction
    JEL: C21 H23 H41 Q51 Q53 R20
    Date: 2013–04–10
  7. By: Stephen Lecourt; Clement Palliere; Oliver Sartor
    Abstract: From Phase 3 (2013-20) of the European Union Emissions Trading Scheme, carbon-intensive industrial emitters will receive free allocations based on harmonised, EU-wide benchmarks. This paper analyses the impacts of these new rules on allocations to key energy-intensive sectors across Europe. It explores an original dataset that combines recent data from the National Implementing Measures of 20 EU Member States with the Community Independent Transaction Log and other EU documents. The analysis reveals that free allocations to benchmarked sectors will be reduced significantly compared to Phase 2 (2008-12). This reduction should both increase public revenues from carbon auctions and has the potential to enhance the economic efficiency of the carbon market. The analysis also shows that changes in allocation vary mostly across installations within countries, raising the possibility that the carbon-cost competitiveness impacts may be more intense within rather than across countries. Lastly, the analysis finds evidence that the new benchmarking rules will, as intended, reward installations with better emissions performance and will improve harmonisation of free allocations in the EU ETS by reducing differences in allocation levels across countries with similar carbon intensities of production.
    Keywords: European Union Emissions Trading Scheme, CO2 allowance allocation, Emissions-performance benchmarking
    Date: 2013
  8. By: Lawrence H. Goulder; Andrew Schein
    Abstract: We examine the relative attractions of a carbon tax, a “pure” cap-and-trade system, and a “hybrid” option (a cap-and-trade system with a price ceiling and/or price floor). We show that the various options are equivalent along more dimensions than often are recognized. In addition, we bring out important dimensions along which the approaches have very different impacts. Several of these dimensions have received little attention in prior literature. A key finding is that exogenous emissions pricing (whether through a carbon tax or through the hybrid option) has a number of attractions over pure cap and trade. Beyond helping prevent price volatility and reducing expected policy errors in the face of uncertainties, exogenous pricing helps avoid problematic interactions with other climate policies and helps avoid large wealth transfers to oil exporting countries.
    JEL: H23 Q50 Q54
    Date: 2013–08
  9. By: Rafael González-Val (Universidad de Zaragoza & Institut d'Economia de Barcelona (IEB), Departamento de Análisis Económico); Fernando Pueyo (Universidad de Zaragoza, Departamento de Análisis Económico)
    Abstract: In this paper, we develop a theoretical model that provides an additional explanation for the forest transition based on a trade liberalisation scenario. Furthermore, in contrast with most explanations, in which the forest transition can only take place at a local level at the expense of other areas, ours is capable of supporting such phenomenon at a worldwide level. We introduce a renewable natural resource (wood), used as an input by manufacturing firms, in a framework with economic geography foundations: transport costs affect the distribution of firms between countries. In a general equilibrium, the results reproduce the forest transition at a global scale: a decrease in transport costs (in particular, that of the natural resource) has a negative effect on the worldwide stock of the natural resource in the short-term; however, this effect is offset during the transition as a consequence of industrial reallocation between countries and eventually disappears in the long-run.
    Keywords: Forest Transition, Natural Resources, Industrial Location, Trade Liberalisation
    JEL: F18 Q20 Q23 R12
    Date: 2013–07
  10. By: Pierre Garello (CERGAM, FEG, Aix-Marseille Université); Pierre Bentata (CERGAM-CAE, Aix-Marseille Université)
    Abstract: The paper analyzes a policy proposition to take into account indirect land use changes in the evaluation of GHG emissions by biofuel industry. Based on an extensive survey of scientific literature onILUC, it is argued that, due to the absence of a satisfactory scientific evaluation of ILUC, the proposition should be rejected for it will necessarily translate into arbitrary decisions and push an already struggling biofuel industry into bankruptcy. The study also provides afirst approximation of the cost of implementing ILUC regulation in terms of employment and subsidies. Also, a different orientation for a policy towards cleaner and renewable energy is outlined that would be based on a realistic account of current scientific and technological knowledge.
    Keywords: Indirect land Use Change, global public goods, GHGemissions, EU energy policy
    JEL: Q42 Q48 Q51 Q56
    Date: 2013–08
  11. By: Bues, Andrea; Krämer, Christine; Schuler, Johannes; Uckert, Götz
    Abstract: Multifunktionale Landbewirtschaftung soll zugleich die öffentlichen Güter Klima- und Naturschutz bereitstellen. Die jeweiligen Politikinstrumente stehen derzeit eher im Konflikt, können aber auch synergetisch sein. Dieser Beitrag stellt die Ergebnisse einer sozial-empirischen Akteursbefragung sowie einer Literaturanalyse vor, die mögliche Konflikte und Synergien zwischen Klima- und Naturschutzmaßnahmen in der Landwirtschaft beleuchten. Im Ergebnis wurde der Moorrenaturierung die größte Bedeutung als Synergiemaßnahme beigemessen, wohingegen dem Anbau von nachwachsenden Rohstoffen (NaWaRo) das geringste Synergiepotential bescheinigt wurde. Nachbesserungen in der Umsetzung sind vonnöten.
    Keywords: Natur- und Klimaschutz in der Landwirtschaft, öffentliche Güter, Delphibefragung, Environmental Economics and Policy, Political Economy,
    Date: 2013
  12. By: Rentschler, Jun E.
    Abstract: This paper investigates the adverse effects of oil price volatility on economic activity and the extent to which countries can hedge against such effects by using renewable energy. By considering the Realized Volatility of oil prices, rather than following the standard approach of considering oil price shocks in levels, the effects of factor price uncertainty on economic activity are analyzed. Sample countries represent developed and developing, oil importing and exporting and service/industry-based economies (United States, Japan, Germany, South Korea, India, and Malaysia) and thus complement the standard literature's analysis of Western OECD countries. In a vector auto-regressive setting, Granger causality tests, impulse response functions, and variance decompositions show that oil price volatility has more-adverse effects in all sample countries than oil price shocks alone can explain. The paper finds that the sensitivity to oil price volatility varies widely across countries and discusses various factors which may determine the level of sensitivity (such as sectoral composition and the energy mix). This implies that the standard approach of solely considering net oil importer-exporter status is not sufficient. Simulations of volatility shocks in hypothetical energy mixes (with increased renewable shares) illustrate the potential economic benefits resulting from efforts to disconnect the macroeconomy from volatile commodity markets. It is concluded that expanding renewable energy can in principle reduce an economy's vulnerability to oil price volatility, but a country-specific analysis would be necessary to identify concrete policy measures. Overall, the paper provides an additional rationale for reducing exposure and vulnerability to oil price volatility for the sake of economic growth.
    Keywords: Energy Production and Transportation,Climate Change Economics,Markets and Market Access,Energy Demand,Emerging Markets
    Date: 2013–09–01

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