nep-env New Economics Papers
on Environmental Economics
Issue of 2013‒10‒05
sixteen papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Environmental Policy and Macroeconomic Dynamics in a New Keynesian Model By Barbara Annicchiarico; Fabio di Dio
  2. Measuring Environmental Regulatory Stringency By Claire Brunel; Arik Levinson
  3. The Carbon Cost of an Educated Future: A Consumer Lifestyle Approach. By Ethan Sharygin
  4. Illustrated implications of the Terrifying New Math of Meinshausen and McKibben By Colin Hunt
  5. Developments in Regional Trade Agreements and the Environment: 2012 Update By Clive George
  6. Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption By Dimitrios Varvarigos
  7. Essays in environmental and resource economics. By Michielsen, T.O.
  8. Imperfect Eco-labeling Signal in a Bertrand Duopoly By Lucie Bottega; Jenny De Freitas
  9. Domestic Incentive Measures for Renewable Energy With Possible Trade Implications By Heymi Bahar; Jagoda Egeland; Ronald Steenblik
  10. Agricultural Advisors: A Receptive Audience for Weather and Climate Information? By Prokopy, Linda; Haigh, Tonya; Mase, Amber; Angel, Jim; Hart, Chad E.; Knutson, Cody; Lemos, Maria; Lo, Yun-Jia; McGuire, Jean; Morton, Lois; Perron, Jennifer; Todey, Dennis; Widhalm, Melissa
  11. Dowry Deaths: Consumption Smoothing in Response to Climate Variability in India By Sheetal Sekhri; Adam Storeygard
  12. Missing Water: Agricultural Stress and Adaptation Strategies in Response to Groundwater Depletion in India By Sheetal Sekhri
  13. Agricultural Trade, Institutions, and Depletion of Natural Resources By Sheetal Sekhri; Paul Landefeld
  14. Less Is More? Implications of Regulatory Capture for Natural Resource Depletion By Sheetal Sekhri; Sriniketh Nagavarapu
  15. How Much is Clean Water Worth? Valuing Water Quality Improvement Using A Meta Analysis By Ge, Jiaqi; Kling, Catherine L.; Herriges, Joseph A.
  16. Gestión ambiental de áreas naturales By Bertolotti, María Isabel; Bertoni, Marcela; López, María José; Testa, Joaquín

  1. By: Barbara Annicchiarico (University of Rome "Tor Vergata"); Fabio di Dio (Sogei S.p.a. IT Economia)
    Abstract: This paper studies the dynamic behaviour of an economy under different environmental policy regimes in a New Keynesian (NK) model with nominal and real uncertainty. We find the following results: (i) an emissions cap policy is likely to dampen macroeconomic fluctuations; (ii) staggered price adjustment alters significantly the performance of the environmental policy regime put in place, especially with an emissions intensity target; (iii) welfare tends to be higher with a tax on emissions when prices are sticky; (iv) the optimal policy response to inflation is found to be very strong as long as welfare is not affected by environmental quality and the environmental policy does not consist in an emissions cap.
    Keywords: New Keynesian Model,Environmental Policy,Macroeconomic Dynamics,Monetary Policy
    JEL: E32 E50 Q58
    Date: 2013–09–30
  2. By: Claire Brunel; Arik Levinson
    Abstract: Researchers have long been interested in whether environmental regulations discourage investment, reduce labour demand, or alter patterns of international trade. But estimating those consequences of regulations requires devising a means of measuring their stringency empirically. While creating such a measure is often portrayed as a data-collection problem, we identify four fundamental conceptual obstacles, which we label multidimensionality, simultaneity, industrial composition, and capital vintage. We then describe the long history of attempts to measure environmental regulatory stringency, and assess their relative success in light of those obstacles. Finally, we propose a new measure of stringency that would be based on emissions data and could be constructed separately for different pollutants.
    Keywords: trade and environment, environmental regulations, environmental subsidies
    JEL: C26 C43 C83 D78 F18 L51 Q52 Q53 Q58
    Date: 2013–08–22
  3. By: Ethan Sharygin
    Abstract: Demographic and economic growth will account for most of the anticipated growth in greenhouse gas (GHG) emissions in the next century. Education is associated with development, and the world population in the near future is likelyto be significantly better educated than today. Previous studies ofhousehold energy demand and associated emissions have not directly considered the consequences of a more educated population. In this study, I estimate the energy intensity of consumption dollars and the total impact of households according to their demographic characteristics, with particular attention to differences in spending habits by education and the environmental consequences. I find that education results in fewer emissions per household, holding other household characteristics constant. Each year of education is associated with an average effect in CO2-equivalent (CO2e) emission of -466kg/yr.After controlling for household characteristics, the effect of a year of education is -163.1kg per year. Educated households spend less on home energy and transportation by car, two of the most important sources of household level atmospheric GHG production. They spend relatively more on investment goods, public transport, and other activities which have a low environmental footprint.
    Keywords: Human capital, environmental impact, household emissions.
    Date: 2013–09
  4. By: Colin Hunt (School of Economics, The University of Queensland)
    Abstract: There is a limit to the quantity of greenhouse gases that may be emitted to the atmosphere if catastrophic climate change is to be avoided. There is a global carbon budget that should not be exceeded by 2050. The practical implication is that most of the world’s fossil fuel inventory must be left in the ground and not burned. The article analyses the implications of adhering to the carbon budget by modelling the implied rate of reduction in emission intensity of the world economy. A delay in concerted international action increases sharply the rate required. The four major emitting countries are examined for their energy and emission policies and the trajectories of their required emission intensities derived. If the budget is adhered to, the intensities of China and Russia will need to be reduced sharply after 2020 when their present policies expire. Barriers are likely to remain to concerted international action in 2020, however. This will leave countries such as China and Russia free to pursue policies for the maintenance of economic growth as a priority, rather than the adoption of strict and economically stultifying targets for emissions or emission intensity.
    Date: 2013–09–30
  5. By: Clive George
    Abstract: This report provides an update on recent developments in the field of Regional Trade Agreements and the environment. Issues arising in the implementation of RTAs with environmental considerations are examined as well as experience in assessing their environmental impacts. It is the sixth update prepared under the aegis of the Joint Working Party on Trade and Environment (JWPTE). The document covers developments from late 2011 to October 2012. It is based on publicly available information.
    Keywords: trade policy, trade and environment, free trade agreements, regional trade agreements, environmental provisions
    JEL: F13 F18 N50 Q56
    Date: 2013–07–04
  6. By: Dimitrios Varvarigos
    Abstract: I model an economy where the adverse health effects of pollution impede labour productivity and capital accumulation is the source of economic growth. Pollution is generated by firms that choose whether to employ a dirty technology and pay an environmental tax, or employ a clean technology and incur the cost of its adoption. The task of inspecting the environmental impact of each firm’s production technology is delegated to bureaucrats who are corruptible since they receive bribes in order to mislead authorities on the firms’ actual technology choice. The model can generate multiple steady state equilibria. In this context, the multiplicity of equilibria is associated with indeterminacy, due to the self-fulfilling nature of corruption incentives and the relevant implications for pollution, productivity and economic growth.
    Keywords: Corruption; Economic Growth; Health; Pollution; Productivity
    JEL: D73 O44 Q58
    Date: 2013–09
  7. By: Michielsen, T.O. (Tilburg University)
    Abstract: The dissertation also deals with conflicts between successive regulators that can arise when policy makers have self-control problems, or because successive regulators share a common concern for long-term environmental outcomes, but each regulator would like his successors to shoulder the costs of preventative policies. Lastly, it contains a chapter that highlights the importance of energy reserves for the location of energy-intensive manufacturing industries.
    Date: 2013
  8. By: Lucie Bottega (Toulouse School of Economics); Jenny De Freitas (Universitat de les Illes Balears)
    Abstract: In a Bertrand duopoly model, we study firms’ eco-labeling behavior when certification process imperfectly signals environmental product quality to consumers. The test is noisy in the sense that brown products may be labeled while green products may not. We study how strategic interaction shapes firms’ incentives to get certified, equilibrium demand, prices and social welfare. We find that the eco-labeling policy is welfare enhancing for all parameter values. Nevertheless, the separating testing equilibrium may be too costly to sustain when the green firm probability to pass the test is small. Moreover, if the certification technology is soft, meaning that both brown and green units are awarded the label with high probability, it would be easier to sustain a separating equilibrium. This is a consequence of price strategic interaction between firms that gives firms incentives to coordinate on a separating equilibrium.
    Keywords: Imperfect Certification, Eco-label, Duopoly, Welfare Analysis, Environmental Quality, Credence Attribute
    JEL: C72 D21 D60 D82 L15 Q50
    Date: 2013
  9. By: Heymi Bahar; Jagoda Egeland; Ronald Steenblik
    Abstract: In recent years the manufacturing of renewable-energy technologies has become truly global. The associated rise in international investment and trade in goods and services related to renewable energy has been rapid, but it has not always been smooth. Already there have been challenges at the WTO, and the unilateral imposition of countervailing and anti-dumping duties, in response to some countries‘ policies on the grounds that they distort trade. Against this background, this paper surveys, through the lenses of market-pull and technology-push policies, the numerous domestic incentives used by governments to promote renewable energy, focusing on those that might have implications for trade — both those that are likely to increase opportunities for trade and those that may be inhibiting imports or promoting exports. Many OECD countries, and an increasing number of non-OECD countries, have established national targets for renewable energy. To help boost the rate of penetration of renewable energy in their economies, most of the same countries are providing additional incentives. Market-pull incentives for the deployment of renewable-energy-based electricity generating plants include quota systems, usually administrated through "green" certificates, and fixed per kilowatt-hour feed-in tariffs and premiums. Renewable fuels for transport are typically promoted by governments through obliging fuel suppliers to mix ethanol or biodiesel with their corresponding petroleum-derived fuels. Frequently, renewable fuels for transport also benefit from exemptions, or reductions in, fuel-excise taxes, and in a few countries from production bounties. Many national and sub-national governments also support capital formation in these industries with grants, subsidised loans, loan guarantees, or a combination of instruments. In some jurisdictions, access to government support schemes have been made conditional upon meeting certain minimum levels of domestic content. Such domestic-content requirements are highly controversial because of their direct effects on trade. These effects, and the effects of other policies in combination and in isolation, are examined through a graphical analysis of generic policies, using a simplified stylised representation of the relevant markets. The basic message is that while many domestic incentives are both increasing the supply of renewable energy and facilitating trade in associated technologies and renewable fuels, some — especially those combined with border protection or domestic-content requirements — are likely reducing export opportunities for foreign suppliers, and raising domestic prices for renewable energy as a consequence.
    Keywords: trade, environment, renewable energy, environmental subsidies, bioenergy, biofuels
    JEL: F18 H23 L98 O38 Q42 Q56 Q58
    Date: 2013–06–27
  10. By: Prokopy, Linda; Haigh, Tonya; Mase, Amber; Angel, Jim; Hart, Chad E.; Knutson, Cody; Lemos, Maria; Lo, Yun-Jia; McGuire, Jean; Morton, Lois; Perron, Jennifer; Todey, Dennis; Widhalm, Melissa
    Abstract: As the climate in the Midwestern United States becomes increasingly variable due to global climate change, it is critical to provide tools to the agricultural community to ensure adaptability and profitability of agricultural cropping systems. When used by farmers and their advisors, agricultural decision support tools can reduce uncertainty and risks in the planning, operation, and management decisions of the farm enterprise. Agricultural advisors have historically played a key role in providing information and guidance in these decisions. However, little is known about what these advisors know or think about weather and climate information and their willingness to incorporate this type of information into their advice to farmers. In this exploratory study, a diverse set of professionals who advise corn growers, including government, non-profit, for-profit and Extension personnel, were surveyed in four states in the Midwestern Corn Belt. Results from the survey indicate that advisors are more influenced by current weather conditions and 1-7 day forecasts than longer term climate outlooks. Advisors predominantly consider historical weather trends and/or forecasts in their advice to farmers on short-term operational decisions versus on longer-term tactical and strategic decisions. The main conclusion from this analysis is that opportunities exist to further engage the advisor community on weather and climate issues and, through them, the farmers who are managing the land.
    Keywords: climate change; profitability; cropping systems
    JEL: Q54
    Date: 2013–04–01
  11. By: Sheetal Sekhri; Adam Storeygard
    Abstract: We examine the eect of rainfall shocks on crimes against women using data from 583 Indian districts for 2002-2007. We nd that a one standard deviation decline in annual rainfall from the local mean increases reported domestic violence by 4.4 percent and dowry deaths by 7.8 percent. Wet shocks have no apparent eect. These patterns are consistent with consumption smoothing by households relying on agriculture, but inconsistent with hypotheses emphasizing general unrest. Women's political representation in the national parliament has no apparent mitigating eect.
    Keywords: Dowry Deaths, Consumption Smoothing, Climate Shocks
    JEL: O10 O13 Q54
    Date: 2013–03
  12. By: Sheetal Sekhri
    Abstract: Groundwater depletion is becoming a serious policy concern in many developing countries but little is known about the costs of groundwater depletion. I use annual deviations of depth to groundwater from 1999 to 2003 from the 1985-1995 decadal means for Indian districts, to investigate how production and sown area respond to groundwater uctuations. I nd that a 1 meter decline in groundwater in a year reduces food-grain production by 8 percent, water intensive crop production by 9 percent and cash crops by 5 percent. I also use year-to-year transitions of groundwater around a cuto value, at which cost of technology required to access groundwater exogenously increases due to physical constraints, to examine coping mechanisms. I nd that for short run shocks around this cuto, sown area for food-grains and water intensive crops falls by 7 to 8 percent, whereas there is no change for cash crops. I evaluate the eect of the transition of 10 year means of groundwater around this cuto on exit from farming. I do not nd evidence of exit of marginal or small farmers from agriculture. mitigating eect.
    Keywords: Groundwater Depletion; Agricultural Production; India
    JEL: O10 O13 Q54
    Date: 2013–10
  13. By: Sheetal Sekhri; Paul Landefeld
    Abstract: Globalization can lead to either conservation or depletion of natural resources that are used in the production of traded goods. Rising prices may lead to better resource man- agement. Alternatively, stronger incentives to extract these resources may exacerbate their decline- especially in open access institutional frameworks. We examine the impact of agricultural trade promotion on the groundwater extraction in India using nationally representative data from 1996-2005. We nd evidence that trade promotion leads to de- pletion of groundwater reserves. Access to world markets does not result in emergence of institutions that would enable protection of the resource.
    Keywords: Groundwater Depletion, Agricultural Trade
    JEL: O13 Q25 Q56
    Date: 2013–09
  14. By: Sheetal Sekhri; Sriniketh Nagavarapu
    Abstract: Well-designed regulation can check politically driven ineciencies, but it can also ex- acerbate distortions if politicians capture the regulators. We examine the consequences of strengthening India's electricity transmission regulatory structure for groundwater ex- traction, where electricity is the key input, and we nd evidence of regulatory capture by politicians. Guided by our model, in which politicians of national and regional parties compete for parliamentary seats, we show that empowering regulators amplied distortions in groundwater extraction in favor of national candidates, who have greater incentives and abilities to co-opt the regulators. Using nationally representative groundwater data from India for 1996-2006, we estimate that regulatory capture led to a 2.75 meter additional de- cline in water tables in closely-contested constituencies won by national parties' candidates. The short-term cost in closely-contested regional constituencies is around an 18 percent re- duction in agricultural production.
    Keywords: Regulatory Capture; Groundwater Depletion; Political Capture
    JEL: O10 O13 Q54
    Date: 2013–10
  15. By: Ge, Jiaqi; Kling, Catherine L.; Herriges, Joseph A.
    Abstract: This paper has developed and estimated a valuation model for water quality improvement. After reviewing more than 100 studies, we set up a data set that has 332 valuations from 38 distinct studies. Based on the data set, we estimate a linear valuation model, which can then be used to predict the mean willingness to pay by households living in a given region for water quality improvement at a given site. For instance, the willingness to pay by a typical household living in the state of Iowa for a water quality increase from 40 to 50 (out of 100) at a one-square-mile aquatic site, like Iowa’s Spirit Lake, is predicted to be $137.52. The valuation model developed in this paper is particularly convenient when we want to evaluate the benefit of a project that aims at improving water quality, but a primary study is too costly or time consuming.
    Date: 2013–03–30
  16. By: Bertolotti, María Isabel; Bertoni, Marcela; López, María José; Testa, Joaquín
    Abstract: El objetivo es presentar una síntesis de los proyectos realizados en los últimos seis años en el grupo de investigación Economía Ecológica que se plantea en función del abordaje del caso de estudio la Reserva de Biosfera de Mar Chiquita. La finalidad de este abordaje fue desarrollar una línea de investigación integral y en profundidad respecto de la gestión ambiental de los espacios protegidos.
    Keywords: Gestión Ambiental; Areas Naturales;
    Date: 2013–04

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