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on Environmental Economics |
| 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: | 2013–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00860045&r=env |
| By: | Adrien Vogt-Schilb (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech); Stéphane Hallegatte (SDN - Sustainable Development Network - The World Bank) |
| Abstract: | Decision makers facing abatement targets need to decide which abatement measures to implement, and in which order. Measure-explicit marginal abatement cost curves depict the cost and abating potential of available mitigation options. Using a simple intertemporal optimization model, we demonstrate why this information is not sufficient to design emission reduction strategies. Because the measures required to achieve ambitious emission reductions cannot be implemented overnight, the optimal strategy to reach a short-term target depends on longer-term targets. For instance, the best strategy to achieve European's -20% by 2020 target may be to implement some expensive, high-potential, and long-to-implement options required to meet the -75% by 2050 target. Using just the cheapest abatement options to reach the 2020 target can create a carbon-intensive lock-in and make the 2050 target too expensive to reach. Designing mitigation policies requires information on the speed at which various measures to curb greenhouse gas emissions can be implemented, in addition to the information on the costs and potential of such measures provided by marginal abatement cost curves. |
| Keywords: | climate change mitigation; dynamic efficiency; sectoral policies |
| Date: | 2013–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:hal-00916328&r=env |
| By: | Trevor Tombe (University of Calgary); Jennifer Winter |
| Abstract: | Firm-level idiosyncratic policy distortions lower aggregate productivity, especially if such distortions are correlated with firm productivity. Many environmental policies, such as energy intensity standards, exhibit this correlation. In contrast to the existing environmental literature comparing taxes to standards, we explicitly consider distortions among a large number of heterogenous firms in multiple industries in a model that matches the industrial structure and energy use patterns of developed economies. We demonstrate that taxes are always superior to intensity standards, especially standards that impose a common target on all firms. We also examine ways to mitigate the costs of standards. |
| Date: | 2013–12–02 |
| URL: | http://d.repec.org/n?u=RePEc:clg:wpaper:2013-29&r=env |
| By: | Christoph Böhringer (University of Oldenburg - Economic Policy & ZenTra); Thomas F. Rutherford (University of Wisconsin-Madison - Agricultural & Applied Economics); Marco Springmann (University of Oldenburg - Economic Policy) |
| Abstract: | The Clean Development Mechanism (CDM) established under the Kyoto Protocol allows industrialized Annex I countries to offset part of their domestic emissions by investing in emissions-reduction projects in developing non-Annex I countries. We present a novel CDM modelling framework which can be used in computable general equilibrium (CGE) models to quantify the sector-specific and macroeconomic impacts of CDM investments. Compared to conventional approaches that mimic the CDM as sectoral emissions trading, our framework adopts a microeconomically consistent representation of the CDM incentive structure and its investment characteristics. In our empirical application we show that incentive compatibility implies that the sectors implementing CDM projects do not suffer, and that overall cost savings from the CDM tend to be lower than suggested by conventional modelling approaches. |
| Keywords: | Clean Development Mechanism, Computable General Equilibrium Modelling |
| JEL: | C68 Q58 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:zen:wpaper:23&r=env |
| By: | Stephen Holland; Andrew J. Yates |
| Abstract: | We analyze a novel method for improving the efficiency of pollution permit markets by optimizing the way in which emissions are exchanged through trade. Under full-information, it is optimal for emissions to exchange according to the ratio of marginal damages. However, under a canonical model with asymmetric information between the regulator and the sources of pollution, we show that these marginal damage trading ratios are generally not optimal, and we show how to modify them to improve efficiency. We calculate the optimal trading ratios for a global carbon market and for a regional nitrogen market. In these examples, the gains from using optimal trading ratios rather than marginal damage trading ratios range from substantial to trivial, which suggests the need for careful consideration of the structure of asymmetric information when designing permit markets. |
| JEL: | D82 H23 Q53 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19780&r=env |
| By: | Daisuke Ichinose (School of Economics, Rikkyo University); Masashi Yamamoto (Center for Far Eastern Studies, University of Toyama); Yuichiro Yoshida (Graduate School for International Development and Cooperation, Hiroshima University) |
| Abstract: | A number of developing countries have come to face the growing problems of municipal solid waste management caused by rapid economic growth. Although there are many studies on the environmental Kuznets curve, very few address the issue of municipal solid waste, and there is still controversy concerning the validity of the waste version of the Kuznets curve hypothesis. In this paper, we provide empirical evidence in support of the waste Kuznets curve hypothesis by applying spatial econometrics methods to municipal-level data from Japan. The study finds valid evidence for the waste Kuznets curve hypothesis using the absolute decoupling method. It is demonstrated that the turning point for household municipal solid waste is approximately 3.7 million yen per person, which is far less than the maximum income in the sample. The success of our study partially stems from our highly disaggregated data and use of a spatial econometrics model that accounts for the mimicking behavior of neighboring municipalities. The former aspect indicates that distinguishing between household and business waste reveals the waste-income relationship, whereas the latter indicates the importance of peer effects when municipal governments formulate waste-reduction policies. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:hir:idecdp:3-10&r=env |
| By: | Sebri, Maamar; Ben Salha, Ousama |
| Abstract: | The current study investigates the causal relationship between economic growth and renewable energy consumption in the BRICS countries over the period 1971-2010 within a multivariate framework. The ARDL bounds testing approach to cointegration and vector error correction model (VECM) are used to examine the long-run and causal relationships between economic growth, renewable energy consumption, trade openness and carbon dioxide emissions. Empirical evidence shows that, based on the ARDL estimates, there exist long-run equilibrium relationships among the competing variables. Regarding the VECM results, bi-directional Granger causality exists between economic growth and renewable energy consumption, suggesting the feedback hypothesis, which can explain the role of renewable energy in stimulating economic growth in BRICS countries. |
| Keywords: | ARDL; BRICS; Granger causality; Economic growth; Renewable energy. |
| JEL: | C32 Q2 Q3 Q4 |
| Date: | 2013–12–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52535&r=env |
| By: | Ben Salha, Ousama; Sebri , Maamar |
| Abstract: | This paper examines the causality linkages between economic growth, renewable energy consumption, CO2 emissions and domestic investment in Tunisia between 1971 and 2010. Using the ARDL bounds testing approach to cointegration, long-run relationships between the variables are identified. The Granger causality analysis, on the other hand, indicates that there is bi-directional causality between renewable energy consumption and economic growth, which supports the feedback hypothesis in Tunisia. In addition, the quantity of CO2 emissions collapses as a reaction to an increase in renewable energy consumption. These findings remain robust even when controlling for the presence of structural break. We conclude that more efforts should be undertaken to further develop a suitable infrastructure to the renewable energy sector, given its enhancing-effects on economic growth and reducing-effects on CO2 emissions. |
| Keywords: | ARDL, Economic growth, Granger causality, Renewable energy consumption, Structural break, Tunisia. |
| JEL: | C3 Q4 |
| Date: | 2013–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52572&r=env |
| By: | Dimitris Georgiou ("Postgraduate program in Agribusiness Management Agricultural University of Athens"); Essam Sh. Mohammed (Department of Natural Resources Management and Agricultural Engineering, Agricultural University of Athens); Stelios Rozakis ("Department of Agricultural Economics and Rural Development Agricultural University of Athens") |
| Abstract: | The important energy requirements for the desalination process impose especially in remote plants supply by Renewable Energy Sources (RES). In this paper five alternative energy generation topologies of Reverse Osmosis desalination process are evaluated. Proposed topologies assessed in terms of economic, environmental, technological and societal indices are compared using multi-criteria analysis, namely the Analytic Hierarchy Process (AHP) and PROMETHEE. Ranking of topologies resulted in the selection of direct connection and hybrid configuration. In case of economic priorities prevail diesel generation should also be considered. |
| Keywords: | desalination, reverse osmosis, topologies, multi-criteria analysis, renewable energy sources. |
| JEL: | Q25 Q42 C44 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:aua:wpaper:2013-6&r=env |
| By: | Reza Farrahi Moghaddam; Fereydoun Farrahi Moghaddam; Mohamed Cheriet |
| Abstract: | A global agreement on how to reduce and cap human footprint, especially their GHG emissions, is very unlikely in near future. At the same time, bilateral agreements would be inefficient because of their neural and balanced nature. Therefore, unilateral actions would have attracted attention as a practical option. However, any unilateral action would most likely fail if it is not fair and also if it is not consistent with the world trade organization's (WTO's) rules, considering highly heterogeneity of the global economy. The modified GHG intensity (MGHGINT) indicator, hereafter called Inequality-adjusted Production-based GHGINT (IPGHGINT), was put forward to address this need in the form of a universal indicator applicable to every region regardless of its economic and social status. Nonetheless, the original MGHGINT indicator ignores hidden consumption-related emissions, and therefore it could be unfair to some production-oriented regions in the current bipolar production/consumption world. Here, we propose two generalizations, called Inequality-adjusted Consumption-based GHGINT (ICGHGINT) and Inequality-adjusted Production/Consumption-Insensitive GHGINT (IIGHGINT), to the IPGHGINT in order to combine both production and consumption emissions in a unified and balanced manner. The impact of this generalizations on the associated border carbon tax rates is evaluated in order to validate their practicality. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1401.0301&r=env |
| By: | Esposito, Piero; Patriarca, Fabrizio; Perini, Luigi; Salvati, Luca |
| Abstract: | The present study investigates the relationship between land vulnerability to desertification and the evolution of the productive structure in Italy during the last fifty years (1960-2010). The objectives of the study are two-fold: (i) to present and discuss an original analysis of the income-environment relationship in an economic-convergent and environmental-divergent country and (ii) to evaluate the impact of the (changing) productive structure and selected socio-demographic characteristics on the level of land vulnerability. The econometric analysis indicates that the relationship between per capita GDP and land vulnerability across Italian provinces is completely reverted once we move from a cross section analysis to panel estimates. While economic and environmental disparities between provinces go in the same direction, with richer provinces having a better land, over time the growth process increases the desertification risk, with the economic structure acting as a significant variable. |
| Keywords: | Environmental quality, Economic growth, Land degradation, Regional disparities, Italy, Panel data. |
| JEL: | C23 Q24 Q56 R11 |
| Date: | 2013–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52601&r=env |
| By: | John Boyce (University of Calgary) |
| Abstract: | This paper documents that natural resources that are more abundant have higher production, lower prices, higher primary industry revenues, and higher R&D. These empirical facts are explained by a model of biased technological change in which relatively more abundant resources attract greater R&D because the return from obtaining a patent is higher in larger markets. Resource specific R&D may be targeted either towards upstream extraction technologies or towards downstream production technologies, and R&D is subject to diminishing knowledge spillovers and diminishing productivity of labor. The estimated elasticity of substitution between natural resources is greater than one, implying that natural resources are substitutes in production. Declining real resource prices in the face of rising resource production are explained by the increasing productivity of labor as knowledge stocks grow. |
| Date: | 2013–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:clg:wpaper:2013-04&r=env |
| By: | Boksh, F. I. M. Muktadir |
| Abstract: | Newfoundland and Labrador province is blessed with many natural resources. The province heavily depends on nonrenewable petroleum products for its domestic need and export. Considering the limited nature of this nonrenewable resources, the provincial government has taken many policy initiatives to develop its renewable energy sector. It has been found that the concentration was mainly on hydroelectric generation where the government is now implementing the formulated policies. But, policymakers are in policy formulation stage for wind energy development. Overall, the province has set its long term vision of sustainable energy supply and moving towards development of clean and environment friendly energy. |
| Keywords: | Newfoundland and Labrador, renewable energy, policy formulation |
| JEL: | Q4 Q48 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52650&r=env |
| By: | Bruce A. Babcock (Center for Agricultural and Rural Development (CARD)); Sebastien Pouliot (Center for Agricultural and Rural Development (CARD)) |
| Abstract: | The proposed decision by the Environmental Protection Agency (EPA) to reduce biofuel mandates that can be met by ethanol to about 13 billion gallons is predicated in part on a finding that consumption of ethanol is largely limited to the amount that can be consumed in E10, a blended fuel containing 10 percent ethanol. One way to increase ethanol consumption beyond E10 levels is with E85, which contains up to 83 percent ethanol. Historical consumption of E85 provides a poor predictor of the level of possible consumption because the price of E85 has never been low enough to save owners of flex vehicles money. We use a new model of E85 demand to estimate the feasibility and cost of meeting higher ethanol mandate levels than those proposed by EPA. Our model shows that if existing E85 stations could sell as much E85 as demanded by consumers, and if E85 were priced at fuel-cost parity with E10, then ethanol consumption in E85 would be 1.65 billion gallons. If E85 were priced to generate a 20 percent reduction in fuel costs to consumers, then ethanol consumption would increase by 3.6 billion gallons per year. These calculations assume no growth in the number of flex vehicles above the level that existed on January 1, 2013. However, it is not realistic to assume that existing E85 stations could sell unlimited amounts of the fuel. Imposing an upper limit on monthly E85 sales of 45,000 gallons per station reduces ethanol-in-E85 consumption levels to 700 million gallons per year at parity prices, and 900 million gallons per year at a price that results in a 20 percent reduction in fuel costs. The large gap between how much E85 would be demanded by consumers and what can realistically be sold by existing stations shows that both price and the number of gasoline stations selling E85 constrain consumption. We show the impact of adding E85 sales outlets in urban areas where flex vehicles are concentrated by calculating the different combinations of new sales outlets and E85 retail prices needed to achieve a ethanol consumption targets beyond E10. An additional ethanol consumption target of 800 million gallons could be achieved with an E85 retail price of $2.32 per gallon and no new stations. If 500 new stations were added, then the required retail price increases to $2.71 per gallon. These results demonstrate that meeting a 14.4 billion gallon ethanol mandate is feasible in 2014 with no new stations, modestly lower E85 prices, and judicious use of available carryover RINs (Renewable Identification Numbers). Meeting a two billion gallon increase in consumption would require installing at least 3,000 new stations. At a cost of $130,000 per station, this would require a one-time investment of $390 million, or about 20 cents per gallon of increased ethanol consumption in one year. With 3,000 additional stations, the retail price of E85 would have to be discounted to $2.10 per gallon to generate two billion gallons of additional ethanol consumption. With a total of 3,500 new stations, the required E85 retail price increases to $2.60 per gallon. The large impact that adding new stations has on the retail price of E85 given a level of E85 sales gives EPA a powerful tool to incentivize investment in new stations that can facilitate meeting expanded ethanol consumption targets. Any gap that arises between the wholesale price of ethanol needed to support a lower retail E85 price and the cost of producing and transporting ethanol would be closed by the price of RINs. RIN prices also indicate the cost that owners of oil refineries bear to meet biofuel mandates. Thus, there exists an inverse relationship between the cost of compliance with mandates and the number of new E85 stations. This means that owners of oil refineries who bear the costs of complying with mandates can reduce their compliance costs by investing in new E85 stations. If EPA were to set the 2014 ethanol mandate at 14.4 billion gallons and the mandate was met by 13 billion gallons of ethanol in E10, 800 million gallons of ethanol in E85, and 600 million banked RINs, then the RIN price that would cover the gap between the required $2.32 per gallon price of E85 and the cost of producing and transporting ethanol would be 69 cents per RIN. With 500 additional stations, the RIN price would drop to 18 cents. This drop in RIN price represents more than a $7 billion drop in the total value of RINs that would be used for compliance in 2014. In this scenario, the cost of adding the additional stations would be $65 million. This dramatic decrease in the total cost of RINs from adding new E85 stations is what gives EPA the tool they need to incentivize the investments that would facilitate expanded ethanol mandates. EPA’s proposed rule would reduce mandated volumes of biofuels in part, because of “supply concerns associated with the blendwall.†We demonstrate in this paper that the important supply concern associated with the E10 blendwall pertains to the supply of stations that sell E85, not the supply of the biofuel. The lack of stations that sell the fuel results in a lack of demand for ethanol, not a lack of supply. EPA’s justification for reducing ethanol mandates means that mandates will not be increased beyond E10 levels until the number of stations that sell E85 increases sufficiently. Our results demonstrate that the number of stations that sell E85 will not increase until EPA sets ethanol mandates beyond E10 levels. If increased mandates wait for the stations to be built, mandates will never increase. Our results showing that 800 million gallons of ethanol can be consumed as E85 in 2014, even with no additional investment in E85 stations can provide one way out of this policy dilemma. Combining this additional consumption of ethanol in E85 with consumption of ethanol in E10 and available banked RINs would facilitate meeting a 14.4 billion gallon mandate in 2014. Adopting a 14.4 billion gallon ethanol mandate would send a clear signal that EPA is not locked into keeping ethanol mandates below E10 levels. It would also increase RIN prices enough to incentivize investments in new E85 stations, which would give EPA the freedom to move the ethanol mandate to 15 billion gallons in 2015. Our results show that it will take at least 3,000 additional stations selling E85 to achieve a 15 billion gallon mandate without use of carryover RINs. If all 3,000 stations needed an additional tank for E85, then it will involve a one-time investment cost of approximately $390 million, or about 20 cents for each gallon of ethanol sold in E85. Because this investment cost is far below what compliance costs would be without the investment, owners of oil refineries would have a strong incentive to make the investment. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:14-pb17&r=env |
| By: | Riekkola, Anna Krook (Luleå University of Technology); Berg, Charlotte (National Institute of Economic Research); Ahlgren, Erik O. (Chalmers University of Technology); Söderholm, Patrik (Luleå University of Technology) |
| Abstract: | The aim of this study is to develop a method for how to soft-link a Computable General Equilibrium (CGE) model with a energy system model. The central research question is how the interaction between modellers and models can, both qualitatively and quantitatively, enable and facilitate a transparent energy and climate policy decision-making process at the national level. The paper describes this development in detail, and presents and discusses the results of the soft-linking methodology applied to a climate scenario. Important similarities and differences between two Swedish models, i.e. EMEC (a CGE model) and TIMES-Sweden (an energy system model), are identified. These findings are used to develop a robust and transparent method to translate simulation results between the two models, resulting in intermediate ‘translation models’ between EMEC and TIMES-Sweden. EMEC provides demand input to TIMES, while TIMES provides feedback on the energy efficiency parameters, the energy mix, and the prices of electricity and heat. These ‘translations’ can also be used stand-alone to feed into other energy system models. The presented soft-linking process demonstrates the importance of linking an energy system model with a macroeconomic model when studying energy and climate policy. With the same exogenous parameters, the soft-linking between the models results in a new picture of the economy and the energy system in 2035 compared with the corresponding model results in the absence of soft-linking. The study also leads to a better understanding of how the models can interact while preserving the respective models' strengths, to give an improved picture of both the flows in the economy and the impact of energy policy instruments. |
| Keywords: | Soft-linking; Computable General equilibrium; TIMES/MARKAL; Climate policy; Energy policy |
| JEL: | C68 D58 Q43 |
| Date: | 2013–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nierwp:0133&r=env |