nep-env New Economics Papers
on Environmental Economics
Issue of 2015‒04‒25
forty papers chosen by
Francisco S. Ramos
Universidade Federal de Pernambuco

  1. ASEAN Economic community and climate change By Ditya A Nurdianto; Budy P Resosudarmo
  2. Carbon Neutrality of Hardwood and Softwood Biomass: Issues of Temporal Preference By Craig M.T. Johnston; G. Cornelis van Kooten
  3. Regional Disparity of Embedded Carbon Footprint and its Sources in China: A Consumption Perspective By Jin Fan; Yanrui Wu; Xiumei Guo; Dingtao Zhao; Dora Marinova
  4. Targeted carbon tariffs. Carbon leakage and welfare effects By Christoph Böhringer; Brita Bye; Taran Fæhn; Knut Einar Rosendahl
  5. Adaptation for Mitigation By Masako Ikefuji; Jan Magnus; Hiroaki Sakamoto
  6. Social Network Effects and Green Consumerism By Dominic Hauck; Erik Ansink; Jetske Bouma; Daan van Soest
  7. Modified Ramsey Discounting for Climate Change By Richard S.J. Tol
  8. The Influence of Environmental Concerns on Drivers’ Preferences for Electric Cars By Alexandros Dimitropoulos
  9. Second-Best Carbon Taxation in the Global Economy: The Green Paradox and Carbon Leakage Revisited By van der Ploeg, Frederick
  10. Measuring transformation towards a green economy in Germany By Dr. Christian Lutz; Roland Zieschank; Dr. Thomas Drosdowski
  11. The Demographic Implications of Climate Change for Aotearoa New Zealand: A Review By Michael P. Cameron
  12. Members, Joiners, Free-riders, Supporters By Erik Ansink; Cees Withagen
  13. Non-Marginal Cost-Benefit Analysis and the Tyranny of Discounting By Koen Vermeylen
  14. Carbon Lock-In: The Role of Expectations By Gerard van der Meijden; Sjak Smulders
  15. International Environmental Agreements for River Sharing Problems By Harold Houba; Gerard van der Laan; Yuyu Zeng
  16. Climate Change, Agricultural Production and Civil Conflict: Evidence from the Philippines By Crost, Benjamin; Duquennois, Claire; Felter, Joseph; Rees, Daniel I.
  17. The Role of Cities in the Socio-Ecological Transition of Europe (ROCSET) By Thomas Sauer; Stephanie Barnebeck; Yannick Kalff; Judith Schicklinski
  18. Assessing the Economic and Political Impacts of Climate Change on International River Basins using Surface Wetness in the Zambezi and Mekong Basins By Brian Blankespoor; Alan Basist; Ariel Dinar; Shlomi Dinar; Harold Houba; Neil Thomas
  19. Trade liberalization, FDI inflows, Environmental quality and Economic growth: A comparative analysis between Tunisia and Morocco By hakimi, Abdelaziz; Hamdi, Helmi
  20. Composition Properties in the River Claims Problem By Erik Ansink; Hans-Peter Weikard
  21. Capacity Choice of Dams under Rivalry Use and Externalities By Harold Houba; Kim Hang Pham Do; Xueqin Zhu
  22. Buffer Effect and Price Effect of a Personal Carbon Trading Scheme By Jin Fan; Shanyong Wang; Yanrui Wu; Jun Li; Dingtao Zhao
  23. The Use and Misuse of Models for Climate Policy By Robert S. Pindyck
  24. Resource Extraction in a Political Economy Framework By Karolina Ryszka
  25. Vog: Using Volcanic Eruptions to Estimate the Health Costs of Particulates and SO2 By Timothy Halliday; John Lynham; Aureo de Paula
  26. The Economics of Transboundary River Management By Erik Ansink; Harold Houba
  27. Annex to MS94: Compilation of case study reports A compendium of case study reports from 40 cities in 14 European countries By Cristina Garzillo; Peter Ulrich
  28. The Interest Rate and Capital Durability, and the Importance of Methodological Pluralism By Roder van Arkel; Koen Vermeylen
  29. Sustainable Agreements on Stochastic River Flow By Harold Houba; Erik Ansink
  30. The Consumption Discount Rate for the Distant Future (if we do not die out) By Koen Vermeylen
  31. The tragedy of ecosystems in open-access By CISSE Abdoul; SANZ Nicolas; BLANCHARD Fabien; DOYEN Luc; PEREAU Jean-Christophe
  32. Biodiversity Prospecting over Time and under Uncertainty: A Theory of Sorts By Amitrajeet A. Batabyal; Peter Nijkamp
  33. Monthly Report No. 10/2014 By Vasily Astrov; Vladimir Gligorov; Julia Grübler; Peter Havlik; Michael Landesmann; Sandra M. Leitner; Olga Pindyuk; Marek Rojicek; Roman Stöllinger
  34. Preference Elicitation in Generalized Data Envelopment Analysis - In Search of a New Energy Balance in Japan By Soushi Suzuki; Peter Nijkamp; Piet Rietveld
  35. Use of environmental approach to innovation-oriented development of industrial enterprises By Dudin, Mikhail; Ljasnikov, Nikolaj; Baranenko, Sergej; Busygin, Konstantin
  36. From bioeconomics to degrowth: About convergences and divergences between Nicholas Georgescu-Roegen and Serge Latouche By FERRARI Sylvie
  37. Completing Ostrom’s Table : A Note on the Taxonomy of Goods By Emmanuel S. de Dios
  38. Eco-innovations: which new paths for the Aquitaine wood industry? By BERGOUIGNAN Marie-Claude
  39. The Effectiveness of Dutch Municipal Recycling Policies By Elbert Dijkgraaf; Raymond Gradus
  40. Foundations and bioeconomic issues of sustainability: The contribution of Nicholas Georgescu-Roegen By FERRARI Sylvie

  1. By: Ditya A Nurdianto; Budy P Resosudarmo
    Abstract: This paper analyzes the benefits and losses associated with cooperation among ASEAN members in mitigating their CO2 emission, particularly by implementing a uniform carbon tax across ASEAN. To achieve this goal, this paper uses a multi-country CGE model for ASEAN, known as the Inter-Regional System of Analysis for ASEAN (IRSA-ASEAN) model. This study finds that the implementation of a carbon tax scenario is an effective means of reducing carbon emissions in the region. However, this environmental gain could come at a cost in terms of GDP contraction and reduction in social welfare, i.e. household income. Nevertheless, Indonesia and Malaysia can potentially gain from the implementation of a carbon tax as it counteracts price distortions due to the existence of heavy energy subsidies in these two countries.
    Keywords: climate change, computable general equilibrium model, ASEAN, regional economics
    JEL: Q54 Q56 O21 O57
    Date: 2014
  2. By: Craig M.T. Johnston; G. Cornelis van Kooten
    Abstract: The carbon flux from burning biomass for energy is often legislated, or simply assumed, to be carbon neutral as subsequent forest growth sequesters carbon lost during energy production. In this sense, there may be no net contributions to atmospheric carbon flux associated with biomass energy. However, trees may take decades to recover the CO2 released by burning, so assumed neutrality hinges on the fact that we count CO2 removals equally independent of when they occur. If dealing with climate change is an urgent matter, we may give higher weight to current CO2 emissions over those that occur in the decades to come. If there is no urgency in dealing with climate change, then all types of biomass will eventually return to carbon neutrality. Yet, if climate change is deemed an urgent matter, biomass never returns to carbon neutrality as we give future CO2 removals less weight. If urgency is high enough, biomass may be more emissions intensive than coal, as the discounted future removals are not enough to offset the relatively higher emissions intensity experience by burning biomass for energy. The race to adopt aggressive renewable energy targets implies climate change mitigation is an urgent matter. Yet, the increasing reliance on biomass for energy production suggests there is no time preference. In the end, the potential benefits of substituting biomass for coal to produce energy might be greatly exaggerated.
    Keywords: Bioenergy, Climate Change, Forestry
    JEL: Q23 Q42 Q50 C63
    Date: 2014–11
  3. By: Jin Fan (School of Management, University of Science and Technology of China); Yanrui Wu (Business School, University of Western Australia); Xiumei Guo (Curtin University Sustainability Policy Institute, Curtin University of Technology); Dingtao Zhao (Curtin University Sustainability Policy Institute, Curtin University of Technology); Dora Marinova (Curtin University Sustainability Policy Institute, Curtin University of Technology)
    Abstract: Carbon emission reduction could be achieved through extensive cooperation between relevant groups such as businesses, governments and consumers. Generally, carbon emissions stem from consumer behavior. To tackle the increasingly serious energy crisis and climate change in China, it is thus vital to control carbon emissions generated by the country’s urban consumers. From a consumption perspective, we utilize a self-organizing feature map (SOFM) model to analyze the spatial differentiation of per capita embedded carbon footprint (ECF) in urban China. We found that the spatial differentiation is significant with the per capita ECF of the east coastal area at a high level and that per capita disposable income is the key factor affecting ECF. Based on these findings, potential business opportunities to develop low-carbon products are discussed.
    Date: 2015
  4. By: Christoph Böhringer; Brita Bye; Taran Fæhn; Knut Einar Rosendahl (Statistics Norway)
    Abstract: Climate effects of unilateral carbon policies are undermined by carbon leakage. To counteract leakage and increase global cost-effectiveness carbon tariffs can be imposed on the emissions embodied in imports from non-regulating regions. We present a theoretical analysis on the economic incentives for emission abatement of producers subjected to carbon tariffs. We quantify the impacts of different carbon tariff designs by an empirically based multi-sector, multi-region CGE model of the global economy. We find that firm-targeted tariffs can deliver much stronger leakage reduction and higher efficiency gains than tariff designs operated at the industry level. In particular, because the exporters are able to reduce their carbon tariffs by adjusting emissions, their competitiveness and the overall welfare of their economies will be less randomly and less adversely affected than in previously studied carbon tariff regimes. This beneficial distributional impact could facilitate a higher degree of legitimacy and legality of carbon tariffs.
    Keywords: carbon leakage; border carbon adjustment; carbon tariffs; computable general equilibrium (CGE)
    JEL: Q43 Q54 H2 D61
    Date: 2015–03
  5. By: Masako Ikefuji (University of Southern Denmark, Esbjerg, Denmark); Jan Magnus (VU University Amsterdam, Netherlands); Hiroaki Sakamoto (Waseda University, Japan)
    Abstract: This paper develops a dynamic model consisting of two regions (North and South), in which the accumulation of human capital is negatively influenced by the global stock of pollution. By characterizing the equilibrium strategy of each region, we show that the regions' best responses can be strategic complements through a dynamic complementarity effect. The model is used to analyze the impact of adaptation assistance from North to South. It is shown that North's unilateral assistance to South (thus enhancing South's adaptation capacity) can facilitate pollution mitigation in both regions, especially when the assistance is targeted at human capital protection.
    Keywords: Climate change, mitigation, adaptation, human capital
    JEL: D91 Q54 Q58
    Date: 2014–09–19
  6. By: Dominic Hauck (VU University Amsterdam); Erik Ansink (VU University Amsterdam); Jetske Bouma (PBL Netherlands Environmental Assessment Agency); Daan van Soest (Tilburg University)
    Abstract: One of the drivers of green consumerism are social network externalities that are associated with buying 'green' because green consumerism is fashionable, or because of reputation effects. We analyze how the strength of this social network effect impacts green consumerism, environmental externalities and total welfare. We discuss a model where products are differentiated according to their environmental quality, where the production of green products generates positive externalities to all, and where those consumers purchasing a green product variety receive the additional benefits of being a member of the network of green consumers. Depending on the strength of the social network effect, we show that (a) firms may produce lower quality, (b) the market may generate fewer positive environmental externalities, and (c) total welfare may deteriorate. The main policy implication is that if there is a network effect, regulators should choose a stricter minimum environmental quality standard.
    Keywords: Quality Differentiation, Social Network Effect, Minimum Environmental Quality Standard
    JEL: D11 L15 Q31
    Date: 2014–12–04
  7. By: Richard S.J. Tol (University of Sussex, United Kingdom; VU University Amsterdam, The Netherlands)
    Abstract: The Ramsey rule for the consumption rate of discount assumes a transfer of money of a (representative) agent at one point in time to the same agent at another point in time. Climate policy (implicitly) transfers money not just over time but also between agents. I propose three alternative modifications of the Ramsey rule to account for this. Taking the Ramsey rule as given, I derive an intuitively clear but ad hoc modification. Using the assumptions underlying the Ramsey rule, I derive a consistent but more elaborate modification. If the discount rate is differentiated by victim, the consistent modified Ramsey rule is simpler and identical to regional equity weights. I apply the modified Ramsey rules to estimates of the marginal damage costs of carbon dioxide emissions. The results confirm that optimal climate policy has differentiated carbon taxes. Results also show that the standard Ramsey rule drastically underestimates the social cost of carbon.
    Keywords: Climate change, social cost of carbon, discount rate, Ramsey rule, equity
    JEL: H43 D63 Q54
    Date: 2013–09–09
  8. By: Alexandros Dimitropoulos (VU University Amsterdam)
    Abstract: We examine the influence of drivers’ environmental concerns on their preferences for different types of plug-in electric vehicles (PEVs). Our empirical approach is built around the results of a large-scale survey among Dutch drivers, where preferences for electric vehicles are elicited through a choice experiment and environmental concerns are reflected in individual responses to Likert-type questions. On this basis, we develop advanced latent class models to study preference heterogeneity and its link to drivers’ socio-demographic background and environmental concerns. We find that environmental concerns are an important predictor of class membership and that highly concerned drivers tend to cluster in classes with a positive stand towards PEVs. High environmental concerns are positively associated with driver’s age and education, while negatively related to d river’s household income.
    Keywords: Latent class, Latent variable, Environmental concern, Electric vehicle, Plug-in hybrid
    JEL: D12 O33 Q58 R41
    Date: 2014–09–22
  9. By: van der Ploeg, Frederick
    Abstract: Unilateral second-best carbon taxes are analysed in a two-period, two-country model with international trade in final goods, oil and bonds. Acceleration of global warming resulting from a future carbon tax is large if the price elasticities of oil demand are large and that of oil supply is small. The fall in the world interest rate weakens this weak Green Paradox effect, especially if intertemporal substitution is weak. Still, green welfare rises if the fall in oil supply and cumulative emissions is strong enough. If the current carbon tax is too low, the second-best future carbon tax is set below the first best to mitigate adverse Green Paradox effects. Unilateral second-best optimal carbon taxes exceed the first-best taxes due to an import tariff component. The intertemporal terms of trade effects of the future carbon tax increase current and future tariffs and those of the current tax lower the current tariff. Finally, carbon leakage and globally altruistic and unilateral second-best optimal carbon taxes if non-Kyoto oil importers do not price carbon or price it too low are analysed in a three-country model of the global economy.
    Keywords: asset tax; carbon leakage; global altruism; Green Paradox; intertemporal terms of trade; second best; tax incidence; unburnt fossil fuel; unilateral carbon taxes
    JEL: D62 D90 H22 H23 Q31 Q38 Q54
    Date: 2015–04
  10. By: Dr. Christian Lutz (GWS - Institute of Economic Structures Research); Roland Zieschank (GWS - Institute of Economic Structures Research); Dr. Thomas Drosdowski (GWS - Institute of Economic Structures Research)
    Abstract: This paper reports results of the study „Green economy: Measuring sustainable welfare using SEEA data“. It contributes to measuring the progress towards green economy and its understanding for political decision making process in Germany. The definition of green economy follows the BMU approach of 2012. The concept to measure the green economy consists of six different dimensions: (A) use of natural resources and environmental damages, (B) natural capital, (C) environmental quality of life, (D) green economy: eco-nomic dimension and fields of action, (E) policies: institutional framework and measures, and (F) background information on economic and social development. For each dimension the concept includes indicators that can be generated from available data and in part have characteristics of desirable indicators. The concept is tested for Germany using scenario analysis (PANTA RHEI model) with regard to the energy transition (‘Energiewende’). Many indicators improve despite some trade-offs such as increases in resource use.
    Keywords: green economy, policies, welfare, sustainability
    JEL: Q
    Date: 2015
  11. By: Michael P. Cameron (University of Waikato)
    Abstract: Despite near universal recognition of the importance of climate change impacts on future generations, to date there has been no dedicated research on the effects of climate change on the population distribution in Aotearoa New Zealand. This paper reports on a review of international literature on the demographic impacts of climate change, with a particular focus on the likely implications for New Zealand. The paper argues that the greatest impacts are likely to be felt in terms of internal migration changes, with smaller but still significant effects on international migration and mortality rates.
    Keywords: climate change; migration; fertility; mortality; New Zealand
    JEL: Q54 R23
    Date: 2013–07–01
  12. By: Erik Ansink (VU University Amsterdam, the Netherlands); Cees Withagen (VU University Amsterdam, the Netherlands)
    Abstract: We augment the standard cartel formation game from non-cooperative coalition theory, often applied in the context of international environmental agreements on climate change, with the possibility that singletons support coalition formation without becoming coalition members themselves. Rather, their support takes the form of a monetary transfer to the coalition, which increases the members' payoffs, and thereby provides an incentive for other singletons to join the coalition. We show that, under mild conditions on the costs and benefits of contributing to the public good (i.e. abatement of CO<SUB>2</SUB> emissions), supporters exist in equilibrium. The existence of supporters increases the size of stable coalitions, increases abatement of CO<SUB>2</SUB> emissions, and increases payoffs to each of four types of agents: members, joiners, free-riders, and supporters. Importantly, this result does not require commitment.
    Keywords: Coalition formation; Public goods; Support; Transfers; International Environmental Agreements
    JEL: C72 D02
    Date: 2015–01–27
  13. By: Koen Vermeylen (University of Amsterdam)
    Abstract: This paper uses the Kaldor-Hicks compensation principle to compute the present value (PV) of a non-marginal future event. Three theoretical results stand out: First, decreasing returns to capital create a wedge between the PV of future generations' willingness to pay (WTP) and the PV of their willingness to accept compensation (WTA); second, the discount rates implicit in the computation of the PVs are endogenous, and rising (declining) over time for the future generations' WTP (WTA); and third, decreasing returns to capital may make it impossible to compensate future generations according to their WTA, effectively defeating the tyranny of discounting. A back-of-the-envelope calibration suggests that this last result is realistic in the case of climate change. A cost-benefit analysis based on the Kaldor-Hicks compensation principle may therefore be impossible if futu re generations are entitled to a world without climate change; and an environmental trust fund - no matter how large it is - may be insufficient to adequately compensate future generations.
    Keywords: climate change, cost-benefit analysis, discounting, WTP, WTA
    JEL: D61 E13 H43 Q51 Q54
    Date: 2013–12–16
  14. By: Gerard van der Meijden (VU University Amsterdam); Sjak Smulders (Tilburg University, the Netherlands)
    Abstract: We argue that expectations about future energy use affect the transition from fossil fuels to renewable substitutes, because of an interaction between innovation and resource scarcity. The paper presents a model of directed technical change to study this interaction. We find that resource-saving technical change erodes the incentives to implement the substitute. Conversely, the anticipation of the substitute being implemented in the future diminishes the incentives to invest in resource-saving technology. As a result, two dynamic equilibria may arise, one with a transition to the substitute and with low resource efficiency, and one without the substitute and with fast efficiency improvements. Expectations determine which equilibrium arises in the decentralized market equilibrium. If multiple equilibria exist, the transition to the substitute generates higher welfare.
    Keywords: Directed technical change, energy transition, multiple equilibria
    JEL: O30 Q32 Q42 Q55
    Date: 2014–08–01
  15. By: Harold Houba (VU University Amsterdam); Gerard van der Laan (VU University Amsterdam); Yuyu Zeng (VU University Amsterdam)
    Abstract: This discussion paper led to a publication in <A href="">Environmental and Resource Economics</A> (forthcoming).<P> We study coalition formation and the strategic timing of membership of an IEA for environmental issues in the Coalitional Bargaining Game (CBG) of Gomes 2005, Econometrica). For the general CBG, we derive the necessary and sufficient condition for immediate formation of the grand coalition. We apply the CBG to a river sharing problem with two symmetric upstream agents and one downstream agent. Taking the discount factor and a productivity variable of water as parameters, we identify five regions in the parameter space. First, there is a region in which the grand coalition always forms immediately. Second, there are two regions in which there is for sure gradual coalition formation, in one of these regions there is a positive probability that the upstream agents form a monopoly. Third, there are two regions in which the grand coalition forms immediately with positive probability, but also gradual coalition formation might occur with positive probability.
    Keywords: Coalitional Bargaining Game, International Environmental Agreements, River Sharing Problems, Markov Perfect Equilibrium, Efficiency, Monopoly
    JEL: C78 Q25
    Date: 2013–10–08
  16. By: Crost, Benjamin (University of Illinois at Urbana-Champaign); Duquennois, Claire (University of Colorado Denver); Felter, Joseph (Stanford University); Rees, Daniel I. (University of Colorado Denver)
    Abstract: Climate change is predicted to affect global rainfall patterns, but there is mixed evidence with regard to the effect of rainfall on civil conflict. Even among researchers who argue that rainfall reduces civil conflict, there is disagreement as to the underlying mechanism. Using data from the Philippines for the period 2001-2009, we exploit seasonal variation in the relationship between rainfall and agricultural production to explore the connection between rainfall and civil conflict. In the Philippines, above-average rainfall during the wet season is harmful to agricultural production, while above-average rainfall during the dry season is beneficial. We show that the relationship between rainfall and civil conflict also exhibits seasonality, but in the opposite direction and with a one-year lag. Consistent with the hypothesis that rebel groups gain strength after a bad harvest, there is evidence that lagged rainfall affects the number of violent incidents initiated by insurgents but not the number of incidents initiated by government forces. Our results suggest that policies aimed at mitigating the effect of climate change on agricultural production could weaken the link between climate change and civil conflict.
    Keywords: climate change, civil conflict, rainfall
    JEL: H56 O13
    Date: 2015–04
  17. By: Thomas Sauer; Stephanie Barnebeck; Yannick Kalff; Judith Schicklinski
    Abstract: Taking into account the potentially different starting and framework conditions of cities in different regions of the European Union, we present a new approach for sustainability transition analysis with a special focus on the governance of urban common-pool resources. The aim is to identify the conditions which are supportive for innovative institutional arrangements, like self-organised and co-operative forms of governance for urban resource systems like energy, water and green spaces. This report explores these conditions systematically focussing on the overarching research question: What is the transformative role of institutional diversification and innovation in the governance of core urban common pool resources? The role of the resource systems energy, urban green spaces and drinking water is empirically analysed in field studies of 40 European cities, exploring the potential for local self-organisation and socio-ecological transition.
    Keywords: Beyond GDP, Biophysical constraints, Common-pool resources, Energy, Green spaces, Water, Multi-level governance, Urban commons, Socio-ecological transition, Sustainable cities, Sustainable urban transitioning
    JEL: Q56 R11 D70
    Date: 2015–03
  18. By: Brian Blankespoor (Development Research Group, World Bank, Washington DC, United States of America); Alan Basist (Weather Predict Consulting, Asheville, North Carolina, United States of America); Ariel Dinar (University of California, Riverside, California, United States of America); Shlomi Dinar (Florida International University, Miami, Florida, United States of America); Harold Houba (VU University Amsterdam, The Netherlands); Neil Thomas (Resource Data Incorporated, Asheville, North Carolina, United States of America)
    Abstract: Many river basins will likely face higher hydrologic variability, including extreme floods and droughts, due to climate change, with economic and political consequences. Water treaties that govern international basins could face non-compliance among riparians and inter-state tensions as hydrologic variability increases. Accurate monitoring of water resources is essential to cope with these fluctuations in flow. This paper demonstrates a simple yet robust procedure—the Basist Wetness Index—to predict gauge station (actual water resources) measurements of surface wetness values derived from satellite data (for 1988-2013) and empirically derived flow distributions in two international river basins: Zambezi and Mekong. The paper further undertakes an economic analysis (applied to the Mekong), which identifies not only the economic costs and losses due to extreme fl ow events, but likewise showcases the benefits countries could potentially reap should they be able to make use of such flow data in real time. An illustrative application, using the wetness data and socio-political data, is also performed to highlight the utility of the procedure for research in the field of conflict and cooperation over water. The paper concludes that satellite data modeled with gauge station flow can help reduce the uncertainty inherent in negotiating international water issues. Moreover, the satellite observations can provide near real time monitoring of water resources, and provide valuable lead time for impending droughts and floods. Thus, the approach presented in the article can assist policy makers to devise more efficient and cooperative institutional apparatus.
    Keywords: runoff; remote sensing; surface wetness, hydrological variability; international relations; microwaves, economic optimization, international river basins; Mekong; Zambezi
    JEL: C53 F51 F53 Q54
    Date: 2014–01–06
  19. By: hakimi, Abdelaziz; Hamdi, Helmi
    Abstract: The aim of this research is to investigate the economic impacts of the trade liberalization on the environmental quality in Tunisia and Morocco. Specifically, the paper inspects whether liberalization of the trade sector has harmed the quality of the environment in both countries. To this end, we conduct various econometric models: a VECM and cointegration techniques for single country case study and a Panel VECM and Panel cointegration when using data of both country as a group. We also include a dummy variable in each model to see the real impact of trade liberalization for both countries. In the empirical section, we found bidirectional causality between FDI and CO2. This implies that the nature of FDI inflows to Morocco and Tunisia are not clean FDI. These results show that trade liberalization has a negative impact on environmental. The paper concludes that although trade liberalization boosted the economies of both countries by creating new employment opportunities, liberalization has harmed the environment.
    Keywords: Trade liberalization, FDI, environmental quality
    JEL: G28 O11 O19
    Date: 2015–04–20
  20. By: Erik Ansink (VU University Amsterdam); Hans-Peter Weikard (Wageningen University)
    Abstract: In a river claims problem, agents are ordered linearly, and they have both an initial water endowment as well as a claim to the total water resource. We provide characterizations of two solutions to this problem, using Composition properties which have particularly relevant interpretations for the river claims problem. Specifically, these properties relate to situations where river flow is uncertain or highly variable, possibly due to climate change impacts. The only solution that satisfies all Composition properties is the 'Harmon rule' induced by the Harmon Doctrine, which says that agents are free to use any water available on their territory, without concern for downstream impacts. The other solution that we assess is the 'No-harm rule', an extreme interpretation of the "no-harm" principle from international water law, which implies that water is allocated with p riority to downstream needs. In addition to characterizing both solutions, we show their relation to priority rules and sequential sharing rules.
    Keywords: river claims problem, sharing rule, Harmon Doctrine, composition axioms, water allocation
    JEL: D63 C71 Q25
    Date: 2013–12–13
  21. By: Harold Houba (VU University Amsterdam, the Netherlands); Kim Hang Pham Do (Massey University, New Zealand); Xueqin Zhu (Wageningen University, the Netherlands)
    Abstract: This paper studies the relation between optimal dam capacity and water management under rivalry uses and externalities. We extend the hydropower generation model, based on Haddad (2011), by including the competing use of water resource, non-linear building cost of dam capacity and externalities in a welfare optimization model. We obtain the optimal dam capacity for multi-functional dams such as providing infrastructure for industrial and households water use, conjunctive use of hydropower generation and irrigation; storing water in the wet season for use in the dry season, and mitigating flooding damages. The optimal solution shows that optimal dam capacity is characterized by the marginal benefits of hydropower generation, the marginal costs of flooding damages, and the constraining factors. Moreover, the optimal water management can be achieved by using derived sea sonal prices in a decentralized manner.
    Keywords: OR in environment and climate change, river-basin management, dam capacity, welfare optimization, externalities
    JEL: C71 C72 D62
    Date: 2014–10–30
  22. By: Jin Fan (School of Management, University of Science and Technology of China); Shanyong Wang (School of Management, University of Science and Technology of China); Yanrui Wu (Business School, University of Western Australia); Jun Li (School of Management, University of Science and Technology of China); Dingtao Zhao (School of Management, University of Science and Technology of China)
    Abstract: Personal carbon trading (PCT) is a downstream cap-and-trade scheme used to reduce carbon emissions from the household sector. It is argued that the PCT scheme could provide a buffer between the energy price and the total energy price, and thus energy demand remains stable. However these effects have never been verified. To fill in this gap in the literature, a price effect analysis is conducted. Firstly, a general utility optimization (GUO) model is proposed to obtain the general formulae of the price effect, substitution effect and income effect under the PCT scheme. Secondly, a specific version of the GUO model, namely a Cobb-Douglas utility function model, is employed to obtain the specific effect formulae to verify the buffer effect. Finally, a numerical example and a sensitive analysis are presented to demonstrate these effects. The results indicate that, under the PCT scheme, the total energy price and energy demand are less sensitive to the energy price changes. Thus, when energy prices fluctuate, the PCT scheme is capable of providing certainty in emissions reduction and is more effective than carbon taxes. On the basis of these results, implications of this research are discussed and suggestions for future research are provided.
    Date: 2015
  23. By: Robert S. Pindyck
    Abstract: In recent articles, I have argued that integrated assessment models (IAMs) have flaws that make them close to useless as tools for policy analysis. IAM-based analyses of climate policy create a perception of knowledge and precision that is illusory, and can fool policy-makers into thinking that the forecasts the models generate have some kind of scientific legitimacy. But some have claimed that we need some kind of model, and that IAMs can be structured and used in ways that correct for their shortcomings. For example, it has been argued that although we know little or nothing about key relationships in the model, we can get around this problem by attaching probability distributions to various parameters and then simulating the model using Monte Carlo methods. I argue that this would buy us nothing, and that a simpler and more transparent approach to the design of climate change policy is preferable. I briefly outline what that approach would look like.
    JEL: D81 Q51 Q54
    Date: 2015–04
  24. By: Karolina Ryszka (VU University Amsterdam)
    Abstract: We analyze resource extraction in a political economy setting by introducing a political leader who optimizes both his own and the society's welfare function. We find that accounting for the private utility of a political elite, its higher discount rate and a different time horizon generally speeds up extraction. The higher than optimal resource extraction is not only relevant in welfare terms, but also regarding possible consequences with respect to climate change. The effect of higher extraction caused by a political leader directly accroaching resources does not hold in a decentralized private ownership economy where the government strives to raise revenues through taxation. We endogenize the political economy framework and show that the politician's discount factor is higher than the social discount factor due to the probability of losing power. The weight that the political leader attaches to social welfare is determined by the way the probability of staying in power depends on the welfare of the society.
    Keywords: exhaustible resources, oil, dictatorship, political economy, taxation, climate change
    JEL: Q31 Q38 Q54
    Date: 2013–07–18
  25. By: Timothy Halliday (University of Hawaii at Manoa and IZA); John Lynham (University of Hawaii at Manoa); Aureo de Paula (UCL, Sao Paulo School of Economics, IFS, CeMMAP)
    Abstract: Kilauea volcano is the largest stationary source of SO2 pollution in the United States of America. Moreover, the SO2 that the volcano emits eventually forms particulate matter, another major pollutant. We use this exogenous SO2 on emergency room admissions and costs in the state of Hawaii. Importantly, our data on costs is more accurate than the measures used in much of the literature. We find strong evidence that particulate pollution increases pulmonary-related hospitalization. Specifically, a one standard deviation increase in particulate pollution leads to a 2-3% increase in expenditures on emergency room visits for pulmonary-related outcomes. However, we do not find strong effects for pure SO2 pollution or for cardiovascular outcomes. We also find no effect of volcanic pollution on fractures, our placebo outcome. Finally, the effects of particulate pollution on pulmonary-related admissions are most concentrated among the very young. Our estimates suggest that, since the large increase in emissions that began in 2008, the volcano has increased healthcare costs in Hawaii by approximately $6,277,204.
    Keywords: Pollution, Health, Volcano, Particulates, SO2
    JEL: H51 I12 Q51 Q53
    Date: 2015–04
  26. By: Erik Ansink (VU University Amsterdam); Harold Houba (VU University Amsterdam)
    Abstract: We survey the economics of transboundary river water allocation, which emerged in the 1960s and has matured over the last decade due to increasing concerns over water scarcity and pollution. We outline the major approaches and pay specific attention to the strategic aspects of transboundary river water allocation. These strategic aspects are captured by employing game theory to assess the economics of transboundary river water allocation in a simple model of river sharing. This model allows us to show how conflict and cooperation over transboundary water resources may occur. It also allows us to pay specific attention to the efficiency, sustainability, and fairness of solutions to this model. We compare and contrast both cooperative and non-cooperative approaches and we relate their solutions to illustrative examples.
    Keywords: River sharing problem, River claims problem, Fairness, Efficiency, Sustainability, Water allocation agreement, Bargaining, Water trade, Sharing rules, Axiomatic approach
    JEL: C71 C73 D63 D74 F53 Q25
    Date: 2014–10–06
  27. By: Cristina Garzillo; Peter Ulrich
    Abstract: The reports were written by 16 field researchers as the result of the field research conducted in the second half of 2013 in 40 cities in 14 countries across Europe. They explore what institutions are required to ensure a local transition towards sustainability. They synthesise all relevant information for each city, collected by the field researchers throughout their field and the preparatory research, enriching and contextualizing the data collected via questionnaires and face-to-face semi-directed interviews as well as additional desktop research. Thus, they constitute a relevant component for data analysis and interpretation and for answering the research questions of the research project “The Role of Cities in the European Socio-Ecological Transition (ROCSET)”, which is part of the larger WWWforEurope project. The reports are structured into seven sections. In the first part, a general city profile first provides background information, giving factual data on size, population, climate, special characteristics, etc. and providing information on basic government/administrative structure as well as on economic conditions (growth trend, key business and industries, employment, etc.). Then local lifestyle and key challenges and trends (economic, social and environmental ones) are addressed. The second part comprises a sector specific synthesis for water, energy and green spaces, each referring to availability, affordability and consumption levels, key issues, key actors/partnerships and key actions/measures/initiatives. The third part looks into governance and citizens´ participation, specifically into multilevel governance (province, national, EU) and participation and bottom-up action. In the conclusion, a short summary is provided, and finally trends and challenges for the future are outlined. All reports contain a references section at the end of the document. The compendium covers all selected countries and cities and provides an important insight into each case through the eye of the respective field researcher processing all his/her collected relevant information in it.
    Date: 2015–03
  28. By: Roder van Arkel (Research Institute, Social Trade Organisation, Utrecht, The Netherlands); Koen Vermeylen (University of Amsterdam)
    Abstract: Champions of sustainable growth often call for more durable production technologies with less capital depreciation. As investment in more durable capital is encouraged by lower interest rates, we investigate whether policy makers can steer the economy towards a path with low interest rates in order to stimulate more durable capital formation. We study this question from the viewpoint of two different macroeconomic paradigms, with three different modeling strategies, and get three fundamentally different and even contradicting answers. As none of these paradigms can claim to be superior to the other one, we argue that all modeling strategies may yield valuable insights, which leads to nuanced and careful policy advice. The paper is therefore an illustration of the importance of methodological pluralism in addressing macro-environmental questions where the interest rat e takes center stage.
    Keywords: interest rate, capital durability, depreciation rate, sustainability, methodological pluralism
    JEL: B4 E22 E43 O44 Q5
    Date: 2013–12–16
  29. By: Harold Houba (VU University Amsterdam); Erik Ansink (VU University Amsterdam)
    Abstract: Many water allocation agreements in transboundary river basins are inherently unstable. Due to stochastic river flow, agreements may be broken in case of drought. The objective of this paper is to analyze whether water allocation agreements can be self-enforcing, or sustainable. We do so using an infinitely-repeated sequential game that we apply to several classes of agreements.To derive our main results we apply the Folk Theorem to the river sharing problem using the equilibrium concepts of subgame-perfect equilibrium and renegotiation-proof equilibrium. We show that, given the upstream-downstream asymmetry, sustainable agreements allow downstream agents to reap the larger share of the benefits of cooperation.
    Keywords: river sharing, sustainable agreements, repeated sequential game, Folk Theorem, water allocation, renegotiation-proofness
    JEL: C73 D74 F53 Q25
    Date: 2013–11–08
  30. By: Koen Vermeylen (University of Amsterdam)
    Abstract: Gollier and Weitzman (2010) show that if future consumption discount rates are uncertain and persistent, the consumption discount rate should decline to its lowest possible value for events in the most distant future. In this paper, I argue that the lowest possible growth rate of consumption per capita in the distant future is zero (assuming that humans do not die out). Substituting in the Ramsey rule shows then that the lowest possible consumption discount rate for the distant future is equal to the lowest possible utility discount rate of the population (according to the descriptive approach to parameterizing the Ramsey rule) or to the utility discount rate of the social evaluator (according to the prescriptive approach). In both cases, there are strong reasons to set the consumption discount rate for the distant future at a value which is virtually zero.
    Keywords: discount rate, climate change, cost-benefit analysis, prescriptive, descriptive
    JEL: O4 Q5
    Date: 2013–12–16
  31. By: CISSE Abdoul; SANZ Nicolas; BLANCHARD Fabien; DOYEN Luc; PEREAU Jean-Christophe
    Abstract: This paper investigates the role played by cooperation for the sustainable harvesting of an ecosystem. To achieve this, a bio-economic model based on a multi-species Gompertz dynamics with interspecific relationships and multi-agent catches is considered. A comparison between the non cooperative and cooperative optimal strategies is carried out. Revisiting the tragedy of open-access and over exploitation issues, it is first proved how harvesting pressure is larger in the non cooperative case for every species. Then it is examined to what extent gains of cooperation can also be derived for the state of the ecosystem. It turns out that cooperation clearly promotes the biodiversity when the number of agents is high. By contrast, when the number of agents remains limited, results are more ambiguous especially if a species by species viewpoint is adopted. However, an indicator is proposed at the ecosystem scale to highlight the gain of cooperation in the general case. Numerical examples illustrate the analytical findings.
    Keywords: Fish war, Ecosystem, Biodiversity, Optimization, Nash equilibrium.
    JEL: Q20 Q22
    Date: 2015
  32. By: Amitrajeet A. Batabyal (Rochester Institute of Technology, United States of America); Peter Nijkamp (VU University Amsterdam)
    Abstract: Biodiversity prospecting refers to the exploration of the commercial value of genetic and biochemical resources. In this chapter, we study a drug producing pharmaceutical firm (PF) that searches for potentially useful chemicals made by wild organisms in a conservation area. This PF is able to assign quality levels to the wild organisms in the conservation area. Organism quality is a proxy for the potential usefulness of the chemicals in an organism. At each date, our PF must decide whether to search for a new wild organism with a certain quality or to produce the drug in question with an extant wild organism with its own quality. Our theoretical analysis leads to four results. First, we show that if our PF discards a wild organism with a certain quality at a point in time then it will never use this same organism at a subsequent point in time. Second, we show that if our PF uses a particular organism with its quality at a point in time then it will co ntinue to produce the drug with the chemicals from this organism at all later points in time. Third, we show that there is a threshold level of organism quality and that our PF's optimal policy involves using (discarding) all organisms with quality above (below) this threshold. Finally, we study the impacts of increases in an exogenous income source and the discount factor on our PF's threshold quality.
    Keywords: Biodiversity Prospecting, Pharmaceutical Firm, Search, Time, Uncertainty
    JEL: D81 D83 I12
    Date: 2013–10–10
  33. By: Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Vladimir Gligorov (The Vienna Institute for International Economic Studies, wiiw); Julia Grübler (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Marek Rojicek; Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Graph of the month Europe Brent Spot Price, fob per barrel, in current USD and euro and real year 2005 euro (p. 1) Opinion corner Russia-Ukraine conflict do Western sanctions have any effect? (by Vasily Astrov, Vladimir Gligorov, Peter Havlik, Michael Landesmann and Olga Pindyuk; pp. 2-6) Agricultural imports from LDCs a comparison across EU-27 Member States (by Julia Grübler, pp. 7-12) Green industries for Europe mission abandoned (by Roman Stöllinger; pp. 13-16) Determinants of SMEs’ funding obstacles – a comparative analysis of EU-15 and NMS-13 countries (by Sandra Leitner and Marek Rojicek; pp. 17-20) Recommended reading (p. 21) Statistical Annex Monthly and quarterly statistics for Central, East and Southeast Europe (pp. 22-42)
    Keywords: oil price, energy, sanctions, Russia, Ukraine, agricultural imports, LDCs, Africa, barriers to trade, MFN, industry, environmental protection, EU, SME, funding obstacles
    Date: 2014–10
  34. By: Soushi Suzuki (Hokkai-Gakuen University); Peter Nijkamp (VU University Amsterdam); Piet Rietveld (VU University Amsterdam)
    Abstract: The recent dramatic change in energy supply in Japan has prompted a search for a new energy-environment-economic efficiency policy, in which a compromise has to be found between a sufficient supply of energy resources, the development of low carbon emission technology, and a continuation of economic growth. The prefectures in Japan – 46 in total (excluding Tokyo) – are regarded as the institutional agents or decision-making units (DMUs) which are responsible for the design of a new sustainable energy balance in these regions. The main challenge is now to design an efficient energy-environment-economic system. The present paper aims to develop a balanced decision-support tool for achieving an efficient energy supply in all Japanese prefectures. To that end, a new variant of Data Envelopment Analysis (DEA) is presented, which is characterized by two integrated features: (i) the use of a general Euclidean Distance Method (EDM) to achieve the most appropriate movement towards the efficiency frontier surface (in contrast to the standard radial movement, leading to a uniform proportional input reduction – or uniform proportional output increase); (ii) the incorporation of preference-based (PB) adjustments in efficiency strategies regarding the input reduction allocation – or the output increase allocation – of DMUs in order to balance rigorous efficiency decisions with political priorities at the regional level. This paper illustrates this new methodology by means of an application to prefectural energy efficiency strategies in Japan.
    Keywords: Data Envelopment Analysis (DEA); Euclidean Distance Minimization (EDM); Preference Based (PB); Energy-Environment-Economic efficiency
    JEL: C00 R58 Q48
    Date: 2013–10–10
  35. By: Dudin, Mikhail (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Russian Academy of Entrepreneurship); Ljasnikov, Nikolaj (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Russian Academy of Entrepreneurship); Baranenko, Sergej (Russian Academy of Entrepreneurship); Busygin, Konstantin (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Russian Academy of Entrepreneurship)
    Abstract: separate factors of internal and external environment of industrial enterprises activity are described in the article which determine their opportunities and capabilities for innovation-oriented development. Special attention is paid to ascertaining factors of external environment which determine economic space of functioning and development of industrial enterprises and to the importance of timely identification of signals outgoing from external environment; besides that the authors investigate modern management tools in the form of scenario technologies which can be used for innovation-oriented development of industrial enterprises.
    Keywords: external environment, internal environment, industrial enterprises, innovations, potential, development, foresight designing, road mapping
    Date: 2014
  36. By: FERRARI Sylvie
    Abstract: The paper aims to put into perspective Nicholas Georgescu-Roegen’s bioeconomics and Serge Latouche’s degrowth approaches. In particular, we analyse the foundations of these approaches such as they have been put forward by those two economists. If the cross-reading of their work shows both proximity and distance, bioeconomics and degrowth do not have to be confused. Facing ecological challenges, the two approaches agree on the need to invite ethics to commit to a change in society that is compatible with the limits of the biosphere.
    Keywords: bioeconomics, degrowth, entropy, sobriety, intergenerational justice, ethics
    JEL: B31 B41
    Date: 2015
  37. By: Emmanuel S. de Dios (School of Economics, University of the Philippines Diliman)
    Abstract: A framework is proposed to subsume public goods and common-pool resources, respectively, as specific cases of positive and negative externalities. A pure public good is a positive externality whose appropriable benefits are too small or too uncertain relative to the high private cost for anyone to produce it in any amount. The common-pool problem is a case where each agent’s action imposes a negative externality on everyone else.
    Keywords: public goods, common-pool resources, positive and negative externalities
    JEL: D61 D62 H41 H42
    Date: 2015–03
  38. By: BERGOUIGNAN Marie-Claude
    Abstract: This article focuses on the question of how eco-innovation projects can lead to the break-out of an industrial trajectory. Using the example of the Aquitaine wood industry, we question how eco-innovation projects promoted by the ‘competitiveness cluster’ might help to modify that trajectory. Based on the existing literature, which refers to the diversity of objectives of eco-innovation, our research analyzes this diversity and then questions the compatibility of these objectives. By doing so, the article aims to identify the main possible paths of evolution of the Aquitaine wood industry.
    Keywords: break-out - competitiveness cluster - eco-innovation - path-dependency - wood industry.
    JEL: B52 O31 Q23 Q55
    Date: 2015
  39. By: Elbert Dijkgraaf (Erasmus University Rotterdam); Raymond Gradus (VU University Amsterdam)
    Abstract: The EU advocates a household waste recycling rate of more than 70%. Although the Netherlands already years ago invested in recycling policies heavily, this is still a large challenge as nowadays on average this rate is approximately 50% and nearly no municipalities have a rate above 70%. Given the experience, it is possible to learn from the Dutch experience which policies are effective in increasing the recycling rates. Based on a large panel data set for the Netherlands , we show that unit-based pricing, avoiding a duo-bin or unsorted and compostable waste, and moving back the frequency of collecting unsorted and compostable waste at the curbside are effective in raising the recycling rate. However, only unit-based pricing has a substantial effect. In nearly all cases changing the frequency of collection of recyclables had no or very small effects. We find some evidence for the effectiveness of adding bring locations to curbside collection. Based on an estimation of the cost function most policies have no effect on costs, except for unit-based pricing (saving on cost) and increases in the frequency of unsorted waste collection (cost increasing). Overall, it seems nearly impossible to reach the EU-goal of 70% with the policies applied.
    Keywords: Recycling; waste policy; recycling; local government; Netherlands
    JEL: Q18 Q38 R11 R15
    Date: 2014–12–18
  40. By: FERRARI Sylvie
    Abstract: The aim of this paper is to discuss some major issues of Georgescu-Roegen’s work for Economic science with a special emphasis on the connection between the economic process and the entropy law. The flow-found approach is discussed and some possible implementations are proposed to measure the sustainability of the economic process.
    Keywords: Foundations and bioeconomic issues of sustainability: The contribution of Nicholas Georgescu-Roegen
    JEL: B31 B41 Q57
    Date: 2015

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