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on Environmental Economics |
| By: | Fischer, Fischer; Greaker, Mads; Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences) |
| Abstract: | In many regions, renewable energy targets are a primary decarbonization policy. Most of the same jurisdictions also subsidize the manufacturing and/or deployment of renewable energy technologies, some being su¢ ciently aggressive as to engender WTO disputes. We consider a downstream energy-using prod- uct produced competitively but not traded across regions, such as electricity or transportation. A renewable energy technology is available, provided by a limited set of upstream suppliers who exercise market power. With multiple market fail- ures (emissions externality and imperfect competition), renewable market share targets as the binding climate policy, and international trade in equipment, the stage is set to examine rationales for green industrial policy. Subsidies may be provided downstream to energy suppliers and/or upstream to technology sup- pliers; each has tradeo¤s. Subsidies can o¤set underprovision upstream, but they allow dirty generation to expand when the portfolio standard becomes less binding. Downstream subsidies raise all upstream pro…ts and crowd out foreign emissions. Upstream subsidies increase domestic upstream market share but expand emissions globally. In our two-region model, strategic subsidies chosen noncooperatively can be optimal from a global perspective, if both regions value emissions at the global cost of carbon. But if the regions su¢ ciently undervalue global emissions, restricting the use of upstream subsidies can enhance welfare. |
| Keywords: | Strategic technology policy; Renewable energy standard; Upstream technology market |
| JEL: | H23 L13 Q54 |
| Date: | 2016–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsseb:2016_001&r=env |
| By: | Hille, Erik; Althammer, Wilhelm |
| Abstract: | To assess the effect of environmental policy on production structures, trade structures or foreign direct investment, a measure for the stringency of policy is necessary. Measures typically used in empirical studies share several disadvantages: They are not available on a sectoral basis to reflect concerns of industry competitiveness; they are not available for a wide range of countries to allow for international comparisons; or they are not broad enough to reflect the multidimensionality of environmental policy. This paper develops a thorough, internationally comparable, sector-specific measure of multidimensional climate policy stringency where a shadow price approach serves as a basis. The approach is applied to climate policy by determining sector-specific emission relevant energy costs on the basis of the sectors usage of emission relevant energy carriers and the carriers respective prices. The resulting shadow price estimates are heterogeneous and can be applied in future research to test for carbon leakage and pollution havens. |
| JEL: | D22 Q48 Q54 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112804&r=env |
| By: | Steinkraus, Arne |
| Abstract: | This paper studies the effect of carbon leakage on the environmental Kuznets curve (EKC) using satellite nighttime light data. I show that nighttime lighting is an important variable for estimating carbon dioxide emissions that is superior to other existing indicators and covers all countries in the world. I find evidence of an inverted-U shaped relationship between light and, thus, greenhouse gas emissions and income, with a turning point at approximately US $50,000. However, the relationship is primarily driven by changes in the structure of international trade, implying strong carbon leakage effects. Consequently, environmental regulations that become operative in only one part of the world may fail without global coordination. |
| Keywords: | Carbon Leakage,Environmental Kuznets Curve,Nighttime Lighting |
| JEL: | F18 Q50 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:126084&r=env |
| By: | Bialek, Sylwia; Weichenrieder, Alfons J. |
| Abstract: | This study examines how environmental stringency affects the location decision of foreign direct investments. We analyze a fi rm-level data set on German outbound FDI and innovate on previous studies by controlling for the mode of entry and applying a mixed-logit analysis. The results show that Greenfi eld projects react to environmental regulation in a strongly different way than M&As. We fi nd robust support for pollution haven hypothesis for polluting Green fields. M&A investments in low polluting industries, on the other hand, seem to be attracted by stricter environmental regulation. We introduce a novel instrumental variable for environmental stringency and apply it to verify the results. |
| JEL: | Q50 F20 Q58 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113179&r=env |
| By: | Soretz, Susanne; Ott, Ingrid |
| Abstract: | We analyse the interdependence between green attitude and equilibrium development of environmental quality in an endogenous growth model. Individuals take only part of their impact on pollution into account, hence there is a negative externality of capital accumulation on environmental quality. Increasing wealth or increasing pollution enhance green attitude and reduce the externality, because individuals care more about the environment if their income is higher or if pollution is more obvious. The time path of pollution as well as the evolution of equilibrium growth are shown to depend crucially on the determinants of green attitude. If green attitude improves with increasing wealth, e.g. as a consequence of an increase in environmental education, the economy converges to the sustainable growth path and in the long run, also the optimal level of environmental quality is realized. In contrast, pollution remains at a suboptimally high level if individual attitude towards the environment is influenced by pollution itself, that means, if individuals care the more about environmental issues the worse environmental quality. |
| JEL: | O11 O44 Q56 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113208&r=env |
| By: | Perino, Grischa; Jarke, Johannes |
| Abstract: | Climate policies overlapping a cap-and-trade scheme are generally considered not to change domestic emissions. In a two-sector general equilibrium model where only one sector is covered by a cap, we find that such policies do have a net impact on carbon emissions through inter-sectoral leakage. Promotion of renewable energy reduces emissions if tax-funded, but can increase emissions if funded by a levy on electricity. Replacing fossil fuels by electricity in uncapped sectors (e.g. power-to-heat or electric cars) and increases in the efficiency of electricity use reduce domestic emissions. Moreover, the commonly used measure to assess renewable energy policies is biased. |
| JEL: | Q58 Q48 H23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113007&r=env |
| By: | Thum, Marcel P.; Konrad, Kai |
| Abstract: | When politicians negotiate in international climate conventions they may suffer from incomplete information about each other's preferences about reaching an agreement. As is known, this may cause failure to reach an efficient cooperative agreement. We study the role of the clean development mechanism (CDM) for the likelihood of such failure. The CDM has been introduced in the context of the Kyoto Protocol to allow countries to make efficiency enhancing use of cross-country low- cost mitigation opportunities. We use a simple bargaining framework to uncover why this mechanism may reduce the likelihood for reaching an efficient cooperative climate agreemen |
| JEL: | Q54 Q58 H41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113174&r=env |
| By: | Wiesmeth, Hans; Weber, Shlomo |
| Abstract: | "Awareness" for a public good is necessary to stimulate voluntary contributions towards the provision of this commodity. This applies in particular to the global reduction of greenhouse gases and its relevance for mitigation of climate change. The success of the new climate agreement to be concluded in Paris in 2015 thus depends on sufficient "awareness" for climate change, but also on the extent of diversity among the participating countries. This papers develops a formal model with diverse countries mitigating climate change. Diversity thereby refers to awareness for global warming, population, GDP per capita and costs of renewable energy sources. The Nash mechanism coordinates individual decisions, and the effect of diversity on equilibrium contributions can be investigated in various ways. The second part of the paper provides rankings of signatories of the Kyoto Protocol regarding awareness for climate change. In these empirical investigations, estimates for awareness are derived from observable data. Some results on the "Environmental Kuznets Curve" and some final remarks conclude the paper. |
| JEL: | H41 Q54 H87 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113024&r=env |
| By: | Nystad Handberg , Øyvind (School of Economics and Business, Norwegian University of Life Sciences); Angelsen, Arild (School of Economics and Business, Norwegian University of Life Sciences) |
| Abstract: | How do different levels of individual payments for environmental services (PES) affect intrinsic and social motivations for forest conservation? Does introducing low levels of PES crowd out these motivations? This paper presents findings from framed field experiments (FFE) conducted with local forest users in Tanzania. The payoff structure represents a common-pool resource situation; participants’ payoffs depend on the number of trees harvested, and aggregate over-harvesting can harm future harvest. Four levels of individual PES are tested in a between-group design: no (0%), low (20%), medium (60%) and full (100%) PES, where the level is relative to the harvest value. We observe lower than theoretically predicted harvest rates at no, low and medium PES, while the opposite is true at full PES. Low PES has a weak negative effect on harvest rates among certain subgroups, while medium and full PES give strong reductions in harvest rates (c. -43% and -75%). The results suggest that low PES has little impact on local forest use in Tanzania and has on aggregate a neutral effect on intrinsic and social motivations. Increasing payments has a negative, but diminishing effect on harvest rates. |
| Keywords: | Field experiment; PES; REDD; crowding-out; forest management; Tanzania |
| JEL: | C93 Q23 |
| Date: | 2016–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsseb:2016_002&r=env |
| By: | Ziegler, Andreas |
| Abstract: | Based on unique data from representative computer-based surveys among more than 3400 citizens, this paper empirically examines the determinants of climate change beliefs, climate policy support, and climate protection activities in three countries which are key players in international climate policy, namely the USA, Germany (as largest country in the European Union), and China. Our econometric analysis focuses on the effect of ideological and political identification and especially considers the interrelationship between a right-wing or a left-wing orientation and environmental values. Our estimation results imply that environmental awareness is in all three countries the major factor for attitudes and activities towards climate change. In Germany, citizens with a conservative, but not social or green orientation significantly less often support climate policy and particularly have a significantly lower willingness to pay a price premium for climate-friendly products, whereas ideological differences are negligible for climate change beliefs. In contrast, a right-wing orientation has significantly negative effects on all attitudes and activities towards climate change in the USA. Furthermore, an increasing environmental awareness decreases ideological differences in the support of climate policy in Germany and the USA and especially in general climate change beliefs and beliefs in anthropogenic climate change in the USA. Our estimation results suggest alternative strategies such as specific communication campaigns in order to reduce the climate change skepticism in conservative and right-wing circles in the USA and to increase the support of climate policy among such population groups. |
| JEL: | Q54 Q58 A13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112918&r=env |
| By: | Mendelevitch, Roman; Richter, Phillip; Jotzo, Frank |
| Abstract: | In this paper we investigate the introduction of an export tax on steam coal levied by an individual country (Australia), or a group of major exporting countries. The policy motivation would be twofold: generating tax revenues against the background of improved terms-of-trade, while CO2 emissions are reduced. We construct and numerically apply a two-level game consisting of an optimal policy problem at the upper level, and an equilibrium model of the international steam coal market (based on COALMOD-World) at the lower level. We find that a unilaterally introduced Australian export tax on steam coal has little impact on global emissions and may be welfare reducing. On the contrary, a tax jointly levied by a "climate coalition" of major coal exporters may well leave these better of while signifcantly reducing global CO2 emissions from steam coal by up to 200 Mt CO2e per year. Comparable production-based tax scenarios consistently yield higher tax revenues but may be hard to implement against the opposition of disproportionally afected local stakeholders depending on low domestic coal prices. |
| JEL: | F13 Q58 C61 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112896&r=env |
| By: | Naegele, Helene |
| Abstract: | International offset certificates have systematically traded at a lower price than European Union Allowances (EUAs), although they are perfect substitutes. Firms therefore had a strong incentive to use the cheaper certificates up to the maximum quantity fixed by the regulator. This study highlights that a considerable number of firms did not use their offset credit entitlement and by doing so seemingly forwent profits, which supports the idea that significant transaction costs exist in carbon permit trade. While most of the literature on emission trading evaluates the efficiency of regulation in a frictionless world, firms in reality face managerial costs of compliance with regulation. This study examines the use of international offset credits within the EU Emissions Trading System (EU ETS) for carbon dioxide, in order to assess the relevance of such managerial and information-related transaction costs. This study further establishes a model of firm decision under fixed entry costs and estimates the size of transaction costs rationalizing firm behavior using both standard parametric and semi-parametric binary quantile regression methods. These costs appear to be sizable and make active optimization of compliance unprofitable for many small emitters. It appears that a large portion of these transaction costs stems from participation in the EU ETS in general, rather than additional participation in the offset trade. |
| JEL: | Q58 H23 D23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112817&r=env |
| By: | Schumacher, Ingmar |
| Abstract: | The results in this paper show that a policy maker who ignores regional data and instead relies on aggregated integrated assessment models will strongly underestimate the carbon price and thus the required climate policy. Using a stylized theoretical model we show that, under the mild and widely-accepted assumptions of asymmetric climate change impacts and declining marginal utility, an Aggregation Dilemma may arise that dwarfs most other policy-relevant aspects in the climate change cost-benefit analysis. Estimates based on the RICE model Nordhaus (2000) suggest that aggregation leads to around 26% higher total world emissions than those from a regional model. The backstop energy use would be zero in aggregated versions of the model, while it is roughly 1.3% of Gross World Product in the regionally-disaggregated models. Though the policy recommendations from fully aggregated models like the DICE model are always used as a benchmark for policy making, the results here suggest that this should be done with the reservations raised by the Aggregation Dilemma in mind. |
| JEL: | Q54 Q58 Q50 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113129&r=env |
| By: | Günther, Michael; Hellmann, Tim |
| Abstract: | Increasing concerns about climate change have given rise to the formation of International Environmental Agreements (IEAs) as a possible solution to limit global pollution eff ects. In this paper, we study the stability of IEAs in a repeated game framework where we restrict to strategies which are simple and invariant to renegotiation. Our main contribution to the literature on IEAs is that we allow for heterogeneous patterns of pollution such that additional to a global eff ect of pollution there are local pollution e ffects represented by a network structure. We show that stable IEAs exist if the network structure is balanced. Too large asymmetries in the degree of local spillovers may however lead to non-existence of stable structures. |
| JEL: | C72 D85 Q50 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112944&r=env |
| By: | Schopf, Mark; Voß, Achim |
| Abstract: | Consider a lobby group of exhaustible-resource suppliers, which bargains with the government over the extraction of an exhaustible resource and over contribution payments. We characterize the path of contributions and the resulting extraction path, taking into account how the environmental damage of resource usage and the demand elasticity change optimal extraction. A high marginal environmental flow damage reduces the government s preferred speed of extraction, a low price elasticity of resource demand reduces that of the lobby. Moreover, the lobby s preferred total extraction exceeds that of the government whenever environmental stock damages exist. Contribution payments are usually positive and declining, along with the conflict of interest between the government and the lobby. In some cases, they may be increasing for while, possibly from a negative level, but they eventually decline and vanish in the long run. |
| JEL: | D72 Q38 Q58 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112814&r=env |
| By: | Kaixing Huang (School of Economics, University of Adelaide) |
| Abstract: | Studies of climate change impacts on agricultural profits using panel data typically do not take account of adaptations over time by farmers, and those that do tend to use the standard hedonic approach which is potentially biased. As an alternative, this paper develops a panel framework that includes farmer adaptation. When tested with United States data, this study finds that the negative impact of expected climate change on farm profits by 2100 is only one-third as large once likely adaptation by farmers is taken into account. |
| JEL: | Q15 Q51 Q54 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:adl:wpaper:2016-03&r=env |
| By: | Klarl, Torben Alexander |
| Abstract: | Many cities in developing countries suffer from bad health and environmental conditions due to urbanization. The paper shows that increasing urban manufacturing congestion costs do not necessarily imply a reduction of a city's health as well as of environmental quality as one could expect ex-ante. The model distills a range of the urban manufacturing sector size which generates a triple dividend: a situation in which the government can simultaneously improve health, reduce pollution, and increase the productivity of labour by investing in either green capital or urban infrastructure that reduces congestion costs. |
| JEL: | R13 R23 Q52 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112829&r=env |
| By: | Cardona Santos, Elsa Maria; Willy, Daniel Kyalo; Holm-Müller, Karin |
| Abstract: | As a means to adapt to climate change, the Mexican government grants, since 2003, payments as an incentive for landholders to conserve, maintain and increase the provision of environmental services through the promotion of a forestry strategy. This paper contributes to the literature with an empirical analysis of the impact of payments for reforestation in one of the states with the highest rates of deforestation, Michoac n. The impact is estimated by means of panel data regressions and propensity score matching. Our results suggest that the payments are not contributing to the overall reforestation in Michoac n because of the existence of leakage in areas that are not participating in the program. Our analysis underlines the challenges faced when implementing financial incentive based programs and provides policy makers with evidence for improving the design of such programs. |
| JEL: | Q23 C87 Q38 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113036&r=env |
| By: | KITAMURA Toshihiko; MANAGI Shunsuke |
| Abstract: | Using plant level data, we investigate the substitution between purchased electricity and fuel usage for onsite power generation by estimating the cross price elasticities in Japan. We find that the sensitivity of the fuel demand for onsite power generation to the changes in the price of purchased electricity and the degree of sensitivity depend heavily on industrial characteristics. We also calculate the expenditure elasticities for the fuels and find that firms prefer to use electricity generated on site compared to purchased electricity. Furthermore, from the analysis of the preference for fuel types used in onsite generation, we find that coal, which is relatively inexpensive but has relatively high CO₂ emission, is increasingly preferred by firms across industries. Some industries indeed are contributing to the reduction of CO₂ emissions by either replacing oil with scrap materials as fuel and/or utilizing recovered fuel or byproducts to generate onsite power. The results indicate the effort capacity to reduce emissions appears to heavily depend on industrial characteristics. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:16007&r=env |
| By: | Heshmati, Almas (Jönköping University, Sogang University) |
| Abstract: | Circular economy (CE) is a sustainable development strategy that is being proposed to tackle urgent problems of environmental degradation and resource scarcity. CE's 3R principles are to reduce, reuse and recycle materials. The principles account for a circular system where all materials are recycled, all energy is derived from renewables; activities support and rebuild the ecosystem and support human health and a healthy society and resources are used to generate value. This study is a review of the rapidly growing literature on CE covering its concept and current practices and assessing its implementation. The review also serves as an assessment of the design, implementation and effectiveness of CE related policies. It first presents the concept of CE and compares it with the current linear economy of taking materials, producing goods and disposing waste. It explains why it is imperative to move away from a linear economy towards regenerative sustainable industrial development with a closed loop. The paper then introduces current practices that have been introduced and discusses standards for the assessment of CE's development and performance. The main focus here is on providing a summary of the data analysis of key CE indicators to give a picture of CE practices. Third, based on an analysis of literature, the paper identifies the underlying problems and challenges to CE in an entrepreneurial perspective. Finally, the review provides a conclusion on CE's current development and gives policy suggestions for its future development as part of an entrepreneurial and innovative national level development strategy. |
| Keywords: | circular economy, environmental policy, national development strategy, sustainable development strategy, entrepreneurial strategy |
| JEL: | E01 F18 H23 O44 Q50 Q53 Q55 Q58 R11 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9611&r=env |
| By: | Glanemann, Nicole; Belaia, Mariia; Funke, Michael |
| Abstract: | The risk of catastrophes is one of the greatest threats by climate change. Yet, the most common Integrated Assessment Models produce the counterintuitive result that a higher concern about climate change risks does not lead to stronger near-term abatement efforts. This paper probes whether this result still holds in a more refined DICE model that features Epstein-Zin utility, uncertainty about climate sensitivity and is fully coupled with a dynamic representation of the Atlantic thermohaline circulation. This modelling allows posing the question of whether aversion to this specific tipping point risk has a significant effect on the climate policy efforts. The simulations, however, show that near-term policy is insensitive to this climate change risk. For the more likely climate sensitivity values, a collapse of the circulation would occur in the more distant future, which allows acting after learning. For the more unlikely and higher climate sensitivity values, the collapse is not prevented as climate policy costs would be too high. |
| JEL: | Q54 C61 C63 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113037&r=env |
| By: | Burghaus, Kerstin; Dao, Thang Nguyen; Edenhofer, Ottmar |
| Abstract: | We consider, in a general equilibrium overlapping generations (OLG) model with environmental externalities, a contract between successive generations, whereby agents of the current working-age generation privately invest a share of their labor income in pollution mitigation in exchange for a transfer to their old-age capital income paid by the next generation. We analyze under which conditions there exist contracts which are Pareto-improving compared to an equilibrium without contract and characterize the set of Pareto-improving mitigation-transfer combinations, the Pareto frontier and the Nash bargaining solution. Further, we prove that steady state emissions under a Pareto-improving contract are lower than without a contract. In the second part of the paper, we study a non-cooperative setting, taking into account that credibly committing to a contract might not be possible. We show that there exists mitigation transfer schemes which are both Pareto-improving and give no generation an incentive to deviate from the provisions of the contract. |
| JEL: | Q52 D70 C72 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113135&r=env |
| By: | Eichner, Thomas; Pethig, Rüdiger |
| Abstract: | This paper studies the formation of self-enforcing global environmental agreements in a world economy with international trade and two groups of countries that differ with respect to fuel demand and environmental damage. It investigates whether the signatories threat to embargo (potential) free riders secures all countries participation in the agreement. Resorting to numerical analysis, we find that an embargo may be unnecessary, ineffective or even counterproductive - depending on the degree of asymmetry and other parameters. On some subset of parameters, the embargo stabilizes the otherwise unstable global agreement, but the threat of embargo is not credible. However, in some of these cases credibility can be restored by suitable intra-coalition transfers. |
| JEL: | F18 Q37 Q58 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112911&r=env |
| By: | Kalkuhl, Matthias; Edenhofer, Ottmar |
| Abstract: | This paper combines neoclassical growth theory with the von Th nen approach of land conversion to model deforestation and land allocation decisions in an intertemporal general equilibrium context suitable for developing countries. Analyzing the impact of several forest conservation policies, including international transfers under a REDD+ scheme, emphasized the role of taxes on non-forest land as effective and powerful policy that has been largely neglected so far.The findings of our equilibrium analysis are in stark contrast to the conventional economic wisdom that taxes on land are allocation neutral. As we model deforestation as one investment decision besides investment into physical capital stocks, land taxes may not only increase forest conservation levels but also overall capital stocks and output. We identify the conditions that lead to this double-dividend effect and apply them to data for a set of countries, concluding that forest conservation, e.g. implemented by land taxes, can have this positive effect for many developing countries. Additionally, we reassess Borlaug s hypothesis and Jevons paradox in a general-equilibrium context and design a land tax scheme that is robust to agricultural yield increases. |
| JEL: | D90 H23 O13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112961&r=env |
| By: | Berlemann, Michael |
| Abstract: | As a consequence of climate change, certain types of natural disasters become either more likely or more severe. While disasters might have numerous direct (typically negative) e ects, the e ect of an increase of natural disaster risk on individual well-being is often neglected. In this paper we study the e ects of natural disaster risk on self-reported happiness and life satisfaction at the example of tropical storms. Combining several waves of the World Values Survey and appropriate storm data we find that disaster risk tends to have little systematic e ect on self-reported happiness, once we correct for individual characteristics. However, hurricane risk turns out to decrease life satisfaction significantly. We conclude that when individuals evaluate their long-term satisfaction with their life, disaster risk is perceived as threat to individual well-being. |
| JEL: | I31 Q54 Q51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113073&r=env |
| By: | Dominique Bianco (Université de Bologne, LEDI (CNRS)); Evens Salies (OFCE-SciencesPo) |
| Abstract: | Few endogenous growth models have focused attention on the strong Porter hypothesis, that stricter environmental policies induce innovations, the benefits ofwhich exceed the costs. A key assumption in this hypothesis is that policy strictness pushes rms to overcome some obstacles to profit maximization. We model this hypothesis by incorporating pollution and taxation in the Aghion and Grifith (2005) analysis of growth with satisficing managers. Our theoretical results predict the strong Porter hypothesis. Moreover, they suggest that the stringency of environmental policy should adjust to changes in the level of potential competition in the intermediate inputs sector |
| Keywords: | Strong Porter Hypothesis, Environmental Policy, Endogenous Growth |
| JEL: | D43 O31 O41 O44 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1601&r=env |
| By: | Heman D. Lohano |
| Abstract: | Migration is a widely used adaptation response to climate and weather variability. In this paper, we investigate how variability in weather affects migration through the agricultural channel. We estimate an instrumental variables regression model that allows us to isolate the impacts of weather from other drivers of migration and analyze the impact of weather-driven changes in the crop revenue per hectare on the in-migration rate. We use panel data for 50 districts of Pakistanand four time periods, 1971-76, 1976-81, 1988-93, and 1993-98, and estimate a two-way error components model, controlling for unobserved district-specific and time-specific effects. Results show that temperature has a nonlinear effect, i.e., as temperature increases, the crop revenue per hectare initially increases and then declines. Furthermore, a 1 ËšC increase in the variability (standard deviation) of temperature reduces expected crop revenue per hectare by around 7.5 percent. The instrumental variables regression results show that a 1 percent weather-driven decrease in the crop revenue per hectare induces, on average, a 2 to 3 percent decrease in the in-migration rate into a district. Predicted increases in temperature and its variability during 2016-2035 (relative to 1971-1998) are likely to decrease crop revenues in relatively warm districts and increase them in cooler districts. These effects would decrease the in-migration rate in 18- 32 districts (36-64 percent) and increase the rate in the remaining 18-32 districts. Thus, the extent and scope of the impacts of weather variability on migration in Pakistan depend on a district's geographic location and the variability of temperature in the future. |
| Keywords: | Migration, weather variability, climate change, agriculture, panel data model, instrumental variables regression, Pakistan |
| URL: | http://d.repec.org/n?u=RePEc:snd:wpaper:99&r=env |
| By: | Borck, Rainald; Tabuchi, Takatoshi |
| Abstract: | We study the optimal and equilibrium size of cities in a monocentric city model with environmental pollution. Pollution is related to city size through the effect of population on production, commuting, and housing consumption. If pollution is local, we find that equilibrium cities are too large, mirroring standard results in the theory of city systems. When pollution is global and per capita pollution declines with city size, however, equilibrium cities may be too small. |
| JEL: | R12 Q54 R13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113124&r=env |
| By: | Meran, Georg; Schwarze, Reimund |
| Abstract: | This paper develops an analytical framework for studying the Baumol-Oates efficiency of traditional single instrument abatement policies vis-a-vis green defaults in the face of price inertia and deliberate defaulting of subpopulations. In this special case of behavioural heterogeneity command and control approaches can outperform price-based instruments and pure tax/subsidy schemes need to be adjusted in order to achieve politically desired levels of abatement. Moreover we prove that choice-preserving nudges are superior to any single-instrument policy in this case. An average marginal abatement cost rule is developed to optimise the green defaults and traditional policies of standards and prices under different degrees of market rigidity. |
| JEL: | H23 Q58 L51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113185&r=env |
| By: | Habla, Wolfgang (Department of Economics, School of Business, Economics and Law, Göteborg University); Roeder, Kerstin (University of Augsburg) |
| Abstract: | In this paper, we acknowledge that the mitigation of and adaptation to climate change have differential fiscal impacts. Whereas mitigation typically raises fiscal revenues, adaptation is costly to the taxpayer and to a greater extent the more distortionary the tax system is. In an OLG model with majority voting, we analyze how the choices of mitigation and adaptation are distorted under a lump-sum and a distortionary income tax regime. We find that whenever emissions and adaptation exhibit stock characteristics, the levels of mitigation and adaptation are chosen inefficiently low in the political equilibrium under lump-sum taxation. By contrast, the political equilibrium may entail inefficiently high mitigation or inefficiently high adaptation (but not both simultaneously) if the tax system is distortionary. A calibration of our model to the German economy shows that both mitigation and adaptation can be expected to be inefficiently low in the political equilibrium. Furthermore, the standard assumption of a lump-sum tax system when analyzing mitigation and adaptation is found to underestimate the loss in utilitarian welfare relative to a distortionary tax system, although mitigation levels are generally higher under the latter regime. |
| Keywords: | Adaptation; Mitigation; Political Economy; Majority Voting; OLG; Environmental Taxes |
| JEL: | D72 D78 H21 H23 Q58 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0643&r=env |
| By: | Zaklan, Aleksandar; Ellerman, Denny; Valero, Vanessa |
| Abstract: | The existence of some 2 billion unused EU Allowances (EUAs) at the end of Phase II of the EU s Emissions Trading System (EU ETS) has sparked considerable debate about structural shortcomings of the EU ETS. However, there has been a surprising lack of interest in considering the accumulation of EUAs in light of the theory of intertemporal permit trading, i.e. allowance banking. In this paper we adapt basic banking theory to the case of a linearly declining cap, as is common in greenhouse gas control systems. We show that it is perfectly rational for agents to decrease emissions beyond the constraint imposed by the cap initially, accumulating an allowance bank and then drawing it down in the interest of minimizing abatement cost over time. Having laid out the theory, we carry out a set of simulations for a reasonable range of key parameters, geared to the EU ETS, to illustrate the effects of intertemporal optimization of abatement decisions on optimal time paths of emissions and allowance prices. We conclude that bank accumulation as the result of intertemporal abatement cost optimization should be considered at least a partial explanation when evaluating the current discrepancy between the cap and observed emissions. |
| JEL: | Q54 D92 F18 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113034&r=env |
| By: | Gerigk, Joschka; MacKenzie, Ian; Ohndorf, Markus |
| Abstract: | In this article, we examine the regulation of pollution in open economies when the regulator is influenced by special interest groups. In a setting with free trade, we identify conditions under which a country may unilaterally adopt the stricter regulatory standards of its competitors. In our model, two lobby groups - representing industrial and environmental special interests - influence their government's policy decision. Their lobbying efforts not only depend on the domestic policy, but also on environmental regulation abroad. We find that both market structure and the characteristics of the pollutant are crucial determinants of the political equilibrium: given a local pollutant, the probability of convergence of environmental policies is increasing in the stringency of regulation abroad when product supply is relatively inelastic. This effect is reversed in the case of transboundary pollution. We also extend our framework to cases of imperfect competition. |
| JEL: | Q50 H73 D72 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113132&r=env |
| By: | Pethig, Rüdiger; Eichner, Thomas |
| Abstract: | In a multi-country model with interconnected markets for fossil fuel and deposits some countries fight climate damage by purchasing and preserving fossil fuel deposits, which would be exploited otherwise. We analyze the effectiveness of such a deposit policy, when that policy stands alone or is combined with fuel cap policies. If the stand-alone deposit policy is non-strategic, it implements the first-best allocation; otherwise, it distorts the allocation in the coalition s favor. Following Harstad (2012), we then analyze the policy mix consisting of the deposit policy, a fuel-supply-cap policy and a fuel-demand-cap policy. The fuel-supply-cap policy turns out to be redundant and so is the fuel-demand-cap policy, if it is nonstrategic. Whenever the coalition acts strategically on one of the markets or on both, it distorts the allocation in its own favor and is better off than in the efficient price-taking scenario which contrasts the efficiency result of Harstad. |
| JEL: | F55 H23 Q54 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113010&r=env |
| By: | Schreiber, Sven; Breitung, Jörg |
| Abstract: | We extend the frequency-specific Granger-causality test of Breitung and Candelon (2006) to a more general null hypothesis that allows non-causality at unknown frequencies within an interval, instead of having to prespecify a single frequency. This setup corresponds better to most hypotheses that are typically analyzed in applied research and is easy to implement. We also discuss a test approach that departs from strict non-causality, given the impossibility of (non-trivial) non-causality over a continuum of frequencies. In an empirical application dealing with the dynamics of US temperatures and CO2 emissions we find that emissions cause temperature changes only at very low frequencies with more than 30 years of oscillation. |
| JEL: | C32 Q54 C53 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113111&r=env |
| By: | Vance, Colin; Frondel, Manuel |
| Abstract: | Using household travel diary data collected in Germany between 1997 and 2012, we employ an instrumental variable (IV) approach that enables us to consistently estimate both fuel price and efficiency elasticities at once. The aim is to gauge the relative impacts of fuel economy standards and fuel taxes on distance traveled. We find that the magnitude of the elasticity estimates are statistically indistinguishable: higher fuel prices reduce driving by the same degree as higher fuel efficiency increases driving. This finding indicates an offsetting effect of fuel efficiency standards on the effectiveness of fuel taxation, calling into question the efficacy of the European Commission's current efforts to legislate CO2 emissions limits for new cars given prevailing high fuel taxes. The ecological implications of this legislation for emissions reductions is explored through a simple numerical simulation using the econometric estimates. |
| JEL: | D12 C36 Q41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113171&r=env |
| By: | Haita-Falah, Corina; Gerber, Anke; Lange, Andreas |
| Abstract: | Motivated by the recent concerns of the scientists participating in the elaboration of the Intergovernmental Panel on Climate Change assessment reports, we study a principal-agent relationship between a politician and a researcher that captures some stylized facts regarding the involvement of politics into scientific research. The politician contracts with a researcher in order to get some scientific advice about a policy relevant variable. The politician trades off the policy that he would implement in the absence of any reelection concerns with a desire to please voters by choosing a policy that is supported by scientific advice and that turns out to be the ``right'' policy ex post. As a consequence, the politician bribes the researcher to bias his scientific advice towards the ideal policy of the politician. We study the optimal contracts under symmetric and under asymmetric information about the researcher's ability and concern for reputation, as well as the selection of a researcher by the politician. Thereby we identify several conflicts between the interests of the voters and those of the politician. |
| JEL: | D72 D82 D83 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113227&r=env |
| By: | Marcotte, Dave E. (American University) |
| Abstract: | Poor air quality has been shown to harm the health and development of children. Research on these relationships has focused almost exclusively on the effects of human-made pollutants, and has not fully distinguished between contemporaneous and long-run effects. This paper contributes on both of these fronts. Merging data on plant pollen, human-made pollutants and ECLS-K data on academic skills, I study the relationship between poor air quality in the first years of life on school-readiness, and the effects of ambient air quality on achievement of young children. I find evidence that exposure in early childhood affects school readiness at the start of kindergarten, and that the effects of air quality on the growth of cognitive skills in math and reading continue into elementary school. |
| Keywords: | pollution, education, cognitive skills |
| JEL: | I1 I2 Q53 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9689&r=env |
| By: | Klößner, Stefan; Pfeifer, Gregor |
| Abstract: | We examine the impact of European car scrappage programs on new vehicle registrations and respective CO2 emissions. To construct proper counterfactuals, we develop MSCM-T, the multivariate synthetic control method using time series of economic predictors. Applying MSCM-T to a rich data set covering two outcomes of interest, ten economic predictors, and 23 countries, we first analyze Germany which implemented the largest program. We find that the German subsidy had an immensely positive effect of 1.3 million program-induced new car registrations. Disentangling this effect reveals that almost one million purchases were not pulled forward from future periods, worth more than three times the program's 5 billion budget. However, stabilizing the car market came at the cost of 2.4 million tons of additional CO2 emissions. For other European countries with comparable car retirement schemes, we show further positive results regarding vehicle registrations. Finally, we demonstrate that all non-scrapping countries could have considerably backed their vehicle markets by adopting scrappage subsidies. |
| JEL: | D04 D12 H23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113207&r=env |
| By: | Gierhake, Klaus |
| Abstract: | Der Artikel analysiert die Adaptationsstrategie an den Klimawandel des Metropolitandistriktes Quito. Als methodisches Instrument dient der Ansatz 'Governmentalität'. Mit dem Ansatz "Governmentalität' können bisher in der Diskussion um den Klimawandel ausgeblendete Faktoren sichtbar gemacht werden, und auf der Basis eines konkreten Beispiels neue Aspekte in die Diskussion eingeführt werden: die Nutzung lokalen Wissens und der Stellenwert sozio-ökonomischer Beiträge zum Klimawandel. Als wesentliche Ergebnisse können zusammengefasst werden: 1) In Quito wurde eine Strategie erarbeitet, die auf der Ebene 'Ziele des Regierungshandelns' deutlich von den bekannten Modellen absetzt, die sehr stark ökologisch oder wirtschaftlich ausgerichtet sind. Der Vorschlag ist zudem in die nationale und kommunale Planung integriert, nimmt die Vorgaben überregionaler lateinamerikanischer Programme auf. 2) Lokales Wissen wird integriert, es soll explizit über die Verwaltung des Metropolitandistriktes gefördert werden. 3) Es werden sozio-ökonomische Instrumente eingesetzt, z.B. Institutionen-Entwicklung, Management von Wissen und Kapazitäten, Aufbau und Nutzung internationaler Gemeindenetzwerke. 4) Im Gegensatz zu bisherigen Modellen der Governmentalität besteht ein neues Regierungsverständnis: die Gemeinderegierung koordiniert den Prozess der Adaptation an den Klimawandel. Über den Ansatz 'Förderung von öffentlichen Belangen und Räumen' soll die Zivilgesellschaft integrieren werden. |
| Abstract: | The article analyses the adaptation strategy to climate change of the metropolitan district Quito by the methodological instrument 'governmentality'. This way the perspectives that have hitherto been less observed can be pointed out more precisely: the use of local knowledge and the importance of socio-economic contributions to climate change. As salient results can be summarized: 1) With the approach 'governmentality' factors can be visualized that have to date been neglected in the discussion about climate change and its management and on the basis of a concrete example new aspects can be introduced into the discussion. 2) A strategy has been elaborated differing clearly from the known models at the level 'aims of governmental action' that are mainly oriented ecologically or economically. The proposal of Quito has been integrated in the national and communal planning and adapts the concepts of comprehensive Latin American programmes. 3) Local knowledge has been integrated; it is to be supported explicitly by the administration of the metropolitan district. 4) Socio economic instruments have been integrated, for example institution development, management of capacities and knowledge, establishment of international networks of local governments. 5) In comparison with existing experiences, a new approach of governmentality has been established: the local government coordinates the process of adaption, civil society should participate through the activity line 'support for public issues and public spaces'. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zeudps:74&r=env |
| By: | David Comerford (Division of Economics, University of Stirling); Ian Lange (Division of Economics and Business, Colorado School of Mines); Mirko Moro (Division of Economics, University of Stirling) |
| Keywords: | energy efficiency, bunching, labels, thresholds |
| JEL: | Q48 L15 Q58 H23 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:mns:pbrief:wp2016-01&r=env |
| By: | Zerrahn, Alexander; Krekel, Christian |
| Abstract: | This paper investigates the effect of wind turbines on residential well-being in Germany, using panel data from the German Socio-Economic Panel (SOEP) and a unique, novel data set on wind turbines for the time period between 2000 and 2012. Using a Geographical Information System (GIS), it calculates the distance from households to the nearest wind turbines to determine whether an individual is affected by disamenities, e.g. through visual pollution. The depth of our unique, novel data set on wind turbines, which has been collected at the regional level and which includes, besides their exact geographical coordinates, their construction dates, allows estimating the causal effect of wind turbines on residential well-being, using difference-in-difference propensity-score and spatial matching techniques. We demonstrate that the construction of a new wind turbine in a treatment area of 4000 metres around households has a significantly negative impact on life satisfaction. Moreover, this effect is found to be of transitory nature. Contrasting the implicit monetary valuation with the damage through CO2 emissions avoided by wind turbines, wind power turns out to be a favorable technology despite robust evidence for negative externalities. |
| JEL: | C23 Q51 R20 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112956&r=env |
| By: | Roger Galipeau; Serge Pourreaux; Alain Duhamel |
| Date: | 2016–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirpro:2016rp-02&r=env |
| By: | Bonde, Magnus (Department of Real Estate and Construction Management, Royal Institute of Technology); Song, Han-Suck (Department of Real Estate and Construction Management, Royal Institute of Technology) |
| Abstract: | It is often argued that great energy savings can be accomplished by upgrading existing energy-inefficient building stock. However, even if these investments are profitable at the time, it might be even better to postpone these measures as even better investments can be realized later on. Such behavior can be analyzed by applying the real options analysis (ROA) framework. In addition, the retrofit scenario differs from the new development case, as the former is affected by the value of the already existing building, since this value must be “surrendered” in order to acquire revenues from the retrofitted building. The main purpose of this paper is to evaluate green refurbishments using the real options methodology. In doing so, we are able to accurately estimate the “embedded” real option values of deferring green refurbishments, thereby adding to current explanations of the energy-efficiency gap. This paper also discusses policy suggestions to reduce the value of waiting and thus trigger these refurbishments today. |
| Keywords: | Refurbishment; Real options; Green building; Timing option; Real estate |
| JEL: | M21 |
| Date: | 2016–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:kthrec:2015_011&r=env |
| By: | Kraehnert, Kati; Groppo, Valeria |
| Abstract: | This paper analyzes the impact of extreme weather shocks on education outcomes in Mongolia. Our focus is on particularly harsh winters that caused mass livestock mortality (called dzud in Mongolian) between 1999 and 2002 and in 2009/2010. The timing of events allows us to analyze both short- and long-term effects of weather shocks on education. Our analysis disentangles the effects by age of exposure. Moreover, we provide new evidence on which households socio-economic characteristics and coping strategies are associated with worse or milder impacts of the shock. The data basis is an unusually detailed household survey that comprises rich information on households shock experience and retrospective information on households pre-shock socio-economic status. Various measures of shock intensity are derived from data on snow depth and livestock mortality. We mainly employ a difference-in-differences econometric approach, which allows to draw causal inference by exploiting exogenous variation in shock exposure across space and age cohorts. Results show that weather shocks negatively affect education both in the short- and in the long-term. Individuals from herding households with poorer socio-economic backgrounds appear to be particularly affected. Individuals exposed during pre-schooling age bear persistent negative human capital effects. |
| JEL: | I25 Q54 O12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113161&r=env |
| By: | Ingrid Peignier; Minh Hoang Bui; Martin Trépanier |
| Date: | 2016–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirpro:2016rp-03&r=env |
| By: | Balzer, Jessica-Elena |
| Abstract: | Der Beitrag stellt ein Konzept zur Etablierung eines Nachhaltigkeitszertifikats für die Spielzeugindustrie vor. In diesem Zusammenhang werden zunächst die Möglichkeiten der Nutzung von etablierten Labels und Zertifikaten für Unternehmen dargestellt, die genutzt werden um Produkte und Dienstleistungen als nachhaltig, grün oder umweltfreundlich darzustellen und verifizieren zu lassen. In diesem aktuellen Zustand wird allerdings Unternehmen die Möglichkeit geboten, eine nachhaltige Verhaltensweise vorzutäuschen. Derzeit gibt es über 400 nutzbare Labels, die verschiedene Nachhaltigkeitsaspekte betonen. Außerdem haben einige Unternehmen eine eigene Nachhaltigkeitsmarke entworfen, wodurch eine notwendige Transparenz für den Verbraucher bzw. Konsument nicht mehr ausreichend gegeben zu sein scheint. Dadurch wird zunehmend Unternehmen, die nur scheinbar den Anforderungen der Labels gerecht werden, eine Verfälschung der Nachhaltigkeitseigenschaften ihrer Produkte ermöglicht, um sich somit den Labeltitel zu erschleichen - man gibt nur noch vor, nachhaltig zu wirtschaften, das ist das sogenannte Greenwashing. Bei der Konsumgüterindustrieanalyse ist auffällig, dass es momentan für Spielwaren kein Label/Zertifikat zur Überprüfung und Verifizierung nachhaltigen Spielzeugs gibt. Zwar existieren verschiedene Siegel, die beispielsweise die Sicherheit oder die Inhaltsstoffe der Spielzeuge thematisieren und belegen. Allerdings weist der Markt keine allgemeingültige und komplette Zertifizierung bezüglich der umwelttechnischen und sozialen Aspekte auf, auf denen die Nachhaltigkeit fußt. Deshalb fokussiert die vorliegende Ausarbeitung die Konzipierung eines Nachhaltigkeitssiegels für die Spielzeugindustrie um somit Greenwashing in dieser Industrie entgegenzuwirken bzw. dessen Entstehung zu erschweren und einzugrenzen. |
| Keywords: | Greenwashing,Labels,Zertifikate,Siegel,Nachhaltigkeit,Spielzeugindustrie |
| JEL: | Q56 M14 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:pfobei:154&r=env |
| By: | Casari, Marco (University of Bologna); Lisciandra, Maurizio (University of Messina) |
| Abstract: | In an open economy with common property resources at the community level, marriage and migratory decisions crucially depend on inheritance rules on the commons. Motivated by the traditional management of the commons in the Italian Alps, we present a model that fits the evolution of property rights observed over six centuries. Women's rights over the commons were progressively eroded from the Middle Ages until 1800, when there was an almost universal adoption of a patrilineal inheritance system. Communities switched from an egalitarian system to a patrilineal inheritance system in an attempt to protect the per capita endowment of common resources from outside immigration. The model shows that inheritance rules have clear-cut implications for marriage strategies, migratory flows, and fertility rates. |
| Keywords: | inheritance, commons, migration, institutions, property rights |
| JEL: | J13 J16 Q24 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9601&r=env |