nep-env New Economics Papers
on Environmental Economics
Issue of 2016‒09‒11
twenty papers chosen by
Francisco S. Ramos
Universidade Federal de Pernambuco

  1. Testing Supply-Side Climate Policies for the Global Steam Coal Market - Can They Curb Coal Consumption? By Roman Mendelevitch
  2. Climate Mitigation in China; Which Policies Are Most Effective? By Ian W.H. Parry; Baoping Shang; Philippe Wingender; Nate Vernon; Tarun Narasimhan
  3. Environmental Policy and Growthwhen Environmental Awarenessis Endogenous By Karine Constant; Marion Davin
  4. The Impact of Climate Change on Agricultural Output in South Africa (1997-2012) By Ncube, Free; Cheteni, Priviledge; Ncube, Prince; Muzawazi, Strugle
  5. Estimating CO2 Emissions Embodied in Final Demand and Trade Using the OECD ICIO 2015: Methodology and Results By Kirsten S. Wiebe; Norihiko Yamano
  6. Investing to Mitigate and Adapt to Climate Change; A Framework Model By Anthony Bonen; Prakash Loungani; Willi Semmler; Sebastian Koch
  7. Optimal biodiversity erosion in multispecies fisheries By Luc DOYEN; Eric TROMEUR
  8. Strategic Complements in International Environmental Agreements: a New Island of Stability By Leonhard Kähler; Klaus Eisenack
  9. An exploratory study of environmental awareness in business tourism By Daniela Gračan; Marina Barkiđija; Andrea Dugandžić
  10. Greening the Vehicle Fleet: Evidence from Norway’s CO2 Differentiated Registration Tax By Yan, Shiyu; Eskeland, Gunnar S.
  11. Mining Matters : Natural Resource Extraction and Local Business Constraints By de Haas, Ralph; Poelhekke, Steven
  12. Optimal control theory with applications to resource and environmental economics By Hoel, Michael
  13. Aging, private health expenditures and environment quality By Safi, Fatma
  14. Where are natural gas prices heading, and which are the environmental consequences for Latin America? By Arturo Leonardo Vásquez Cordano; Abdel M. Zellou
  15. Noah Revisits Biodiversity Prioritization By David Martin
  16. An Evaluation of the Proposed Worker Protection Standard with Respect to Pesticide Exposure, and Parkinson’s Disease By Alica Stubnova Sparling; David W. Martin; Lillian B. Posey
  17. Efectos potenciales de los certificados ambientales sobre la cobertura forestal de los cafetales en México. By Javier Alejandro López Aguilar
  18. Una aproximación al valor social y ambiental de las áreas verdes urbanas de la Ciudad de México. By Claudio Othón Cruz Martínez
  19. Natural resources and capital structure By Kurronen, Sanna
  20. Overcoming Salience Bias: How Real-Time Feedback Fosters Resource Conservation By Degen, Kathrin; Fleisch, Elgar; Götte, Lorenz; Lalive, Rafael; Staake, Thorsten; Tasic, Vojkan; Tiefenbeck, Verena

  1. By: Roman Mendelevitch
    Abstract: The achieved international consensus on the 1.5‐2°C target entails that most of current fossil fuel reserves must remain unburned. Currently, a majority of climate policies aiming at this goal are directed towards the demand side. In the absence of a global carbon regime these polices are prone to carbon leakage and other adverse effects. Supply‐side climate policies present an alternative and more direct approach to reduce the consumption of fossil fuels by addressing their production. Here, coal as both, the most abundant and the most emission-intensive fuel, plays a pivotal role. In this paper, I employ a numerical model of the international steam coal market (COALMOD‐World) to examine two alternative supply‐side policies: 1) a production subsidy reform introduced in major coal producing countries, in line with the G20 initiative to reduce global fossil fuel subsidies; 2) a globally implemented moratorium on new coal mines. The model is designed to replicate global patterns of coal supply, demand and international trade. It features endogenous investments in production and transportation capacities in a multi‐period framework and allows for substitution between imports and domestic production of steam coal. Hence, short‐run adjustments (e.g. import substitution effects) and long‐run reactions (e.g. capacity expansions) of exporting and importing countries are endogenously determined. Results show that a subsidy removal, while associated with a small positive total welfare effect, only leads to an insignificant reduction of global emissions. By contrast, a mine moratorium induces a much more pronounced reduction in global coal consumption by effectively limiting coal availability and strongly increasing prices. Depending on the specification of reserves, the moratorium can achieve a coal consumption path consistent with the 1.5‐2°C target.
    Keywords: Supply‐side climate policy, coal markets, reserves, subsidy removal, International trade
    JEL: C72 H25 Q35
    Date: 2016
  2. By: Ian W.H. Parry; Baoping Shang; Philippe Wingender; Nate Vernon; Tarun Narasimhan
    Abstract: For the 2015 Paris Agreement on climate change, China pledged to reduce the carbon dioxide (CO2) intensity of GDP by 60–65 percent below 2005 levels by 2030. This paper develops a practical spreadsheet tool for evaluating a wide range of national level fiscal and regulatory policy options for reducing CO2 emissions in China in terms of their impacts on emissions, revenue, premature deaths from local air pollution, household and industry groups, and overall economic welfare. By far, carbon and coal taxes are the most effective policies for meeting environmental and fiscal objectives as they comprehensively cover emissions and have the largest tax base.
    Keywords: Climatic changes;China;Greenhouse gas emissions;Trading systems;Fiscal policy;Climate policy;Paris Agreement, carbon tax, China, air pollution, coal tax, emissions trading, incidence, welfare effects
    Date: 2016–07–25
  3. By: Karine Constant; Marion Davin
    Abstract: This paper examines the relationship between environmental policy and growth whengreen preferences are endogenously determined by education and pollution. We consideran environmental policy in which the government implements a tax on pollution andrecycles the revenue to fund pollution abatement activities and/or an education subsidy(influencing green behaviors). When the sensitivity of agents’ environmental preferencesto pollution and human capital is high, the economy can converge to a balanced growthpath equilibrium with damped oscillations. We show that this environmental policy canboth remove the oscillations, associated with intergenerational inequalities, and enhancethe long-term growth rate. However, this solution requires that the revenue from the taxrate must be allocated to education and direct environmental protection simultaneously.We demonstrate that this type of mixed-instrument environment policy is an effectiveway to address environmental and economic issues in both the short and the long run
    Date: 2016–08
  4. By: Ncube, Free; Cheteni, Priviledge; Ncube, Prince; Muzawazi, Strugle
    Abstract: South Africa has shown major interest in the climate change discourse since the Kyoto Protocol in 1997. Climate change has moved from an issue of environmental concern to an issue of commercial significance. The purpose of this study was to investigate the impact of climate change on agriculture output in South Africa. The impact of climate change on output is examined in this study using the ordinary least squares (OLS) method. The estimated econometric model regresses temperature, rainfall, labour and capital on GDP in the agricultural sector. The results suggest that there is a negative relationship between climate change and agricultural output in South Africa.
    Keywords: Impact, OLS, South Africa, Climate Change, Agricultural Output.
    JEL: Q1 Q5 Q54
    Date: 2015
  5. By: Kirsten S. Wiebe; Norihiko Yamano
    Abstract: Reliable carbon emissions statistics are essential for formulating responses to climate change including global negotiations such as those concluded in Kyoto in 1997 or recently in Paris at COP21. Typically, emissions statistics are compiled according to production-based or territorial emission accounting methods: measuring emissions occurring within sovereign borders. However, these estimates do not account for global production chains i.e. emissions from many countries may be implicated in the production of final goods and services. Using the 2015 edition of the OECD Inter-Country Input-Output (ICIO) tables and detailed IEA CO2 emissions from fuel combustion data, estimates of emissions embodied in final demand and in international trade were generated to contribute to a better understanding of how CO2 emissions around the world are driven by global consumption patterns. After explaining the methodology in detail, some general results are described and examples given of how to use and interpret the derived indicators.
    Date: 2016–09–03
  6. By: Anthony Bonen; Prakash Loungani; Willi Semmler; Sebastian Koch
    Abstract: We propose a macroeconomic model to assess optimal public policy decisions in the the face of competing funding demands for climate change action versus traditional welfare-enhancing capital investment. How to properly delineate the costs and benefits of traditional versus adaption-focused development remains an open question. The paper places particular emphasis on the changing level of risk and vulnerabilities faced by developing countries as they allocate investment toward growth strategies, adapting to climate change and emissions mitigation.
    Keywords: Climatic changes;Government expenditures;Public investment;Econometric models;Climate Change, Fiscal Policy, Public Capital, Nonlinear Model Predictive Control
    Date: 2016–08–05
  7. By: Luc DOYEN; Eric TROMEUR
    Abstract: As marine ecosystems are under pressure worldwide, many scientists and stakeholders advocate the use of ecosystem-based approaches for fishery management. In particular, management policies are expected to account for the multispecies nature of fisheries. However, numerous fisheries management plans remain based on single-species concepts such as Maximum Sustainable Yield (MSY) and Maximum Economic Yield (MEY), that respectively aim at maximizing catches and profits of single species or stocks. In this study, we assess the sustainability and profitability of multispecies MSY and MEY in a mixed fishery with technical interactions. First, we analytically show that multispecies MSY and MEY can induce overharvesting and extinction of species with low productivity and low monetary value. Second, we identify and discuss incentives on effort costs and landing prices, as well as technical regulations, that promote biodiversity conservation and more globally sustainability. Finally, a numerical example based on the coastal fishery in French Guiana illustrates the analytical findings.
    Keywords: Multispecies fishery, ecosystem-based fisheries management, maximum sustainable yield, maximum economic yield, overexploitation, technical interaction
    JEL: Q22
    Date: 2016
  8. By: Leonhard Kähler; Klaus Eisenack
    Abstract: International environmental agreements have had varying success in the past; the theoretical literature on international environmental agreements (IEAs) explains why freeriding is so common. This paper allows for two strategically different types of countries. Damage functions are concave for some countries (contrary to the standard convexity assumption). This leads to strategic substitutes and complements in emissions reduction within the same model. The interaction of both country types can lead to a stable agreement that is larger than in the standard case, and to more global abatement. Such a stable agreement constitutes an island of stability in addition to the small standard agreement.
    Date: 2016–08
  9. By: Daniela Gračan (Faculty of tourism and hospitality management, Opatija, University of Rijeka, Croatia); Marina Barkiđija (Faculty of tourism and hospitality management, Opatija, University of Rijeka, Croatia); Andrea Dugandžić (Faculty of tourism and hospitality management, Opatija, University of Rijeka, Croatia)
    Abstract: Purpose – Business tourism is recognized as the largest holder of income for a particular destination but it is problematic in terms of sustainability. More and more countries are beginning to recognize the negative effects of business tourism on environment, turning to the organization of environmentally friendly business meetings, which are the main subject of this paper. Methodology – The research was conducted using a questionnaire with 23 questions which examined the attitudes of participants about the environmental sustainability of business meetings and the assessment of hotel performance, taking into account the environmentally sustainable performance during the business meeting. Since the one hotel that placed the congress has the "sustainable management" certificate, and the other one does not, the aim of this work is determining whether there is a difference in the business meeting participants’ environmental awareness in different hotels. Findings – Based on the results of the surveyed business meeting participants, it can be concluded that main hypothesis: Participants show awareness of the need for environmentally sustainable behavior, is confirmed since none of the respondents declared that they would initially choose a hotel without a "green" certificate if it is offered a possibility to go to a hotel with an environmentally certified business. Contribution – In the near future, "green" meetings will become recognized as the main feature of business tourism, and that all business meeting organizers will follow the rules of sustainability, achieving greater benefits with less harmful effects for the whole community.
    Keywords: green meetings, business tourism, sustainable development, "sustainable management" certificate
    JEL: L83
    Date: 2016–04
  10. By: Yan, Shiyu (Dept. of Business and Management Science, Norwegian School of Economics); Eskeland, Gunnar S. (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: Fiscal policies are used to improve vehicle fuel efficiency and reduce CO2 emissions in the transport sector. Years of forceful reform in Norway may be seen as informative. From 2007, Norway has linked its new vehicle registration tax to CO2 intensities, later adapting it into a feebate form. We exploit a detailed dataset of new vehicle registrations, using fixed effects and instrumental variables in our econometric analysis. We find that the CO2 differentiated registration tax contributes significantly to shifting purchases towards low-emitting cars. A 1000NOK tax increase (about 120USD) is associated with a reduction of 1.13% - 1.58% in vehicle registrations, and the responsiveness in car choice to fuel costs is of the same magnitude. The estimated effect of the tax explains the majority (79%) of the reduction in average CO2 intensity in the new car fleet 2006 through 2011. A point estimate of the elasticity of the CO2 intensity with respect to the CO2 price is minus 0.06, whereas the elasticity with respect to (resulting) car prices is about minus 0.5. An intuitive model with ‘all’ car types losing demand to low-emitting types applies fairly well: low-emitting segments gain in share and do not get CO2 leaner, while high-emitting segments lose in share and become CO2 leaner. Moves between nine segments and within those segments are equally important.
    Keywords: CO2 intensity; new vehicle; vehicle registration tax; fuel cost; Pigovian taxation; green tax reform; greenhouse gas emission reductions
    JEL: C12 H23 Q00 Q50
    Date: 2016–08–31
  11. By: de Haas, Ralph (Tilburg University, Center For Economic Research); Poelhekke, Steven
    Abstract: We estimate the impact of local mining activity on the business constraints experienced by 22,150 firms across eight resource-rich countries. We find that with the presence of active mines, the business environment in the immediate vicinity (<20 km) of a firm deteriorates but business constraints of more distant firms relax. The negative local impact of mining is concentrated among firms in tradeable sectors whose access to inputs and infrastructure becomes more constrained. This deterioration of the local business environment adversely affects firm growth and is in line with a natural resource curse at the sub-national level.
    Keywords: mining; natural resources; business environment
    JEL: L16 L25 L72 O12 O13 Q30
    Date: 2016
  12. By: Hoel, Michael (Dept. of Economics, University of Oslo)
    Abstract: This note gives a brief, non-rigorous sketch of basic optimal control theory, which is a useful tool in several simple economic problems,such as those in resource and environmental economics. While the mathematical analysis in the note is self-contained, there is not much explanation and intuition on the economic issues. The note should therefore be read together with articles or books that give more discussion of the economics of the problems considered.
    Keywords: optimal control theory; exhaustible Resources; renewable Resources; climate change; water management
    JEL: C61 Q20 Q30 Q50
    Date: 2016–08–23
  13. By: Safi, Fatma
    Abstract: This paper presents a simple two-period overlapping generation's model with uncertain lifetimes that contains environmental and health issues. It investigates an intergenerational conflict between old and young generations as regards two defensive expenditures, offsetting the influence of a worsening environment, represented here by health care and environmental investment. Workers support environmental maintenance while retirees prefer investing in healthcare. The author shows that an increasing support for private health expenditures in an aging economy leads to a higher level of capital accumulation and leads also to a higher level of environmental quality only if the maintenance efforts are larger than consumption externalities.
    Keywords: aging,environmental expenditures,environmental quality,overlapping generations,age-based conflict
    JEL: D91 J11 Q20
    Date: 2016
  14. By: Arturo Leonardo Vásquez Cordano (Chief Economist and Manager of the Bureau of Regulatory Policy and Economic Analysis at Osinergmin, Vice-President of the Commission of Free Competition at the Peruvian Antitrust and Consumer Protection Authority (Indecopi), as well as Professor at GERENS Graduate School of Business in Lima, Peru.); Abdel M. Zellou (currently co-founder and partner at Clear Future Consulting, U.S.A. Was Market Development Director of Gathering and Midstream Gas at T.D. Williamson, U.S.A.)
    Abstract: There was an upward trend in energy commodity prices since 2000, but with the surge in supply coming from unconventional oil and gas resources in North and South America, the trend in natural gas prices has become downward in recent years. However, the exploitation of these resources is generating public concerns due to the possible adverse environmental impacts of using hydraulic fracturing and other techniques on underground water. The purpose of this paper is to address the following questions: are there super cycles in natural gas prices? What are the environmental consequences in Latin America of the exploitation of unconventional gas given the cyclical behavior of gas prices and how can governments implement environmental policies to regulate unconventional gas extraction? Three super cycles in natural gas prices are identified with the last peak occurring in 2006. Our analysis indicates that the instable political situation and institutional weakness, the governmental intervention through asset nationalization and state-owned oil companies, the lack of transparent investment rules, high capital expenditures to develop LNG export projects and the exploration of shale resources, as well as the pre-salt discoveries in Brazil make uncertain that the shale gas boom achieve a large impact in Latin American during the current gas price super cycle.
    JEL: E32 L71 Q41 E37 L51 Q48 Q58
    Date: 2016–05
  15. By: David Martin (Department of Economics, Davidson College)
    Abstract: The challenge of using limited funds to protect biodiversity has motivated much important research. One important line of work has been based upon the Noah’s Ark metaphor developed by Weitzman (1998). I summarize the main criticisms of that model and use those to develop heuristically a new variation of that model. That new policy ranking model includes ecological value and diversity as well as the economic benefits and costs and probability of successful protection that Weitzman used. I demonstrate the model with an example of two policies intended to enhance Keoladeo National Park in India, and conclude be discussing how the example highlights the importance of the interactions of all five of those aspects.
    Keywords: Biodiversity, Noah’s Ark, Natural Capital, Conservation
    JEL: Q57
    Date: 2016–08
  16. By: Alica Stubnova Sparling (Department of Economics, Davidson College); David W. Martin (Department of Economics, Davidson College); Lillian B. Posey (Urban Institute)
    Abstract: In its analysis of costs and benefits of the Worker Protection Standards revisions that limit exposure of workers to pesticides, the U.S. Environmental Protection Agency did not account for benefits of averting many chronic diseases, citing a lack of information. Our paper challenges this decision by demonstrating a process for estimation of benefits that incorporates odds ratios from meta-analyses on Parkinson’s disease as well as information available in the literature on remaining parameters. Incorporating this process in the cost benefit analysis of policies affecting chronic health can lead to more a comprehensive measurement of total benefits and thus a more precise cost benefit analysis.
    Keywords: Worker Protection Standards, Pesticide Exposure, Parkinson’s Disease
    JEL: I18
    Date: 2016–09
  17. By: Javier Alejandro López Aguilar (Division of Economics, CIDE)
    Abstract: En este trabajo se simula el efecto potencial de los certificados de café orgánico y café de sombra, como instrumentos para conservar la cobertura forestal de los cafetales mexicanos. Las plantaciones tradicionales de café en México están caracterizadas por emplear una cobertura de árboles nativos de los bosques y selvas, por lo que son asociadas con la provisión de algunos servicios ambientales de estos ecosistemas, especialmente el de hábitat para la biodiversidad. Sin embargo, la búsqueda de mayores beneficios económicos incentiva a los productores a adoptar métodos de cultivo más intensivos, que generan contaminación y empobrecen la cobertura forestal de sus parcelas. Ante esta situación las iniciativas de certificación ambiental de café buscan revertir esta tendencia, mediante la creación de mercados especializados en los que se paga un mayor precio a los cafeticultores que recurren a métodos productivos más sustentables. Para el análisis, se especifica un modelo dinámico de maximización de beneficios en el que un productor representativo elige entre distintas tecnologías, incluyendo una alternativa ambientalmente sustentable (certificada). Cada tecnología es caracterizada por una función de producción en la que la cobertura forestal afecta de manera distinta la productividad total de los factores. Así, simulando el estado actual de los cafetales mexicanos, es posible identificar la mejor opción tecnológica para cada uno de ellos y conocer el nivel de cobertura forestal que resulta de su uso. El efecto potencial de los certificados se obtiene de comparar estos resultados con los de un escenario hipotético en el que no existe la tecnología certificada. Finalmente, se simulan escenarios en los que se incluyen instrumentos de política como complemento de la certificación ambiental.
    Keywords: café orgánico, café de sombra, certificados ambientales, sistemas agroforestales, programación dinámica, economía computacional
    JEL: C61 C63 Q12 Q23 Q57
    Date: 2016–08
  18. By: Claudio Othón Cruz Martínez (Division of Economics, CIDE)
    Abstract: Las áreas verdes urbanas representan una amenidad que impacta en el precio de las viviendas cercanas por los importantes servicios que prestan –principalmente sociales y ecosistémicos–. En el caso de la Ciudad de México, las áreas verdes se clasifican en arboladas, deportivas y simplemente con pastos y arbustos. En este trabajo, el área y la distancia a dichas áreas verdes son consideradas para ver su efecto en los precios de vivienda en la Ciudad de México. Usando un modelo de Precios Hedónicos de vivienda se encontró que los precios de la vivienda aumentan entre mayor sea el tamaño de las áreas arboladas, mientras el efecto contrario sucede con la cercanía a las áreas deportivas. El primero de estos resultados es intuitivo, mientras que el segundo podría deberse a las condiciones en que se encuentran las instalaciones de dichas áreas en cuanto a infraestructura como a la alta propensión de presencia de actividades ilícitas. Estos resultados pueden dar una pista a los hacedores de política pública sobre algunas acciones que podrían tomarse para la ubicación, tamaño y clase de nuevas áreas verdes.
    Keywords: áreas verdes urbanas, espacios abiertos urbanos, Ciudad de México, Precios Hedónicos, regresión espacial
    JEL: Q26 Q51
    Date: 2016–08
  19. By: Kurronen, Sanna
    Abstract: ​This paper examines the effect of natural resources on capital structure of the firm. Using an extensive dataset of listed firms in 70 countries, we show that firms operating in resource extraction industries have less debt and that that debt tends to have a longer maturity than that of other non-financial firms. Moreover, non-resource firms in resource-dependent countries are found to be less indebted than their counterparts in other countries. The results suggest that the very fact of a firm’s location in a resource-dependent country may be an overlooked country-specific de-terminant of firm capital structure and that financial institutions in resource-dependent countries may play a role in exacerbating a nation’s resource curse.
    Keywords: resource dependence, capital structure, panel data
    JEL: G32 O13 Q32
    Date: 2016–08–29
  20. By: Degen, Kathrin; Fleisch, Elgar; Götte, Lorenz; Lalive, Rafael; Staake, Thorsten; Tasic, Vojkan; Tiefenbeck, Verena
    Abstract: Inattention and imperfect information bias behavior toward the salient and immediately visible. This distortion causes costs to individuals, the organizations they work in, and soci- ety at large. We show that an effective way to overcome this bias is making the implications of one's behavior salient in real time, while individuals can directly adapt. In a large-scale field experiment, we gave participants real-time feedback on the resource consumption of a daily, energy-intensive behavior (showering). We find that real-time feedback reduced re- source consumption for the target behavior by 22%. At the household level, this led to much larger conservation gains in absolute terms than conventional policy interventions that provide aggregate feedback on resource use. High-baseline users displayed a larger conservation effect, in line with the notion that real-time feedback helps eliminate "slack" in resource use. The approach is cost-effective, technically applicable to the vast majority of households, and generated savings of 1.2 kWh per day and household, which exceeds the average energy use for lighting.The intervention also shows how digitalization in our every- day lives makes information available that can help individuals overcome salience bias and act more in line with their preferences.
    Keywords: decision making; energy conservation; environmental behavior; randomized controlled trials; water conservation
    JEL: C93 D03 H41
    Date: 2016–08

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