nep-env New Economics Papers
on Environmental Economics
Issue of 2017‒10‒15
24 papers chosen by
Francisco S. Ramos
Universidade Federal de Pernambuco

  1. The Distribution of Environmental Damages By Solomon Hsiang; Paulina Oliva; Reed Walker
  2. Hydrodynamic influence on reservoir sustainability in semi-arid climate: A physicochemical and environmental isotopic study By Rawaa Ammar; Véronique V. Kazpard; Antoine G. El Samrani; Nabil Amacha; Zeinab Z. Saad; Lei Chou
  3. Climate Policy Commitment Devices By Dengler, Sebastian; Gerlagh, Reyer; Trautmann, Stefan; van de Kuilen, Gijs
  4. Climate Policy Commitment Devices By Sebastian Dengler; Reyer Gerlagh; Stefan T. Trautmann; Gijs van de Kuilen
  5. Bounds Testing Approach to Analyzing the Environment Kuznets Curve Hypothesis: The Role of Biomass Energy Consumption in the United States with Structural Breaks By Shahbaz, Muhammad; Solarin, Sakiru Adebola; Hammoudeh, Shawkat; Shahzad, Syed Jawad Hussain
  6. Burden of Climate Change on Malaria Mortality By Shouro Dasgupta
  7. The Carbon Bubble: Climate Policy in a Fire-sale Model of Deleveraging By Alessandro Spiganti; David Comerford
  8. Intergenerational equity under catastrophic climate change By Aurélie Méjean; Antonin Pottier; Stéphane Zuber; Marc Fleurbaey
  9. Delegating climate policy to a supranational authority: a theoretical assessment By Pichler, Paul; Sorger, Gerhard
  10. Mobile Phone Innovation and Environmental Sustainability in Sub-Saharan Africa By Asongu, Simplice; Nwachukwu, Jacinta
  11. Simulated vs. Empirical Weather Responsiveness of Crop Yields: U.S. Evidence and Implications for the Agricultural Impacts of Climate Change By Malcolm N. Mistry; Ian Sue Wing; Enrica De Cian
  12. Pollution Meets Efficiency: Multi-equation modelling of generation of pollution and related efficiency measures* By Førsund, Finn R
  13. Carbon emissions and economic growth in South Africa: A quantile regression approach By Mapapu, Babalwa; Phiri, Andrew
  14. Joint Management of an Interconnected Coastal Aquifer and Invasive Tree By Sittidaj Pongkijvorasin; Kimberly Burnett; Christopher Wada
  15. Taxation, redistribution and observability in social dilemmas By Daniel A. Brent; Lata Gangadharan; Anca Mihut; Marie Claire Villeval
  16. Television, sustainability and happiness in Peru By Monica Guillen-Royo
  17. Is Pollution Value-Maximizing? The DuPont Case By Roy Shapira; Luigi Zingales
  18. Do Temperature Thresholds Threaten American Farmland? By Emanuele Massetti; Robert Mendelsohn
  19. Will Assets be Stranded or Bailed Out? Expectations of Investors in the Face of Climate Policy By Suphi Sen; Marie-Theres Von Schickfus
  20. Corporate Apology for Environmental Damage By Ben Gilbert; Alexander James; Jason Shogren
  21. Systematic sensitivity analysis of the full economic impacts of sea level rise By T. Chatzivasileiadis; F. Estrada; M. W. Hofkes; R. S. J. Tol
  22. Financial mechanism to invest in knowledge from natural resource revenues: Experiences from Bolivia, Chile, Colombia and Peru By Iizuka, Michiko; Vargas, Fernando; Baumann, Jakob
  23. Die EU und die Umsetzung der Sustainable Development Goals (SDGs) By Obrovsky, Michael
  24. Services Trade Policy and Sustainable Development By Matteo Fiorini; Bernard Hoekman

  1. By: Solomon Hsiang; Paulina Oliva; Reed Walker
    Abstract: Most regulations designed to reduce environmental externalities impose costs on individuals and firms. An active body of research has explored how these costs are disproportionately born by different sectors of the economy and/or across different groups of individuals. However, much less is known about the distributional characteristics of the environmental benefits created by these policies, or conversely, the differences in environmental damages associated with existing environmental externalities. We review this burgeoning literature and develop a simple and general framework for focusing future empirical investigations. We apply our framework to findings related to the economic impact of air pollution, deforestation, and climate, highlighting important areas for future research. A recurring challenge to understanding the distributional effects of environmental damages is distinguishing between cases where (i) populations are exposed to different levels or changes in an environmental good, and (ii) where an incremental change in the environment may have very different implications for some populations. In the latter case, it is often difficult to empirically identify the underlying sources of heterogeneity in marginal damages, as damages may stem from either non-linear and/or heterogeneous damage functions. Nonetheless, understanding the determinants of heterogeneity in environmental benefits and damages is crucial for welfare analysis and policy design.
    JEL: H23 I14 Q5 Q56
    Date: 2017–09
  2. By: Rawaa Ammar; Véronique V. Kazpard; Antoine G. El Samrani; Nabil Amacha; Zeinab Z. Saad; Lei Chou
    Abstract: Water scarcity and increasing water demand require the development of water management plans such as establishing artificial lakes and dams. Plans to meet water needs are faced by uprising challenges to improve water quality and to ensure the sustainability of hydro-projects. Environmental isotopes coupled to water physicochemical characteristics were investigated over a biennial cycle to assess both geomorphological and environmental impacts on the water quality of a reservoir situated in an intensively used agricultural watershed under a Mediterranean semi-arid climate. The particularity of the semi-arid climate and the diverse topography generate a continental and orographic rain effect on the isotopic composition of precipitation and the water recharged sources. The studied reservoir responds quickly to land-use activities and climatic changes as reflected by temporal and spatial variations of water chemistry and isotopic composition. Increasing changes in precipitation rate and dry periods significantly modified the water isotopic composition in the reservoir. During the first year, hydrogen (δD) and oxygen (δ18O) isotopes are depleted by 6 and 2‰ between dry and wet season, respectively. While a shift of −2‰ for δD and −1‰ for δ18O was detected during the second annual cycle. Environmental isotopic compositions demonstrate for the first time the occurrence of groundwater inflow to the central (Cz) and dam (Dz) zones of the Qaraaoun reservoir. The Cz and Dz can be considered as open water bodies subjected to dilution by groundwater inflow, which induces vertical mixing and reverse isotopic stratification of the water column. In the contrary, the river mouth zone acts as a closed system without groundwater intrusion, where heavy water accumulates and may act as a sink for contaminants during dry season. Groundwater influx acts as a dilution factor that renews the hypolimnion, and minimizes the perturbations induced by both internal biogeochemical reactions and external hydrological variations. Attention should be devoted to the hydrogeological location of planned reservoirs, which should take into account the vicinity of shallow water table to insure good water quality and water sustainability.
    Keywords: Environmental isotopes; Groundwater; Mediterranean basin; Reservoir; Resource sustainability; Semi-arid
    Date: 2017–07
  3. By: Dengler, Sebastian (Tilburg University, Center For Economic Research); Gerlagh, Reyer (Tilburg University, Center For Economic Research); Trautmann, Stefan (Tilburg University, Center For Economic Research); van de Kuilen, Gijs (Tilburg University, Center For Economic Research)
    Abstract: We develop a dynamic resource extraction game that mimics the global multi-generation planning problem for climate change and fossil fuel extraction. We implement the game under different conditions in the laboratory. Compared to a ‘libertarian’ baseline condition, we find that policy interventions that provide a costly commitment device or reduce climate threshold uncertainty reduce resource extraction. We also study two conditions to assess the underlying social preferences and the viability of ecological dictatorship. Our results suggest that climate-change policies that focus on investments that lock the economy into carbon-free energy sources provide an important commitment device in the intertemporal cooperation problem.
    Keywords: climate policy instruments; intertemporal cooperation; climate game; experiments
    JEL: C91 D62 D99 Q38 Q54
    Date: 2017
  4. By: Sebastian Dengler (Tilburg University); Reyer Gerlagh (Tilburg University and CREE - Oslo Centre for Research on Environmentally friendly Energy); Stefan T. Trautmann (Tilburg University and University of Heidelberg); Gijs van de Kuilen (Tilburg University)
    Abstract: We develop a dynamic resource extraction game that mimics the global multi-generation planning problem for climate change and fossil fuel extraction. We implement the game under different conditions in the laboratory. Compared to a ‘libertarian’ baseline condition, we find that policy interventions that provide a costly commitment device or reduce climate threshold uncertainty reduce resource extraction. We also study two conditions to assess the underlying social preferences and the viability of ecological dictatorship. Our results suggest that climate-change policies that focus on investments that lock the economy into carbon-free energy sources provide an important commitment device in the intertemporal cooperation problem.
    Keywords: Climate Policy Instruments, Intertemporal Cooperation, Climate Game, Experiments
    JEL: C91 D62 D99 Q38 Q54
    Date: 2017–09
  5. By: Shahbaz, Muhammad; Solarin, Sakiru Adebola; Hammoudeh, Shawkat; Shahzad, Syed Jawad Hussain
    Abstract: This paper re-examines the specification of the environmental Kuznets curve (EKC) for the US economy by accounting for the presence of a major renewable energy source and trade openness over the period 1960-2016. Biomass energy consumption and trade openness as well as oil prices are considered as additional determinants of economic growth, and consequentially of CO2 emissions. The bounds testing approach to cointegration is applied to examine the long-run relationship between the variables in the presence of structural breaks. The causal relationship between the variables is investigated by applying the VECM Granger causality test by accommodating structural breaks. The results confirm the presence of cointegration between the variables. Moreover, the relationship between economic growth and CO2 emissions is not only inverted-U shaped but also N-shaped in the presence of structural breaks and biomass. Biomass energy consumption lowers CO2 emissions. Exports, imports and trade openness are also environment- friendly. The causality analysis indicates a feedback effect between biomass energy consumption and CO2 emissions. Economic growth still Granger causes CO2 emissions in this new setup.
    Keywords: EKC; Biomass energy; Oil prices; Trade openness; Structural breaks
    JEL: A1
    Date: 2017–10–03
  6. By: Shouro Dasgupta (Università Ca’ Foscari, FEEM and CMCC)
    Abstract: In 2015, an estimated 429,000 deaths and 212 million cases of malaria occurred worldwide, while 70% of the deaths occurred in children under five years old. Changes in climatic exposure such as temperature and precipitation makes malaria one of the most climate sensitive outcomes. Using a global malaria mortality dataset for 105 countries between 1980 and 2010, we estimate that the global optimal temperature maximizing all-age malaria mortality is 20.6, lower than previously predicted in the literature. While in the case of child mortality, a significantly lower optimum temperature of 19.3° is estimated. Our results also suggest that in Africa and Asia, the continents where malaria is most prevalent malaria, mortality is maximized at 28.4 and 26.3, respectively. Furthermore, we estimate that child mortality (ages 0-4) is likely to increase by up to 20 percent in some areas due to climate change by the end of the 21st century.
    Keywords: Climate change, Malaria, Vector borne disease, Temperature, Precipitation
    JEL: C10 C23 Q54 Q56
    Date: 2017–09
  7. By: Alessandro Spiganti (University of Edinburgh); David Comerford (University of Strathclyde)
    Abstract: Committed and credible implementation of climate change policy, consistent with the usual 2C limit, is thought to require large fossil fuel asset write-offs. This issue, termed the Carbon Bubble, is usually presented as having implications for investors but, for the first time, this paper discusses its implications for macroeconomic policy and for climate policy itself. We embed the Carbon Bubble in a macroeconomic model exhibiting a financial accelerator: if investors are leveraged, the Carbon Bubble may precipitate a fire-sale as investors rush for the exits, and generate a large and persistent fall in output and investment. We investigate policy responses which can accompany the writing-off of fossil fuel assets, like debt transfers, investment subsidies, government guarantees, or even deception about the true scale of the required write-off of fossil fuel assets. We find a role for policy in mitigating the Carbon Bubble.
    Date: 2017
  8. By: Aurélie Méjean (CIRED - CNRS); Antonin Pottier (Centre d'Economie de la Sorbonne); Stéphane Zuber (Paris School of Economics - Centre d'Economie de la Sorbonne); Marc Fleurbaey (Woodrow Wilson School of Public and International Affairs, Princeton University)
    Abstract: Climate change raises the issue of intergenerational equity. As climate change threatens irreversible and dangerous impacts, possibly leading to extinction, the most relevant trade-off may not be between present and future consumption, but between present consumption and the mere existence of future generations. To investigate this trade-off, we build an integrated assessment model that explicity accounts for the risk of extinction of future generations. We compare different climate policies, which change the probability of catastrophic outcomes yielding an early extinction, within the class of variable population utilitarian social welfare functions. We show that the risk of extinction is the main driver of the preferred policy over climate damages. We analyze the role of inequality aversion and population ethics. Usually a preference for large populations and a low inequality aversion favour the most ambitious climate policy, although there are cases where the effect of inequality aversion is reversed
    Keywords: Climate change; catastrophic risk; equity; population; climate-economy
    JEL: D63 Q01 Q54 Q56 Q5
    Date: 2017–09
  9. By: Pichler, Paul; Sorger, Gerhard
    Abstract: We study the delegation of climate policy to a supranational environmental authority. We demonstrate that the authority faces a dynamic inconsistency problem that leads to welfare losses. The losses can be kept small if the mandate of the authority penalizes the local cost of emissions heavily, but puts little or no weight on the cost of climate change. The design of the authority's mandate creates another dynamic inconsistency because the countries face a recurrent incentive to modify it.
    JEL: F53 H87 O33 Q43 Q54
    Date: 2017
  10. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: This study investigates how the mobile phone can complement knowledge diffusion in order to influence CO2 emissions in 44 Sub-Saharan African countries for the period 2000-2012. The empirical evidence is based on Generalised Method of Moments. Three knowledge diffusion variables representing three of the four pillars of the World Bank’s Knowledge Economy Index are employed: educational quality, information and communication technology (ICT) and scientific output. Six CO2 emission variables are used, namely: CO2 per capita, CO2 from electricity and heat, CO2 from liquid fuel, CO2 from manufacturing and construction, CO2 from transport and CO2 intensity. In the assessments, a decreasing tendency in these variables translates into positive conditions for environmental sustainability. Based on net effect from complementarities, the following findings are established. First, the mobile phone complements education to have a net negative effect on CO2 emissions per capita and CO2 emissions from the consumption of liquid fuel. Second, where some positive net effects of knowledge diffusion are apparent, corresponding marginal effects are negative. Corresponding mobile phone penetration thresholds at which the positive net effects on CO2 emissions can be dampened and reversed are largely within policy range. Practical and theoretical implications are discussed.
    Keywords: CO2 emissions; ICT; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2017–05
  11. By: Malcolm N. Mistry (Università Ca' Foscari, FEEM and CMCC); Ian Sue Wing (Boston University); Enrica De Cian (FEEM and CMCC)
    Abstract: Global gridded crop models (GGCMs) are the workhorse of assessments of the agricultural impacts of climate change. Yet the changes in crop yields projected by different models in response to the same meteorological forcing can differ substantially. Through an inter-method comparison, we provide a first glimpse into the origins and implications of this divergence—both among GGCMs and between GGCMs and historical observations. We examine yields of rainfed maize, wheat, and soybeans simulated by six GGCMs as part of the Inter-Sectoral Impact Model Intercomparison Project-Fast Track (ISIMIP-FT) exercise, comparing 1981-2004 hindcast yields over the coterminous United States (U.S.) against U.S. Dept. of Agriculture (USDA) time series for about 1,000 counties. Leveraging the empirical climate change impacts literature, we estimate reduced-form econometric models of crop yield responses to temperature and precipitation exposures for both GGCMs and observations. We find that up to 60% of the variance in both simulated and observed yields is attributable to weather variation. Majority of the GGCMs have difficulty reproducing the observed distribution of percentage yield anomalies, and exhibit aggregate responses that show yields to be more weather-sensitive than in the observational record over the predominant range of temperature and precipitation conditions. This disparity is largely attributable to heterogeneity in GGCMs’ responses, as opposed to uncertainty in historical weather forcings, and is responsible for widely divergent impacts of climate on future crop yields.
    Keywords: Climate Change Impacts, Crop Yields, Global Gridded Crop Models, ISI-MIP
    JEL: Q1 Q5
    Date: 2017–09
  12. By: Førsund, Finn R (Dept. of Economics, University of Oslo)
    Abstract: The generation of unintended residuals in the production of intended outputs is the key factor behind our serious problems with pollution. The way this joint production is modelled is therefore of crucial importance for our understanding and empirical efforts to change economic activities in order to reduce harmful residuals. The materials balance tells us that residuals stem from the use of material inputs. The modelling of joint production must therefore reflect this. A multi-equation model building on the factorially determined multi-output model of classical production theory can theoretically satisfy the materials balance. Potentially complex technical relationships are simplified to express each of the intended outputs and the unintended residuals as functions of the same set of inputs. End-of-pipe abatement activity is introduced for a production unit. Introducing direct environmental regulation of the amount of pollutants generated an optimal private solution based on profit maximisation is derived. Serious problems with the single-equation models that have dominated the literature studying efficiency of production of intended and unintended outputs the last decades are revealed. An important result is that a functional trade-off between desirable and undesirable outputs for given resources, as exhibited by single-equation models, is not compatible with the materials balance and efficiency requirements on production relations. Multi-equation models without this functional trade-off should therefore replace single equation models. Extending the chosen multi-equation model to allow for inefficiency, three efficiency measures are introduced: desirable output efficiency, residuals efficiency, and abatement efficiency. All measures can be estimated separately using the non-parametric DEA model.
    Keywords: Materials balance; Joint Production; Residuals generation; Single-equation and multi-equation models; End-of-pipe abatement; Efficiency measures; Data Envelopment Analysis (DEA)
    JEL: C51 D24 D62 Q50
    Date: 2017–09–15
  13. By: Mapapu, Babalwa; Phiri, Andrew
    Abstract: Of recent carbon emissions have become an increasing concern for economies worldwide. In this study we investigate the relationship between carbon emissions and economic growth for the South African economy, one of the largest emitters of carbon dioxide worldwide. We employ the quantile regression methodology which is applied to annual data covering a period of 1970 to 2014. Our empirical results indicate that very low levels of carbon emissions are most beneficial towards economic growth. Our results thus encourage policymakers to continue to embark on energy efficiency programmes which specifically target lower levels of carbon pollution.
    Keywords: Carbon Emissions; Economic growth; Environmental Kuznets curve; South Africa; Quantile regressions
    JEL: C13 C32 C51 Q43 Q56
    Date: 2017–10–06
  14. By: Sittidaj Pongkijvorasin (Chulalongkorn University); Kimberly Burnett (University of Hawaii Economic Research Organization); Christopher Wada (University of Hawaii Economic Research Organization)
    Abstract: Kiawe (Prosopis pallida), a mesquite tree considered invasive in many parts of the world including Hawai‘i, has been shown to reduce regional groundwater levels via deep taproots. In areas where aquifers are primary sources of fresh water, kiawe control has the potential to be an integral component of water management planning. We develop an analytical dynamic framework for the joint management of kiawe and groundwater, and show that optimal water management depends on expected kiawe damages, while optimal kiawe removal depends on groundwater scarcity and removal cost. Using data from the Kīholo aquifer on the west coast of Hawai‘i Island, we solve for joint management decisions with corresponding parameters related to kiawe damage and water scarcity. With 1.5% water demand growth, Kiawe should be removed if the removal cost is below $1,884/ha. Our numerical results indicate that kiawe damage is nonlinear in the rate of water demand growth. The damage costs can be attributed to three main factors. When demand growth is low, kiawe damage is driven by a higher water extraction cost. For moderate growth, the effect is compounded by anticipated future scarcity. Damage is amplified by a backstop cost effect when the growth rate is high.
    Keywords: Prosopis pallida, kiawe, groundwater management, invasive species, Kīholo
    Date: 2017–10
  15. By: Daniel A. Brent (Department of Economics, Louisiana State University, Business Education Complex, Baton Rouge, LA 70803-6306, U.S.A.); Lata Gangadharan (Department of Economics, Monash University, Clayton, Australia); Anca Mihut (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69130 Ecully, France); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69130 Ecully, France)
    Abstract: In the presence of social dilemmas, cooperation is more difficult to achieve when populations are heterogeneous because of conflicting interests within groups. We examine cooperation in the context of a non-linear common pool resource game, in which individuals have unequal extraction capacities and have to decide on their extraction of resources from the common pool. We introduce monetary and nonmonetary policy instruments in this environment. One instrument is based on two variants of a mechanism that taxes extraction and redistributes the tax revenue. The other instrument varies the observability of individual decisions. We find that the two tax and redistribution mechanisms reduce extraction, increase efficiency and decrease inequality within groups. The scarcity pricing mechanism, which is a per-unit tax equal to the marginal extraction externality, is more effective at reducing extraction than an increasing block tax that only taxes units extracted above the social optimum. In contrast, observability impacts only the Baseline condition by encouraging free-riding instead of creating moral pressure to cooperate.
    Keywords: Common Pool Resource game, taxation mechanisms, observability, cooperation, heterogeneity, experiment
    JEL: C92 H23 D74
    Date: 2017
  16. By: Monica Guillen-Royo (TIK Center for Technology, Innovation and Culture, University of Oslo)
    Abstract: Earlier studies have concluded that television consumption is detrimental to environmental sustainability and people’s wellbeing, due to its promotion of consumerism and materialistic goals. However, recent evidence indicates that, in contexts of relative deprivation, television can be a source of wellbeing, a main provider of entertainment and information. However, this might present a conflict between the wellbeing of present and future generations, and poses a challenge for sustainability policy in developing countries. This article contributes to the emergent debate on the role of television in sustainability policy, by presenting a study of the effects of television viewing in a heterogeneous Peruvian sample (n=500). Regression analysis results indicate that television consumption is negatively associated with sustainable attitudes, partially through the promotion of goals linked to materialism. The relationship between television consumption and happiness is not significant but becomes marginally positive when materialistic goals are accounted for. This study finds that in countries like Peru, television need not limit the wellbeing of present and future generations if materialistic messages are reduced and the content of environmental programmes is critically revised.
    Date: 2017–10
  17. By: Roy Shapira; Luigi Zingales
    Abstract: DuPont, one of the most respectable U.S. companies, caused environmental damage that ended up costing the company around a billion dollars. By using internal company documents disclosed in trials we rule out the possibilities that this bad outcome was due to ignorance, an unexpected realization, or a problem of bad governance. The documents rather suggest that the polluting was a rational decision: under reasonable probabilities of detection, polluting was ex-ante optimal from the company’s perspective, even if the cost of preventing pollution was lower than the cost of the health damages produced. We then examine why different mechanisms of control – legal liability, regulation, and reputation – all failed to deter a behavior that was inefficient from a social point of view. One common reason for the failures of deterrence mechanisms is that the company controls most of the information and its release. We then sketch potential ways to mitigate this problem.
    JEL: K32 L21 Q52
    Date: 2017–09
  18. By: Emanuele Massetti (Georgia Institute of Technology); Robert Mendelsohn (Yale School of Forestry and Environmental Studies)
    Abstract: Estimated Ricardian models have been criticized because they rely on mean temperatures and do not explicitly include extreme temperatures. This paper uses a cross sectional approach to compare a standard quadratic Ricardian model of mean temperature with a fully flexible daily temperature bin model of farmland values in the Eastern United States. The flexible bin model leads to smaller damages from warming than the quadratic mean specification, but the difference is not statistically significant. Although weather panel studies find high temperature events lead to large annual damage, high temperature events have no harmful effect on farmland values. The results are robust to alternative model specifications and data sets.
    Keywords: Agriculture, Climate Change, Weather, Crop Yields, Ricardian, Threshold
    JEL: Q1 Q5
    Date: 2017–09
  19. By: Suphi Sen; Marie-Theres Von Schickfus
    Abstract: The goal to keep global warming below 2°C implies that many energy-sector assets are at risk of becoming stranded. This paper investigates whether and how investors price in stranded asset risk due to climate policy. We exploit the gradual development of a German climate policy proposal aimed at reducing electricity production from coal and analyze its effect on the valuation of energy utilities. We find that investors do care about stranded asset risk due to climate policy, but that they also expect a financial compensation policy for their stranded assets. We show that these results are not driven by contemporaneous confounding events.
    Keywords: Stranded assets, climate policy
    JEL: Q38 G14
    Date: 2017
  20. By: Ben Gilbert (Division of Economics and Business, Colorado School of Mines); Alexander James (Department of Economics and Public Policy, University of Alaska Anchorage); Jason Shogren (Department of Economics, University of Wyoming)
    Abstract: Apologies are a powerful way to restore trust and reduce punishment costs in bilateral settings. But what do we know about public apologies for large scale man-made disasters? Herein we report on results from an experiment with apologies in a multilateral setting: a firm-caused environmental disaster. Subjects read about an oil spill scenario, and learned whether the oil firm made a full apology, a partial apology, or no apology, and whether the firm had a good, bad, or no environmental reputation. A partial apology is one that fails to accept full material responsibility for damages, such as by shifting the blame to another party. We find that full apologies and better reputation reduce the demand for punishment. However, full apologies and reputation are substitutes, with reputation being significantly more important. Additionally, apologies do not reduce the demand for compensation and may increase it if the firm is clearly a bad actor, or if admission of guilt is the only information subjects have. Our results help explain corporate social responsibility investments and greenwashing, and why many public apologies over an environmental disaster are only partial apologies.
    Keywords: apologies, environmental disaster, oil spill, cheap talk
    JEL: Q54 L14
    Date: 2017–09
  21. By: T. Chatzivasileiadis (Institute for Environmental Studies, Vrije Universiteit, Amsterdam); F. Estrada (Centro de Ciencias de la Atmosfera, Universidad Nacional Autonoma de Mexico, Ciudad Universitaria, Mexico; Institute for Environmental Studies, Vrije Universiteit, Amsterdam); M. W. Hofkes (Department of Economics, Vrije Universiteit, Amsterdam; Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Department of Spatial Economics, Vrije Universiteit, Amsterdam); R. S. J. Tol (Institution Department of Economics, University of Sussex; Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Department of Spatial Economics, Vrije Universiteit, Amsterdam; Tinbergen Institute, Amsterdam; CESifo, Munich)
    Abstract: The potential impacts of Sea Level Rise (SLR) due to climate change have been widely studied in the literature. However, the uncertainty and robustness of these estimates has seldom been explored. Here we assess the model input uncertainty regarding the wide effects of SLR on marine navigation from a global economic perspective. We systematically assess the robustness of Computable General Equilibrium (CGE) estimates to model’s inputs uncertainty. Monte Carlo (MC) and Gaussian Quadrature (GQ) methods are used for conducting a Systematic Sensitivity Analysis (SSA). This design allows to both explore the sensitivity of the CGE model and to compare the MC and GQ methods. Results show that, regardless whether triangular or piecewise linear Probability distributions are used, the welfare losses are higher in the MC SSA than in the original deterministic simulation. This indicates that the CGE economic literature has potentially underestimated the total economic effects of SLR, thus stressing the necessity of SSA when simulating the general equilibrium effects of SLR. The uncertainty decomposition shows that land losses have a smaller effect compared to capital and seaport productivity losses. Capital losses seem to affect the developed regions GDP more than the productivity losses do. Moreover, we show the uncertainty decomposition of the MC results and discuss the convergence of the MC results for a decomposed version of the CGE model. This paper aims to provide standardised guidelines for stochastic simulation in the context of CGE modelling that could be useful for researchers in similar settings.
    Keywords: CGE, Sea Level Rise, Systematic Sensitivity Analysis, Monte Carlo, GTAP
    JEL: C68 Q54
    Date: 2017–10
  22. By: Iizuka, Michiko (UNU-MERIT, Maastricht University); Vargas, Fernando (UNU-MERIT, Maastricht University); Baumann, Jakob
    Abstract: In resource-rich emerging countries, management of revenues from natural resources (NR) plays a critical role in transforming their economies. In this paper, a conceptual framework is constructed for an institution to promote the economic diversification through investing in knowledge, based on the literature from management of natural resources, industrial policy and public management. Existing financial mechanisms in Bolivia, Chile, Colombia and Peru, where NR revenues are invested in knowledge to enhance productivity (natural resources for knowledge, or NR4K funds), are examined applying the framework. The analysis identified that NR4K in these countries currently fall short of achieving their intended purpose of transitioning their economies toward increased diversification. These require complementary public policies to enhance capabilities, coordinate between stakeholders and initiate experimental investments.
    Keywords: Natural resources, STI policy, Natural resource fund, NR4K, Latin America, Bolivia, Chile, Colombia, Peru
    JEL: P48 P51 O38 O21 O54
    Date: 2017–09–21
  23. By: Obrovsky, Michael
    Abstract: Die Europäische Union (EU) nimmt für sich in Anspruch eine treibende Kraft sowohl bei der Post 2015-Diskussion, als auch bei der 2030 Agenda gewesen zu sein. Die Umsetzung des neuen Referenzrahmens kommt aber nur langsam in Schwung, konkrete Strategien soll die EU-Kommission erst Mitte 2018 - während der österreichischen EU-Präsidentschaft im 2. Halbjahr 2018 - vorlegen.
    Date: 2017
  24. By: Matteo Fiorini; Bernard Hoekman
    Abstract: The realization of many of the sustainable development goals (SDGs) depends on bolstering the performance of services sectors and improving access to specific services in developing countries. We show that prevailing services trade and investment policies impact on access to services that matter for the realization of a number of SDGs: lower trade restrictiveness is an instrument that can enhance the performance of domestic services sectors. An implication is that pursuit of the SDGs should include a focus on facilitating trade and investment in services.
    Keywords: Services, trade policy, sustainable development goals
    JEL: L8 O10 O24
    Date: 2017–08

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