nep-env New Economics Papers
on Environmental Economics
Issue of 2018‒03‒05
thirteen papers chosen by
Francisco S. Ramos
Universidade Federal de Pernambuco

  1. An evaluation of policy options for reducing greenhouse gas emissions in the transport sector: The cost-effectiveness of regulations versus emissions pricing By Nicholas Rivers, Randall Wigle
  2. Some financial implications of global warming: An empirical assessment By Claudio Morana; Giacomo Sbrana
  3. Can climate mitigation help the poor? Measuring impacts of the CDM in rural China By Yimeng Du; Kenji Takeuchi
  4. A bottom-up, non-cooperative approach to climate change control: Assessment and comparison of Nationally Determined Contributions (NDCs) By Carraro, Carlo
  5. Emissions Trading Subject to Kantian Preferences By Hennlock, Magnus; Löfgren, Åsa; Sterner, Thomas; Martinsson, Peter
  6. Threshold Policy Effects and Directed Technical Change in Energy Innovation By Lionel Nesta; Elena Verdolini; Francesco Vona
  7. The Effect of Inequality Aversion on a Climate Coalition Formation: Theory and Experimental Evidence By Lin, Yu-Hsuan
  8. Measuring Impact of Uncertainty in a Stylized Macro-Economic Climate Model within a Dynamic Game Perspective By Stienen, V.F.; Engwerda, Jacob
  9. Estimates of air pollution in Delhi from the burning of firecrackers during the festival of Diwali. By Ghei, Dhananjay; Sane, Renuka
  10. R&D in Clean Technology: A Project Choice Model with Learning By Koki Oikawa
  11. La eficiencia en el uso del agua y la energía en los procesos mineros: casos de buenas prácticas en Chile y el Perú By Lewinsohn, José Luis
  12. SDG 16 on Governance and its measurement: Africa in the Lead By Jean-Pierre Cling; Mireille Razafindrakoto; François Roubaud
  13. Quelle diversité des moyens de gestion des forêts privées familiales de France ? By Bernard Elyakime; Alain Cabanettes

  1. By: Nicholas Rivers, Randall Wigle (Wilfrid Laurier University)
    Abstract: The reduction of greenhouse gas emissions from road transport is a key policy goal that is being pursued by both federal and provincial governments using a range of policies. This paper considers the cost of alternative approaches to reducing emissions from road passenger travel in Canada. Our findings reinforce the widely-held belief that a revenue-neutral carbon tax is the most cost-effective tool to reduce greenhouse gas emissions. Regulatory instruments on their own, such as a low carbon fuel standard, vehicle greenhouse gas intensity regulation, or zero emission vehicle mandate, achieve a given reduction at much higher cost. We show, however, that a combination of regulatory instruments can better approach the cost-effectiveness of a carbon tax than individual regulations. We provide insight about the optimal combination of regulatory instruments in the Canadian context, and find that both a low carbon fuel standard and an zero emission vehicle mandate can be jointly used to reduce GHG emissions from the transport sector. Our analysis is timely, given the rapidly evolving policies in this sector.
    Keywords: Greenhouse gas emissions, low carbon fuel standard, electric vehicles, carbon tax, road transport
    Date: 2018–01–01
  2. By: Claudio Morana (Università di Milano Bicocca, Italy; CeRP-Collegio Carlo Alberto, Italy; Rimini Centre for Economic Analysis); Giacomo Sbrana (NEOMA Business School, France)
    Abstract: Concurrent with the rapid development of the market for catastrophe (cat) bonds, a steady decline in their risk premia has been observed. Whether the latter trend is consistent with the evolution of natural disasters risk is an open question. Indeed, a large share of outstanding risk capital in the cat bonds market appears to be exposed to some climate change-related risk as, for instance, hurricane risk, which global warming is expected to enhance. This paper addresses the above issue by assessing the global warming evidence, its implications for the natural environment and the drivers of cat bonds risk premia. We find that radiative forcing, i.e. the net insolation absorbed by the Earth, drives the warming trend in temperature anomalies and the trend evolution of natural phenomena, such as ENSO and Atlantic hurricanes, enhancing their disruptive effects. Hence, in the light of the ongoing contributions of human activity to radiative forcing, i.e., greenhouse gases emissions, natural disasters risk appears to be on a raising trend. Yet, the latter does not appear to have been accurately priced in the cat bonds market so far. In fact, while we find that the falling trend in cat bonds multiples is accounted by the expansionary monetary stance pursued by the Fed, we do also find evidence of significant undervaluation of natural disasters risk.
    Keywords: Cat bonds, risk premia/multiples, temperature anomalies, global warming, radiative forcing, ENSO, El Niño, Atlantic hurricanes, dynamic conditional correlation model
    JEL: G11 G23 C32
    Date: 2018–02
  3. By: Yimeng Du (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Abstract: This study aims to examine whether investment in climate change mitigation plays a role in poverty alleviation. We investigate impacts of the renewable energy-based clean development mechanism (RE-CDM) on rural communities in China. The impacts of RE-CDM projects are estimated by combining propensity score matching with the difference-in-differences approach. We found that the promotion of biomass-based CDM projects significantly contribute to income improvement, employment generation, and industrial transformation in rural communities in China. On the other hand, our estimation results reveal that large-scale wind and solar energy-based CDM projects have the potential to increase the labor force in the primary industry in rural areas.
    Keywords: CDM; renewable energy; poverty alleviation; rural development; propensity score matching; difference-in-differences
    Date: 2018–02
  4. By: Carraro, Carlo
    Abstract: International negotiations on climate change control are moving away from a global cooperative agreement (at least from the ambition to achieve it) to adopt a bottom-up framework composed of unilateral pledges of domestic measures and policies. This shift from cooperative to voluntary actions to control GHG emissions already started in Copenhagen at COP 15 in 2007 and became a platform formally adopted by a large number of countries in Paris at COP 21. The new architecture calls for a mechanism to review the nationally determined contributions (NDCs) of the various signatories and assess their adequacy. Most importantly, countries' voluntary pledges need to be compared to assess the fairness, and not only the effectiveness, of the resulting outcome. This assessment is crucial to support future, more ambitious, commitments to reduce GHG emissions. It is therefore important to identify criteria and quantitative indicators to assess and compare the NDCs.
    Keywords: Climate change negotiations; GHG emissions; mitigation; Paris agreement
    Date: 2018–01
  5. By: Hennlock, Magnus (IVL Swedish Environmental Research Institute); Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University); Sterner, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We study a cap-and-trade market equilibrium where different regions belonging to an emissions trading regime have different ambitions about the stringency of the cap. Specifically, we introduce a segment of consumers with Kantian preferences and show that they would prefer a more stringent cap compared to other regions. When a region sets up a voluntary more stringent cap within a cap-and-trade market, dual carbon markets with dual prices on allowances can emerge with trade against both caps. We then show that labelling a subset of the allowances in a cap-and-trade market captures the higher willingness to pay driven by different ambition levels among agents within a trading scheme. We show under what circumstances a socially efficient outcome from carbon markets can be achieved by labelling allowances when there are heterogeneous preferences among regions about the ambition level in an emissions trading regime. Being voluntary, trade in labelled allowances is consistent with a bottom-up approach where efforts are built up gradually by actors, countries and regions that wants to take leadership in international climate policy.
    Keywords: emissions trading; emissions allowances; carbon markets; public goods; ethics; Kant
    JEL: D03 D62 D63 Q54
    Date: 2018–01
  6. By: Lionel Nesta (Université Côte d'Azur, CNRS, Gredeg, & OFCE Sciences Po Paris, France); Elena Verdolini (FEEM & CMCC, Italy); Francesco Vona (OFCE Sciences Po Paris France & Université Côte d'Azur, CNRS, Gredeg,)
    Abstract: This paper analyzes the effect of environmental policies on the direction of energy innovation across countries over the period 1990-2012. Our novelty is to use threshold regression models to allow for discontinuities in policy effectiveness depending on a country's relative competencies in renewable and fossil fuel technologies. We show that the dynamic incentives of environmental policies become effective just above the median level of relative competencies. In this critical second regime, market-based policies are moderately effective in promoting renewable innovation, while commandand-control policies depress fossil based innovation. Finally, market-based policies are more effective to consolidate a green comparative advantage in the last regime. We illustrate how our approach can be used for policy design in laggard countries.
    Keywords: Directed technical change, threshold models, environmental policies, policy mix.
    JEL: Q58 Q55 Q42 Q48 O34
    Date: 2018–01–30
  7. By: Lin, Yu-Hsuan
    Abstract: This chapter examines the impact of inequality-averse attitudes on the individual incentives of participating in international environmental agreements by a laboratory experiment. The experimental result shows that the inequality-averse attitudes have significantly positive impact on the incentives of participation. Particularly, when they are non-critical players, egalitarians are likely to give up the free riding benefit by joining a coalition. It helps us to understand the coalition formation in the international conventions.
    Keywords: Social preference, experimental design, international environmental agreement, inequality aversion, heterogeneous countries
    JEL: C91 D71 Q01 Q54 Q58
    Date: 2017–01
  8. By: Stienen, V.F.; Engwerda, Jacob (Tilburg University, Center For Economic Research)
    Abstract: In this paper we try to quantify/measure the main factors that influence the equilibrium outcome and pursued strategies in a simplistic model for the use of fossil versus green energy over time. The model is derived using the standard Solow macro-economic growth model in a two-country setting within a dynamic game perspective. After calibrating the model for a setting of OECD versus non-OECD countries we study what kind of uncertainties affect the outcomes of the linearized model most, assuming both countries use Nash strategies to cope with shocks that impact the model. The main outcome of this study is that the parameters that occur in the objective of both players seem to carry the most uncertainty for both the outcome of the model and strategies.
    Keywords: Differential games; environemental engineering; uncertain dynamic systems; linearization; economic systems; open-loop control systems
    JEL: Q43 Q54 Q56 Q58 C61 C72 C73
    Date: 2018
  9. By: Ghei, Dhananjay (Department of Economics, University of Minnesota); Sane, Renuka (National Institute of Public Finance and Policy)
    Abstract: Delhi is one of the most polluted cities in the world, especially in the winter months from October - January. These months coincide with the religious festival of Diwali. It is argued that air quality gets worse in the aftermath of Diwali on account of firecrackers that get burned during the festival. We use hourly data on PM 2.5 particulate matter from 2013 to 2017 to estimate the Diwali effect on air quality in Delhi. We improve on existing work by using the event study technique as well as a difference-in-difference regression framework to estimate the Diwali effect on air quality. The results suggest that Diwali leads to a small, but statistically significant increase in air pollution. The effect is different across locations within Delhi. To our knowledge, this is the first causal estimate of the contribution of Diwali firecracker burning to air pollution.
    Date: 2018–02
  10. By: Koki Oikawa
    Abstract: In this study, we investigate the qualitative and quantitative effects of an R&D subsidy for clean technology and a Pigouvian tax on a dirty technology on environmental R&D when it is uncertain how long the research takes to complete. The model is formulated as an optimal stopping problem, in which the number of successes required to complete the R&D project is finite and which incorporates learning about the probability of success. We show that the optimal R&D subsidy with the consideration of learning is higher than that without it. We also find that an R&D subsidy performs better than a Pigouvian tax unless the government can induce suppliers to make cost reduction efforts even after the new technology successfully replaces the old one. Moreover, by a two-project model, we show that a uniform subsidy is better than a selective subsidy.
  11. By: Lewinsohn, José Luis
    Abstract: El uso del agua y la energía en los procesos mineros, en especial en los países andinos, planteará múltiples desafíos en el futuro, ya que la necesidad de capturar la renta derivada de la actividad extractiva exigirá, entre otros aspectos, el uso intensivo de estos insumos. En el presente ya existe una creciente preocupación social y ambiental respecto del uso múltiple del agua (gestión integrada), así como del aumento del impacto ambiental originado por la generación de energía (emisiones de gases de efecto invernadero). Uno de los caminos para promover el uso racional de estos y otros recursos es la integración de metodologías e instrumentos que permitan dotar de la eficiencia y la eficacia necesarias a los procesos mineros. En este documento se presenta el análisis de dos casos de estudio de la industria minera. El primero se relaciona con la gran minería del cobre de Chile, en la que se examina la incorporación de la herramienta de análisis de macrodatos (big data) en la toma de decisiones para reconocer alertas tempranas en determinados procesos de la producción (condiciones de riesgo, episodios críticos y otros). En el segundo se pasa revista al proceso de modernización de operaciones en el uso del agua y la energía en dos minas de mediana producción de oro en la zona andina del Perú.
    Date: 2018–12–31
  12. By: Jean-Pierre Cling (IRD, UMR DIAL, Insee); Mireille Razafindrakoto (IRD, UMR DIAL, PSL, Université Paris-Dauphine); François Roubaud (IRD, UMR DIAL, PSL, Université Paris-Dauphine)
    Abstract: (english) This article provides some elements for reflection on an apparent paradox. On the one hand, Africa appears to be the continent most riddled by problems related to governance and conflict; on the other hand, it is at the forefront in both promoting the issue of governance at the international level and in implementing its statistical measurement, an observation that has gone largely unnoticed until now. Will Africa manage to maintain its lead following the adoption by all countries of Sustainable Development Goal 16 on governance, peace and security, to which the continent contributed greatly?_________________________________ (français) Cet article se propose d’apporter des éléments de réflexion sur un apparent paradoxe : alors que l’Afrique apparaît comme le continent où les questions de gouvernance et de conflits sont les plus problématiques, c’est également celui qui se montre le plus en pointe, à la fois dans la promotion de cette thématique au niveau international et dans la mise en oeuvre de sa mesure statistique, un constat passé largement inaperçu jusqu’ici. Cette avance pourra-t-elle se maintenir avec l’adoption par tous les pays de l’Objectif de Développement Durable 16 sur la gouvernance, la paix et la sécurité, auquel le continent a largement contribué ?e la société malgache. La faible organisation, tant du côté d’élites fragmentées que d’une population atomisée géographiquement et socialement, n’est pas propice à l’émergence de violences politiques. Mais c’est surtout la prégnance d’une violence symbolique systémique qui permet le maintien de l’ordre établi et freine l’émergence de mobilisations susceptibles de remettre en cause l’équilibre de la société. Faiblesse organisationnelle, normes sociales et violence symbolique se conjuguent pour une apparente paix sociale. Celle-ci reflète moins une solidité institutionnelle que la domination symbolique de la classe élitaire.
    Keywords: Governance, Peace, Security, SDGs, Statistical surveys, Political economy, Africa, Gouvernance, Paix, Sécurité, Objectif du Développement Durable, Enquête statistique, Economie politique, Afrique.
    JEL: C18 C81 C83 F5 O10 O55
    Date: 2018–01
  13. By: Bernard Elyakime (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France); Alain Cabanettes (INPT, INPT-EI Purpan, INRA-DYNAFOR, Université de Toulouse, BP 52 627, 31320 Castanet-Tolosan France.)
    Abstract: Ce travail s’intéresse aux propriétés forestières privées familiales de France métropolitaine dans lesquelles le propriétaire, personne physique individu ou couple autoconsommateur de bois de feu, s’investit sans que cela soit son activité principale. Nous étudions les paramètres d’accès aux divers moyens de gestion forestière à la disposition des propriétaires forestiers privés familiaux. La structure des données est pour cela précisée à partir des proximités statistiques entre caractéristiques de la propriété forestière, caractéristiques socioéconomiques des propriétaires, gestion de la forêt, vente des bois et choix gestionnaires étudiés. Deux groupes principaux de propriétaires sont soulignés selon leurs moyens de gestion. La distribution de ces deux groupes dans les régions de la métropole est également explicitée. Ces éléments permettent de préciser des pistes régionalisées pour pérenniser et développer la gestion des propriétés forestières privées familiales, accroître la récolte de bois et plus globalement une offre de services écosystémiques de façon ciblée.
    Keywords: Propriétés forestières privées
    JEL: Q23 Q55
    Date: 2017–11

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