nep-env New Economics Papers
on Environmental Economics
Issue of 2019‒05‒06
35 papers chosen by
Francisco S. Ramos
Universidade Federal de Pernambuco

  1. International Agricultural Mitigation Research and the Impacts and Value of Two SLMACC Research Projects By David A Fleming; Kate Preston
  2. Paying for Mitigation: How New Zealand Can Contribute to Others’ Efforts By Suzi Kerr; Catherine Leining
  3. Managing Scarcity and Ambition in the NZ ETS By Catherine Leining; Suzi Kerr
  4. Uncertainty, Risk and Investment and the NZ ETS By Suzi Kerr; Catherine Leining
  5. Think global, act local! A mechanism for global commons and mobile firms By Lassi Ahlvik; Matti Liski
  6. Green Bonds as an instrument to finance low carbon transition By Eftichios S. Sartzetakis
  7. Inclusive development in environmental sustainability in sub-Saharan Africa: insights from governance mechanisms By Asongu, Simplice; Odhiambo, Nicholas
  8. A primer on weather and climate intervention for economists By Scott Knowles; Mark Skidmore
  9. The risk-adjusted carbon price By Ton S. van den Bremer; Rick van der Ploeg
  10. Where's the Greenium? By Larcker, David F.; Watts, Edward M.
  11. Population and the environment: the role of fertility, education and life expectancy By Fabio Mariani; Agustin Perez Barahona; Natacha Raffin
  12. Malthus in the Light of Climate Change By Lucas Bretschger
  13. The Effects of Exposure to Air Pollution on Subjective Well-being in China By Zhang, Xin; Chen, Xi; Zhang, Xiaobo
  14. Consumer Buying Behavior of Organic Food with Respect to Health and Safety Concerns among Adolescents By Raza, Syed Ali; Shah, Nida; Nisar, Wasay
  15. Moving the Coal-Posts: Ottawa’s Wrong Turn on Carbon Pricing for Electricity Generation By Grant Bishop
  16. Economic Development Thresholds for a Green Economy in Sub-Saharan Africa By Asongu, Simplice; Odhiambo, Nicholas
  17. Destructive Behavior, Judgment, and Economic Decision-making under Thermal Stress By Ingvild Almås; Maximilian Auffhammer; Tessa Bold; Ian Bolliger; Aluma Dembo; Solomon M. Hsiang; Shuhei Kitamura; Edward Miguel; Robert Pickmans
  18. Multiple Benefits through Smart Home Energy Management Solutions -- A Simulation-Based Case Study of a Single-Family House in Algeria and Germany By Marc Ringel; Roufaida Laidi; Djamel Djenouri
  19. The benefit of management policy of Seoul on airborne particulate matter: An application of contingent valuation By Hwang, In Chang; Son, Wonik
  20. Energy- and multi-sector modelling of climate change mitigation in New Zealand: current practice and future needs By Dominic White; Niven Winchester
  21. The Importance of Source-Side Effects for the Incidence of Single Sector Technology Mandates and Vintage Differentiated Regulation By Alex Marten
  22. Who cares? Future sea-level-rise and house prices By Olga Filippova; Cuong Nguyen; Ilan Noy; Michael Rehm
  23. Carbon Inventory Buildup By Plambeck, Erica
  24. A Dynamic Model of Characteristic-Based Return Predictability By Aydoğan Alti; Sheridan Titman
  25. The Effect of Air Pollution on Body Weight and Obesity: Evidence from China By Deschenes, Olivier; Wang, Huixia; Wang, Si; Zhang, Peng
  26. Spatio-temporal diffusion of solar thermal systems in Germany: A spatial panel data analysis By Jan Paul Baginski
  27. Drinking Water Quality Impacts on Health Care Expenditures in the United States By Fahad Alzahrani; Alan R. Collins; Elham Erfanian
  28. Crecimiento verde inclusivo e informalidad By Cristina Férnandez; Francisco Fernández; Nicolás Gómez
  29. Local entrepreneurship ecosystems and emerging industries: Case study of Coventry and Warwickshire, United Kingdom By OECD
  30. Analysis of private consumption using weather data By Kunihiro Akutsu; Yasutaka Koike
  31. Local entrepreneurship ecosystems and emerging industries: Case study of Malopolskie, Poland By OECD
  32. Regression tree analysis of soil fertility and agro-economic practices and the effects on yield in Tanzania By Jan Lietava; Risa Morimoto
  33. Spatial Spillovers in the Implicit Market Price of Soil Erosion: An Estimation using a Spatio-temporal Hedonic Model By Caffera, Marcelo; Vásquez Lavín, Felipe; Rodríguez Anza, Daniel; Carrasco-Letelier, Leonidas; Hernández, José Ignacio; Buonomo, Mariela
  34. Addressing the Challenges of Industrial Transition Processes – the Case of Photovoltaics Industry By Marta, Najda-Janoszka; Jacek, Gancarczyk
  35. Evaluación de los impactos causados en las regiones productoras de hidrocarburos y minerales con el actual Sistema General de Regalías By Fedesarrollo

  1. By: David A Fleming (Motu Economic and Public Policy Research); Kate Preston (Motu Economic and Public Policy Research)
    Abstract: Evaluating the benefits of publicly funded research is always a challenging task. This paper cannot produce air-tight quantification of the benefits of Sustainable Land Management and Climate Change (SLMACC) research. We do, however, demonstrate the key building blocks of significant impact have been obtained. First, it is clear that public funding has contributed importantly to New Zealand’s positioning itself as one of the leading global contributors to agricultural mitigation research. Second, the prominence of the research combined with the low likelihood of research occurring on this scale without public support suggests strongly that the results would not have been obtained absent public funding. Finally, though the realization of ultimate environmental and/or economic benefits will depend on the evolution of farming practices and climate change policy settings, the advances in genetic markers for low CH4 animals and identification of emission-reducing management practices have the potential for GHG emission reductions that would be significant in environmental terms, and whose value at likely carbon pricing levels would be in the hundreds of millions of dollars. Although the results discussed are conditional on several factors such as future policy implementation, adoption rates and the practical availability of mitigation options and practices for different farm landscapes; the impacts, economic and environmental values attached to mitigation research cannot be overlooked and provide important insights to the benefits that public investments can make to the development of a more sustainable agricultural system for the country.
    Keywords: Agricultural greenhouse gas mitigation; public funding analysis, science policy, climate change
    JEL: Q15 Q16 Q51 Q54
    Date: 2018–09
  2. By: Suzi Kerr (Motu Economic and Public Policy Research); Catherine Leining (Motu Economic and Public Policy Research)
    Abstract: Purchasing international emission reductions (IERs) can help New Zealand make a more ambitious and cost-effective contribution toward global climate change mitigation and support developing countries in accelerating their low-emission transition. However, New Zealand must avoid past mistakes by ensuring international purchasing does not derail its own decarbonisation pathway. Furthermore, the Paris Agreement has fundamentally changed how countries will trade IERs over the 2021–30 period. This working paper, which evolved under Motu’s ETS Dialogue process from 2016 to 2018, focuses on how we can balance our international and domestic mitigation efforts. It explores how many IERs we may want, how we should integrate international mitigation support with participants’ obligations under the New Zealand Emissions Trading Scheme (NZ ETS), and what mechanisms we can use to fund international mitigation effectively. Fundamentally, the New Zealand government will need to ensure that all IERs counted toward its targets and accepted in the NZ ETS have environmental integrity and are both approved and not double counted by seller and buyer governments. This paper presents a working model for New Zealand’s purchase of IERs, in which the quantity is controlled by government, purchasing is managed by government for the foreseeable future (with potential participation by private entities), and the quantity is factored into decisions on the NZ ETS cap and price management mechanisms. If NZ ETS participants are able to purchase IERs in the future, then a quantity limit should apply as a percentage of the surrender obligation and the volume should offset other supply under the cap. The paper also highlights an innovative “climate team” mechanism for international climate change cooperation that could facilitate purchasing by the New Zealand government. Two companion working papers address interactions between decisions on international purchasing and the choice of NZ ETS cap and price management mechanisms. The three working papers elaborate on an integrated proposal for managing unit supply, prices, and linking in the NZ ETS that was presented in Kerr et al. (2017).
    Keywords: Emissions trading, New Zealand Emissions Trading Scheme, greenhouse gas, climate change mitigation, linking
    Date: 2019–05
  3. By: Catherine Leining (Motu Economic and Public Policy Research); Suzi Kerr (Motu Economic and Public Policy Research)
    Abstract: The fundamental purpose of an emissions trading system (ETS) is to constrain emissions and enable the market to set an emissions price path that facilitates an effective transition to a low-emissions economy. In a conventional ETS, the emissions constraint is defined by a cap (a fixed limit) on tradable, government-issued emission units together with a quantity limit on any external units allowed in the system (e.g. via an offsets mechanism). Essentially, an ETS cap underpins the ambition, cost-effectiveness, distributional implications, and credibility of a jurisdiction’s approach to decarbonisation. From 2008 to mid-2015, the New Zealand Emissions Trading Scheme (NZ ETS) broke from convention by linking to the global Kyoto cap without its own limit on domestic emissions. NZ ETS participants met compliance obligations using unlimited overseas units at low prices and faced little incentive to reduce their own emissions. The NZ ETS delinked from the Kyoto market in mid-2015, creating uncertainty over the future of domestic unit supply and an efficient price path for domestic decarbonisation. This working paper, which evolved under Motu’s ETS Dialogue process from 2016 to 2018, explores key considerations for ETS cap setting and proposes the design for a cap on units auctioned and freely allocated in the NZ ETS. The recommendations focus on issues of cap architecture rather than ambition. The proposed cap is defined in tonnes of emissions per year, fixed for five years in advance, extended by one year each year, and guided by an indicative ten-year cap trajectory. The fixed cap and cap trajectory need to reflect consideration of New Zealand’s domestic decarbonisation objectives, international targets, mitigation potential and costs in both ETS and non-ETS sectors, and prospects for cost-effective investment in overseas emission reductions. Two companion working papers address how the choice of cap will interact with decisions on ETS price management mechanisms and linking to overseas markets. The three working papers elaborate on an integrated proposal for managing unit supply, prices, and linking in the NZ ETS that was presented in Kerr et al. (2017).
    Keywords: Emissions trading, New Zealand Emissions Trading Scheme, cap, greenhouse gas, climate change mitigation
    Date: 2019–05
  4. By: Suzi Kerr (Motu Economic and Public Policy Research); Catherine Leining (Motu Economic and Public Policy Research)
    Abstract: New Zealand is facing a challenging low-emission transition, and effective emission pricing needs to be part of the solution. In its pure form, an emissions trading system (ETS) fixes the quantity of emissions in regulated sectors and the market sets the emission price. In New Zealand’s current policy and market context, there is value in managing both unit supply and emission prices under the NZ ETS. While emission price changes in response to policy and market conditions are desirable to drive efficient abatement, excessive price instability can deter low-emission investment. This working paper, which evolved under Motu’s ETS Dialogue process from 2016 to 2018, explores key considerations for emission price management in the context of a specific working model for unit supply in the NZ ETS. Emission price instability can be reduced at its source by reinforcing policy commitment and improving market regulation and development. Emission price instability can be mitigated by incorporating a price ceiling (cost containment reserve backed by a fixed-price option) and a price floor (auction reserve price) into the auction mechanism. Decisions on price management should be coordinated with other decisions affecting unit supply, guided by an indicative ten-year trajectory for both unit supply and emission prices, and informed by independent advice. Two companion working papers address interactions between ETS price management and the choice of cap and linking to overseas markets. The three working papers elaborate on an integrated proposal for managing unit supply, prices, and linking in the NZ ETS that was presented in Kerr et al. (2017).
    Keywords: Emissions trading, New Zealand Emissions Trading Scheme, greenhouse gas, climate change mitigation, price ceiling, price floor
    Date: 2019–05
  5. By: Lassi Ahlvik; Matti Liski
    Abstract: It is tricky to design local regulations on global externalities, especially so if firms are mobile. We show that when costs and outside options are firms’ private information, the threat of firm relocation leads to local regulations that are stricter, not looser. This result is general and follows because policy-driven information rents act as targeted compensations to firms that can efficiently limit the externality. The optimal mechanism supplements this strict local regulation with a looser opt-in scheme, creating a global cap for externalities for a subset of firms. We illustrate the magnitude of these effects by providing a quantification of the optimal mechanism for the key sectors in the EU emissions trading system.
    Keywords: externalities, mechanism design, private information, climate change, emissions trading, carbon leakage
    JEL: D82 L51 Q54 Q58
    Date: 2019
  6. By: Eftichios S. Sartzetakis (Bank of Greece)
    Abstract: The present paper examines the role that green bonds can play in financing the transition to low carbon economy. We first establish the need for central banks to respond to climate change challenges and we present the main ways in which they can get involved. We explain why green bonds should be used to instrument of choice for financing the low carbon transition, based, on the one hand, on the theoretical argument of intergenerational burden sharing and, on the other hand, on the practical need of large long-term infrastructure investments. After defining green bonds, we present their main characteristics. We then summarize the development of the green bond market in the last decade. We conclude by presenting ways in which to respond to existing challenges and barriers, so that the green bonds market develops further.
    Keywords: Green bonds; climate change;low carbon transition
    JEL: Q54 G12 G28
    Date: 2019–03
  7. By: Asongu, Simplice; Odhiambo, Nicholas
    Abstract: This research examines the relevance of inclusive development in modulating the role of governance on environmental degradation. The study focuses on forty-four countries in sub-Saharan Africa for the period 2000-2012. The Generalised Method of Moments is employed as the empirical strategy and CO2 emissions per capita is used to measure environmental pollution. Bundled and unbundled governance dynamics are employed, notably: political governance (consisting of political stability/no violence and “voice and accountability”), economic governance (encompassing government effectiveness and regulation quality), institutional governance (entailing corruption-control and the rule of law), and general governance (a composite measure of political governance, economic governance and institutional governance). The following main findings are established. First, the underlying net effect in the moderating role of inclusive development in the governance-CO2 emissions nexus is not significant in regressions pertaining to political governance and economic governance. Second, there are positive net effects from the relevance of inclusive development in modulating the effects of regulation quality, economic governance and general governance on CO2 emissions. The significant and insignificant effects are elucidated. Policy implications are discussed.
    Keywords: CO2 emissions; Governance; Sustainable development; Sub-Saharan Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2019–01
  8. By: Scott Knowles; Mark Skidmore
    Abstract: There is limited public discourse and understanding about the history and science of weather and climate intervention, though scientists have researched, tested and implemented numerous methods of weather modification for six decades. Also, climate-related geoengineering is steadily gaining support as a means of combatting rising global temperatures. With climate change and associated increasing occurrence of extreme weather events, there has not been a more providential moment to consider the implications of anthropogenic, atmospheric intervention. This paper summarizes information about weather and climate intervention with the aim of answering the question: Why aren’t more economists interested in evaluating weather and climate intervention activities?
    Keywords: weather modification, cloud seeding, geoengineering, climate change, economic analysis
    Date: 2019
  9. By: Ton S. van den Bremer; Rick van der Ploeg
    Abstract: We use perturbation methods to derive a rule for the optimal risk-adjusted social cost of carbon (SCC) that incorporates the effects of uncertainties associated with climate and the economy from a calibrated DSGE model. We allow for different aversions to risk and intertemporal fluctuations, convex damages, uncertainties in economic growth, atmospheric carbon, climate sensitivity and damages, their correlations, and distributions that are skewed in the longer run to capture long-run climate feedbacks. Our non-certainty-equivalent rule for the SCC incorporates precaution, risk insurance, and climate sensitivity and damage rate hedging effects to deal with future economic and climatic and damage risks.
    Keywords: precaution, insurance, hedging, economic, climatic and damage uncertainties, skewness, mean reversion, correlated risks, risk aversion, intergenerational inequality aversion, convex damages
    JEL: H21 Q51 Q54
    Date: 2019
  10. By: Larcker, David F. (Graduate School of Business, Stanford University and Rock Center for Corporate Governance); Watts, Edward M. (Graduate School of Business, Stanford University)
    Abstract: This study investigates whether investors are willing to trade-off wealth for societal benefits. We take advantage of unique institutional features of the municipal securities market to provide insight into this question. Since 2013, over $23 billion Green Bonds have been issued to fund eco-friendly projects. Comparing Green securities to nearly identical securities issued for non-Green purposes by the same issuers on the same day, we observe economically identical pricing for Green and non-Green issues. In contrast to a number of recent theoretical and experimental studies, we find that in real market settings investors appear entirely unwilling to forgo wealth to invest in environmentally sustainable projects. When risk and payoffs are held constant, municipal investors view Green and non-Green securities by the same issuer as almost exact substitutes. Thus, the “greenium†is essentially zero.
    JEL: G12 G14 G20
    Date: 2019–02
  11. By: Fabio Mariani (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Agustin Perez Barahona (University of Cergy-Pontoise and Ecole Polytechnique); Natacha Raffin (Normandie Univ, UNIROUEN, CREAM and EconomiX, University Paris Nanterre)
    Abstract: This paper explores the interplay between population and environmental quality. After reviewing the existing literature, we set up a theoretical framework suitable to analyze two major endogenous forces of demographic change - fertility and life expectancy - and their dynamic interaction with human capital and environmental conditions. We thus revisit and encompass in a unified model some key results of the literature, and gain new insight on the consequences of policy intervention on environmental dynamics and economic development. In particular, we highlight (i) the possible perverse effects of pollution control, (ii) a demographic explanation of the environmental Kuznets curve, (iii) the opportunity of relying on educational subsidies to alleviate the pressure on natural resources, and (iv) the existence of poverty traps related to human capital and environmental quality.
    Keywords: Environmental quality; Life expectancy; Education; Fertility
    JEL: J11 O44 Q56
    Date: 2019–04
  12. By: Lucas Bretschger (ETH Zurich, Switzerland)
    Abstract: To reconsider the Malthusian predictions of natural limits to economic development, the paper develops a multi-sector growth model with exhaustible resource extraction, investments in physical and knowledge capital, climate change, and endogenous fertility. Economic growth is driven by endogenous innovations which increase in the availability and productivity of research labour. Poor substitution of natural resources triggers sectoral change. Climate change is the result of polluting resource use which is, like consumption and investments, based on the intertemporal optimization of the households. Highlighting the importance of bounded resource supply and of rational extraction decisions I show that climate change is independent of population growth in steady state and there is no causal relationship between climate and population during transition to steady state. The consumption per capita growth rate rises in the innovation rate and the output elasticities of labour and capital in the different sectors. Unlike climate policy, population policy is not warranted; it may be counterproductive because labour is crucial for the research sector.
    Keywords: Population growth, climate change, endogenous innovation, sectoral change, fertility choice
    JEL: Q43 O47 Q56 O41
    Date: 2019–04
  13. By: Zhang, Xin (Beijing Normal University); Chen, Xi (Yale University); Zhang, Xiaobo (Peking University)
    Abstract: This paper studies the impact of six main air pollutants on three key dimensions of subjective well-being (SWB) – life satisfaction, hedonic happiness and mental health. We match a nationally representative survey in China with local air quality and rich weather conditions according to the exact date and county of each interview. By making use of variations in exposures to air pollution across similar respondents living in the same county, we find that PM2.5 reduces hedonic happiness and increases the rate of depressive symptoms, but does not affect life satisfaction. Our results show that the benefits of reducing air pollution would be higher if the hidden costs of air pollution on SWB in China are taken into account.
    Keywords: life satisfaction, hedonic happiness, depressive symptoms, air pollution, China
    JEL: I31 Q51 Q53
    Date: 2019–04
  14. By: Raza, Syed Ali; Shah, Nida; Nisar, Wasay
    Abstract: In the recent era, environmental protection has gained popularity and a paradigm shift has been observed in the consumer’s dietary choices. The consumer start preferring organic foods, as they are considered as healthier and eco-friendly. The organic food consumption is widely increased in the developed countries but its adoption is still low in the developing country like Pakistan. Therefore, the purpose of this study is to examine the factors that affect the adolescent’s intention to purchase organic foods in the context of Pakistan. For the purpose of the study, the data have been collected from 350 respondents and Partial Least Square Structural Equation Modeling (PLS-SEM) has been used for the analysis. The result shows that the variables ecological welfare, nutritional content, sensory appeal has a significant relationship with utilitarian and hedonic attitude. Whereas, natural content has a significant relationship with utilitarian attitude but has an insignificant relationship with hedonic attitude. On the contrary, price has a significant relationship with hedonic attitude but has an insignificant relationship with utilitarian attitude. Moreover, both the attitude (utilitarian and hedonic) has a significant relationship with consumer intention to buy organic foods. From the results, several implications can be derived for the marketers, policymakers, and the organic food retailers.
    Keywords: Organic Food Consumption, Utilitarian and Hedonic Attitude, Pakistan. PLS-SEM
    JEL: I12
    Date: 2019–04–05
  15. By: Grant Bishop (C.D. Howe Institute)
    Keywords: Energy and Natural Resources; Electricity;Environmental Policies and Norms;Role and Efficiency of Government; Fiscal and Tax Policy; Federalism and Constitution
    JEL: Q58
    Date: 2019–04
  16. By: Asongu, Simplice; Odhiambo, Nicholas
    Abstract: This study investigates how increasing economic development affects the green economy in terms of CO2 emissions, using data from 44 countries in the SSA for the period 2000-2012. The Generalised Method of Moments (GMM) is used for the empirical analysis. The following main findings are established. First, relative to CO2 emissions, enhancing economic growth and population growth engenders a U-shaped pattern whereas increasing inclusive human development shows a Kuznets curve. Second, increasing GDP growth beyond 25% of annual growth is unfavorable for a green economy. Third, a population growth rate of above 3.089% (i.e. annual %) has a positive effect of CO2 emissions. Fourth, an inequality-adjusted human development index (IHDI) of above 0.4969 is beneficial for a green economy because it is associated with a reduction in CO2 emissions. The established critical masses have policy relevance because they are situated within the policy ranges of adopted economic development dynamics.
    Keywords: CO2 emissions; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2019–01
  17. By: Ingvild Almås; Maximilian Auffhammer; Tessa Bold; Ian Bolliger; Aluma Dembo; Solomon M. Hsiang; Shuhei Kitamura; Edward Miguel; Robert Pickmans
    Abstract: Accumulating evidence indicates that environmental temperature substantially affects economic outcomes and violence, but the reasons for this linkage are not well understood. We systematically evaluate the effect of thermal stress on multiple dimensions of economic decisionmaking, judgment, and destructive behavior with 2,000 participants in Kenya and the US who were randomly assigned to different temperatures in a laboratory. We find that most dimensions of decision-making are unaffected by temperature. However, heat causes individuals to voluntarily destroy other participants’ assets, with more pronounced effects during a period of heightened political conflict in Kenya.
    JEL: C91 D74 O1 Q50
    Date: 2019–04
  18. By: Marc Ringel; Roufaida Laidi; Djamel Djenouri
    Abstract: From both global and local perspectives, there are strong reasons to promote energy efficiency. These reasons have prompted leaders in the European Union (EU) and countries of the Middle East and North Africa (MENA) to adopt policies to move their citizenry toward more efficient energy consumption. Energy efficiency policy is typically framed at the national, or transnational level. Policy makers then aim to incentivize microeconomic actors to align their decisions with macroeconomic policy. We suggest another path towards greater energy efficiency: Highlighting individual benefits at microeconomic level. By simulating lighting, heating and cooling operations in a model single-family home equipped with modest automation, we show that individual actors can be led to pursue energy efficiency out of enlightened self-interest. We apply simple-to-use, easily, scalable impact indicators that can be made available to homeowners and serve as intrinsic economic, environmental and social motivators for pursuing energy efficiency. The indicators reveal tangible homeowner benefits realizable under both the market-based pricing structure for energy in Germany and the state-subsidized pricing structure in Algeria. Benefits accrue under both the continental climate regime of Germany and the Mediterranean regime of Algeria, notably in the case that cooling energy needs are considered. Our findings show that smart home technology provides an attractive path for advancing energy efficiency goals. The indicators we assemble can help policy makers both to promote tangible benefits of energy efficiency to individual homeowners, and to identify those investments of public funds that best support individual pursuit of national and transnational energy goals.
    Date: 2019–04
  19. By: Hwang, In Chang; Son, Wonik
    Abstract: There is an increasing concern on particulate matter (PM) management in Seoul. The annual mean PM concentration of Seoul is far higher than the World Health Organization guideline and its decreasing rate has been slowed since 2012. Seoul Metropolitan Government has made various efforts to solve the problem. In particular, after an open forum held in June 2017, the Ten Measures for Fine Particles were established. Since the management of fine particles would enforce a huge budget (annual mean of 146 million US dollar) it requires a legitimate validation by the benefit analysis. This paper aims to estimate the benefit of the management policy of Seoul on airborne particulate matter. The benefit is estimated by the contingent valuation method. The estimation by the Spike model shows that the annual willingness to pay (WTP) per household for the management of airborne particulate matter is 126 US dollar (or 138,107 Korean won) (95% confidence interval of 114 to 137 US dollar). The applications of the other statistical models are also analyzed. Considering the total number of households, annual benefit of the management policy of Seoul on airborne particulate matter is 492 million US dollar annually (95% confidence interval of 446 to 537 million US dollar). A simple comparison shows that the benefit of the management of airborne particulate matter in Seoul is 3~4 times higher than the incurred expense.
    Keywords: Air pollution; Contingent valuation; Particulate matter; Willingness to pay
    JEL: H7 Q51 Q53
    Date: 2019–05–02
  20. By: Dominic White (Motu Economic and Public Policy Research); Niven Winchester (Motu Economic and Public Policy Research)
    Abstract: As New Zealand charts its course toward a low-emissions economy, the quality of energy-sector and multi-sector modelling is becoming increasingly important. This paper outlines why models are useful for answering complex questions, provides a stocktake of energy-sector and multi-sector models used for climate change mitigation modelling in New Zealand, and makes suggestions for improving future modelling work. While New Zealand is fortunate to have a range of different modelling tools, these have historically been used in a sporadic and ad hoc way, and underlying datasets are deficient in some areas. As the foundation for a more strategic development of New Zealand’s modelling capability, this paper profiles some of the energy-sector and multi-sector models and datasets currently applied in New Zealand. New Zealand’s modelling capability could be strengthened by collecting and sharing data more effectively; building understanding of underlying relationships informed by primary research; creating more collaborative and transparent processes for applying common datasets; increasing international collaboration; and conducting more integrated modelling across environmental issues. These improvements will require strategic policies and processes for refining model development; providing increased, predictable and sustained funding for modelling activities, underlying data collection and primary research; and strengthening networks across modellers inside and outside of government. Many of the suggested improvements could be realised by creating an integrated framework for climate change mitigation modelling in New Zealand. This framework would bring together a suite of models and a network of researchers to assess climate change mitigation policies regularly. Core elements of the framework would include a central repository of data, input assumptions and scenarios, and a “dashboard” that synthesises results from different models to allow decision-makers to understand and apply the insights from the models more easily.
    Keywords: Applied general equilibrium, Electricity, Greenhouse gases, Policy analysis, Transportation
    JEL: C31 D58 Q4 Q54
    Date: 2018–11
  21. By: Alex Marten
    Abstract: Understanding the distribution of regulatory costs is key to evaluating whether a rulemaking exacerbates or ameliorates preexisting economic disparities and is of stated interest to many stakeholders and policy makers. Previous studies on the incidence of command-and-control environmental regulations have predominantly focused on the distribution of costs through final goods prices (the use side). However, the impact of regulations on household income (the source side) can be of first-order importance in determining the overall incidence. Using a detailed computable general equilibrium model of the U.S. economy we study the incidence of single-sector technology mandates across a broad set of industrial sectors. We find the use-side incidence is notably regressive but the source-side effects are progressive on average and tend to dominate the overall incidence of costs. This occurs as a significant share of regulatory costs is passed on through lower returns to capital and natural resources, which predominantly affects upper-income households, while indexed transfer payments partially shields the purchasing power of low-income households from increases in output prices. However, when the regulated sector predominantly produces final goods with inelastic demand and low trade exposure (e.g., utility services) we find that the use-side incidence can dominate leading to regressive distribution of regulatory costs. Finally, we find that the common practice of vintage differentiation, whereby only new sources of pollution are covered, can cause a significantly more regressive distribution of costs, all else equal.
    Keywords: environmental regulation, incidence, general equilibrium
    JEL: Q52 C68
    Date: 2019–04
  22. By: Olga Filippova; Cuong Nguyen; Ilan Noy; Michael Rehm
    Abstract: Globally, the single-most observable, predictable, and certain impact of climate change is sea level rise. Using a case study from the Kapiti Coast District in New Zealand, we pose a simple question: Do people factor in the warnings provided by scientists and governments about the risk of sea-level rise when making their investment decisions? We examine the single most important financial decision that most people make – purchasing a home, to see whether prices of coastal property change when more/less information becomes available about property-specific consequences of future sea level rise. The Kapiti Coast District Council published detailed projected erosion risk maps for the district’s coastline in 2012 and was forced to remove them by the courts in 2014. About 1,800 properties were affected. We estimate the impact of this information on home prices using data from all real estate transactions in the district with a difference-in-differences framework embedded in a hedonic pricing model. We find that the posting of this information had a very small and statistically insignificant impact on house prices, suggesting people do not care much about the long-term risks of sea-level rise as they do not incorporate these risks in their investment decisions.
    Keywords: house price, sea level rise, climate change, erosion
    JEL: Q54 R38
    Date: 2019
  23. By: Plambeck, Erica (Stanford Graduate School of Business)
    Date: 2018–11
  24. By: Aydoğan Alti; Sheridan Titman
    Abstract: We present a dynamic model that links characteristic-based return predictability to systematic factors that determine the evolution of firm fundamentals. In the model, an economy-wide disruption process reallocates profits from existing businesses to new projects and thus generates a source of systematic risk for portfolios of firms sorted on value, profitability, and asset growth. If investors are overconfident about their ability to evaluate the disruption climate, these characteristic-sorted portfolios exhibit persistent mispricing. The model generates predictions about the conditional predictability of characteristic-sorted portfolio returns and illustrates how return persistence increases the likelihood of observing characteristic-based anomalies.
    JEL: G02 G12
    Date: 2019–04
  25. By: Deschenes, Olivier (University of California, Santa Barbara); Wang, Huixia (Hunan University); Wang, Si (Hunan University); Zhang, Peng (Hong Kong Polytechnic University)
    Abstract: We provide the first study estimating the causal effect of air pollution on body weight. Using the China Health and Nutrition Survey, which provides detailed longitudinal health and socioeconomic information for 13,226 adult individuals over 1989-2011, we find significant positive effects of air pollution, instrumented by thermal inversions, on body mass index (BMI). Specifically, a 1 μg/m3 (1.59%) increase in average PM2.5 concentrations in the past 12 months increases BMI by 0.31%, and further increases the overweight and obesity rates by 0.89 and 0.19 percentage points, respectively. Our paper identifies a new cause of obesity, and sheds new light on the morbidity cost of air pollution.
    Keywords: air pollution, obesity, weight gain, China
    JEL: I12 I15 Q53
    Date: 2019–04
  26. By: Jan Paul Baginski (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen))
    Abstract: Solar thermal roof-top installations offer the potential to meet an important share of residential water and space heating demand in Germany. These systems are subsidised with grants under the so-called market incentive program. The political goal is to encourage the adoption of renewable energy and to reduce CO2-emissions in the heating market in view of a low-carbon building stock. Solar thermal adoption levels are currently rather low after a high period in 2008 and 2009. Also, solar thermal adoption rates distinctly vary between regions. This paper tries to disentangle influences governing regional and temporal differences in residential solar thermal uptake. Spatial panel regression models are estimated to capture spatial interactions, while controlling for potential adoption determinants, including economic considerations, household characteristics and climatic suitability. The panel data contain observations for over 1 million solar thermal installations across 402 German regions covering the period from 2001 to 2015. Results indicate that differences in profitability influence the spatial and temporal patterns of solar thermal uptake. Regional diffusion is mainly driven by solar radiation. The development of fossil fuel prices is accountable for different adoption rates over time. New constructions do not seem to foster solar thermal use, indicating that solar heating is easily applied to existing houses. Larger households are more inclined to use solar heating, given that they use more efficiently solar generated heat. Results also show that spatial dependence drives the diffusion of solar thermal systems. These findings imply that there is potential for new policies and business models to increase the geographic and social diversification of solar thermal adoption.
    Keywords: solar energy, domestic solar thermal heating, spatial econometrics, panel data
    JEL: C23 D12 Q28 Q42
  27. By: Fahad Alzahrani (Division of Resource Economics and Management, West Virginia University); Alan R. Collins (Division of Resource Economics and Management, West Virginia University); Elham Erfanian (Regional Research Institute, West Virginia University)
    Abstract: This paper explores the relationship between episodes of contaminated drinking water and health care expenditures in the United States. The analysis relies on panel data from the 48 contiguous states from 2000 to 2011. We use the population served by public water systems that violate health-based standards of the Safe Drinking Water Act as a proxy for contaminated drinking water. We estimate spatial and non-spatial models and control for factors that may affect per capita health care expenditures including variables that reflect air quality violations along with ability to pay plus demand for and supply of health care services. The results from a Spatial Durbin Model indicate that a 1% decrease in the percentage of population exposed to drinking water quality violations is associated with reductions in in-state and regional effects equal to 0.005% ($0.32) and 0.035% ($2.26) of per capita health care expenditures, respectively. Drinking water violations have a larger impact on expenditures than air quality violations (whose effects are not statistically different from zero). However, compared to other factors, such as Medicare enrollment and income, the impact of these violations on health care expenditures is relatively small. We find that regional health care expenditure impacts from drinking water violations are substantially greater than in-state impacts. Thus, a regional approach is recommended to addressing drinking water quality improvements.
    Keywords: Water Quality, Health Care Expenditures, Spatial Econometrics, Spillover Effects
    JEL: Q53 I11 C31
    Date: 2019–04
  28. By: Cristina Férnandez; Francisco Fernández; Nicolás Gómez
    Abstract: El presente trabajo realiza un análisis de la informalidad y el crecimiento verde inclusivo, con énfasis en los sectores de minería, actividades agropecuarias, silvicultura, construcción y manejo de residuos. La informalidad se estima para las unidades productivas desde el punto de vista de la normativa laboral, empresarial, ambiental y de títulos. El crecimiento verde inclusivo, se mide mezclando las metodologías utilizadas para estimar el Índice de Crecimiento Sostenible del WEF, y el Índice EPI, de la Universidad de Yale. Además de hacer evidentes las altísimas tasas de informalidad en los sectores seleccionados, la conclusión principal de este trabajo es que predomina una relación positiva entre formalidad y buen desempeño ambiental y esta relación se muestra robusta y significativa, aún después de controlar por variables observables como el tamaño, el sector, la geografía y la educación (como proxy de ingresos). Aunque no es posible realizar un ejercicio de causalidad, nuestros resultados sugieren que la relación entre las dos variables se explica principalmente por determinantes comunes. Bajo este entendido y después de realizar un análisis de ecuaciones simultáneas para establecer los determinantes del desempeño ambiental y laboral, formulamos algunas recomendaciones de política.
    Keywords: nformalidadInformalidad LaboralInformalidad de Firma, Crecimiento Verde, Crecimiento Inclusivo
    JEL: Q01 Q51 Q56
    Date: 2018–11–30
  29. By: OECD
    Abstract: This report examines the local entrepreneurship ecosystem of the Coventry and Warwickshire region in the United Kingdom and its capacity to promote productivity upgrading and industrial renewal. It forms part of the OECD’s work stream on local entrepreneurship ecosystems and emerging industries. This work examines how policy at the local level can promote innovative start-ups, innovative scale-ups and innovation in existing enterprises for entrepreneurship and industrial diversification.
    Date: 2019–05–03
  30. By: Kunihiro Akutsu (Bank of Japan); Yasutaka Koike (Bank of Japan)
    Abstract: Private consumption is affected by temporary disturbance factors such as weather conditions, so it is difficult to assess business conditions. In this paper, we propose "Macro Weather Index" as a comprehensive indicator of Japan's weather conditions, and analyze the effect of weather factors on private consumption. We find that a rise in the amount of precipitation depresses consumer spending and a rise in temperature has a positive effect on private consumption in the summer and a negative influence in the winter. We also find that the effects of weather factors on consumption differ by type as well as by item.
    Date: 2019–04–19
  31. By: OECD
    Abstract: This report examines the local entrepreneurship ecosystem of the Malopolskie region in Poland and its capacity to promote productivity upgrading and industrial renewal. It forms part of the OECD’s work stream on local entrepreneurship ecosystems and emerging industries.
    Date: 2019–05–03
  32. By: Jan Lietava; Risa Morimoto (Department of Economics, SOAS University of London, UK)
    Abstract: Food security and yield production have been extensively studied in regard to fertiliser response in the context of Sub-Saharan Africa. Soil fertility gradients within farms interact with other complex factors such as plot management, alongside bio-physical as well as socio-economic constraints, to create extensive heterogeneity in yield production. Hence, blanket recommendations regarding increasing inputs may not just lead to limited or no change in productivity but may affect long term sustainability. To try and explore the relationships between these factors, Classification and Regression Tree (CART) analysis was used to simplify the effect of plot management decisions. Data was from the focal plots of the 2016 and 2017 Tanzanian Agronomy Panel Survey (TAPS 2017; n = 580) with a range of yields and socio-economic contexts (2.10tha-1 – 3.68tha-1). Results suggested that in low resource fields, management factors are subservient to extreme soil degradation while in high resource fields good management such as optimal planting are needed for maximum predicted yield (4.48tha-1; n = 51). Boundary line analysis was conducted, and maximum yield-nutrient response values calculated. The yield gap obtained suggested only up to 60% of locally obtainable yield is reached, highlighting the necessary balance between intensity of resource use and good management for sustainable and sufficient crop production, especially in the case of extreme soil degradation.
    Keywords: Regression tree analysis, soil property, Tanzania, agro-economic practice
    JEL: Q10 Q15 Q56 R15 R28
    Date: 2019–02
  33. By: Caffera, Marcelo; Vásquez Lavín, Felipe; Rodríguez Anza, Daniel; Carrasco-Letelier, Leonidas; Hernández, José Ignacio; Buonomo, Mariela
    Abstract: Abstract: We estimate the implicit market price of soil erosion, fitting a spatio-temporal hedonic price model using quarterly data of 3,563 agricultural farms traded in Uruguay between 2000 and 2014. A unique feature of our estimation is that we allow for possible spatial spillovers. We find evidence of a negative and statistically significant association between erosion and land values. A 1% increase in own topsoil loss due to own erosion is associated with a decrease of 0.22% in the per-hectare price of agricultural land (p-value: 0.013, 95% CI: -0.0039, -0.0005). This is equivalent to a decrease of 7.7 USD in the average price per hectare and USD 1,040 in the price of the average farm (134 hectares). This value increases to USD 1,277 when we add the average cross marginal effect of erosion in nearby farms. Our estimates are sensitive to our measure of erosion and our specification of the spatio-temporal weighting matrix. We also find evidence consistent with our hypothesis that farms entering a governmental erosion control plan sent a valuable signal to the market regarding soil management. An indicator of whether the farm has at least one parcel under the government erosion control plans is associated with a 29% increase in the farm´s per-hectare price (p-value: 0.000, 95% CI: 16.26%, 41.53%) higher than those with no parcel under these plans. The average total marginal effect (own plus cross effects) of the erosion control plans is 35.37% (p-value: 0.000, 95% CI: 20.33%, 50.40%).
    Keywords: spatial spillovers, spatio-temporal hedonic model, soil erosion, farmland values, Uruguay
    JEL: Q1 Q12 Q15
    Date: 2019–04–30
  34. By: Marta, Najda-Janoszka; Jacek, Gancarczyk
    Abstract: The aim of the article is to explore the managerial practices that enable capitalizing on the critical instability during an on-going transition period in the life-cycle of an industry. The investigation followed a qualitative approach using a field-based case study method and a longitudinal design. Multiple data collection methods were adopted to reduce a systematic bias in the gathered data and to develop the case, shaped by the context and emergent data. The gathered rich data enabled the confrontation of industry transformation signals with the strategic maneuvering exhibited by the investigated firm. Observed options involved imitating, repositioning, exiting or entering. The study is a part of a larger project financed by National Science Centre of Poland (NCN) - 2013/11/D/HS4/03965
    Keywords: industry life-cycle, industrial transition, photovoltaics, strategic positioning, value capture, value appropriation
    JEL: L10 M0
    Date: 2018
  35. By: Fedesarrollo
    Abstract: Realizar una evaluación de los impactos causados en las regiones productoras de hidrocarburos y minerales con el actual Sistema General de Regalías que permita evaluar su funcionamiento, fórmulas de distribución de las regalías, e identificar los aspectos por mejorar y los cambios a incorporar en la composición y esquema de distribución actual.
    Keywords: Regalías, Sistema General de Regalías, Evaluación de Impacto, Análisis Costo-Beneficio, Economía Regional, Hidrocarburos, Minería, Colombia
    JEL: L71 F43 O47 R11 E60
    Date: 2018–05–15

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