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on Resource Economics |
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Issue of 2005‒04‒30
three papers chosen by |
| By: | George Economides; Apostolis Philippopoulos |
| Abstract: | This paper studies the properties of second-best optimal policy in a standard general equilibrium model of growth augmented with renewable natural resources. The government chooses its policy instruments (the income tax rate and the allocation of collected tax revenues between public investment and environmental policy) to solve a Ramsey-type policy problem. The main result is that, the more the citizens care about the environment, the more growth-enhancing policies the government finds it optimal to choose in the long run. This is because when citizens care about the environment, this requires tax revenues for environmental policy and can be only achieved by large tax bases and high growth. Thus, only growing economies can afford to care about the environment. This is the case even if pollution occurs as a by-product of output produced. |
| Keywords: | second-best policy, natural resources, economic growth |
| JEL: | H23 O13 Q20 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1433&r=res |
| By: | Denise L. Mauzerall; Babar Sultan; Namsoug Kim; David Bradford |
| Abstract: | We present a proof-of-concept analysis of the measurement of the health damage of ozone (O3) produced from nitrogen oxides (NOx = NO + NO2) emitted by individual large point sources in the eastern United States. We use a regional atmospheric model of the eastern United States, the Comprehensive Air Quality Model with eXtensions (CAMx), to quantify the variable impact that a fixed quantity of NOx emitted from individual sources can have on the downwind concentration of surface O3, depending on temperature and local biogenic hydrocarbon emissions. We also examine the dependence of resulting ozone-related health damages on the size of the exposed population. The investigation is relevant to the increasingly widely used "cap and trade" approach to NOx regulation, which presumes that shifts of emissions over time and space, holding the total fixed over the course of the summer O3 season, will have minimal effect on the environmental outcome. By contrast, we show that a shift of a unit of NOx emissions from one place or time to another could result in large changes in resulting health effects due to ozone formation and exposure. We indicate how the type of modeling carried out here might be used to attach externality-correcting prices to emissions. Charging emitters fees that are commensurate with the damage caused by their NOx emissions would create an incentive for emitters to reduce emissions at times and in locations where they cause the largest damage. |
| Keywords: | surface ozone, NOx emissions, point sources, health impacts, mortality, morbidity, cap-and-trade |
| JEL: | H10 Q50 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1442&r=res |
| By: | Marcelo Caffera (Universidad de Montevideo); Juan Dubra (Universidad de Montevideo) |
| Abstract: | We study the problem of a regulator who must control the emissions of a given pollutant from a series of industries when the firms' abatement costs are unknown. We develop a mechanism in which the regulator asks firms to report their abatement costs and implements the most stringent emissions standard consistent with the firms' declarations. He also inspects one of the firms in each industry which declared the cost structure consistent with the least stringent emissions standard and with an arbitrarily small probability, he discovers whether the report was true or not. The firm is punished with an arbitrarily small fine if and only if its report was false. This mechanism is simple, is implementable in practice, its unique equilibrium is truth telling by firms, it implements the first best pollution standards and shares some features of the regulatory processes actually observed in reality. |
| Keywords: | Emissions Standards, Command and Control, Undominated Nash Implementation |
| JEL: | D78 D82 Q20 |
| Date: | 2005–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpmi:0504008&r=res |