nep-res New Economics Papers
on Resource Economics
Issue of 2008‒06‒21
four papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Exporting and the Environment: A New Look with Micro-Data By Sourafel Girma; Aoife Hanley; Felix Tintelnot
  2. Environmental Quality, Life Expectancy, and Sustainable Economic Growth By Dimitrios Varvarigos
  3. Emissions trading with updated grandfathering. Entry/exit considerations and distributional effects By Knut Einar Rosendahl and Halvor Briseid Storrøsten
  4. Tradable Rights to Emit Air Pollution By Burtraw, Dallas; Evans, David A.

  1. By: Sourafel Girma; Aoife Hanley; Felix Tintelnot
    Abstract: Previous aggregate studies ignore additional environmental improvements caused by intra industry reallocations to high productivity/ low pollution firms. They also fail to consider potential differences in abatement efforts by exporting status. Our estimation based on UK firm level data from 1998 to 2002 shows that exporters are 7.5 percent more likely to denote their innovation as having a ‘high’ or ‘very high’ environmental effect. Our findings also show that exporters are 17.5 percent more likely, all things equal, to report that their firm’s innovation cuts the cost of energy/ materials. Our results agree with our environment trade model which predicts that exporters amortize the fixed cost of environmental abatement over their wider output base
    Keywords: Exporting, environment, innovation, heterogeneity
    JEL: O31 Q55 Q56
    Date: 2008–06
  2. By: Dimitrios Varvarigos
    Abstract: I construct a model of a growing economy with pollution. The analysis of the model shows that the interactions between capital accumulation, endogenous longevity and environmental quality determine both the long-run growth rate of the economy and the pattern of convergence (i.e., monotonic or cyclical) towards the balanced growth path. I argue that such interactions can provide a possible explanatory factor behind the, empirically observed, negative correlation of longrun growth with its short-term cycles. Furthermore, the model may capture the observed pattern whereby economic growth and mortality rates appear to be negatively related in the long-run, but positively related in the short-run.
    Keywords: Environmental quality; longevity; economic growth; cycles
    JEL: O13 O41 Q56
    Date: 2008–06
  3. By: Knut Einar Rosendahl and Halvor Briseid Storrøsten (Statistics Norway)
    Abstract: Allocation of free emissions allowances may distort firms' incentives or have adverse distributional effects. Nevertheless, Böhringer and Lange (2005) show that in a closed emissions trading scheme with a fixed number of firms, a first-best outcome can be achieved if the base year for allocation is continually updated (i.e. updated grandfathering). In this paper we examine whether updated grandfathering alters the entry and exit conditions for firms compared to pure grandfathering, and how the distributional effects are affected. We find that updated grandfathering functions surprisingly similar to pure grandfathering: First, the incentives to entry and exit are identical under the two regimes. Second, the total value of free quotas to existing firms, based on emissions before the system starts, is identical under pure and updated grandfathering. In both cases, higher prices under updated grandfathering exactly match the shorter time period with free allowances. The only difference occurs when there is some combination of auction and pure or updated grandfathering, in which case the total value of free quotas will always be highest under pure grandfathering. Entry and exit incentives are still the same.
    Keywords: Emission trading; Allocation of quotas; Quota prices
    JEL: H21 Q28
    Date: 2008–06
  4. By: Burtraw, Dallas (Resources for the Future); Evans, David A.
    Abstract: The use of cap-and-trade to regulate air pollution promises to achieve environmental goals at lower cost than traditional prescriptive approaches. Cap-and-trade has been applied to various air pollutants including sulfur dioxide, nitrogen oxides, and volatile organic compounds in the United States and carbon dioxide in the European Union. This corresponds to what is likely to become the most expensive environmental undertaking in history—the effort to reduce the heating of the planet. However, the efficacy of a cap-and-trade policy for carbon dioxide depends in large part on the design of the program. In addition to the level of the cap, the most important decision facing policymakers will be the initial allocation of emissions allowances. The method used to allocate tradable emissions allowances will have significant influence on the distributional impact and efficiency of the program.
    Keywords: cap-and-trade, emission allowances, allocation, auction, grandfathering, climate change, global warming, carbon dioxide
    JEL: Q52 Q53 Q54
    Date: 2008–03–17

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