nep-res New Economics Papers
on Resource Economics
Issue of 2009‒03‒28
six papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Environmental policy without costs? A review of the Porter hypothesis By Brännlund, Runar; Lundgren, Tommy
  2. Environmental policy and profitability. Evidence from Swedish industry By Brännlund, Runar; Lundgren, Tommy
  3. Does remediation save lives? On the cost of cleaning up arsenic-contaminated sites in Sweden By Forslund, Johanna; Samakovlis, Eva; Vredin Johansson, Maria; Barregård, Lars
  4. Does ratification matter and do major conventions improve safety and decrease pollution in shipping? By Knapp, S.; Franses, Ph.H.B.F.
  5. Pollution and the State: The Role of the Structure of Government By Lopez, Ramon; Galinato, Gregmar I.; Islam, Asif
  6. An analysis of the spatial and temporal patterns of greenhouse gas emissions by agriculture in Western Australia and the opportunities for agroforestry offsets By Kingwell, Ross; Harris'Adams, Keely

  1. By: Brännlund, Runar (Umeå University); Lundgren, Tommy (Umeå School of Business)
    Abstract: This paper reviews the theoretical and empirical literature connected to the so called Porter Hypothesis. That is, to review the literature connected to the discussion about the relation between environmental policy and competitiveness. According to the conventional wisdom environmental policy, aiming for improving the environment through for example emission reductions, do imply costs since scarce resources must be diverted from somewhere else. However, this conventional wisdom has been challenged and questioned recently through what has been denoted the “Porter hypothesis”. Those in the forefront of the Porter hypothesis challenge the conventional wisdom basically on the ground that resources are used inefficiently in the absence of the right kind of environmental regulations, and that the conventional neo-classical view is too static to take inefficiencies into account. The conclusions that can be made from this review is (1) that the theoretical literature can identify the circumstances and mechanisms that must exist for a Porter effect to occur, (2) that these circumstances are rather non-general, hence rejecting the Porter hypothesis in general, (3) that the empirical literature give no general support for the Porter hypothesis. Furthermore, a closer look at the “Swedish case” reveals no support for the Porter hypothesis in spite of the fact that Swedish environmental policy the last 15-20 years seems to be in line the prerequisites stated by the Porter hypothesis concerning environmental policy.
    Keywords: Environmental policy; Costs; Porter hypothesis
    Date: 2009–01–01
  2. By: Brännlund, Runar (Umeå University); Lundgren, Tommy (Umeå School of Business)
    Abstract: The purpose of this paper is to investigate the existence of a “Porter effect” using firm level data on output and inputs from Swedish industry between 1990 and 2004. By utilizing a factor demand modeling approach, and specifying a profit function which has a technology component dependent upon firm specific effective tax on CO2, we are able to separate out the effect of regulatory pressure on technological progress. The results indicate that there is evidence of a reversed “Porter effect” in most industrial sectors, specifically energy intensive industries.
    Keywords: CO2 tax; factor demands; induced technological change; Porter argument
    Date: 2009–03–21
  3. By: Forslund, Johanna (National Institute of Economic Research); Samakovlis, Eva (National Institute of Economic Research); Vredin Johansson, Maria (National Institute of Economic Research); Barregård, Lars (National Institute of Economic Research)
    Abstract: Swedish environmental policy is based on 16 environmental quality objectives (Gov. Bill 2000/01:130 and Gov.Bill 2004/05:150).1 One of the most challenging objectives,‘A non toxic environment’, has two interim targets that concern remediation of contaminated sites. In sum, they state that the highest priority should be given to sites posing the highest risks to human health and the environment.2 By eliminating pollutants in soil, groundwater and sediment, the interim targets aim to reduce risks to human health and the environment. In Sweden, 83,000 sites are potentially contaminated due to previous industrial activities. According to the Swedish Environmental Protection Agency (EPA), the administrator of the governmental funds for remediation, approximately 1500 of these sites contain contaminant concentrations that could seriously harm human health and the environment (Swedish EPA, 2008a). To reach the interim targets, all these sites need to be remediated by 2050. Remediation of contaminated sites has so far cost more than SEK 3,000 million.3 The approximated cost to mitigate the potential risks at the most harmful sites is estimated at SEK 60,000 million.4 The Swedish government’s funding for remediation presently comes in the form of a directed grant (sakanslag). The directed grant, administrated by the Swedish EPA, subsidises remediation of contaminated sites that were contaminated prior to modern environmental legislation (in 1969) or for which no liable party can be found. The directed grant amounts to approximately 455 millions annually, which corresponds to about 10 percent of the annual national funds for environmental protection (Gov. Bill 2007/08:1). To make it possible to prioritise among contaminated sites, the Swedish EPA has developed a method for risk assessment called the ‘MIFO’ (i.e. the Method for Inventory of Contaminated Sites). The risk assessment does not take into account the actual exposure at a contaminated site. Risk is instead assessed based on divergence from guideline values for acceptable concentrations given a standardised (i.e. worst case) exposure situation on an individual level. This means that a site can be remediated without any individuals actually being exposed. The expected risk reduction is consequently not quantified. This eliminates the possibility of valuing the risk reduction, which should be weighed against the remediation cost.<p><p> The purpose of this paper is to analyse how health effects, in the form of cancer risks, from sites contaminated by arsenic are valued implicitly in remediation. By using an environmental medicine approach that takes exposure into account, and without underestimating the potential health consequences of arsenic exposure, our purpose is to place arsenic risk management in the overall picture of live-saving interventions. In the case of cancer prevention, it is necessary to recognise that focus on an environmental carcinogen like arsenic may draw public attention – and funding – away from mental health risks like ambient air pollution and indoor radon. Although environmental pollution accounts for less than ten percent of all cancer cases (Harvard Centre for Cancer Prevention, 1996; Saracci and Vineis, 2007), environmental factors are important to recognize since they may be preventable. We emphasise, however, the inefficiency in becoming overly concerned about small risks while, at the same time, losing sight of the large risks. If society’s spending on lifesaving measures with small effects (i.e. a small number of lives saved) crowds out spending on lifesaving measures with large effects, then remediation can, in fact, even be said to waste lives.<p><p>By using data on 23 arsenic-contaminated sites in Sweden, we estimate the sitespecific cancer risks and calculate the cost per life saved by using the sites’ remediation costs. Our results show that the cost per life saved through remediation is much higher than that associated with other primary prevention measures, indicating that the ambition level of Swedish remediation may be too high.
    Date: 2009–02–28
  4. By: Knapp, S.; Franses, Ph.H.B.F. (Erasmus Econometric Institute)
    Abstract: We develop a method which measures the effect of the major international conventions in the area of safety, pollution, search and rescue and work related measures. We further distinguish between the effect of entry into force and the status of ratification of a convention by its parties. We use standard econometric models and base our analysis on a unique dataset of 30 years of monthly data where we correct for other factors which can influence safety such as safety inspections and ship economic cycles. The results show a complex picture where the average time between adoption and entry into force was calculated to be 3.1 years. Overall, the more parties ratify a convention, the more likely safety is improved and pollution is decreased although one can detect a certain level of non compliance. The immediate effect of entry into force presents a mixed picture where most negative effects can be found with legislation in the area of safety management and pollution, followed by technical areas. The effect of legislation in the areas related to working and living conditions and certification and training is smallest. Seasonality can be found with peaks in December and January for all conventions but are less important for pollution.
    Date: 2009–02–17
  5. By: Lopez, Ramon; Galinato, Gregmar I.; Islam, Asif
    Abstract: Government spending has significant environmental implications. This paper analyzes the effect of the allocation of government spending between public goods broadly defined and private goods or non-social subsidies on air and water pollution. The theoretical model predicts that a reallocation of expenditures from private subsidies to public goods improves environmental quality by reducing production pollution. We estimate an empirical model that shows that such a reallocation causes a significant reduction in air pollutants namely sulfur dioxide and lead and an improvement in water quality measures including dissolved oxygen and biological oxygen demand.
    Date: 2009
  6. By: Kingwell, Ross; Harris'Adams, Keely
    Abstract: If agriculture is included in an Australian emissions trading scheme then it may face from 2015 at the earliest, a price for its greenhouse gas emissions; and thereby have incentives to offset and lessen its emissions. Yet because there is currently little understanding of the spatial pattern of emissions in agricultural regions of Australia, the extent of the challenge the sector faces in reducing its emissions is not fully recognised. To improve our understanding, this study uses the National Greenhouse Accounts methodology to estimate the spatial and temporal patterns of agricultural emissions since 1990 in the key agricultural region in Australia’s southwest. This region generates almost 40 percent of the nation’s winter crop production and supports over a quarter of the nation’s sheep. The quantity and trajectory of emissions from each shire in this region are reported, thereby identifying where emission problems may be worsening or easing. The composition and causes of changes in emissions are discussed. This study also generates spatial estimates of sequestration costs by drawing on land and forestry cost and tree growth data. Many relatively low cost sites for carbon sequestration, based on permanent reforestation, are identified with the implication that agriculture may be able to cost-effectively offset its emissions, as well as some of those from other sectors. However, an implication of this study’s findings is that in some shires eventually there may be strong land use competition between farming and forestry.
    Keywords: greenhouse gas emissions, spatial analysis, agriculture, offsets, sequestration,
    Date: 2009

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