nep-res New Economics Papers
on Resource Economics
Issue of 2009‒09‒26
four papers chosen by
Maximo Rossi
Universidad de la Republica

  1. The effect of risk, ambiguity, and coordination on farmers’ adaptation to climate change: A framed field experiment By Alpizar, Francisco; Carlsson, Fredrik; Naranjo, Maria
  2. Environmental Effects of International Trade By Frankel, Jeffrey
  3. Reacting to Greenhouse Gas Emissions: A Carbon Tax to Meet Emission Targets. By Gilbert Metcalf
  4. Tax Policies for Low-Carbon Technologies By Gilbert Metcalf

  1. By: Alpizar, Francisco (Environment for Development Center, Tropical Agricultural and Higher Education Center (CATIE)); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Naranjo, Maria (Environment for Development Center, Tropical Agricultural and Higher Education Center (CATIE))
    Abstract: The risk of loses of income and productive means due to adverse weather associated to climate change can significantly differ between farmers sharing a productive landscape. It is important to learn more about how farmers react to different levels of risk, under measurable and unmeasurable uncertainty. Moreover, the costs associated to investments in reduced vulnerability to climatic events are likely to exhibit economies of scope. We explore these issues using a framed field experiment that captures realistically the main characteristics of production, and the likely weather related loses of premium coffee farmers in Tarrazu, Costa Rica. Given that the region recently was severely hit by an extreme, albeit very infrequent, climatic event, we expected to observe, and found high levels of risk aversion, but we do observe farmers making trade offs under different risk levels. Although hard to disentangle at first sight given the high level of risk aversion, we find that farmer’s opt more frequently for safe options in a setting characterized by unknown risk. Finally, we find that farmers to a large extent are able to coordinate their decisions in order to achieve a lower cost of adaptation, and that communication among farmers strongly facilitates coordination.<p>
    Keywords: Risk aversion; ambiguity aversion; technology adoption; climate change; field experiment
    JEL: C93 D81 H41 Q16 Q54
    Date: 2009–09–21
  2. By: Frankel, Jeffrey (Harvard University)
    Date: 2009–01
  3. By: Gilbert Metcalf
    Abstract: In previous papers I have described a revenue and distributionally neutral approach to reducing U.S. greenhouse gas emissions that uses a carbon tax. The revenue from the carbon tax is used to finance an environmental earned income tax credit designed to be distributionally neutral. The carbon tax reform proposal is also revenue neutral and avoids conflating carbon policy with debates over the appropriate size of the federal budget. This paper describes a variant to address concerns of environmentalists that a carbon tax does not provide certainty of emission reductions over the control period. The Responsive Emissions Autonomous Carbon Tax (REACT) combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period.
    Date: 2009
  4. By: Gilbert Metcalf
    Abstract: The U.S. tax code provides a number of subsidies for low-carbon technologies. I discuss the difficulties of achieving key policy goals with subsidies as opposed to using taxes to raise the price of pollution-related activities. In particular, subsidies lower the cost of energy (on average) rather than raising it. Thus consumer demand responses work at cross purposed to the goal of reducing emissions (especially as average cost pricing is used for electricity). Second, it is difficult to achieve technology neutrality with subsidies-here defined as an equal subsidy cost per ton of CO2 avoided. Third, many subsidies are inframarginal. Finally, subsidies often suffer from unintended interactions with other policies. I conclude with some observations on the use of price-based instruments. In particular I discuss how a carbon tax could be designed to achieve environmental goals of emission caps over a control period.
    Date: 2009

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