nep-res New Economics Papers
on Resource Economics
Issue of 2010‒01‒10
eight papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Environmental climate instruments in Romania: A comparative approach using dynamic CGE modelling By Rodica Loisel
  2. The potential for mitigation of CO2 emissions in Vietnam's power sector By Nhan Thanh Nguyen; Minh Ha-Duong
  3. Valuation of Marine Ecosystem Threshold Effects: Application of Choice Experiments to Value Algal Bloom in the Black Sea Coast of Bulgaria By Taylor, Timothy; Longo, A.
  4. On the measurement of environmental taxes By Annegrete Bruvoll
  5. On blending mandates, border tax adjustment and import standards for biofuels By Eggert, Håkan; Greaker, Mads
  6. Ethnic Cleansing or Resource Struggle in Darfur? An empirical analysis By Olsson, Ola; Siba, Eyerusalem
  7. Uncertain Outcomes and Climate Change Policy By Robert S. Pindyck
  8. The Cost of Climate Policy in the United States By Sergey Paltsev; John M. Reilly; Henry D. Jacoby; Jennifer F. Morris

  1. By: Rodica Loisel (CIRED - Centre international de recherche sur l'environnement et le développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Nationale des Ponts et Chaussées - Ecole Nationale du Génie Rural des Eaux et Forêts)
    Abstract: This study simulates a CO2 permit market in Romania using a dynamic general equilibrium model. The carbon constraint is set at 20.7% below the reference emissions level for sectors eligible according to the EU-ETS (European Union Emission Trading Scheme). Free permit distribution enhances growth despite a severe emissions cap, because environmental regulation stimulates structural changes (Porter, 1991). That is, grandfathering allows sectors additional resources to invest in developing technologies, but it also raises the CO2 abatement costs because of energy rebound effects from enhanced growth. Results under endogenous growth (Romer, 1990) are very similar to those obtained under an exogenous growth scenario (Ramsey, 1928), as the substitution effects are responsible for the majority of variations; in addition, Romanian research activities are too modest to significantly impact this system. The abatement cost per unit of GDP is higher under endogenous growth, as spillover effects reduce incentives to invest. Technological diffusion continues to have a positive impact on economic growth, which counterbalances the free-riding attitude adopted by some energy-intensive sectors, such as glass and cement.
    Keywords: tradable permits, Romania, endogenous/exogenous growth, spillover effects.
    Date: 2009–06
  2. By: Nhan Thanh Nguyen (CIRED - Centre international de recherche sur l'environnement et le développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Nationale des Ponts et Chaussées - Ecole Nationale du Génie Rural des Eaux et Forêts); Minh Ha-Duong (CIRED - Centre international de recherche sur l'environnement et le développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Nationale des Ponts et Chaussées - Ecole Nationale du Génie Rural des Eaux et Forêts)
    Abstract: This manuscript examines CO2 emissions from Vietnam's power sector using an expanded Integrated Resource Planning model. The potential effects of the following alternative policy options are examined: energy efficiency, favorably imported generation fuels, nuclear energy, renewable energy, and an internalized positive carbon value. The baseline in terms of cumulative CO2 emissions over 2010-2030 is 3.6 Gt. Lighting energy efficiency improvements offers 14% of no-regret abatement of CO2 emissions. Developing nuclear and renewable energy could help meet the challenges of the increases in electricity demand, the dependence on imported fuels for electricity generation in the context of carbon constraints applied in a developing country. When CO2 costs increase from 1 $/t to 30 $/t, building 10 GW of nuclear generation capacity implies an increase in abatement levels from 24% to 46%. Using renewable energy abates CO2 levels by between 14% and 46%. At 2 $/tCO2, the model predicts an abatement of 0.77 Gt from using wind power at prime locations as well as energy from small hydro, wood residue and wood plantations, suggesting Clean Development Mechanism opportunities. At 10 $/tCO2, the model predicts an abatement of 1.4 Gt when efficient gas plants are substituted for coal generation and when the potential for wind energy is economically developed further than in the former model.
    Keywords: integrated resource planning, carbon value, abatement of CO2 emissions, Vietnam, electricity generation
    Date: 2009–11–25
  3. By: Taylor, Timothy; Longo, A.
    Abstract: Algal bloom arises in part from anthropogenic emissions of nutrients into the coastal zone. Increased interest in water quality in coastal and marine areas stemming from the Water Framework Directive and the Marine Strategy Framework Directive leads to important questions in terms of policies to address nutrient loadings. This paper presents the results from a choice experiment for the valuation of algal blooms in Varna Bay, Bulgaria. Varna Bay is an important tourist destination and a large port city on the Black Sea coast of Bulgaria. Algal bloom events have been experienced frequently in this area. A choice experiment questionnaire was developed to be applied in Varna Bay. The key attributes used were visibility, duration of bloom and the amount of congestion on the beach. The amount of bloom is found to be important - respondents are willing to pay for a program that entails 1 week of algal bloom about 33 Leva (s.e. 8.09) when there is high visibility; 21 Leva (s.e. 5.75) with medium visibility and 9 Leva (s.e. 3.48) with low visibility. Respondents are willing to pay more for programs that offer shorter duration of algal bloom. The marginal price for one metre of extra space between the respondent and the nearest person is equal to 0.38 Leva.
    Keywords: marine ecosystem; threshold effects;
    Date: 2009
  4. By: Annegrete Bruvoll (Statistics Norway)
    Abstract: The purpose of environmental taxes is to correct the market when it fails to take environmental damages into account, i.e. to internalize the Pigouvian element. In addition, fiscal taxes are levied on both polluting and clean goods, which may follow the Ramsey principle. In practical policy, environmental and fiscal taxes are conceptually intertwined. This mixture complicates the calculation of the extent and the evaluation of the effects of environmental taxes. Eurostat, OECD and IEA include all taxes related to energy, transport and pollution, and most resource taxes in their international measurement of environmentally related taxes. Consequently, numerous fiscal taxes are added together with the environmental taxes. This article discusses the distinctions between the Pigouvian and the fiscal taxes in light of tax theory. The revenues following the Eurostat et al. statistical basis deviate significantly from the revenues from the environmental taxes defined on the basis of theory. Steps should be taken to harmonize the international statistics of environmental taxes with economic tax theory.
    Keywords: Environmental taxes; Fiscal taxes; Pigou taxes; Ramsey taxes
    JEL: H23 Q58
    Date: 2009–12
  5. By: Eggert, Håkan (Department of Economics, School of Business, Economics and Law, Göteborg University); Greaker, Mads (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The transport sector is a major contributor to green house gas (GHG) emissions and its share is increasing. Biofuels may provide an option to replace fossil fuels and generate an increasing worldwide interest. Rich countries like the US and the European Union ha idies for domestic producers, while applying tariffs for some of the foreign producers. Mid income and poor countries do not have binding restrictions on carbon emissions in the Kyoto treaty, but may have great potential for producing biofuels both for domestic and foreign use. In this paper we study trade policies for biofuels. We find that only by combining an import standard with border tax adjustment the government can ensure cost efficient production of biofuels from a global point of view. We also consider a blending mandate. This fundamentally alters the way the market works. For instance, if domestic biofuels production is subsidized, the optimal BTA may be negative.<p>
    Keywords: Biofuels; Border tax adjustment; Carbon Leakage; Trade policy
    JEL: F10 H20 Q50
    Date: 2009–12–09
  6. By: Olsson, Ola (Department of Economics, School of Business, Economics and Law, Göteborg University); Siba, Eyerusalem (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The con‡ict in Darfur has been described both as an ethnic cleansing campaign, carried out by the Sudanese government and its allied militias, and as a local struggle over dwindling natural resources between African farmers and Arab herders. In this paper, we construct a theoretical framework for understanding the choice between ethnic cleansing and resource capture and use a previously unexploited data set on 530 villages in Southwestern Darfur to analyze the determinants of attacks in the region. Our results clearly indicate that Janjaweed attacks have been targeted at villages dominated by the major rebel tribes, resulting in a massive displacement of those populations. Resource variables, capturing access to water and land quality, also have some explanatory power but are not consistently significant. These patterns suggest that attacks in the area had ethnic cleansing as a primary objective.<p>
    Keywords: Ethnic cleansing; resource struggle; Darfur
    JEL: O41 P16
    Date: 2009–12–09
  7. By: Robert S. Pindyck
    Abstract: Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w_(_ ) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to _ . Using information on the distributions for temperature change and economic impact from studies assembled by the IPCC and from “integrated assessment models” (IAMs), I fit displaced gamma distributions for these variables. Unlike existing IAMs, I model economic impact as a relationship between temperature change and the growth rate of GDP as opposed to its level, so that warming has a permanent impact on future GDP. The fitted distributions for temperature change and economic impact generally yield values of w_(_ ) below 2%, even for small values of _ , unless one assumes extreme parameter values and/or substantial shifts in the temperature distribution. These results are consistent with moderate abatement policies.
    Date: 2009–08
  8. By: Sergey Paltsev; John M. Reilly; Henry D. Jacoby; Jennifer F. Morris
    Abstract: We consider the cost of meeting emissions reduction targets consistent with a G8 proposal of a 50 percent global reduction in emissions by 2050, and an Obama Administration proposal of an 80 percent reduction over this period. We apply the MIT Emissions Prediction and Policy Analysis (EPPA), modeling these two policy scenarios if met by applying a national cap-and-trade system, and compare results with an earlier EPPA analysis of reductions of this stringency. We also test results to alternative assumptions about program coverage, banking behavior, and cost of technology in the electric power sector. Two main messages emerge from the exercise. First, technology uncertainties have a huge effect on the generation mix but only a moderate effect on the emissions price and welfare cost of achieving the assumed targets. Measured in terms of changes in economic welfare, the economic cost of 80 percent reduction by 2050 is in the range of 2 to 3% by 2050, with CO2 prices between $48 and $67 in 2015 rising to between $190 and $266 by 2050. Second, implementation matters. When an idealized economy-wide cap-and-trade is replaced by coverage omitting some sectors, or if the credibility of long-term target is weak (limiting banking behavior) prices and welfare costs change substantially.
    Date: 2009–04

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