nep-res New Economics Papers
on Resource Economics
Issue of 2010‒02‒20
six papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Environmental Labeling By Andrea Podhorsky
  2. Flexible Global Carbon Pricing: A Backward-Compatible Upgrade for the Kyoto Protocol By Steven Stoft
  3. Sustainable Development Concerning with Mankind’s Climate Changes By Dobrescu, Emilian M.; Susanu, Monica; Oprea, Raducan
  4. Modeling the Impact of Warming in Climate Change Economics By Robert S. Pindyck
  5. Climate Shocks and Exports By Benjamin F. Jones; Benjamin A. Olken
  6. Environmental Inspection Proclivity and State Manufacturing Growth: The US Experience from the 1990s By Christopher S. Decker; John W. Maxwell

  1. By: Andrea Podhorsky (York University, Toronto)
    Abstract: This paper studies how information disclosed by voluntary environmental labels creates in- centives for firms to invest in environmentally-friendly production technologies. I develop a model with differentiated products and imperfectly-informed consumers. Consumers care about the environmental characteristics of goods (for example, how they were produced), but cannot directly observe these product characteristics. Firms differ in their abilities to develop "clean" technologies, but have no incentive to do so absent government regulation or a policy that pro- vides information to consumers. A scheme of voluntary labels, awarded to firms that achieve some chosen level of environmental friendliness, gives some firms enough incentive to develop clean technologies, while others choose to produce "dirty" goods. Each consumer is individu- ally ineffective in reducing aggregate environmental damage but consumers purchase products according to how they privately value environmental quality. I parameterize the relationship between the environmental quality consumers experience privately from their own consumption of a product and the intensity of its environmental damage. I use the model to explain how voluntary labels improve consumer welfare and characterize the welfare maximizing labeling standard. I also contrast the effects of a labeling program on consumer welfare with those of compulsory environmental regulation.
    Keywords: credence goods, disclosure, environmental policy, firm heterogeneity and product labeling.
    JEL: L15 Q58
    Date: 2009–12
  2. By: Steven Stoft
    Abstract: The Kyoto Protocol’s approach of assigning emission targets, or “caps,” promises certainty that it cannot deliver, because it exacerbates problems with international cooperation and commitment. Global carbon pricing addresses these problems and, with less risk and more reward, can generate and sustain stronger policies. This paper proposes a system, “flexible global carbon pricing,” designed to replace the Kyoto Protocol. It provides backward-compatibility with the Kyoto Protocol by allowing un-modified cap and trade as one form of national carbon pricing. Instead of many national “caps,” the proposal sets a global target price for carbon and specifies a pair of incentives. A Pricing Incentive rewards nations that set their carbon price higher than the global target and penalizes nations that underachieve. These rewards and penalties sum to zero by design. The strength of the Pricing Incentive is adjusted automatically so that the global average carbon price converges to the global target price. A Clean Development Incentive (CDI), free from the gaming problems that plague the U.N.’s Clean Development Mechanism, encourages full participation by low-emission countries. An example, based on a $20 price target, causes transfers from the United States of only seven cents per capita per day. Nevertheless, India’s CDI receipts cover its compliance costs. The example shows that low costs can be guaranteed.
    Keywords: Kyoto protocol,cap and trade,flexible global carbon pricing,international cooperation
    Date: 2009–07–15
  3. By: Dobrescu, Emilian M.; Susanu, Monica; Oprea, Raducan
    Abstract: Mankind has witnessed many outstanding weather happenings which determined radical climate changes and thus, the draught is expected further to grow. Many experts, academics and scientists all over the continents have strongly called for attention about the importance of saving the water, either for housing and industrial consumers. According to the February - 2007 UNO Report, Terra is the subject of an accelerated global heating process, firstly due to the carbon emissions. Several decades further the climate changes will continue even if, theoretically, these emissions could partly be stopped. As one of the official UNO’s institutions, the World Meteorology Organisation certified the global heating and alerts about another worrying phenomenon,namely the soil disaster.
    Keywords: environment; climate changes; global warming; greenhouse effect; sustainable development; EU policy on the environment; climate protection
    JEL: Q50 Q53 Q51 Q54 Q58
    Date: 2009–12–25
  4. By: Robert S. Pindyck
    Abstract: Any economic analysis of climate change policy requires some model that describes the impact of warming on future GDP and consumption. Most integrated assessment models (IAMs) relate temperature to the level of real GDP and consumption, but there are theoretical and empirical reasons to expect temperature to affect the growth rate rather than level of GDP. Does this distinction matter in terms of implications for policy? And how does the answer depend on the nature and extent of uncertainty over future temperature change and its impact? I address these questions by estimating the fraction of consumption society would be willing to sacrifice to limit future increases in temperature, using probability distributions for temperature and impact inferred from studies assembled by the IPCC, and comparing estimates based on a direct versus growth rate impact of temperature on GDP.
    JEL: D81 Q5 Q54
    Date: 2010–01
  5. By: Benjamin F. Jones; Benjamin A. Olken
    Abstract: This paper uses international trade data to examine the effects of climate shocks on economic activity. We examine panel models relating the annual growth rate of a country’s exports in a particular product category to the country’s weather in that year. We find that a poor country being 1 degree Celsius warmer in a given year reduces the growth rate of that country’s exports by between 2.0 and 5.7 percentage points, with no detectable effects in rich countries. We find negative effects of temperature on exports of both agricultural products and light manufacturing products, with little apparent effects on heavy industry or raw materials. The results confirm large negative effects of temperature on poor countries’ economies and suggest that temperature affects a much wider range of economic activity than conventionally thought.
    JEL: F18 Q54
    Date: 2010–01
  6. By: Christopher S. Decker (Department of Economics and Real Estate, College of Business Administration, University of Nebraska at Omaha); John W. Maxwell (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: In this paper we construct a ranking of states based on their proclivity to inspect facilities for environmental compliance. Our measure utilizes state-level inspections data supplied by the US Environmental Protection Agency. After developing our ranking, we use it to predict state-level growth in manufacturing establishments. In doing so, we find support for the notion that enforcement intensity adversely impacts such growth. Our results offer insight into why existing studies that examine the impact of environmental regulation on location and growth produce inconsistent results.
    Keywords: Monitoring and Enforcement, Environmental Regulations, Business Formation Growth
    JEL: K32 Q28 R58
    Date: 2010–01

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