nep-res New Economics Papers
on Resource Economics
Issue of 2011‒05‒07
six papers chosen by
Maximo Rossi
Universidad de la Republica

  1. The supply side of CO2 with country heterogeneity By Hoel, Michael
  2. A Nonlinear Offset Program to Reduce Nitrous Oxide Emissions Induced by Excessive Nitrogen Application By Francisco Rosas; Bruce A. Babcock; Dermot J. Hayes
  3. The Impact of Ethanol Production on US and Regional Gasoline Markets: An Update to May 2009 By Xiaodong Du; Dermot J. Hayes
  4. Climate Change Policy and the Adoption of Methane Digesters on Livestock Operations By Key, Nigel; Sneeringer, Stacy E.
  5. Land Use and Greenhouse Gas Implications of Biofuels: Role of Technology and Policy By Chen, Xiaoguang; Huang, Haixiao; Khanna, Madhu
  6. China's Rising Demand for "Green Cities": Evidence from Cross-City Real Estate Price Hedonics By Siqi Zheng; Jing Cao; Matthew E. Kahn

  1. By: Hoel, Michael (Dept. of Economics, University of Oslo)
    Abstract: Several recent articles have analyzed climate policy giving explicit attention to the nonrenewable character of carbon resources. In most of this literature the economy is treated as a single unit, which in the context of climate policy seems reasonable to interpret as the whole world. However, carbon taxes and other climate policies differ substantially across countries. With such heterogeneity, the effects on emission paths of changes in taxes, costs and subsidies may be very different from what one …finds for a hypothetical world of identical countries.
    Keywords: climate change; exhaustible resources; renewable energy; green paradox
    JEL: Q31 Q41 Q42 Q54 Q58
    Date: 2011–04–28
  2. By: Francisco Rosas; Bruce A. Babcock (Center for Agricultural and Rural Development (CARD)); Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: On average, U.S. farmers choose to apply nitrogen fertilizer at a rate that exceeds the ex post agronomically optimal rate. The technology underlying the yield response to nitrogen rewards producers who over apply in years when rainfall is excessive. The overapplication of nutrients has negative environmental consequences because the nitrogen that is not taken up by the plant will typically volatilize causing N2O emissions, or leach causing water pollution. We present a nonlinear offset program that induces farmers to reduce their nitrogen applications to the level that will be consumed by the plant in a typical year and, as a result, reduce N2O emissions from agriculture. The offset program is nonlinear because of the nonlinear relationship between N2O and nitrogen application rates. We assume that the farmer solves an expected utility maximization problem, choosing the optimal nitrogen application rate. The key contribution is a set of simulations that shows that modest offset payments will induce participation in the program and will have a significant impact on both expected and actual N2O emissions without having a significant impact on actual or expected yields. We also find that more risk-averse farmers will reduce emissions by a greater amount than less risk-averse farmers. Finally, we show the distribution of emission reductions induced by this nonlinear offset scheme.
    Keywords: carbon offsets, nitrogen fertilizer, nitrous oxide, pollution, uncertainty. JEL Codes: Q12, Q18, Q51, Q53, Q54, D8
    Date: 2011–04
  3. By: Xiaodong Du; Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: This report updates the findings in Du and Hayes 2009 by extending the data to December 2010 and concludes that over the sample period from January 2000 to December 2010, the growth in ethanol production reduced wholesale gasoline prices by $0.25 per gallon on average. The Midwest region experienced the biggest impact, with a $0.39/gallon reduction, while the East Coast had the smallest impact at $0.16/gallon. Based on the data of 2010 only, the marginal impacts on gasoline prices are found to be substantially higher given the much higher ethanol production and crude oil prices. The average effect increases to $0.89/gallon and the regional impact ranges from $0.58/gallon in the East Coast to $1.37/gallon in the Midwest. In addition, we report on a related analysis that asks what would happen to US gasoline prices if ethanol production came to an immediate halt. Under a very wide range of parameters, the estimated gasoline price increase would be of historic proportions, ranging from 41% to 92%.
    Keywords: crack ratio, crack spread, import elasticity.
    Date: 2011–04
  4. By: Key, Nigel; Sneeringer, Stacy E.
    Abstract: Methane digestersâbiogas recovery systems that use methane from manure to generate electricityâhave not been widely adopted in the United States because costs have exceeded benefi ts to operators. Burning methane in a digester reduces greenhouse gas emissions from manure management. A policy or program that pays producers for these emission reductionsâthrough a carbon offset market or directly with paymentsâcould increase the number of livestock producers who would profi t from adopting a methane digester. We developed an economic model that illustrates how dairy and hog operation size, location, and manure management methods, along with electricity and carbon prices, could influence methane digester profi ts. The model shows that a relatively moderate increase in the price of carbon could induce signifi cantly more dairy and hog operations, particularly large ones, to adopt a methane digester, thereby substantially lowering emissions of greenhouse gases.
    Keywords: methane, methane digesters, manure, livestock, climate change, greenhouse gases, carbon offset, Environmental Economics and Policy, Financial Economics, Livestock Production/Industries, Resource /Energy Economics and Policy,
    Date: 2011–02
  5. By: Chen, Xiaoguang; Huang, Haixiao; Khanna, Madhu
    Abstract: This paper examines the extensive and intensive margin changes in land use in the U.S. likely to be induced by biofuel policies and the implications of these policies for GHG emissions over the 2007-2022 period. The policies considered here include the Renewable Fuel Standard (RFS) by itself as well as combined with current biofuel tax credits or a carbon price policy. We use a dynamic, spatial, multi-market equilibrium model, Biofuel and Environmental Policy Analysis Model (BEPAM), to endogenously determine the effects of these policies on cropland allocation, food and fuel prices, and the mix of first and second-generation biofuels. We find that the increase in crop prices under the RFS is likely to be less than 20% in most cases and this increase is much smaller when the RFS is accompanied by volumetric subsidies or a carbon price policy since these policies induce a switch away from corn ethanol to cellulosic biofuels. The impact of the RFS on GHG emissions reduction in the U.S. is fairly modest in size but increases when the RFS is accompanied by volumetric subsidies or a carbon price policy. However, domestic savings in GHG emissions achieved by the RFS can be severely eroded by the indirect land use changes and the rebound effect on global gasoline consumption. The net reductions in global GHG emissions are largest when the RFS is accompanied by a carbon price policy.
    Keywords: Biofuel Mandates, Land Use, GHG Emissions, Technology, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy,
    Date: 2011–05–01
  6. By: Siqi Zheng; Jing Cao; Matthew E. Kahn
    Abstract: With the decline of the traditional hukou system, migrants in China have a broad set of cities to choose from. Within an open system of cities, compensating differentials theory predicts that local real estate prices will reflect the marginal valuation of non-market local public goods. More polluted cities will feature lower real estate prices. But, local pollution may be caused by booming local industries. To address such endogeneity concerns, we estimate hedonic regressions using an instrumental variable strategy based on “imports” of pollution from nearby sources. By documenting the importance of spatial emissions patterns, our study highlights how real estate prices in one city are affected by Pigouvian externalities originating in another location. On average, a 10% decrease in imported neighbor pollution is associated with a 1.8% increase in local home prices.
    JEL: Q53 R31
    Date: 2011–04

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