nep-res New Economics Papers
on Resource Economics
Issue of 2011‒12‒19
seven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Integrated Economic and Climate Modeling By William D. Nordhaus
  2. Using a harmonized carbon price framework to finance the Green Climate Fund By Silverstein, David N.
  3. Economic valuation of coastal zone quality improvements By Halkos, George
  4. Natural resource wealth: the challenge of managing a windfall By van der Ploeg, Frederick; Venables, Anthony J.
  5. Effects on growth of environmental policy in a small open economy By Adu, George
  6. Towards a General Theory of Environmental Inequality: Social Characteristics of Townships and the Distribution of Pollution in Chinaâs Jiangsu Province By Schoolman, Ethan D.; Ma, Chunbo
  7. Tradable pollution permits in dynamic general equilibrium: can optimality and acceptability be reconciled? By Thierry Bréchet; Pierre-André Jouvet; Gilles Rotillon

  1. By: William D. Nordhaus (Cowles Foundation, Yale University)
    Abstract: This survey examines the history and current practice in integrated assessment models (IAMs) of the economics of climate change. It begins with a review of the emerging problem of climate change. The next section provides a brief sketch of the rise of IAMs in the 1970s and beyond. The subsequent section is an extended exposition of one IAM, the DICE/RICE family of models. The purpose of this description is to provide readers an example of how such a model is developed and what the major components are. The final section discusses major important open questions that continue to occupy IAM modelers. These involve issues such as the discount rate, uncertainty, the social cost of carbon, the potential for catastrophic climate change, algorithms, and fat-tailed distributions. These issues are ones that pose both deep intellectual challenges as well as important policy implications for climate change and climate-change policy.
    Keywords: Climate change, Integrated assessment models, Environmental economics, Social cost of carbon, Large-scale mathematical models
    JEL: Q5 Q54 C6 H4
    Date: 2011–12
  2. By: Silverstein, David N.
    Abstract: Funding a response to climate change after Kyoto will require another look at both burden sharing and funding mechanisms. After reviewing the risks of cap-and-trade with carbon offsets and the advantages of a harmonized carbon tax, a method is proposed to utilize a harmonized carbon price to finance the Green Climate Fund. A common carbon price is set across all nations with either a carbon tax or an emissions trading floor price with carbon offsets excluded. The harmonized carbon price is incrementally increased until 2050 to reach the cost of atmospheric removal and achieve equilibrium. Carbon revenues collected internally within nations are used for internal investments in climate change. Financing for the Green Climate Fund is generated from transferring a percentage of the collected revenues, based on a sliding window of historical responsibility for fossil fuel emissions and national wealth. Collected revenue is disbursed for climate aid based on a set of national climate need factors for adaptation and mitigation, including preserving strategic carbon absorbers, low-carbon infrastructures, technology transfer and population management. In the interest of distributive justice, nations themselves determine the need factors of each other. Unlike cap-and-trade, this method does not explicitly set emissions caps, but total global emissions can be regulated nevertheless. Formulas are presented for collection and disbursement, which require parameters for a globally harmonized carbon price, a climate fund contribution rate, historical responsibility from fossil fuel emissions, a national wealth threshold for fund contributions and need factors for each nation. Published economic and emissions data are used with the formulas to demonstrate an example of how the financing can work. This presents an equitable way to address climate needs across all nations on both a global and regional level.
    Keywords: climate change; global warming; green climate fund; carbon tax; cap-and-trade; climate finance; Kyoto protocol
    JEL: F18 F35 Q56 F51 E01 F53 Q54
    Date: 2011–12–08
  3. By: Halkos, George
    Abstract: Individuals’ decision to use a particular coastal beach is influenced by their preferences and perceptions as well as beach’s characteristics. This study examines visitors’ attributes and desired site specific characteristics in order to determine the factors affecting willingness to pay for an improvement quality (environment, water as well as recreation activities) program. A contingent valuation survey is carried out in order to evaluate the economic benefits of improving coastal quality of beaches in a coastal line of an area in Central Greece (Volos) where persistent failures to meet the standards of the Blue Flag program are observed. Our empirical findings suggest that the major variables affecting respondents’ willingness to pay were related to income, age, gender, coastal recreational activities and environmental quality of the site as well as to previous environmental behavior and mainly if they had paid for environmental protection in the past.
    Keywords: Coastal zone; contingent valuation; economic value of recreation; blue flags
    JEL: Q50 N54 Q51
    Date: 2011–12
  4. By: van der Ploeg, Frederick; Venables, Anthony J.
    Abstract: Many countries have failed to use natural resource wealth to promote growth and development. They have been damaged by volatility of revenues, have failed to save a sufficiently high proportion of their resource revenues and failed to make high return investments to support diversification of their economies. This paper explores the reasons for these failures and discusses policies to improve performance.
    Keywords: absorptive capacity; Dutch disease; fiscal rules; managing windfalls; public investment; resource curse; volatility
    JEL: E60 F34 F35 F43 H21 H63 O11 Q33
    Date: 2011–12
  5. By: Adu, George
    Abstract: This paper examines the effect of environmental policy on economic growth in a small open economy in a neoclassical framework with pollution as an input. We show that environmental policy imposes a drag on long run growth in both the open and closed economy cases. The effect of environmental policy on growth is stronger in the open economy case relative to the closed economy model if the country has strong aversion to pollution and thus serves as a net exporter of capital in the international capital market. On the other hand, if the agents in the economy have low aversion to pollution and thus import capital, the effect of environmental care on growth is stronger in the closed economy relative to the open economy. Thus, from our set-up, environmental policy is harmful to growth but environmental sustainability need not be incompatible with continued economic growth.
    Keywords: Economic growth, Pollution tax, Capital-output ratio, Open economy, Capital flight, Environmental Economics and Policy, O40, O41, Q56,
    Date: 2011–11
  6. By: Schoolman, Ethan D.; Ma, Chunbo
    Keywords: Environmental Inequality, Hukou System, Pollution, China, Community/Rural/Urban Development, Health Economics and Policy, Resource /Energy Economics and Policy, D63, J15, J61, Q53, R12, R23,
    Date: 2011–11–07
  7. By: Thierry Bréchet (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics and Management); Pierre-André Jouvet (EconomiX, Univ. Paris Ouest, Nanterre - La Défense, Climate Economics Chair, Paris); Gilles Rotillon (EconomiX, Univ. Paris Ouest, Nanterre - La Défense.)
    Abstract: In this paper we study the optimal growth path and its decentralization in a twosector overlapping-generations model with pollution. One sector (power generation) is polluting and the other (final good) is not. Pollution is regulated by tradable emission permits. The issue is whether the optimal growth path can be replicated in equilibrium with pollution permits, given that some permits must be issued free of charge for the sake of political acceptability. We provide a policy rule that allows optimality and acceptability to be reconciled.
    Keywords: general equilibrium, optimal growth, pollution, tradable emission permits, acceptability
    JEL: D61 D9 Q28
    Date: 2011–02

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