nep-res New Economics Papers
on Resource Economics
Issue of 2012‒02‒01
nine papers chosen by
Maximo Rossi
Universidad de la Republica

  1. The Competitiveness Impacts of Climate Change Mitigation Policies By Aldy, Joseph E.; Pizer, William A.
  2. The Environment and Directed Technical Change: Comment By Jean-Charles Hourcade; Antonin Pottier; Etienne Espagne
  3. Growth and Demographic Change: Do Environmental Factors Matter? By Dimitrios Varvarigos; Intan Zanariah Zakaria
  4. Strictness of Environmental Policy and Investment in Abatement By Maria J. Gil-Molto; Bouwe Dijkstra
  5. Emission Taxes and the Adoption of Cleaner Technologies: The Case of Environmentally Conscious Consumers By Maria José Gil-Moltó; Dimitrios Varvarigos
  6. Unravelling the Worldwide Pollution Haven Effect By Jean-Marie Grether; Nicole A. Mathys; Jaime de Melo
  7. Are there incentives to integrate to land and water management across northern Australia? By William Nikolakis; Quentin Grafton
  8. The Promise and Problems of Pricing Carbon: Theory and Experience By Joseph E. Aldy; Robert N. Stavins
  9. Using the Market to Address Climate Change: Insights from Theory and Experience By Joseph E. Aldy; Robert N. Stavins

  1. By: Aldy, Joseph E. (Harvard University); Pizer, William A. (Duke University)
    Abstract: The pollution haven hypothesis suggests that unilateral domestic emission mitigation policies could cause adverse "competitiveness" impacts on domestic manufacturers as they lose market share to foreign competitors and relocate production activity--and emissions--to unregulated economies. We construct a precise definition of competitiveness impacts appropriate for climate change regulation that can be estimated exclusively with domestic production and net import data. We use this definition and a 20+ year panel of 400+ U.S. manufacturing industries to estimate the effects of energy prices, which is in turn used to simulate the impacts of carbon pricing policy. We find that a U.S.-only $15 per ton CO2 price will cause competitiveness effects on the order of a 1.0 to 1.3 percent decline in production among the most energy-intensive manufacturing industries. This amounts to roughly one-third of the total impact of a carbon pricing policy on these firms' economic output.
    JEL: F18 Q52 Q54
    Date: 2011–12
  2. By: Jean-Charles Hourcade (CIRED, Centre International de Recherche sur l'Environnement et le Développement); Antonin Pottier (CIRED, Centre International de Recherche sur l'Environnement et le Développement); Etienne Espagne (CIRED, Centre International de Recherche sur l'Environnement et le Développement)
    Abstract: This paper discusses the growth model with environmental constraints recently presented in (Acemoglu et al., 2011) which focuses on the redirection of technical change by climate policies with research subsidies and a carbon tax. First, Acemoglu et al.'s model and chosen parameters yield numerical results that do not support the conclusion that ambitious climate policies can be conducted “without sacrificing (much or any) long-run growth”. Second, they select unrealistic key parameters for carbon sinks and elasticity of substitution. We find that more realistic parameters lead to very different results. Third, the model leads to an unrealistic conclusion when used to analyse endogenous growth, suggesting specification problems.
    Keywords: Technological Change, Endogenous Growth, Climate, Energy Substitutability
    JEL: O30 O33 Q43 Q54 Q56
    Date: 2011–12
  3. By: Dimitrios Varvarigos; Intan Zanariah Zakaria
    Abstract: We incorporate health-damaging pollution into a three period overlapping generations model in which life expectancy, fertility and economic growth are all endogenous. We show that environmental factors can cause significant changes to the economy’s demographics. In particular, the entrepreneurial choice of less polluting production processes, induced by environmental policy, can account for such demographic changes as higher longevity and lower fertility rates.
    Keywords: Economic growth; Pollution; Demography
    JEL: J10 O41 Q56
    Date: 2011–09
  4. By: Maria J. Gil-Molto; Bouwe Dijkstra
    Abstract: In this paper we model an oligopoly where .rms invest in abatement technologies and emissions are taxed by the government. We show that a stricter environmental policy does not necessarily lead to an increase in .rms.R&D investment into cleaner production methods. In fact, the emission-to-output ratio may be a U-shaped function of the environmental damage parameter. This result holds both when the government can commit and in the social optimum. When the government cannot commit, this relationship is ambiguous except in markets with few .rms. Our results further suggest that if the emission-to-output ratio is decreasing throughout, output is a U-shaped function of the environmental damage.
    Keywords: Environmental innovation; environmental taxation; commitment; oligopoly
    JEL: L12 Q55 Q58
    Date: 2011–07
  5. By: Maria José Gil-Moltó; Dimitrios Varvarigos
    Abstract: We model a market with environmentally conscious consumers and a duopoly in which firms consider the adoption of a clean technology. We show that as pollution increases, consumers shift more resources to the environmental activities, thereby affecting negatively the demand faced by the duopoly. This effect generates incentives for firms to adopt the clean technology even in the absence of emissions taxes. When such taxes are considered, our results indicate that the benefit of adopting the clean technology is initially increasing and then decreasing in the emission tax. The range of values for which the emission tax increases this benefit becomes narrower when the consumers’ environmental awareness is stronger.
    Keywords: Environmentally Conscious Consumers; Technology Choice; Environmental Taxation
    JEL: L13 Q55 Q58
    Date: 2011–11
  6. By: Jean-Marie Grether (University of Neuchâtel); Nicole A. Mathys (Swiss Federal Office of Energy, Bern and University of Neuchâtel); Jaime de Melo (University of Geneva and CEPR)
    Abstract: This paper tackles the “pollution haven” argument by estimating the pollution content of imports (PCI). The PCI is then decomposed into three components: (i) a “deep” component (i.e. traditional variables unrelated to the environmental debate); (ii) a factor endowment component and (iii) a “pollution haven” component reflecting the impact of differences in environmental policies. The estimation is carried out for 1987 for an extensive data set covering 10 pollutants, 48 countries and 79 ISIC 4-digit sectors. Decompositions based on cross-section econometric estimates suggest a significant pollution haven effect which increases the PCI of the North because of stricter environmental regulations in the North. At the same time, the factor endowment effect lowers the PCI of the North, as the North is relatively well-endowed in capital and pollution-intensive activities are capital intensive. On a global scale, because the bulk of trade is intra-regional with a high North-North share, these effects are small relative to the “deep” determinants of the worldwide PCI. In sum, differences in factor endowments and environmental policies have only marginally affected the PCI of world trade at the end of the eighties.
    Keywords: Trade and The Environment, Pollution Haven Effect, Factor Endowment Effect
    JEL: F18 Q56
    Date: 2011–10
  7. By: William Nikolakis (Crawford School of Economics and Government, The Australian National University); Quentin Grafton (Crawford School of Economics and Government, The Australian National University)
    Abstract: The aim of this work is to understand what incentives exist to encourage integration in land and water management across northern Australia. Integration is seen as important in improving planning and management of resources in the context of climate change and development pressure. The north Australian region is made up of three jurisdictions, the two states of Queensland and Western Australia, and the Northern Territory. It is a sparsely populated region, with over a quarter of the Australian estate and only 2% of the nation’s population. However, the region makes a significant contribution to national exports and is recognized for its ecological values, and its prominent Indigenous population who have customary rights to land and water. The region produces over half the nation’s annual runoff during the wet season.Increasingly there is a focus on northern Australia as the next frontier for irrigation development. A report by the North Australian Land and Water Taskforce in 2009 suggested irrigation could expand by up to 200% in the region, though in a form that is distinct from southern Australia given soil, hydrological and biophysical characteristics of the region. Population is increasing and climate change projections point to increased temperatures and evapotranspiration, as well as more intense rainfall and cyclonic events, and in coastal areas storm surges and erosion, while in inland areas there is predicted greater incidence of drought and bushfire (CSIRO, BOM and BRS 2010a, b). The linear and non linear forces that may shape northern Australia’s landscape highlight the need for integrated land and water management as a tool for adaptation. Integration can improve the coordination of government adaptation programs, as well as efforts between government and non government actors (vertical integration), and encourage coordination between sectors (horizontal integration).
    Date: 2011–06
  8. By: Joseph E. Aldy (Assistant Professor of Public Policy, Harvard Kennedy School; Nonresident Fellow, Resources for the Future; and Faculty Research Fellow, National Bureau of Economic Research); Robert N. Stavins (Albert Pratt Professor of Business and Government, Harvard Kennedy School; University Fellow, Resources for the Future; and Research Associate, National Bureau of Economic Research)
    Abstract: Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful reductions in the emissions of greenhouse gases. Due to the ubiquity and diversity of emissions of greenhouse gases in most economies, as well as the variation in abatement costs among individual sources, conventional environmental policy approaches, such as uniform technology and performance standards, are unlikely to be sufficient to the task. Therefore, attention has increasingly turned to market-based instruments in the form of carbon-pricing mechanisms. We examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap-and-trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions.
    Keywords: : Global Climate Change, Market-Based Instruments, Carbon Pricing, Carbon Taxes, Cap-and-Trade, Emission Reduction Credits, Energy Subsidies, Clean Energy Standards
    JEL: Q54 Q58 Q40 Q48
    Date: 2011–11
  9. By: Joseph E. Aldy (Assistant Professor of Public Policy, Harvard Kennedy School, Nonresident Fellow, Resources for the Future, and Faculty Research Fellow, National Bureau of Economic Research); Robert N. Stavins (Albert Pratt Professor of Business and Government, Harvard Kennedy School, University Fellow, Resources for the Future, and Research Associate, National Bureau of Economic Research)
    Abstract: Emissions of greenhouse gases linked with global climate change are affected by diverse aspects of economic activity, including individual consumption, business investment, and government spending. An effective climate policy will have to modify the decision calculus for these activities in the direction of more efficient generation and use of energy, lower carbon-intensity of energy, and – more broadly – a more carbon-lean economy. The only approach to doing this on a meaningful scale that would be technically feasible and cost-effective is carbon pricing, that is, market-based climate policies that place a shadow-price on carbon dioxide emissions. We examine alternative designs of three such instruments – carbon taxes, cap-and-trade, and clean energy standards. We note that the U.S. political response to possible market-based approaches to climate policy has been and will continue to be largely a function of issues and structural factors that transcend the scope of environmental and climate policy.
    Keywords: Global Climate Change, Market-Based Instruments, Carbon Pricing, Carbon Taxes, Cap-And-Trade, Clean Energy Standards
    JEL: Q54 Q58 Q40 Q48
    Date: 2011–10

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