nep-res New Economics Papers
on Resource Economics
Issue of 2012‒03‒28
eight papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Tipping points and ambiguity in the economics of climate change By Lemoine, Derek M.; Traeger, Christian P.
  2. Emissions Trading and Social Justice By Farber, Daniel A
  3. Public preferences for climate change policies: Exploratory evidence from Spain By Michael Hanemann; Xavier Labandeira; María L. Loureiro
  4. Natural Disasters and Economic Policy for the Pacific Rim By Ilan Noy
  5. Do Species Interactions and Stochasticity Matter to Optimal Management of Multispecies Fisheries? By Poudel, Diwakar; Sandal, Leif K.; Steinshamn, Stein I.; Kvamsdal, Sturla F.
  6. Climate and Industrial Policy in an Asymmetric World By Gries, Thomas
  7. Trading Off Generations: Infinitely Lived Agent Versus OLG By Schneider, Maik T.; Traeger, Christian P.; Winkler, Ralph
  8. Reconciling Trade and Climate Policies By de Melo, Jaime; Mathys, Nicole Andréa

  1. By: Lemoine, Derek M.; Traeger, Christian P.
    Abstract: We model optimal policy when the probability of a tipping point, the welfare change due to a tipping point, and knowledge about a tipping point's trigger all depend on the policy path. Analytic results demonstrate how optimal policy depends on the ability to affect both the probability of a tipping point and also welfare in a post-threshold world. Simulations with a numerical climate-economy model show that possible tipping points in the climate system increase the optimal near-term carbon tax by up to 45% in base case speciffcations. The resulting policy paths lower peak warming by up to 0.5 C compared to a model without possible tipping points. Different types of tipping points have qualitatively different effects on policy, demonstrating the importance of explicitly modeling tipping points' effects on system dynamics. Aversion to ambiguity in the threshold's distribution can amplify or dampen the effect of tipping points on optimal policy, but in our numerical model, ambiguity aversionincreases the optimal carbon tax.
    Keywords: tipping point, threshold, regime shift, ambiguity, climate, uncertainty, integrated assessment, dynamic programming, social cost of carbon, carbon tax, Agricultural and Resource Economics, Environmental Studies, Environmental Science
    Date: 2011–12–28
  2. By: Farber, Daniel A
    Abstract: Cap and trade is controversial in part because of claims that it is unjust, an issue that was highlighted by recent litigation against California’s proposed carbon market. This essay considers an array of fairness issues relating to cap and trade. In terms of fairness to industry, the conclusion is that distributing free allowances overcompensates firms for the cost of compliance, assuming any compensation is warranted. Industry should not receive, in effect, ownership of the atmosphere at the expense of the public. Environmental justice advocates argue that cap-and-trade systems promote hotspots and encourage dirtier, older plants to continue operating to the detriment of some communities. Designers of cap-and-trade systems should be alert to possible hotspots, particularly in disadvantaged communities. Little reason exists, however, to believe that any such hotspots are systematically linked with disadvantage. Finally, any regulation of emissions raises costs, with a disproportionate impact on low-income consumers. This effect can be greatly ameliorated through adroit use of revenue from auctions. The bottom line is that fairness issues are not a deal-breaker for cap and trade, but do deserve thoughtful consideration in designing a system.
    Keywords: Administrative Law, Economics, Energy and Utilities Law, Environmental Law, Social Welfare, Administrative Law, Energy Law, Environmental Law, Law and Economics, Social Welfare Law
    Date: 2011–09–20
  3. By: Michael Hanemann; Xavier Labandeira; María L. Loureiro
    Abstract: There is a body of evidence showing public attitudes towards climate change in various countries around the world. In this study, we employ a phone survey in order to assess attitudes towards climate change in Spain and preferences for a green electricity program that reduces CO2 emissions while making electricity more expensive. Results are similar to those obtained in other studies elsewhere, and complement them by showing a strong public support for implementing the green electricity program. In particular, we find that the mean willingness to pay per month and household is about 29.36€ over the current electric bill. Our results also show that younger individuals who live in the Mediterranean region of Spain are more likely to be willing to pay for this green electricity program.
    Keywords: abatement policies, citizen preferences, contingent valuation, green electricity
    Date: 2010–06
  4. By: Ilan Noy (Department of Economics, University of Hawaii at Manoa)
    Abstract: We survey the history of natural disasters in the Pacific Rim, and the region's vulnerabilities. We also discuss the extent of our knowledge about the short- and long-term economic impacts of these disasters, and prevention, mitigation and post-disaster policies that may be implemented.
    Keywords: Natural disasters, Climate change, Growth, Economic impact, Pacific Rim
    JEL: O11 O40 Q54
    Date: 2012–01–01
  5. By: Poudel, Diwakar (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Sandal, Leif K. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Steinshamn, Stein I. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Kvamsdal, Sturla F. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: The multispecies fisheries management looks at a bigger picture in addressing the long-term consequences of present decisions. This implies an ecosystem management that includes a number of species and their physical, biological and economic interactions. These interactions make the growth of resources stochastic and increase complexity in understanding stock dynamics and optimal catch for such a stochastic and multiple stocks´ system. To address the issue of identifying optimal catch of stochastically growing multi stocks, we have formulated and applied a time-continuous stochastic model. The model contributes to multispecies bioeconomic management of marine ecosystems. An application of model in a predator-prey relationship in Barent Sea revealed that the optimal catch for stochastically growing stocks in a multispecies interaction model is different from the deterministic model.
    Keywords: Bioeconomic model; multispecies; species interaction; time-continuous stochasticity
    JEL: Q20 Q22
    Date: 2012–01–30
  6. By: Gries, Thomas
    Abstract: Climate change is a phenomenon leading to randomly distributed disasters around the globe. Due to massive economic and technical asymmetry between the advanced North and the developing South efficient climate and industrial policy is particular difficult. Globally efficient policy would need to equip the South with pollution reducing technologies. However, there is a tradeoff between capital accumulation for consumption growth and low-carbon development. The pollution stock affecting today.s climate was historically accumulated by the North, therefore, the .ability-to-pay principal. and the .polluter pays principle. suggest to allocate the main burden of climate change policy to the advanced economies.
    Keywords: climate change policy, North-South asymmetries, stock pollution, distribution of burdens
    Date: 2011
  7. By: Schneider, Maik T.; Traeger, Christian P.; Winkler, Ralph
    Abstract: The prevailing literature discusses intergenerational trade-offs in climatechange predominantly in terms of the Ramsey equation relying on the infinitelylived agent model. We discuss these trade-offs in a continuous time OLG framework and relate our results to the infinitely lived agent setting. We identify three shortcomings of the latter: First, underlying normative assumptions about social preferences cannot be deduced unambiguously. Second, the distribution among generations living at the same time cannot be captured. Third, the optimal solution may not be implementable in overlapping generations market economies.
    Keywords: climate change, intergenerational equity, overlapping generations, time preference, discounting, infinitely lived agents, Agricultural and Resource Economics, Natural Resources and Conservation
    Date: 2012–01–26
  8. By: de Melo, Jaime; Mathys, Nicole Andréa
    Abstract: The outcome of the 15th conference of the Parties to the UNFCC showed a shift from a top-down approach with a collective target favoring environmental objectives to a bottom-up accord favoring political feasibility. There is no meaningful binding agreement in sight, also because the global climate regime and the global trade policy regime, represented by the WTO, appear to be on a collision course. Following a review of the challenges ahead, the paper argues that trade will have a second-order contribution to world-wide CO2 emissions. Evidence shows increasing carbon transfers through trade, but the magnitude of carbon leakage effects, likely to be induced by differences in climate mitigation policies, may be less than feared in some circles. Trade policy, however, will play a role in implementing climate mitigation policies in two areas: maintaining an open trading system and hence boosting growth and facilitating technological diffusion, and trade policy as a strategic instrument in negotiations. The paper concludes that an agreement with a few guiding principles and leeway where much initial mitigation would first take place unilaterally or in small groups, as under the early days of the GATT, is the most promising way ahead while preserving an open trading system and environmental integrity.
    Keywords: carbon leakage; climate change; trade policy
    JEL: F18 Q54 Q56
    Date: 2012–01

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