New Economics Papers
on Resource Economics
Issue of 2012‒08‒23
six papers chosen by

  1. Aligning climate change mitigation and agricultural policies in Eastern Europe and Central Asia By Larson, Donald F.; Dinar, Ariel; Blankespoor, Brian
  2. The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment By Richard Schmalensee; Robert Stavins
  3. Green Growth and Equity in the Context of Climate Change : Some Considerations By Jeffrey D. Sachs; Shiv Someshwar
  4. Economic Cost-Benefit Analysis (CBA) of Project Environmental Impacts and Mitigation Measure: Implementation Guideline By John A. Dixon
  5. Consumer valuation of environmentally friendly production practices in wines considering asymmetric information and sensory effects By Schmit, Todd M.; Taber, John T.; Rickard, Bradley J.
  6. Risk and Return in Environmental Economics By Robert S. Pindyck

  1. By: Larson, Donald F.; Dinar, Ariel; Blankespoor, Brian
    Abstract: Greenhouse gas emissions are largely determined by how energy is created and used, and policies designed to encourage mitigation efforts reflect this reality. However, an unintended consequence of an energy-focused strategy is that the set of policy instruments needed to tap mitigation opportunities in agriculture is incomplete. In particular, market-linked incentives to achieve mitigation targets are disconnected from efforts to better manage carbon sequestered in agricultural land. This is especially important for many countries in Eastern Europe and Central Asia where once-productive land has been degraded through poor agricultural practices. Often good agricultural policies and prudent natural resource management can compensate for missing links to mitigation incentives, but only partially. At the same time, two international project-based programs, Joint Implementation and the Clean Development Mechanism, have been used to finance other types of agricultural mitigation efforts worldwide. Even so, a review of projects suggests that few countries in Eastern Europe and Central Asia take full advantage of these financing paths. This paper discusses mitigation opportunities in the region, the reach of current mitigation incentives, and missed mitigation opportunities in agriculture. The paper concludes with a discussion of alternative policies designed to jointly promote mitigation and co-benefits for agriculture and the environment.
    Keywords: Climate Change Mitigation and Green House Gases,Wetlands,Climate Change Economics,Environmental Economics&Policies,Energy and Environment
    Date: 2012–06–01
  2. By: Richard Schmalensee; Robert Stavins
    Abstract: Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, this system was put in place to curb acid rain, but the main source of benefits from it was unexpected. Second, a substantial source of this system’s cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away.
    JEL: Q40 Q48 Q54 Q58
    Date: 2012–08
  3. By: Jeffrey D. Sachs (Asian Development Bank Institute); Shiv Someshwar
    Abstract: Green growth entails several different kinds of processes : conversion to low-carbon energy, climate resilience, and response to climate shocks. Equity implies a fair sharing of the costs, within countries and between countries. The authors set out to explore some of the ways that equity has been considered in climate change discussions. They discuss per capita emission right approaches, and highlight key challenges in the application of equity in global climate change negotiations. They provide a brief overview of key approaches to carbon financing, focusing on some recent cost estimations of potential climate change impacts, as well as of projected needs for green growth programs. The diversity of estimates and present evidence on the apparent gulf between available public financing and green growth needs are highlighted; and considerations of implementing green growth, focusing on building climate resilience and responding to climate shocks are discussed. In conclusion, the authors present one approach to a global Green Fund to receive assessed contributions of member countries and disburse grant and loan fund to low-income and middle-income countries to pursue green growth programs.
    Keywords: Green growth, Equity, Climate change, low carbon, carbon financing, global Green Fund
    JEL: Q2 Q5
    Date: 2012–07
  4. By: John A. Dixon
    Abstract: This paper provides guidance to Bank staff on how to conduct an expanded, comprehensive economic cost-benefit analysis (CBA) in order to measure net benefits from a project taking both project and environmental factors into account, as required under Directives B.5 and B.9 in the Bank's operational policy OP-703.
    Keywords: Economics, Environment & Natural Resources, cost benefit analysis, project environmental impact, project mitigation measures, environmental economics, Benefit-Cost Analysis
    Date: 2012–07
  5. By: Schmit, Todd M.; Taber, John T.; Rickard, Bradley J.
    Keywords: Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety,
    Date: 2012–05
  6. By: Robert S. Pindyck
    Abstract: I examine the risk/return tradeoff for environmental investments, and its implications for policy choice. Consider a policy to reduce carbon emissions. To what extent does the value of such a policy depend on the expected future damages from global warming versus uncertainty over those damages, i.e., on the expected benefits from the policy versus their riskiness? And to what extent should the policy objective be a reduction in the expected temperature increase versus a reduction in risk? Using a simple model of a stock externality (e.g., temperature) that evolves stochastically, I examine the ``willingness to pay" (WTP) for alternative policies that would reduce the expected damages under ``business as usual" (BAU) versus the variance of those damages. I also show how one can compute ``iso-WTP" curves (social indifference curves) for combinations of risk and expected returns as policy objectives. Given cost estimates for reducing risk and increasing expected returns, one can compute the optimal risk-return mix for a policy, and the policy's social surplus. I illustrate these results by calibrating the model to data for global warming.
    JEL: D81 Q5 Q54
    Date: 2012–07

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