nep-res New Economics Papers
on Resource Economics
Issue of 2012‒09‒16
seven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Investment decision making under deep uncertainty -- application to climate change By Hallegatte, Stephane; Shah, Ankur; Lempert, Robert; Brown, Casey; Gill, Stuart
  2. On the Emergence of Overcompliance with Endogenous Environmental Standards and Patronising Consumers By L. Lambertini; A. Tampieri
  3. Public Procurement and the Private Supply of Green Buildings By Timothy Simcoe; Michael W. Toffel
  4. Global trade and climate policy scenarios ? Impact on Finland By Janne Niemi; Juha Honkatukia; Ville Kaitila; Markku Kotilainen
  5. Fair, Optimal or Detrimental? Environmental vs. Strategic Use of Border Carbon Adjustment By Matthias Weitzel; Michael Hübler; Sonja Peterson
  6. Transaction costs can encourage Coasean bargaining By Alex Robson
  7. The organization of R&D and environmental policy: So does emission subsidy reduce emissions? By Yasunori Ouchida; Daisaku Goto

  1. By: Hallegatte, Stephane; Shah, Ankur; Lempert, Robert; Brown, Casey; Gill, Stuart
    Abstract: While agreeing on the choice of an optimal investment decision is already difficult for any diverse group of actors, priorities, and world views, the presence of deep uncertainties further challenges the decision-making framework by questioning the robustness of all purportedly optimal solutions. This paper summarizes the additional uncertainty that is created by climate change, and reviews the tools that are available to project climate change (including downscaling techniques) and to assess and quantify the corresponding uncertainty. Assuming that climate change and other deep uncertainties cannot be eliminated over the short term (and probably even over the longer term), it then summarizes existing decision-making methodologies that are able to deal with climate-related uncertainty, namely cost-benefit analysis under uncertainty, cost-benefit analysis with real options, robust decision making, and climate informed decision analysis. It also provides examples of applications of these methodologies, highlighting their pros and cons and their domain of applicability. The paper concludes that it is impossible to define the"best"solution or to prescribe any particular methodology in general. Instead, a menu of methodologies is required, together with some indications on which strategies are most appropriate in which contexts. This analysis is based on a set of interviews with decision-makers, in particular World Bank project leaders, and on a literature review on decision-making under uncertainty. It aims at helping decision-makers identify which method is more appropriate in a given context, as a function of the project's lifetime, cost, and vulnerability.
    Keywords: Climate Change Economics,Climate Change Mitigation and Green House Gases,Science of Climate Change,Global Environment Facility,Water Supply and Sanitation Governance and Institutions
    Date: 2012–09–01
  2. By: L. Lambertini; A. Tampieri
    Abstract: We propose a model of environmental overcompliance in a duopoly setting where consumers are environmentally concerned and may patronise the product they buy, firms set their green investment to abate the impact of productivity on pollution and a government sets the environmental standard with the aim to maximise welfare. We show that, with no patronising consumers, overcompliance is unilateral by the firm with higher quality standard under Bertrand behaviour, whereas both firms may overcomply under Cournot competition if the environmental impact of production is sufficiently low. Conversely with patronising consumers, overcompliance is unilateral with low environmental impact of production under price competition, and both firm overcomply under quantity competition.
    JEL: L13 L51 Q50
    Date: 2012–09
  3. By: Timothy Simcoe (Boston University, School of Management); Michael W. Toffel (Harvard Business School, Technology and Operations Management Unit)
    Abstract: We measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and supplier investments in green building expertise. Our findings suggest that government procurement policies can accelerate the diffusion of new environmental standards that require coordinated complementary investments by various types of private adopter.
    Date: 2012–09
  4. By: Janne Niemi; Juha Honkatukia; Ville Kaitila; Markku Kotilainen
    Abstract: In this study we use the dynamic version of the GTAP model to analyse the effects of global trade policy changes and their interaction with different global climate policy regimes from Finland?s point of view, and in particular, implications for Finnish export sectors. Scenarios explore further trade liberalisation as well as effects of higher-than-current tariffs on world markets. As a complementary dimension we analyse the impact of a global climate agreement that will lead to an additional improvement in energy efficiency and impose limitations to GHG emissions.<br><br>We find a general trend towards a greater weight of services sector in Finland?s total exports volume, whilst the share of traditionally important heavy industry and electronics industries declines. These trends are amplified by further trade liberalisation and slowed down by new barriers for trade. The global coverage of climate policy is particularly significant for energy-intensive industries.
    Keywords: trade policy, climate policy, general equilibrium model
    JEL: Q58 C68 F13
    Date: 2012–09–03
  5. By: Matthias Weitzel; Michael Hübler; Sonja Peterson
    Abstract: We carry out a detailed sensitivity analysis of border carbon adjustment (rates) by applying a global Computable General Equilibrium (CGE) GTAP7-based model. We find different incentives for the regions in the climate coalition to raise carbon-based border tax rates (BTAX) above the standard rate that mimics an equalisation of carbon prices across regions. Herein, the strategic use of BTAX (the manipulation of the terms of trade) is stronger for all coalition regions than the environmental use (the reduction of carbon emissions abroad). Higher BTAX can reduce carbon leakage but with a declining marginal effect. Furthermore, we find different incentives for regions outside the coalition to oppose high BTAX rates: Russia and the other energy exporters would oppose it, while the Low-Income Countries would not because of benefits from the trade diversion effect. Thus, BTAX encourages the former to join the coalition, while compensating transfers are necessary to encourage the other (developing) countries including China and India
    Keywords: climate policy, border tax adjustment, leakage, trade diversion, coalitions, general equilibrium mod
    JEL: F13 F18 Q54
    Date: 2012–08
  6. By: Alex Robson
    Keywords: Coase Theory, externalities, transaction costs, cooperatives games
    JEL: D23 K00 C71 C78 D62
    Date: 2012–08
  7. By: Yasunori Ouchida (Department of Economics, Hiroshima University); Daisaku Goto (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: This paper reexamines the Poyago-Theotoky model and provides additional investigation that was conducted under a corrected environmental damage parameter. As new findings, we obtain the following. First, social welfare under a time-consistent emission tax (emission subsidy) policy is always welfare-enhancing rather than the case of laissez-faire. Second, if the environmental damage parameter is sufficiently small, then the equilibrium emission tax rate is invariably negative. It is therefore an emission subsidy. Moreover, total emissions under the emission subsidy become smaller than those under laissez-faire if the damage parameter is sufficiently small, and if the R&D cost is low. However, total emissions under the emission subsidy become greater than those under laissez-faire if the damage parameter is sufficiently small, and if the R&D cost is high.
    Keywords: Emission subsidy, Emission tax, Emission reduction, Environmental R&D, Cournot duopoly
    JEL: O32 L13 Q55 Q58
    Date: 2012–09

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