nep-res New Economics Papers
on Resource Economics
Issue of 2012‒11‒24
seven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. The cost structure of the clean development mechanism By Rahman, Shaikh M.; Larson, Donald F.; Dinar, Ariel
  2. Natural capital and New Zealand’s Resource Management Act (1991) By Clothier, Brent; Macay, Alec; Dominati, Estelle
  3. Spatial Climate-Economic Models in the Design of Optimal Climate Policies Across Locations By William A. Brock; Gustav Engström; Anastasios Xepapadeas
  4. Mitigating market power under tradeable permits By Heindl, Peter
  5. Mitigation and Heterogeneity in Management Practices on New Zealand Dairy Farms By Anastasiadis, Simon; Kerr, Suzi
  6. Providing Agri-environmental Public Goods through Collective Action: Lessons from New Zealand Case Studies By Uetake, Tetsuya
  7. Is bioenergy trade good for the environment? By Jean-Marc Bourgeon; Helene Ollivier

  1. By: Rahman, Shaikh M.; Larson, Donald F.; Dinar, Ariel
    Abstract: This paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. The results show that, in general, the distribution of projects in the pipeline does not correspond exclusively to the cost of generating anticipated credits. Rather, investment choices appear to be influenced by location and project type considerations in a way that is consistent with variable transaction costs and investor preferences among hosts and classes of projects. This implies that comparative advantage based on the marginal cost of abatement is only one of several factors driving Clean Development Mechanism investments. This is significant since much of the conceptual and applied numerical literature concerning greenhouse gas mitigation policies relies on presumptions about relative abatement costs. The authors also find that Clean Development Mechanism projects generally exhibit constant or increasing returns to scale. In contrast, they find variations among classes of projects concerning economies of time.
    Keywords: Climate Change Economics,Climate Change Mitigation and Green House Gases,Energy Production and Transportation,Transport Economics Policy&Planning,Energy and Environment
    Date: 2012–11–01
  2. By: Clothier, Brent; Macay, Alec; Dominati, Estelle
    Abstract: Quantifying natural resources as natural capital and the valuation of the ecosystem services that flow from natural capital stocks are emerging areas of science. Are these developing concepts compatible with current resource management legislation? Can these ideas be used in judicial proceedings to protect natural capital and maintain the portfolio value of nature‟s ecosystem services? We describe two recent cases in New Zealand where natural capital concepts were used in the Environment Court to protect land from peri-urban creep and to protect receiving water quality through the allocation of a nutrient discharge allowance to land. Results have been mixed, with prospects appearing good.
    Keywords: Environmental Economics and Policy, Land Economics/Use,
    Date: 2012–08
  3. By: William A. Brock (Department of Economics, University of Wisconsin); Gustav Engström (The Beijer Institute of Ecological Economics and University of Stockholm); Anastasios Xepapadeas (Athens University of Economics and Business)
    Abstract: We couple a one-dimensional energy balance climate model with heat transportation across latitudes, with an economic growth model. We derive temperature and damage distributions across locations and optimal taxes on fossil fuels which, in contrast to zero-dimensional Integrated Assessment Models, account for cross latitude externalities. We analyse the impact of welfare weights on the spatial structure of optimal carbon taxes and identify conditions under which these taxes are spatially nonhomogeneous and are lower in latitudes with relatively lower per capita income populations. We show the way that heat transportation affects local economic variables and taxes, and locate sufficient conditions for optimal mitigation policies to have rapid ramp-up initially and then decrease over time.
    Keywords: One-dimensional Energy Balance Model, Heat Transport, Latitudes, Temperature Distribution, Damage Distribution, Social Planner, Competitive Equilibrium, Local Welfare Weights, Optimal Taxes
    JEL: Q54 Q58 R11
    Date: 2012–10
  4. By: Heindl, Peter
    Abstract: As shown by R. Hahn [6], free allocation equal to the amount of permits a firm with market power uses in equilibrium, can prevent welfare losses. If the necessary amount of free allocation is not provided to the firm with market power, a second best solution is obtained where marginal abatement costs of regulated firms are not equated. In this paper, it is proposed that the government may change the economy wide emissions constraint (cap) as a response to market power, e.g. when free allocation cannot be adjusted. Changing the cap can lead to a situation where marginal abatement costs are equated in the presence of market power. Because changing the cap will lead to changes of social welfare, both effects must be balanced. It is shown that there exists a second best social optimum by balancing the positive effect of limiting market power and the negative effect of changing the cap. --
    Keywords: Tradeable Permits,Market Power,Environmental Regulation
    JEL: Q53 L12 D21
    Date: 2012
  5. By: Anastasiadis, Simon; Kerr, Suzi
    Abstract: We consider two approaches to quantify New Zealand farmers’ ability to mitigate their farm’s environmental impact: The construction of marginal abatement cost curves and improvements in farm management practices. Marginal abatement cost curves can be constructed by combining information on the effectiveness of mitigation with cost data. However, we find that the available data is not sufficient to support this approach. We consider improvements in management practices using a distribution of farm production efficiency with regard to nitrogen and greenhouse gas (kg production per unit of emissions). Where differences in production efficiency are due to factors that can be managed by farmers, targeting less efficient farmers to encourage the adoption of management practices similar to those of the more efficient farmers is a potential mitigation strategy.
    Keywords: Cost curves, greenhouse gas, heterogeneity, leaching, mitigation, nitrogen, production efficiency, Agribusiness, Environmental Economics and Policy, Farm Management, Land Economics/Use, Production Economics, Q53, Q57,
    Date: 2012–08
  6. By: Uetake, Tetsuya
    Abstract: Agriculture is a provider of food and, to a certain extent, public goods such as biodiversity and landscape, but it can also have negative impacts on natural assets such as biodiversity and water quality. In addition to implementing policies that target individual farmers, different approaches are needed to promote collective action. The literature review and three New Zealand case studies (Sustainable Farming Fund, East Coast Forestry Project and North Otago Irrigation Company) have identified some findings including benefits and barriers of collective action and key factors for its success. Collective action should be given serious consideration in addressing agri-environmental problems.
    Keywords: Collective action, public goods, agri-environmental policy, social capital, Agribusiness, Environmental Economics and Policy, Public Economics,
    Date: 2012–08
  7. By: Jean-Marc Bourgeon (Institut National de la Recherche Agronomique - INRA, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Helene Ollivier (ARE - Department of Agricultural and Resource Economics - University of California, Berkeley)
    Abstract: We analyze the impacts of bioenergy trade on greenhouse gas emissions using a two-good, three-factor model. Bioenergy is an agricultural good used as a substitute for fossil fuels in industry. Governments tax domestic pollution without international coordination. We assume that northern countries have higher labor productivity than southern ones and that agriculture is less pollution intensive than industry (after taxation). We show that whereas southern countries impose a lower tax rate than northern ones, they do not necessary have a competitive advantage in industry, and that compared to autarky, trade liberalization either increases or decreases worldwide emissions depending on regional comparative advantages.
    Keywords: Bioenergy; Intermediate product; North-South trade; Global pollution
    Date: 2012–04

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