nep-res New Economics Papers
on Resource Economics
Issue of 2012‒12‒15
six papers chosen by
Maximo Rossi
Universidad de la Republica

  1. The Optimal Management of a Natural Resource with Switching Dynamics By Michele Baggio
  2. A Hotelling Model for Fixed-Cost Driven Power Generation By Andreas A. Renz; Christoph Weber
  3. Should we be Worried about the Green Paradox? Announcement Effects of the Acid Rain Program By Corrado Di Maria; Ian A. Lange; Edwin van der Werf
  4. Estimating Distributional Effects of Environmental Policy in Swedish Coastal Environments – A Walk along different Socio-economic Dimensions By Håkansson, Cecilia; Östberg, Katarina; Bostedt, Göran
  5. Longevity, pollution and growth By Natacha Raffin; Thomas Seegmuller
  6. Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry By Philippe Aghion; Antoine Dechezleprêtre; David Hemous; Ralf Martin; John Van Reenen

  1. By: Michele Baggio (Chair of Environmental Policy and Economics, Institute for Environmental Decisions, ETH Zurich)
    Abstract: This paper analyzes the optimal management of a natural resource that can shift between different dynamics at random times. Using a classical linear control model I investigate how the switching behavior influences the optimal extraction of the resource. I use exogenous sea-surface temperature anomalies to study how future climate change affects the optimal management of the resource. The model is applied to the Peruvian anchoveta fishery, which has shown evidence of structural differences in the biological relationship over time. Results indicate that a management policy that adapts to a changing dynamic leads to mean biomass and resource rents that are 2 and 2.5 times higher than a non-adaptive policy. This analysis provides a framework that can be used to quantitatively address the effects of adaptation in the context of a natural resource. Specifically, it gives important indications for the management of a natural resource with alternating dynamics, which can be used to design policies that adapt to the variability of the physical environment.
    Keywords: Bioeconomic modeling, Climate change, Peruvian anchoveta, Real option, Regime switching
    JEL: C61 Q22 Q54 Q57
    Date: 2012–11
  2. By: Andreas A. Renz; Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen)
    Abstract: This paper links Hotelling's theory, in recent literature applied to an emissionâ€constraint environment, with the classical capacity planning framework to describe portfolio timeâ€paths in electricity production. Emission targets are considered by a ceiling on the stock of pollution. We propose conditions for an efficient production portfolio as a subset of available technologies. We then derive potential production portfolio timeâ€paths for a renewable, a fossil and a carbon capturing technology that differ according to their fixed and variable costs, their efficiency and their polluting characteristics. We conclude that the share of the fossil technology will continuously decrease, the scarce resource will be fully exploited. On each constraint path, the stock of pollution will remain at the ceiling for a nonâ€zero time period. Emission targets push down scarcity rents, an option for carbon capturing would decrease societal costs and uphold scarcity rents.
    Keywords: Scarce resources, Optimal control theory, Hotelling, Valuation, Nonâ€renewable resource, Pollution target, Climate change, Peakâ€loadâ€pricing
    JEL: C61 Q23 Q41 L94
    Date: 2012–12
  3. By: Corrado Di Maria; Ian A. Lange; Edwin van der Werf
    Abstract: This paper presents the first empirical test of the green paradox hypothesis, according to which well-intended but imperfectly implemented policies may lead to detrimental environmental outcomes due to supply side responses. We use the introduction of the Acid Rain Program in the U.S. as a case study. The theory predicts that owners of coal deposits, expecting future sales to decline, would supply more of their resource between the announcement of the Acid Rain Program and its implementation; moreover, the incentive to increase supply would be stronger for owners of high-sulfur coal. This would, all else equal, induce an increase in sulfur dioxide emissions. Using data on prices, heat input and sulfur content of coal delivered to U.S. power plants, we find strong evidence of a price decrease, some indication that the amount of coal used might have increased, and no evidence that the announcement of the Acid Rain Program lead the use of higher sulfur coal. Overall, our evidence suggests that while the mechanism indicated by the theory might be at work, market conditions and concurrent regulation prevented a green paradox from arising. These results have implications for the design of climate policies.
    Keywords: Green Paradox, implementation lags, announcement effects, climate policy, acid rain policy
    JEL: Q31 Q38 Q53 Q54 Q58
    Date: 2012
  4. By: Håkansson, Cecilia (Division for Environmental Strategies Research); Östberg, Katarina (CERE, Centre for Environmental and Resource Economics); Bostedt, Göran (CERE, Centre for Environmental and Resource Economics)
    Abstract: This paper studies distributional effects of environmental policies in Swedish coastal environments, in monetary and environmental quality terms, for different socio-economic groups. The study area is widely used for different recreational activities and has a mix of different visitors. Data comes from a choice experiment study. Some results confirm limited existing knowledge from previous research, although the ethnical dimension to a certain extent contradicts conventional perceptions. Based on previous research from other countries, the hypothesis would be that native Swedes would benefit more from environmental improvements than respondents with a non-Swedish background. Interestingly results differ, depending on the environmental amenity. For example, respondents with a non-Swedish origin benefit more, both in monetary and environmental quality terms, from reduced noise and littering compared to respondents with a Swedish origin. Also, independent of ethnical background, people use the area in a similar manner.
    Keywords: Distributional effects in monetary and environmental quality terms; Non-market valuation; Marine policy; Ethnicity
    JEL: Q51 Q52 Q53
    Date: 2012–12–07
  5. By: Natacha Raffin; Thomas Seegmuller
    Abstract: We analyze the interplay between longevity, pollution and growth. We develop an OLG model where longevity, pollution and growth are endogenous. The authorities may provide two types of public services, public health and environmental maintenance, that participate to increase agents’ life expectancy and to sustain growth in the long term. We show that global dynamics might be featured by a high growth rate equilibrium, associated with longer life expectancy and a environmental poverty trap. We examine changes in public policies: increasing public intervention on health or environmental maintenance display opposite effects on global dynamics, i.e. on the size of the trap and on the level of the stable balanced growth path. On the contrary, each type of public policy induces a negative leverage on the long run rate of growth.
    Keywords: Life expectancy; Pollution; Health; Growth
    JEL: I15 O44 Q56
    Date: 2012
  6. By: Philippe Aghion; Antoine Dechezleprêtre; David Hemous; Ralf Martin; John Van Reenen
    Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.
    JEL: L62 O13 O3
    Date: 2012–12

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