nep-res New Economics Papers
on Resource Economics
Issue of 2013‒02‒03
eight papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Technological change and international interaction in environmental policies By Furukawa, Yuichi; Takarada, Yasuhiro
  2. The Influence of Voluntary and Mandatory Environmental Performance on Financial Performance: An Empirical Study of Indonesian Firms By Kimitaka Nishitani; Nurul Jannah; Hardinsyah Ridwan; Shinji Kaneko
  3. The financial performance of green prospector firms: a contingent approach By Javier Aguilera-Caracuel; Javier Aguilera-Caracuel; Natalia Ortiz-de-Mandojana
  4. Air Pollution and Infant Mortality: Evidence from the Expansion of Natural Gas Infrastructure By Resul Cesur; Erdal Tekin; Aydogan Ulker
  5. Beyond environmental scarcity: Human and social capital as driving forces of bootstrapping activities By D. GRICHNICK; J. BRINCKMAN; L. SINGH; S. MANIGART
  6. A balance of questions: what can we ask of climate change economics? By David Comerford (University of Edinburgh)
  7. Payment for Environmental Services: Hypotheses and Evidence By Lee J. Alston; Krister Andersson; Steven M. Smith
  8. How Should Benefits and Costs Be Discounted in an Intergenerational Context? By Richard S. J. Tol; Kenneth J. Arrow; Maureen L. Cropper; Christian Gollier; Ben Groom; Geoffrey M. Heal; Richard G. Newell; William D. Nordhaus; Robert S. Pindyck; William A. Pizer; Paul R. Portney; Thomas Sterner; Martin L. Weitzman

  1. By: Furukawa, Yuichi; Takarada, Yasuhiro
    Abstract: This paper considers the impact of differences in endogenous technological change between two countries on global pollution emissions under international strategic interaction in environmental policies. First, we demonstrate that an environmentally lagging country's technology may continue to advance through a learning-by-doing effect until it exceeds the environmental friendliness of a leading country that initially had the cleanest technology (i.e., environmental leapfrogging could occur). Whether a country eventually becomes an environmentally leading country depends on the country size and its awareness of environmental quality. Second, we find that global emissions fluctuate despite the fact that environmental technology advances in both countries. Global emissions eventually become constant because both countries cease to tighten environmental regulations when their technologies are sufficiently clean. The final emissions might be larger than emissions in early stages of adjustment under dirty technologies. If environmental leapfrogging frequently occurs, both countries possess similarly clean technologies, thereby reducing long-term global pollution.
    Keywords: Environmental policy; leapfrogging; learning-by-doing; strategic interaction; technological change; transboundary pollution
    JEL: O30 Q55 O33 O31 O44
    Date: 2013–01
  2. By: Kimitaka Nishitani (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Nurul Jannah (Ministry of the Environment, Indonesia); Hardinsyah Ridwan (Faculty of Human Ecology, Bogor Agriculture University, Indonesia); Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University, Japan)
    Abstract: This paper, using data derived from a questionnaire survey of Indonesian firms, analyzes not only whether a firm's environmental performance improves its financial performance, but also whether this relationship depends on the firm's stance on conducting environmental management voluntarily or mandatorily. The estimation results suggest that a reduction of greenhouse gas (GHG) emissions increases a firm's profit, because firms that conduct environmental management voluntarily are more likely to reduce GHG emissions. However, this is not the case for the reduction of pollution emissions, because firms that conduct environmental management mandatorily are more likely to reduce pollution emissions. These results imply that only firms conducting environmental management voluntarily can improve financial performance through better environmental performance in Indonesia.
    Date: 2013–01
  3. By: Javier Aguilera-Caracuel; Javier Aguilera-Caracuel (Department of Business Organization and Marketing, Universidad Pablo de Olavide); Natalia Ortiz-de-Mandojana (Department of Management, Universidad de las Islas Baleares.)
    Abstract: Innovation is central to improving economic productivity, human well-being and environmental conservation. Firm-level green innovation includes technological improvements that save energy, prevent pollution, or make it possible to recycle waste. Such innovation also includes green product design and corporate environmental management. This type of innovation contributes to business sustainability as it potentially has a positive effect on the firms’ financial, social and environmental outcomes. However, the specific effect of green innovation on firms’ outcomes can be highly influenced by the context in which firms develops their activities. Using a contingent approach and employing a sample of 88 green prospector firms from 14 different countries, we observe that the intensity of green innovation is positively related to firm profitability. We also show that stringent environmental regulations keep firms from taking the financial advantage of the benefits of green innovation. However, the environmental normative conditions in a country do not have any significant impact on the way firms take advantage of green innovation to increase their level of financial performance. Finally, we also discuss implications for academia, managers and policy-makers.
    Keywords: Green innovation, environmental regulations, environmental normative dimension, contingent approach, prospector firms.
    Date: 2013–01
  4. By: Resul Cesur; Erdal Tekin; Aydogan Ulker
    Abstract: One of the consequences of rapid economic growth and industrialization in the developing world has been deterioration in environmental conditions and air quality. While air pollution is a serious threat to health in most developing countries, environmental regulations are rare and the determination to address the problem is weak due to ongoing pressures to sustain robust economic growth. Under these constraints, natural gas, as a clean, abundant, and highly-efficient source of energy, has emerged as an increasingly attractive source of fuel, which could address some of the environmental and health challenges faced by these countries without undermining their economies. In this paper, we examine the impact of air pollution on infant mortality in Turkey using variation across provinces and over time in the adoption of natural gas as a cleaner fuel. Our results indicate that the expansion of natural gas infrastructure has caused a significant decrease in the rate of infant mortality in Turkey. In particular, a one-percentage point increase in the rate of subscriptions to natural gas services would cause the infant mortality rate to decline by 4 percent, which could result in 348 infant lives saved in 2011 alone. These results are robust to a large number of specifications. Finally, we use supplemental data on total particulate matter and sulfur dioxide to produce direct estimates of the effects of these pollutants on infant mortality using natural gas expansion as an instrument. Our elasticity estimates from the instrumental variable analysis are 1.25 for particulate matter and 0.63 for sulfur dioxide.
    JEL: I0 I12 I15 I18 O10 O13 Q42 Q48 Q53
    Date: 2013–01
    Abstract: Although entrepreneurship scholars highlight bootstrapping as an important resource acquisition approach to respond to the inherent resource constraints which nascent ventures face, little is known about what causes nascent ventures to engage in bootstrapping. Theory highlights the environment as an important determinant of bootstrapping activity. Analyzing bootstrapping behavior of 298 nascent ventures, we find that beyond environmental factors, individual characteristics of the nascent entrepreneurs and factors relating to the embeddedness of the entrepreneurs in the environment determine their venture’s bootstrapping behavior. In a more fine-grained analysis we gain insights how theses antecedents shape the use of particular bootstrap strategies. Findings contribute to our understanding of how early resource management approaches are developed in nascent ventures.
    Keywords: Bootstrapping, Human capital, Social capital, Environmental munificence, Nascent ventures
    JEL: G01 G21 G28 H6
    Date: 2013–01
  6. By: David Comerford (University of Edinburgh)
    Abstract: The standard approach to the economics of climate change, which has its best known implementation in Nordhaus's DICE and RICE models (well described in Nordhaus's 2008 book, A Question of Balance) is not well equipped to deal with the possibility of catastrophe, since we are unable to evaluate a risk averse representative agent's expected utility when there is any significant probability of zero consumption. Whilst other authors attempt to develop new tools with which to address these problems, the simple solution proposed in this paper is to ask a question that the currently available tools of climate change economics are capable of answering. Rather than having agents optimally choosing a path (that divers from the recommendations of climate scientists) within models which cannot capture the essential features of the problem, I argue that economic models should be used to determine the savings and investment paths which implement climate targets that have been suggested in the physical science literature.
    Keywords: Climate Change, Catastrophe, Optimal Policy, Alternative Energy Investment;
    JEL: Q54 Q43 E22 H23
    Date: 2013–01–25
  7. By: Lee J. Alston; Krister Andersson; Steven M. Smith
    Abstract: The use of Payment for Environmental Services (PES) is not a new type of contract but they have become more in vogue because of the potential for sequestering carbon by paying to prevent deforestation and degradation of forest lands. We provide a framework utilizing transaction costs to hypothesize which services are more likely to be provided effectively. We then interpret the literature on PES programs to see the extent to which transaction costs vary as predicted across the type of service and assess the performance of PES programs. As predicted we find that transaction costs are the least for club goods like water and greatest for pure public goods like carbon reduction. Actual performance is difficult to measure and varies across the examples. More work and experimentation is needed to gain a better outlook on what elements support effective delivery of environmental services.
    JEL: Q15 Q54 Q57 Q58
    Date: 2013–01
  8. By: Richard S. J. Tol (Department of Economics, University of Sussex, Brighton, United Kingdom; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, Netherlands); Kenneth J. Arrow; Maureen L. Cropper; Christian Gollier; Ben Groom; Geoffrey M. Heal; Richard G. Newell; William D. Nordhaus; Robert S. Pindyck; William A. Pizer; Paul R. Portney; Thomas Sterner; Martin L. Weitzman
    Abstract: In September 2011, the US Environmental Protection Agency asked 12 economists how the benefits and costs of regulations should be discounted for projects that affect future generations. This paper summarizes the views of the panel on three topics: the use of the Ramsey formula as an organizing principle for determining discount rates over long horizons, whether the discount rate should decline over time, and how intra- and intergenerational discounting practices can be made compatible. The panel members agree that the Ramsey formula provides a useful framework for thinking about intergenerational discounting. We also agree that theory provides compelling arguments for a declining certainty-equivalent discount rate. In the Ramsey formula, uncertainty about the future rate of growth in per capita consumption can lead to a declining consumption rate of discount, assuming that shocks to consumption are positively correlated. This uncertainty in future consumption growth rates may be estimated econometrically based on historic observations, or it can be derived from subjective uncertainty about the mean rate of growth in mean consumption or its volatility. Determining the remaining parameters of the Ramsey formula is, however, challenging.
    Keywords: discount rate, uncertainty, declining discount rate, benefit-cost analysis
    Date: 2013–01

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