nep-res New Economics Papers
on Resource Economics
Issue of 2013‒07‒05
ten papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Mixing It Up: Power Sector Energy and Regional and Regulatory Climate Policies in the Presence of a Carbon Tax By Burtraw, Dallas; Palmer, Karen L.
  2. Comparative Life Cycle Assessments: Carbon Neutrality and Wood Biomass Energy By Sedjo, ROger A.
  3. Economic Ideas for a Complex Climate Policy Regime By Burtraw, Dallas; Woerman, Matt
  4. Why Fracking Won't Bring Back the Factories (Yet) By Bown, Chad; Denevers, Michele; Harrison, Ann
  5. Designing contracts for reducing emissions from deforestation and forest degradation By Cordero Salas, Paula
  6. Resource discoveries, learning, and national income accounting By Hamilton, Kirk; Atkinson, Giles
  7. An Agent-Based Model of Climate-Induced Agricultural Labor Migration By Cai, Ruohong; Oppenheimer, Michael
  8. Climate change in the Himalayas : current state of knowledge By Gautam, Mahesh R.; Timilsina, Govinda R.; Acharya, Kumud
  9. The marginal cost of public funds in the EU: the case of labour versus green taxes By Salvador Barrios; Jonathan Pycroft; Bert Saveyn
  10. An economic model of Brazil's ethanol-sugar markets and impacts of fuel policies By de Gorter, Harry; Kliauga, Erika M.; Timilsina, Govinda R.

  1. By: Burtraw, Dallas (Resources for the Future); Palmer, Karen L. (Resources for the Future)
    Abstract: A carbon tax will interact with other policies that are intended to reduce carbon dioxide emissions and encourage clean sources of energy and energy efficiency. This paper examines these policy interactions. A well-designed carbon tax can be an efficient instrument for reducing emissions, yet whether it will be implemented in an efficient manner is uncertain. A legislatively determined tax may not fully reflect up-to-date scientific and economic information. Behavioral and institutional factors suggest that a tax may not have its fully intended effect. These considerations suggest that climate policy should and will continue to be a complex mix of regulations at various levels of government, even with a carbon price. Nonetheless, the possibility of unintended interactions among policies remains. The role for policies to encourage renewables and energy efficiency depends on the stringency of the carbon tax and presence of externalities related to technological learning and the energy efficiency gap.
    Keywords: externalities, regulation, federalism, Clean Air Act
    JEL: Q58 H23 H77
    Date: 2013–04–17
  2. By: Sedjo, ROger A. (Resources for the Future)
    Abstract: Biomass energy is expected to play a major role in the substitution of renewable energy sources for fossil fuels over the next several decades. The US Energy Information Administration (EIA 2012) forecasts increases in the share of biomass in US energy production from 8 percent in 2009 to 15 percent by 2035. The general view has been that carbon emitted into the atmosphere from biological materials is carbon neutral—part of a closed loop whereby plant regrowth simply recaptures the carbon emissions associated with the energy produced. Recently this view has been challenged, and the US Environmental Protection Agency (EPA) is considering regulations to be applied to biomass energy carbon emissions. A basic approach for analyses of environmental impacts has been the use of life cycle assessment (LCA), a methodology for assessing and measuring the environmental impact of a product over its lifetime—from raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling. However, LCA approaches vary, and the results of alternative methodologies often differ (Helin et al. 2012). This study investigates and compares the implications of these alternative approaches for emissions from wood biomass energy, the carbon footprint, and also highlights the differences in LCA environmental impacts.
    Keywords: life cycle assessment, carbon neutrality, biomass, bioenergy, carbon dioxide, energy, rational expectations
    JEL: Q2 Q23 Q4 Q54
    Date: 2013–04–25
  3. By: Burtraw, Dallas (Resources for the Future); Woerman, Matt (Resources for the Future)
    Abstract: The parsimony of economic theory provides general insights into an otherwise complex world. However, the most straightforward organizing principles from theory have not often taken hold in environmental policy or in the decentralized climate policy regime that is unfolding. One reason is inadequate recognition of a variety of institutions. This paper addresses three ways the standard model may inadequately anticipate the role of institutions in the actual implementation of climate policy, with a US focus: multilayered authority across jurisdictions, the impressionistic rather than deterministic influence of prices through subsidiary jurisdictions, and the complementary role of prices and regulation in this context. The economic approach is built on the premise that incentives affect behavior. We suggest an important pathway of influence for economic theory is to infuse incentive-based thinking into the conventional regulatory framework. In a complex policy regime, incentives can be shaped by shadow prices as well as market prices.
    Keywords: institutions, federalism, subsidiarity, shadow prices, incentives, regulation
    JEL: Q54 H77 D02
    Date: 2013–03–08
  4. By: Bown, Chad; Denevers, Michele; Harrison, Ann
    Abstract: Since last fall, President Obama has repeatedly declared that manufacturing jobs are coming back to America. In this article, however, we suggest that the return of U.S. manufacturing is still more promise than reality.In particular, while the recent increase in natural gas exploration and production has been optimistically linked to a U.S. manufacturing revival, the boom has not led to significant growth in employment. Paradoxically, for the U.S. to reap the greatest benefit possible from the extraction of its natural gas reserves, both more and fewer regulations are needed. On the one hand, current restrictions on natural gas exports must to be lifted to provide the right incentives for domestic producers, who receive much lower prices at home than they would abroad. On the other hand, more comprehensive environmental regulations would reassure critics that natural gas does indeed providea clean and sustainable promise for the U.S. economy.
    Keywords: environment; fracking; natural gas, climate change; methane
    JEL: Q4 Q5 Q55 Q58
    Date: 2013
  5. By: Cordero Salas, Paula
    Abstract: Reduction of carbon emissions from deforestation and forest degradation has been identified as a cost effective element of the post-Kyoto strategy to achieve long-term climate objectives. Its success depends primarily on the design and implementation of a financial mechanism that provides land-holders sufficient incentives to participate in such scheme. This paper proposes self-enforcing contracts (relational contracts) as a potential solution for the constraints in formal contract enforcement derived from the stylized facts of the implementation because relational contracting relies upon mutual private self-enforcement in a repeated transaction framework. The paper derives an opportunity cost function for land use and characterizes the optimal self-enforcing contract as well as provide the parameters under which private enforcement is sustainable. The optimal payment scheme suggests that all payments should be made contingent on the carbon offsets delivered, that is, at the end of the contracting period. Thus, the optimal contract does not observe any ex ante payment. Self-enforcement is more difficult to sustain the higher the opportunity cost of forest conservation is relative to the value of the carbon offsets from the contract. Necessary extensions to the relational contracting model are also discussed.
    Keywords: Climate Change Mitigation and Green House Gases,Environmental Economics&Policies,Debt Markets,Forestry,Climate Change and Environment
    Date: 2013–06–01
  6. By: Hamilton, Kirk; Atkinson, Giles
    Abstract: Questions about the ultimate size of mineral and energy resource endowments and the degree of fiscal prudence which should be exercised by countries engaged in resource extraction have become central for many developing countries during the recent resource boom. To explore these questions, this paper develops a model of optimal resource extraction and discovery that combines two polar assumptions: (i) that discovering a resource today drives up the cost of future resource discoveries, and (ii) that extracting resources yields knowledge that reduces the cost of discovery. Although the model shows that resource discoveries should be valued at marginal discovery cost in measures of national saving and income, the ultimate size of the resource that can be exploited is the result of the interplay between rising discovery costs and accumulating knowledge. Empirical tests of the model show that the resulting income estimates would be extremely volatile for many extractive economies, owing to the lumpiness of resource discoveries. Two alternative accounting approaches, based on Hicksian concepts, yield more intuitive and less volatile income estimates. The question of fiscal prudence for extractive economies hinges on how optimistic countries are about the risks in future mineral and energy markets, and how far into the future these countries are willing to project optimistic trends when making decisions about how much to consume and how much to save of current resource revenues.
    Keywords: Environmental Economics&Policies,Economic Theory&Research,Debt Markets,Climate Change Economics,Banks&Banking Reform
    Date: 2013–06–01
  7. By: Cai, Ruohong; Oppenheimer, Michael
    Abstract: Using an agent-based model, we simulate the climate-induced agricultural labor migration for alternative future climate scenarios. For each agent, the probability of migration is calculated as a function of a set of relevant factors using a logistic regression model. Historical U.S. agricultural employment data was used to calibrate the model. The simulation result showed that larger crop yield reduction induced by climate change tends to generate larger migration flows. Furthermore, we observed that the network effects tend to forecast a larger migration difference between alternative climate scenarios.
    Keywords: Agent-based model, Climate change, Agricultural labor migration, Agricultural and Food Policy, Environmental Economics and Policy, Labor and Human Capital,
    Date: 2013
  8. By: Gautam, Mahesh R.; Timilsina, Govinda R.; Acharya, Kumud
    Abstract: This paper reviews the literature on the potential biophysical and economic impacts of climate change in the Himalayas. Existing observations indicate that the temperature is rising at a higher rate in Nepal and Chinese regions of the Himalayas compared with rest of the Himalayas. A declining trend of monsoon in the western Indian Himalayas and an increasing trend in the eastern Indian Himalayas have been observed, whereas increasing precipitation and stream flow in many parts of Tibetan Plateau are noted. Glaciers in both the eastern and western Himalayas are mostly retreating, but the majority of the glaciers in Karakorum are either stable or advancing slowly. Expansion of glacier lakes is reported, with the highest rate in Nepal and Bhutan. Most literature predicts increases in temperature and monsoon precipitations and decreases in winter precipitations in the future thereby leading to monsoon flooding and increased sediments in stream flow. Available hydrological simulations indicate reduced rainfall and shrinkage of glacier thereby leading to shortage of water supply for power generation and irrigation in winter particularly in highly glaciated basins. Projected economic impacts of glacial lake outburst floods can be substantial on the developed river basin with infrastructures and population centers. However, there is a clear gap in knowledge of economic impacts of climate change in the Himalayas.
    Keywords: Climate Change Mitigation and Green House Gases,Science of Climate Change,Global Environment Facility,Regional Economic Development,Ecosystems and Natural Habitats
    Date: 2013–06–01
  9. By: Salvador Barrios (European Commission); Jonathan Pycroft (European Commission); Bert Saveyn (European Commission)
    Abstract: One key objective of tax-based fiscal consolidations which is too often disregarded in public debate is to minimise economic distortions. This paper uses a computable general equilibrium model to gauge these potential distortions by calculating the marginal cost of public funds (MCF) for EU member states. We consider two specific tax categories which are often proposed as good candidates for efficiency-enhancing tax shifting policies: labour and green taxes. Our analysis suggests that the economic distortions provoked by labour taxes are significantly larger than for green taxes. This result suggests that a green-taxes oriented fiscal consolidation would be preferred to a labour-tax oriented one (assuming that both tax increases would yield the same tax revenues). This holds for all EU member states modelled and despite the fact that potential welfare enhancement through pollution abatement are cancelled-out. Nevertheless, this result is slightly less strong when one considers the spillover effects between countries, which are more pronounced (in relative terms) for green taxes. This suggests that the use of green taxes for fiscal consolidation would be more effective were there to be close coordination across EU countries. In addition the efficiency losses associated with labour taxes are also likely to be greater when labour markets are less flexible (from an efficiency-wage perspective), a result also found to a small extent for green taxes. This raises the possibility that undertaking structural reforms (especially in the labour market) would help to minimize the efficiency losses entailed by tax-driven fiscal consolidations.
    Keywords: European Union, Taxation, labour taxation, environment, marginal cost public funds
    JEL: H21 H23 H24
    Date: 2013–05
  10. By: de Gorter, Harry; Kliauga, Erika M.; Timilsina, Govinda R.
    Abstract: The lack of growth in the Brazilian sugarcane-ethanol complex since the 2008 financial crisis has been blamed on policies: lower mandate, holding gasoline prices below world levels, high fuel taxes, and inadequate fuel tax exemptions for ethanol. This paper develops an empirical model of the Brazilian fuel-ethanol-sugar complex to analyze the impacts of these policies. Unlike biofuel mandates and tax exemptions elsewhere, Brazil's fuel-ethanol-sugar markets and fuel policies are unique such that each policy, in theory, has an ambiguous impact on the market price of ethanol and hence on sugarcane and sugar prices. The results indicate two policies that seemingly help the ethanol industry do otherwise in reality: low gasoline taxes and high anhydrous tax exemptions lower ethanol prices. But higher mandates, hydrous ethanol tax exemptions, and gasoline prices had the expected impact of increasing ethanol and sugar prices. Eliminating Brazilian ethanol tax exemptions and mandates reduces ethanol prices by 21 percent. Observed changes in prices are explained by outward shifts in fuel transportation and sugar export demand curves, and bad weather reducing sugarcane supply.
    Keywords: Energy Production and Transportation,Markets and Market Access,Transport and Environment,Renewable Energy,Alcohol and Substance Abuse
    Date: 2013–06–01

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