nep-res New Economics Papers
on Resource Economics
Issue of 2013‒07‒28
nine papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Technology Flexibility and Stringency for Greenhouse Gas Regulations By Burtraw, Dallas; Woerman, Matt
  2. Toward the Green Economy: Assessing Countries’ Green Power By Babette Never
  3. Environmental Protection, Rare Disasters, and Discount Rates By Robert J. Barro
  4. The Reform of China‘s Energy Policies By Joachim Betz
  5. Sector Effects of the Shale Gas Revolution in the United States By Krupnick, Alan; Wang, Zhongmin; Wang, Yushuang
  6. Towards a more comprehensive policy mix conceptualization for environmental technological change: A literature synthesis By Rogge, Karoline S.; Reichardt, Kristin
  7. The natural Resource Curse, Fiscal Decentralization, and Agglomeration Economies By Fidel Perez-Sebastian; Ohad Raveh
  8. The Effects of Driving Restrictions on Air Quality and Driver Behavior By Carnovale, Maria; Gibson, Matthew
  9. Truth-telling by Third-party Auditors and the Response of Polluting Firms: Experimental Evidence from India By Esther Duflo; Michael Greenstone; Rohini Pande; Nicholas Ryan

  1. By: Burtraw, Dallas (Resources for the Future); Woerman, Matt
    Abstract: The Clean Air Act provides the primary regulatory framework for climate policy in the United States. Tradable performance standards (averaging) emerge as the likely tool to achieve flexibility in the regulation of existing stationary sources. This paper examines the relationship between flexibility and stringency. The metric to compare the stringency of policies is ambiguous. The relevant section of the act is traditionally technology based, suggesting an emissions rate focus. However, a specific emissions rate improvement averaged over a larger set of generators reduces the actual emissions change. A marginal abatement cost criterion to compare policy designs suggests cost-effectiveness across sources. This criterion can quadruple the emissions reductions that are achieved, with net social benefits exceeding $25 billion in 2020, with a 1.3 percent electricity price increase. Under the act, multiple stringency criteria are relevant. EPA should evaluate state implementation plans according to a portfolio of attributes, including effectiveness and cost.
    Keywords: climate policy, efficiency, EPA, Clean Air Act, coal, compliance flexibility, regulation
    JEL: K32 Q54 Q58
    Date: 2013–07–23
  2. By: Babette Never (GIGA German Institute of Global and Area Studies)
    Abstract: The green power potential of a country is a central factor in the transformation to a green economy. This paper argues that green power will become a decisive factor for global change. Green power combines sustainability, innovation and power into one concept. By merging insights from political science, economics and innovation research, this paper develops a multidimensional, multilevel concept of green power that takes both resources and processes into account. A first empirical assessment of the current distribution of green power in global environmental governance shows that China and India, in particular, as well as Brazil and Costa Rica are catching up in clean technology and renewable energy. The European Union, Germany and the United States still dominate, but they are not fully maximizing their green power potential. In spite of their discursive power, the green power potential of the least developed countries is relatively small, making the jump toward a green economy unlikely.
    Keywords: climate change, power, global environmental governance, innovation, green economy.
    Date: 2013–06
  3. By: Robert J. Barro
    Abstract: Extremely low discount rates play a central role in the Stern Review’s evaluation of environmental protection, and this assumption has been criticized by many economists. The Review also stresses that great uncertainty is a critical element for optimal environmental policies. An appropriate model for this policy analysis requires sufficient risk aversion and fattailed uncertainty to get into the ballpark of explaining the observed equity premium. A satisfactory framework, based on Epstein-Zin/Weil preferences, also separates the coefficient of relative risk aversion (important for results on environmental investment) from the intertemporal elasticity of substitution for consumption (which matters little). Calibrations based on existing models of rare macroeconomic disasters suggest that optimal environmental investment can be a significant share of GDP even with reasonable values for the rate of time preference and the expected rate of return on private capital. The key parameters, yet to be pinned down, are the proportionate effect of environmental investment on the probability of environmental disaster and the baseline probability of environmental disaster.
    JEL: E1 G12 Q5
    Date: 2013–07
  4. By: Joachim Betz (GIGA Institute of Asian Studies)
    Abstract: China’s shift in energy policies has been broader, deeper and more successful than that of most other emerging economies, although the economic costs of this transition are tremendous because China is an over-industrialized country whose production is highly energy-intense and it depends on emission-intensive coal as main energy source. Factors that have influenced energy reforms, which focus on saving and conserving energy, developing renewable sources and nuclear power, are – on the international level – the impact of climate change on India, the desire to be recognized as a responsible power in the international community, China’s dangerously growing dependence on energy imports, and the uncertain prospects of equity oil abroad for energy security. Domestic factors are the growing assertiveness of environmental NGOs, relatively effective sectorial governance, and the embedding of energy policies in a blueprint for industrial upgrading.
    Keywords: energy policy, climate change, energy institutions, international climate summits, political system, civil society
    Date: 2013–02
  5. By: Krupnick, Alan (Resources for the Future); Wang, Zhongmin (Resources for the Future); Wang, Yushuang
    Abstract: This paper reviews the impact of the shale gas revolution on the sectors of electricity generation, transportation, and manufacturing in the United States. Natural gas is being substituted for other fuels, particularly coal, in electricity generation, resulting in lower greenhouse gas emissions from this sector. The use of natural gas in the transportation sector is currently negligible but is projected to increase with investments in refueling infrastructure and natural gas vehicle technologies. Petrochemical and other manufacturing industries have responded to lower natural gas prices by investing in domestically located manufacturing projects. This paper also speculates on the impact of a possible shale gas boom in China.
    Keywords: shale gas, electricity, transportation, and manufacturing
    JEL: L71 L9 Q4
    Date: 2013–07–19
  6. By: Rogge, Karoline S.; Reichardt, Kristin
    Abstract: Reaching a better understanding of the politics and policies of transitions presents a main agenda item in the emerging field of sustainability transitions. One important requirement for these transitions, such as the move towards a decarbonized energy system, is the redirection and acceleration of technological change, for which policies play a key role. Several studies of policies supporting environmental technological change have argued for the need to combine different policy instruments in so-called policy mixes. However, existing policy mix studies often fall short of reflecting the complexity and dynamics of actual policy mixes, and they lack a common terminology. In this paper we take a first step towards a more comprehensive policy mix concept for environmental technological change based on a review of the bodies of literature on innovation studies, environmental economics and policy analysis. The concept we develop consists of the three building blocks elements, processes and dimensions and introduces a clear terminology, which is particularly important for the characteristics of such a policy mix, including the consistency of its elements and the coherence of its processes. Throughout the paper, we illustrate the concept using the example of the policy mix for fostering the transition of the German energy system to renewable power generation technologies. We argue that the proposed concept provides an interdisciplinary analytical framework for empirical studies analyzing the impact of the policy mix on environmental technological change and may thereby contribute to reaching a better understanding of the politics and policies of sustainability transitions. Finally, we derive policy implications and suggest avenues for future research. --
    Keywords: policy mix,policy strategy,instrument mix,policy making and implementation,consistency,coherence
    Date: 2013
  7. By: Fidel Perez-Sebastian; Ohad Raveh
    Abstract: Natural resource abundance is a blessing for some countries, but a curse for othes. We show that differences across countries in the degree of fiscal decentralisation can contribute to this divergent outcome. First, the paper presents a unified theory that combines political and market mechanisms to illustrate why natural resource booms can create negative effects in fiscally decentralized nations. Thereafter, we employ Sachs and Warner's cross-sectional data, and also construct a new panel-data sample to test the hypothesis. Results support the joint effect of the two variables.
    Keywords: Natural resources, economic growth, fiscal decentralization, agglomeration economies, tax competition
    JEL: O13 O18 O40 Q32
    Date: 2013
  8. By: Carnovale, Maria; Gibson, Matthew
    Abstract: We evaluate whether driving restrictions improve air quality.  While Milan's restriction decreases overall air pollution, there is a significant behavioral response that attenuates the effect.  Our study expoits the natural experiment created by an unanticipated court injunction suspending Milan's restriction.  Drivers respond to the restriction with: 1) intertemporal substituion toward the unpriced period; 2) substitution toward exempt vehicles; and 3) spatial substitution toward unpriced roads.  Importantly, the net effect on traffic varies with public transit availability.
    Keywords: Social and Behavioral Sciences, spatial substitution, air pollution, air quality
    Date: 2013–07–01
  9. By: Esther Duflo; Michael Greenstone; Rohini Pande; Nicholas Ryan
    Abstract: In many regulated markets, private, third-party auditors are chosen and paid by the firms that they audit, potentially creating a conflict of interest. This paper reports on a two-year field experiment in the Indian state of Gujarat that sought to curb such a conflict by altering the market structure for environmental audits of industrial plants to incentivize accurate reporting. There are three main results. First, the status quo system was largely corrupted, with auditors systematically reporting plant emissions just below the standard, although true emissions were typically higher. Second, the treatment caused auditors to report more truthfully and very significantly lowered the fraction of plants that were falsely reported as compliant with pollution standards. Third, treatment plants, in turn, reduced their pollution emissions. The results suggest reformed incentives for third-party auditors can improve their reporting and make regulation more effective.
    JEL: L51 M42 O13 Q56
    Date: 2013–07

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