nep-res New Economics Papers
on Resource Economics
Issue of 2013‒10‒02
ten papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Do Market Shares or Technology Explain Rising New Vehicle Fuel Economy? By Khanna, Shefali; Linn, Joshua
  2. Cheaper Fuels for the Light-Duty Fleet: Opportunities and Barriers By Fraas, Arthur G.; Harrington, Winston; Morgenstern, Richard D.
  3. International Transport and the Environment: Environmental regulations and international emissions trading (Japanese) By TAKARADA Yasuhiro
  4. Holding Distribution Utilities Liable for Outage Costs: An Economic Look By Brennan, Timothy J.
  5. Moving from Concept to Implementation: The Emergence of the Northern Everglades Payment for Environmental Services Program By Shabman, Leonard; Lynch, Sarah
  6. Timing of adoption of clean technologies, transboundary pollution and international trade By Ben Jebli, Mehdi; Ben Youssef, Slim
  7. Should forests be used as uncertain carbon sinks or uncertain fossil fuel substitutes in the EU Roadmap to 2050? By Elofsson, Katarina; Gren, Ing-Marie
  8. Governance of CO2 markets: lessons from the EU ETS By Christian de Perthuis; Raphael Trotignon
  9. Empirical Evidence on the Resource Curse Hypothesis in Oil Abundant Economy By Satti, Saqlain Latif; Farooq, Abdul; Shahbaz, Muhammad
  10. Asymmetric Incentives in Subsidies: Evidence from a Large-Scale Electricity Rebate Program By Koichiro Ito

  1. By: Khanna, Shefali (Resources for the Future); Linn, Joshua (Resources for the Future)
    Abstract: By decreasing gasoline consumption, greater fuel economy could significantly reduce environmental and energy security concerns. In this paper, we show that since the year 2000, technology and market shares have contributed roughly equally to rising new vehicle fuel economy in the United States. We discuss the implications of these patterns for the safety and welfare effects of fuel economy standards.
    Keywords: corporate average fuel economy standards, passenger vehicles, fuel savings, vehicle safety, greenhouse gas emissions rate standards
    JEL: Q4 L62
    Date: 2013–09–09
  2. By: Fraas, Arthur G. (Resources for the Future); Harrington, Winston (Resources for the Future); Morgenstern, Richard D. (Resources for the Future)
    Abstract: The shale gas revolution in the United States has dropped the price of natural gas (NG) significantly. Combined with new fuel and vehicle technologies, an opportunity exists to expand the use of NG throughout the economy, including in the light-duty fleet of cars and trucks. This expansion could involve the direct combustion of the gas in the form of compressed natural gas or liquid petroleum gas or, alternatively, the use of natural-gas-based liquid fuels such as ethanol or methanol. This paper examines the potential economic, environmental, and national security gains from replacing a portion of the domestic gasoline use in the light-duty fleet with these various NG-based fuels. Also examined are the regulatory barriers to the expanded use of the fuels. We find that these NG-based fuels could yield significant fuel cost savings relative to conventional gasoline in the light-duty fleet, along with gains to national security and, possibly, some environmental benefits.
    Keywords: energy, natural gas, alternative fuels
    JEL: Q42 Q48 Q53 Q55
    Date: 2013–09–09
  3. By: TAKARADA Yasuhiro
    Abstract: We develop a two-country, two-good general equilibrium model of international trade that takes international transport sectors into explicit consideration to examine the effects of environmental policy on international transport. International transportation services are traded between two countries. First, we find that international emission permit trading between the international transport sectors of two countries benefits the country that imports transportation services, regardless of the trading price of emission permits. However, a country that exports transportation services may lose from emissions trading even if it receives all of the direct gains from permit trade by buying (or selling) permits at the current market price of the other country. Our results suggest that the trade pattern in transportation services is crucial to the welfare effects of permit trade in international transport sectors. Second, we demonstrate that a country may gain from unilateral reduction in the emission permit of its transport sector despite the fact that the stricter regulation shrinks its transport sector. Both countries can benefit from the voluntary regulation if environmental regulations on international transport are initially weak.
    Date: 2013–09
  4. By: Brennan, Timothy J. (Resources for the Future)
    Abstract: Storm-related service outages in electricity and telecommunications have created public controversies regarding the adequacy of ex ante efforts to prevent outages and ex post efforts to restore power. Product liability rules, used to promote quality of service throughout the economy, might seem to offer a solution to this problem in the utility context. Strict liability rules avoid the need for determining whether utilities were appropriately careful but increase ratepayer costs because of moral hazard and, in effect, force ratepayers to buy outage insurance from the utility. By leaving customers exposed to damage, negligence rules can avoid these shortcomings but force upon regulators and courts the need to make difficult decisions regarding efficient care levels. Profit regulation, risk aversion, regulatory commitment failures, and distributional considerations add further complications. Still, the consideration of liability rules may provide worthwhile reminders that increased reliability is neither free nor guaranteed by public provision of service.
    Keywords: electricity, distribution, reliability, outage, blackouts, liability, negligence
    JEL: L51 K13 L94
    Date: 2013–07–05
  5. By: Shabman, Leonard (Resources for the Future); Lynch, Sarah
    Abstract: The Northern Everglades Payment for Environmental Services (NE-PES) program was launched in 2011 by the state of Florida. The NE-PES program was developed through the Florida Ranchlands Environmental Services Project (FRESP), a six-year collaborative effort (2005–2011) that engaged ranchers, government agencies, and environmental NGOs. Through FRESP, eight pilot water management projects were implemented on cattle ranches. The projects demonstrated how ranchland owners, as service sellers, could enter into contracts with a state agency buyer to provide the buyer-desired services of water retention (acre-feet) and/or nutrient load retention (lbs. of phosphorus or nitrogen). Innovative contract elements, based on the experience of implementing the pilot projects, developed by FRESP collaboration partners made the now operating NE-PES possible.
    Keywords: environmental services, payment for environmental services, environmental markets, Everglades
    Date: 2013–08–27
  6. By: Ben Jebli, Mehdi; Ben Youssef, Slim
    Abstract: The authors consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology which uses fossil energy. However, these firms can adopt a clean technology which uses a renewable energy having a lower unit cost. Surprisingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. Interestingly, the socially optimal adoption date under a common market better internalizes transboundary pollution than that under autarky. It also better internalizes transboundary pollution compared with the optimal adoption dates for firms. In autarky (resp. a common market), firms adopt the clean technology earlier (resp. later) than what is socially optimal and, therefore, regulators can induce clean technology adoption at the socially optimal adoption date by giving firms postpone (resp. speed up) adoption subsidies. Opening markets to international trade, speeds up socially optimal adoption dates and delays optimal adoption dates for firms. Consequently, with market opening, speed up adoption subsidies are needed to reduce the global flow of pollution. --
    Keywords: regulation,adoption date,renewable energy,transboundary pollution,common
    JEL: D62 F18 H57 Q42 Q55
    Date: 2013
  7. By: Elofsson, Katarina (Department of Economics, Swedish University of Agricultural Sciences); Gren, Ing-Marie (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: This study investigates the contribution of forest carbon sequestration to a cost-efficient EU climate policy from 2010 to 2050 under conditions of uncertainty. We note that there is a trade-off between sequestration and alternative uses of forests such as bioenergy and timber production. A dynamic and probabilistic cost-minimization model is developed, which includes fossil fuel use within the EU Emissions Trading System and forest management in the EU-27 countries. The results suggest that if policy makers wish to meet emissions targets with 80% certainty, this goal will be eight times more expensive than when they were unconcerned with uncertainty. Policy makers’ risk attitudes affect forest management strategy primarily through the inclusion of wood products, where potential carbon emissions reductions are high but also highly uncertain. Excluding wood products from a climate strategy can be expensive if policy maker are insensitive to uncertainty.
    Keywords: uncertainty; carbon sequestration; bioenergy; wood products; climate policy; cost-efficiency; EU.
    JEL: Q23 Q28 Q48 Q54
    Date: 2013–09–12
  8. By: Christian de Perthuis; Raphael Trotignon
    Abstract: The European emissions trading scheme (EU ETS) is the centrepiece of Europe’s climate policy. The system has been undermined variously by the weakness of its regulation, an undesirable overlap with other public policies and the far-reaching economic and financial crisis that caused the market price of allowances to plunge. This article attempts to identify the conditions for making the coming years of the EU ETS a success. It draws historical lessons from the eight years the scheme has been in operation, and then analyzes, using the ZEPHYR-Flex model, the various interventions by the public authorities currently under discussion in order to revive the market. These simulations reveal the risk of carrying forward problems to the future, with further clouding of the visibility needed by ETS actors in the long term. Finally, the article proposes to draw lessons from monetary policy by outlining what might be the mandate of an Independent Carbon Market Authority, with responsibility for the dynamic management of the supply of allowances, and whose main mission would be to ensure the optimal linkage between the different temporal horizons of the climate strategy.
    Keywords: Emission trading, EU ETS, governance
    Date: 2013
  9. By: Satti, Saqlain Latif; Farooq, Abdul; Shahbaz, Muhammad
    Abstract: This present study investigates the relationship between natural resource abundance and economic growth in Venezuelan economy. We have applied the ARDL bounds testing approach to cointegration developed by Pesaran et al. (2001) to examine long run relationship between the variables. The VECM Granger causality is applied to test the direction of causality between the variables. The present study covers the period of 1971-2011. Our empirical evidence indicated that variables are found to be cointegrated. The results confirm that natural resource abundance impedes economic growth. Financial development, capital stock and trade openness enhance economic growth. The feedback hypothesis is also found between natural resource abundance and economic growth.
    Keywords: natural resource abundance, economic growth, cointegration
    JEL: C3
    Date: 2013–09–11
  10. By: Koichiro Ito
    Abstract: Many countries use substantial public funds to subsidize reductions in negative externalities. However, such subsidies create asymmetric incentives because increases in externalities remain unpriced. This paper examines implications of such asymmetric subsidy incentives by using a regression discontinuity design in California's electricity rebate program that provided a financial reward for energy conservation. Using household-level panel data from administrative records, I find precisely-estimated zero causal effects in coastal areas. In contrast, the incentive produced a 5% consumption reduction in inland areas. Income and climate conditions significantly drive the heterogeneity. Asymmetric subsidy structures weaken incentives because consumers far from the rebate target show little response. The overall program cost is 17.5 cents per kWh reduction and $390 per ton of carbon dioxide reduction, which is unlikely to be cost-effective for a reasonable range of the social marginal cost of electricity.
    JEL: L11 L51 L94 L98 Q41 Q48 Q58
    Date: 2013–09

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