New Economics Papers
on Resource Economics
Issue of 2013‒11‒22
ten papers chosen by

  1. The dynamics of environmental concern and the evolution of pollution By Emeline Bezin
  2. Unintended Consequences of Transportation Carbon Policies: Land-Use, Emissions, and Innovation By Stephen P. Holland; Jonathan E. Hughes; Christopher R. Knittel; Nathan C. Parker
  3. Abandoning Fossil Fuel: How fast and how much? By Rick Van der Ploeg; Armon Rezai
  4. Energizing Economic Growth in Ghana : Making the Power and Petroleum Sectors Rise to the Challenge By World Bank
  5. Green Growth Challenges and the Need for an Energy Reform in Mexico By Carla Valdivia de Richter
  6. Is there space for agreement on climate change? A non-parametric approach to policy evaluation By Simon Dietz; Anca N. Matei
  7. Act-based versus harm-based sanctions for environmental offenders. By Blondiau, Thomas; Rousseau, Sandra
  8. Abrupt Positive Feedback and the Social Cost of Carbon By Rick Van der Ploeg
  9. Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality? By Martin Weitzman
  10. Active Learning about Climate Change By In Chang Hwang; Richard S.J. Tol; Marjan W. Hofkes

  1. By: Emeline Bezin
    Abstract: We develop an overlapping generations model within which the evolution of pollution and the formation of environmental concern are endogenous. On the one hand, people heterogeneously concerned with environmental issues contribute to pollution which is a public bad. On the other hand, the transmission of environmental attitudes is the result of some economic choice which is affected by pollution. The model predicts that the long run proportion of environmentally concerned individuals will always be high. Though, depending on the pollution-generating technology, the transition from a low-environmentally concerned society to a high-environmentally concerned one is accompanied by two different outcomes regarding the long run level of pollution. If the technology is “clean”, there is a stable steady state level of pollution. However, if it is “dirty”, pollution experiences an unlimited growth which eventually causes an environmental disaster. This result captures some stylized facts regarding the joint evolution of environmental concern and pollution in developing nations. In the latter case, we show that intergenerational transfers from the older generation to the young working one restore the possibility to reach a stationary level of pollution.
    Keywords: Overlapping generations, pollution, environmental concern, cultural transmission,environmental policy
    JEL: Q50 D90 J11
    Date: 2013
  2. By: Stephen P. Holland; Jonathan E. Hughes; Christopher R. Knittel; Nathan C. Parker
    Abstract: Renewable fuel standards, low carbon fuel standards, and ethanol subsidies are popular policies to incentivize ethanol production and reduce emissions from transportation. Compared to carbon trading, these policies lead to large shifts in agricultural activity and unexpected social costs. We simulate the 2022 Federal Renewable Fuel Standard (RFS) and find that energy crop production increases by 39 million acres. Land- use costs from erosion and habitat loss are between $277 and $693 million. A low carbon fuel standard (LCFS) and ethanol subsidies have similar effects while costs under an equivalent cap and trade (CAT) system are essentially zero. In addition, the alternatives to CAT magnify errors in assigning emissions rates to fuels and can over or under-incentivize innovation. These results highlight the potential negative efficiency effects of the RFS, LCFS and subsidies, effects that would be less severe under a CAT policy.
    JEL: H4 Q2 Q4 Q5
    Date: 2013–11
  3. By: Rick Van der Ploeg; Armon Rezai
    Abstract: Climate change must deal with two market failures, global warming and learning by doing in renewable use. The social optimum requires an aggressive renewables subsidy in the near term and a gradually rising carbon tax which falls in long run. As a result, more renewables are used relative to fossil fuel, there is an intermediate phase of simultaneous use, the carbonfree era is brought forward, more fossil fuel is locked up and global warming is lower. The optimal carbon tax is not a fixed proportion of world GDP. The climate externality is more severe than the learning by doing one. �
    Keywords: climate change, integrated assessment, Ramsey growth, carbon tax, renewables subsidy, learning by doing, directed technical change, multiplicative damages, additive damages
    JEL: H21 Q51 Q54
    Date: 2013–10–09
  4. By: World Bank
    Keywords: Energy - Energy and Environment Environment - Climate Change Mitigation and Green House Gases Oil Refining and Gas Industry Environment - Environment and Energy Efficiency Energy - Energy Production and Transportation Industry
    Date: 2013–06
  5. By: Carla Valdivia de Richter
    Abstract: As Mexico seeks to boost economic growth, pressures on its natural resources and environmental outcomes may intensify, jeopardizing the sustainability of that growth and the well-being of the population. Costs of environmental degradation were estimated at approximately 5% of GDP in 2011, primarily from the health impact of air pollution, while overexploitation of natural resources – such as water – threatens their sustainability. Subsidies and prices do not reflect environmental externalities or cost of providing natural resources, including scarcity costs. They result in poor environmental outcomes, represent a heavy burden on the government budget and, contrary to their original objective, have not efficiently tackled poverty and inequality. Such subsidies should be gradually removed. In the energy sector, reforms are needed in order to allow the state-owned oil company PEMEX to become more efficient operationally and environmentally, and to better provide fiscal revenues. Les défis de la croissance verte et la nécessité d'une réforme de l'énergie au Mexique Comme le Mexique cherche à stimuler la croissance économique, les pressions sur les ressources naturelles et les effets sur l’environnement peuvent s'intensifier, ce qui compromet la durabilité de cette croissance et le bien-être de la population. Les coûts de la dégradation de l'environnement ont été estimés à environ 5% du PIB en 2011, essentiellement dus à l'impact sanitaire de la pollution de l'air, tandis que la surexploitation des ressources naturelles - comme l'eau - menace leur pérennité. Les subventions et les prix ne reflètent pas les externalités environnementales ou le coût de l’approvisionnement de ressources naturelles, y compris les coûts de rareté. Elles se traduisent par des résultats médiocres pour l'environnement, représentent un lourd fardeau pour le budget de l'État et, contrairement à leur objectif initial, n'ont pas été très efficace contre la pauvreté et l'inégalité. Ces subventions devraient être progressivement supprimées. Dans le secteur de l'énergie, des réformes sont nécessaires afin de permettre à la compagnie pétrolière publique PEMEX de devenir plus efficace sur le plan opérationnel et de l'environnement, et à améliorer la prestation des recettes fiscales.
    Keywords: Mexico, climate change, green growth, water sustainability, energy, énergie, durabilité de l’eau, changement climatique, croissance verte, Mexique
    JEL: H23 O44 Q4 Q5
    Date: 2013–11–12
  6. By: Simon Dietz; Anca N. Matei
    Abstract: Economic evaluation of climate policy is notoriously dependent on assumptions about time and risk preferences, since reducing greenhouse gas emissions today has a highly uncertain pay-off, far into the future. These assumptions have always been much debated. Rather than occupy a position in this debate, we take a non-parametric approach here, based on the concept of Time-Stochastic Dominance. Using an integrated assessment model, we apply Time-Stochastic Dominance analysis to climate change, asking are there global emissions abatement targets that everyone who shares a broad class of time and risk preferences would agree to prefer? Overall we find that even tough emissions targets would be chosen by almost everyone, barring those with arguably `extreme' preferences.
    Date: 2013–10
  7. By: Blondiau, Thomas; Rousseau, Sandra
    Date: 2013–06
  8. By: Rick Van der Ploeg
    Abstract: Optimal climate policy should act in a precautionary fashion to deal with tipping points that occur at some future random moment. The optimal carbon tax should include an additional component on top of the conventional present discounted value of marginal global warming damages. This component increases with the sensitivity of the hazard to temperature or the stock of atmospheric carbon. If the hazard of a catastrophe is constant, no correction is needed of the usual Pigouvian tax. The results are applied to a tipping point resulting from an abrupt and irreversible release of greenhouse gases from the ocean floors and surface of the earth, which set in motion a positive feedback loop. Convex enough hazard functions cause overshooting of the carbon tax, but a linear hazard function gives rise to undershooting. A more convex hazard function and a high discount rate speed up adjustment. �
    Keywords: social cost of carbon, tipping point, positive feedback, climate
    JEL: D81 H20 Q31 Q38
    Date: 2013–10–07
  9. By: Martin Weitzman
    Abstract: Thus far, most approaches to resolving the global warming externality have been quantity based. With n different national entities, a meaningful comprehensive treaty involves negotiating n different binding emissions quotas (whether tradeable or not). In post-Kyoto practice this n-dimensional coordination problem has proven intractable and has essentially devolved into sporadic regional volunteerism. By contrast, on the price side there is a natural one-dimensional focus on negotiating a single binding carbon price, the proceeds from which are domestically retained. Significantly (and unlike negotiated quantities) the negotiated uniform price on carbon emissions embodies an automatic "countervailing force" against free-riding self interest by incentivizing agents to internalize the externality. The model of this paper indicates an exact sense in which each agent's extra cost from a higher emissions price is counter-balanced by that agent's extra benefit from inducing (via the higher emissions price) all other agents to simultaneously lower their emissions. With some further restrictions, the theoretical model shows that population-weighted majority rule for a uniform price on carbon emissions can come as close to global efficiency as the median marginal benefit (per capita) is close to the mean marginal benefit (per capita).
    JEL: Q5 Q54
    Date: 2013–11
  10. By: In Chang Hwang (Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands); Richard S.J. Tol (Department of Economics, University of Sussex, Falmer, United Kingdom; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands; Tinbergen Institute, Amsterdam, The Netherlands; CESifo, Munich, Germany); Marjan W. Hofkes (Department of Economics, Vrije Universiteit, Amsterdam, The Netherlands; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands)
    Abstract: We develop a climate-economy model with active learning. We consider three ways of active learning: improved observations, adding observations from the past and improved theory from climate research. From the model, we find that the decision maker invests a significant amount of money in climate research. Expenditures to increase the rate of learning are far greater than the current level of expenditure on climate research, as it helps in taking improved decisions. The optimal carbon tax for the active learning model is nontrivially lower than that for the uncertainty model and the passive learning model.
    Keywords: Climate policy; deep uncertainty; active learning; Bayesian statistical decision; integrated assessment; dynamic programming
    JEL: Q54
    Date: 2013–11

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