nep-res New Economics Papers
on Resource Economics
Issue of 2013‒12‒15
seven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Climate Policy and Catastrophic Change: Be Prepared and Avert Risk By Rick Van der Ploeg; Aart de Zeeuw
  2. Untapped Fossil Fuel and the Green Paradox: A classroom calibration of the optimal carbon tax By Rick Van der Ploeg
  3. Are tax exemptions for electric cars an efficient climate policy measure? By Geir H. Bjertnæs
  4. Self-enforcing environmental agreements and capital mobility By Thomas Eichner; Rüdiger Pethig
  5. Can non-market regulations spur innovations in environmental technologies? : A study on firm level patenting By Marit E. Klemetsen; Brita Bye; Arvid Raknerud
  6. Trade tariffs and self-enforcing environmental agreements By Thomas Eichner; Rüdiger Pethig
  7. Efficiency and Acceptability of Climate Policies: Race Against the Lock-ins By Julie Rozenberg; Adrien Vogt-Schilb; Hallegatte Stéphane

  1. By: Rick Van der Ploeg; Aart de Zeeuw
    Abstract: The optimal reaction to a pending climate catastrophe is to accumulate capital to be better prepared for the disaster and levy a carbon tax to reduce the risk of the hazard by curbing global warming. The optimal carbon tax consists of the present value of marginal damages, the non-marginal expected change in welfare caused by a marginal higher risk of catastrophe, and the expected loss in after-catastrophe welfare. The last two terms offset precautionary capital accumulation. A linear hazard function calibrated to an expected time of 15 years for a 32% drop in global GDP if temperature stays at 6 degrees Celsius implies with a discount rate of 1.4% a precautionary return of 1.6% and a carbon tax of 136 US $/tC. More intertemporal substitution lowers precautionary capital accumulation and lessens the need for a high carbon tax, but implies less intergenerational inequality aversion which pushes up the carbon tax.
    Keywords: non-marginal climate policy, tipping points, risk avoidance, economic growth, social cost of carbon, precaution, adaptation capital
    JEL: D81 H20 O40 Q31 Q38
    Date: 2013–07–24
  2. By: Rick Van der Ploeg
    Abstract: A classroom model of global warming, fossil fuel depletion and the optimal carbon tax is formulated and calibrated. It features iso-elastic fossil fuel demand, stock-dependent fossil fuel extraction costs, an exogenous interest rate and no decay of the atmospheric stock of carbon. The optimal carbon tax reduces emissions from burning fossil fuel, both in the short and medium run. Furthermore, it brings forward the date that renewables take over from fossil fuel and encourages the market to keep more fossil fuel locked up. A renewables subsidy induces faster fossil fuel extraction and thus accelerates global warming during the fossil fuel phase, but brings forward the carbon-free era, locks up more fossil fuel reserves and thus ultimately curbs cumulative carbon emissions and global warming. For relatively large subsidies social welfare is more likely to fall as the economic costs rises more than proportionally with the size of the subsidy. Our calibration suggests that such subsidies are not a good second-best climate policy.
    Keywords: global warming, social cost of carbon, optimal cabon tax, renewables
    JEL: D81 H20 Q31 Q38
    Date: 2013–07–25
  3. By: Geir H. Bjertnæs (Statistics Norway)
    Abstract: This study finds that the welfare gain, excluding environmental effects, generated by increasing the Norwegian tax rate on purchase of electric cars from 8 to 37 percent amounts to approximately 5500- 6500 NOK (or 680-820 euro) per ton increase in GHG emissions in the long run. Substantial tax exemptions implies that reallocation from electric cars towards petrol and diesel powered cars generates a tax revenue gain of more than 40 billion NOK, which amounts to almost 10 percent of government consumption in 2007.
    Keywords: Taxation; Electric cars; CO2 emissions
    JEL: Q54 R48 H23
    Date: 2013–05
  4. By: Thomas Eichner; Rüdiger Pethig
    Abstract: In a multi-country model with mobile capital and global pollution this paper analyzes the stability of self-enforcing environmental agreements (IEAs) when the coalition formed by the signatory countries plays Nash. In accordance with previous environmental literature we show that there exists a unique self-enforcing IEA consisting of two or three signatory countries if emissions tax rates are strategic substitutes. However, emissions tax rates are strategic complements if the pollution is not too detrimental. In that case we find very small self-enforcing IEAs, as before, but now the socially optimal agreement among all countries may be selfenforcing as well. Special emphasis is placed on the investigation and interpretation of the conditions which render stable the grand coalition.
    Keywords: capital mobility, self-enforcing environmental agreements, emissions tax, Nash behavior
    JEL: H23 H77 Q58
    Date: 2013
  5. By: Marit E. Klemetsen; Brita Bye; Arvid Raknerud (Statistics Norway)
    Abstract: This paper provides new evidence on the role of non-market based (“command-and-control”) regulations in relation to innovations in environmental technologies. While pricing is generally considered the first-best policy instrument, non-market regulations, such as technology standards and non-tradable emission quotas, are common when a regulator faces multiple emission types and targets, heterogeneous recipients, or uncertainty with regard to marginal damages. Knowing whether these regulations spur or hinder innovation is of great importance to environmental policy. Using a unique Norwegian panel data set that includes information about the type and number of patent applications, technology standards, non-tradable emission quotas, and a large number of control variables for almost all large and medium-sized Norwegian incorporated firms, we are able to conduct a comprehensive study of the effect of non-market based regulations on environmental patenting. Unlike previous studies that are typically conducted at the industry level, we are able to take firm heterogeneiry into account, and thereby reduce the common problem of omitted variable bias in our analysis. We empirically identify strong and significant effects on innovations from implicit regulatory costs associated with the threat that a firm will be sanctioned for violating an emission permit.
    Keywords: Command-and-control regulations; Technology standards; Non-tradable emission quotas; Patents; Innovation; Environmental technologies; Random effects ordered probit model.
    JEL: C23 O34 Q52 Q53 Q55 Q58
    Date: 2013–09
  6. By: Thomas Eichner; Rüdiger Pethig
    Abstract: In the basic model of international environmental agreements (IEAs) (Barrett 1994, Rubio and Ulph 2006) extended by international trade, self- enforcing - or stable - IEAs may comprise up to 60% of all countries (Eichner and Pethig 2013). But these IEAs reduce total emissions only slightly compared to non-cooperation. Here we analyze the capacity of sign-unconstrained tariffs to enhance the size and performance of self-enforcing IEAs. We show that the size of stable IEAs shrinks when climate coalitions are Stackelberg leaders and set tariffs in addition to their cap-and-trade schemes. Surprisingly, these smaller IEAs reduce total emissions more effectively than the larger stable IEAs without tariffs. In the model with tariffs the signatory countries import fossil fuel and their tariff takes the form of a subsidy of fuel consumption and a tax on the production of the consumption good.
    Keywords: tariff, trade, self-enforcing environmental agreements, Stackelberg equilibrium
    JEL: C72 F18 Q50 Q58
    Date: 2013
  7. By: Julie Rozenberg (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Adrien Vogt-Schilb (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech); Hallegatte Stéphane (SDN - Sustainable Development Network - The World Bank)
    Abstract: Policymakers have good reasons to prefer capital-based policies - such as CAFE standards or feebates programs - over a carbon price. A carbon price minimizes the discounted cost of a climate policy, but may result in existing capital being under-utilized or scrapped before its scheduled lifetime, hurt the workers that depend on it, and inflict an immediate income drop. Capital-based policies avoid these obstacles, but can reach a given climate target only if implemented early enough. Delaying mitigation policies may thus create a political-economy lock-in (easier-to-implement policies become unavailable) in addition to the economic lock-in (the target becomes more expensive).
    Keywords: intergenerational equity, sectoral policies, mothballing
    Date: 2013

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