nep-res New Economics Papers
on Resource Economics
Issue of 2014‒07‒28
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. How should we measure environmental policy stringency? A new approach By Caspar Sauter
  2. Environmental Policies under Debt Constraint By Mouez Fodha; Thomas Seegmuller; Hiroaki Yamagami
  3. Online Appendix: How should we measure environmental policy stringency? A new approach By Caspar Sauter
  4. An Account of Pollution Emission Embodied in Global Trade: PGT1 and PGT2 Database By Honma, Satoshi; Yoshida, Yushi
  5. Robustness of norm-driven cooperation in the commons to environmental variability By Maja Schlüter; Alessandro Tavoni; Simon Levin
  6. Robust Dynamic Optimal Taxation and Environmental Externalities By Ted Temzelides; Borghan Narajabad
  7. The Aggregation Dilemma in Climate Change Policy Evaluation By Ingmar Schumacher
  8. Network economics and the environment: insights and perspectives By Sergio Currarini; Carmen Marchiori; Alessandro Tavoni
  9. The Diesel Differential: Differences in the Tax Treatment of Gasoline and Diesel for Road Use By Michelle Harding

  1. By: Caspar Sauter (Institute of economic research IRENE, Faculty of Economics and Business, University of Neuchâtel, Switzerland)
    Abstract: One of the biggest obstacles in cross-country empirical research in the area of environmental economics is the absence of a sound indicator quantifying environmental policy stringency. A variety of indicators have been proposed and are currently used. Almost none of them rely on an explicitly stated methodology, violating thereby one of the most fundamental rules of index construction. To overcome this problem, this paper develops a new general methodology for the measurement of environmental policy stringency and proposes a first implementation using the example of CO2 policy stringency. To do so it combines originally extensive databases on CO2 emissions.
    Keywords: Greenhouse gas emissions, environmental regulation, environmental policy stringency, policy stringency index, CO2 emissions
    JEL: Q50 Q53 Q58 C18
    Date: 2014–07
  2. By: Mouez Fodha (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Thomas Seegmuller (AMSE - Aix-Marseille School of Economics - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Hiroaki Yamagami (Seikei University - Seikei University)
    Abstract: This article analyzes the consequences of environmental tax policies when the government imposes a constraint on stabilizing public debt. A public sector of pollution abatement is financed by taxation and by issuing public debt. Considering a simple overlapping-generations model, the tax reform stimulates steady-state investment. Then, the environmental quality and the aggregate consumption increase if and only if (i) pollution abatement is large enough and (ii) there is under-accumulation of the per capita capital stock. This arises if environmental taxation allows a decrease of either income taxation or debt-output ratio.
    Keywords: environmental tax reform; debt; public emission abatement; double dividend
    Date: 2014–06
  3. By: Caspar Sauter (Institute of economic research IRENE, Faculty of Economics and Business, University of Neuchâtel, Switzerland)
    Abstract: This is the online appendix to the paper “How should we measure environmental policy stringency? A new approach” (Sauter, 2014). The main paper outlines the general methodology proposed to construct environmental policy indexes and proposes a first implementation of a CO2 input index and a CO2 performance index. This online appendix reports the results of the implementation of a SO2 input index, a SO2 performance index, a CH4 input index, a CH4 performance index as well as the broad GHG input index. All of those indexes have been constructed using the methodology outlined in the main paper.
    Keywords: Greenhouse gas emissions, environmental regulation, environmental policy stringency, policy stringency index, CO2 emissions
    JEL: Q50 Q53 Q58 C18
    Date: 2014–07
  4. By: Honma, Satoshi; Yoshida, Yushi
    Abstract: For the period between 1988 and 2009, we constructed the two sets of the world panel database for the pollution emission embedded in international trade. By applying the time-invariant common pollution intensity at industry level for international trade of over 150 countries, a change in pollution emission from the first database reflects scale and composition effects. This first database allows us to investigate whether the composition of international trade for a country changed toward pollution intensive industries during the last two decades. By utilizing a time-varying and country-varying pollution intensity variable for technique effect, the second database provides a full account of pollution emission embodied in global trade and show to what degree the pollution emission is attributed to scale, composition and technique effects.
    Keywords: Database Construction; Environment; International trade; Pollution emission; World Panel Database
    JEL: F18 O13 Q56
    Date: 2014–07–22
  5. By: Maja Schlüter; Alessandro Tavoni; Simon Levin
    Abstract: Growing empirical evidence points to the importance of social norms for achieving sustainable use of common pool resources (CPR). Social norms can facilitate the cooperation and collective action needed to sustainable share a common resource. With global change, however, the social and environmental conditions under which cooperation has evolved and been maintained in the past may vary dramatically. Higher variability of resource availability and more frequent extreme events, for instance, will put additional pressure on cooperation, possibly triggering its collapse, with detrimental effects on the environment. In light of this, the potential impact of climate change on conflict has recently received considerable attention. Here we assess the robustness of norm-driven cooperation to changing resource availability in a stylised model of community harvesting from a shared resource. The model is a generalised representation of CPR extraction, which allows for social disapproval towards norm-violators. We use an agent-based model to assess the robustness of cooperative outcomes to variable resource flows. Our results indicate that both resource abundance and low resource variability can lead to its unsustainable use, while wither scarcity or high variability in the resource have the potential to stabilise cooperation. These findings provide insights into possible effects of global change on self-governance of the commons. They also indicate that there is no simple answer to the question whether global change has the potential to destabilise cooperation in natural resource use, and lead to environmental degradation and possible conflict.
    Date: 2014–01
  6. By: Ted Temzelides (Rice University); Borghan Narajabad (Federal Reserve)
    Abstract: We study a dynamic stochastic general equilibrium model where agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions adversely affects the economys capital stock. We assume that the mapping from climate change to damages is subject to uncertainty, and we adapt and use techniques from robust control theory in order to study efficiency and optimal policy. We obtain a sharp analytical solution for the implied environmental externality, and we characterize dynamic optimal taxation. A small increase in the concern about model uncertainty can cause a significant drop in optimal energy extraction. The optimal tax which restores the social optimal allocation is Pigouvian. Under more general assumptions, we develop a recursive method and solve the model computationally. We find that the introduction of uncertainty matters qualitatively and quantitatively. We study optimal output growth in the presence and in the absence of concerns about uncertainty and find that these can lead to substantially dfferent conclusions.
    Date: 2014
  7. By: Ingmar Schumacher
    Abstract: The results in this paper show that a policy maker who ignores regional data and instead relies on aggregated integrated assessment models will strongly underestimate the carbon price and thus the required climate policy. Using a stylized theoretical model we show that, under the mild and widely-accepted assumptions of asymmetric climate change impacts and declining marginal utility, an Aggregation Dilemma may arise that dwarfs most other policy- relevant aspects in the climate change cost-benefit analysis. Estimates based on the RICE model (Nordhaus and Boyer 2000) suggest that aggregation leads to around 26% higher total world emissions than those from a regional model. The backstop energy use would be zero in aggregated versions of the model, while it is roughly 1.3% of Gross World Product in the regionally-disaggregated models. Though the policy recommendations from fully aggre- gated models like the DICE model are always used as a benchmark for policy making, the results here suggest that this should be done with the reservations raised by the Aggregation Dilemma in mind.
    Keywords: Aggregation Dilemma; aggregation; Integrated Assessment Models; climate policy.
    JEL: Q54 Q58
    Date: 2014–07–16
  8. By: Sergio Currarini; Carmen Marchiori; Alessandro Tavoni
    Abstract: Recent research in the field of network economics has shown how explicitly modelling the network structure of social and economic relations can provide significant theoretical insights, as well as account for previously unexplained empirical evidence. Despite their critical importance to many environmental problems, network structures and dynamics have been largely disregarded by the environmental economics literature. This paper aims to begin to fill this gap by analysing how networks can provide new insights for both theory and practice, and identifying several avenues for future research. The paper addresses questions pertaining to a wide range of issues, including the adoption and diffusion of green technologies, access to and distribution of natural resources, common-pool resource management and governance, and the stability of international environmental coalitions.
    Date: 2014–01
  9. By: Michelle Harding
    Abstract: Diesel and gasoline account for around 95% of energy used for road transport in the OECD and for the largest share of revenue from taxes on energy. In 33 out of 34 OECD countries, diesel fuel is taxed at lower rates than gasoline both in terms of energy and carbon content. To assess whether this difference is warranted from an environmental perspective, this paper examines the rationales for taxing both fuels, considering the externalities (including local air pollution, carbon emissions and other social costs related to road transport) associated with the use of each fuel and the fuel efficiency advantage of diesel vehicles. The revenue, distributional and competitiveness consequences of increasing tax rates on diesel are also briefly considered and the revenue effects of the tax treatment of diesel are shown to be significant. We conclude that the externalities associated with each fuel show that the lower tax rates that currently apply to diesel fuel are not justifiable from an environmental perspective. Reduction of the diesel differential is warranted. A gradual approach to removing the differential would allow the adverse distributional and competitiveness impacts to be mitigated during the transitional phase. Avantage fiscal en faveur du gazole : différences de traitement fiscal de l'essence et du gazole à usage routier Le gazole et l’essence représentent environ 95 % de l’énergie consommée pour le transport routier dans la zone OCDE et génèrent l’essentiel des recettes issues des taxes sur l’énergie. Dans 33 des 34 pays de l’OCDE, le gazole est taxé à des taux inférieurs à ceux applicables à l’essence, tant du point de vue du contenu énergétique que de la teneur en carbone. Afin de déterminer si cette différence est justifiée d’un point de vue environnemental, ce document examine les raisons qui sous-tendent l’imposition de ces deux types de carburants, tenant compte des externalités (pollution atmosphérique locale, émissions de carbone et autres coûts sociaux induits par le transport routier, etc.) associées à l’utilisation de chacun de ces carburants et la moindre consommation des véhicules diesel. Les conséquences sur le plan des recettes, de la distribution et de la compétitivité d’un relèvement des taux d’imposition du gazole font également l’objet d’une analyse succincte et les répercussions de la taxation du gazole sur les recettes fiscale s’avèrent significatives. En conclusion, les externalités associées à chacun de ces carburants ne justifient pas, d’un point de vue environnemental, les taux d’imposition plus faibles actuellement réservés au gazole. Une réduction de l’avantage fiscal en faveur du gazole est justifiée. Une réduction progressive de cet avantage permettrait l'atténuation dans la phase transitoire des effets défavorables sur la distribution et la compétitivité.
    Date: 2014–07–11

This nep-res issue is ©2014 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.