nep-res New Economics Papers
on Resource Economics
Issue of 2014‒09‒25
six papers chosen by
Maximo Rossi
Universidad de la República

  1. The Drivers of Long-run CO2 Emissions: A Global Perspective since 1800 By Sofia Teives HENRIQUES; Karol Jan BOROWIECKI
  2. Abatement Technology Search By Alain-Désiré Nimubona; Andrew Leach
  3. Structural disparities in carbon dioxide consumption and trade in the world economy By Stefan Ederer; Stefan Weingärtner
  4. Searching for carbon leaks in multinational companies By Antoine Dechezleprêtre; Caterina Gennaioli; Ralf Martin; Mirabelle Muûls
  5. Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering when Countries are Asymmetric By Vassiliki Manoussi; Anastasios Xepapadeas
  6. Political Violence and Greenfield Foreign Direct Investment in Natural Resources By Caroline Witte; Martijn Burger; Elena Ianchovichina; Enrico Pennings

  1. By: Sofia Teives HENRIQUES (Department of Business and Economics, University of Southern Denmark); Karol Jan BOROWIECKI (Department of Business and Economics, University of Southern Denmark; Department of Economics, Trinity College Dublin)
    Abstract: Fossil-fuel-related carbon dioxide emissions have risen dramatically since 1800. We identify the long-run drivers of CO2 emissions for a sample of twelve developed economies using an extended Kaya decomposition. By considering biomass and carbon-free energy sources along with fossil fuels we are able to shed light on the effects of past and present energy transitions on CO2 emissions. We find that at low levels of income per capita, fuel switching from biomass to fossil fuels is the main contributing factor to emission growth. Scale effects, especially income effects, become the most important emission drivers at higher levels of income and also dominate the overall long-run change. Technological change is the main offsetting factor. Particularly in the last decades, technological change and fuel switching have become important contributors to the decrease in emissions in Europe. Our results also individualize the different CO2 historical paths across parts of Europe, North America and Japan.
    Keywords: CO2 emissions, Kaya decomposition, Energy transition
    JEL: N70 O44 Q40 Q54 Q5
    Date: 2014–09
  2. By: Alain-Désiré Nimubona (Department of Economics, University of Waterloo); Andrew Leach (Alberta School of Business, University of Alberta)
    Abstract: We develop a three-stage model of abatement technology search, adoption, and deployment. Using this model, which draws on search theory tools more frequently used in labour and monetary economics, we compare market-based and command-and-control pollution control instruments with respect to the incentives each provides for abatement technology search and adoption, expected emissions reductions, and expected compliance costs. We show that the polluting firm always has more incentives to search for and adopt a more ecient abatement technology under either an emissions tax or a tradeable permit system than under an equivalently stringent emissions standard. We also show that while expected incentives for innovation are comparable under emissions taxes and tradeable permit regimes, the likelihood for total future compliance costs to be reduced after an increase in the stringency of environmental policy - the so-called Porter hypothesis - is higher with a tradeable permit regime.
    JEL: Q55 Q58 H23 D83
    Date: 2014–08
  3. By: Stefan Ederer; Stefan Weingärtner
    Abstract: Social scientists have long argued that developed countries are more and more responsible for climate change because they externalise pollution to less developed countries. This paper offers a way to quantify climate responsibility by calculating carbon footprints and carbon balances between regions by means of an input-output analysis. We find that regions in the center of the world economy are increasingly consuming CO2 which was emitted in the periphery. Developed countries exhibit a large emission balance deficit with the less developed economies. Furthermore, we decompose carbon footprint developments between 1995 and 2007 into three effects: technical progress, shifts in the global value chain and increasing final demand. Our results show that the effect of technical progress is overcompensated by the effect of increased consumption and value chain shifts. Footprint growth in the center is strongly linked to additional pollution and technical development in the periphery. These findings challenge the prevailing view of the potential of modernisation and globalisation with regard to climate change.
    Keywords: Climate responsibility, carbon leakage, carbon footprint, environmental world-system theory, input-output analysis
    JEL: C67 F18 Q37 Q56 O13
    Date: 2014–09
  4. By: Antoine Dechezleprêtre; Caterina Gennaioli; Ralf Martin; Mirabelle Muûls
    Abstract: Does climate change policy cause companies to shift the location of production, thereby creating carbon leakage? We examine the impact of the European Union Emissions Trading System (EU ETS) on the geographical distribution of carbon emissions within multinational companies based on data from the Carbon Disclosure Project for the period 2007- 2009. Our data includes regional emissions of 435 companies, of which 47 are subject to EU ETS regulation. We find no evidence that the EU ETS has induced a displacement of carbon emissions from Europe towards the rest of the world. Our results suggest that claims that the EU ETS would cause carbon leakage might have been exaggerated.
    Date: 2014–09
  5. By: Vassiliki Manoussi; Anastasios Xepapadeas
    Abstract: We study a dynamic game of climate policy design in terms of emissions and solar radiation management (SRM) involving two heterogeneous regions or countries. Countries emit greenhouse gasses (GHGs), and can block incoming radiation by unilateral SRM activities, thus reducing global temperature. Heterogeneity is modelled in terms of the social cost of SRM, the environmental damages due to global warming, the productivity of emissions in terms of generating private benefits, the rate of impatience, and the private cost of geoengineering. We determine the impact of asymmetry on mitigation and SRM activities, concentration of GHGs, and global temperature, and we examine whether a tradeoff actually emerges between mitigation and SRM. Our results could provide some insights into a currently emerging debate regarding mitigation and SRM methods to control climate change, especially since asymmetries seem to play an important role in affecting incentives for cooperation or unilateral actions.
    Keywords: Climate change, mitigation, solar radiation management, cooperation, differential game, asymmetry, feedback Nash equilibrium.
    JEL: Q53 Q54
    Date: 2014–09–02
  6. By: Caroline Witte (Erasmus University Rotterdam and Erasmus Research Institute of Management); Martijn Burger (Erasmus University Rotterdam, Tinbergen Institute); Elena Ianchovichina (Chief Economist Office, Middle East and North Africa Region, World Bank); Enrico Pennings (Erasmus University Rotterdam, Tinbergen Institute, Erasmus Research Institute of Management)
    Abstract: In this paper the heterogeneous effect of political violence on Greenfield Foreign Direct Investment is examined using the predictions from real options theory. We hypothesize that political violence reduces overall FDI inflows, as violence increases uncertainty and operating costs. Yet, this effect is expected to be smaller for secessionist conflicts than for conflict concerning national authority, as secessionist conflicts are more geographically concentrated. In addition, we hypothesize that FDI in the natural resource sector is less sensitive to political violence than FDI in manufacturing and services, since MNEs active in the natural resource sector are more restricted in their location choice and the economic rents associated with natural resource extraction can offset the negative effects of political violence on profits. We find evidence for these hypothesizes. In addition, we empirically show that the insensitivity of natural resource FDI to political violence is related to the existence of limited investment options and high resource rents.
    Date: 2014–09

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