nep-res New Economics Papers
on Resource Economics
Issue of 2014‒11‒01
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Environment and Regional Trade Agreements: Emerging Trends and Policy Drivers By Clive George
  2. Clean substitutes and the effectiveness of Carbon Footprint Labels vs. Pigovian Subsidies: Evidence from a Field Experiment By Bruno Lanz; Jules-Daniel Wurlod; Luca Panzone; Timothy Swanson
  3. Cities and Green Growth: The Case of the Chicago Tri-State Metropolitan Area By OECD
  4. The Good, Bad, and Ugly of Watershed Management By Kimberly Burnett; James Roumasset; Christopher Wada
  5. EU Biofuel Policies in Practice – A Carbon Map for the Brazilian Cerrado By Mareike Lange
  6. Impacts of Changes in Federal Crop Insurance Programs on Land Use and Environmental Quality By Langpap, Christian; Wu, JunJie
  7. Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality? By Weitzman, Martin L.
  8. Green subsidies and the WTO By Charnovitz, Steve
  9. Transition to Clean Technology By Douglas Hanley; Daron Acemoglu; Ufuk Akcigit; William Kerr

  1. By: Clive George
    Abstract: This report examines trends in the use of environmental provisions in Regional Trade Agreements and identifies factors which may explain the presence or absence of these provisions. The report builds on work of the OECD Joint Working Party on Trade and Environment (JWPTE) and includes results of an informal survey of delegates. Analysis of the environmental provisions in RTAs reveals an encouraging upward trend. While basic provisions remain the most common types found in RTAs, the incidence of more substantive provisions has increased significantly in recent years. Among these, environmental co-operation has been the most common type. Several factors may have contributed to this evolution. These include countries extending their political mandates for RTAs, for example to include provisions for compliance with multilateral environmental agreements (MEAs), as well as a general accumulation of experience with the use of environmental provisions.
    Keywords: trade policy, trade and environment, free trade agreements, environmental provisions, regional trade agreements
    JEL: F13 F18 N50 Q56
    Date: 2014–07–25
  2. By: Bruno Lanz; Jules-Daniel Wurlod (Centre for International Environmental Studies, The Graduate Institute); Luca Panzone; Timothy Swanson
    Abstract: We study how substitutability between clean and dirty alternatives affects the effectiveness of environmental regulation in a field experiment that controls for the choice set of respondents. We consider four product categories with clean and dirty alternatives: (i) cola products in plastic bottles vs. in aluminum cans; (ii) skimmed vs. whole milk; (iii) chicken meat vs. beef meat; and (iv) margarine vs. butter. We employ two neutrally framed treatments to quantify the willingness to substitute between clean and dirty alternatives in each product market, namely a change in relative prices and the removal of the dirty alternative, leaving respondents the option of buying one of the remaining clean alternatives or nothing. We then compare the impact of a carbon footprint label and a Pigovian subsidy to the clean alternatives. While both instruments increase the market share of the clean products, their impact is higher when clean and dirty alternatives are close substitutes. We also find evidence that motivation crowding is present and increases with substitutability. Our results highlight the importance of product markets in the design of consumer-orientated policies.
    Keywords: Field experiments; Environmental policy; Market-based instruments; Information provision; Clean substitutes; Motivation crowding; Carbon footprint.
    JEL: C25 C91 D12 D64 L15 L50 Q58
    Date: 2014–10–01
  3. By: OECD
    Abstract: This working paper assesses opportunities and policies for green growth in the Chicago Tri-State Metropolitan Area. It first examines the Chicago metro-region's economic and environmental performance and potential constraints to regional growth, and identifies emerging regional specialisations in green products and services. This is followed by a review of sector-specific policies that can contribute to green jobs, green firms and urban attractiveness, with particular attention to energy-efficient buildings, the wind energy industry, public transportation, and the water and waste sectors. Finally, the working paper considers the role of workforce, innovation and governance policies, focusing on skill shortages and skill mismatches in the regional labour market, ways to make the most of the region's innovation assets, and opportunities for regional institutional co-ordination.
    Keywords: sustainable development, innovation, transport, renewable energy, climate change, energy efficiency, green technologies, green growth, green economy, urban sustainability, cities, multi-level governance, metro-region, Chicago, Indiana, Illinois, green cities, Milwaukee, urban development, regional clusters, attractiveness, Wisconsin
    JEL: O18 O44 Q01 Q55 Q58 R11 R58
    Date: 2013–05–03
  4. By: Kimberly Burnett (UHERO, University of Hawai‘i at Manoa); James Roumasset (University of Hawai‘i at Manoa, UHERO); Christopher Wada (UHERO, University of Hawai‘i at Manoa)
    Abstract: Efficient management of groundwater resource systems requires careful consideration of relationships — both positive and negative — with the surrounding environment. The removal of and protection against “bad” and "ugly" natural capital such as invasive plants and feral animals and the enhancement of “good” capital (e.g. protective fencing) are often viewed as distinct management problems. Yet environmental linkages to a common groundwater resource suggest that watershed management decisions should be informed by an integrated framework. We develop such a framework and derive principles that govern optimal investment in the management of two types of natural capital — those that increase recharge and those that decrease recharge — as well as groundwater extraction itself. Depending on the initial conditions of the system and the characteristics of each type of natural capital, it may make sense to remove bad capital exclusively, enhance good capital exclusively, or invest in both activities simultaneously until their marginal benefits are equal.
    Keywords: Watershed management, natural capital, invasive species, groundwater economics
    JEL: Q24 Q25
    Date: 2014–05
  5. By: Mareike Lange
    Abstract: It is still difficult for biofuel producers to prove the contribution of their biofuels to reducing carbon emissions because the production of biofuel feedstocks can cause land use change (LUC), which in turn causes carbon emissions. A carbon map can serve as a basis to prove such contribution. I show how to calculate a carbon map according to the sustainability requirements for biofuel production adopted by the European Commission (EU-RED) for the Brazilian Cerrado. Based on the carbon map and the carbon balance of the production process I derive maps showing the possible emission savings that would be generated by biofuels based on soy and sugarcane if an area were to be converted to produce feedstock for this biofuel options. I evaluate these maps according to the criterion contained in the EU-RED of 35% minimum emission savings for each biofuel option compared to its fossil alternative. In addition, to avoid indirect LUC effects of the EU-RED that might offset any contribution of biofuels to reducing carbon emissions. I argue that all agricultural production should be subject to a carbon assessment. In this effort, the calculated carbon maps can be the basis for a climate friendly land use planning that is binding for all agricultural production in the Cerrado
    Keywords: biofuels, carbon emissions, Renewable Energy directive, carbon map, land use change, Brazil
    JEL: Q42 Q58 Q56 Q16
    Date: 2014–10
  6. By: Langpap, Christian; Wu, JunJie
    Abstract: This paper integrates economic and physical models to assess how federal crop revenue insurance programs might affect land use, cropping systems, and environmental quality in the U.S. Corn Belt region. The empirical framework includes econometric models that predict land conversion, crop choices, and crop rotations at the parcel level based on expectation and variance of crop revenues, land quality, climate conditions, and physical characteristics at each site. The predictions are then combined with site-specific environmental production functions to determine the effect of revenue insurance on nitrate runoff and leaching, soil water and wind erosion, and carbon sequestration. Results suggest that crop insurance will have small impacts on conversions of non-cropland to cropland, but more significant impacts on crop choice. These changes in crop mix have moderate impacts on agricultural pollution.
    Keywords: Crop Insurance, Revenue Insurance, Crop Choice, Environmental Quality, Agricultural and Food Policy, Land Economics/Use, Risk and Uncertainty, Q18, Q28,
    Date: 2014–10
  7. By: Weitzman, Martin L.
    Abstract: It is difficult to resolve the global warming free-rider externality problem by negotiating n different quantity targets. By contrast, negotiating a single internationally binding minimum carbon price (the proceeds from which are domestically retained) counters self-interest by incentivizing agents to internalize the externality. The model of this article indicates an exact sense in which each agent’s extra cost from a higher emissions price is counterbalanced by that agent’s extra benefit from inducing all other agents to simultaneously lower their emissions in response to the higher price. Some implications are discussed. While the study is centered on a formal model, the tone of the policy discussion resembles more an exploratory think piece.
    Date: 2014
  8. By: Charnovitz, Steve
    Abstract: This paper provides a detailed explanation how the law of the World Trade Organization regulates environmental subsidies with a focus on renewable energy subsidies. The paper begins by discussing the economic justifications for such subsidies and the criticisms of them and then gives examples of categories of subsidies. The paper provides an overview of the relevant World Trade Organization rules and case law, including the recent Canada-Renewable Energy case. The paper also makes specific recommendations for how World Trade Organization law can be improved and discusses the literature on reform proposals. The study finds that because of a lack of clarity in World Trade Organizaion rules, for some clean energy subsidies, a government will not know in advance whether the subsidy is World Trade Organization-legal.
    Keywords: Environmental Economics&Policies,Economic Theory&Research,Taxation&Subsidies,Emerging Markets,Trade Law
    Date: 2014–10–01
  9. By: Douglas Hanley; Daron Acemoglu; Ufuk Akcigit; William Kerr
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation-in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several steps to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model`s quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy heavily relies on research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policy structures. For example, just relying on carbon taxes or delaying intervention both have significant welfare costs--though their implications for medium run temperature increases are quite different.
    Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy
    JEL: O30 O31 O33 C65
    Date: 2014–01

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