nep-res New Economics Papers
on Resource Economics
Issue of 2014‒11‒07
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. Moral Behaviour, Altruism and Environmental Policy By Marc Daube; David Ulph
  2. Robust Dynamic Optimal Taxation and Environmental Externalities By Li, Xin; Narajabad, Borghan N.; Temzelides, Theodosios
  3. Pollution Offshoring and Emission Reductions in European and US Manufacturing By Claire Brunel
  4. Developments in Regional Trade Agreements and the Environment: 2013 Update By Clive George
  5. The Role of Product and Process Innovation in CGE Models of Environmental Policy By Claudio Baccianti; Andreas Löschel
  6. Fat Tails and the Social Cost of Carbon By Weitzman, Martin L.
  7. Linking emission trading to environmental innovation: evidence from the Italian manufacturing industry By Simone Borghesi; Giulio Cainelli; Massimiliano Mazzanti
  8. Price versus Quantities versus Indexed Quantities By Frédéric Branger; Philippe Quirion
  9. The critical mass approach to achieve a deal on green goods and services : what is on the table? how much to expect ? By de Melo, Jaime; Vijil, Mariana
  10. Consumer Behaviour in a Social Context: Implications for Environmental Policy By Partha Dasgupta; Dale Southerton; Alistair Ulph; David Ulph

  1. By: Marc Daube (University of St Andrews); David Ulph (University of St Andrews)
    Abstract: Free-riding is often associated with self-interested behaviour. However if there is a global mixed pollutant, free-riding will arise if individuals calculate that their emissions are negligible relative to the total, so total emissions and hence any damage that they and others suffer will be unaffected by whatever consumption choice they make. In this context consumer behaviour and the optimal environmental tax are independent of the degree of altruism. For behaviour to change, individuals need to make their decisions in a different way. We propose a new theory of moral behaviour whereby individuals recognise that they will be worse off by not acting in their own self-interest, and balance this cost off against the hypothetical moral value of adopting a Kantian form of behaviour, that is by calculating the consequences of their action by asking what would happen if everyone else acted in the same way as they did. We show that: (a) if individuals behave this way, then altruism matters and the greater the degree of altruism the more individuals cut back their consumption of a ’dirty’ good; (b) nevertheless the optimal environmental tax is exactly the same as that emerging from classical analysis where individuals act in self-interested fashion.
    Keywords: Altruism; Climate Change; Environmental Economics; Environmental Tax; Externalities; Moral Behaviour; Pro-Social Behaviour; Public Goods
    JEL: Q5 Q58 D11
    Date: 2014–02–03
  2. By: Li, Xin (International Monetary Fund); Narajabad, Borghan N. (Board of Governors of the Federal Reserve System (U.S.)); Temzelides, Theodosios (Rice University)
    Abstract: We study a dynamic stochastic general equilibrium model in which agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions damages the economy's capital stock. We assume that the mapping from climate change to damages is subject to uncertainty, and we use robust control theory techniques to study efficiency and optimal policy. We obtain a sharp analytical solution for the implied environmental externality and characterize dynamic optimal taxation. A small increase in the concern about model uncertainty can cause a significant drop in optimal fossil fuel use. The optimal tax that restores the socially 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 concerns can lead to substantially different conclusions.
    Keywords: Climate change; optimal dynamic taxation; uncertainty; robust
    Date: 2014–05–29
  3. By: Claire Brunel (Department of Economics, Georgetown University)
    Abstract: Between 1995 and 2008, the European Union and the United States raised environmental standards and concurrently experienced important reductions in emissions from manufacturing despite a rise in output. Levinson (2009) finds that the offshoring of polluting industries to countries with lower environmental standards played only small role in the cleanup of US manufacturing, which was largely due to improvements in production technique. But there is no evidence of whether US patterns hold in other developed economies. I provide the first analysis of the pollution intensity of EU production and imports to examine which forces drove the EU cleanup. I find that concerns about the effect of pollution offshoring were unfounded in the European Union, not because the effect was small like in the United States, but because the patterns of specialization of EU production and imports were actually exactly opposite to what pollution offshoring would predict. Starting in the early 2000s, EU manufacturing increasingly produced more pollution-intensive goods while imports became progressively less pollution- intensive, especially from low-income countries. The "brown" specialization of EU production is difficult to explain, but about a quarter can be matched by increased demand for EU exports of polluting goods. However, similar to the US cleanup, changes in production and imports were overwhelmed by improvements in production technique, which were the main drivers of the cleanup of manufacturing.
    Keywords: Trade and environment, Environmental account and accounting, Technological innovation, Input output table
    JEL: D57 F18 Q55 Q56
    Date: 2014–01–01
  4. By: Clive George
    Abstract: This report provides an update on recent developments in the field of Regional Trade Agreements and the environment. Issues arising in the implementation of RTAs with environmental considerations are examined as well as experience in assessing their environmental impacts. This is the seventh update prepared under the aegis of the Joint Working Party on Trade and Environment (JWPTE) since the series began with the 2007 publication Environment and Regional Trade Agreements. The document covers developments from late 2012 to October 2013. It is based on publicly available information.
    Keywords: trade policy, trade and environment, free trade agreements, environmental provisions, regional trade agreements
    JEL: F13 F18 N50 Q56
    Date: 2014–07–25
  5. By: Claudio Baccianti; Andreas Löschel
    Abstract: In the last two decades, large scale CGE models used for environmental policy assessment underwent an important upgrade to integrate endogenous technological progress. Nevertheless, several complexities of innovation are still neglected even if they are of primary interest for policymakers. This paper provides a review of the current state of the art in the CGE modelling literature through a special lens. We discuss how existing models deal with different types of innovation (i.e. product and process innovation) and how differences in innovation activities influence modelling results. We also emphasise the implications of product innovation in a multisector framework, which has received little attention in the literature.
    Keywords: CGE models, ecological innovation, economic growth path, green jobs, innovation, innovation policy, social innovation, socio-ecological transition, sustainable growth
    JEL: O41 O40 O47
    Date: 2014–10
  6. By: Weitzman, Martin L.
    Abstract: At high enough greenhouse gas concentrations, climate change might conceivably cause catastrophic damages with small but non-negligible probabilities. If the bad tail of climate damages is sufficiently fat, and if the coefficient of relative risk aversion is greater than one, the catastrophe-reducing insurance aspect of mitigation investments could in theory have a strong influence on raising the social cost of carbon. In this paper I exposit the influence of fat tails on climate change economics in a simple stark formulation focused on the social cost of carbon. I then attempt to place the basic underlying issues within a balanced perspective.
    Date: 2014
  7. By: Simone Borghesi (University of Siena, Italy.); Giulio Cainelli (University of Padova, Italy.); Massimiliano Mazzanti (University of Ferrara, Italy; SEEDS, Ferrara, Italy.)
    Abstract: This paper examines the different forces underlying the adoption of environmental innovations (EI), with a focus on policy related EI. In particular, exploiting the 2006-2008 wave of the Italian Community Innovation Survey (CIS), we investigate whether the first phase of the European Emissions Trading Scheme (EU-ETS) exerted some effects on EI in CO2 abatement and energy efficiency controlling for other variables, grouped as internal/external to the firm, and additional environmental regulation factors. Our empirical analyses show that a few factors emerge as particularly relevant such as relationships with other firms and institutions, sectoral energy expenditure intensity, and current and future expected environmental regulation. For the specific role of the EU ETS, we find that, on the one hand ETS sectors are more likely to innovate than non-ETS sectors but on the other hand that sector specific policy stringency is negatively associated with EI, possibly due to anticipatory behavior from early moving innovative firms and some sector idiosyncratic factors.
    Keywords: Environmental innovation, EU-ETS, CIS EU data, manufacturing
    Date: 2014–10
  8. By: Frédéric Branger (AgroParisTech ENGREF et CIRED); Philippe Quirion (CNRS et CIRED)
    Abstract: We develop a stochastic model to rank different policies (tax, fixed cap and relative cap) according to their expected total social costs. Three types of uncertainties are taken into account: uncertainty about abatement costs, business-as-usual (BAU) emissions and future economic output (the two latter being correlated). Two parameters: the ratio of slopes of marginal benefits and marginal costs, and the above-mentioned correlation, are crucial to determine which instrument is preferred. When marginal benefits are relatively flatter than marginal costs, prices are preferred over fixed caps (Weitzman’s result). When the former correlation is higher than a parameter-dependent threshold, relative caps are preferred to fixed caps. An intermediate condition is found to compare the tax instrument and the relative cap. The model is then empirically tested for seven different regions (China, the United States, Europe, India, Russia, Brazil and Japan). We find that tax is preferred to caps (absolute or relative) in all cases, and that relative caps are preferred to fixed caps in the US and emerging countries (except Brazil where it is ambiguous), whereas fixed cap are preferred to relative cap in Europe and Japan.
    Keywords: Instrument, Price, Quantity, Intensity Target, Regulation, post-Kyoto, Uncertainty, Climate Policy
    JEL: Q58
    Date: 2014–09
  9. By: de Melo, Jaime; Vijil, Mariana
    Abstract: At the Davos forum of January 2014, a group of 14 countries pledged to launch negotiations on liberalizing trade in"green goods"(also known as"environmental"goods), focusing on the elimination of tariffs for an Asia-Pacific Economic Cooperation list of 54 products. The paper shows that the Davos group, with an average tariff of 1.8 percent, has little to offer as countries have avoided submitting products with tariff peaks for tariff reductions. Even if the list were extended to the 411 products on the World Trade Organization list, taking into account tariff dispersion, the tariff structure on environmental goods would be equivalent to a uniform tariff of 3.4 percent, about half the uniform tariff-equivalent for non-environmental goods. Enlarging the number of participants to low-income countries might be possible as, on average, their imports would not increase by more than 8 percent. However, because of the strong complementarities between trade in environmental goods and trade in environmental services, these should also be brought to the negotiation table, although difficulties in reaching agreement on their scope are likely to be great.
    Keywords: Environmental Economics&Policies,Free Trade,Trade Policy,Economic Theory&Research,International Trade and Trade Rules
    Date: 2014–10–01
  10. By: Partha Dasgupta (University of Cambridge and University of Manchester); Dale Southerton (University of Manchester); Alistair Ulph (University of Manchester); David Ulph (University of St Andrews)
    Abstract: In this paper we summarise some of our recent work on consumer behaviour, drawing on recent developments in behavioural economics, in which consumers are embedded in a social context, so their behaviour is shaped by their interactions with other consumers. For the purpose of this paper we also allow consumption to cause environmental damage. Analysing the social context of consumption naturally lends itself to the use of game theoretic tools, and indicates that we seek to develop links between economics and sociology rather than economics and psychology, which has been the more predominant field for work in behavioural economics. We shall be concerned with three sets of issues: conspicuous consumption, consumption norms and altruistic behaviour. Our aim is to show that building links between sociological and economic approaches to the study of consumer behaviour can lead to significant and surprising implications for conventional economic policy prescriptions, especially with respect to environmental policy.
    Keywords: consumer behaviour, social context, environmental policy, game theory, competitive consumption, consumption norms, altruism, moral behaviour, Kantian calculus
    JEL: D1 D6 H2 Q5 Z1
    Date: 2014–01–01

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