nep-res New Economics Papers
on Resource Economics
Issue of 2015‒02‒16
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Self-enforcing international environmental agreements and trade: taxes versus caps By Pethig, Rüdiger; Eichner, Thomas
  2. Should We Ban Unconventional Oil Extraction to Reduce Global Warming? By Samuel Carrara; Emanuele Massetti
  3. Environmental Art, Prior Knowledge about Climate Change, and Carbon Offsets By Blasch, Julia; Turner, Robert
  4. Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering when Countries are Asymmetric By Vassiliki Manoussi; Anastasios Xepapadeas
  5. The Environmental and Economic Effects of a New Carbon Tax in Portugal:A Dynamic General Equilibrium Model Assessment By Alfredo Marvão Pereira; Rui M. Pereira

  1. By: Pethig, Rüdiger; Eichner, Thomas
    Abstract: This paper studies within a multi-country model with international trade the stability of international environmental agreements (IEAs) when countries regulate carbon emissions either by taxes or caps. Regardless of whether coalitions play Nash or are Stackelberg leaders the principal message is that the choice of caps or taxes matters. International trade and tax regulation turn out to be necessary conditions for the existence of the encompassing self-enforcing IEA, and that the latter is attained the more likely, the less severe the climate damage. Hence, cap regulation is inferior to tax regulation insofar as in case of the former there exist no large and effective self-enforcing IEAs, in particular not the encompassing self-enforcing IEA. Further results are that for the formation of encompassing self-enforcing IEAs it does not matter (much) whether climate coalitions play Nash or are Stackelberg leaders or whether fossil fuel is modeled as a consumer good or an intermediate good.
    JEL: C72 F18 Q54
    Date: 2014
  2. By: Samuel Carrara (FEEM and CMCC); Emanuele Massetti (Georgia Institute of Technology, CESIfo and FEEM)
    Abstract: The extraction and processing of unconventional oil is more energy intensive and has larger negative environmental impacts than the extraction of conventional oil. The European Union (EU) estimates that oil sands lead to 22% more emissions than conventional oil. The EU is very concerned by the potential climate and environmental impacts and has considered introducing a tax on imported unconventional oil in order to discourage its production. This study shows that a global ban on the use of unconventional oil substantially reduces global carbon dioxide emissions, but the policy is not efficient. A unilateral ban of the EU on unconventional oil has no climate benefits and it is expensive for Europe.
    Keywords: Unconventional Oil, Climate Mitigation, Energy Policy, European Union
    JEL: Q37 Q42 Q48 Q56
    Date: 2014–12
  3. By: Blasch, Julia (Department of Economics, Colgate University); Turner, Robert (Department of Economics, Colgate University)
    Abstract: Using a contingent choice survey of US citizens, we investigate the influence of environmental art on individual willingness to purchase voluntary carbon offsets. In a split-sample experiment, we compare the stated preferences of survey respondents in two different treatment groups to the preferences of a control group. One treatment group is shown photographs that illustrate the impacts of climate change; the other is shown animated images that illustrate wind speeds and patterns for extreme weather events. While individuals seeing the photographs show a higher willingness to purchase voluntary offset than the control group, respondents seeing the animated images seem less willing to buy offsets. This result remains stable when accounting for preference heterogeneity related to prior knowledge about climate change issues. We hypothesize that the differential impacts of the two kinds of artistic images are due to a combination of factors influencing individual choices: emotional affect, cognitive interest, and preferences for the prevention of specific climate change impacts as well as, more generally, internalized and social norms for the mitigation of climate change.
    Keywords: environmental art, climate change, carbon offsetting, knowledge, norms, discrete choice experiment
    JEL: Q5 Z1
    Date: 2015–01–01
  4. By: Vassiliki Manoussi (Athens University of Economics and Business, Department of International and European Economic Studies); Anastasios Xepapadeas (Athens University of Economics and Business, Department of International and European Economic Studies)
    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 trade-off 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: 2014–12
  5. By: Alfredo Marvão Pereira (Department of Economics, The College of William and Mary); Rui M. Pereira (Department of Economics, The College of William and Mary)
    Abstract: We consider the environmental, economic, and budgetary effects of a new carbon tax indexed to the carbon price in the EU-ETS market in the context of a dynamic general equilibrium model of the Portuguese economy. We show that the careful recycling of the carbon tax revenues to finance reductions in the personal income tax, in the social security taxes and increases in investment tax credits, in particular when these changes are connected to energy efficiency promoting activities, allows for the carbon tax reform to yield three dividends – reduction in emissions, improvement in economic conditions, and improvements in the budgetary position. By doing so we show that it is possible to design a carbon tax reform that is politically feasible as it satisfies the main constraints of the domestic economy – the quest for growth and for fiscal consolidation – and can accommodate the legitimate interests and needs of different social players–the focus on environmental goals by environmental groups, the concerns with households distributional issues by consumer advocacy groups, and with international competitiveness by business groups.
    Keywords: Carbon Taxation, Economic Performance, Budgetary Consolidation, Three Dividends, Portugal.
    JEL: D58 H63 O44
    Date: 2015–02–05

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