nep-res New Economics Papers
on Resource Economics
Issue of 2016‒03‒17
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Combining Price and Quantity Controls under Partitioned Environmental Regulation By Sebastian Rausch; Jan Abrell
  2. Climate Change Policy under Spatial Heat Transport and Polar Amplification By William Brock; Anastasios Xepapadeas
  3. Economic growth and particulate pollution concentrations in China By David I. Stern; Donglan Zha
  4. Climate variability and infectious diseases nexus: evidence from Sweden By Franklin Amuakwa-Mensah; George Marbuah; Mwenya Mubanga

  1. By: Sebastian Rausch (ETH Zurich, Switzerland); Jan Abrell (ETH Zurich, Switzerland)
    Abstract: This paper analyzes hybrid emissions trading systems (ETS) under partitioned environmental regulation when firms’ abatement costs and future emissions are uncertain. We show that hybrid policies that introduce bounds on the price or the quantity of abatement provide a way to hedge against differences in marginal abatement costs across partitions. Price bounds are more efficient than abatement bounds as they also use information on firms’ abatement technologies while abatement bounds can only address emissions uncertainty. Using a numerical stochastic optimization model with equilibrium constraints for the European carbon market, we find that introducing hybrid policies in EU ETS reduces expected excess abatement costs of achieving targeted emissions reductions under EU climate policy by up to 89 percent. We also find that under partitioned regulation there is a high likelihood for hybrid policies to yield sizeable ex-post cost reductions.
    Keywords: Emissions trading, Partitioned environmental regulation, Uncertainty, Prices, Quantities, EU ETS
    JEL: H23 Q54 C63
    Date: 2016–03
  2. By: William Brock; Anastasios Xepapadeas
    Abstract: This paper is, to our knowledge, the first paper in climate economics to consider the combination of spatial heat transport and polar amplification. We simplified the problem by stratifying the Earth into latitude belts and assuming, as in North et al. (1981), that the two hemispheres were symmetric. Our results suggest that it is possible to build climate economic models that include the very real climatic phenomena of heat transport and polar amplification, and still maintain analytical tractability. We demonstrate the importance of heat transfer and polar amplification in the welfare analysis of climate change, and in particular on the social price of the climate change externality. Furthermore, we show that the effect of heat transfer and polar amplification on climate policy depend upon the interaction of climate component dynamics with the distribution of welfare weights, population, and productive capacities across latitudes. We discuss optimal fossil fuel taxes in a competitive environment with income effects and show that optimal taxes have a spatial structure and are dependent on each latitude�s output. In addition, we characterize the interactions between spatial transport phenomena and the competitive equilibrium price path of tradable permits. Using general power utility functions, we show that an increase in the coefficient of relative risk aversion will reduce the social price of the climate externality.
    Keywords: climate change, heat transport, polar amplification, welfare maximization, fossil fuels, optimal taxation, emissions permits
    JEL: Q54 Q58 C61
    Date: 2016–02–26
  3. By: David I. Stern (Crawford School of Public Policy, The Australian National University); Donglan Zha (College of Economics and Management, Nanjing University of Aeronautics and Astronautics)
    Abstract: Though the environmental Kuznets curve (EKC) was originally developed to model the ambient concentrations of pollutants, most subsequent applications have focused on pollution emissions. Yet, it seems more likely that economic growth could eventually reduce the concentrations of local pollutants than emissions. We examine the role of income, convergence, and time related factors in explaining recent changes in PM 2.5 and PM 10 particulate pollution in 50 Chinese cities using new measures of ambient air quality that the Chinese government has published only since the beginning of 2013. We use a recently developed model that relates the rate of change of pollution to the growth of the economy and other factors as well as the traditional environmental Kuznets curve model. Pollution fell sharply from 2013 to 2014. We show that economic growth, convergence, and time effects all served to lower the level of pollution. The results also demonstrate the relationship between the two modeling approaches.
    Keywords: air pollution; economic growth; environmental Kuznets curve; China
    JEL: O44 P28 Q53 Q56
    Date: 2016–02
  4. By: Franklin Amuakwa-Mensah (Department of Economics, Swedish University of Agricultural Sciences); George Marbuah (Department of Economics, Swedish University of Agricultural Sciences); Mwenya Mubanga (Dept. of Medical Sciences, Uppsala University)
    Abstract: In this paper, we present evidence based on a theoretical model developed that links the impact of climate variability on health. Using Swedish data on infectious diseases, we empirically estimate the causal relationship between climate variability and health outcomes. Generally, we find that the number of infectious disease patients and admissions are significantly driven by indicators of climate variability and socio-economic variables such as income and number of immigrants. Specifically, the effect of temperature variation on the health outcomes is ambiguous and sensitive to the choice of winter, summer or average temperature. Precipitation is relevant in explaining the number of infectious disease patients and admissions only when summer temperature considered in the model. Further, we find that an increase in carbon emissions directly causes the number patients and admissions in the summer. The relationship between infectious disease proxies (i.e. patients and admissions) and income per capita follows an inverted-U shape.
    Keywords: Climate change, Infectious diseases, Migration, Sweden
    JEL: Q54
    Date: 2016–02

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