nep-res New Economics Papers
on Resource Economics
Issue of 2016‒04‒30
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Strategic Subsidies for Green Goods By Fischer, Carolyn
  2. The incentives to North-South transfer of climate-mitigation technologies with trade in polluting goods By Matthieu Glachant; Julie Ing; Jean Philippe Nicolai
  3. Optimal Regional Regulation of Animal Waste By Iho, Antti; Parker, Doug; Zilberman, David
  4. Extending the EU Commission’s Proposal for a Reform of the EU Emissions Trading System By Schleicher, Stefan P.; Köppl, Angela; Zeitlberger, Alexander
  5. Investing in disaster risk management in an uncertain climate By McDermott,Thomas K.J.
  6. Economic and Environmental Effects of the European Biofuel Policy By Rasetti, Michele; Filho, Joaquim B.S. Ferreira; Finco, Adele; Pena-Levano, Luis M.; Zhao, Xin; Opgrand, Jeffrey

  1. By: Fischer, Carolyn
    Abstract: Globally and locally, government support policies for green goods (like renewable energy) are much more popular internationally than raising the cost of bads (as through carbon taxes). These support policies may encourage downstream consumption (renewable energy deployment) or upstream development and manufacturing of those technologies. The use of subsidies—particularly upstream ones—is disciplined by World Trade Organization agreements, and its subsidies code lacks exceptions for transboundary externalities like human health or resource conservation, including those related to combating global climate change. The strategic trade literature has devoted little attention to the range of market failures related to green goods. This paper considers the market for a new environmental good that when consumed downstream may provide external benefits like reduced emissions. The technology is traded internationally but provided by a limited set of upstream suppliers that may operate in imperfect markets, such as with market power or external scale economies. We examine the national incentives and global rationales for offering production and consumption subsidies in producer countries, allowing that some of the downstream market may lie in nonregulating third-party countries. Although technology producer countries can benefit from restraints on upstream subsidies, global welfare is higher without them, and market failures imply that optimal subsidies are even higher. We supplement the analysis with numerical simulations of the case of renewable energy, exploring optimal subsidies for the major renewable energy producing and consuming regions and the cost of restrictions on upstream subsidies.
    Keywords: International Trade, Subsidies, Imperfect Competition, Externalities, Emissions Leakage, Environmental Economics and Policy, F13, F18, H21, Q5,
    Date: 2016–04–15
  2. By: Matthieu Glachant (Cerna MINES ParisTech); Julie Ing (ETH Zurich, Switzerland); Jean Philippe Nicolai (ETH Zurich, Switzerland)
    Abstract: The need to transfer climate mitigation technologies towards the developing world has been acknowledged since the beginning of climate negotiations. Little progress has however been made as shown by Article 10 of the Paris Agreement. One reason is that these technologies could become vital assets to compete on global markets. This paper presents a partial equilibrium model with two regions, the North and the South, and imperfect competition in the international polluting goods market to analyze the North’s incentives to accept technology transfer. Results crucially depend on the existence of environmental cooperation. When both northern and southern governments set emission quotas non-cooperatively, inducing fewer global emissions is a necessary, but not sufficient condition for the North to accept the transfer. In contrast, when governments set quotas cooperatively, the North never accepts the transfer because it only leads to a partial relocation of pollutant goods production to the South. We derive the implications for the global regulation of climate change.
    Keywords: Technology transfer, Imperfect competition, Climate policy, Environmental cooperation, Cap and trade
    JEL: D43 F18 Q5
    Date: 2016–04
  3. By: Iho, Antti; Parker, Doug; Zilberman, David
    Abstract: Large animal facilities generate more manure than needed on their own feed production areas. Excessive nutrient applications deteriorate groundwater (nitrogen) and surface water quality (nitrogen and/or phosphorus). Due to differences in environmental and economic characteristics, adjacent regions may have differing objectives towards controlling nitrogen and phosphorus surpluses from manure applications. We consider jointly and separately optimal nutrient policies of an upstream agricultural and a downstream recreational region. We show that, depending on the environmental and economic characteristics, tightening upstream regulation with respect to the loading of one nutrient might increase the downstream loading of the other. We differentiate the impacts of manure regulation between the livestock farms and the adjacent crop production farms and show how this impacts nitrogen and phosphorus loading due to changes in nutrient application, crop uptake and changes in application areas. We allow regional differences in abatement objectives and identify locally and globally optimal policies.
    Keywords: Manure, Transboundary Pollution, Phosphorus, Nitrogen, Regulation, Externality, Environmental Economics and Policy, Livestock Production/Industries,
    Date: 2015
  4. By: Schleicher, Stefan P.; Köppl, Angela; Zeitlberger, Alexander
    Abstract: Pursuing an evidence based approach we summarize the key elements of the European Commission’s proposal of July 2015 for a reform of the EU Emissions Trading System and offer facts about the current state of EU ETS that underline the needs for such a reform. We supply key data for understanding the current state of EU ETS and report in particular the share of freely allocated allowances in emissions for the various sectors since the start of EU ETS in 2005. This is the most relevant parameter for evaluating the stringency and cost impacts of the EU ETS on sectors and installations. We provide propositions for enhancing the allocation procedure of both free and auctioned allowances, the fundamental element in the cap and trade design of this system. We link this procedure closely to the relevant suggestions of the Commission proposal and offer extensions that can make in particular the allocation of free allowances more targeted and effective. We indicate how the impacts of free allowances can be calculated both for sectors and installations and conclude that these reform steps could reduce the administrative burden of the system.
    Keywords: EU Emissions Trading System, Reform Options, EU Commission’s Proposal, Environmental Economics and Policy, Q53, Q54,
    Date: 2016–04–15
  5. By: McDermott,Thomas K.J.
    Abstract: Climate change will exacerbate the challenges associated with environmental conditions, especially weather variability and extremes, in developing countries. These challenges play important, if as yet poorly understood roles in the development prospects of affected regions. As such, climate change reinforces the development case for investment in disaster risk management. Uncertainty about how climate change will affect particular locations makes optimal investment planning more difficult. In particular, the inability to derive meaningful probabilities from climate models limits the usefulness of standard project evaluation techniques, such as cost-benefit analysis. Although the deep uncertainty associated with climate change complicates disaster risk management investment decisions, the analysis presented here shows that these considerations are only relevant for a relatively limited set of investment circumstances. The paper offers a simple decision framework that enables policy makers to identify the particular circumstances under which uncertainty about future climate change becomes critical for disaster risk management investment decisions. Accounting for climate uncertainty is likely to shift the optimal balance of disaster risk management strategies toward more flexible, low-regret type interventions, especially those that seek to promote"development first"or"risk-coping"objectives. Such investments are likely to confer additional development dividends, regardless of the climate future that materializes in a given location. Importantly, the analysis here also demonstrates that climate uncertainty does not necessarily motivate a"wait and see"approach. Instead, where opportunities exist to avail of adaptation co-benefits, climate uncertainty provides additional motivation for early investment in disaster risk management initiatives.
    Keywords: Adaptation to Climate Change,Climate Change Economics,Science of Climate Change,Economic Theory&Research,Climate Change Mitigation and Green House Gases
    Date: 2016–04–12
  6. By: Rasetti, Michele; Filho, Joaquim B.S. Ferreira; Finco, Adele; Pena-Levano, Luis M.; Zhao, Xin; Opgrand, Jeffrey
    Abstract: For many years, biofuels have been considered a cleaner, greener alternative to fossil fuels in order to reduce greenhouse gas (GHG) emissions in the transportation sector. For this reason, in recent years, many European policies has tried to promote biofuels production and consumption. However, some concerns on the actual sustainability of biofuels have arisen. In particular, scientific studies have pointed out that additional emissions from indirect land-use change (ILUC) could cancel out biofuels benefits on climate change. This paper analyzes the global economic and environmental consequences of an increase in biofuel production, as established by the RE Directive, for the period 2001-2020. The GTAP-BIO general equilibrium model was used for the simulation. The results suggest a total emission of 168 gCO2/MJ per year over 20 years of biodiesel production, which would mean that the GHG reduction requirements established by the policies could not be fulfilled.
    Keywords: European biofuel policy, Biodiesel, GTAP-BIO, Land use change, GHG emissions, Environmental Economics and Policy, Land Economics/Use, D58, Q16, Q58,
    Date: 2015

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