nep-res New Economics Papers
on Resource Economics
Issue of 2016‒08‒28
four papers chosen by
Maximo Rossi
Universidad de la República

  1. The Impact of Removing Tax Preferences for U.S. Oil and Natural Gas Production: Measuring Tax Subsidies by an Equivalent Price Impact Approach By Gilbert E. Metcalf
  2. On the Treatment of Emissions Trading and Green and White Certificates in Cost–Benefit Analysis By Johansson, Per-Olov
  3. Natural Disasters and Human Mobility By Mbaye, Linguère Mously; Zimmermann, Klaus
  4. The U.S. Economy in WWII as a Model for Coping with Climate Change By Hugh Rockoff

  1. By: Gilbert E. Metcalf
    Abstract: This paper presents a novel methodology for estimating impacts on domestic supply of oil and natural gas arising from changes in the tax treatment of oil and gas production. It corrects a downward bias when the ratio of aggregate tax expenditures to domestic production is used to measure the subsidy value of tax preferences. That latter approach underestimates the value of the tax preferences to firms by ignoring the time value of money. The paper introduces the concept of the equivalent price impact, the change in price that has the same impact on aggregate drilling decisions as a change in the tax provisions for oil and gas drilling and production. Using this approach I find that removing the three largest tax preferences for the oil and gas industry would likely have very modest impacts on global oil production, consumption or prices. Domestic oil and gas production is estimated to decline by 4 to 5 percent over the long run. Global oil prices would rise by less than one percent. Domestic natural gas prices are estimated to rise by 7 to 10 percent. Changes to these tax provisions would have modest to negligible impacts on greenhouse gas emissions or energy security.
    JEL: H23 Q40 Q48
    Date: 2016–08
  2. By: Johansson, Per-Olov (CERE and HHS)
    Abstract: There are conflicting views on how to handle permits for greenhouse gases in cost-bene fit analysis. This paper aims at clarifying within a simple general equilibrium model how to treat di fferent kinds of tradable permits in economic evaluations of projects. Within a framework that reminds of the EU Emissions Trading System (EU ETS), the paper looks at cost-benefi t rules for a small project providing a public good, interpreted as a shortcut for infrastructure, using a fossil fuel and a renewable as inputs. In addition, it illustrates the Samuelson condition for the optimal provision of the public good, discusses briefly how to assess the EU permit system for sectors not covered under the EU ETS, as well as taxes and permits used to combat acid rain, and provides an illustration of the magnitude of the bias incurred if permits are valued at the marginal damage cost. The paper also introduces electricity ("green") certi ficates, a cousin to tradable permits, as well as well as energy savings ("white") certi ficates. Finally, a cap on the output of a commodity is considered.
    Keywords: Cost-benefit analysis; greenhouse gases; emissions trading; tradable permits; general equilibrium; Samuelson condition; EU ETS; non-ETS; acid rain; electricity certificates; renewable portfolio standards; energy savings certificates; output cap
    JEL: H21 H23 H41 H43 I30 L13
    Date: 2016–08–16
  3. By: Mbaye, Linguère Mously; Zimmermann, Klaus
    Abstract: This paper reviews the effect of natural disasters on human mobility or migration. Although there is an increase of natural disasters and migration recently and more patterns to observe, the relationship remains complex. While some authors find that disasters increase migration, others show that they have only a marginal or no effect or are even negative. Human mobility appears to be an insurance mechanism against environmental shocks and there are different transmission channels which can explain the relationship between natural disasters and migration. Moreover, migrants’ remittances help to decrease households’ vulnerability to shocks but also dampen their adverse effects. The paper provides a discussion of policy implications and potential future research avenues.
    Keywords: natural disasters, forced migration, channels, remittances, migration as insurance, floods, earthquakes, droughts, International Relations/Trade, J61, O15, Q54, Q56,
    Date: 2016–08
  4. By: Hugh Rockoff (Rutgers Department of Economics)
    Abstract: During World War II the United States rapidly transformed its economy to cope with a wide range of scarcities, such as shortfalls in the amounts of ocean shipping, aluminum, rubber, and other raw materials needed for the war effort. This paper explores the mobilization to see whether it provides lessons about how the economy could be transformed to meet scarcities produced by climate change or other environmental challenges. It concludes that the success of the United States in overcoming scarcities during World War II without a major deterioration in living standards provides a basis for optimism that environmental challenges can be met, but that the unique political consensus that prevailed during the war limits the practical usefulness of the wartime model.
    Keywords: World War II, Climate Change, Infrastructure
    JEL: N4
    Date: 2016–08–25

This nep-res issue is ©2016 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.