nep-res New Economics Papers
on Resource Economics
Issue of 2017‒04‒09
three papers chosen by

  1. Output-based allocations in pollution markets with uncertainty and self-selection By Juan-Pablo Montero; Guy Meunier; Jean-Pierre Ponssard
  2. Income inequality and the international transfer of environmental values By Meya, Jasper N.; Drupp, Moritz A.; Hanley, Nick
  3. Adopting a Cleaner Technology: The Effect of Driving Restrictions on Fleet Turnover By Francisco Gallego; Juan-Pablo Montero; Hernán Barahona

  1. By: Juan-Pablo Montero; Guy Meunier; Jean-Pierre Ponssard
    Abstract: We study pollution permit markets in which a fraction of permits are allocated to firms based on their output. Output-based allocations, which are receiving increasing attention in the design of carbon markets around the world (e.g., Europe, California, New Zealand), are shown to be optimal under demand and supply volatility despite the output distortions they may create. In a market that covers multiple sectors, the optimal design combines auctioned permits with output-based allocations that are specific to each sector and increasing in its volatility. When firms are better informed about the latter or must self select, the regulator resort to some free (i.e., lump-sum) allocations to sort firms out.
    JEL: D24 L13 H23 L74
    Date: 2016
  2. By: Meya, Jasper N.; Drupp, Moritz A.; Hanley, Nick
    Abstract: How income and the valuation of environmental goods are related is a key question for science and policy, but the role of income inequality is often neglected. This paper studies how income inequality impacts the international transfer of environmental values-a practice called value or benefit transfer. Specifically, we apply theory-driven transfer factors to examine whether adjusting for income inequality can improve benefit transfer, drawing on a multi-country case study on water quality improvement. We find that income inequality adjustment reduces benefit transfer errors significantly, and by 1.5 percentage points on average. Adjusting for income inequality is particularly important when income is distributed more unequally at the policy site relative to the study site, yielding reductions in transfer errors of up to 25 percentage points. Our results are relevant for the practice of policy appraisal and environmental accounting, and more generally for the role of income inequality in non-market valuation.
    Keywords: benefit transfer,income,inequality,stated preference,transfer errors
    JEL: Q51 D63 H43 Q53 Q25
    Date: 2017
  3. By: Francisco Gallego; Juan-Pablo Montero; Hernán Barahona
    Abstract: Driving restrictions —limits on car use based on the last digit of a car’s license plate— are increasingly popular forms of pollution and congestion control, notwithstanding the literature has shown they typically result in more pollution by moving the fleet composition toward higher-emitting vehicles. We study a design feature present in some restriction programs but much overlooked in the literature: that cleaner cars be exempted from the restriction. Based on evidence from Santiago- Chile’s 1992 program, we find this exemption feature to have a large impact on fleet composition toward cleaner vehicles. We also develop and calibrate for Santiago a vertical-differentiation model of the car market to show that driving restrictions that make optimal use of these exemptions can be way more effective in the fight against local air pollution than alternative instruments such as scrappage subsidies and gasoline taxes.
    JEL: J14 O12 L26 M53
    Date: 2016

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