nep-res New Economics Papers
on Resource Economics
Issue of 2017‒10‒01
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Is Pollution Value-Maximizing? The DuPont Case By Shapira, Roy; Zingales, Luigi
  2. Water, Health and Wealth By Nava Ashraf; Edward Glaeser; Abraham Holland; Bryce Millett Steinberg
  3. Climatic variation as a determinant of rural-to-rural migration destination choice: Evidence from Tanzania By Zaneta Kubik
  4. Who Benefits from Fairtrade? Evidence from the Swedish Coffee Market By Durevall, Dick

  1. By: Shapira, Roy; Zingales, Luigi
    Abstract: DuPont, one of the most respectable U.S. companies, caused environmental damage that ended up costing the company around a billion dollars. By using internal company documents disclosed in trials we rule out the possibilities that this bad outcome was due to ignorance, an unexpected realization, or a problem of bad governance. The documents rather suggest that the harmful pollution was a rational decision: under reasonable probabilities of detection, polluting was ex-ante optimal from the company's perspective, albeit a very harmful decision from a societal perspective. We then examine why different mechanisms of control - legal liability, regulation, and reputation - all failed to deter socially harmful behavior. One common reason for the failures of deterrence mechanisms is that the company controls most of the information and its release. We then sketch potential ways to mitigate this problem.
    Keywords: Environmental Regulation; Firm Objectives; pollution
    JEL: K32 L21 Q52
    Date: 2017–09
  2. By: Nava Ashraf; Edward Glaeser; Abraham Holland; Bryce Millett Steinberg
    Abstract: Providing clean water requires maintenance, as well as the initial connections that are typically measured. Frequently, the water supply fails in the developing world, especially when users don’t pay the marginal cost of water. This paper uses the timing of frequent, unexpected water service outages in Lusaka, Zambia to identify the short-term impacts of piped water access on contagious disease, economic activity and time use. We use microdata from the primary water utility in the city on the timing and location of supply complaints to identify outages, matched to extensive administrative data across the city. Conditional on fixed effects for time and water service district within Lusaka, we find that increases in outages are associated with increased incidence of diarrheal disease, upper respiratory infections, typhoid fever and measles. We match outages to geolocated microdata on financial transactions from the largest mobile money provider in Zambia, and find that outages cause a reduction in financial transactions. Outages also increase the time that young girls spend at their chores, possibly at the expense of time they spend doing schoolwork. Imperfect infrastructure appears to burden the poor in ways that go far beyond obvious health consequences.
    JEL: D12 D14 G21 I12 I18 O12 O13 O16 O18 Q25
    Date: 2017–09
  3. By: Zaneta Kubik (Centre d'Economie de la Sorbonne)
    Abstract: This paper attempts to establish if climate acts as the determinant of destination choice in case of rural-to-rural migration. In the context of climate change where the link between climate and rural income has been well established, it is argued that migrants who move within rural areas choose destinations with more favourable climate conditions allowing for higher incomes. Employing the alternative-specific conditional logit model, this paper shows that such indirect effect of climate on migration destination choice is non-negligible, since one per cent increase in the expected income differentials between origin and destination, attributable to climate, increases the probability of choosing a given destination by at least nine percentage points. On the other hand, distance acts as a constraint for migration, in particular for the poorest individuals who might be inhibited from reaping full benefits of mobility
    Keywords: climate change; regional migration; rural economics; agriculture; regional economics
    JEL: R11 R23 Q15 Q54
    Date: 2017–08
  4. By: Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper analyses how the premium customers pay for Fairtrade-labelled coffee is distributed in the Swedish market, using information on costs of production and scanner data on almost all roasted and ground coffee products sold by retailers. A key finding is that roasters and retailers get 43–70%, while producer countries, in this paper comprising coffee farmers, cooperatives, middlemen, exporters and Fairtrade International, get 24–51%. Fairtrade Sweden gets 5–8%. These values are upper and lower bounds that reflect assumptions made about the additional costs of producing roasted and ground Fairtrade coffee, given the cost of beans and the Fairtrade license, and whether conventional coffee is compared with organic or non-organic Fairtrade coffees. Since roasters’ and retailers’ margins are higher for Fairtrade than conventional coffee, there is evidence that Fairtrade retail prices are higher than the level attributable to costs. However, producer countries receive a significantly larger share of the premium paid than reported in earlier studies, which are either dated or analyse very small samples of coffees.
    Keywords: coffee supply chain; ethic labels; Fair Trade; extra price; Fairtrade; market power; organic coffee
    JEL: D43 O19 P46
    Date: 2017–09

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