nep-res New Economics Papers
on Resource Economics
Issue of 2018‒04‒16
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Mirage on the Horizon: Geoengineering and Carbon Taxation Without Commitment By Daron Acemoglu; Will Rafey
  2. Regulating Mismeasured Pollution: Implications of Firm Heterogeneity for Environmental Policy By Eva Lyubich; Joseph S. Shapiro; Reed Walker
  3. Regional Climate Change Policy under Positive Feedbacks and Strategic Interactions By William Brock; Anastasios Xepapadeas
  4. Climate Policy under Cooperation and Competition between Regions with Spatial Heat Transport By Yongyang Cai; William Brock; Anastasios Xepapadeas; Kenneth Judd

  1. By: Daron Acemoglu; Will Rafey
    Abstract: We show that, in a model without commitment to future policies, geoengineering breakthroughs can have adverse environmental and welfare effects because they change the (equilibrium) carbon taxes. In our model, energy producers emit carbon, which creates a negative environmental externality, and may decide to switch to cleaner technology. A benevolent social planner sets carbon taxes without commitment. Higher future carbon taxes both reduce emissions given technology and encourage energy producers to switch to cleaner technology. Geoengineering advances, which reduce the negative environmental effects of the existing stock of carbon, decrease future carbon taxes and thus discourage private investments in conventional clean technology. We characterize the conditions under which these advances diminish - rather than improve - environmental quality and welfare.
    JEL: C65 O30 O31 O33 Q01 Q4 Q54 Q55 Q58
    Date: 2018–03
  2. By: Eva Lyubich (UC Berkeley); Joseph S. Shapiro (Cowles Foundation, Yale University); Reed Walker (University of California, Berkeley, IZA, & NBER)
    Abstract: This paper provides the first estimates of within-industry heterogeneity in energy and CO2 productivity for the entire U.S. manufacturing sector. We measure energy and CO2 productivity as output per dollar energy input or per ton CO2 emitted. Three findings emerge. First, within narrowly de ned industries, heterogeneity in energy and CO2 productivity across plants is enormous. Second, heterogeneity in energy and CO2 productivity exceeds heterogeneity in most other productivity measures, like labor or total factor productivity. Third, heterogeneity in energy and CO2 productivity has important implications for environmental policies targeting industries rather than plants, including technology standards and carbon border adjustments.
    JEL: F18 H23 Q56
    Date: 2018–01
  3. By: William Brock; Anastasios Xepapadeas
    Abstract: The surface albedo feedback, along with heat and moisture transport from the Equator to the Poles, is associated with polar amplification which is a well-established scientific fact. The present paper extends Brock and Xepapadeas (2017a) to a non-cooperative framework with polar amplification, where regions decide emissions by maximizing own welfare. This can be regarded as a case of regional non-cooperation regarding climate change.Open loop and feedback solutions are derived and compared, in terms of temperature paths and welfare, with the cooperative solution. Carbon taxes which could bridge the gap between cooperative and non-cooperative emissions path are also derived. Finally, the framework is extended to a Ramsey set-up in which it is shown how the regional climate model can be coupled with standard optimal growth models. Numerical simulations confirm the theoretical results and provide insights about the size and the direction of deviations between the cooperative and the non-cooperative solutions.
    Keywords: Arctic amplification, Spatial heat and moisture transport, Optimal policy, Emission taxes, Open loop, Feedback Nash Equilibrium
    JEL: Q54 Q58
    Date: 2018–02–20
  4. By: Yongyang Cai (The Ohio State University); William Brock; Anastasios Xepapadeas; Kenneth Judd (Hoover Institution)
    Abstract: We build a novel stochastic dynamic regional integrated assessment model (IAM) of the climate and economic system including a number of important climate science elements that are missing in most IAMs. These elements are spatial heat transport from the Equator to the Poles, sea level rise, permafrost thaw and tipping points. We study optimal policies under cooperation and various degrees of competition between regions. Our results suggest that when the elements of climate science which are accounted for in this paper are ignored, important policy variables such as the social cost of carbon and adaptation could be seriously biased.
    Keywords: Integrated Assessment Model, spatial heat transport, social cost of carbon, carbon taxes, adaptation, sea level rise, permafrost, stochastic tipping points, Epstein-Zin preferences
    JEL: Q54 Q58 C61 C63
    Date: 2018–03–26

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