nep-res New Economics Papers
on Resource Economics
Issue of 2018‒12‒17
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Foreign Demand and Greenhouse Gas Emissions: Empirical Evidence with Implications for Leakage By Geoffrey Barrows; Helene Ollivier
  2. Environmental Inequality and Economic Valuation By Jasper N. Meya
  3. But What Does it Mean? Competition between Products Carrying Alternative Green Labels when Consumers are Active Acquirers of Information By Anthony Heyes; Sandeep Kapur; Peter W. Kennedy; Steve Martin; John W. Maxwell
  4. Reconciling Emissions Trading and the Promotion of Renewable Energy By Sebastian Schaefer

  1. By: Geoffrey Barrows (Ecole Polytechnique); Helene Ollivier (PSE)
    Abstract: With asymmetric climate policies, regulation in one country can be undercut by emissions growth in another. Previous research finds evidence that regulation erodes the competitiveness of domestic firms and leads to higher imports, but increased imports need not imply increased emissions if domestic sales are jointly determined with export sales or if emission intensity of manufacturing adjusts endogenously to foreign demand. In this paper, we estimate for the first time how production and emissions of manufacturing firms in one country respond to foreign demand shocks in trading partner markets. Using a panel of large Indian manufacturers and an instrumental variable strategy, we find that foreign demand growth leads to higher exports, domestic sales, production, and CO2 emissions, and slightly lower emission intensity. The results imply that a representative exporter facing the average observed foreign demand growth over the period 1995-2011 would have increased CO2 emissions by 1.39% annually as a result of foreign demand growth, which translates into 6.69% total increase in CO2 emissions from Indian manufacturing over the period. Breaking down emission intensity reduction into component channels, we find some evidence of product-mix effects, but fail to reject the null of no change in technology. Back of the envelope calculations indicate that environmental regulation that doubles energy prices world-wide (except in India) would only increase CO2 emissions from India by 1.5%. Thus, while leakage fears are legitimate, the magnitude appears fairly small in the context of India.
    Keywords: leakage, trade and environment, product mix, technological change
    JEL: F14 F18 Q56
    Date: 2018–11
  2. By: Jasper N. Meya (University of Oldenburg, Department of Economics)
    Abstract: I study how the distribution of environmental goods and income affect the economic valuation of local public goods. I find that how environmental inequality affects societal willingness to pay (WTP) for environmental local public goods is determined by their substitutability as well as by how their provision is correlated with income. Specifically, environmental inequality decreases societal (WTP) for substitutes, but this effect is reversed if environmental goods are complements or distributed strongly in favour of richer households. Moreover, I show that sorting of richer households into places where environmental good endowment is high increases (decreases) societal WTP if and only if it is a substitute for (complement to) consumption goods. I propose novel adjustment factors for structural benefit transfer to control for differences in the spatial distribution of environmental local public goods. Using forest preservation in Poland as an empirical example, I find that societal WTP is up to 4 percent higher for equal access to forests and up to 8 percent higher for an equal distribution of both income and access to forests.
    Keywords: Inequality, environmental valuation, WTP, local public good, spatial distribution, benefit transfer, forest ecosystem services
    Date: 2018–12
  3. By: Anthony Heyes (University of Ottawa); Sandeep Kapur (Birkbeck, University of London); Peter W. Kennedy (University of Victoria); Steve Martin (Statistics Canada); John W. Maxwell (Indiana University)
    Abstract: Programs that certify the environmental (or other social) attributes of firms are common.But the proliferation of labeling schemes makes it difficult for consumers to know what each one mean – what level of `greenness' does a particular label imply? We provide the first model in which consumers can expend effort to learn what labels mean. The relationship between information acquisition costs, firm pricing decisions, the market shares obtained by alternatively-labeled goods and a brown `backstop' good, and total environmental impact prove complex.Consumer informedness can have perverse implications. In plausible cases a reduction in the cost of information damages environmental outcomes. Our results challenge the presumption that provision of environmental information to the public is necessarily good for welfare or the environment.
    Keywords: Eco-labeling, green consumerism, information-based instruments.
    JEL: D83 L15 L31 Q52
    Date: 2018–11
  4. By: Sebastian Schaefer (University of Siegen)
    Abstract: The EU emissions trading system (ETS) and the promotion of renewable energy are overlapping regulations. Although the resulting early development of renewables is associated with several advantages such an overlap may violate the path of optimal abatement. Subsidies may cause a too high share of renewables in electricity generation. This results in additional expenses and efficiency losses. We develop a control mechanism serving as thumb rule to limit additional expenses. Under optimal implementation the rule signicantly restricts additional expenses to a maximum of about 4 % of total abatement costs in worst case. This result holds for marginal abatement costs (MAC) approximated by any conical combination of weak convex power functions. This means high exibility of MAC leading to high validity of the results. Consequences of a non-optimal implementation of the mechanism are examined as well. An empirical application to German data shows that the promotion of renewable energy has not yet violated the path of optimal abatement. However, data is restricted because the ETS has not induced an additional emission reduction since 2010.
    Keywords: Overlapping Regulations, Promotion of Renewable Energy, Emissions Trading
    JEL: D61 H23 Q42 Q48 Q54
    Date: 2018

This nep-res issue is ©2018 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.