nep-res New Economics Papers
on Resource Economics
Issue of 2020‒06‒08
eight papers chosen by

  1. Entry, exit, and instrument choice in environmental regulation By Nikula Harri
  2. Instrument choice in the case of multiple externalities By Nikula Harri
  3. Can Social Protection Reduce Environmental Damages? By Garg, Teevrat; McCord, Gordon C.; Montfort, Aleister
  4. Deregulation in a Time of Pandemic: Does Pollution Increase Coronavirus Cases or Deaths? By Persico, Claudia; Johnson, Kathryn R.
  5. The Political Economy of Negotiating International Carbon Markets By Maria Arvaniti; Wolfgang Habla
  6. Traffic Congestion, Transportation Policies, and the Performance of First Responders By Daniel A. Brent; Louis-Philippe Beland
  7. Health Shocks under Hospital Capacity Constraint: Evidence from Air Pollution in Sao Paulo, Brazil By Guidetti, Bruna; Pereda, Paula; Severnini, Edson R.
  8. The Causal Effect of Education on Climate Literacy and Pro-Environmental Behaviours: Evidence from a Nationwide Natural Experiment By Powdthavee, Nattavudh

  1. By: Nikula Harri (Faculty of Management and Business, Tampere University)
    Abstract: We study market-based regulation where a government tries to avoid excessive firm closures by providing reliefs from emission fees for incumbent firms. Regulation is asymmetric as only incumbents, not new entrants are subsidized by the payment reliefs. We ask whether this feature affects the choice between environmental taxes and tradable permits under uncertainty. We find a trade-off between tax-beneficial inefficiency effect and permit-beneficial volume effect. The latter effect arises as the free quotas makes the number of aggregate permits and the aggregate emissions to fluctuate in the quantity implementation. We show that the subsidization of incumbent firms does not unambiguously favor one of the instruments but the advantage depends on policy- and industry-specific factors.
    Keywords: Emission taxation, firm closure, environmental subsidies, tradable emission permits, uncertainty
    JEL: D62 D81 H23 Q58
    Date: 2020–05
  2. By: Nikula Harri (Faculty of Management and Business, Tampere University)
    Abstract: We study market-based regulation in a polluting industry that produces two externalities at the same time. There is a negative externality (emissions) to which every firm in the industry contributes, and a positive externality (technological spillover), so that an additional application of green technology becomes easier as the number of appliers increases. An optimal policy is shown to consist of a uniform emission price across polluting firms and a subsidy to early users of green technology. We also show that the presence of the second externality strongly affects the instrument choice under uncertainty between taxes and tradable permits, and that the influence depends on the design of the instruments. More specifically, it depends on whether early users of green technology are subsidized or not.
    Keywords: Green production, emission taxation, internalizing externalities, spillover effect, tradable emission permits, uncertainty
    JEL: D62 D81 H23 Q58
    Date: 2020–05
  3. By: Garg, Teevrat (University of California, San Diego); McCord, Gordon C. (University of California, San Diego); Montfort, Aleister (World Bank)
    Abstract: Why do damages from changes in environmental quality differ across and within countries? Causal investigation of this question has been challenging because differences may stem from heterogeneity in cumulative exposure or differences in socioeconomic factors such as income. We revisit the temperature-violence relationship and show that cash transfers attenuate one-half to two-thirds of the effects of higher same-day temperatures on homicides. Our results not only demonstrate causally that income can explain much of the heterogeneity in the marginal effects of higher temperatures, but also imply that social protection programs can help the poor adapt to rising temperatures.
    Keywords: cash transfers, temperature, violence
    JEL: Q50 Q52 Q54 Q58 I14
    Date: 2020–05
  4. By: Persico, Claudia (American University); Johnson, Kathryn R. (American University)
    Abstract: The COVID-19 virus, also known as the coronavirus, is currently spreading around the world. While a growing literature suggests that exposure to pollution can cause respiratory illness and increase deaths among the elderly, little is known about whether increases in pollution could cause additional or more severe infections from COVID-19, which typically manifests as a respiratory infection. Using variation in pollution induced by a rollback of enforcement of environmental regulations by the Environmental Protection Agency (EPA) and a difference in differences design, we estimate the effects of increased pollution on county-level COVID-19 deaths and cases. Despite popular media coverage to the contrary, we find that counties with more Toxic Release Inventory (TRI) sites saw increases in pollution following the EPA's rollback of enforcement, while counties with fewer sites saw a smaller increase in pollution. We find that increases in pollution are associated with increases in cases and deaths from COVID-19.
    Keywords: pollution, COVID-19, coronavirus, health, mortality
    JEL: Q53 I10 I14
    Date: 2020–05
  5. By: Maria Arvaniti (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland); Wolfgang Habla (Department of Environmental and Resource Economics, Environmental Management, ZEW – Leibniz Centre for European Economic Research, L7, 1, 68161 Mannheim, Germany)
    Abstract: International carbon markets are frequently propagated as an efficient instrument for reducing CO2 emissions. We argue that such markets, despite their desirable efficiency properties, might not be in the best interest of governments who are guided by strategic considerations in negotiations. We identify the circumstances under which governments benefit or are harmed by cooperation in the form of an international market. Our results challenge the conventional wisdom that an international market is most beneficial for participating countries when they have vastly diverging marginal abatement costs; rather, it may be more promising to negotiate agreements with non-tradable emissions caps.
    Keywords: cooperative climate policy, political economy, emissions trading, linking of permit markets, strategic delegation, strategic voting
    JEL: D72 H23 H41 Q54 Q58
    Date: 2020–05
  6. By: Daniel A. Brent (Department of Agricultural Economics, Sociology, and Education, Pennsylvania State University); Louis-Philippe Beland (Department of Economics, Carleton University)
    Abstract: Traffic congestion is a growing problem in urbanizing economies that results in lost time, health problems from pollution, and contributes to the accumulation of greenhouse gas emissions. We examine a new external cost of traffic by estimating the relationship between traffic congestion and emergency response times. Matching traffic data at a fine spatial and temporal scale to incident report data from fire departments in California allows us to assign traffic immediately preceding an emergency. Our results show that traffic slows down fire trucks arriving at the scene of an emergency and increases the average monetary damages from fires. The effects are highly nonlinear; increases in response time are primarily due to traffic in the right tail of the traffic distribution. We document an additional externality of traffic congestion and highlight the negative effect of traffic on a critical public good.
    Keywords: Traffic, Public Goods, Externalities, Emergency Response Times
    JEL: R41 R42 R48 H41 Q50
    Date: 2020–05–20
  7. By: Guidetti, Bruna (University of Michigan); Pereda, Paula (University of Sao Paulo); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: When a health shock hits a location, the healthcare infrastructure needs to be adjusted to meet the increased demand. This may be a challenge in developing countries because of limited hospital capacity. In this study, we examine the consequences of health shocks induced by air pollution in a megacity in the developing world: Sao Paulo, Brazil. Using daily data from 2015-2017, and an instrumental variable approach based on wind speed, we provide evidence that exposure to particulate matter (PM10) causes an increase in pediatric hospitalizations for respiratory diseases, which in turn leads to a decrease in hospital admissions for elective care – phimosis surgery and epilepsy-related procedures such as video-EEG (electroencephalograph) monitoring. Importantly, emergency procedures such as appendectomy and bone fracture repair are not affected. While strained Sao Paulo hospitals seem to absorb the increased demand induced by poor air quality, our results imply that the common practice of using health outcomes unrelated to pollution as "placebo tests" in studies on the effects of air pollution might be inadequate in settings with limited healthcare infrastructure. This is often the case in developing countries, where severe pollution is also ubiquitous, but also happens in deprived areas in the developed world.
    Keywords: air pollution, health outcomes, hospitalization for respiratory diseases and other causes, healthcare infrastructure, hospital capacity constraint
    JEL: I15 Q53 Q56 O13
    Date: 2020–05
  8. By: Powdthavee, Nattavudh (University of Warwick)
    Abstract: There is a widespread belief that a lack of education is the primary cause of public apathy to climate change. Yet, despite the global campaign to promote education as a tool to combat global warming, empirical evidence on the causal effect of education on climate literacy and pro-environmental behaviours remains worryingly scarce. Using the raising of the minimum school leaving age law in England from 15 to 16 years of age in September 1972 as a natural experiment, I showed that remaining in school as a result of the reform causally increased the level of comprehension about the causes of climate change. However, I found little causal evidence that more education also improved the pro-environmental behaviours of those who were affected by the reform. This raises an important question of whether policies aimed at improving climate change awareness through education can effectively produce long-lasting changes in pro-environmental behaviours.
    Keywords: climate change, education, pro-environmental behaviours, regression discontinuity, UK
    JEL: I26 Q54
    Date: 2020–05

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