nep-res New Economics Papers
on Resource Economics
Issue of 2020‒06‒22
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Environmental co-benefits and adverse side-effects of alternative power sector decarbonization strategies By Gunnar Luderer; Michaja Pehl; Anders Arvesen; Thomas Gibon; Benjamin Bodirsky; Harmen Sytze de Boer; Oliver Fricko; Mohamad Hejazi; Florian Humpenöder; Gokul Iyer; Silvana Mima; Ioanna Mouratiadou; Robert Pietzcker; Alexander Popp; Maarten van den Berg; Detlef van Vuuren; Edgar Hertwich
  2. Environmental Preferences and Technological Choices : Is Market Competition Clean or Dirty? By Aghion, Philippe; Bénabou, Roland; Martin, Ralf; Roulet, Alexandra
  3. A dynamic theory of spatial externalities By Raouf Boucekkine; Giorgio Fabbri; Salvatore Federico; Fausto Gozzi
  4. Adoption of environment-friendly agricultural practices with background risk: experimental evidence By Marianne Lefebvre; Estelle Midler; Philippe Bontems

  1. By: Gunnar Luderer (PIK - Potsdam Institute for Climate Impact Research); Michaja Pehl; Anders Arvesen; Thomas Gibon (LIST - Luxembourg Institute of Science and Technology); Benjamin Bodirsky (PIK - Potsdam Institute for Climate Impact Research); Harmen Sytze de Boer (PBL Netherlands Environmental Assessment Agency); Oliver Fricko; Mohamad Hejazi; Florian Humpenöder (PIK - Potsdam Institute for Climate Impact Research); Gokul Iyer; Silvana Mima (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique); Ioanna Mouratiadou (Scottish Agricultural College - University of Edinburgh); Robert Pietzcker (PIK - Potsdam Institute for Climate Impact Research); Alexander Popp (PIK - Potsdam Institute for Climate Impact Research); Maarten van den Berg; Detlef van Vuuren (Utrecht University [Utrecht]); Edgar Hertwich
    Abstract: A rapid and deep decarbonization of power supply worldwide is required to limit global warming to well below 2?°C. Beyond greenhouse gas emissions, the power sector is also responsible for numerous other environmental impacts. Here we combine scenarios from integrated assessment models with a forward-looking life-cycle assessment to explore how alternative technology choices in power sector decarbonization pathways compare in terms of non-climate environmental impacts at the system level. While all decarbonization pathways yield major environmental co-benefits, we find that the scale of co-benefits as well as profiles of adverse side-effects depend strongly on technology choice. Mitigation scenarios focusing on wind and solar power are more effective in reducing human health impacts compared to those with low renewable energy, while inducing a more pronounced shift away from fossil and toward mineral resource depletion. Conversely, non-climate ecosystem damages are highly uncertain but tend to increase, chiefly due to land requirements for bioenergy.
    Keywords: life-cycle assessment,climate-change mitigation,land-use,integrated assessment,water demand,transformation pathways,electricity-generation,severe accidents,air-pollution,impact assessment
    Date: 2019–12
  2. By: Aghion, Philippe; Bénabou, Roland; Martin, Ralf; Roulet, Alexandra
    Abstract: This paper investigates the joint effect of consumers' environmental concerns and product-market competition on firms' decisions whether to innovate "clean" or "dirty". We first develop a step-by-step innovation model to capture the basic intuition that socially responsible consumers induce firms to escape competition by pursuing greener innovations. To test and quantify the theory, we bring together patent data, survey data on environmental values, and competition measures. Using a panel of 8,562 firms from the automobile sector that patented in 42 countries between 1998 and 2012, we indeed find that greater exposure to environmental attitudes has a significant positive effect on the probability for a firm to innovate in the clean direction, and all the more so the higher the degree of product market competition. Results suggest that the combination of historically realistic increases in prosocial attitudes and product market competition can have the same effect on green innovation as major increase in fuel prices.
    Keywords: climate change; Competition; Environment; Innovation; patents; Social Responsibility
    JEL: D21 D22 D62 D64 H23 O3 O31
    Date: 2020–04
  3. By: Raouf Boucekkine (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain); Giorgio Fabbri (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Salvatore Federico (DEPS - Dipartimento di Economia Politica e Statistica - UNISI - Università degli Studi di Siena); Fausto Gozzi (Dipartimento di Economia e Finanza [Roma] - LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma])
    Abstract: In this paper, we revisit the theory of spatial externalities. In particular, we depart in several respects from the important literature studying the fundamental pollution free riding problem uncovered in the associated empirical works. First, instead of assuming ad hoc pollution diffusion schemes across space, we consider a realistic spatiotemporal law of motion for air and water pollution (diffusion and advection). Second, we tackle spatiotemporal non-cooperative (and cooperative) differential games. Precisely, we consider a circle partitioned into several states where a local authority decides autonomously about its investment, production and depollution strategies over time knowing that investment/production generates pollution, and pollution is transboundary. The time horizon is infinite. Third, we allow for a rich set of geographic heterogeneities across states while the literature assumes identical states. We solve analytically the induced non-cooperative differential game under decentralization and fully characterize the resulting long-term spatial distributions. We further provide with full exploration of the free riding problem, reflected in the so-called border effects. In particular, net pollution flows diffuse at an increasing rate as we approach the borders, with strong asymmetries under advection, and structural breaks show up at the borders. We also build a formal case in which a larger number of states goes with the exacerbation of pollution externalities. Finally, we explore how geographic discrepancies affect the shape of the border effects.
    Keywords: spatial externalities,environmental federalism,transboundary pollution,differential games in continuous time and space,infinite dimensional optimal control problems
    Date: 2020–05
  4. By: Marianne Lefebvre (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage); Estelle Midler (Alexander von Humboldt Professorship of Environmental Economics - Osnabrück University); Philippe Bontems (TSE - Toulouse School of Economics - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UT1 - Université Toulouse 1 Capitole)
    Abstract: Agriculture is one of the economic sectors most exposed to exogenous risks such as climate hazards and price volatility on agricultural markets. Agricultural policies targeting the adoption of environment-friendly but potentially risk-increasing practices cannot ignore this challenge. Farmers have indeed to decide if they take the foreground risk associated with the adoption of environment-friendly practices, while simultaneously facing exogenous background risk beyond their control. Using a theoretical model and a public good experiment, we analyse the adoption of agri-environmental practices and the effect of agri-environmental subsidies in a context where risks are both foreground and background. While most of the literature on background risk focuses on its impact on individual decisions, we analyse the influence of background risk in a context of strategic uncertainty (contribution to a public good). The results highlight the potential synergies between greening the CAP and supporting risk management. We find that background risk discourages the adoption of green practices, although it affects all farmland independently from the farmer's choice of practices (environment friendly or conventional). An incentive payment per hectare of land farmed with green practices increases the adoption of risk-increasing practices but is significantly less effective in the presence of background risk.
    Keywords: Background risk,Agri-environmental measures,Risk aversion,Public good game,Lab experiment,Common Agricultural Policy
    Date: 2020–05–21

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