nep-res New Economics Papers
on Resource Economics
Issue of 2021‒05‒31
four papers chosen by
Maximo Rossi
Universidad de la República

  1. The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption By Shapiro Finkelstein, Alan; Metcalf, Gilbert E.
  2. Growth with Deadly Spillovers By Pietro F. Peretto; Simone Valente
  3. Norm-based feedback on household waste: Large-scale eld experiments in two Swedish municipalities By Ek, Claes; Söderberg, Magnus
  4. On current and future carbon prices in a risky world By Stan Olijslagers; Rick van der Ploeg; Sweder van Wijnbergen

  1. By: Shapiro Finkelstein, Alan; Metcalf, Gilbert E.
    Abstract: We analyze the quantitative labor market and aggregate effects of a carbon tax in a framework with pollution externalities and equilibrium unemployment. Our model incorporates endogenous labor force participation and two margins of adjustment influenced by carbon taxes: firm creation and green production-technology adoption. A carbon-tax policy that reduces carbon emissions by 35 percent - roughly the emissions reductions that will be required under the Biden Administration's new commitment under the Paris Agreement - and transfers the tax revenue to households generates mild positive long-run effects on consumption and output; a marginal increase in the unemployment and labor force participation rates; and an expansion in the number and fraction of firms that use green technologies. In the short term, the adjustment to higher carbon taxes is accompanied by gradual gains in output and consumption and a negligible expansion in unemployment. Critically, abstracting from endogenous firm entry and green-technology adoption implies that the same policy has substantial adverse short- and long-term effects on labor income, consumption, and output. Our findings highlight the importance of these margins for a comprehensive assessment of the labor market and aggregate effects of carbon taxes.
    Keywords: Environmental Economics and Policy
    Date: 2021–05–26
  2. By: Pietro F. Peretto (Duke University); Simone Valente (University of East Anglia)
    Abstract: Pollution is one of the world's primary causes of premature death, but macroeconomic analysis largely neglects the existence of such negative externality. We build a tractable multi-sector growth model where innovations raise productivity, a polluting primary sector exploits natural resources, emissions increase mortality, and fertility is endogenous. The response of the mortality rate to changes in population size is generally ambiguous and often non-monotonic, and reflects a precise equilibrium relationship that combines emission intensity, dilution e¤ects and labor reallocation e¤ects caused by technology. Deadly spillovers a¤ect welfare through multiple channels - including market-size e¤ects - and create additional steady states, including mortality traps that undermine development in less populated resource-rich countries even for low emission elasticities. Emission taxes yield double dividends in terms of income and population capacity, whereas subsidies to primary production reduce potential population and may trigger population implosion especially if combined with new discoveries of polluting primary resources.
    Keywords: Endogenous Growth, Environmental Externalities, Mortality
    JEL: O12 O44 Q56
    Date: 2021–05–28
  3. By: Ek, Claes (Department of Economics, School of Business, Economics and Law, Göteborg University); Söderberg, Magnus (bDepartment of Sociology, Environmental and Business Economics, University of Southern Denmark,)
    Abstract: We conduct separate randomized controlled trials of norm-based feedback nudges on household waste in two municipalities in western Sweden. Our main treatment presents recipients with accurate, household-specific feedback highly similar to the standard Home Energy Report design, but with residual (unsorted) waste as the object of comparison. We also test a novel `dynamic' norm design informed by psychological research. Post-experimental reductions are on the order of 7-12% in both municipalities, substantially larger than in most previous studies. We estimate that the reduction corresponds to a 30-60% increase in unit-based waste fees. Effect differences between our main treatment and the dynamicnorm treatment are not significant. We find that feedback nudges are highly cost-effective compared to alternative means for reducing household residual waste. However, net social benefits depend on whether existing waste fees internalize the marginal social cost of residual waste. Our results have implications for the usefulness of feedback interventions as well as for unit-based pricing of waste, on which our feedback materials rely.
    Keywords: Field experiments; household waste; norm-based feedback; unit-based pricing; pay-as-you-throw
    JEL: D13 I21 Q53
    Date: 2021–05
  4. By: Stan Olijslagers (University of Amsterdam); Rick van der Ploeg (University of Amsterdam); Sweder van Wijnbergen (University of Amsterdam)
    Abstract: We analyse optimal abatement and carbon pricing strategies under a variety of economic, temperature and damage risks. Economic growth, convex damages and temperature-dependent risks of climatic tipping points lead to higher growth rates, but gradual resolution of uncertainty lowers them. For temperature-dependent economic damage tipping points, carbon prices are higher, but when the tipping point occurs, the price jumps downward. With only a temperature cap the carbon price rises at the risk-adjusted interest rate. Adding damages leads to a higher carbon price that grows more slowly. But as temperature and cumulative emissions get closer to their caps, the carbon price is ramped up ever more. Policy makers should commit to a rising path of carbon prices.
    Keywords: CO2 prices, growth uncertainty, tipping points, damages, gradual resolution of damage uncertainty, temperature caps
    JEL: H23 Q51 Q54
    Date: 2021–05–24

This nep-res issue is ©2021 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.