nep-res New Economics Papers
on Resource Economics
Issue of 2021‒10‒04
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Economic Production and Biodiversity in the United States By Liang, Yuanning; Rudik, Ivan; Zou, Eric Yongchen
  2. River pollution abatement: A decentralized solution through smart contracts By Jens Gudmundsson; Jens Leth Hougaard
  3. The informational value of environmental taxes By Stefan Ambec; Jessica Coria

  1. By: Liang, Yuanning; Rudik, Ivan (Cornell University); Zou, Eric Yongchen
    Abstract: Species extinctions and ecological degradation are accelerating to a degree unprecedented in human history. Despite such trends, causal evidence for economic drivers of biodiversity loss and effective policy responses remains sparse. Here we study the relationship between economic production and biodiversity using a novel panel dataset that contains detailed and consistently reported information on the types and quantities of wildlife at thousands of locations across the United States between 1960 and 2015. Our research design exploits well- understood sources of change to local economic output – including those induced by fiscal shocks and environmental regulations – to identify how local economic production affects biodiversity outcomes. We find that economic production re- duces the total abundance of wildlife, reduces the count of distinct species, and changes the composition of species in a local ecosystem even holding the number of species constant. Our findings point toward environmental degradation as a potential culprit in the decline of biodiversity. We show that the adverse effect of economic production is mitigated by conservation, and by advances in emission abatement technologies that were spurred by stricter pollution regulations.
    Date: 2021–09–22
  2. By: Jens Gudmundsson (Department of Food and Resource Economics, University of Copenhagen); Jens Leth Hougaard (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: In river systems, costly upstream pollution abatement creates downstream welfare gains. Absent adequate agreement on how to share the gains, upstream regions lack incentives to reduce pollution levels. We develop a model that makes explicit the impact of water quality on production benefits and suggest a solution for sharing the gains of optimal pollution abatement, namely the Shapley value of an underlying convex cooperative game. We provide a decentralized implementation through a smart contract to automate negotiations and payments. In effect, it ensures a socially optimal agreement supported by fair compensations to regions that turn to cleaner production from those that pollute.
    Keywords: River pollution, Decentralized mechanism, Shapley value, Water quality, Smart contracts
    JEL: C7 D47 D62 Q52 Q25
    Date: 2021–09
  3. By: Stefan Ambec (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jessica Coria (Unknown)
    Abstract: We propose informational spillovers as a new rationale for the use of multiple policy instruments to mitigate a single externality. We investigate the design of a pollution standard when the firms' abatement costs are unknown and emissions are taxed. A firm might abate pollution beyond what is required by the standard by equalizing its marginal abatement costs to the tax rate, thereby revealing information about its abatement cost. We analyze how a regulator can take advantage of this information to design the standard. In a dynamic setting,the regulator relaxes the initial standard in order to induce more information revelation, which would allow her to set a standard closer to the first best in the future. Updating standards, though, generates a ratchet effect since a lowcost firm might strategically hide its cost by abating no more than required by the standard. We characterize the optimal standard and its update across time depending on the firm's abatement strategy. We illustrate our theoretical results with the case of NOx regulation in Sweden. We find evidence that the firms that pay the NOx tax experience more frequent standard updates and more stringent revisions than those who are exempted.
    Keywords: Policy overlap,Multi-governance,Ratchet effect,Asymmetric information,Tax,Environmental policy,Pollution
    Date: 2021–07

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