nep-res New Economics Papers
on Resource Economics
Issue of 2021‒12‒13
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Optimal Unilateral Carbon Policy By Samuel Kortum; David A. Weisbach
  2. The (Alleged) Environmental and Social Benefits of Dynamic Pricing By Harding, Matthew; Kettler, Kyle; Lamarche, Carlos; Ma, Lala
  3. Climatic shocks, air quality, and health at birth in Bogotá By Luis Guillermo Becerra-Valbuena; Jorge A. Bonilla
  4. All it takes is one: The effect of weakest-link and summation aggregation on public good provision under threshold uncertainty By Carlsson, Fredrik; Ek, Claes; Lange, Andreas

  1. By: Samuel Kortum; David A. Weisbach
    Abstract: We derive the optimal unilateral policy in a general equilibrium model of trade and climate change where one region of the world imposes a climate policy and the rest of the world does not. A climate policy in one region shifts activities—extraction, production, and consumption—in the other region. The optimal policy trades off the costs of these distortions. The optimal policy can be implemented through: (i) a nominal tax on extraction at a rate equal to the global marginal harm from emissions, (ii) a tax on imports of energy and goods, and a rebate of taxes on exports of energy but not goods, both at a lower rate than the extraction tax rate, and (iii) a goods-specific export subsidy. The policy controls leakage by combining supply-side and demand-side taxes to control the price of energy in the non-taxing region. It exploits international trade to expand the reach of the climate policy. We calibrate and simulate the model to illustrate how the optimal policy compares to more traditional policies such as extraction, production, and consumption taxes and combinations of those taxes. The simulations show that combinations of supply-side and demand-side taxes are much better than simpler policies and can perform nearly as well as the optimal policy.
    Keywords: carbon taxes, border adjustments, leakage, climate change
    JEL: F18 H23 Q54
    Date: 2021
  2. By: Harding, Matthew (University of California, Irvine); Kettler, Kyle (University of California, Irvine); Lamarche, Carlos (University of Kentucky); Ma, Lala (University of Kentucky)
    Abstract: This paper provides a cautionary tale about claiming environmental costs and benefits when justifying the use of public funds. Using the example of a dynamic pricing policy, we show that the resulting impact on short-term operating costs and emissions is at best ambiguous. Moreover, it is hard to quantify even in ideal scenarios where data is plentiful and the behavioral response can be estimated precisely using a randomized control trial of customers of an electric utility. While dynamic pricing has been touted as a means to control generation costs and pollution, price-induced reallocation of electricity consumption within a day may actually increase net emissions depending on the source-generation mix of a region.
    Keywords: dynamic pricing, randomized experiment, load shifting, air pollution
    JEL: D12 L11 L94 Q53 Q58
    Date: 2021–11
  3. By: Luis Guillermo Becerra-Valbuena (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jorge A. Bonilla (ULA - Universidad de Los Andes [Venezuela])
    Abstract: We contribute to the literature on air pollution and health by assessing an additional channel, the effect of El Niño Southern Oscillation (ENSO) on health. Currently, there is a vast literature on the effects of urban pollution on health. Our research, unlike other studies, jointly investigates the effects of pollution, ENSO and local weather on health. On the one hand, ENSO manifests itself as an extreme climatic shock that follows certain seasonality and influences weather. It may also have an impact on floods, droughts and agriculture inducing changes in food markets or a loss of household income, which also affect health. On the other hand, health outcomes are affected by other factors which follow separate mechanisms to the previous ones. Therefore, pollutant impacts on health may be interpreted as separate effects from other shocks mediated through ENSO. Using a database from 1998 to 2015 on air quality and vital statistics for Bogotá, and ENSO information, we find that across several specifications, ENSO affects birth weight and the probability of low birth weight after separating pollution and classical local weather impacts. Interestingly, the effect on birth weight of ENSO are several times larger than the impacts of pollution. Being exposed to ENSO may decrease birth weight up to 1.3%, while an increase of 1 ppb of SO2 or 1 µg/m3 of PM25 might reduce birth weight up to 0.3% or 0.14%, respectively. From a policy point of view, these results are relevant because regardless of the measure of pollution that we employ, the amount of the impacts exhibited by climatic shocks via ENSO events dominate.
    Keywords: Climate change,Health,ENSO Index,El Niño,La Niña,weather,Pollution,Bogotá
    Date: 2021–11
  4. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Ek, Claes (Department of Economics, School of Business, Economics and Law, Göteborg University); Lange, Andreas (University of Hamburg)
    Abstract: We report experimental evidence on the voluntary provision of public goods under threshold uncertainty. By explicitly comparing two prominent technologies, summation and weakest link, we show that uncertainty is particularly detrimental to threshold attainment under weakest link, where low contributions by one subject cannot be compensated by others. In contrast, threshold uncertainty does not affect contributions under summation. We demonstrate non-binding pledges as one mechanism to improve chances of threshold attainment under both technologies, yet in particular under weakest link.
    Keywords: public goods; threshold uncertainty; weakest link; coordination; experiment
    JEL: C91 H41 Q54
    Date: 2021–11

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