nep-res New Economics Papers
on Resource Economics
Issue of 2022‒12‒19
four papers chosen by
Maximo Rossi
Universidad de la República

  1. The Effect of Ambiguity in Strategic Environments: an Experiment By Pablo Brañas-Garza; Antonio Cabrales; Maria Paz Espinosa; Diego Jorrat
  2. Inequality and Climate Change: Two Problems, One Solution? By Francesco Nicolli; Marianna Gilli; Francesco Vona
  3. On the Geographic Implications of Carbon Taxes By Bruno Conte; Klaus Desmet; Esteban Rossi-Hansberg
  4. Climate Change, Natural World Preservation and the Emergence and Containment of Infectious Diseases By William Brock; Anastasios Xepapadeas

  1. By: Pablo Brañas-Garza (Loyola Behavioral Lab); Antonio Cabrales (Universidad Carlos III de Madrid); Maria Paz Espinosa (University of the Basque Country); Diego Jorrat (Loyola Behavioral Lab)
    Abstract: We experimentally study a game in which success requires a sufficient total contribution by members of a group. There are significant uncertainties surrounding the chance and the total effort required for success. A theoretical model with max-min preferences towards ambiguity predicts higher contributions under ambiguity than under risk. However, in a large representative sample of the Spanish population (1,500 participants) we find that the ATE of ambiguity on contributions is zero. The main significant interaction with the personal characteristics of the participants is with risk attitudes, and it increases contributions. This suggests that policymakers concernedwith ambiguous problems (like climate change) do not need to worry excessively about ambiguity.
    Date: 2022–11
  2. By: Francesco Nicolli (Department of Economics and Management, University of Ferrara); Marianna Gilli (Department of Economics and Management, University of Ferrara); Francesco Vona (University of Milan, Fondazione Eni Enrico Mattei and OFCE, Sciences Po)
    Abstract: This paper re-examines the relationship between per capita income, inequality, and per capita emissions while accounting for nonhomotheticity in green preferences and nonlinearities in the impact of economic growth on GHG emissions. Theoretically, our research is motivated by the fact that if environmental quality is a need with low priority on the hierarchical scale, the effect of inequality on emissions should vary depending on the level of income per capita. Specifically, for a given level of income per capita, a richer median voter will be more likely to approve of more stringent environmental policies, and thus, lower inequality is beneficial for the environment. With nonhomothetic preferences, the beneficial environmental effect of reducing inequality emerges only for countries that are sufficiently rich. We test this hypothesis by augmenting a standard EKC equation with the interaction between income per capita and the Gini coefficient. Our results for CO2, SO2 and N2O emissions corroborate our main hypothesis: reducing inequality is beneficial for the environment only for rich countries.
    Keywords: Inequality, Climate Change, GHG Emissions, Environmental Kuznets Curve, Sustainable Development Goals, Political Economy
    JEL: Q53 Q56 O15
    Date: 2022–11
  3. By: Bruno Conte; Klaus Desmet; Esteban Rossi-Hansberg
    Abstract: A unilateral carbon tax trades off the distortionary costs of taxation and the future gains from slowing down global warming. Because the cost is local and immediate, whereas the benefit is global and delayed, this tradeoff tends to be unfavorable to unilateral carbon taxes. We show that this logic breaks down in a world with trade and migration where economic geography is shaped by agglomeration economies and congestion forces. Using a multisector dynamic spatial integrated assessment model (S-IAM), this paper predicts that a carbon tax introduced by the European Union (EU) and rebated locally can, if not too large, increase the size of Europe’s economy by concentrating economic activity in its high-productivity non-agricultural core and by incentivizing immigration to the EU. The resulting change in the spatial distribution of economic activity improves global efficiency and welfare. A unilateral carbon tax with local rebating introduced by the US generates similar global welfare gains. Other forms of rebating can dilute or revert this positive effect.
    JEL: F18 H23 O13 O44 Q56 R11
    Date: 2022–11
  4. By: William Brock; Anastasios Xepapadeas
    Abstract: Scientific evidence suggests that anthropogenic impacts on the environment such as land use changes and climate change promote the emergence of infectious diseases in humans. We develop a two-region epidemic-economic model which unifies short-run disease containment policies with long-run policies which could control the drivers and the severity of infectious diseases. We structure our paper by linking a susceptible-infected-susceptible model with an economic model which includes land use choices for agriculture and climate change and accumulation of knowledge that supports land augmenting technical change. The contact number depends on short-run containment policies (e.g., lockdown, vaccination), and long-run policies affecting land use, the natural world and climate change. Climate change and land use changes have an additional cost in terms of infectious disease since they might increase the contact number in the long run. We derive optimal short-run containment controls for a Nash equilibrium between regions, and long-run controls for climate policy, land use and knowledge at an open loop Nash equilibrium and the social optimum and unify the short- and long-run controls. We explore the impact of ambiguity aversion and model misspeciffication in the unified model and provide simulations which support the theoretical model.
    Keywords: infectious diseases, SIS model, natural world, climate change, land use, containment, Nash equilibrium, OLNE, social optimum, land augmenting technical change
    JEL: I18 Q54 D81
    Date: 2022–12–06

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