nep-res New Economics Papers
on Resource Economics
Issue of 2023‒05‒22
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. Can Resource-backed Loans Mitigate Climate Change ? By Yacouba Coulibaly
  2. Immersive Technologies Affecting Psychological Factors that Lead to Voluntary Pro-Environmental Behavior: A Transdisciplinary Survey By Barbara Buljat
  3. The Distribution of Air Quality Health Benefits from Meeting US 2030 Climate Goals By Burtraw, Dallas; Villanueva, Seth; Domeshek, Maya; Shih, Jhih-Shyang; Lambert, Kathy Fallon
  4. Air pollution: a review of its economic effects and policies to mitigate them By Laura Hospido; Carlos Sanz; Ernesto Villanueva
  5. Carbon Pricing and the Elasticity of CO2 Emissions By Rafaty, Ryan; Dolphin, Geoffroy; Pretis, Felix
  6. An estimation of the carbon footprint in spanish credit institutions’ business lending portfolio By Luis Ángel Maza
  7. Climate change and sustainable growth: international initiatives and European policies. By Leonor Dormido; Isabel Garrido; Pilar L´Hotellerie-Fallois; Javier Santillán
  8. Industrial Decarbonization and Competitiveness: Building a Performance Alliance By Kopp, Raymond J.; Pizer, William; Rennert, Kevin

  1. By: Yacouba Coulibaly (UO - Université d'Orléans, UCA - Université Clermont Auvergne)
    Abstract: Resource-backed loans are used today by many resource-rich countries as an effective means of providing public goods and services. However, this type of financing can undermine environmental sustainability (e.g., forest cover loss, CO2 emissions, pollution, ecological collapse, material footprint, etc.). In this paper, we first use propensity score matching, which allows for self-selection bias in signature policies, coarsened exact matching, and the entropy balancing method to test whether resource-backed loans have a causal impact on forest cover loss in 64 developing countries from 2004 to 2018. Through a series of econometric and alternative specification tests, we find that resource-backed loans increase forest cover loss. Nevertheless, when we disaggregate resource-backed loans to run the regressions, we find that mineral, tobacco, and cocoa-backed loans increase forest cover, while oil-backed loans have no significant direct impact on forest cover. We recommend that signatory countries and those considering signing resource-backed loans put in place a very strong compensation mechanism, such as introducing taxes or reforming the current tax system in resource-backed loan agreements, to protect biodiversity and mitigate the environmental impacts of these loans. Signatory countries must ensure full transparency of resource-backed loans to make the characteristics of the loans more fluid, avoiding a situation of budgetary debauchery.
    Keywords: H81, C12, Q54, Q01, Resource-backed loans, Resource rents, Forest cover loss, Resource taxation, Environment, Climate Change, Propensity score matching O13
    Date: 2023–04–18
  2. By: Barbara Buljat (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: We often read about environmental issues, but we rarely personally witness them. Because of this lack of direct experience, people often perceive environmental threats as events distant in space and time and therefore underestimate their risks. Although direct contact with environmental threats might enhance people's risk perception and engagement, in reality such experiences may be dangerous, costly, and complicated to implement. One strategy to bridge this gap could be communication through virtual immersive experiences. This meta-research identifies the key psychological factors that lead to voluntary pro-environmental behavior (PEB) that have been investigated in previous studies using virtual experiments. After a systematic review of the existing literature, we conclude that immersive virtual experiences can influence some of the psychological factors that are important predictors of pro-environmental behavior, namely, concern, risk perception, connectedness to nature, intrinsic motivation for pro-environmental behavior, psychological distance, and presence. This work makes an academic and a practical contribution. It provides a foundation for policy makers and environmental communicators who want to enhance their campaigns with immersive storytelling, and for researchers who want to enrich and contextualize laboratory experiments that test environmental behaviors and risk preferences.
    Keywords: Pro-environmental behavior (PEB), immersive technology, virtual experiments, meta research
    Date: 2022–05
  3. By: Burtraw, Dallas (Resources for the Future); Villanueva, Seth (Resources for the Future); Domeshek, Maya (Resources for the Future); Shih, Jhih-Shyang (Resources for the Future); Lambert, Kathy Fallon
    Abstract: This analysis provides one of the first nationwide estimates of health benefits associated with meeting the United States’ Paris Agreement climate goal. The target, which was established by the Biden Administration in April 2021, aims for a 50-52 percent reduction in the United States’ economy-wide net greenhouse gas emissions in 2030. A new report by scholars at Resources for the Future (RFF) finds that the health benefits associated with avoiding premature deaths are significant and accrue in every state in the nation.The authors examine avoided premature deaths in the context of “secondary†PM2.5, which is formed when several pollutants associated with the combustion of fossil fuels—sulfur dioxide (SO2 ), nitrous oxide (NOx ), and ammonia—combine in the atmosphere. The team analyzes the distribution of health benefits across states, counties, and demographic groups in a future that includes a binding cap on CO2 emissions, sector-specific regulations, and innovation policies in line with US climate goals.All regions of the United States would experience health benefits by reducing PM2.5, with the Midwest seeing the most benefits per capita. Benefits accrue broadly across income levels and racial and ethnic groups as well. These estimates are likely an underrepresentation of total health benefits because they exclude benefits related to averted non-lethal health problems, premature mortality associated with other pollutants, and environmental improvements.
    Date: 2022–01–31
  4. By: Laura Hospido (Banco de España, CEMFI and IZA); Carlos Sanz (Banco de España and CEMFI); Ernesto Villanueva (Banco de España)
    Abstract: Air pollution is an increasing cause of concern among the scientific community, policymakers and the general public. This interest has led to a sharp increase in the number of scientific papers on air pollution. This paper provides a summary of the most prominent recent economic literature on the effects of air pollution, the main policy lessons that can be drawn from it, and the areas in which more research would be especially valuable. The literature has found sizable negative effects of air pollution on health and mortality. There is also some evidence that air pollution may have negative non-health effects, reducing labour supply and productivity, although the evidence is more mixed on the latter aspect. The literature also suggests that effects on both health and non-health dimensions may be heterogeneous in a number of dimensions, most prominently age, with more negative effects for the elderly. Finally, more research is needed on which policies to tackle air pollution would be more cost-effective.
    Keywords: air pollution, health, labour supply, productivity
    JEL: I12 J22 J24 Q51 Q53
    Date: 2023–01
  5. By: Rafaty, Ryan; Dolphin, Geoffroy (Resources for the Future); Pretis, Felix
    Abstract: We study the impacts of carbon pricing on CO2 emissions across five sectors for a panel of 39 countries covering 1990–2016. Constructing new sector-level carbon price data, we implement a novel approach to estimate the changes in CO2 emissions associated with (i) the introduction of carbon pricing regardless of the price level, (ii) the elasticity of emissions with respect to the price level, and (iii) the potential response of future emissions to possible carbon price trajectories. Using a synthetic control factor model, we find that the introduction of carbon pricing has reduced growth in total aggregate (national) CO2 emissions by 1–2 percent on average relative to imputed counterfactuals, with most abatement occurring in the electricity and heat sector. Exploiting variation in observed carbon prices to explain heterogeneity in treatment effects, we decompose the average treatment effect obtained from the synthetic control factor model to distinguish the effect of merely introducing a carbon price from the effect of the price level itself. We find a small and imprecisely estimated semielasticity of a 0.03 percent reduction in emissions growth per average $1/metric ton of CO2. Simulating the response of future global emissions to several possible carbon price trajectories, we conclude that carbon pricing alone, even if implemented globally at a level equivalent to the world’s current highest recorded price in Sweden, is unlikely to be sufficient to achieve emission reductions consistent with the Paris climate agreement. Click "Download" above to read the full working paper.
    Date: 2021–10–25
  6. By: Luis Ángel Maza (Banco de España)
    Abstract: This paper proposes an indicator to estimate the carbon footprint of the business lending of Spanish credit institutions. The growing interest in our societies in environmental issues means that the action taken by financial institutions to support the fight against climate change and the green transition needs to be analysed. In this respect, it is essential to have quality environmental information available and to establish robust methodologies to assess the climate exposure of the financial sector. This paper seeks to contribute to this debate, offering an experimental statistic to measure the degree of exposure of the banking sector in Spain to the risks involved in the transition to a more sustainable economic model. The results obtained show that the carbon footprint of the loans of Spanish credit institutions seems to have been significantly reduced recently. This decline is compatible with the overall reduction in the intensity of pollutant emissions that has taken place in the Spanish economy in recent years, but also with a slight shift in the composition of the loan portfolio towards less polluting activities.
    Keywords: climate change, carbon footprint, financial risks
    JEL: Q50 Q56 G10 G20
    Date: 2022–03
  7. By: Leonor Dormido (Banco de España); Isabel Garrido (Banco de España); Pilar L´Hotellerie-Fallois (Banco de España); Javier Santillán (Banco de España)
    Abstract: In recent years, the fight against climate change and for sustainable growth has been gaining prominence on the international agenda. Reducing pollutant emissions depends on a sufficiently large number of countries adopting efficient mitigating measures that are in line with international agreements. International cooperation is essential to deliver on the commitments undertaken pursuant to these agreements, implement the energy transition and stop climate change. Both the G-20, some of whose members are among the largest greenhouse gas emitters, and the International Monetary Fund are increasingly taking into account climate issues when performing their functions. The European Union plays an active and leading role in this global commitment and is pursuing increasingly ambitious goals. In compliance with the European Green Deal, the European Union has enshrined its goal of climate neutrality in the European Climate Law and has launched a number of groundbreaking policies to implement it, such as the “Fit for 55” package. The war in Ukraine adds an element of uncertainty to this path, given the importance of Russia as a supplier of fossil fuels to the European Union.
    Keywords: climate change, decarbonisation, European Union, G-20, IMF, COP, Green Deal, Ukraine/Russia.
    JEL: F53 P18 H23 H87 Q54 F64 F68
    Date: 2023–01
  8. By: Kopp, Raymond J. (Resources for the Future); Pizer, William (Resources for the Future); Rennert, Kevin (Resources for the Future)
    Abstract: Reducing greenhouse gas (GHG) emissions from carbon-intensive industrial sectors like steel, aluminum, cement, and chemicals will be aided by the introduction of new low- and zero-carbon production process technologies. While the cost of new technologies will decline over time, in the short run they will likely cost more than more carbon-intensive, incumbent technologies. When the products from these sectors are exchanged on highly competitive international markets, decarbonization efforts could therefore lead to lost competitive advantage vis-à -vis nations with weaker environmental policies.A recent issue brief, “Industrial Decarbonization and Competitiveness: A Domestic Benchmark Approach†(hereafter, “Benchmark†), introduced an idea for a domestic emissions reduction policy that targets the US industrial sector, paired with a border adjustment tariff. The Clean Competition Act recently introduced by Senator Sheldon Whitehouse (D-RI) builds on the paired policy structure. As US industry continues to decarbonize, these paired policies would protect domestic producers from competitive imports, maintain competitiveness in export markets, and provide incentives for trading partners to increase environmental ambition.In this issue brief, we introduce the related idea of a “performance alliance†in which a group of countries align industrial decarbonization efforts and trade policies to maintain competitiveness, limit leakage of emissions, and provide incentives for others to pursue ambitious decarbonization policies. This idea can be traced to work on “climate clubs, †initially popularized by William Nordhaus. The most recent reference to a climate club can be found in the G7 Leaders Communiqué, released May 20, 2022. Catalyzing leadership, action, and inclusivity is a key element of the G7 grouping and suggests the idea of an alliance more than the notion of exclusivity and protectionism suggested by a club.The international policy proposed in the Clean Competition Act and the EU carbon border adjustment mechanism (CBAM) proposal point to implicit climate clubs. In the EU case, a nation exporting primary commodities to the European Union could be a member of the club if that nation imposes a carbon price on its domestic production. That carbon price for the nation’s primary commodities would have to be equal to or greater in magnitude to the price charged within the European Union. In such a case the exporting nation does not face an EU-imposed border fee. In the case of the Clean Competition Act, a nation exporting primary commodities to the United States could be a member of the club if the GHG intensity of its domestic primary commodity production is less than the US benchmark intensity. In such a case the exporting nation does not face a US-imposed border fee. If one were to consider the Clean Competition Act and the EU CBAM as forms of climate clubs, true members of each club might further align their own border measures to match the European Union and the United States.Admission to such an EU club requires the adoption of a common policy to address emissions from the industrial sector; that policy is a specific and explicit carbon price. Admission to such a US club requires environmental performance on a par with the United States, where that performance is measured in terms of GHG intensity of production. We might think of the EU approach as a policy club, while thinking of the US as a performance club.In the remainder of this issue brief we elaborate on the idea of an alliance, rather than a “club, †where members work to drive industrial sector decarbonization–this would happen through an alignment of efforts and advanced technology that levels the playing field of economic competition and negates the need for border measures within the alliance. Border measures would remain a component of this approach for countries that do not choose to increase their ambition and join the alliance. The border measures need not be harmonized among the alliance members. This reduces the protectionist feel of the alliance.
    Date: 2022–07–06

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