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on Resource Economics |
| By: | Luca Bargna (Department of Economics, Insubria University, Varese, Italy); Davide La Torre (SKEMA Business School, Université Côte d'Azur, France); Benjamin Montmartin (SKEMA Business School, France; Université Côte d'Azur, CNRS, GREDEG, France); Lionel Nesta (Université Côte d'Azur, CNRS, GREDEG, France; OFCE, Sciences Po, France; SKEMA Business School, France) |
| Abstract: | We develop a spatial optimal-control model in which air pollution and climate-mitigation innovation evolve jointly through a coupled reaction–diffusion system. We characterize stability and optimal policy, derive closed-form controls under spatial homogeneity, and obtain bounds for nonlinear dynamics. Using data from 1, 181 European NUTS 3 regions over 2005–2020, we estimate the reaction–diffusion dynamics and simulate the optimal policy mix under alternative welfare valuations of pollution-generating activities. Pollution exhibits strong spatial diffusion, whereas innovation diffusion is limited. Innovation is associated with lower subsequent pollution growth, while higher pollution is followed by stronger innovation growth. The optimal policy mix combines environmental regulation and innovation support, but their timing and persistence differ. Abatement may be immediate or delayed depending on the net welfare contribution of pollution-generating activities, while sustained innovation support depends on the value assigned to the terminal innovation stock. |
| Keywords: | Optimal control; Reaction–diffusion systems; Pollution; Innovation; Spatial econometrics |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-21 |
| By: | Erik Ansink (Vrije Universiteit Amsterdam); Hans-Peter Weikard (Wageningen University) |
| Abstract: | We study ordered claims problems in which availability of a resource changes across positions according to a stationary linear transition structure. Our main motivating example is the allocation of river water with conveyance loss. Allocations assigned to agents at different positions have different implications for their feasibility and for resource requirements. We characterise a class of geometric allocation rules in which claims are weighted by a constant multiplicative factor along the ordering and then scaled to the feasibility boundary. We apply these rules to two settings that capture opposing transition effects. In river water allocation the geometric weighting factor balances proportional sharing with efficiency considerations that would favour upstream agents. In a setting of river pollution with pollution decay, a geometric rule balances equal access to pollution rights with a reduction of pollution damage when favouring upstream agents. |
| JEL: | C71 D63 Q25 |
| Date: | 2026–09–06 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260067 |
| By: | Xulia González; María J. Moral |
| Abstract: | In response to the sharp rise in fuel prices following Russia’s 2022 invasion of Ukraine, many governments introduced temporary fuel subsidies to shield households from higher energy costs. This paper evaluates the distributional and environmental effects of Spain’s fuel subsidy policy. We combine household-level estimates of gasoline price elasticities from the Household Budget Survey with weekly retail fuel price data to estimate the pass-through of the subsidy to consumers. We find an average short-run gasoline price elasticity of 0.55 and incomplete pass-through, with only 89% of the subsidy reflected in retail prices. As a result, part of the fiscal transfer was captured by fuel retailers, while the benefits accrued disproportionately to higher-income households: the lowest income quartile received 12.4% of total benefits compared with 28.4% for the highest quartile. We also identify substantial regional heterogeneity in this distribution. The subsidy also increased fuel consumption and carbon emissions. Overall, the findings suggest that uniform fuel subsidies are poorly targeted and can conflict with both equity and environmental policy objectives. |
| Keywords: | Fuel subsidy, price elasticity, gasoline prices, distributional equity, emissions |
| JEL: | H22 H23 L11 Q41 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:vig:wpaper:2603 |
| By: | Huppertz, Maximilian (Department of Economics, Oberlin College) |
| Abstract: | It is well established that climate change affects productivity, but its effects on trade costs have not been studied. I combine international trade and weather data covering 190 years and show how an augmented gravity framework can be used to estimate the impact of climate change on bilateral trade cost. I find that climate change, as measured by decadal temperature shifts at the origin or destination country, increases them. Adaptation to these changes seems slow. They appear to be driven by impacts on maritime trade in particular, perhaps due to the vulnerability of seaports to climate change. Combining these results with a standard international trade model, I find that 2010s welfare would increase by 1.7 percent if we could undo the impact of climate change on trade cost over the preceding 100 years. Welfare gains depend not only on countries’ own climate trends, but also on their neighbors’ trajectories. Smaller economies, which are more reliant on international trade, are especially affected. Ignoring this trade cost channel and focusing only on productivity impacts leads to a nine percent underestimate of the welfare effect of climate change, with larger differences for smaller open economies. Because it is based on a gravity framework, my methodology can easily be embedded in studies of the impact of climate change. |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:cxv:wpaper:2606 |
| By: | Alexander Mihailov (Department of Economics, University of Reading) |
| Abstract: | This paper is a sequel to my 'greening prosperity stripes' article, Mihailov (2026). It refines the calculation of these illustrative color stripes to take into account consumption-based, or trade-embodied, carbon dioxide (CO2) emissions, not production-based CO2 emissions as in the earlier study, thus revealing the influence of, in particular, offshoring polluting industries. Yet, the refined indicator comes at the cost of losing nearly half of the countries in the world and most country groupings in the World Bank classification, due to unavailability of such data. Nevertheless, it offers a more precise - and, perhaps, fairer - image, relative to the original production-based greening prosperity stripes, of how green(ing) is the prosperity for most countries in the world. The novelty of this sequel paper consists in illustrating clearly the difference between the two indicators of greening prosperity, in pairs of comparative graphs. Because images and colors have power to impress human minds deeper than words, the greening prosperity stripes, in addition to raising awareness and mobilizing immediate climate policy action worldwide, can essentially be used to track the progress of each country in comparison with other countries toward the goal of net zero. Ideally, an annually updated public-domain website could serve this crucial monitoring function at a global scale in a straightforward way with immediate online illustration and verification. |
| Keywords: | consumption-based (or trade-embodied) greening prosperity stripes and maps; production-based greening prosperity stripes and maps; comparative colormap data visualization; communicating science to raise public awareness; tracking progress to net zero |
| JEL: | C82 F64 O44 Q51 |
| Date: | 2026–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2026-09 |