|
on Energy Economics |
|
Issue of 2010‒05‒22
fifty-five papers chosen by Roger Fouquet Basque Climate Change Centre, Bilbao, Spain |
| By: | David F. Hendry |
| Abstract: | We consider information from many sciences bearing on the causes and consequences of climate change, focusing on lessons from past mass extinctions of life on Earth. The increasing atmospheric levels of the main greenhouse gases are now established, as is their source in human activity. World-wide temperatures are rising on a high variance stochastic trend. Evidence from the past 500 million years provides a major warning: climate change is the main culprit in previous mass extinctions, with several different triggers - humanity is the latest trigger. The different approaches and sources of evidence across so many disciplines make a compelling case. Economic analysis offers a number of ideas, but the key problem is that distributions can shift, making action to avoid possible future shifts urgent. Adaptation ceases to be meaningful if food, water and land resources become inadequate, whereas the first migration steps are not costly and should stimulate innovation, creating opportunities as new technologies develop. |
| Keywords: | Climate change, Mass extinction, Greenhouse gases, Location shifts |
| JEL: | Q54 Q51 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:485&r=ene |
| By: | Gollier, Christian; Weitzman, Martin |
| Abstract: | It is not immediately clear how to discount distant-future events, like climate change, when the distant-future discount rate itself is uncertain. The so-called “Weitzman-Gollier puzzle” is the fact that two seemingly symmetric and equally plausible ways of dealing with uncertain future discount rates appear to give diametrically opposed results with the opposite policy implications. We explain how the “Weitzman-Gollier puzzle” is resolved. When agents optimize their consumption plans and probabilities are adjusted for risk, the two approaches are identical. What we would wish a reader to take away from this paper is the bottom-line message that the appropriate long run discount rate declines over time toward its lowest possible value. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:21968&r=ene |
| By: | Scarborough, Helen |
| Abstract: | Recent modelling of the costs and benefits of climate change has renewed debate surrounding assumptions regarding the social discount rate in analysing the impacts of environmental change. Previous literature segments the social discount rate into being influenced by two key factors; the rate of pure time preference and the elasticity of marginal utility of future consumption. These components of the social discount rate reinforce the linkages between the choice of social discount rate and intergenerational distribution. In an extension of previous work by the author on intergenerational distributional preferences, this paper discusses the relationship between intergenerational equity and the social discount rate. The work has significant policy implications given the sensitivity of Cost Benefit Analysis outcomes to assumptions regarding the social discount rate. |
| Keywords: | Intergenerational equity, Social discount rate, Environmental Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59156&r=ene |
| By: | Hourcade, Jean-Charles; Nadaud, Franck |
| Abstract: | This paper sheds light on an implicit dimension of the climate policy debate: the extent to which supply-side response (emission-reducing energy technologies) may substitute for the transformation of consumption behavior and thus help get around the political difficulties surrounding such behavioral transformation. The paper performs a meta-review of long-term energy forecasts since the end of the 1960s in order to put in perspective the controversies around technological optimism about the potential for cheap, large-scale, carbon-free energy production. This retrospective analysis encompasses 116 scenarios conducted over 36 years and analyzes their predictions for a) fossil fuels, b) nuclear energy, and c) renewable energy. The analysis demonstrates how the predicted relative shares of these three types of energy have evolved since 1970, for two cases: a) predicted shares in 2010, which shows how the initial outlooks for the 2000-2010 period have been revised as a function of observed trends; and b) predicted shares for t+30, which shows how these revisions have affected medium-term prospects. The analysis shows a decrease, since 1970, in technological optimism about switching away from fossil fuels; this decrease is unsurprisingly correlated with a decline in modelers’ beliefs in the suitability of nuclear energy. But, after a trend of increasing optimism, a declining trend also characterizes renewable energies in the 1980s and 1990s before a slight revival of technological optimism about renewables in the aftermath of Kyoto. |
| Keywords: | Energy Production and Transportation,Energy and Environment,Environment and Energy Efficiency,Energy Demand,Climate Change Mitigation and Green House Gases |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5298&r=ene |
| By: | Strand, Jon |
| Abstract: | This paper uses some simple conceptual models to draw out various implications of infrastructure investments with long lifetimes for the ability of societies to reduce their future greenhouse gas emissions. A broad range of such investments, related both to energy supply and demand systems, may commit societies to high and persistent levels of greenhouse gas emissions over time, that are difficult and costly to change once the investments have been sunk. There are, the author argues, several strong reasons to expect the greenhouse gas emissions embedded in such investments to be excessive. One is that infrastructure investment decisions tend to be made on the basis of (current and expected future) emissions prices that do not fully reflect the social costs of greenhouse gas emissions resulting from the investments. A second, related, set of reasons are excessive discounting of future project costs and benefits including future climate damages, and a too-short planning horizon for infrastructure investors. These issues are illustrated for two alternative cases of climate damages, namely with the possibility of a"climate catastrophe,"and with a sustained increase in the marginal global damage cost of greenhouse gas emissions. |
| Keywords: | Climate Change Economics,Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Transport Economics Policy&Planning,Environment and Energy Efficiency |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5295&r=ene |
| By: | Franz Fuerst (School of Real Estate & Planning, Henley Business School, University of Reading); Pat McAllister (School of Real Estate & Planning, Henley Business School, University of Reading); Karen Smith (School of Real Estate & Planning, Henley Business School, University of Reading) |
| Abstract: | Drawing upon an updated and expanded dataset of Energy Star and LEED labeled commercial offices, this paper investigates the effect of eco-labeling on rental rates, sale prices and occupancy rates. Using OLS and robust regression procedures, hedonic modeling is used to test whether the presence of an eco-label has a significant positive effect on rental rates, sale prices and occupancy rates. The study suggests that estimated coefficients can be sensitive to outlier treatment. For sale prices and occupancy rates, there are notable differences between estimated coefficients for OLS and robust regressions. The results suggest that both Energy Star and LEED offices obtain rental premiums of approximately 3%. A 17% sale price premium is estimated for Energy Star labeled offices but no significant sale price premium is estimated for LEED labeled offices. Surprisingly, no significant occupancy premium is estimated for Energy Star labeled offices and a negative occupancy premium is estimated for LEED labeled offices. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:repxwp:rep-wp2010-01&r=ene |
| By: | Hazuki Ishida (Faculty of Symbiotic Systems Science, Fukushima University) |
| Abstract: | The fact that harnessing renewable energy depends heavily upon fossil fuels implies that a continuous rise in energy prices is inevitable without technological progress in saving fossil fuel use. Using a simple Hotelling model of optimal nonrenewable resource extraction, this paper explores the conditions under which the continuous price rise of renewable energy is restrained in the presence of technological progress in harnessing renewable energy. In these circumstances, the results show that the growth rate of technology in harnessing renewable energy has to be larger than the discount rate to sustain the age of cheap energy. |
| Keywords: | renewable energy; fossil fuels; technological progress |
| JEL: | Q31 Q41 Q42 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1016&r=ene |
| By: | Chakravorty, Ujjayant; Leach, Andrew; Moreaux, Michel |
| Abstract: | In this paper, we show that the potential for endogenous technological change in alternative energy sources may alter the behaviour of resource-owning firms. When technological progress in an alternative energy source can occur through learning-by-doing, resource owners face competing incentives to extract rents from the resource and to prevent expansion of the new technology. We show that in such a context, it is not necessarily the case that scarcity-driven higher traditional energy prices over time will induce alternative energy supply as resources are exhausted. Rather, we show that as we increase the learning potential in the substitute technology, lower equilibrium energy prices prevail and there may be increased resource extraction and greenhouse gas emissions. We show that the effectiveness and the incidence of emissions reduction policies may be altered by increased potential for technological change. Our results suggest that treating finite resource rents as endogenous consequences of both technological progress and policy changes will be important for the accurate assessment of climate change policy. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:22540&r=ene |
| By: | Richard Green |
| Abstract: | This chapter discusses the implications of an increasing proportion of renewable energy for the way in which energy companies are regulated. While the scope of regulation varies from country to country, depending on the degree of liberalisation, an increase in the overall cost of energy, and a shift from operating to capital costs will be relevant for all regulators. Where there is third party access to transmission, the tariffs may need to send stronger signals of the relative costs imposed by generators in different places, and may have significant effects on their profitability. Regulators responsible for generation revenues will have to allow peaking plants to recover their costs, even if those are rarely-used reserves to cope with intermittent renewable generation. Regulators in control of final prices charged to consumers will probably have to pass on a higher cost of energy, and determine how much is paid by different groups. The shift to renewable energy, however, will not change the fundamental tasks or nature of economic regulation. |
| Keywords: | Economic regulation, renewable energy, electricity, transmission pricing |
| JEL: | L94 Q42 L95 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:10-16&r=ene |
| By: | Bishwanath Goldar |
| Abstract: | The paper examines the factors that influence energy intensity in Indian industries. It has two parts. In the first part, trends in energy intensity are analysis and cross-industry panel data (taken from ASI) are used to estimate an energy demand function. The results show that energy demand responds negatively to a hike in energy prices and positively to a hike in real wages. There are indications from the results of the analysis that the post- 1992 decline in energy intensity of Indian manufacturing is attributable mostly to an improvement in energy use efficiency of energy intensive industries, which in turn may be traced to hikes in the real price of energy paid by manufacturing firms. |
| Keywords: | ASI, prices, technology, industries, demand, energy, real wages, Indian, manufacturing, real price, manufacturing firms, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2483&r=ene |
| By: | Pandit, Ram; Laband, David N. |
| Abstract: | Trees cast shade on homes and buildings, lowering the inside temperatures and thus reducing demand for power to cool these buildings during hot times of the year. Drawing from a large sample of residences in Auburn, Alabama, we develop a statistical model that produces specific estimates of the electricity savings generated by shade-producing trees in a suburban environment. This empirical model links residential energy consumption to hedonic characteristics of the structures, characteristics and behaviors of the occupants, and the extent, density, and timing of shade cast on the structures. Our estimates suggest that if an additional 10 percent of the 125 million home owners in America started using tree shade to reduce electricity consumption an average of 10 kwh/day for 100 days per year, the annual amount of electricity conserved would be approximately 12,500 thousand megawatts. At the 2007 average residential price of electricity ($0.1065/kwh), this would save each household an estimated $106/year and $1.3 billion in the aggregate. Moreover, the electricity saved would represent approximately one-third of the electricity produced annually in the U.S. by wind power. |
| Keywords: | Environmental Economics and Policy, Resource /Energy Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59147&r=ene |
| By: | Crampes, Claude; Moreaux, Michel |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22286&r=ene |
| By: | Nuppenau, Ernst-August |
| Abstract: | Questions on farm structures (such as superiority of large farms) are typically linked to economies of scale. Economies of scale are normally a matter of investments in energy consuming technologies (large machinery). In contrast there is the issue of remaining prevalence of labour intensive, small farms (meant to be inferior); but which are less energy intensive. We see a revival in theoretical and policy debates on pathways of agricultural development concerning energy use. We analyse, how one can develop an approach that includes incentives to save energy and produce less GHG, and develop a framework of coexistence of farm types. |
| Keywords: | Agricultural and Food Policy, Farm Management, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa114:60912&r=ene |
| By: | Gasmi, Farid; Oviedo, Juan Daniel |
| Abstract: | This paper develops a simple model in which a regulated (upstream) transporter provides capacity to a marketer competing in output with an incumbent in the (downstream) gas commodity market. The equilibrium outcome of the firms' interaction in the downstream market is explicitly taken into account by the regulator when setting the transport charge. We consider various forms of competition in this market and derive the corresponding optimal transport charge policies. We then run simulations that allow us to perform a comparative welfare analysis of these transport infrastructure investment policies based on different assumptions about the intensity of the competition that prevails in the gas commodity market. |
| Keywords: | transport capacity investment, regulation, natural gas |
| JEL: | L51 L91 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22244&r=ene |
| By: | Regnard, Nazim; Zakoian, Jean-Michel |
| Abstract: | A novel GARCH(1,1) model, with coefficients function of the realizations of an exogenous process, is considered for the volatility of daily gas prices. A distinctive feature of the model is that it produces non-stationary solutions. The probability properties, and the convergence and asymptotic normality of the Quasi-Maximum Likelihood Estimator (QMLE) have been derived by Regnard and Zakoian (2009). The prediction properties of the model are considered. We derive a strongly consistent estimator of the asymptotic variance of the QMLE. An application to daily gas spot prices from the Zeebruge market is presented. Apart from conditional heteroskedasticity, an empirical finding is the existence of distinct volatility regimes depending on the temperature level. |
| Keywords: | GARCH; Gas prices; Nonstationary models; Periodic models; Quasi-maximum likelihood estimation; Time-varying coefficients |
| JEL: | C53 C22 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22642&r=ene |
| By: | Devarajan, Shantayanan; Le, Tuan Minh; Raballand, Gael |
| Abstract: | This paper proposes that, to increase the efficiency of public spending in oil-rich economies, some or all of the oil revenues be transferred to citizens, and fiscal instruments such as taxation be used to finance public expenditures. The authors develop the case as follows. First, they confirm the well-known result that public-expenditure efficiency is lower in oil-rich countries compared with other developing countries. Second, they show that this efficiency gap is associated with differences in accountability to citizens of government's spending decisions. They find that various measures of accountability are systematically weaker in oil-rich countries. They attribute this difference to the fact that oil revenues typically accrue directly to the government, unlike tax revenues, which pass through the hands of citizens. Third, they show that, controlling for a number of factors, accountability is stronger in countries that rely more on direct taxation to finance public spending. They conclude that accountability, and hence public expenditure efficiency, can be increased by transferring oil revenues to citizens and then taxing them to finance public spending. The paper reviews existing schemes that redistribute oil revenues to the population, such as the Alaska Citizen Fund, to assess the feasibility of a modest proposal in African countries. The authors conclude that, while it may be difficult to implement such a proposal in existing oil producers, there is scope for introducing it in some of Africa's new oil producers. |
| Keywords: | Subnational Economic Development,National Governance,Public Sector Economics,Public Sector Expenditure Policy,DebtMarkets |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5287&r=ene |
| By: | Wei Chen; J L Ford |
| Abstract: | This paper is an original study of the volatility in China’s oil fuel spot and futures markets, and in the spot market of Singapore one of China’s main source of imports. GARCH(1,1), TGARCH(1,1) and a constant variance model are estimated using 500 daily observations from 25 August 2005. The optimum hedge ratios derived from the competing models are evaluated in terms of the variance and semi-variance (downside) risk that they promise compared with a no-hedge portfolio: and also in terms of their expected utility. This is also accomplished for hedging in the Singapore market. Out-of-sample observations (54) are used to up-date, day-by-day, the variance-covariance matrices from the estimation period. The findings are used to compare the competing models, and the two hedging strategies, over that extended period. They showed the stability of the original estimates and of the ranking of the models under any given criterion. Hedging in China’s market is more effective in terms of reducing downside risk and maximising expected utility than is hedging in Singapore’s market. The latter dominates in terms of variance reduction. |
| Keywords: | China's fuel oil spot and futures returns, Singapore's spot market, volatility, bivariate GARCH and TGARCH, hedged portfolio returns, variance reduction, downside risk, expected utility |
| JEL: | G10 C53 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:10-15&r=ene |
| By: | Lean, H.H. (Erasmus Econometric Institute); McAleer, M.J. (Erasmus Econometric Institute); Wong, W-K. (Erasmus Econometric Institute) |
| Abstract: | This paper examines investor preferences for oil spot and futures based on mean-variance (MV) and stochastic dominance (SD). The mean-variance criterion cannot distinct the preferences of spot and market whereas SD tests leads to the conclusion that spot dominates futures in the downside risk while futures dominate spot in the upside profit. It is also found that risk-averse investors prefer investing in the spot index, whereas risk seekers are attracted to the futures index to maximize their expected utilities. In addition, the SD results suggest that there is no arbitrage opportunity between these two markets. Market efficiency and market rationality are likely to hold in the oil spot and futures markets. |
| Keywords: | stochastic dominance;risk averter;risk seeker;futures market;spot market;C14;G12;G15 |
| Date: | 2010–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureir:1765019455&r=ene |
| By: | Castillo, Paul (Banco Central de Reserva del Perú); Montoro, Carlos (Banco Central de Reserva del Perú; CENTRUM-Catolica); Tuesta, Vicente. (CENTRUM-Catolica) |
| Abstract: | In a fully micro-founded New Keynesian framework, we characterize analytically the relation between average inflation and oil price volatility by solving the rational expectations equilibrium of the model up to second order of accuracy. Higher oil price volatility induces higher levels of average inflation. We also show that when oil has low substitutability and the central bank responds to output fluctuations, oil price volatility matters for the level of average inflation. The model shows that when oil price volatility increases, average inflation increases whereas average output falls: this implies a trade-off also between average inflation and that of output. The analytical solution further indicates that for a given level of oil price volatility, average inflation is higher when marginal costs are convex in oil prices, the Phillips Curve is convex, and the degree of relative price dispersion is also higher. We perform a numerical exercise showing that the model with a empirically plausible Taylor rule can replicate the level of average inflation observed in the U.S. in 2000s. |
| Keywords: | Oil price volatility, monetary policy, perturbation method, second order solution. |
| JEL: | E52 E42 E12 C63 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:rbp:wpaper:2010-002&r=ene |
| By: | Rosa, Franco |
| Abstract: | The dir 30/2003 by fixing the 5,75% target of biofuel incorporation to fossil fuel for vehicles for 2010 has increased the interest for a further development of the agro-energies in the EU and generated a virtuous competition among the Member States. Purpose of this paper is to analyze the dimension and profitability of the integrated biodiesel chain with different organizations to analyze their effectiveness in different industrial organization contest. Possible improvement of the economic performance is related with the constitution of local biofuel districts where cluster of farms producing oil seed are integrated with processors to reduce production-processing transport costs: evidences of the last 15 years suggest a decline up to 20% in current â¬. The optimal size of plants with an higher level of exploitation of their capacity within an integrated organization is an important part of the cost-reducing process. This paper examines the theoretical plant size rules for a conventional processing business integrated in producer/processing enterprise, based on different form of integration and the spatial dimension of the oilseed input market is examined for its consequences for the scale economies of biodiesel processing facilities. The analysis drives to the following conclusions: i) the optimal size may grow further but the constrain is given by the supply of feedstock at farm level; ii) investment profitability measured with the return on capital is convenient if the dimension of the supply area is appropriate to the processing capacity of the plant; iii) the integrated cooperative network is improved to gain efficiency by reducing transaction costs; iv) the total producer plus processor profits and sharing among partners change with the type of organization used in the integrated chain. |
| Keywords: | Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iefi09:59202&r=ene |
| By: | Meyer, Seth; Binfield, Julian; Westhoff, Patrick |
| Abstract: | The beneficiaries of technology adoption in agriculture and biofuels markets in the United States are heavily influenced by domestic biofuel policies and market context. Biofuel mandates, one of the key pillars of domestic biofuel policies, may significantly alter the elasticity of demand for biofuels as well as the derived demand for maize used to produce a significant share of ethanol in the United States. Using a stochastic agriculture and biofuels model, we assess how the introduction of technology may affect the crops and biofuel markets under binding and non-binding biofuel mandates and discuss the implications for analysis of EU biofuel policies. |
| Keywords: | biofuels, policy, technology adoption, mandates, Agricultural and Food Policy, Farm Management, Land Economics/Use, |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa114:61089&r=ene |
| By: | Gebrezgabher, Solomie A.; Meuwissen, Miranda P.M.; Oude Lansink, Alfons G.J.M. |
| Abstract: | By 2020, Dutch dairy chains envisage to be self-sufficient with regard to energy used by dairy farms and dairy processors. This would require dairy farms to produce 25 PJ per year, possibly by a combination of wind, solar and biogas. Current analyses focus on biogas. To evaluate the projectâs feasibility we estimated the expected technical and financial performance of 4 types of business models, i.e. âCHP-farmâ, âCHP-largeâ, âgreen gasâ and âcentral upgradingâ. Data stem among others from 23 biogas plants in the Netherlands. Anticipating that CHP-models and green gas models occur with a likelihood of 40% and 60% respectively, the total number of biogas plants at dairy farms would amount to 463. There would however be an expected deficit of Euro 157 million over the projectâs life time, i.e. Euro 0.02 per liter of milk. Fully switching to green gas is expected to reduce the number of plants to 438 with an aggregated financial surplus, i.e. of Euro 368 million. Findings are useful in current stakeholder debates on dairy chainsâ sustainability, and, more specifically, level of subsidies, availability of co-digestion materials and market opportunities of digestate. |
| Keywords: | Green electricity, Green gas, Empirical data, Technical performance, Financial performance, Agribusiness, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty, |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iefi09:59116&r=ene |
| By: | Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)) |
| Abstract: | Expanded mandates under the Renewable Fuel Standard provide ethanol and biodiesel producers a guaranteed future market at volumes that exceed what they have produced in the past. Despite having these mandates in place, biofuel producers continue to support tax credits and ethanol import tariffs. An examination of how the new mandates will be implemented shows that biofuel producers will receive little or no additional benefit from tax credits. Ethanol import tariffs will continue to provide U.S. corn ethanol producers a cost advantage over imported Brazilian sugarcane ethanol until at least 2013 when the demand for sugarcane ethanol to meet the noncellulosic advanced biofuel mandate starts to increase. |
| Keywords: | biodiesel, biofuel tax credit, biofuels mandates, corn ethanol, ethanol import tariffs, fuel subsidies, sugarcane ethanol, Renewable Identification Numbers. |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:10-pb1&r=ene |
| By: | Couture, Stéphane; Garcia, Serge; Reynaud, Arnaud |
| Abstract: | In an international context of soaring oil prices and growing awareness of the need to combat global warming, wood would appear to be becoming increasingly competitive and desirable for our environment. France is the leading consumer of fuelwood in the EU, mainly for home consumption and for heating, although the share of wood in primary energy consumption is still very low (4%). It is therefore important to understand how domestic consumer fuelwood demand is determined. We propose an econometric analysis of fuelwood consumption by modeling the choice made by consumers of the type of use of wood for heating, and the possible combination between one energy used as a main source of heating and another used as a back-up. Our estimations show that this choice is mainly determined by income. Wood is chosen as the main energy source by the poorest households. Consumption is price sensitive in the case of main use of wood (price elasticity of -0.4), but price elasticity is lower in the case of back-up use, and varies according to the type of energy used as the main source (electricity, gas, fuel oil). |
| Keywords: | energy wood, type of use, domestic demand |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22147&r=ene |
| By: | Maureen L. Cropper (University of Maryland and Resources for the Future); Yi Jiang (Asian Development Bank); Anna Alberini (University of Maryland); Patrick Baur (National Academy of Sciences) |
| Abstract: | Ground level ozone remains a serious problem in the United States. Because ozone non-attainment is a summer problem, episodic rather than continuous controls of ozone precursors are possible. We evaluate the costs and effectiveness of an episodic scheme that requires people to buy permits in order to drive on high ozone days. We estimate the demand function for permits based on a survey of 1,300 households in the Washington, DC metropolitan area. Assuming that all vehicle owners comply with the scheme, the permit program would reduce VOCs by 50 tons and NOx by 42 tons per Code Red day at a permit price of $75. Allowing for non-compliance by 15% of respondents reduces the effectiveness of the scheme to 39 tons of VOCs and 33 tons of NOx per day. The cost per ozone season of achieving these reductions is approximately $9 million (2008 USD). This compares favorably with permanent methods of reducing VOCs that cost $645 per ton per year. |
| Keywords: | Ground-Level Ozone, Episodic Pollution Control Schemes, Mobile Sources, Volatile Organic Compounds (Vocs), Cost Per Ton of Vocs Removed |
| JEL: | Q52 Q53 Q58 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.46&r=ene |
| By: | De Villemeur, Étienne; Pineau, Pierre-Olivier |
| Abstract: | Electricity trade across regions is often considered welfare enhancing. We show in this paper that this could be reconsidered if environmental externalities are taken into account. We consider two cases where trade is beneficial, before accounting for environmental damages: first, when two regions with the same technology display some demand heterogeneity; second when one region endowed with hydropower arbitrages with its "thermal" neighbor. Our results show that under reasonable demand and supply elasticities, trade comes with an additional environmental cost. This calls for integrating environmental externalities into market reforms when redesigning the electricity sector. Two North American applications illustrate our results: trade between Pennsylvania and New York, and trade between hydro-rich Quebec and New York. |
| Keywords: | Electricity trade, hydropower, greenhouse gas emissions |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:21971&r=ene |
| By: | Amigues, Jean-Pierre (Toulouse School of Economics (INRA, IDEI and LERNA)); Chakravorty, Ujjayant (University of Alberta); Moreaux, Michel (Toulouse School of Economics (IUF, IDEI and LERNA)) |
| Abstract: | Regulation of environmental externalities like global warming from the burning of fossil fuels (e.g., coal and oil) is often done by capping both emission flows and stocks. For example, the European Union and states in the Northeastern United States have introduced caps on flows of carbon emissions while the stated goal of the Intergovernmental Panel on Climate Change (IPCC) which provides the science behind the current global climate negotiations is to stabilize the atmospheric stock of carbon. Flow regulation is often local or regional in nature, while stock regulation is global. How do these multiple pollution control efforts interact when a nonrenewable resource creates pollution? In this paper we show that local and global pollution control efforts, if uncoordinated, may exacerbate environmental externalities. For example, a stricter cap on emission flows may actually increase the global pollution stock and hasten the date when the global pollution cap is reached. |
| JEL: | Q12 Q32 Q41 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:21973&r=ene |
| By: | Valentina Bosetti (Fondazione Eni Enrico Mattei and CMCC); Carlo Carraro (Fondazione Eni Enrico Mattei, University of Venice, CEPR, CESifo and CMCC); Romain Duval (OECD); Massimo Tavoni (Fondazione Eni Enrico Mattei, Princeton Environmental Institute and CMCC) |
| Abstract: | This paper addresses two basic issues related to technological innovation and climate stabilisation objectives: i) Can innovation policies be effective in stabilising greenhouse gas concentrations? ii) To what extent can innovation policies complement carbon pricing (taxes or permit trading) and improve the economic efficiency of a mitigation policy package? To answer these questions, we use an integrated assessment model with multiple externalities and an endogenous representation of technical progress in the energy sector. We evaluate a range of innovation policies, both as a stand-alone instrument and in combination with other mitigation policies. Even under fairly optimistic assumptions about the funding available for, and the returns to R&D, our analysis indicates that innovation policies alone are unlikely to stabilise global concentration and temperature. The efficiency gains of combining innovation and carbon pricing policies are found to reach about 10% for a stabilisation target of 535 ppm CO2eq. However, such gains are reduced when more plausible (sub-optimal) global innovation policy arrangements are considered. |
| Keywords: | Climate Change, Environmental Policy, Energy R&D Fund, Stabilisation Costs |
| JEL: | H0 H2 H3 H4 O3 Q32 Q43 Q54 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.42&r=ene |
| By: | Odile Blanchard (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | Climate change is definitely a huge challenge for the 21st century. Models in energy economics show that efficiency gains through energy productivity improvement, technical change and technological innovations towards lower carbon technologies will not be sufficient to achieve the ultimate objective of the UNFCCC, ie stabilize greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system. Mitigation actions that stem from individual behaviour change towards a lower individual carbon footprint are also part of the response to the climate challenge. However, barriers are numerous for individuals to change their behaviour and actually reduce their greenhouse gas emissions. Even individuals with positive attitudes may show much reluctance to behave in a climate-friendly way : cognitive dissonance often emerges between people's statements and people's actual actions. The paper aims to investigate how these barriers can be overcome so that individuals take action. It draws on the climate-friendly initiative that has been carried out at Grenoble university for six years. The first part of the paper presents the university actors, and their mission in the initiative. The second part identifies the actors' main motivations and barriers to a climate-friendly behaviour. The third part discusses potential responses provided by various social sciences in order to address the barriers and remove them as much as possible. Digging alternatively into economics, sociology, psychology, or marketing is obviously not sufficient to entice behaviour change. Adopting an interdisciplinary approach drawing simultaneously on those social sciences may bring better results. |
| Keywords: | climate change ; attitude ; behaviour ; social sciences |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00483037_v1&r=ene |
| By: | Moss, Jonathan; Cacho, Oscar; Mounter, Stuart |
| Abstract: | With the impending introduction of an Australian Carbon Pollution Reduction Scheme, farmers and landholders in rural Australia have increased opportunities to participate in the market. This includes the adoption of land-use change to sequester additional carbon in exchange for carbon credits and the production of a renewable energy source (biofuels). However, these land-use changes compete with existing farm enterprises and may contain significant transaction costs. Therefore it is necessary for the institutional arrangements to provide adequate incentives for landholders to adopt these land-use changes. This paper examines the potential supply of these land-use changes for climate mitigation from landholders in a northern NSW catchment. These results will allow further investigation of how incentive structures and policy instruments may be developed to increase the supply of these goods from landholders. |
| Keywords: | Border Rivers-Gwydir, carbon sequestration, land-use change, Resource /Energy Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59104&r=ene |
| By: | Hennessy, Hugh; Tol, Richard S. J. |
| Abstract: | We construct a model of the stock of private cars in the Republic of Ireland. The model distinguishes cars by fuel, engine size and age. The modelled car stock is build up from a long history of data on sales, and calibrated to recent data on actual stock. We complement the data on the number of cars with data on fuel efficiency and distance driven ? which together give fuel use and emissions ? and the costs of purchase, ownership and use. We use the model to project the car stock from 2010 to 2025. The following results emerge. The 2009 reform of the vehicle registration and motor tax has lead to a dramatic shift from petrol to diesel cars. Fuel efficiency has improved and will improve further as a result, but because diesel cars are heavier, carbon dioxide emissions are reduced but not substantially so. The projected emissions in 2020 are roughly the same as in 2007. In a second set of simulations, we impose the government targets for electrification of transport. As all-electric vehicles are likely to displace small, efficient, and little-driven petrol cars, the effect on carbon dioxide emissions is minimal. We also consider the scrappage scheme, which has little effect as it applies to a small fraction of the car stock only. |
| Keywords: | Carbon dioxide emissions/Climate policy/Policy/Private car transport/Republic of Ireland/scenarios |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp342&r=ene |
| By: | Grimaud, André; Lafforgue, Gilles; Magné, Bertrand |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22241&r=ene |
| By: | Frank Vöhringer (Ecole Polytechnique Fédérale de Lausanne); Alain Haurie (ORDECSYS); Dabo Guan (University of Cambridge); Maryse Labriet (KANLO Consultants); Valentina Bosetti (Fondazione Eni Enrico Mattei); Pryadarshi R. Shukla (Indian Institute of Management Ahmedabad); Philippe Thalmann (Ecole Polytechnique Fédérale de Lausanne) |
| Abstract: | The FP6 TOCSIN project has evaluated climate change mitigation options in China and India and the conditions for strategic cooperation on research, development and demonstration (RD&D) and technology transfer with the European Union. In particular, the project investigated the strategic dimensions of RD&D cooperation and the challenge of creating incentives to encourage the participation of developing countries in post-2012 GHG emissions reduction strategies and technological cooperation. This paper summarizes the main policy-relevant results of the project, including the requests for: (I) almost immediate decisions on ambitious mitigation; (II) a strong increase in Annex I support regarding R&D spending and technology transfer; (III) a well-designed mix of instruments and targets in an effective climate deal that addresses manifold national interests and concerns. |
| Keywords: | Climate Policy, Technology Transfers |
| JEL: | Q54 Q55 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.43&r=ene |
| By: | Dallas Burtraw (Resources for the Future); Jacob K. Goeree (California Institute of Technology); Charles A. Holt (University of Virginia); Erica Myers (University of California, Berkeley); Karen Palmer (Resources for the Future); William Shobe (University of Virginia) |
| Abstract: | Auctions are increasingly being used to allocate emissions allowances (“permits”) for cap and trade and common-pool resource management programs. These auctions create thick markets that can provide important information about changes in current market conditions. This paper reports a laboratory experiment in which half of the bidders experienced unannounced increases in their willingness to pay for permits. The focus is on the extent to which the predicted price increase due to the demand shift is reflected in sales prices under alternative auction formats. Price tracking is comparably good for uniform-price sealed-bid auctions and for multi-round clock auctions, with or without end-of-round information about excess demand. More price inertia is observed for “pay as bid” (discriminatory) auctions, especially for a continuous discriminatory format in which bids could be changed at will during a pre-specified time window, in part because “sniping” in the final moments blocked the full effect of the demand shock. |
| Keywords: | auction, greenhouse gases, price discovery, cap and trade, emission allowances, laboratory experiment |
| JEL: | C92 D44 Q54 Q58 |
| Date: | 2010–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:vac:wpaper:wp10-01&r=ene |
| By: | Stéphanie Monjon (Centre International de Recherche sur l’Environnement et le Développement (CIRED), CNRS); Philippe Quirion (Centre International de Recherche sur l’Environnement et le Développement (CIRED), CNRS) |
| Abstract: | Border adjustments are currently discussed to limit the possible adverse impact of climate policies on competitiveness and carbon leakage. We discuss the main choices that will have to be made if the European Union implements such a system alongside with the EU ETS. Although more analysis is required on some issues, on others some design options seem clearly preferable to others. First, the import adjustment should be a requirement to surrender allowances rather than a tax. Second, the general rule to determine the amount of allowances per ton imported should be the product-specific benchmarks that the European Commission is currently elaborating for a different purpose (i.e. to determine the amount of free allowances). Third, this obligation should apply when the exported product is registered at the EU border, and not after the end of the year as is the case for domestic emitters. Fourth, the export adjustment should take the form of a rebate on the amount of allowances a domestic emitter has to surrender. Five, this rebate should equal the above-mentioned product-specific benchmarks, not the emissions of the particular exporting plant or firm. Finally, the adjustment does not have to apply to consumer products but mostly to basic products. |
| Keywords: | Carbon Leakage, Border Adjustment, Border Tax Adjustment, EU ETS, Competitiveness |
| JEL: | Q38 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.36&r=ene |
| By: | Donaghy, Peter; Rolfe, John; Gowen, Rebecca; Bray, Steven; Madonna, Hoffman |
| Abstract: | Although agriculture generates a significant portion of Australiaâs greenhouse gas emissions, it also has the potential to sequester large quantities of emissions through changed land use management such as agroforestry. Whilst there is an extensive amount of agroforestry literature, little has been written on the economic consequences of adopting silvopastoral systems in northern Australia. This paper reports the economic feasibility of adopting complimentary agroforestry systems in the low rainfall region of northern Australia. The analysis incorporates the dynamic tradeoffs between tree and pasture growth, carbon sequestration, cleared regrowth decomposition rates and livestock methane emissions in a bioeconomic model. The results suggest there are financial benefits for landholders who integrate complimentary agroforestry activities into existing grazing operations depending on the rules of the carbon accounting framework used. |
| Keywords: | carbon sequestration, financial analysis, carbon accounting framework, Agroforestry, Resource /Energy Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59069&r=ene |
| By: | ZhongXiang Zhang (East-West Center) |
| Abstract: | With countries from around the world set to meet in Copenhagen to try to hammer out a post-2012 climate change agreement, no one would disagree that a U.S. commitment to cut greenhouse gas emissions is essential to such a global pact. However, despite U.S. president Obama’s recent announcement to push for a commitment to cut U.S. greenhouse gas emissions by 17% by 2020, in reality it is questionable whether U.S. Congress will agree to specific emissions cuts, although they are not ambitious at all from the perspectives of both the EU and developing countries, without the imposition of carbon tariffs on Chinese products to the U.S. market, even given China’s own recent announcement to voluntarily seek to reduce its carbon intensity by 40-45% over the same period. This dilemma is partly attributed to flaws in current international climate negotiations, which have been focused on commitments on the two targeted dates of 2020 and 2050. However, if the international climate change negotiations continue on their current course without extending the commitment period to 2030, which would really open the possibility for the U.S. and China to make the commitments that each wants from the other, the inclusion of border carbon adjustment measures seems essential to secure passage of any U.S. legislation capping its own greenhouse gas emissions. Moreover, the joint WTO-UNEP report indicates that border carbon adjustment measures might be allowed under the existing WTO rules, depending on their specific design features and the specific conditions for implementing them. Against this background, this paper argues that, on the U.S. side, there is a need to minimize the potential conflicts with WTO provisions in designing such border carbon adjustment measures. The U.S. also needs to explore, with its trading partners, cooperative sectoral approaches to advancing low-carbon technologies and/or concerted mitigation efforts in a given sector at the international level. Moreover, to increase the prospects for a successful WTO defence of the Waxman-Markey type of border adjustment provision, there should be: 1) a period of good faith efforts to reach agreements among the countries concerned before imposing such trade measures; 2) consideration of alternatives to trade provisions that could reasonably be expected to fulfill the same function but are not inconsistent or less inconsistent with the relevant WTO provisions; and 3) trade provisions that should allow importers to submit equivalent emission reduction units that are recognized by international treaties to cover the carbon contents of imported products. Meanwhile, being targeted by such border carbon adjustment measures, China needs to, at the right time, indicate a serious commitment to address climate change issues to challenge the legitimacy of the U.S. imposing carbon tariffs by signaling well ahead that it will take on binding absolute emission caps around the year 2030, and needs the three transitional periods of increasing climate obligations before taking on absolute emissions caps. This paper argues that there is a clear need within a climate regime to define comparable efforts towards climate mitigation and adaptation to discipline the use of unilateral trade measures at the international level. As exemplified by export tariffs that China applied on its own during 2006-08, the paper shows that defining the comparability of climate efforts can be to China’s advantage. Furthermore, given the fact that, in volume terms, energy-intensive manufacturing in China values 7 to 8 times that of India, and thus carbon tariffs have a greater impact on China than on India, the paper questions whether China should hold the same stance on this issue as India as it does now, although the two largest developing countries should continue to take a common position on other key issues in international climate change negotiations. |
| Keywords: | Post-2012 Climate Negotiations, Border Carbon Adjustments, Carbon Tariffs, Emissions Allowance Requirements, Cap-And-Trade Regime, Lieberman-Warner Bill, Waxman-Markey Bill, World Trade Organization, Kyoto Protocol, China, United States |
| JEL: | F18 Q48 Q54 Q56 Q58 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.34&r=ene |
| By: | Patrick McCully |
| Abstract: | The world’s biggest carbon offset market, the Clean Development Mechanism, is a global shell game that is increasing greenhouse gas emissions behind the guise of promoting sustainable development. It is handing out billions of dollars to chemical companies and the developers of destructive dams and fossil fuel projects. A rapidly growing industry of carbon brokers and consultants is lobbying for the CDM to be expanded and its rules weakened further. If we want to sustain public support for effective global action on climate change, we cannot risk one of its central planks being a program that is so fundamentally flawed. In the short term the CDM must be radically reformed; in the longer term it must be replaced. |
| Keywords: | development, Kyoto protocol, greenhouse gas emission, projects, carbon, brokers, public support, global, climate change, rivers, dams, people, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2486&r=ene |
| By: | Strand, Jon |
| Abstract: | Interests in obtaining carbon offsets in host countries for Clean Development Mechanism projects may serve as an obstacle to implementing more stringent general environmental policies in the same countries. A relatively lax environmental policy, whereby carbon emissions remain high, can be advantageous for such countries as it leaves them with a higher than otherwise scope for future emissions reductions through Clean Development Mechanism and other offset projects. In this note, the potential to affect the availability of future Clean Development Mechanism projects is shown to distort environmental and energy policies of Clean Development Mechanism host countries in two ways. Measures to reduce use of fossil energy are weakened. Because this weakens private sector incentives to switch to lower-carbon technology through Clean Development Mechanism projects, host governments then also find it attractive to subsidize this switch, in order to maximize the country’s advantage from the Clean Development Mechanism. |
| Keywords: | Climate Change Mitigation and Green House Gases,Energy Production and Transportation,Environmental Economics&Policies,Environment and Energy Efficiency,Climate Change Economics |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5296&r=ene |
| By: | Enrica De Cian (Fondazione Eni Enrico Mattei and University of Venice); Massimo Tavoni (Princeton Environmental Institute, Fondazione Eni Enrico Mattei, and Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC)) |
| Abstract: | International carbon offsets have been promoted since the Kyoto Protocol and an increasing number of countries have implemented or proposed cap-and-trade schemes with international trading, even though with quantitative or qualitative restrictions. Those limits reflect the trade-off between economic efficiency, distributional issues, and the need for additionality of foreign mitigation measures. Ceilings are also justified on the ground that international offsets undermine the capability of climate policy to induce and diffuse technological change. This paper addresses these issues in a second-best setting that explicitly considers the interplay between multiple externalities. We evaluate numerically how limits to the size, the timing, and the participation in an international carbon market affect the macroeconomic costs of climate policy, international financial transfers, and the incentive to carry out innovation. Results indicate that when constraints on international offsets are moderate, such as limiting their use to at most 15% of regional abatement, efficiency losses are small because they are partly compensated by more technological change and energy market effects, although specific regional patterns are identified. Regarding financial outflows from OECD countries, already a 15% ceiling would limit financial transfers significantly. Provisions of this kind are in line with some of the most recent policy proposals in OECD countries. |
| Keywords: | Energy-economy Modelling, Climate Policy, Technology Spillovers |
| JEL: | Q54 Q55 Q43 H23 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.&r=ene |
| By: | Ayong Le Kama, Alain; Fodha, Mouez; Lafforgue, Gilles |
| Abstract: | Following the IPCC's report (2005), which recommended the development and the use of carbon capture and sequestration (CCS) technologies in order to achieve the environmental goals, dened by the Kyoto Protocol, the issue addressed in this paper concerns the optimal strategy regarding the long-term use of CCS technologies. The aim of this paper is to study the optimal carbon capture and sequestration policy. The CCS technologies has motivated a number of empirical studies, via complex integrated assessment models. This literature always considers that the existing technology allows sequestrating a fraction of the carbon emissions and concludes that the early introduction of sequestration can lead to a substantial decrease in the cost of environmental externality. But, the level of complexity of such operational models, aimed at defining some specific climate policies. We develop a very simple growth model so as to obtain analytical and tractable results and therefore exhibit the main driving forces that should determine the optimal CSS policy. We show within on the cost of extractions, CSS may be a long-term solution for the carbon emissions problem. Besides, it is also shown that the social planner will optimally choose to decrease the rate of capture and sequestration. Besides, we also introduce the decentralization of this simple economy, by considering the individual program of the fossil resource-holder and the one of the representative consumer. This helps us to compute analytically the optimal environmental policy, that is the also the optimal fossil fuel price profile. |
| Date: | 2009–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:22199&r=ene |
| By: | Gowen, Rebecca; Rolfe, John; Donaghy, Peter |
| Abstract: | This paper reports research seeking to understand the economic implications for central Queensland graziers of participating in a carbon trading scheme and to measure the likely participation of graziers in an emissions trading scheme under various market design scenarios. An initial desktop study was undertaken to compare an enterprise which produced only cattle to one which produced cattle and sequestered carbon. The findings from this analysis were used to inform the design of an experimental auction to test alternative carbon trading scenarios. An experimental workshop was conducted at seven locations across central Queensland with a range of beef producers, extension officers and consultants. Participants were presented with a scenario in which they had the choice of maintaining current management practices against altering management practices to reduce beef production and enter into a carbon sequestration contract (CSC). They were asked at what price they would enter into a CSC and how that price and likelihood of participating would change under a range of alternative contract conditions. The results of the experimental auctions found significantly higher than breakeven prices for carbon would be required before landholders would offer land as a carbon offset. Participation rates were influenced by price and also the carbon contract rules. Five rule changes were trialled and all were found to have a significant impact on reducing participation and increasing required payment levels. |
| Keywords: | Farm Management, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59082&r=ene |
| By: | Pannell, David J. |
| Abstract: | A number of Australian governments have established or planned programs to assist farmers in adapting to climate change. This paper considers a potential range of policy responses that may be appropriate for climate change adaptation in agriculture. It discusses the extent to which different policy responses may be justified on the basis of market-failure and the likelihood of positive net benefits. While research and extension have the potential to generate significant benefits, there is a need to carefully consider their rationales and emphases. Given the characteristics of climate change (slow, highly uncertain, small relative to climate variability, spatially heterogeneous), the value of information from research and extension to guide farmersâ decision making about adaptation is likely to be low for decisions about farming practices and land uses. Such information would be more valuable for decisions that are larger and indivisible, such as land purchase or the decision to exit from agriculture. Policy options that appear likely to generate relatively large benefits are technology development, quarantine/eradication/containment of pests and weeds, and water market reform. This assessment is not consistent with the emphasis of existing government programs. |
| Keywords: | Environmental Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59149&r=ene |
| By: | Sanderson, Todd; Ahmadi-Esfahani, Fredoun Z. |
| Abstract: | Australia has long been a major exporter of wheat, a commodity well suited to the economic and climatic conditions of Australia. According to the conventional wisdom, Australia holds a comparative advantage in wheat. However, the future validity of this proposition is sensitive to the proposed impacts of climate change. This paper develops a framework with which to examine the future patterns of comparative advantage in wheat given the projections of several global climate models. We find support for the conventional wisdom, and identify the presence of substantial resilience in Australiaâs comparative advantage to adverse yield change. |
| Keywords: | International Relations/Trade, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59155&r=ene |
| By: | Helen Ding (University of Venice and FEEM); Silvia Silvestri (University of Venice); Aline Chiabai (FEEM); Paulo A.L.D. Nunes (University of Venice and FEEM) |
| Abstract: | In this paper we present a systematic attempt to assess economic value of climate change impact on forest ecosystems and human welfare. In the present study, climate change impacts are downscaled to the different European countries, which in turn constitute the elements of our analysis. First, we anchor the valuation exercise in the Millennium Ecosystem Assessment (MEA) Approach and therefore the link between the different forest ecosystem goods and services, including provisioning, regulating and cultural services, human well-being and climate change. Second, climate change is operationalized by exploring the different storylines developed by the International Panel on Climate Change (IPCC) and applied, downscaled, for each of the European countries under consideration. Third, and bearing in mind the different nature of the benefits provided by the different types of forest ecosystems under examination, we shall explore different economic valuation methodologies so as to shed light on the magnitude of the involved welfare changes. According to the estimation results the four different IPCC scenarios, i.e. A1F1, A2, B1 and B2, are associated to different welfare impacts. First, these reveal to depend on both the nature of the forest ecosystem service. For example, cultural values reveal to be more sensitive to the four IPCC scenarios than the other ones, with the wood forest products being more resilient to climate change. Second, the distributional impacts of climate change on the provision of these goods and services do also depend on the geo-climatic regions under consideration. For the Scandinavian group of countries, B1 is ranked with the highest level of provision of carbon sequestration services, amounting to 46.3 billion dollars. In addition, we can see that cultural services provided by forest ecosystems have their highest levels in the Mediterranean countries, ranging from 8.4 to 9.0 million dollars, respectively in the B2 and B1 scenarios. Finally, we can see that the total value of wood forest products ranges between 41.2 and 47.5 million dollars for Central Europe to 5.4 and 7.2 million dollars in Northern Europe, respectively A1 and A2 scenarios. For this service, Mediterranean Europe provides a relatively weak role in the provision with values ranging from 6.4 million dollars in A1 scenario to 8.7 million dollars in the B2. In short, and to conclude, the valuation results (1) may contribute to a better understanding of the potential welfare loss in the context of climate change and the economic trade-offs between potential mitigation or adaptation strategies; and (2) confirm that climate change will be responsible for a re-distribution of welfare among the European countries, signalling the potential for a(n) agreement(s) among these same countries focus on the re-allocation of potential trade-offs among the countries. |
| Keywords: | Wood Products, Biodiversity, Climate Change, Market and Non-market Valuation Methods, Ecosystem Goods and Services, Millennium Ecosystem Assessment |
| JEL: | Q57 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.50&r=ene |
| By: | Barnett, Jon; Webber, Michael |
| Abstract: | This paper explains how climate change may increase future migration, and which risks are associated with such migration. It also examines how some of this migration may enhance the capacity of communities to adapt to climate change. Climate change is likely to result in some increase above baseline rates of migration in the next 40 years. Most of this migration will occur within developing countries. There is little reason to think that such migration will increase the risk of violent conflict. Not all movements in response to climate change will have negative outcomes for the people that move, or the places they come from and go to. Migration, a proven development strategy, can increase the capacity of communities to adapt to climate change. The fewer choices people have about moving, however, the less likely it is that the outcomes of that movement will be positive. Involuntary resettlement should be a last resort. Many of the most dire risks arising from climate-motivated migration can be avoided through careful policy. Policy responses to minimize the risks associated with migration in response to climate change, and to maximize migration’s contribution to adaptive capacity include: ensuring that migrants have the same rights and opportunities as host communities; reducing the costs of moving money and people between areas of origin and destination; facilitating mutual understanding among migrants and host communities; clarifying property rights where they are contested; ensuring that efforts to assist migrants include host communities; and strengthening regional and international emergency response systems. |
| Keywords: | Population Policies,Climate Change Mitigation and Green House Gases,Health Monitoring&Evaluation,Climate Change Economics,Voluntary and Involuntary Resettlement |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5270&r=ene |
| By: | Creese, Jonathan; Marks, Nicki |
| Abstract: | Purpose â The purpose of this paper is to alert food producers to emerging market demands associated with climate change. Design/methodology/approach â The study draws on literature review and applied market research. Findings â Many food retailers are applying pressure to their value chains to measure and manage carbon emissions. Although consumers play a role, consumers are not the main driver compelling retailers to respond to climate change. Research limitations/implications â This study only interviewed retailers in the United Kingdom and Japan as these are markets that are of particular interest for Australian food exporters. Originality/value â Consumers and retailers in export markets are responding to climate change. The research suggests that food producers may need to consider market signals in addition to regulatory pressure and/or environmental concern when assessing their response to climate change. |
| Keywords: | climate change, food, agriculture, value chain, retailer, Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty, |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iefi09:59186&r=ene |
| By: | Dasgupta, Susmita; Huq, Mainul; Khan, Zahirul Huq; Ahmed, Manjur Murshed Zahid; Mukherjee, Nandan; Khan, Malik Fida; Pandey, Kiran |
| Abstract: | This paper integrates information on climate change, hydrodynamic models, and geographic overlays to assess the vulnerability of coastal areas in Bangladesh to larger storm surges and sea-level rise by 2050. The approach identifies polders (diked areas), coastal populations, settlements, infrastructure, and economic activity at risk of inundation, and estimates the cost of damage versus the cost of several adaptation measures. A 27-centimeter sea-level rise and 10 percent intensification of wind speed from global warming suggests the vulnerable zone increases in size by 69 percent given a +3-meter inundation depth and by 14 percent given a +1-meter inundation depth. At present, Bangladesh has 123 polders, an early warning and evacuation system, and more than 2,400 emergency shelters to protect coastal inhabitants from tidal waves and storm surges. However, in a changing climate, it is estimated that 59 of the 123 polders would be overtopped during storm surges and another 5,500 cyclone shelters (each with the capacity of 1,600 people) to safeguard the population would be needed. Investments including strengthening polders, foreshore afforestation, additional multi-purpose cyclone shelters, cyclone-resistant private housing, and further strengthening of the early warning and evacuation system would cost more than $2.4 billion with an annual recurrent cost of more than $50 million. However, a conservative damage estimate suggests that the incremental cost of adapting to these climate change related risks by 2050 is small compared with the potential damage inthe absence of adaptation measures. |
| Keywords: | Climate Change Mitigation and Green House Gases,Climate Change Economics,Science of Climate Change,Hazard Risk Management,Global Environment Facility |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5280&r=ene |
| By: | Kee, Hiau Looi; Ma, Hong; Mani, Muthukumara |
| Abstract: | Under the Kyoto Protocol, industrialized countries (called Annex I countries) have to reduce their combined emissions to 5 percent below 1990 levels in the first commitment period of 2008-12. Efforts to reduce emissions to meet Kyoto targets and beyond have raised issues of competitiveness in countries that are implementing these policies,as well as fear of leakage of carbon-intensive industries to non-implementing countries. This has also led to proposals for tariff or border tax adjustments to offset any adverse impact of capping carbon dioxide emissions. This paper examines the implications of climate change policies such as carbon tax and energy efficiency standards on competitiveness across industries, as well as issues related to leakage, if any, of carbon-intensive industries to developing countries. Although competitiveness issues have been much debated in the context of carbon taxation policies, the study finds no evidence that the energy intensive industries’ competitiveness is affected by carbon taxes. In fact, the analysis suggests that exports of most energy-intensive industries increase when a carbon tax is imposed by the exporting countries, or by both importing and exporting countries. This finding gives credence to the initial assumption that recycling the taxes back to the energy-intensive industries by means of subsidies and exemptions may be overcompensating for the disadvantage to those industries. There is, however, no conclusive evidence that supports relocation (leakage) of carbon-intensive industries to developing countries due to stringent climate change policies. |
| Keywords: | Climate Change Mitigation and Green House Gases,Climate Change Economics,Energy and Environment,Environment and Energy Efficiency,Transport Economics Policy&Planning |
| Date: | 2010–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5309&r=ene |
| By: | Meriem Hamdi-Cherif (CIRED, Chaire Paris-Tech «Modélisation Prospective au service du Développement Durable»); Céline Guivarch (CIRED, Ecole des Ponts Paris-Tech); Philippe Quirion (CIRED, CNRS and LMD-IPSL) |
| Abstract: | Although a global cap-and-trade system is seen by many researchers as the most cost-efficient solution to reduce greenhouse gas emissions, developing countries governments refuse to enter into such a system in the short term. Hence, many scholars and stakeholders, including the European Commission, have proposed various types of commitments for developing countries that appear less stringent, such as sectoral approaches. In this paper, we assess such a sectoral approach for developing countries. More precisely, we simulate two policy scenarios in which developed countries continue with Kyoto-type absolute commitments, whereas developing countries adopt an emission trading system limited to electricity generation and linked to developed countries' cap-and-trade system. In a first scenario, CO2 allowances are auctioned by the government, which distributes the auctions receipts lump-sum to households. In a second scenario, the auction receipts are used to reduce taxes on, or to give subsidies to, electricity generation. Our quantitative analysis, led with a hybrid general equilibrium model, shows that such options provide almost as much emission reductions as a global cap-and-trade system. Moreover, in the second sectoral scenario, GDP losses in developing countries are much lower than with a global cap-and-trade system and so is the impact on the electricity price. |
| Keywords: | Sectoral Approach, Sectoral Target |
| JEL: | Q38 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.37&r=ene |
| By: | Carlo Carraro (Department of Economics, University Of Venice Cà Foscari); Francesco Bosello (University of Milan, Fondazione Enrico Mattei, and CMCC); Enrica De Cian (University of Venice, Fondazione Enrico Mattei) |
| Abstract: | It has become commonly accepted that a successful climate strategy should compound mitigation and adaptation. The accurate combination between adaptation and mitigation that can best address climate change is still an open question. This paper proposes a framework that integrates mitigation, adaptation, and climate change residual damages into an optimisation model. This set-up is used to provide some insights on the welfare maximising resource allocation between mitigation and adaptation, on their optimal timing, and on their marginal contribution to reducing vulnerability to climate change. The optimal mix between three different adaptation modes (reactive adaptation, anticipatory adaptation, and investment in innovation for adaptation purposes) within the adaptation bundle is also identified. Results suggest that the joint implementation of mitigation and adaptation is welfare improving. Mitigation should start immediately, whereas adaptation somehow later. It is also shown that in a world where the probability of climate-related catastrophic events is small and where decision makers have a high discount rate, adaptation is unambiguously the preferred option. Adaptation needs, both in developed and developing countries, will be massive, especially during the second half of the century. Most of the adaptation burden will be on developing countries. International cooperation is thus required to equally distribute the cost of adaptation. |
| Keywords: | Climate change impacts, mitigation, adaptation, integrated assessment model |
| JEL: | Q54 Q56 Q43 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2010_09&r=ene |
| By: | Pezzey, John C.V; Mazouz, Salim; Jotzo, Frank |
| Abstract: | We thank two anonymous referees and the Department of Climate Change for helpful comments. This research was supported financially by the Environmental Economics Research Hub of the Australian Government's Commonwealth Environment Research Facilities program. |
| Keywords: | climate policy, Australia, targets, emission trading, carbon leakage, lobbying, Environmental Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59577&r=ene |
| By: | Lapan, Harvey E.; Sikdar, Shiva |
| Abstract: | We analyze the effects of trade liberalization on environmental policies in a strategic setting when there is transboundary pollution. Trade liberalization can result in a race to the bottom in environmental taxes, which makes both countries worse o. This is not due to the terms of trade motive, but rather the incentive, in a strategic setting, to reduce the incidence of transboundary pollution. With command and control policies (emission quotas), countries are unable to influence foreign emissions by strategic choice of domestic policy; hence, there is no race to the bottom. However, with internationally tradable quotas, unless pollution is a pure global public bad, there is a race to the bottom in environmental policy. Under free trade, internationally nontradable quotas result in the lowest pollution level and strictly welfare- dominate taxes. The ordering of internationally tradable quotas and pollution taxes depends, among other things, on the degree of international pollution spillovers |
| Keywords: | Environmental Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:59160&r=ene |
| By: | Ajani, Judith |
| Abstract: | The widespread shift of Australiaâs wood products industry away from native forests to an agricultural regimeâwood plantationsâhas enhanced forestry industry competitiveness. Wood now competes against food for agricultural land, water and other resources (including government support). New plantings have increased substantially since the mid 1990s via plantation managed investment schemes (MIS), arousing protest in the traditional agricultural sector and claims of unfair government policy treatment. This claim is investigated in an analysis that integrates the taxation treatment of plantation MIS with economics and forestry industry knowledge. Three methods are developed, and applied, to estimate the plantation MIS tax-based subsidy. Preliminary estimates indicate a tax-based subsidy to forestry through plantation MIS of between $0.9-1.2 billion over the five years ending 2008. The estimated subsidy is then incorporated in the Productivity Commissionâs calculations of the effective rate of assistance (ERA) to industry groups from tariff, budget outlay and tax-based government policy. The ERA to Forestry & logging in 2008 was estimated to be 41.8 per cent: government assistance is equivalent to 42 per cent of Forestry & loggingâs unassisted value added. The estimated plantation MIS tax based subsidy accounted for 77 per cent of the assistance. Assistance to Forestry & logging exceeds substantially the assistance (including drought related payments) to food growers: 7.2 per cent to Grain, sheep & beef and 17.3 per cent to Dairy cattle farming (a significant proportion was assistance that ceased in April 2008). A detailed examination of Australiaâs proposed climate change policy concerning the land use sector indicates that agricultural resource use distortions created through plantation MIS arrangements are lightly to intensify. |
| Keywords: | Environmental Economics and Policy, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare10:58877&r=ene |
| By: | Gregory C. Chow (Princeton University) |
| Abstract: | This paper reviews the basic laws and policies of the Chinese government on environmental problems and discusses the issues in policy implementation, the prospect of solving the environmental problems in the future and some recent successes in the development of alternative energy and in controlling pollution. It also includes two proposals for improving the regulation of industrial pollution in China and for controlling carbon emission in the world. |
| Keywords: | China, environmental policy, environmental problems, pollution |
| JEL: | D60 F18 O53 Q52 Q56 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:1221&r=ene |