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on Environmental Economics |
| By: | Löfgren, Åsa (Department of Economics, School of Business, Economics and Law, Göteborg University); Nordblom, Katarina (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We analyze how habit formation affects optimal environmental taxation, when consumption of a habitual good causes a negative external effect on the environment. In a simple two-period model, we show that optimal taxation is still Pigouvian, where tax rates equal marginal damage in each period. However, the magnitudes of the tax rates are affected by habit formation. Using simulations we show that since consumption of the habitual good increases over time, so does the optimal tax rate, implying a higher tax rate in period two than in period one. The discrepancy increases in habitual strength. Given the development of the tax rates over time we discuss the welfare loss from imposing a secondbest environmental tax and its relation to habitual strength. Further, we analyze how optimal taxation changes if we relax the assumption of time-consistency. <p> |
| Keywords: | Optimal taxation; environment; habit formation; secondbest; myopia |
| JEL: | D62 D91 H21 H23 |
| Date: | 2006–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0204&r=env |
| By: | Ghalwash, Tarek (Department of Economics, Umeå University) |
| Abstract: | In this paper we estimate the income elasticity of demand for recreational services and <p> other traditional groups of goods in Sweden and test for potential changes in such <p> estimates over the twentieth century. Due to the difficulty of directly observing the <p> demand for recreational services, we employ an indirect methodology by using the <p> demand for some outdoor goods as a proxy for the demand for recreational services. In <p> line with most prior research, our results confirm the expectation that recreational <p> services, as a public good, is a luxury good in Sweden. Our results also show that the <p> income elasticities for traditional goods are stable over time, indicating that consumer <p> preferences for expenditure on these specific commodities do not change over time. |
| Keywords: | Household demand; environmental services; income elasticities; Engel curves |
| JEL: | D12 H41 Q26 |
| Date: | 2006–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0676&r=env |
| By: | Brännlund, Runar (Department of Economics, Umeå University); Ghalwash, Tarek (Department of Economics, Umeå University) |
| Abstract: | The main purpose of this study is to analyze the relationship between pollution and income at household level. The study is motivated by the recent literature emphasizing the importanceof income distribution for the aggregate relation between pollution and income. The main findings from previous studies are that if the individual pollution-income relationship is nonlinear, then aggregate pollution for, say, a whole country, will depend not only on average income, but also on how income is distributed. To achieve our objective we formulate a model for determining the choice of consumption of goods in different types of household. Furthermore we link the demand model to emission functions for the various goods. The theoretical analysis shows that without imposing very restrictive assumptions on preferences and the emission functions, it is not possible to determine a priori the slope or the curvature of the pollution-income relation. The empirical analysis shows that, given the model used, thepollution-income relation has a positive slope in Sweden and is strictly concave for all three pollutants under study (CO2, SO2, NOx), at least in the neighborhood of the observed income for an average household. Further, the results show that the curvature of the relation differs between different types of households. We also show that altering the prevailing income distribution, holding average income constant, will affect aggregate emissions in the sense that an equalization of incomes will give rise to an increase in emissions. One implication is then that the development of aggregate pollution due to growth depends not only on the income level, but also on how growth is distributed. |
| Keywords: | Household demand; Environmental Kuzents curve; Environmental emissions; Income distribution |
| JEL: | D12 Q53 Q56 |
| Date: | 2006–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0677&r=env |
| By: | Gilbert E. Metcalf |
| Abstract: | Efforts to reduce carbon emissions significantly will require considerable improvements in energy intensity, the ratio of energy consumption to economic activity. Improvements in energy intensity over the past thirty years suggest great possibilities for energy conservation: current annual energy consumption avoided due to declines in energy intensity since 1970 substantially exceed current annual domestic energy supply. While historic improvements in energy intensity suggest great scope for energy conservation in the future, I argue that optimistic estimates of avoided energy costs due to energy conservation are likely biased downward. I then analyze a data set on energy intensity in the United States at the state level between 1970 and 2001 to disentangle the key elements of energy efficiency and economic activity that drive changes in energy intensity. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0609&r=env |
| By: | Boyd, James W. (Resources for the Future) |
| Abstract: | Green gross domestic product (green GDP) is meant to account for nature’s value on an equal footing with the market economy. Several problems bedevil green GDP, however. One is that nature does not come prepackaged in units like cars, houses, and bread. Even worse, green GDP requires measurement of the benefits arising from public goods provided by nature for which there are no market indicators of value. So what should green GDP count? That is the subject of this paper. Ecological and economic theory are used to describe what should be counted—and what should not—if green GDP is to account for the nonmarket benefits of nature. |
| Keywords: | green GDP, environmental accounting, ecosystem services, index theory, nonmarket valuation |
| JEL: | Q51 Q57 Q58 D6 |
| Date: | 2006–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-06-24&r=env |