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on Environmental Economics |
| By: | Vouvaki, Dimitra; XEPAPADEAS, Anastasios |
| Abstract: | Total factor productivity growth (TFPG) has been traditionally associated with technological change. We show that when a factor of production, such as energy, generates an environmental externality in the form of CO₂ emissions which is not internalized because of lack of environmental policy, then TFPG estimates could be biased. This is because the contribution of environment as a factor of production is not accounted for in the growth accounting framework. Empirical estimates confirm this hypothesis and suggest that part of what is regarded as technology's contribution to growth could be attributed to the use of environment in output production. |
| Keywords: | Total Factor Productivity; Sources of Growth; Environmental Externalities; Energy; Environmental Policy |
| JEL: | Q56 O4 |
| Date: | 2008–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10237&r=env |
| By: | Cohen, Marc J.; Tirado, Cristina; Aberman, Noora-Lisa; Thompson, Brian |
| Keywords: | Climate change, Bioenergy, Nutrition, food security, Food prices, Sustainable development, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprib:climate:2008&r=env |
| By: | Mary Lovely; David Popp |
| Abstract: | Countries who adopted regulation of coal-fired power plants after 1980 generally did so at a much lower level of per-capita income than did early adopters -- poor countries regulated sooner. This phenomenon suggests that pioneering adopters of environmental regulation provide an advantage to countries adopting these regulations later, presumably through advances in technology made by these first adopters. Focusing specifically on regulation of coal-fired power plants, we ask to what extent the availability of new technology influences the adoption of new environmental regulation. We build a general equilibrium model of an open economy to identify the political-economy determinants of the decision to regulate emissions. Using a newly-created data set of SO2 and NOX regulations for coal-fired power plants and a patent-based measure of the technology frontier, we test the model's predictions using a hazard regression of the diffusion of environmental regulation across countries. Our findings support the hypothesis that international economic integration eases access to environmentally friendly technologies and leads to earlier adoption, ceteris paribus, of regulation in developing countries. By limiting firms' ability to burden shift, however, openness may raise opposition to regulation. Our results suggest that domestic trade protection allows costs to be shifted to domestic consumers while large countries can shift costs to foreign consumers, raising the likelihood of adoption. Other political economy factors, such as the quality of domestic coal and election years, are also important determinants. |
| JEL: | F18 O33 Q53 Q55 Q56 Q58 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14286&r=env |
| By: | Thomas Ziesemer (University of Augsburg, Department of Economics); Peter Michaelis (University of Augsburg, Department of Economics) |
| Abstract: | Recent political discussions about the possible advantages of first-mover behaviour in terms of environmental policy again called attention to the well-established controversy about the effects of environmental regulation on international competitiveness. Conventional theory claims that the trade-off between regulation and competitiveness will be negative while the revisionist view, also known as the Porter Hypothesis, argues for the opposite. Several previous attempts that analysed this quarrel by means of strategic trade game settings indeed support the former claim and conclude that, to increase a firm’s competitiveness, ecological dumping is the most likely outcome in a Cournot duopoly configuration. However, these results were derived from one period games in which so-called innovation offsets are unlikely to occur. The present paper considers a two-period model that includes an intertemporally growing firm-level knowledge capital. In doing so the accumulation of knowledge is modelled in a unilateral and a bilateral variant. It is shown that for both scenarios in period 1 the domestic government will set a higher emission tax rate compared to its foreign counterpart. Furthermore, we identify conditions for which the domestic tax rate will be set above the Pigouvian level in period 1 in both model variants. |
| Keywords: | first-mover behaviour, Porter Hypothesis, strategic environmental policy, environmental regulation, international competitiveness |
| JEL: | F18 Q55 Q58 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:aug:augsbe:0301&r=env |
| By: | Peter Michaelis (University of Augsburg, Department of Economics); Thomas Ziesemer (University of Augsburg, Department of Economics) |
| Abstract: | Policy diffusion refers to the process by which a political innovation – like the introduction of a novel emission tax – disseminates over time among countries. In order to analyze this issue from an economic point of view we develop a simple two-country-model of the taxation of emissions in presence of (possible) policy diffusion. Contrary to the usual Nash setting of simultaneous decision making we consider a Stackelberg game: In the first step the domestic government introduces an emission tax td thus acting as Stackelberg-leader, in the second step the foreign government decides whether or not to introduce an emission tax tf and in the third step the firms decide on their output quantities to be sold on a third country’s market. For the case of an exogenous given probability of policy diffusion we show that the optimal domestic tax rate is c.p. the higher, the higher the probability of policy diffusion is. Moreover, we explore under which conditions first-mover behaviour by the domestic government leads to a higher tax rate compared to the Nash solution In the next step we introduce an endogenous probability of policy diffusion by combining our model with a strategic lobbying approach. As a result, the probability of policy diffusion is c.p. the smaller, the higher domestic tax rate td is. Consequently, in fixing the optimal tax rate the domestic government has to account for the foreign firm’s lobbying activities otherwise it will choose a tax rate too high. |
| Keywords: | emission taxes, first-mover behaviour, strategic environmental policy, policy diffusion |
| JEL: | F18 Q55 Q58 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:aug:augsbe:0302&r=env |
| By: | Nillesen, P.; Pollitt, M.G. |
| Abstract: | Consolidation in many sectors has lead to the formation of “groups of companies”. Extracting all the potential cost savings from these independent or separate operating units is a challenge given asymmetric information. We develop a step-by-step approach that applies regulatory benchmarking techniques to set efficiency targets for operating units. Holding company management – like a regulator – will want to set targets to encourage efficient operation but in the absence of full information on effort, costs and environmental conditions. Our approach using the parallel with regulation incorporates issues such as measurement error and potential environmental factors that could influence the underlying efficiency score. We demonstrate the approach using data from the US electricity distribution sector and show that substantial savings can be extracted using this approach that was originally developed for regulatory purposes. |
| Keywords: | benchmarking, regulation, operating companies, electricity distribution |
| JEL: | L98 M21 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0834&r=env |
| By: | Vardas, Giannis; XEPAPADEAS, Anastasios |
| Abstract: | We analyze ecosystem management under `unmeasurable' Knightian uncertainty or ambiguity which, given the uncertainties characterizing ecosystems, might be a more appropriate framework relative to the classic risk case (measurable uncertainty). This approach is used as a formal way of modelling the precautionary principle in the context of least favorable priors and maxmin criteria. We provide biodiversity management rules which incorporate the precautionary principle. These rules take the form of either safety margins and minimum safety standards or optimal harvesting under precautionary approaches. |
| Keywords: | Knightian uncertainty; ambiguity; risk; precautionary principle; biodiversity management; optimal harvesting; robust control. |
| JEL: | D81 Q20 |
| Date: | 2008–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10236&r=env |