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on Environmental Economics |
| By: | Deepa Menon Choudhary |
| Abstract: | The production, transportation and consumption of energy resources, especially of fossil fuels such as coal, oil and natural gas, generate negative environmental externalities including air pollution. The use of energy resources are the largest anthropogenic source of air pollution and the impacts are felt both at the global and local level. At the global level, emissions include greenhouse gases (GHGs) like carbon-dioxide (CO2), methane (CH4) and nitrous oxide (N2O) and the local pollutants include sulphur-dioxide (SO2), nitrogen-dioxide (NO2), suspended particulate matter (SPM) and carbon monoxide (CO). The GHG emissions cause global warming, which impacts agriculture and food security, natural ecosystems, human health, energy and industrial infrastructures, and coastal areas. In the case of local pollutants, their concentration in the ambient air reflects the air quality in an area. These concentrations, if exceeded, result in direct and immediate damaging impacts on human health and ecosystems, besides having other local and regional impacts such as acid rains.[CSH OP NO 12] |
| Keywords: | Energy; environment; policymaking; deteriorating; air quality; market-based instruments; power generation; coal; steel; cement; chemical; fertilizer; externalities; GHG emissions; SO2; air quality management; Mashelkar Committee; Public Interest Litigations; power sector; United Nations Framework Convention on Climate Change; cost savings; Power; Planning Commission, 2002b; Industrial Policy Resolution; Electricity Supply Act, 1948; National Thermal Power Corporation |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1957&r=env |
| By: | Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre) |
| Abstract: | This article provides a critical appraisal of the concept of sustainable development in light of climate change. As the latest climate change science indicates strong effects of anthropogenic activity on global warming, we review the pros and the cons of prioritizing development over environmental protection. The methodology used consists in critically discussing the arguments of scientists and academic researchers in the environmental economics field to put a greater emphasis on the preservation of the environment vs. urging development issues. We show that the debate over prioritization does not make sense insomuch as the wider consequences of climate change are envisioned, i.e. it does not appear conceptually appropriate to think about environment and development issues in separate spheres. Our main contribution consists in embracing a holistic approach to discuss sustainable development issues within the new international framework of climate change policy and anthropogenic global warming concerns. |
| Keywords: | climate change policy, sustainable development, prioritization, development, environmental protection, global warming |
| Date: | 2009–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00388069_v1&r=env |
| By: | MacCracken, Mike |
| Abstract: | Global climate change is occurring at an accelerating pace, and the global greenhouse gas (GHG) emissions that are forcing climate change continue to increase. Given the present pace of international actions, it seems unlikely that atmospheric composition can be stabilized at a level that will avoid"dangerous anthropogenic interference"with the climate system, as called for in the UN Framework Convention on Climate Change. Complicating the situation, as GHG emissions are reduced, reductions in the offsetting cooling influence of sulfate aerosols will create an additional warming influence, making an early transition to climate stabilization difficult. With significant reductions in emissions (mitigation) likely to take decades, and with the impacts of projected climate change-even with proactive adaptation-likely to be quite severe over the coming decades, additional actions to offset global warming and other impacts have been proposed as important complementary measures. Although a number of possible geoengineering approaches have been proposed, each has costs and side effects that must be balanced against the expected benefits of reduced climate impacts. However, substantial new research is needed before comparison of the relative benefits and risks of intervening is possible. A first step in determining whether geoengineering is likely to be a useful option is the initiation of research on four interventions to limit the increasing serious impacts: limiting ocean acidification by increasing the removal of carbon dioxide from the atmosphere and upper ocean; limiting the increasing intensity of tropical cyclones; limiting the warming of the Arctic and associated sea level rise; and sustaining or enhancing the existing sulfate cooling influence. In addition, in depth consideration is needed regarding the governance structure for an international geoengineering decision-making framework in the event that geoengineering becomes essential. |
| Keywords: | Montreal Protocol,Climate Change,Energy Production and Transportation,Energy and Environment,Environment and Energy Efficiency |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4938&r=env |
| By: | Natacha Raffin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This article aims at investigating the interplay between environmental quality, health and development. We consider an OLG model, where human capital dynamics depend on the current environment, through its impact on children's school attendance. In turn, environmental quality dynamics depend on human capital, through maintenance and pollution. This two-way causality generates a co-evolution of human capital and environmental quality and may induce the emergence of an environmental poverty trap characterized by a low level of human capital and deteriorated environmental quality. Our results are consistent with empirical observation about the existence of Environmental Kuznets Curve. Finally, the model allows for the assessment of an environmental policy that would allow to escape the trap. |
| Keywords: | Education, environmental quality, growth, health. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00384500_v1&r=env |
| By: | Foa, Roberto |
| Abstract: | This paper addresses two vital concerns in the debate on adaptation to climate change. First, how can countries prepare to manage the impact of climate-change induced natural disasters? Second, how can countries ensure that they have the governmental institutions required to manage the phenomenal challenge of adaptation to climate change? A range of economic and institutional measures are tested for their potential effects on natural disaster resilience and the quality of environmental governance. The findings suggest an important role is played by social and political institutions in determining the ability of countries to adapt to climate change and respond to natural disasters, in particular in the degree to which countries have succeeded in gender empowerment and the development of a robust civil society and nonprofit sector. As the climate change challenge moves from that of"proving the facts"to that of"implementing change,"the authors suggest that international policymakers, donors, and activists must increasingly focus on building domestic policy environments that are conducive to the delivery of more effective environmental legislation, for example through implementation of gender quotas and provision of support to civil society groups. |
| Keywords: | Environmental Economics&Policies,Population Policies,Natural Disasters,Governance Indicators,Hazard Risk Management |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4939&r=env |
| By: | Norgaard, Kari Marie |
| Abstract: | Climate scientists have identified global warming as the most important environmental issue of our time, but it has taken over 20 years for the problem to penetrate the public discourse in even the most superficial manner. While some nations have done better than others, no nation has adequately reduced emissions and no nation has a base of public citizens that are sufficiently socially and politically engaged in response to climate change. This paper summarizes international and national differences in levels of knowledge and concern regarding climate change, and the existing explanations for the worldwide failure of public response to climate change, drawing from psychology, social psychology and sociology. On the whole, the widely presumed links between public access to information on climate change and levels of concern and action are not supported. The paper's key findings emphasize the presence of negative emotions in conjunction with global warming (fear, guilt, and helplessness), and the process of emotion management and cultural norms in the construction of a social reality in which climate change is held at arms length. Barriers in responding to climate change are placed into three broad categories: 1) psychological/conceptual, 2) social and cultural, and 3) structural (political economy). The author provides policy considerations and summarizes the policy implications of both psychological and conceptual barriers, and social and cultural barriers. An annotated bibliography is included. |
| Keywords: | Environmental Economics&Policies,Climate Change,Transport and Environment,Global Environment Facility,Environmental Governance |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4940&r=env |
| By: | Devarajan, Shantayanan; Go, Delfin S.; Robinson, Sherman; Thierfelder, Karen |
| Abstract: | Noting that South Africa may be one of the few African countries that could contribute to mitigating climate change, the authors explore the impact of a carbon tax relative to alternative energy taxes on economic welfare. Using a disaggregate general-equilibrium model of the South African economy, they capture the structural characteristics of the energy sector, linking a supply mix that is heavily skewed toward coal to energy use by different sectors and hence their carbon content. The authors consider a"pure"carbon tax as well as various proxy taxes such as those on energy or energy-intensive sectors like transport and basic metals, all of which achieve the same level of carbon reduction. In general, the more targeted the tax to carbon emissions, the better the welfare results. If a carbon tax is feasible, it will have the least marginal cost of abatement by a substantial amount when compared to alternative tax instruments. If a carbon tax is not feasible, a sales tax on energy inputs is the next best option. Moreover, labor market distortions such as labor market segmentation or unemployment will likely dominate the welfare and equity implications of a carbon tax for South Africa. This being the case, if South Africa were able to remove some of the distortions in the labor market, the cost of carbon taxation would be negligible. In short, the discussion of carbon taxation in South Africa can focus on considerations other than the economic welfare costs, which are likely to be quite low. |
| Keywords: | Environmental Economics&Policies,Transport Economics Policy&Planning,Taxation&Subsidies,Energy Production and Transportation,Environment and Energy Efficiency |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4933&r=env |
| By: | Meadowcroft, James |
| Abstract: | Climate change governance poses difficult challenges for contemporary political/administrative systems. These systems evolved to handle other sorts of problems and must now be adapted to handle emerging issues of climate change mitigation and adaptation. This paper examines long-term climate governance, particularly in relation to overcoming"institutional inertia"that hampers the development of an effective and timely response. It argues that when the influence of groups that fear adverse consequences of mitigation policies is combined with scientific uncertainty, the complexity of reaching global agreements, and long time frames, the natural tendency is for governments to delay action, to seek to avoid antagonizing influential groups, and to adopt less ambitious climate programs. Conflicts of power and interest are inevitable in relation to climate change policy. To address climate change means altering the way things are being done today - especially in terms of production and consumption practices in key sectors such as energy, agriculture, and transportation. But some of the most powerful groups in society have done well from existing arrangements, and they are cautious about disturbing the status quo. Climate change governance requires governments to take an active role in bringing about shifts in interest perceptions so that stable societal majorities in favor of deploying an active mitigation and adaptation policy regime can be maintained. Measures to help effect such change include: building coalitions for change, buying off opponents, establishing new centers of economic power, creating new institutional actors, adjusting legal rights and responsibilities, and changing ideas and accepted norms and expectations. |
| Keywords: | Environmental Economics&Policies,Climate Change,Environment and Energy Efficiency,Transport and Environment,Energy and Environment |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4941&r=env |
| By: | Rosendahl, Knut Einar; Strand, Jon |
| Abstract: | The Clean Development Mechanism (CDM) is an offset mechanism designed to reduce the overall cost of implementing a given global target for greenhouse gas (GHG) emissions in industrialized"Annex B"countries of the Kyoto Protocol. This paper discusses various ways in which CDM projects do not imply full offset of emissions, thus leading to an overall increase in global GHG emissions when considering the Annex-B emissions increase allowed by the offsets. The authors focus on two ways in which this may occur: baseline manipulation; and leakage. Baseline manipulation may result when agents that carry out CDM projects have incentives to increase their initial (or baseline) emissions in order to optimize the value of CDM credits. Leakage occurs because reductions in emissions under a CDM project may affect market equilibrium in local and/or global energy and product markets, and thereby increase emissions elsewhere. Remedies against these problems are discussed. Such remedies are more obvious for the baseline problem (where one is simply to choose an exogenous baseline independent of the project) than for the leakage problem (which is difficult to prevent, and where a prediction of the effect must rely on information about overall market equilibrium effects). |
| Keywords: | Energy Production and Transportation,Environmental Economics&Policies,Environment and Energy Efficiency,Energy and Environment,Transport Economics Policy&Planning |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4931&r=env |
| By: | Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre) |
| Abstract: | In international emissions trading schemes such as the Kyoto Protocol and the European Union Emissions Trading Scheme, the suboptimal negotiation of the cap with respect to total pollution minimization leads us to critically examine the proposition that generous allocation of grandfathered permits by the regulator based on recent emissions might pave the way for dominant positions. Stemming from this politically given market imperfection, this chapter develops a differential Stackelberg game with two types of non cooperative agents: a large potentially dominant agent, and a competitive fringe whose size are exogenously determined. The strategic interactions are modeled on an intra-industry permits markets where agents can freely bank and borrow permits. This chapter contributes to the debate on initial permits allocation and market power by focusing on the effects of allowing banking and borrowing. A documented appraisal on whether or not such provisions should be included is frequently overlooked by the debate to introduce the permits market itself among other environmental regulation tools. Numerical simulations provide a quantitative illustration of the results obtained. |
| Keywords: | Emissions Trading; Banking; Borrowing; Market Power. |
| Date: | 2009–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00388207_v1&r=env |
| By: | Ashraf-Ball, Hezlin; Oswald, Andrew J. (Department of Economics, Warwick University); Oswald, James I. |
| Abstract: | Unlike oil and coal, which are compressed forms of energy, renewable energy requires unusually large land areas. This article calculates the consequences of a switch to hydrogen-cell vehicles powered by electricity from wind turbines. It then re-does the calculation for three other green energy sources : wave power ; biofuels ; solar energy. We argue that policy-makers and social scientists need to understand the significant spatial demands of a move to a carbon-free society. |
| Keywords: | Renewable energy ; wind power ; land use ; energy efficiency ; wind turbines ; transport ; environmental ; solar ; biomass ; wave |
| JEL: | Q42 R12 R40 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:903&r=env |
| By: | Isabelita M. Pabuayon (Department of Agricultural Economics, College of Economics and Management, University of the Philippines Los Baños) |
| Abstract: | This study provides an assessment of the farming and agroforestry systems in upland coconut-based farms and the policy and socio-economic issues in the cutting of coconut trees in the Philippines. In general, there is a lack of focus on the environmental and agro-ecological aspects of coconut-based farming and agroforestry systems (CBF/AFS) R&D and program initiatives. Nevertheless, earlier works provide recommendations that include soil conservation and the planting of perennials and forest species in the upland and steeply sloping coconut farms. In practice, however, annual crops are planted even in steep slopes; intercropping of coconuts with forest species is uncommon. Generally, coconut intercropping provides higher returns than coconut monocrop. |
| Keywords: | agroforestry system, coconut farms, Philipines |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:eep:tpaper:tp200812t1&r=env |
| By: | Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research); Dr. Marc Ingo Wolter (GWS - Institute of Economic Structures Research) |
| Abstract: | The year 2008 started in January (Jan 23, 2008) with ambitious European initiatives on climate change when the European Commission suggested a climate packages with new targets for energy from renewable sources (RES), for the design of the third phase of the emission trading system, for a directive on carbon capture and storage systems (CCS), for the fuel directive, and a directive on CO2 limit for new vehicles. Several of these proposed directives have been an issue of fierce discussion during the year, especially as the extent of the financial crisis gradually came to the fore and the fears of a worldwide economic crisis grew. At the end of 2008, however, the package passed the European parliament (Dec. 17, 2008) though several concessions had to be made concerning the emission trading system or the vehicle directive. However, seemingly unaffected by current fears and therefore largely unaltered the directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources in Europe passed with a rather high amount of “yes” votes of the whole package, indicating that the support for energy from renewable sources still seems strong. The Directive “establishes a common framework for the promotion of energy from renewable sources. It sets mandatory national targets for the overall share of energy from renewable sources in gross final consumption of energy and for the share of energy from renewable sources in transport.” (COM(2008)0019 – C6-0046/2008 – 2008/0016(COD) The national overall targets are set individually for each country and the required increases compared to 2005 are as low as 22% (Sweden, Latvia) or as high as more than 1000% in the case of the UK (c.f. full table in the Appendix). Each country will have to develop a strategy for a sustainable pathway to reach the target. Though the strategic decisions will be on the national levels for each country, the knowledge of the targets for the European Community provides useful information to back the decision. Domestic support of RES technologies can induce a lead market and create international export opportunities. Observing the strategies of the other EC member states will affect the choice of the national efficient and effective policy mix. Austria is an interesting case study insofar as it already uses renewable energy to a large extent (23.3% in 2005) and still has to increase it by almost 50% to 34% by 2020. This increase will come with large necessary investments and will require a combined energyefficiency strategy. To answer the question how and at what overall economic costs in terms of GDP and employment effects the targets can be reached a scenario has to be developed and tested with the help of a model that reflects the economic and environmental interdependences. Therefore, to analyze the overall effects a highly interdependent resource economic modeling approach is needed. The macro-econometric model e3.at has been developed to answer such questions. The article is organized as following. Section 2 describes the model e3.at. Section 3 suggests an energy-efficiency scenario that meets the EC’s targets. Section 4 presents modeling results and section 5 concludes. |
| Keywords: | Austria, Macro-Econometric Model, e3.at, Economic impacts, RES Obligations |
| JEL: | C51 C52 C53 E17 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:gws:dpaper:09-1&r=env |
| By: | José Belbute (Department of Economics, University of Évora; CEFAGE-UE); Paulo Brito (Department of Economics, Technical University of Lisbon; UECE) |
| Abstract: | In this paper we study a simple endogenous growth model in which the two engines of growth are the exogenous technical progress in dematerialization and the accumulation of a renewable natural resource. The model is also labeled as been "endogenous" as the rate of growth of natural capital is endogenously determined and should lie between zero and the rate of technical progress. In this context, it is possible to combine permanent economic growth with permanent growth of the environmental asset. the endogenous rate of growth of the stock of natural resources is a positive function of the physical rate of regeneration (which will occur if consumption would be zero) and of the rate of technical progress. However, in order to assure sustainability, the former growth rate should be larger than zero but smaller than the later. Second, the output growth rate (which in our model is equal to the rate of consumption) should lie between the rate of technical progress and the sum of the rate of technical progress and the natural rate of regeneration. Therefore, even in the case in which the physical rate of renewal is mall, this will allow for unbounded growth. Third, in our simple model, there is no transitional dynamics. |
| Keywords: | Endogenous growth, environmental preservation, habit-formation |
| JEL: | C61 Q56 O39 O40 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:evo:wpecon:07_2009&r=env |
| By: | Paul K. Gorecki (ESRI); Seán Lyons (ESRI); Richard S. J. Tol (ESRI) |
| Abstract: | Under European Union proposals for CO2 emission reduction between 2013 and 2020, a Member State can transfer to another Member State the right to use its unused Clean Development Mechanism (?CDMs?) credits. The paper addresses three issues in relation to these CDM Warrants (?CDMW?). First, how should the Member State treat the CDMW in making decisions concerning emission reduction? The price of the property right is an important signal for a Member State in deciding the level of domestic abatement compared to trading in CDMWs. In other words, a shadow price for CDMWs should be used in formulating the emission strategy in order to determine whether or not a member State is a buyer or seller of CDMWs. Second, what mechanism should be used to facilitate the exchange of CDMWs? The preferred mechanism depends on the market size, over which there appears to be some ambiguity: market intermediaries such as Over-the-Counter trades and exchanges are preferred if market size is small; auctions if the market size is large. Third, who should realise the value of CDMWs ? the State, existing polluters etc? The value of CDMWs should accrue to the State. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp299&r=env |
| By: | Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre); Benoît Sévi (GRANEM LEMNA - Université d'Angers - Université de Nantes) |
| Abstract: | The recent implementation of the EU Emissions Trading Scheme (EU ETS) in January 2005 created new financial risks for emitting firms. To deal with these risks, options are traded since October 2006. Because the EU ETS is a new market, the relevant underlying model for option pricing is still a controversial issue. This article improves our understanding of this issue by characterizing the conditional and unconditional distributions of the realized volatility for the 2008 futures contract in the European Climate Exchange (ECX), which is valid during Phase II (2008-2012) of the EU ETS. The realized volatility measures from naive, kernel-based and subsampling estimators are used to obtain inferences about the distributional and dynamic properties of the ECX emissions futures volatility. The distribution of the daily realized volatility in logarithmic form is shown to be close to normal. The mixture-of-distributions hypothesis is strongly rejected, as the returns standardized using daily measures of volatility clearly departs from normality. A simplified HAR-RV model (Corsi, 2009) with only a weekly component, which reproduces long memory properties of the series, is then used to model the volatility dynamics. Finally, the predictive accuracy of the HAR-RV model is tested against GARCH specifications using one-step-ahead forecasts, which confirms the HAR-RV superior ability. Our conclusions indicate that (i) the standard Brownian motion is not an adequate tool for option pricing in the EU ETS, and (ii) a jump component should be included in the stochastic process to price options, thus providing more efficient tools for risk-management activities. |
| Keywords: | CO2 Price; Realized Volatility; HAR-RV; GARCH; Futures Trading; Emissions Markets; EU ETS; Intraday data; Forecasting |
| Date: | 2009–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00387286_v1&r=env |
| By: | Hilary Sigman |
| Abstract: | Many communities are concerned about the reuse of potentially contaminated land ("brownfields") and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. Existing literature has found price reductions in response to liability, but few studies have looked for an effect on vacancies. This paper studies variations in state liability rules — specifically, strict liability and joint and several liability — that affect the level and distribution of expected private cleanup costs. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. Neither a price nor quantity effect is estimated from strict liability. The results suggest that liability is at least partly capitalized, but does still deter redevelopment. |
| JEL: | K13 K32 Q53 R14 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15017&r=env |
| By: | Bandyopadhyay, Sushenjit; Tembo, Gelson |
| Abstract: | Game management areas in Zambia aim to combine nature conservation with economic empowerment of rural households. By looking at households inside and outside game management areas, this study advances the knowledge of the impact of community based natural resource management on household welfare. The paper focuses on the economic welfare of households living inside game management areas. It tries to answer the question: Do the households in game management areas enjoy higher levels of welfare relative to the conditions they would have been in had the area not been designated as a game management area? Within the game management area, the paper tries to determine the factors that influence household participation in natural resource management, and whether the participating households get any extra benefits. Also of interest is whether such benefits of living in a game management area, and, once in such an area, those of participating accrue more to the poorer segments of the communities. The study finds that the gains from living in a game management area and from active participation in natural resource management are large but unevenly distributed. Only game management areas near Kasanka, Lavushi, Isangano, and South Luangwa national parks in the sample show significant benefits to general and participating households. And in those areas, the poor do not seem to gain even when they participate actively. More even distribution of gains from game management areas across households near different park systems and across the poor and the non-poor should be a continuing goal of national policy makers. |
| Keywords: | Housing&Human Habitats,Access to Finance,Small Area Estimation Poverty Mapping,Poverty Lines,Community Development and Empowerment |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4932&r=env |