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on Environmental Economics |
| By: | Warwick J. McKibbin; Adele C. Morris; Peter J. Wilcoxen |
| Abstract: | The political accord struck by world leaders at the United Nations negotiations in Copenhagen in December 2009 allows participating countries to express their greenhouse gas commitments in a variety of ways. For example, developed countries promised different percent emissions reductions relative to different base years by 2020. China and India committed to reducing their emissions per unit of gross domestic product (GDP) relative to 2005 by 40 and 20 percent respectively. Such flexibility promotes consensus by allowing each country to use its preferred commitment formulation. However, the disparate approaches and widely varying baseline trends across different economies complicate comparing the likely emissions reductions and economic efforts required to achieve the commitments. This paper provides such a comparison by analyzing the Copenhagen targets using the GCubed model of the global economy. We begin by formulating a no-policy baseline projection for major world economies. We then model the Copenhagen Accord’s economy-wide commitments, with a focus on fossil-fuel-related CO2. We show how different formulations make the same targets appear quite different in stringency, and we estimate and compare the likely economic and environmental performance of major emitters’ Copenhagen targets. The analysis also explores the spillover effects of emission reductions efforts on countries that did not adopt economy-wide emissions targets at Copenhagen. We emphasize that this work is not a policy analysis or a prediction about how countries will actually achieve their commitments. Rather, it offers a way of standardizing and comparing heterogeneous proposals with an eye towards assessing their relative environmental and economic consequences. |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:acb:camaaa:2010-24&r=env |
| By: | Olmstead, Sheila M. (Resources for the Future); Stavins, Robert N. |
| Abstract: | We describe three essential elements of an effective post-2012 international global climate policy architecture: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change. |
| Keywords: | global climate change, global warming, policy architecture, Kyoto Protocol |
| JEL: | Q54 Q58 Q48 Q39 |
| Date: | 2010–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-10-34&r=env |
| By: | Meredith Fowlie |
| Abstract: | U.S. adoption of a cap-and-trade program for greenhouse gases could place some domestic producers at a disadvantage relative to international competitors who do not face similar regulation. To address this issue, proposed federal climate change legislation includes a provision that would freely allocate (or rebate) emission allowances to eligible sectors using a continuously updating output-based formula. Eligibility for the rebates would be determined at the industry-level based on emissions or energy intensity and a measure of import penetration. Dynamic updating of permit allocations has the potential to mitigate adverse competitiveness impacts and emissions leakage in eligible industries. It can also undermine the cost-effectiveness of permit market outcomes, as more of the mandated emissions reductions must then be achieved by sources deemed ineligible for rebates. This chapter investigates both the benefits and the costs of output-based updating. It identifies differences between proposed eligibility criteria and those consistent with standard measures of economic efficiency. The analysis underlines the importance of taking both benefits and costs into account when determining the scale and scope of output-based rebating provisions in cap-and-trade programs. |
| JEL: | Q58 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16307&r=env |
| By: | Blackman, Allen (Resources for the Future); Lahiri, Bidisha; Pizer, William A. (Resources for the Future); Planter, Marisol Rivera; Piña, Carlos Muñoz |
| Abstract: | Because conventional command-and-control environmental regulation often performs poorly in developing countries, policymakers are increasingly experimenting with alternatives, including voluntary regulatory programs. Research in industrialized countries suggests that such programs are sometimes ineffective because they mainly attract relatively clean participants free-riding on unrelated pollution control investments. We use plant-level data on more than 100,000 facilities to analyze the Clean Industry Program, Mexico’s flagship voluntary regulatory initiative. We seek to identify the drivers of participation and to determine whether the program improves participants’ environmental performance. Using data from the program’s first decade, we find that plants recently fined by environmental regulators were more likely to participate, but that after graduating from the program, participants were not fined at a substantially lower rate than nonparticipants. These results suggest that although the Clean Industry Program attracted dirty plants under pressure from regulators, it did not have a large, lasting impact on their environmental performance. |
| Keywords: | voluntary environmental regulation, duration analysis, propensity score matching, Mexico |
| JEL: | Q56 Q58 O13 O54 C41 |
| Date: | 2010–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-36-rev&r=env |
| By: | James B. Bushnell |
| Abstract: | Although international programs for carbon offsets play an important role in current and prospective climate-change policy, they continue to be very controversial. Asymmetric information creates several incentive problems, include adverse selection and moral hazard, in offset markets. The current regulatory focus on additionality tends to paint all these problems with a broad brush without proper consideration of the context or their implications. |
| JEL: | H23 L14 L5 Q54 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16305&r=env |
| By: | Jean-Michel Glachant; Robert Grant; Manfred Hafner; Jacques de Jong |
| Abstract: | We are in desperate need of an EU Energy Policy. The facts are that, yes, there is indeed an EU Energy Policy. It is a policy based on a vision, a vision with three components. The policy is aiming for “markets, competition and efficiency”, it is equally focussing on “a sustainable energy economy”, and thirdly, it wants to “secure the EU’s energy supply”. Three objectives, three separate action lines. Balancing the three objectives in an integrated approach is challenging and difficult. To what extent is the market approach consistent with the other two policy packages? What impact does a climate package with tradable emission rights and non-tradable targets for green energy have on the market designs for gas and electricity? Are the necessary investments in new pipes and wires for securing our energy supplies sufficiently coming under the prevailing regulatory framework? Or, to put it differently; are we smart enough in the way in which we are making implementing steps in order to meet our stated objectives? Our paper ends with a proposed new vision and a set of 22 recommendations to the new European Commission. |
| Keywords: | energy policy; climate change; security of energy supply; EU internal marke |
| Date: | 2010–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/52&r=env |
| By: | Cunha-e-Sa, Maria Antonieta; Leitao, Alexandra; Reis, Ana Balcao |
| Abstract: | We study a two sector endogenous growth model with environmental quality with two goods and two factors of production, one clean and one dirty. Technological change creates clean or dirty innovations. We compare the laissez-faire equilibrium and the social optimum and study first- and second-best policies. Optimal policy encourages research toward clean technologies. In a second-best world, we claim that a portfolio that includes a tax on the polluting good combined with optimal innovation subsidy policies is less costly than increasing the price of the polluting good alone. Moreover, a discriminating innovation subsidy policy is preferable to a non-discriminating one. JEL codes: H23; O3; O41 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:unl:unlfep:wp548&r=env |
| By: | Wagura Ndiritu, Simon; Nyangena, Wilfred |
| Abstract: | This paper presents an empirical study of schooling attendance and collection of environmental resources using cross-sectional data from the Kiambu District of Kenya. Because the decision to collect environmental resources and attend school is jointly determined, we used a bivariate probit method to model the decisions. In addition, we corrected for the possible endogeneity of resource collection work in the school attendance equation by using instrumental variable probit estimation. One of the key findings is that being involved in resource collection reduces the likelihood of a child attending school. The result supports the hypothesis of a negative relationship between children working to collect resources and the likelihood that they will attend school. The results further show that a child’s mother’s involvement in resource collection increases school attendance. In addition, there is no school attendance discrimination against girls, but they are overburdened by resource collection work. The study recommends immediate policy interventions focusing on the provision of public amenities, such as water and fuelwood. |
| Keywords: | environmental goods collection, firewood, water, children, schooling, Kenya |
| JEL: | O13 O15 |
| Date: | 2010–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-10-18-efd&r=env |
| By: | Teklewold, Hailemariam; Köhlin, Gunnar |
| Abstract: | Soil degradation is one of the most serious environmental problems in the highlands of Ethiopia. The prevalence of traditional agricultural land use and the absence of appropriate resource management often result in the degradation of natural soil fertility. This has important implications for soil productivity, household food security, and poverty. Given the extreme vulnerability of farmers in this area, we hypothesized that farmers’ risk preferences might affect the sustainability of resource use. This study presents experimental results on the willingness of farmers to take risks and relates the subjective risk preferences to actual soil conservation decisions. The study looks at a random sample of 143 households with 597 farming plots. We found that a high degree of risk aversion significantly decreases the probability of adopting soil conservation. This implies that reducing farmers’ risk exposure could promote soil conservation practices and thus more sustainable natural resource management. This might be achieved by improving tenure security, promoting access to extension services and education, and developing off-farm activities that generate income. |
| Keywords: | adoption, Ethiopia, risk preference, soil conservation |
| JEL: | Q12 Q16 Q24 D81 |
| Date: | 2010–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-10-19-efd&r=env |
| By: | Charles D. Kolstad |
| Abstract: | This paper develops a simple model of a polluting industry and an innovating firm. The polluting industry is faced with regulation and costly abatement. Regulation may be taxes or marketable permits. The innovating firm invests in R&D and develops technologies which reduce the cost of pollution abatement. The innovating firm can patent this innovation and use a licensing fee to generate revenue. In a world of certainty, the first best level of innovation and abatement can be supported by either a pollution tax or a marketable permit. However, the returns to the innovator from innovation are not the same under the two regimes. A marketable permit system allows the innovator to capture all of the gains to innovation; a tax system involves sharing the gains of innovation between the innovator and the polluting industry. |
| JEL: | L51 Q55 Q58 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16303&r=env |
| By: | Xunpeng SHI (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | Abstract: This paper discusses carbon footprint (CFP) labeling activities in the East Asia Summit (EAS) region with a focus on their spillover effects on less developed countries (LDCs). Due to increased and increasing economic integration, implementation of CFP labeling schemes in one country will have significant impact on others. The impact is particularly significant for LDCs in the EAS region because: the EAS production networks are highly integrated, which provide necessary condition for the spill-over effects to be generated; LDCs generally lack the capacity to measure and label CFP of their products; and exports from LDCs often produced by relatively small producers. However, the effective inclusion of LDCs in labeling schemes may offer more and cost-effective opportunities for carbon emission reductions. The presence of spillover effects means that countries that are implementing carbon labeling schemes need to take stakeholders outside of their boundaries into consideration. The disadvantages of LDCs can be reduced by well designed carbon labeling schemes, by innovative solutions to low cost data collection and certification, and by technical transfer, training and capacity building. |
| Date: | 2010–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2010-06&r=env |
| By: | Plankl, Reiner; Weingarten, Peter; Nieberg, Hiltrud; Zimmer, Yelto; Isermeyer, Folkhard; Krug, Janina; Haxsen, Gerhard |
| Abstract: | In den Diskussionen über die Gemeinsame Agrarpolitik nach 2013 nimmt die Honorierung nicht marktgängiger gesellschaftlicher Leistungen der Landwirtschaft eine zentrale Rolle ein. Unterschiedliche Ansichten bestehen darüber, was unter diesen Leistungen genau zu verstehen ist und wie sie quantifiziert und monetarisiert werden können. Die hierzu durchgeführte Auswertung von rund 80 Studien zeigt einerseits, dass in der Bevölkerung eine generelle Zahlungsbereitschaft für solche Leistungen besteht, und andererseits, dass die ausgewerteten Fallstudien nicht auf Deutschland hochgerechnet werden können. Die Leistung 'Offenhaltung der Landschaft' verursacht - wenn sie nicht als Koppelprodukt unentgeltlich anfällt - Kosten, deren Höhe in starkem Maße davon abhängen, ob mit dem geringsten Aufwand nur die Fläche offen gehalten werden soll oder darüber hinaus Naturschutzziele verfolgt werden. Die Einhaltung strikterer Umweltregulierungen wird oftmals ebenfalls als Leistung angeführt. Die Ergebnisse der wenigen Studien zu den durch Umweltregulierung verursachten Kosten und der exemplarische Vergleich zweier Ackerbaubetriebe in Sachsen-Anhalt und der Ukraine deuten darauf hin, dass diese Kosten im Vergleich zu anderen Kostenkomponenten in Deutschland einen eher geringen Einfluss auf die gesamten Produktionskosten haben. -- The remuneration of public goods provided by agriculture plays a central role in the discussion about the Common Agricultural Policy after 2013. Various opinions exist on what exactly these pubic goods constitute and how they can be quantified and assigned monetary values. The results of about 80 studies analysed show that, on the one hand, a general willingness to pay for such public goods is present, and on the other hand, that the evaluated case studies cannot be applied to the whole of Germany. The service 'keeping the landscape open' - if not provided costless as a by-product - incurs costs that are strongly dependent on whether the land areas are to be held open with the least amount of effort, or if, in addition, natural protection goals are to be pursued. The compliance of stricter environmental regulations is also often seen as a service which provides public goods. The results of the few studies on the costs generated by environmental regulations, and the exemplary comparison of two arable farms in Saxony Anhalt and the Ukraine indicate that these costs - in comparison to other cost components in Germany -, tend to have less influence on the total production costs. |
| Keywords: | Gesellschaftliche Leistungen der Landwirtschaft,Koppelprodukte,Zahlungsbereitschaft,Offenhaltung der Landschaft,Kosten für Umweltregulierung,Public goods provided by agriculture,by-product,willingness to pay,open landscape,environmental regulation cost |
| JEL: | Q01 Q51 Q56 Q57 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vtiaba:012010&r=env |
| By: | Paul Collier; Anthony J. Venables |
| Abstract: | This paper provides an overview of the relationships between natural resources, governance, and economic performance. The relationships run in both directions, with re-sources potentially altering the quality of governance, and governance being particularly important for resource poor countries. Both these relationships have threshold effects; if governance quality is above a certain level, then natural resources can lead to further improvement, while, below the threshold, further deterioration may take place. Theoretical and empirical work is reviewed, the interactions between the relationships discussed, and policy implications outlined. |
| Keywords: | Exhaustible resources ; resource curse; economic development ; revenue management |
| Date: | 2010–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/36&r=env |
| By: | Xu, Lixin Colin |
| Abstract: | In the past decade, the World Bank has promoted improving business environments as a key strategy for development, which has resulted in a significant amount of investment in collecting firm-level investment climate surveys across countries. What lessons have emerged from the papers using these new data? The key finding is that the effects of business environments are heterogeneous and depend crucially on industry, initial conditions, and complementary institutions. Some elements of the business environment, such as labor flexibility, low entry and exit barriers, and a reasonable protection from the"grabbing hands"of the government, seem to matter a great deal for most economies. Other elements, such as infrastructure and contracting institutions (courts and access to finance), hinge on their initial status and the size of the market. |
| Keywords: | Environmental Economics&Policies,Labor Policies,Debt Markets,Emerging Markets,Access to Finance |
| Date: | 2010–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5402&r=env |
| By: | Xi Chen; William D. Nordhaus |
| Abstract: | One of the pervasive issues in social and environmental research has been to improve the quality of socioeconomic data in developing countries. Because of the shortcoming of standard data sources, the present study examines luminosity (measures of nighttime lights) as a proxy for standard measures of output. The paper compares output and luminosity at the country levels and at the 1° x 1° grid-cell levels for the period 1992-2008. The results are that luminosity has very little value added for countries with high-quality statistical systems. However, it may be useful for countries with the lowest statistical grades, particularly for war-torn countries with no recent population or economic censuses. The results also indicate that luminosity has more value added for economic density estimates than for time-series growth rates. |
| JEL: | E01 O47 Q4 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16317&r=env |
| By: | Michael J. Roberts; Wolfram Schlenker |
| Abstract: | Extreme heat is the single best predictor of corn and soybean yields in the United States. While average yields have risen continuously since World War II, we find no evidence that relative tolerance to extreme heat has improved between 1950 and 2005. Climate change forecasts project a sharp increase in extreme heat by the end of the century, with the potential to significantly reduce yields under current technologies. |
| JEL: | Q1 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16308&r=env |