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on Environmental Economics |
| By: | Simone Borghesi (University of Siena) |
| Abstract: | This paper discusses the merits and limits of the recent European energy policy aimed at reducing carbon emissions, devoting particular attention to the European Trading System of carbon permits and to the measures that the European Union has adopted to promote renewable energy sources. From the comparison of past goals and present results, it is argued that more credible targets for carbon emission reductions and renewable shares would probably help the transition towards an alternative energy system and the necessary reduction of greenhouse gases. |
| Keywords: | Pollution, Sustainable Development, Climate Change, Fossil Fuels, Energy Policy, European Union, European Trading System (ETS), Cap-And-Trade, Renewable Energy Sources, Credibility |
| JEL: | L11 Q28 Q38 Q42 Q43 Q48 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.141&r=env |
| By: | Hassan Benchekroun (Department of Economics, CIREQ McGill University); Amrita Ray Chaudhuri (Department of Economics, CentER and TILEC Tilburg University) |
| Abstract: | We show that a technological breakthrough that reduces CO2 emissions per output can exacerbate the climate change problem: countries may respond by raising their emissions resulting in an increase of the stock of pollution that may reduce welfare. Using parameter values based on empirical evidence we obtain that any 'new technology' that reduces the emissions of CO2 per dollar of GDP by less than 76% from their current level is welfare reducing. Developing clean technologies as well as transferring “cleaner” technologies to developing countries make a global post-Kyoto agreement over the control of emissions all the more urgent. |
| Keywords: | Transboundary Pollution, Renewable Resource, Climate Change, Clean Technologies, Differential Games |
| JEL: | Q20 Q54 Q55 Q58 C73 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2011.05&r=env |
| By: | Francesco Bosello (Fondazione Eni Enrico Mattei, University of Milan, Euromediterranean Center for Climate Change); Fabio Eboli (Fondazione Eni Enrico Mattei, University of Venice, Euromediterranean Center for Climate Change); Ramiro Parrado (Fondazione Eni Enrico Mattei, University of Venice, Euromediterranean Center for Climate Change); Renato Rosa (Fondazione Eni Enrico Mattei, University of Venice, Euromediterranean Center for Climate Change) |
| Abstract: | Deforestation is a major source of CO2 emissions, accounting for around 17% of total annual anthropogenic carbon release. While the cost estimates of reducing deforestation rates vary considerably depending on model assumptions, it is widely accepted that emissions reductions from avoided deforestation consist of a relatively low cost mitigation option. Halting deforestation is therefore not only a major ecological challenge, but also a great opportunity to cost effectively reduce climate change negative impacts. In this paper we analyze the impact of introducing avoided deforestation credits into the European carbon market using a multiregional Computable General Equilibrium model – the ICES model (Inter-temporal Computable Equilibrium System). Taking into account political concerns over a possible “flooding” of REDD credits, various limits to the number of REDD allowances entering the carbon market are considered. Finally, unlike previous studies, we account for both direct and indirect effects occurring on land and timber markets resulting from lower deforestation rates. We conclude that avoided deforestation notably reduces climate change policy costs - by approximately 80% with unlimited availability of REDD credits - and may drastically reduce carbon prices. Policy makers may, however, effectively control for these imposing limits to avoided deforestation credits use. Moreover, avoided deforestation has the additional positive effect of reducing carbon leakage of a unilateral European climate change policy. This is good news for the EU, but not necessarily for REDD regions. Indeed we show that REDD revenues are not sufficient to compensate REDD regions for a less leakage-affected and more competitive EU in international markets. In fact, REDD regions would prefer to free ride on the EU unilateral mitigation policy. |
| Keywords: | Forestry, Avoided Deforestation, Climate Change, Emission Trading, General Equilibrium Modelling |
| JEL: | D58 Q23 Q54 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.142&r=env |
| By: | Joachim Fünfgelt (Sustainability Economics Group, Leuphana University of Lüneburg, Germany); Günther G. Schulze (Dept. of International Economic Policy, University of Freiburg, Germany) |
| Abstract: | We analyze the formation of environmental policy to regulate transboundary pollution if governments are self-interested. In a common agency framework, we portray the environmental policy calculus of two political supportmaximizing governments that are in a situation of strategic interaction with respect to their environmental policies, but too small to affect world market prices. We show how governments systematically deviate from socially optimal environmental policies. Taxes may be too high if environmental interests and pollution-intensity of production are very strong; under different constellations they may be too low. Governments may actually subsidize the production of a polluting good. Politically motivated environmental policy thus may be more harmful to the environment as compared to the benevolent dictators’ solution. In other cases it may enhance environmental quality and welfare beyond what a benevolent government would achieve. |
| Keywords: | Political economy, environmental policy, transboundary pollution, common agency, strategic interaction |
| JEL: | Q F |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:196&r=env |
| By: | Valentina Giannini (Institute for Environmental Studies (IVM), Ca’ Foscari University and Fondazione Eni Enrico Mattei) |
| Abstract: | Climate change mitigation can be achieved, according to many, by means of Reducing emissions from deforestation and forest degradation in the Tropics (REDD). Within the climate change policy debate we thus find discussions on how to reduce GHG emissions by designing appropriate REDD programmes and projects. In this paper I try to capture this debate by looking at the role of five major international organizations, which were chosen to represent the different aspects related to REDD. In order for REDD to be successful, not only GHG reduction, but also multiple benefits should be achieved: indigenous and local peoples’ involvement, livelihood improvement, fair and equitable labour, biodiversity conservation, and sustainable forest management, to name some of the most relevant. The selected international organizations are: UN-REDD, The GEF, The CBD, ITTO, and ILO. The role of these is assessed, to understand not only what has been defined and achieved, but also what possible way forward the organizations are envisioning, and what issues remain to be addressed. |
| Keywords: | Reducing Emissions from Deforestation and Forest Degradation, REDD, Climate Change, Climate Policy Debate, Mitigation, Multiple Benefits, UN-REDD, The GEF, The CBD, ITTO, ILO |
| JEL: | O13 O20 Q23 Q28 Q54 Q56 Q57 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.157&r=env |
| By: | ZhongXiang Zhang (East-West Center) |
| Abstract: | Just prior to the Copenhagen climate summit, China pledged to cut its carbon intensity by 40-45% by 2020 relative to its 2005 levels to help to reach an international climate change agreement at Copenhagen or beyond. This raises the issue of whether such a pledge is ambitious or just represents business as usual. To put China’s climate pledge into perspective, this paper examines whether this proposed carbon intensity goal for 2020 is as challenging as the energy-saving goals set in the current 11th five-year economic blueprint, to what extent it drives China’s emissions below its projected baseline levels, and whether China will fulfill its part of a coordinated global commitment to stabilize the concentration of greenhouse gas emissions in the atmosphere at the desirable level. Given that China’s pledge is in the form of carbon intensity, the paper shows that GDP figures are even more crucial to the impacts on the energy or carbon intensity than are energy consumption and emissions data by examining the revisions of China’s GDP figures and energy consumption in recent years. Moreover, the paper emphasizes that China’s proposed carbon intensity target not only needs to be seen as ambitious, but more importantly it needs to be credible. Finally, it is concluded with a suggestion that international climate change negotiations need to focus on 2030 as the targeted date to cap the greenhouse gas emissions of the world’s two largest emitters in a legally binding global agreement. |
| Keywords: | Carbon Intensity, Post-Copenhagen Climate Change Negotiations, Climate Commitments, China |
| JEL: | Q42 Q43 Q48 Q52 Q53 Q54 Q58 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.158&r=env |
| By: | Brechet, Thierry (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium); HRITONENKO, Natali (Department of Mathematics, Prairie View A&M University, Texas, USA); YATSENKO, Yuri (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium; School of Business, Houston Baptist University, Texas, USA) |
| Abstract: | The paper analytically explores the optimal policy mix between mitigation and environmental adaptation against climate change at a macroeconomic level. The constructed economic- environmental model is formulated as a social planner problem with the adaptation and abatement investments as separate decision variables. The authors prove the existence of a unique steady state and provide a comparative static analysis of the optimal investment. It leads to essential implications for associated long-term environmental policies. In particular, the dependence of the optimal ratio between abatement and adaptation investments on economic efficiency appears to have an inverted U-shape. Data calibration and numerical simulation are provided to illustrate theoretical outcomes. |
| Keywords: | environmental adaptation, mitigation, optimal investment, long-term climate policies |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2010065&r=env |
| By: | Melania Michetti (Fondazione Eni Enrico Mattei); Renato Nunes Rosa (Fondazione Eni Enrico Mattei) |
| Abstract: | This paper analyzes the role of afforestation-reforestation and timber management activities, and their major and secondary economic effects in stabilizing climate during the first commitment period of the Kyoto Protocol. In particular, with a Computable General Equilibrium framework, the ICES model, it is inferred how forest carbon sequestration fits within the European domestic portfolio of a 2020-20 and 2020-30 climate stabilization policy. Afforestation and land use are accounted for by introducing their effects in the model. This is done by relying on carbon sequestration curves provided by Sohngen (2005), which describe the average annual cost of sequestration for selected world regions. Results show that afforestation and timber management could lead to substantially lower policy costs if included. By allowing afforestation alone it is possible to achieve the 30% emissions reduction target with an additional European effort of only 0.2% compared with the cost of a 20% emissions reduction without afforestation. The introduction of these alternatives for mitigating climate is expected to reduce carbon price by around 30% in 2020 and the already contained leakage effect (around 1%), coming from an independent European commitment, by 0.2%. |
| Keywords: | Climate Change, General Equilibrium Modelling, Forestry, Afforestation |
| JEL: | D58 Q23 Q24 Q52 Q54 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2011.04&r=env |
| By: | Dirk Rübbelke |
| Abstract: | <br /> International transfers in climate policy channeled from the industrialized to the developing<br /> world either support the mitigation of climate change or the adaptation to global warming.<br /> From an allocative efficiency point of view, transfers supporting mitigation tend to be Pareto-improving<br /> whereas this is not very likely in the case of adaptation support. We illustrate this<br /> by regarding transfer schemes currently applied under the UN Framework Convention on<br /> Climate Change (UNFCCC) and the Kyoto framework.<br /> However, if we enrich the analysis by integrating distributional aspects, we find that<br /> international adaptation funding may help both developing and developed world. Interestingly<br /> this is not due to altruistic incentives, but due to follow-up effects on international<br /> negotiations on climate change mitigation. We argue that the lack of fairness perceived by<br /> developing countries in the international climate policy arena can be reduced by the support<br /> of adaptation in these countries. As we show – taking into account different fairness concepts<br /> – this might raise the prospects of success in international negotiations on climate change.<br /> Yet, we find that the influence of transfers may induce different fairness effects on climate<br /> change mitigation negotiations to run counter.<br /> We discuss whether current transfer schemes under the UNFCCC and the Kyoto framework<br /> adequately serve the distributive and allocative objectives pursued in international climate<br /> policy.<br /> |
| Keywords: | adaptation, climate change, fairness, Global Environmental Facility, international climate policy, mitigation, reciprocity, transfers |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:wp2011-02&r=env |
| By: | Alex L. Marten; Stephen C. Newbold |
| Abstract: | Many estimates of the social cost of CO2 emissions (SCCO2) can be found in the climate economics literature. However, to date far fewer estimates of the social costs of other greenhouse gases have been published, and many of those that are available are not directly comparable to current estimates of the SCCO2. In this paper we use a simplified integrated assessment model that combines MAGICC and (elements of) DICE to estimate the social costs of the three most important greenhouse gases—CO2, CH4, and N2O—for the years 2010 through 2050. Insofar as possible, we base our model runs on the assumptions and input parameters of the recent U.S. government inter-agency SCC working group. We compare our estimates of the social costs of CH4 and N2O emissions to those that would be produced by using the SCCO2 to value the "CO2-equivalents" of each of these gases, as calculated using their global warming potentials (GWPs). We examine the estimation error induced by valuing non-CO2 greenhouse gas emission reductions using GWPs and the SCCO2 for single- and multi-gas abatement policies. In both cases the error can be large, so estimates of the social costs of these gases, rather than proxies based on GWPs, should be used whenever possible. However, if estimates of the social cost are not available the value of non-CO2 GHG reductions estimated using GWPs and the SCCO2 will typically have lower absolute errors than default estimates of zero. |
| Keywords: | social cost of carbon, global warming potential, integrated assessment |
| JEL: | Q54 Q58 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201101&r=env |
| By: | Carlo Carraro (University of Venice, Fondazione Eni Enrico Mattei); Emanuele Massetti (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center for Climate Change) |
| Abstract: | We propose a realistic approach to climate policy based on the Copenhagen Agreement to reduce Greenhouse Gases (GHGs) emissions. We assess by how much the non-binding, although official, commitments to reduce emissions made in Copenhagen will affect the level of world GHGs emissions in 2020. Our estimates are based on official communications to the UNFCCC, on historic data and on the Business-as-Usual scenario of the WITCH model. We are not interested in estimating the gap between the expected level of emissions and what would be needed to achieve the 2°C target. Nor do we attempt to calculate the 2100 temperature level implied by the Copenhagen pledges. We believe these two exercises are subject to high uncertainty and would not improve the current state of negotiations. Rather, we take stock of the present politically achievable level of commitment and suggest an effective way to push forward the climate policy agenda. The focus is on what can be done rather than on what should be done. To this end, we estimate the potential of the financial provisions of the Copenhagen Agreement to sponsor mitigation effort in Non-Annex I countries. Using scenarios produced with the WITCH model, we show that lower commitment on domestic abatement measures can be compensated by devoting roughly 50% of the Copenhagen financial provisions in 2020 to mitigation in Non-Annex I countries. The policy implications of our results will be discussed. |
| Keywords: | Kyoto Protocol, International Climate Agreements, Climate Policy, Clean Development Mechanism |
| JEL: | F5 Q01 Q54 Q58 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.136&r=env |
| By: | Luca Di Corato (Swedish University of Agricultural Sciences); Michele Moretto (University of Padova, Fondazione Eni Enrico Mattei and Centro Studi Levi-Cases); Sergio Vergalli (University of Brescia and Fondazione Eni Enrico Mattei) |
| Abstract: | In this paper stochastic dynamic programming is used to investigate habitat conservation by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We analytically determine the impact of uncertainty and optimal policy conversion dynamics and discuss different policy scenarios on the basis of the relative long-run expected rate of deforestation. Finally, some numerical simulations are provided to illustrate our findings. |
| Keywords: | Optimal Stopping, Deforestation, Payments For Environmental Services, Natural Resources Management |
| JEL: | C61 D81 Q24 Q58 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.160&r=env |
| By: | Francesco Bosello (University of Milan and Fondazione Eni Enrico Mattei); Chen Chen (Defap Graduate School in Public Economics and Fondazione Eni Enrico Mattei) |
| Abstract: | Nowadays, as stressed by important strategic documents like for instance the 2009 EU White Paper on Adaptation or the recent 2009 “Copenhagen Accord”, it is amply recognized that both mitigation and adaptation strategies are necessary to combat climate change. This paper enriches the rapidly expanding literature trying to devise normative indications on the optimal combination of the two introducing the role of catastrophic and spatial uncertainty related to climate change damages. Applying a modified version of the Nordhaus’ Regional Dynamic Integrated Model of Climate and the Economy it is shown that in both cases uncertainty works in the direction to make mitigation a more attractive strategy than adaptation. When catastrophic uncertainty is concerned mitigation becomes relatively more important as, by curbing emissions, it helps to reduce temperature increase and hence the probability of the occurrence of the event. Adaptation on the contrary has no impact on this. It is also shown that optimal mitigation responses are much less sensitive than adaptation responses to spatial uncertainty. Mitigation responds to global damages, while adaptation to local damages. The first, being aggregated, change less than the second in the presence of spatial uncertainty as higher expected losses in some regions are compensated by lower expected losses in other. Accordingly, mitigation changes less than adaptation. Thus if it cannot be really claimed that spatial uncertainty increases the weight of mitigation respect to that of adaptation, however its presence makes mitigation a “safer” or more robust strategy to a policy decision maker than adaptation. |
| Keywords: | Climate Change, Mitigation, Adaptation, Uncertainty, Integrated Assessment Model |
| JEL: | C61 D58 Q54 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.159&r=env |
| By: | Konstantinos Angelopoulos; George Economides; Apostolis Philippopoulos |
| Abstract: | This paper uses a micro-founded DSGE model to compare second-best optimal environmental policy and the resulting allocation to first-best allocation. The focus is on the source and size of uncertainty, and how this affects optimal choices and the inferiority of second best vis-à-vis first best. |
| Keywords: | General equilibrium; uncertainty; environmental policy; second best |
| JEL: | C68 D81 H23 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2010_35&r=env |
| By: | Alexander Golub (Environmental Defense Fund); Daiju Narita (Kiel Institute for the World Economy) |
| Abstract: | Uncertainty plays a key role in the economics of climate change, and the discussions surrounding its implications for climate policy are far from settled. We give an overview of the literature on uncertainty in integrated assessment models of climate change and identify some future research needs. In the paper, we pay particular attention to three different and complementary approaches that model uncertainty in association with integrated assessment models: the discrete uncertainty modeling, the most common way to incorporate uncertainty in complex climate-economy models: the real options analysis, a simplified way to identify and value flexibility: the continuous-time stochastic dynamic programming, which is computationally most challenging but necessary if persistent stochasticity is considered. |
| Keywords: | Uncertainty, Learning, Economics of Climate Change, Integrated Assessment Models, Real Options |
| JEL: | D81 Q54 C61 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2011.02&r=env |
| By: | Eric BERR (GREThA, CNRS, UMR 5113) |
| Abstract: | Using the works of Steven Lukes, John Kenneth Galbraith and Kenneth Boulding, this paper gives a typology of power relationships in economics, a concept that has been “forgotten” by the mainstream. Secondly, this typology is used to evaluate and show the real aim of neo-liberal policies implemented since the beginning of the 1980s. |
| Keywords: | Input-output analysis, minimum disruption approach, eco-environmental impacts, opportunity cost, road transport, greenhouse gas emissions |
| JEL: | C61 C67 D57 D61 H54 Q54 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2011-04&r=env |
| By: | Ruslana Rachel Palatnik (FEEM, Department of Economics, the Max Stern Academic College of Emek Yezreel Israel, NRERC- Natural Resource and Environmental Research Center, University of Haifa); Paulo A.L.D. Nunes (FEEM and Center for Environmental Economics and Management, Department of Economics, Ca’ Foscari University of Venice) |
| Abstract: | It is clear that climate change involves changes in temperature and precipitation and therefore directly affects land productivity. However, this is not the only channel for climatic change to affect agro-systems. Biodiversity is subject to climatic fluctuations and in turn may alter land productivity too. Firstly, biodiversity is an input into agro-ecosystems. Secondly, biodiversity supports the functioning of these systems (e.g. the balancing of the nutrient cycle). Thirdly, agro-systems also host important wildlife species which, though not always, play a functional role in land productivity, nonetheless constitute important sources of landscape amenities. The present paper illustrates a unique attempt to economically assess this additional effect climate change may imply on agriculture. We first empirically evaluate changes in land productivity due to climatic change effect on temperature, precipitations and biodiversity. Then we estimate the economic cost of biodiversity impact on agro-systems. Our key finding is that climate-change-induced biodiversity impact on European agro-systems measured in terms of GDP change in year 2050 is sufficiently large to deepen the direct climate-change effect in some regions and to reverse it in others. Different economies show different resilience profiles to deal with this effect. |
| Keywords: | Climate Change, Biodiversity, Agro-Ecosystems |
| JEL: | D58 Q54 Q57 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.138&r=env |
| By: | Steve Hatfield-Dodds (CSIRO Energy Transformed Flagship, Canberra, ACT, Australia; Centre for Climate Economics and Policy, Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia); Mark Morrison (Institute for Land, Water and Society, School of Business, Charles Sturt University, Bathurst, New South Wales, Australia) |
| Abstract: | Concerns about the economic impacts of achieving deep cuts in emissions are a pivotal issue in achieving the political support required for emissions reductions. We assess a widespread reference point bias in the communication of economic modelling of climate policy impacts, and find it significantly reduces public support for emissions reductions. At least one in five Americans and Australians incorrectly believe that reducing emissions would result in incomes falling from current levels Ð triggering loss aversion Ð rather than incomes rising more slowly. Avoiding this misunderstanding results in support being up to 23 percentage points higher than when impacts are presented as reductions in income from current levels. This suggests that clearly communicating that incomes continue to rise could have a larger effect on support for emissions reductions among US and Australian citizens over the next few years than increased public confidence in climate science. We conclude that improved communication of policy impacts, including that ambitious stabilisation goals are consistent with strong trend economic growth and rising incomes and employment, has a crucial role in facilitating an informed democratic response to climate change, and may be necessary for achieving a political mandate for global action. |
| JEL: | Q54 D70 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:0910&r=env |
| By: | BRECHET, Thierry (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium); JOUVET, Pierre - André (EconomiX, Université de Paris Ouest, Nanterre – La Défense, France); ROTILLON, Gilles (EconomiX, Université de Paris Ouest, Nanterre – La Défense, France) |
| Abstract: | In this paper we study the optimal growth path and its decentralization in a two-sector overlapping- generations model with pollution. One sector (power generation) is polluting and the other (final good) is not. Pollution is regulated by tradable emission permits. The issue is whether the optimal growth path can be replicated in equilibrium with pollution permits, given that some permits must be issued free of charge for the sake of political acceptability. We provide a policy rule that allows optimality and acceptability to be reconciled. |
| Keywords: | general equilibrium, optimal growth, pollution, tradable emission permits, acceptability |
| JEL: | D61 D9 Q28 |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2010056&r=env |
| By: | BRECHET, Thierry (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium); THENIE, Julien (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium; ORDECSYS Company, Chêne-Bougeries, Switzerland.); ZEIMES, Thibaut (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium); ZUBER, Stéphane (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Eonomics and Management, B- 1348 Louvain-la-Neuve, Belgium) |
| Abstract: | This article presents an analysis of the behavior of countries defining their climate policies in an uncertain context. The analysis is made using the S-CWS model, a stochastic version of an integrated assessment growth model. The model includes a stochastic definition of the climate sensitivity parameter. We show that the impact of uncertainty on policy design critically depends on the shape of the damage function. We also examine the benefits of cooperation in the context of uncertainty: we highlight the existence of an additional benefit of cooperation, namely risk reduction. |
| Keywords: | cooperation, uncertainty, climate change, integrated assessment model |
| JEL: | C71 C73 D9 D62 F42 Q2 |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2010062&r=env |
| By: | Juan Carlós Bárcena-Ruiz (Universidad del País Vasco); Maria Luz Campo (Universidad del País Vasco) |
| Abstract: | This paper analyzes the effect that passive investment in rival firms has on the setting of cooperative and non-cooperative environmental taxes. We consider two firms located in different countries, one of which owns a stake in its rival. We show that partial cross-ownership affects the taxes set by the countries in the cooperative and non-cooperative cases. Depending on the stake that one firm has in its rival we show that cooperative taxes may he higher or lower than non-cooperative taxes. Moreover, for intermediate values of the stake, the non-cooperative tax is higher in one country and lower in the other than the cooperative tax. |
| Keywords: | Environmental Taxes, International Trade; Local Pollution, Partial Ownership |
| JEL: | Q58 F12 L13 |
| Date: | 2011–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:201147&r=env |
| By: | Alain-Désiré Nimubona (Department of Economics, University of Waterloo, and CIRANO); Bernard Sinclair-Desgagné (HEC Montréal, CIRANO and École polytechnique) |
| Abstract: | To comply with laws, regulations and social demands, polluting firms increasingly purchase the needed means from specialized suppliers. This paper analyzes this relatively recent phenomenon. We show how environmental regulation, the size of the output market, the elasticity of demand for abatement goods and services, and the fact that in-house and outsourced abatement expenses are substitutes or complements can influence a polluter’s make-or-buy decision. Specific features of abatement outsourcing are highlighted, qualifications and refinements of the theory of vertical integration are then proposed, and some consequences for environmental policy are briefly discussed. |
| Keywords: | Eco-industry, Make-or-buy Decision, Outsourcing, Vertical Integration |
| JEL: | L23 L24 Q52 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.146&r=env |
| By: | Heltberg, Rasmus; Bonch-Osmolovskiy, Misha |
| Abstract: | This paper develops a methodology for regional disaggregated estimation and mapping of the areas that are ex-ante the most vulnerable to the impacts of climate change and variability and applies it to Tajikistan, a mountainous country highly vulnerable to the impacts of climate change. The authors construct the vulnerability index as a function of exposure to climate variability and natural disasters, sensitivity to the impacts of that exposure, and capacity to adapt to ongoing and future climatic changes. This index can inform decisions about adaptation responses that might benefit from an assessment of how and why vulnerability to climate change varies regionally and it may therefore prove a useful tool for policy analysts interested in how to ensure pro-poor adaptation in developing countries. Index results for Tajikistan suggest that vulnerability varies according to socio-economic and institutional development in ways that do not follow directly from exposure or elevation: geography is not destiny. The results indicate that urban areas are by far the least vulnerable, while the eastern Region of Republican Subordination mountain zone is the most vulnerable. Prime agricultural valleys are also relatively more vulnerable, implying that adaptation planners do not necessarily face a trade-off between defending vulnerable areas and defending economically important areas. These results lend support to at least some elements of current adaptation practice. |
| Keywords: | Population Policies,Climate Change Mitigation and Green House Gases,Science of Climate Change,Climate Change Economics,Adaptation to Climate Change |
| Date: | 2011–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5554&r=env |
| By: | Cinzia Di Novi (Dipartimento di Politiche Pubbliche e Scelte Collettive, Università del Piemonte Orientale, Italy) |
| Abstract: | Limited literature has been published on the association between environmental health indicators, life-style habits and ambient air pollution. We have examined the association of asthma prevalence and the amount of health investment with daily mean concentrations of particulate matter (PM) with a mass median aerodynamic diameter less than 2.5 mm (PM25) in 16 metropolitan areas in U.S. using the Behavioral Risk Factor Surveillance System (2001) data in conjunction with the Air Quality System data collected by the Environmental Protection Agency. A multivariate probit approach has been used to estimate recursive systems of equations for environmental health outcome and life-styles. A piecewise linear relationship has been postulated to describe the association between health outcome, health investment and pollution. We have assumed one change point at AQI value of 100 which corresponds to the US national air quality standard. The most interesting result concerns the influence of pollution on health-improving life-style choices: below a specified threshold concentration (AQI=100) a positive linear association exists between exposure to PM25 and health investments; above the threshold the association becomes negative. Hence, only if ambient pollution is in the `satisfactory range' (AQI level at or below 100), individuals will have incentive to invest in health. |
| Keywords: | : health production, multivariate probit, spline, life-style, fine particulate, asthma |
| JEL: | I12 C31 D13 D81 Q25 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:gea:wpaper:1/2011&r=env |
| By: | Elisa Lanzi (Fondazione Eni Enrico Mattei); Elena Verdolini (Fondazione Eni Enrico Mattei and Università Cattolica di Milano); Ivan Hašcic (OECD Environment Directorate) |
| Abstract: | This paper studies innovation dynamics in efficiency improving electricity generation technologies as an important means of mitigating climate change impacts. Relevant patents are identified and used as an indicator of innovation. We find that patenting in efficiency improving technologies has mostly been stable over time, with a recent decreasing trend. We also find that majority of patents are first filed in OECD countries and only then in non-OECD or BRIC countries. Conversely, non-OECD and BRIC countries apply for patents that are mostly marketed domestically. This result shows that there is significant technology transfer in the field of efficiency improving technologies for electricity production. This flow of know-how is likely to contribute to mitigation of greenhouse gases emissions in emerging economies in the long run. |
| Keywords: | Climate Change, Technological Innovation, Energy, Patents, Fossil Fuels |
| JEL: | Q32 Q4 Q55 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2011.10&r=env |
| By: | Massimiliano Mazzanti (University of Ferrara (DEIT) and National Research Council (CERIS Milan)); Antonio Musolesi (INRAE Dijon, France and LSE department of Geography and the Environment) |
| Abstract: | We study the eventual structural differences of climate change leading ‘actors’ such as Northern EU countries, and ‘lagging actors’ - southern EU countries and the ‘Umbrella group’ - with regard to long run (1960-2001) carbon-income relationships. Parametric and semi parametric panel models show that the groups of countries that were in the Kyoto arena less in favour of stringent climate policy, have yet to experience a turning point, though they at least show relative delinking in their monotonic carbon-income relationship. Northern EU instead robustly shows bell shapes across models, which seem to depend on time related (policy) events. Time related effects are more relevant than income effects in explaining the occurrence of robust Kuznets curves. The reaction of northern EU to exogenous policy events such as the 1992 climate change convention that gave earth to the Kyoto era, and even the second oil shock that preceded it in the 80’s are among the causes of the observed structural differences. |
| Keywords: | Carbon Kuznets Curves, Kyoto, Long Run Dynamics, Policy Events, Heterogeneous Panels, Cross-Section Correlation, Semi Parametric Models, Common Time Trends |
| JEL: | C14 C22 C23 Q53 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.149&r=env |
| By: | Skoufias, Emmanuel; Vinha, Katja; Conroy, Hector V. |
| Abstract: | This paper examines the impacts of weather shocks, defined as rainfall or growing degree days more than a standard deviation from their respective long-run means, on household consumption per capita and child height-for-age. The results reveal that the current risk-coping mechanisms are not effective in protecting these two dimensions of welfare from erratic weather patterns. These findings imply that the change in the patterns of climatic variability associated with climate change is likely to reduce the effectiveness of the current coping mechanisms even more and thus increase household vulnerability further. The results reveal that weather shocks have substantial (negative as well as positive) effects on welfare that vary across regions (North vs. Center and South) and socio-economic characteristics (education and gender). The heterogeneous impacts of climatic variability suggest that a"tailored"approach to designing programs aimed at decreasing the sensitivity and increasing the capacity of rural households to adapt to climate change in Mexico is likely to be more effective. |
| Keywords: | Health Monitoring&Evaluation,Science of Climate Change,Regional Economic Development,Global Environment Facility,Climate Change Mitigation and Green House Gases |
| Date: | 2011–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5555&r=env |
| By: | Nathalie Trudeau; Cecilia Tam; Dagmar Graczyk; Peter Taylor |
| Abstract: | For India to play its part in helping to realise deep cuts in global CO2 emissions by the middle of the 21st century, it will need to achieve rapid economic development over the next 40 years with only a very small increase in emissions. Currently there is no precedent for such a low-CO2 development path. The challenge for India will be to achieve strong economic growth while improving energy security, but without locking in high emissions. This information paper further develops the analysis presented in the India chapter of ‘Energy Technology Perspectives 2010’ and provides insights on the implications of achieving deep energy and CO2 emission cuts in the industrial sector both for India and globally. It investigates the least-cost combination of options that can significantly reduce energy and CO2 emissions in India’s industrial sector, while enabling the Indian economy to continue to grow and alleviate energy poverty. |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ieaaaa:2011/2-en&r=env |
| By: | Andrés Fuentes |
| Abstract: | Spain uses its natural water resources intensively, mostly in agriculture, thanks to a highly developed dam infrastructure. The limits for extraction of natural resources have largely been reached and climate change is expected to continue lowering natural water endowments markedly in future especially in dry areas of the country. The costs of exploiting alternative supply sources on a large scale, notably desalination and recycling, remain well above water prices paid by consumers at present. The government has recognised that water policies therefore need to switch to demand management, so as to ensure that available resources are put to most efficient and priority use. Scope for water savings is substantial, especially in agriculture, where much irrigation water generates little value-added. The government has subsidised the use of more efficient irrigation technology at considerable budgetary cost, which has contributed to a modest reduction of water use in irrigation in recent years. The participatory approach in water policy governance should be extended further to stakeholders beyond the irrigation community, to include more scientists or representatives of institutions protecting local ecosystems Low water prices, combined with the free allocation of water concessions, still hamper an efficient use of water resources. Water prices will need to rise further so as to reflect service provision costs in full as well as the scarcity and environmental costs of water abstractions. Steps to better take into account water scarcity should include the progressive inclusion of market instruments, such as the tendering of water concessions as well as the elimination of some barriers to the exchange of such concessions among users. Benchmark regulation of water utilities would contribute to more efficient water supply and treatment services. Further steps need to be taken to halt excessive groundwater abstractions, including through improved monitoring and the introduction of charges on abstractions from overexploited aquifers.<P>Action en faveur d'une utilisation durable de l'eau en Espagne<BR>L’Espagne fait un usage intensif de ses ressources naturelles en eau, surtout en agriculture, grâce aux très nombreux barrages qu’elle a mis en place. L’extraction de ces ressources a dans une large mesure atteint ses limites, d’autant qu’elles devraient continuer de diminuer sensiblement à l’avenir sous l’effet du changement climatique, notamment dans les régions sèches du pays. Les coûts d’exploitation à grande échelle d’autres formes d’approvisionnement en eau, comme le dessalement et le recyclage de l’eau, restent bien supérieurs aux tarifs payés aujourd’hui par les consommateurs. Dans ces conditions, le gouvernement a admis la nécessité de recentrer la politique de l’eau sur la gestion de la demande, pour faire en sorte que les ressources disponibles soient affectées aux usages les plus efficients et prioritaires. Il existe d’importants gisements d’économies d’eau, en particulier dans l’agriculture où le rendement de l’eau d’irrigation est souvent faible. Le gouvernement a subventionné l’adoption de techniques d’irrigation plus efficientes, pour un coût budgétaire considérable, ce qui a contribué à une légère réduction de la consommation d’eau d’irrigation ces dernières années. L’approche participative dans la gouvernance de la politique d’eau devrait être étendue à un plus large éventail d’intervenants au delà du secteur de l’irrigation, dont les chercheurs et les représentants d’institutions qui protègent les écosystèmes locaux. Le bas niveau des prix de l’eau, conjugué à l’attribution gratuite des concessions, fait encore obstacle à une utilisation efficiente des ressources en eau. Les prix de l’eau devront encore augmenter afin de refléter pleinement les coûts de fourniture du service, ainsi que le coût de rareté et les coûts environnementaux des prélèvements d’eau. Pour une meilleure prise en compte de la rareté de l’eau, il conviendrait entre autres d’adopter progressivement des instruments économiques tels que la mise aux enchères des concessions et d’éliminer certains obstacles aux échanges de concessions entre les usagers. Une régulation par comparaison des compagnies des eaux contribuerait à accroître l’efficience des services de distribution d’eau et de traitement des eaux. De nouvelles mesures s’imposent pour mettre fin aux prélèvements souterrains excessifs, à commencer par une meilleure surveillance et l’instauration de redevances sur les prélèvements d’eau dans les aquifères surexploités. |
| JEL: | Q15 Q18 Q25 |
| Date: | 2011–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:840-en&r=env |
| By: | Ambec, Stefan; Dinar, Ariel |
| Abstract: | By signing an international river sharing agreement (RSA), countries voluntary commit to release water in exchange for a compensation. We examine the robustness of such commitments to reduced water ows. We focus on RSAs that satisfy core lower bounds and fairness upper bounds. We characterize the constrained upstream incremental RSA as the core and fair RSA that is sustainable during the most severe droughts. It assigns to each country its marginal contribution to its followers, up to its maximal benet from water extraction. It lexicographically maximizes the welfare of the most upstream countries in the set of core and fair RSAs. Its mirror image, the downstream incremental RSA, is not sustainable to drought at the river source. |
| Keywords: | international river agreement, water, stability, core, fairness, global warming |
| JEL: | D74 Q23 Q28 Q54 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:23886&r=env |
| By: | Adkins, Liwayway; Garbaccio, Richard; Ho, Mun (Resources for the Future); Moore, Eric (Resources for the Future); Morgenstern, Richard (Resources for the Future) |
| Abstract: | The effects of a carbon price on U.S. industries are likely to change over time as firms and customers gradually adjust to new prices. The effects will also depend on the number of countries implementing the policy as well as offsetting policies to compensate losers. We examine the effects of a $15/ton CO2 price, including Waxman-Markey-type allocations to vulnerable industries, over four time horizons -- the very short-, short-, medium-, and long-runs -- distinguished by the ability of firms to raise output prices, change their input mix, and reallocate capital. We find that if firms cannot pass on higher costs, the loss in profits in a number of industries will indeed be large. When output prices can rise to reflect higher energy costs, the reduction in output and profits is substantially smaller. Over the medium- and long-terms, however, when more adjustments occur, the impact on output is more varied due to general equilibrium effects. The use of the H.R. 2454 rebates can substantially offset the output losses over all four time frames considered. We also consider competitiveness and leakage effects—changes in trade flows and changes in emissions in the rest of the world. We examine two measures of leakage: “trade-related” leakage that accounts for both the increased volume of net imports into the U.S. as well as the higher carbon intensity of these imports, and a broader leakage measure that includes the effect of increased fossil fuel consumption in countries not undertaking a carbon-pricing policy. |
| Keywords: | carbon price, competitiveness, input-output analysis, output-based allocations, carbon leakage |
| JEL: | F14 D D57 D58 H23 |
| Date: | 2010–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-10-47&r=env |
| By: | Christopher Carpenter (Paul Merage School of Business, University of California, Irvine); Sabina Postolek (Department of Economics, Queen's University); Casey Warman (Department of Economics, Queen's University) |
| Abstract: | Public-place smoking restrictions are the most important non-price tobacco control measures worldwide, yet surprisingly little is known about their effects on exposure to environmental tobacco smoke (ETS). We study these laws in Canada using data with questions about respondents’ ETS exposure in public and private places. In fixed-effects models we find these laws had no effects on smoking but induced large and statistically significant reductions in public-place ETS exposure, especially in bars and restaurants. We do not find significant evidence of ETS displacement to private homes. Our results indicate wide latitude for health improvements from banning smoking in public places. |
| Keywords: | smoking, cigarettes, tobacco, exposure |
| JEL: | I1 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1260&r=env |
| By: | Alfredo Marvão Pereira (Department of Economics, College of William and Mary, Williamsburg, VA, USA e CASEE, Portugal); José Manuel Belbute (Universidade de Évora, Departamento de Economia e CEFAGE-EU, Portugal) |
| Abstract: | The objective of this paper is to analyze the degree of persistence of final energy demand in Portugal. Our results suggest the presence of a strong level of persistence for aggregate final energy demand. Final demand for gas is the most persistent component of energy demand, while the final demand for coal is the least persistent. In turn, final demand for petroleum and biomass tend to have levels of persistence similar to aggregate final demand. The case of final demand for electricity is inconclusive. These results have the important implication for the design of environmental policies. First, the fact that final energy demand is highly persistent is good news in that environmental policies in Portugal can be implemented in a favorable setting in which their effects will tend to be long lasting. Second, the high persistence of gas and the fact that biomass and petroleum have levels of persistence that are similar suggests that fuel switching policies will be relatively easy to implement in these cases. The case of coal is somewhat different in that switching away from coal may not be easy. In turn, the case of electricity is somewhat ambiguous. While the fact that it is also highly persistent suggests that shocks to its final demand will produce long lasting effects, it is not clear, however, how they compare to the effects on the other final demand components and therefore we can make no statements about fuel switching. |
| Keywords: | Persistence, final energy demand, fuel switching, environmental policy, Portugal |
| JEL: | C14 C22 O13 Q41 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:evo:wpecon:2_2011&r=env |
| By: | International Rivers Network IRN |
| Abstract: | Improving our ability to cope with floods under current and future climates requires adopting a more sophisticated set of techniques -- the "soft path" of flood risk management, which aims to understand, adapt to and work with the forces of nature. The report gives an in-depth look at the flaws with hard, structural flood-control techniques and describes what we need to do to make our communities safer from floods. |
| Keywords: | storms, dam management, rivers, coasts, nature, flood control, floods, risk, rechniques, communities, flood control technique, climate, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:3531&r=env |
| By: | BRECHET, Thierry (Université catholique de Louvain, CORE & Louvain School of Management, Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium.); PICARD, Pierre M. (University of Luxembourg, CREA, Luxembourg; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium) |
| Abstract: | Noise-induced pollution constitutes a hot and topical societal problem for all major airports. This paper discusses various issues in the implementation of a market for noise licenses as a solution to solve the noise externality between the residents located around airports and the aircrafts moving in and to airports. |
| Keywords: | airport, environment, noise, licenses |
| JEL: | Q5 R4 D4 D6 D78 D82 L5 L93 |
| Date: | 2010–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2010086&r=env |
| By: | Martin F. Quaas (Department of Economics, University of Kiel, Germany); Stefan Baumgärtner (Department of Sustainability Sciences and Department of Economics, Leuphana University of Lüneburg, Germany) |
| Abstract: | We study optimal adaptive grazing management under uncertain rainfall in a discrete-time model. As in each year actual rainfall can be observed during the short rainy season, and grazing management can be adapted accordingly for the growing season, the closed-loop solution of the stochastic optimal control problem does not only depend on the state variable, but also on the realization of the random rainfall. This distinguishes optimal grazing management from the optimal use of most other natural resources under uncertainty, where the closed-loop solution of the stochastic optimal control problem depends only on the state variables. Solving this unusual stochastic optimization problem allows us to critically contribute to a long-standing controversy over how to optimally manage semi-arid rangelands by simple rules of thumb. |
| Keywords: | environmental risk, risk management, stochastic optimal control, grazing management, rules of thumb |
| JEL: | Q57 D81 Q12 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:193&r=env |
| By: | Jean-Christophe MARTIN (GREThA, CNRS, UMR 5113); Patrick POINT (GREThA, CNRS, UMR 5113) |
| Abstract: | This paper proposes to construct linkage indicators of greenhouse gas (GHG) emissions for the Aquitaine region of France by using the notion of vertical integration with a presentation of results in the form of block. Because of poor regional accounting in France, we had to construct an input-output table for the Aquitaine region with a GHG emissions inventory associated. Method of construction of input-output table will affect both reliability and richness of results. |
| Keywords: | regionalized input-output table, quotients of localization, greenhouse gas emissions, linkage indicators |
| JEL: | C67 R15 E2 Q4 Q54 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2011-05&r=env |
| By: | Angelo Antoci (Universita' degli Studi di Sassari); Marcello Galeotti (Dipartimento di Matematica per le Decisioni, Universita' degli Studi di Firenze); Davide Radi (Universita' di Bergamo) |
| Abstract: | In this article we propose a simple mechanism aimed at implementing and supporting environmental protection policies in urban areas based on innovative financial instruments issued by a policy maker, which can be bought by two categories of involved agents, city users and agencies providing the city services. According to this mechanism, virtuous service providers choosing to offer high quality services can obtain cost abatement. City users, recip- rocally, have to pay for entering into the city, but can protect themselves against a city low quality of life by a self-insurance device. The interaction of these two categories of economic agents is modelled by a two-population evolutionary game, where the population of city users strategically interacts with that of service providers. From the analysis of the model it emerges that such a dynamics may lead to a welfare- improving attracting Nash equilibrium at which all city users choose to use environmental-friendly means of transportation and all service providers choose to offer high quality services. However, the basin of attraction of that equilibrium may have a rather complex morphology. In particular more attractors and/or limit cycles can be present. In such a context we indicate sufficient conditions making the virtuous equilibrium a global attractor for all trajectories starting at a mixed-strategy point. |
| Keywords: | Environment preserving policies, financial options, evolutionary dynamics. |
| JEL: | C73 H23 Q55 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:flo:wpaper:2011-01&r=env |
| By: | Linda Bui (Department of Economics, Brandeis University) |
| Abstract: | To date, there is little convincing evidence on the effectiveness of “quasi-regulatory” mechanisms. Here I investigate how quasi-regulatory policies known as pollution prevention (“P2”) programs affect toxic pollution. I construct a data base on state-level P2 programs as well as the 1990 federal Pollution Prevention Act (PPA) and exploit variation in state adoption dates and program characteristics to study their effects on facility-level toxic releases. I find strong evidence that these mechanisms can affect pollution outcomes. In particular, I find that (1) the 1990 PPA has had a significant effect on toxic releases; (2) state programs geared to reducing the costs of P2 activities led to significant reductions in toxic releases; and (3) the response to P2 programs that increased the regulators’ ability to monitor polluting behavior could either increase or decrease reported releases, depending on the regulators’ ability to verify the accuracy of the reported releases. |
| Keywords: | TRI, Quasi-Regulation, Voluntary Programs, Toxic Pollution |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:brd:wpaper:26&r=env |
| By: | Johannes Herold (Technische Universität Berlin); Sophia Rüster (Technische Universität Dresden); Christian Von Hirschhausen (Technische Universität Dresden) |
| Abstract: | This paper is a follow up of the SECURE-project, financed by the European Commission to study “Security of Energy Considering its Uncertainties, Risks and Economic Implications”. It addresses the perspectives of, and the obstacles to a CCTS-roll out, as stipulated in some of the scenarios. Our main hypothesis is that given the substantial technical and institutional uncertainties, the lack of a clear political commitment, and the available alternatives of low-carbon technologies, CCTS is unlikely to play an important role in the future energy mix; it is even less likely to be an “energy bridge” into a low-carbon energy future |
| Keywords: | Carbon Capture, Transport, Storage |
| JEL: | L71 Q3 Q4 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.156&r=env |
| By: | Anna Alberini (University of Maryland, College Park, FEEM and Queen’s University Belfast); Milan Šcasný (Charles University Prague) |
| Abstract: | The Value of a Statistical Life is a key input into the calculation of the benefits of environmental policies that save lives. To date, the VSL used in environmental policy analyses has not been adjusted for age or the cause of death. Air pollution regulations, however, are linked to reductions in the risk of dying for cancer, heart disease, and respiratory illnesses, raising the question whether a single VSL should be applied for all of these causes of death. We conducted a conjoint choice experiment survey in Milan, Italy, to investigate this question. We find that the VSL increases with dread, exposure, the respondents’ assessments of the baseline risks, and experience with the specific risks being studied. The VSL is higher when the risk reduction is delivered by a public program, and increases with the effectiveness rating assigned by the respondent to public programs that address specific causes of death. The effectiveness of private risk-reducing behaviors is also positively associated with the VSL, but the effect is only half as large as that of public program effectiveness. The coefficients on dummies for the cause of death per se—namely, whether it’s cancer, a road traffic accident or a respiratory illness—are strongly statistically significant. All else the same, the fact that the cause of the death is “cancer” results in a VSL that is almost one million euro above the amount predicted by dread, exposure, beliefs, etc. The VSL in the road safety context is about one million euro less than what is predicted by dread, exposure, beliefs, etc. These effects are large, but the majority of the variation in the VSL is accounted for by the public program feature, the effectiveness of public programs at reducing the indicated risk, and dread. The effects of exposure and experience are smaller. These results raise the question whether using VSL figures based on private risk reduction, which is usually recommended to avoid double-counting, severely understates how much a society might be willing to pay for public safety. |
| Keywords: | VSL, Conjoint Choice Experiments, Mortality Risk Reductions, Cost-benefit Analysis, Forced Choice Questions |
| JEL: | I18 J17 K32 Q51 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.139&r=env |
| By: | Mathieu Couttenier (University of Paris 1 Panthéon-Sorbonne, CES and Sciences-Po); Raphael Soubeyran (INRA-LAMETA and IDEP Montpellier) |
| Abstract: | In this paper, we show that drought has a positive effect on the incidence of civil war over the 1945-2005 period in Sub-Saharan Africa. We use the Palmer Drought Severity Index which is a richer measurement of drought than the measures used in the literature (rainfall and temperature) as it measures the accumulation of water in the soil in taking into account the temperature and the geological characteristics of the soil. We show that the risk of civil war increases by more than 42% from a “normal” climate to an “extremely drought” climate. Surprisingly, only 2.5% of this effect is channeled through economic growth. |
| Keywords: | Climate Change, Drought, Civil War |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.150&r=env |
| By: | BALESTRA, Carlotta (Université catholique de Louvain , CORE and Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium); BRECHET, Thierry (Université catholique de Louvain , CORE and Chair Lhoist Berghmans in Environmental Economics and Management, B-1348 Louvain-la-Neuve, Belgium); LAMBRECHT, Stéphane (Universités de Lille, Faculté des Sciences Economiques et Sociales, Université Lille 1 Sciences et Technologies, Laboratoire EQUIPPE, France and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium) |
| Abstract: | In an overlapping generations setup we address the issue of the optimal number of property rights to allocate over a natural resource when the goal is to maximize the stock of the natural resource at the steady state. We assume that the effect of the property rights regime on the evolution of the resource is twofold: through biological spillovers and through monitoring costs. Property rights are assigned to local communities, which can decide whether to cooperate or not. The outcome in the strategic setting is hence compared to the one in the cooperative setup. A fiscal policy able to decentralize the cooperative outcome is studied. |
| Keywords: | overlapping generations, resource management, common pool resource, spatial interdependence, strategic behaviour, cooperative behaviour |
| JEL: | H21 K11 Q20 |
| Date: | 2010–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2010071&r=env |
| By: | Valentin Przyluski (Centre International de Recherche sur l’Environnement et le Développement (CIRED)); Stéphane Hallegatte (Centre International de Recherche sur l’Environnement et le Développement (CIRED) and Ecole Nationale de la Meteorologie, Meteo-France) |
| Abstract: | Funding adaptation requires adequate governance and there are different ways to organise and channel the funds to where it is most efficient and most necessary. This paper investigates this issue and studies the practical implementation of a development under conditionality, namely adaptation-development, and its requirement in terms of financing architecture. To contribute to this research, it looks at similar problems that have been met in the past, namely the European funding programs for Eastern Europe countries that were candidates to adhesion, and European internal structural and cohesion funds. These funding examples provide a pertinent analogy for the adaptation problem, and most issues in adaptation finance have also been met in these funds (difficulty to define and measure additionality and incremental cost, concept fuzziness, need for leverage and mainstreaming, ownership and sovereignty issues). Publicly available documents from the European Commission and the European Court of Auditors are reviewed, providing interesting insights into possible implementation of adaptation finance. These insights can be summarized into seven main lessons: (1) “black-spot” programs are less flexible but more efficient than “concept-based” programs; (2) a multi-scale and multi-step approach can minimize sovereignty and ownership issue, and facilitate capacity building; (3) private funding leverage is a myth, and funding based on the “additional cost” is highly inefficient; (4) non substitutability among objectives and regions is necessary; (5) sub-national eligibility criteria are a viable solution; (6) institutional capacity matter: low-capacity countries should focus on capacity building and “black-spot” strategies; higher-capacity countries can follow a concept-based approach; and (7) the EU should use its own experience to promote its views of adaptation funds. |
| Keywords: | Economic Development, Climate Change Adaptation, Foreign Aid, European Union, Pre-acccession and Solidarity Funds |
| JEL: | E61 F35 O19 O2 Q54 Q56 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.137&r=env |
| By: | Anil Markandya (Basque Center for Climate Change and University of Bath); Paulo A.L.D. Nunes (Fondazione Eni Enrico Mattei and University of Venice) |
| Abstract: | In order to regulate the proliferated bioprospecting and protect the biological diversity in the source countries, the Convention on Biological Diversity (CBD) established a legal framework for the reciprocal transfer of biological materials between the interested parties in bioprospecting activities, subject to the Prior Informed Content (PIC) principles and a set of mutually agreed items on equitable sharing of benefits (CBD 1992, Bhat 1999; Ten Kate and Laird 1999; Dedeurwaerdere 2005). Although interesting and valuable to the cause of conservation, there is a feeling that the ‘price’ being paid under these arrangements is too low. Somehow ecologists argue that, surely, these materials have a greater value than the few million dollars being paid to national conservation organizations for the protection of the areas where the material are located. In this paper we seek to understand better how a biodiversity resource’ use value in production is determined, and how the real value is obscured by the fact that the resource is largely open access. We attempt to analyse how special arrangements, set op top of a basic framework in which the resource open access is limited in what it can achieve and in the ‘price’ that will emerge from any transaction between the buyers of the rights and the sellers of the rights. |
| Keywords: | Access and Benefit Sharing, Convention for Biological Diversity, Bioprospecting Contract, Genetic Resource, Open Access and Welfare Analysis |
| JEL: | D21 D23 D61 L14 Q57 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.154&r=env |
| By: | Reyer Gerlagh (Tilburg University, Netherlands); Nicole A. Mathys (Swiss Federal Office of Energy and University of Neuchâtel,) |
| Abstract: | We study the effect of countries’ energy abundance on trade and sector activity, conditional on sector’s energy intensity, using an unbalanced panel with 14 high-income countries from Europe, America and Asia, 10 broad sectors, and years 1970-1997. We find that (i) countries with large energy endowments have low energy prices, and are thus energy abundant both on micro and macro level. (ii) Energy abundant countries have a high level of energy embodied in exports relative to imports. (iii) Energy intensive sectors export from and (iv) have higher economic activity in energy abundant countries. (v) The trade and location effects increase with a sector’s exposure to international trade. In short, energy is a major driver for sector location through specialisation. We show that capital and energy are complements in the production function and use various controls in our analysis. The results give insights into delocalisation effects that may take place among rich countries with heterogeneous energy policy. |
| Keywords: | Trade and the Environment, Pollution Haven, Factor Endowments, Industry Location |
| JEL: | Q56 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2011.03&r=env |
| By: | Julien Daubanes; Pierre Lasserre |
| Abstract: | Optimum commodity taxation theory asks how to raise a given amount of tax revenue while minimizing distortions. We reexamine Ramsey’s inverse elasticity rule in presence of Hotelling-type non-renewable natural resources. Under standard assumptions borrowed from the non-renewable-resource-extraction and from the optimum-commodity-taxation literatures, we show that a non-renewable resource should be taxed in priority whatever its demand elasticity and whatever the demand elasticity of regular commodities. It should also be taxed at a higher rate than other commodities having the same demand elasticity and, while the tax on regular commodities should be constant, the resource tax should vary over time. The appropriate taxation rule depends on the government’s revenue needs; the higher these needs, the closer the consumer price to the monopoly price. Reserves are a form of capital and royalties tax its income; our results contradict Chamley’s conclusion that capital should not be taxed at all in the very long run. When reserves to be extracted are responsive to the taxation of extraction, in the absence of any subsidy to reserve discoveries, the optimal tax rate on extraction obeys an inverse elasticity rule almost identical to that of a commodity whose supply is perfectly elastic. As a matter of fact, there is a continuum of optimal combinations of extraction taxes and subsidies. When the government cannot commit, extraction rents are completely expropriated and subsidies are maximum. In general the optimum Ramsey tax not only causes a distortion of the extraction path, as happens when reserves are given, but also distorts the level of reserves developed for extraction. When that distortion is the sole effect of the tax, it is determined by a rule reminiscent of the inverse elasticity rule applying to elastically-supplied commodities. <P>La taxation optimale des biens cherche à lever des revenus fiscaux donnés en minimisant les distorsions. Nous réexaminons la règle de l’élasticité inverse de Ramsey en présence de ressources non-renouvelables à la Hotelling. Sous les hypothèses standard des littératures de l’extraction des ressources non-renouvelables et de la taxation optimale, une ressource non-renouvelable doit être taxée en priorité, quelles que soient l’élasticité de sa demande et l’élasticité de la demande pour les autres biens. Elle doit l’être à un taux plus élevé qu’un autre bien dont la demande est aussi élastique et, contrairement au taux s’appliquant aux biens conventionnels, ce taux doit varier dans le temps. La taxe dépend des besoins en revenus fiscaux; plus ils sont élevés, plus le prix correspondant s’approche du prix de monopole. Les réserves minérales constituent une forme de capital que taxent les royalties; Chamley a montré qu’il est néfaste de taxer le capital à très long terme. Au contraire, même lorsque les réserves à extraire dépendent du traitement fiscal de l’extraction, en l’absence de toute subvention à l’exploration, le taux optimal de la taxe obéit à la même règle d’élasticité inverse que les biens conventionnels dont l’offre est parfaitement élastique. En fait, il y a une infinité de combinaisons optimales de taxes à l’extraction et de subventions à la constitution de réserves. Si le gouvernement n’est pas en mesure de s’engager à s’abstenir de taxer les producteurs, ces derniers sont entièrement expropriés et ce sont des subventions qui doivent financer la constitution de réserves. En général, la taxe optimale de Ramsey cause une distorsion tant sur le profil d’extraction (comme lorsque les réserves sont données) que sur le volume des réserves lorsque celles-ci sont endogènes. Lorsque cette dernière distorsion est le seul effet de la taxe, elle obéit à une règle proche de celle qui s’applique aux biens conventionnels dont l’offre est élastique. |
| Keywords: | Optimum commodity taxation, inverse elasticity rule, non-renewable resources, hotelling resource, supply elasticity, demand elasticity, capital income taxation., Taxation optimale des biens, règle de l’élasticité inverse, ressources non-renouvelables, ressource hotellienne, élasticité de l’offre, élasticité de la demande, taxation du capital. |
| JEL: | Q31 Q38 H21 |
| Date: | 2011–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2011s-05&r=env |
| By: | David Simpson |
| Abstract: | There has been considerable recent interest in the idea that farms can produce both food and a variety of ecosystem services. One particularly intriguing notion is that farmers might find it in their own interest to adopt an “ecosystem services” approach to production in preference to a “conventional” approach. In the conventional approach farmers devote substantially all of their land directly to production and purchase a variety of fertilizers, pesticides, and other inputs. In contrast, if farmers preserve a substantial fraction of their land in a more-or-less “natural” condition, or restore it to such a state, the ecosystem services provided by preserved natural systems may obviate the purchase of many inputs. While private adoption of the ecosystem services approach would not result in the optimal provision of ecosystem services, given that some such services generate positive benefits on a broader scale than an individual farmer can appropriate, it is reasonable to regard the conversion of farms from a conventional to an ecosystem services approach to production as a step in the right direction toward more ecologically benign land use. In this paper I develop a simple and schematic model of land use in agriculture. I motivate the model by reference to Polyface Farm, a farm described in Michael Pollan’s 2006 bestseller The Omnivore’s Dilemma. Polyface Farm has adopted an ecosystem service approach: its owner restored more than fourth-fifths of the land he controls to a natural state. In contrast, his neighbors actively farm the great majority of their holdings. I develop a simple model that duplicates the stylized fact that farmers choose between very different production approaches. The model also predicts, however, that farmers who adopt an ecosystem services approach would reduce their production in the same proportion as they reduce the area of land they employ directly in production. This finding has an important implication for policy. While manipulation of agricultural prices or subsidies might induce some farmers to adopt an ecosystem services approach, such a strategy would be self-limiting. When one farmer adopts an ecosystem services approach in preference to the conventional approach she will reduce her output. Prices would rise in response, and the incentive for others to emulate her choice would be reduced. |
| Keywords: | Ecosystem services, conventional agriculture, Perfect substitures, Purchased inputs, Subsidies |
| JEL: | Q24 Q57 R14 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201012&r=env |