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on Environmental Economics |
| By: | Soham Baksi; Amrita Ray Chaudhuri |
| Abstract: | We examine the impacts of trade liberalization and border tax adjustment (BTA) on the incentives of heterogeneous countries to cooperate when regulating emissions of a global pollutant. We consider an oligopoly model of trade between two countries, North and South, where production generates transboundary pollution and the pollution damage parameter is higher in the North. Each country imposes a pollution tax on its domestic firm, where the tax rate can be chosen either cooperatively or non-cooperatively. We analyze the sustainability of environmental cooperation between the countries within an infinitely repeated game framework using trigger strategies. While the North has a stronger incentive to cooperate than the South, we find that an increase in the degree of heterogeneity between the two countries in terms of their pollution damage parameter reduces the likelihood of cooperation between them. Trade liberalization increases both the global gains from cooperation as well as the likelihood of cooperation between the countries. Further, we consider the use of a border tax adjustment under non-cooperation, where the North imposes a tariff on imports of the polluting good from the South, and the tariff rate reflects the difference in pollution tax rates across the two countries. We find that imposing the BTA makes the North less likely to cooperate, while the South is more likely to cooperate provided the countries are sufficiently heterogeneous. |
| Keywords: | International environmental agreements, Transboundary pollution, International trade, Border tax adjustment |
| JEL: | Q54 Q58 F18 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:win:winwop:2016-03&r=env |
| By: | Quaas, Martin F.; Bröcker, Johannes |
| Abstract: | We develop an overlapping generations endogenous growth model with stocks of produced capital, human capital, a non-renewable resource, and irreversibly accumulated greenhouse gases in deterministic and stochastic versions. The model allows for analyzing different elasticities of substitution. We present a full analytical solution and characterization of the transition dynamics. We show that, as a rule of thumb, the social cost of carbon grow at a rate equal to the economy's growth rate divided by the elasticity of substitution. We analytically study sensitivity of the social cost of carbon with respect to key parameters: the intergenerational discount rate, the elasticity of substitution, and climate uncertainty. We show that the social cost of carbon explode at a finite level of log-normally distributed climate uncertainty. We illustrate results in a calibrated version of the model. |
| Keywords: | overlapping generations,substitutes vs. complements,stochastic resource dynamics,optimum growth,climate policy |
| JEL: | Q54 O44 Q32 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cauewp:201609&r=env |
| By: | Stefano Carattini; Alessandro Tavoni |
| Abstract: | The market for voluntary carbon offsets has grown steadily in the last decade, yet it remains a very small niche. While 10% of greenhouse gas emissions generated by transportation are related to civil aviation, the use of offsets in this industry remains marginal for both leisure and business traveling. This paper exploits a unique dataset examining the decision to purchase carbon offsets at two academic conferences in environmental and ecological economics. We find that having the conference expenses covered by one’s institution increases the likelihood of offsetting, but practical and ethical reservations as well as personal characteristics and preferences also play an important role. We focus on the effect of objecting to the use of offsets and discuss the implications for practitioners and policy-makers. Based on our findings, we suggest that ecological and environmental economists should be more involved in the design and use of carbon offsets. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp247&r=env |
| By: | Giovanni Marin (IRCrES-CNR, Milano, Italy); Roberto Zoboli (DISEIS, Catholic University of Milano, Italy) |
| Abstract: | The structural change of the economy towards an increasing share of services is seen in environmental economics as a fundamental driver of ‘decoupling’ between economic growth and environmental pressures. The environmental and socio-economic consequence of structural change, however, can be less straightforward when economic interdependencies are considered. In this paper we evaluate the implications of structural change towards services in the EU in terms of environmental pressures (aggregate and by sector, direct and indirect). The changing patterns in environmental pressures are analyses vis à vis the corresponding changes in the distribution of employment and value added. For carrying out this integrated assessment we use Environmentally Extended Multi Regional Input Output modelling applied to data from the World Input Output Database (WIOD). The results suggest that the service sectors is characterized by a lower emission intensity than the industrial sectors, when looking at direct emissions (‘production perspective’) but this gap is much smaller when considering also indirect emissions in a ‘vertically integrated’ approach (‘consumption perspective’). Moreover, changes in the production structure of the EU economy in absence of relevant changes in the composition of the final demand induce an increased reliance on environmental pressures, employment and value added generated abroad. The integrated assessment of these ‘global footprints’ suggests that the EU is transferring worldwide more emissions that value added and employment. This form of ‘unequal exchange’ can be relevant for development and environmental policies, in particular those on global climate change. |
| Keywords: | EE-MRIO; structural change; carbon leakage; production and consumption perspective; international trade |
| JEL: | C67 F18 Q52 Q55 Q56 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0816&r=env |
| By: | Ke Wang |
| Abstract: | Purpose This study provides an estimation of CO2 emission abatement costs in China's industry sector during the period of 2006-2010, and additionally provide an ex-post estimation of CO2 abatement cost savings that would be realized if carbon emission permits trading among different industry sectors of 30 provinces in China during the same period was allowed, in order to answer the question that whether the industrial carbon emission abatement cost can (partially) be recovered from carbon emission trading in China. Design/methodology/approach The joint production framework associated with the environmental technology is utilized for formulating the models for estimating abatement costs and simulating emission permits trading scheme. Several Data Envelopment Analysis (DEA) based models that could deal with both the desirable and undesirable outputs with in the above framework is utilized for abatement cost saving estimation. The weak disposability assumption and variable returns to scale assumption are applied in the modelling. Findings In China's industry sector, during 2006-2010: (i) The estimated CO2 emission abatement cost is 1842 billion yuan which accounts for 2.45% of China¡¯s total industrial output value; (ii) The emission abatement cost saving from emission permits trading would be 315 billion yuan, which accounts for 17.12% of emission opportunity abatement cost. (iii) Additional 1065.95 million tons of CO2 emission reductions would be realized from emission permits trading, and this accounts for 4.75% of the total industrial CO2 emissions. Research limitations/implications The estimation is implemented at the regional level, i.e., the emission permits trading subjects are the whole industry sectors in different Chinese provinces, because of the data limitation in this study. Further estimation could be implemented at the enterprise level in order to provide a deeper insight into the abatement cost recovery from emission permits trading. Practical implications The estimation models and calculation process introduced in this study could be applied for evaluating the efficiency and effectiveness of pollutant emission permits trading schemes from the perspective that whether these market-based abatement policy instruments help to realize the potential abatement cost savings. Originality/value To the best of our knowledge, no study has provided the estimation of CO2 emission abatement cost and the estimation of CO2 abatement cost saving effect from emission permits trading for China¡¯s industry sector. This study provides the first attempt to fill this research gap. |
| JEL: | Q54 Q40 |
| Date: | 2016–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:94&r=env |
| By: | Marion Dupoux |
| Abstract: | Land use change (LUC) is the second human-induced source of greenhouse gases (GHG). This paper warns about the LUC time-accounting failure in internalizing GHG impacts in economic appraisal (within policies). This emerges from (i) relative carbon prices commonly following the Hotelling rule as if climate change were regarded as an exhaustible resource problem and (ii) a uniform annualization (i.e. constant flows over time) of LUC impacts supported by most energy policies. First, carbon prices time evolution should account for the climate change framework specificities (natural carbon absorption, uncertainty), which makes a departure from the Hotelling rule necessary. Second, there is a carbon dynamic after land conversion: GHG impact flows are strictly decreasing over time. With a theoretical framework, I show that the employment of the uniform annualization, within a benefit-cost analysis, enhances both the discounting overwhelming effect and the carbon price increase, whatever the type of impact (emissions or sequestrations). It results in skewed values of LUC-related projects as long as relative carbon prices deviate from the Hotelling rule. I apply this framework to global warming impacts of bioethanol in France and quantify this bias. In particular, carbon profitability payback periods under the uniform approach do not reflect the LUC effective carbon investment. This potentially modifies the conclusions regarding a project’s achievement of imposed environmental criteria. |
| Keywords: | Benefit-cost analysis, Discounting, Global warming, Land use change, Relative carbon price |
| JEL: | D61 H43 Q15 Q16 Q48 Q54 |
| Date: | 2016–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:apu:wpaper:2016/02&r=env |
| By: | Zheming Tong; Yujiao Chen; Malkawi, Ali; Zhu Liu; Richard B. Freeman |
| Abstract: | Natural ventilation (NV) is a key sustainable solution for reducing the energy use in buildings, improving thermal comfort, and maintaining a healthy indoor environment. However, the energy savings and environmental benefits are affected greatly by ambient air pollution in China. Here we estimate the NV potential of all major Chinese cities based on weather, ambient air quality, building configuration, and newly constructed square footage of office buildings in the year of 2015. In general, little NV potential is observed in northern China during the winter and southern China during the summer. Kunming located in the Southwest China is the most weather-favorable city for natural ventilation, and reveals almost no loss due to air pollution. Building Energy Simulation (BES) is conducted to estimate the energy savings of natural ventilation in which ambient air pollution and total square footage at each city must be taken into account. Beijing, the capital city, displays limited per-square-meter saving potential due to the unfavorable weather and air quality for natural ventilation, but its largest total square footage of office buildings makes it become the city with the greatest energy saving opportunity in China. Our analysis shows that the aggregated energy savings potential of office buildings at 35 major Chinese cities is 112 GWh in 2015, even after allowing for a 43 GWh loss due to China?s serious air pollution issue especially in North China. 8?78% of the cooling energy consumption can be potentially reduced by natural ventilation depending on local weather and air quality. The findings here provide guidelines for improving current energy and environmental policies in China, and a direction for reforming building codes. |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:428396&r=env |
| By: | Asian Development Bank (ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB) |
| Abstract: | Asia and the Pacific has achieved rapid economic expansion in the recent years and has become a major source of greenhouse gas (GHG) emissions. With more than half of the world’s population and high rates of economic growth, the region is especially vulnerable to the effects of climate change and therefore must play its part in cutting GHG emissions. The Paris Agreement adopted last December 2015 at the United Nations Framework Convention on Climate Change COP21 aims to restrict global warming to well below 2o C above preindustrial levels and to pursue efforts to reach 1.5oC - which is especially relevant to Asia and the Pacific region given its vulnerability. This knowledge product highlights how robust policies on emissions trading systems (ETS) can be important tools in reducing GHG emissions in a cost-effective manner, as well as supporting the mobilization of finance together with deployment of innovative technologies. There are currently 17 ETSs in place in four continents and account for nearly 40% of global gross domestic product. In Asia and the Pacific region, there are 11 systems operating, with more being planned. The growing wealth of experience on ETSs can be valuable to support DMCs that are planning and designing new systems of their own. This knowledge product summarizes some of the most significant learning experiences to date and discusses some of the solutions to alleviate challenges that have been faced. It also examines the possibilities for future linked carbon markets in the region. |
| Keywords: | carbon pricing, carbon pricing instruments, emissions, carbon emissions, emissions trading, emissions trading systems, linking emissions trading systems, greenhouse gas, carbon trading, climate change, mitigation, renewable energy policy, renewable energy |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt167931-2&r=env |
| By: | Aghion, Philippe; Dechezleprêtre, Antoine; Hemous, David; Martin, Ralf; Van Reenen, John |
| Abstract: | Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:faseco:27759048&r=env |
| By: | Ke Wang; Xian Zhang; Xueying Yu; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Bin Wang |
| Abstract: | This study evaluates the efficiency advantage of a market-based emission permit trading policy instrument over a command and control policy instrument in the case of China's thermal power industry. We estimate the unrealized gains achievable through emission permit trading with an optimization frontier analysis. These unrealized gains include potential recoveries of electricity generation through eliminating spatial and temporal regulatory rigidity on emission permit trading. The results of an ex post estimation during 2006 and 2010 indicate a potential gain of 8.48% increase in electricity generation if both the intra- and inter-period regulatory rigidities CO2 emission permits trading had been eliminated. In addition, if the permit trading systems for three air pollutions, CO2, SO2, and NOx, had been completely integrated, a positive net synergy effect of 1.43% increase in electricity generation could have been secured. The unrealized gains identified in this study provide supports for establishing a nationwide emission permit trading system in China. |
| Keywords: | Data envelopment analysis, CO2 emissions, Regulatory rigidity, Synergy effect, Tradable permits |
| JEL: | Q54 Q40 |
| Date: | 2016–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:95&r=env |
| By: | Lyu, Wanning; Yuan Li; Dabo Guan; Hongyan Zhao; Qiang Zhang; Zhu Liu |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:428386&r=env |
| By: | Dorin JULA (Institute for Economic Forecasting, Romanian Academy and Faculty of Economics, Ecological University of Bucharest); Nicoleta JULA ("Nicolae Titulescu" University of Bucharest) |
| Abstract: | In the paper, we use Kaya identity and the cointegration relationship between the dynamics of population, economic growth, energy intensity of gross domestic product and carbon intensity of energy produced in order to estimate, on long-run, the greenhouse gas emissions. |
| Keywords: | Kaya identity, greenhouse gas emissions, panel data model |
| JEL: | C33 Q54 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:eub:wpaper:2016-01&r=env |
| By: | Hélia Costa; Graham Floater; Hans Hooyberghs; Stijn Verbeke; Koen De Ridder |
| Abstract: | Cities are particularly vulnerable to heat waves. Despite this, no comprehensive methodology has been developed to assess the costs of heat stress on city economies either currently or under future climate change scenarios. Here, we develop a cost methodology that integrates urban climate modelling with labour productivity and economic production. It is designed to be tailored by policy makers and transferable from one city to another. As such it provides a potentially powerful policy tool for assessing the exposure of different economic sectors and the key mechanisms resulting in urban production losses under climate change. Results show that the impacts of heat on the urban economy are highly variable and depend on characteristics of production, such as the elasticity of substitution between capital and labour, and the relative size of different sectors in the economy. We estimate that in a warm year in the far future (2081-2100), the total losses to the urban economy could range between 0.4% of Gross Value Added (GVA) for London and 9.5% for Bilbao in the absence of adaptation. The averted losses due to adaptation measures such as behaviour change, air conditioning, ventilation, insulation and solar blinds range from -€114 million to over €2.3 billion. The methodology demonstrates the substantial impact that climate change could have on different sectors of the city economy, such as the financial services industry in London. |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp248&r=env |
| By: | Asian Development Bank (ADB); Asian Development Bank (ADB) (East Asia Department, ADB, ADB); Asian Development Bank (ADB) (East Asia Department, ADB); Asian Development Bank (ADB) |
| Abstract: | The Sanjiang Plain wetlands are among the most important wetlands in the People’s Republic of China with unique habitats, species, and ecology. There is a considerable body of literature devoted to various aspects of the Sanjiang Plain wetlands including their ecological values. Building on lessons from the Sanjiang Plain Wetlands Protection Project supported by the Asian Development Bank and the Global Environment Facility—and based on a comprehensive literature review and discussions with experts who have been directly involved in wetland conservation e?fforts—this publication synthesizes current knowledge on the Sanjiang Plain wetlands, best practices, and options for achieving sustainable wetland management. |
| Keywords: | wetlands, wetland management, environment, Sanjiang, Global Environment Facility |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt168005&r=env |
| By: | Asian Development Bank (ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB) |
| Abstract: | This report summarizes the investments in clean energy made by the operations departments of the Asian Development Bank (ADB) in 2015, condensing information from project databases and formal reports in an easy-to-reference format. This report was prepared by ADB’s Clean Energy Program which provides the cohesive agenda that encompasses and guides ADB’s lending and nonlending assistance, initiatives, and plan of action for sustainable growth in Asia and the Pacific. |
| Keywords: | adb, asian development bank, asdb, asia, pacific, poverty asia, adb energy investments, clean energy, renewable energy, solar energy, wind energy, energy efficiency, climate change financing, green cities, clean energy program, sustainable transport, loans, grants, technical assistance |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt168065-2&r=env |
| By: | Alvarez, Francisco; André, Francisco J.; Mazón, Cristina |
| Abstract: | We study the efficiency of the uniform auction as an allocation mechanism for emission permits among polluting firms. In our model, firms have private information about their abatement costs, which differ across firms and across units, and bidders' demands are linear. We show that there is a continuum of interior Bayesian-Nash equilibria, and only one is effcient, minimizing abatement costs. We find that the existence of many bidders is not a sufficient condition to guarantee an efficient equilibrium in the uniform auction. Additionally, bidders' types have to be uncorrelated. |
| Keywords: | Emission permits, Uniform auction, Efficiency, Incomplete information Simultaneous games |
| JEL: | D44 Q58 |
| Date: | 2016–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72827&r=env |
| By: | Kussel, Gerhard |
| Abstract: | Using panel data originating from two extensive surveys conducted in 2012 and 2014, we investigate German households' adaptation behavior in response to indoor heat stress during summer months. Providing detailed information of household characteristics, behavior and technical equipment, our unique database allows us to estimate a random-eff ects probit model on households' vulnerability and adaptive capacity. The estimates indicate that even moderate increases in temperatures are suffi cient to trigger investments in adaptation measures: While the propensity to adapt is heterogeneous across socio-economic groups, an increase of one degree Celsius in average summer temperature is associated with a rise of 2.3 percentage points in adaptation probability. |
| Keywords: | climate change,heat stress,panel data,discrete choice models |
| JEL: | D12 Q54 R22 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:625&r=env |
| By: | Elettra Agliardi (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy) |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:16-22&r=env |
| By: | Mi, Zhifu; Zhang, Yunkun; Dabo Guan; Shan, Yuli; Zhu Liu; Cong, Ronggang; Yuan, Xiao-Chen; Wei, Yi-Ming |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:428381&r=env |
| By: | Yogesh Punia |
| Abstract: | Information and communication technology (ICT) stands for the combined set of resources, whether physical, infrastructure or human, that stands for the efficient transformation of information across the globes. In the recent years, we have witnessed several changes in the global scenario as the rapidly boundaries caused the people, society and nations to merge together for a common cause of development. The spread of information and communication technology and global interconnectedness has great potential to accelerate human progress to bridge the digital divide and develop knowledge societies. Sustainable development is required for maintaining proper balance between the exhausting resources and our existence. This paper is an attempt to explore the various aspects of ICT, the challenges in its implementation and future prospects of ICT in our vision of world as a better place - to live and to prosper. Key words: ICT and Sustainable Development |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:vor:issues:2016-06-12&r=env |
| By: | Stephen Golub; Aly Mbaye; Hanyu Chwe (Swarthmore College; Professor of Economics) |
| Abstract: | Disappointing job creation in Sub-Saharan Africa (SSA), despite improved economic growth, is drawing greater attention to the labor market. Recent research has highlighted the paucity of formal employment and large disparities between formal and informal sector incomes. Formal private sector wage employment has grown too slowly to offset declines in public sector employment and to keep up with labor force growth, so employment remains overwhelmingly informal, with very low wages, no benefits or job security, and hazardous working conditions. The question arises as to whether labor market regulations play a role in limiting formal sector employment creation. We combine quantitative and qualitative assessments of labor-market regulations in SSA, and compare them to countries in other regions, particularly Asia, using indicators of labor market restrictions around the world, and conducting case studies of selected countries. We carried out an in-depth study of Senegal based on interviews and original data collection, and less detailed studies of Ethiopia and Ghana in SSA and Bangladesh and China in Asia. Our main conclusion is that labor market regulations are a less important obstacle than lack of infrastructure and general weaknesses in the business climate, but do contribute to holding back formal employment growth in Senegal and other SSA countries. |
| Keywords: | Labor market regulations, Sub-Saharan Africa, informal & formal employment, relative unit labor costs, manufacturing |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:ctw:wpaper:201505&r=env |
| By: | Sevrin Waights |
| Abstract: | I investigate the welfare effect of conservation areas that preserve historic districts by regulating development. Such regulation may improve quality of life but does so by reducing housing productivity - the efficiency with which inputs (land and non-land) are converted into housing services. Using a unique panel dataset for English cities and an instrumental variable approach, I find that cities with more conservation areas have higher house prices for given land values and building costs (lower housing productivity) and higher house prices for given wages (higher quality of life). The overall welfare impact is found to be negative. |
| Keywords: | housing, planning, regulation, historic preservation, construction, land |
| JEL: | H89 L51 L74 D62 R21 R31 R38 R52 R58 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0202&r=env |
| By: | Thomasz, Esteban Otto; Casparri, María Teresa |
| Abstract: | The aim of this work is to present an exploratory synthesis of international experience related to index-based insurance, in order to assess their potential applicability as adaptation to climate risk in the case of countries dependent of agriculture. It will attempt to define the particular engineering these instruments , define its main characteristics, identify their advantages and disadvantages compared to traditional insurance; and from the study of international experience analyze the feasibility of implementing this tool . This line of research aims to identify the challenges faced by countries in developing for the implementation of these instruments. |
| Keywords: | index-based insurance, climate risk, agriculture. |
| JEL: | G22 Q14 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72690&r=env |