|
on Environmental Economics |
|
Issue of 2016‒09‒04
twenty-two papers chosen by Francisco S. Ramos Universidade Federal de Pernambuco |
| By: | Marcelo Ochoa (Federal Reserve Board of Governors); Dana Kiku (University of Ilinois); Ravi Bansal (Duke University) |
| Abstract: | We use the forward-looking information from the US and global capital markets to estimate the economic impact of long-run temperature fluctuations. We find that global warming has a significant negative effect on asset valuations and that temperature risks carry a negative price. We also find that the negative elasticity of equity prices to temperature risks have been increasing over time, which suggests that the impact of climate change on the macro-economy has been rising. We use our empirical evidence to calibrate a long-run risks model with temperature-induced disasters in future output and growth and quantify the social cost of carbon emissions. The model simultaneously matches the projected temperature path, the observed consumption growth dynamics, discount rates provided by the risk-free rate and equity market returns, and the estimated temperature elasticity of equity prices. We show that a preference for early resolution of uncertainty and long-run impact of temperature on growth imply a significant social cost of carbon emissions. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:542&r=env |
| By: | Aithal, Sreeramana; Acharya, Sridhar |
| Abstract: | The climate of the earth is influenced by first six miles above the surface and the gap between the earth's surface and six miles above is considered to be the atmosphere. The atmosphere is maintaining a temperature up to 40 to 45 degree Celsius which is suitable for the living organisms to lead a happy life. Due to increase in the emission of green house gases like CO2 the environmental temperature is gradually increasing. This is called Global warming. The emission of Co2 is increasing day by day due to deforestation or burning fossil fuels. The major contributor for global warming is industries. Conventional energy production system pollutes the environment by emitting poisonous gases. The average increase in the temperature is found to be 0.4 to 0.8 degree Celsius. If the same situation continuous, then during 2100 the average temperature may increase up to 1.4 to 5.8 degree Celsius. The average increase in the temperature year by year brings threat to the living organisms around the globe. Now it is very important to think on this issue and find out the remedy to bring down the global temperature. In energy sector the main electricity production is done using thermal energy system. In this paper the impact of green energy on green house gases is explained. In this paper a comparative study of emission of CO2 by the traditional energy production system and Renewable energy production system. The paper also suggests the methods to bring down the global warming by adopting Renewable energy sources. |
| Keywords: | Green energy, Green house, Renewable Energy, fossil fuels, Deforestation. |
| JEL: | Q54 Q55 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73374&r=env |
| By: | Matthew Adler (Duke University School of Law); David Anthoff (Energy and Resources Group, University of California); Valentina Bosetti (Bocconi University); Greg Garner (The Pennsylvania State University); Klaus Keller (The Pennsylvania State University and Carnegie Mellon University); Nicolas Treich (INRA, University of Toulouse) |
| Abstract: | The social cost of carbon (SCC) is a monetary measure of the harms from carbon emission. Specifically, it is the reduction in current consumption that produces a loss in social welfare equivalent to that caused by the emission of a ton of CO2. The standard approach is to calculate the SCC using a discounted-utilitarian social welfare function (SWF)—one that simply adds up the well-being numbers (utilities) of individuals, as discounted by a weighting factor that decreases with time. The discounted-utilitarian SWF has been criticized both for ignoring the distribution of well-being, and for including an arbitrary preference for earlier generations. Here, we use a prioritarian SWF, with no time-discount factor, to calculate the SCC in the integrated assessment model RICE. Prioritarianism is a well-developed concept in ethics and theoretical welfare economics, but has been, thus far, little used in climate scholarship. The core idea is to give greater weight to well-being changes affecting worse off individuals. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCC. |
| Keywords: | Prioritarianism, Social Welfare Function, Social Cost of Carbon |
| JEL: | Q54 I30 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.55&r=env |
| By: | Dipak Dasgupta (The Energy & Resource Institute (TERI)); Etienne Espagne (Centre d’Etudes Prospectives et d’Information Internationale (CEPII)); Jean-Charles Hourcade (Centre International de Recherche sur l’Environnement et le Développement (CIRED)); Irving Minzer (Johns Hopkins University, School of Advanced International Studies (SAIS)); Seyni Nafo (African Group at the UNFCCC); Baptiste Perissin-Fabert (Commissariat Général au Développement Durable (CGDD)); Nick Robins (Inquiry into the Design of a Sustainable Financial System (UNEP)); Alfredo Sirkis (Centro Brasil no Clima (CBC)) |
| Abstract: | Finance has been critical to the development of interest and momentum concerning the Paris Agreement, which emerged from COP21. However, a quick scan of the accord could lead many to derive a disappointing picture because of the absence of practical commitments to financial devices that can limit the risks of climate change. We support the opposite view that the text marks a new departure by committing countries to “making financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development ». This was matched by parallel developments such as the Financial Stability Board’s launch of a new Task Force on climate disclosure. We argue that, further steps now need to be taken within the broader context of financing the new model of prosperity laid out in the UN Sustainable Development Goals (UN, September 2015). At a time of increasing financial uncertainty and inadequate investment in the real economy, putting in place a framework for financing the transition to a low-carbon, resilient model of development is now an economic imperative – and an immense opportunity. Mitigating the systemic risks of climate change while putting the global financial system on a path toward balanced and sustainable development, is in the long-term strategic interests of both industrialized and developing countries and we suggest what practical steps can be accomplished in a near future in this direction. |
| Keywords: | COP 21, Paris Agreement, Climate Finance |
| JEL: | Q5 Q58 F53 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.50&r=env |
| By: | Johannes Emmerling (Fondazione Eni Enrico Mattei (FEEM) and Centro Euromediterraneo sui Cambiamenti Climatici (CMCC)); Vassiliki Manoussi (Fondazione Eni Enrico Mattei (FEEM)); Anastasios Xepapadeas (Athens University of Economics and Business) |
| Abstract: | Climate Engineering, and in particular Solar Radiation Management (SRM) has become a widely discussed climate policy option to study in recent years. However, its potentially strategic nature and unforeseen side effects provide major policy and scientific challenges. We study the role of the SRM implementation and its strategic dimension in a model with two heterogeneous countries with the notable feature of model misspecification on the impacts from SRM. We find that deep uncertainty leads to a reduction in SRM deployment both under cooperation and strategic behavior, which is a more relevant issue if countries act strategically. Furthermore, we demonstrate that the heterogeneity in impacts from SRM has an asymmetric effect on the optimal policy and could typically lead to unilateral SRM implementation. We also consider heterogeneous degrees of ambiguity aversion, in which case the more confident country only will use SRM. |
| Keywords: | Climate Change, Solar Radiation Management, Uncertainty, Robust Control, Differential Game |
| JEL: | Q53 Q54 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.52&r=env |
| By: | Matthew R. Sisco (Center for Research on Environmental Decisions, Columbia University); Valentina Bosetti (Bocconi University and Fondazione Eni Enrico Mattei); Elke U. Weber (Center for Research on Environmental Decisions, Columbia University) |
| Abstract: | We analyzed the effects of 10,748 weather events on attention to climate change between December 2011 and November 2014 in local areas across the United States. Attention was gauged by quantifying the relative increase in Twitter messages about climate change in the local area around the time of each event. Coastal floods, droughts, wildfires, strong wind, hail, excessive heat, extreme cold, and heavy snow events all had detectable effects. Attention was reliably higher directly after events began, compared to directly before. This suggests that actual experiences with extreme weather events are driving the increases in attention to climate change, beyond the purely descriptive information provided by the weather forecasts directly beforehand. Financial damage associated with the weather events had a positive and significant effect on attention, although the effect was small. The abnormality of each weather event’s occurrence compared to local historical activity was also a significant predictor. In particular and in line with past research, relative abnormalities in temperature (“local warming”) generated attention to climate change. In contrast, wind speed was predictive of attention to climate change in absolute levels. These results can be useful to predict short-term attention to climate change for strategic climate communications, and to better forecast long-term climate policy support. |
| Keywords: | Climate Attention, Social Media, Extreme Weather |
| JEL: | Q54 C81 D80 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.53&r=env |
| By: | Shahbaz, Muhammad; Kumar, Mantu; Shah, Syed Hasanat; Sato, João Ricardo |
| Abstract: | This paper detects the direction of causality among carbon dioxide (CO2) emissions, energy consumption, and economic growth in Next 11 countries for the period 1972–2013. Changes in economic, energy, and environmental policies as well as regulatory and technological advancement over time, cause changes in the relationship among the variables. We use a novel approach i.e. time-varying Granger causality and find that economic growth is the cause of CO2 emissions in Bangladesh and Egypt. Economic growth causes energy consumption in the Philippines, Turkey, and Vietnam but the feedback effect exists between energy consumption and economic growth in South Korea. In the cases of Indonesia and Turkey, we find the unidirectional time-varying Granger causality running from economic growth to CO2 emissions thus validates the existence of the Environmental Kuznets Curve hypothesis, which indicates that economic growth is achievable at the minimal cost of environment. The paper gives new insights for policy makers to attain sustainable economic growth while maintaining long-run environmental quality. |
| Keywords: | Energy, Growth, Emissions, Next 11 Countries |
| JEL: | A1 |
| Date: | 2016–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73395&r=env |
| By: | Ingrid Ott; Susanne Soretz |
| Abstract: | We analyse the interdependence between green attitude and equilibrium development of environmental quality in an endogenous growth model. Individuals take only part of their impact on pollution into account, hence there is a negative externality of capital accumulation on environmental quality. Increasing wealth or increasing pollution enhance green attitude and reduce the externality, because individuals care more about the environment if their income is higher or if pollution is more obvious. The time path of pollution as well as the evolution of equilibrium growth are shown to depend crucially on the determinants of green attitude. Ongoing growth may lead to complete internalization of the environmental externality if green attitude improves with increasing wealth, e.g. as a consequence of an increase in environmental education. In contrast, if green attitude is determined exclusively by the level of environmental quality, pollution remains at a suboptimally high level. The interdependence of wealth and pollution in the determination of environmental awareness implies more complex dynamics. Capital growth enhances green attitude and thereby decreases pollution. Improved environmental quality in turn may increase capital growth due to less green attitude and therefore slow down convergence to the sustainable balanced growth path. |
| Keywords: | pollution, endogenous growth, green attitude |
| JEL: | O1 O4 Q2 Q5 |
| Date: | 2016–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:eus:ce3swp:0116&r=env |
| By: | Samuel Fankhauser; Aditi Sahni; Annie Savvas; John Ward |
| Abstract: | Climate change cannot be addressed unless developed and developing countries alike invest heavily in low-carbon technologies and climate-resilient practices. Access to finance has therefore become central to climate change policy. In this Viewpoint we review likely climate investment needs and ask where the main financing gaps might be. We argue that besides the usual analysis of mitigation and adaptation needs, it is important to also gauge the ability of investors to mobilize the required funds. Some investors, whether public and private, will find it harder than others to raise capital, and so a rough |
| Keywords: | adaptation financing; climate change; climate policy; climate finance |
| JEL: | F3 G3 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:64179&r=env |
| By: | Johnsen, Reid (University of California, Berkeley); LaRiviere, Jacob (University of Tennessee); Wolff, Hendrik (Simon Fraser University) |
| Abstract: | This paper estimates indirect benefits of improved air quality induced by hydraulic fracturing, or "fracking". The recent increase in natural gas supply led to displacement of coal-fired electricity by cleaner natural gas-fired generation. Using detailed spatial panel data comprising the near universe of US power plants, we find that coal generation decreased by 28%. Further, fracking decreased local air pollution by an average of 4%. We show that benefits vary geographically; air pollution levels decreased by 35% in the most affected region. Back of the envelope calculations imply accumulated health benefits of roughly $17 billion annually. |
| Keywords: | fracking, coal-fired power plants, air pollution, health, electricity |
| JEL: | Q41 Q53 I18 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10170&r=env |
| By: | B. Sudhakara Reddy (Indira Gandhi Institute of Development Research); Arpit Tiwari (Tata Institute of Social Sciences) |
| Abstract: | This study provides a snapshot of the sustainability of selected Indian cities by employing 57 indicators in four dimensions to develop an overall city sustainability index. In recent years, its complexity has made 'urban sustainability' a prominent concept. Urban areas propel growth and at the same time pose a lot of ecological, social and infrastructural problems and risks. High population density and continuous in-migration among developing countries created the highest risk in natural and man-made disasters. These issues and the inability of policy-makers in providing basic services make the cities unsustainable. The objective of the paper is to develop a city performance index (CPI) to measure and evaluate the urban regions in terms of sustainable performance. The paper uses benchmark approach to measure the cumulative performance of the 25 largest Indian cities based on economic, environmental social and institutional dimensions. The CPI, consisting of four dimensions disaggregates into 12 categories and ultimately into 53 indicators. The data are obtained from public and non-governmental organizations, as also from city officials and experts. By ranking a sample of diverse cities on a set of specific dimensions the study can serve as a baseline of current conditions and a marker for referencing future results. The benchmarks and indices presented in the study provide a unique resource for the government and the city authorities to learn about the positive and negative attributes of their a city and prepare plans for sustainable urban development. |
| Keywords: | City, Benchmark, Index, Performance, Sustainability, Urban |
| JEL: | P28 Q41 Q42 Q48 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2016-021&r=env |
| By: | Shahbaz, Muhammad; Shahzad, Syed Jawad Hussain; Ahmad, Nawaz; Alam, Shaista |
| Abstract: | The present paper re-examines the asymmetric impact of financial development on environmental quality in Pakistan for the period 1985Q1 to 2014Q4. A comprehensive index of financial development is generated using Bank- and Stock market-based financial development indicators. The results show that inefficient use of energy adversely affects the environmental quality. This suggests adoption of energy efficient technology at both production and consumption levels. These technologies would be helpful to improve environmental quality, enhance the productivity in long-run and save energy. Bank-based financial development also impedes the environment. The government should encourage lenders to ease the funding for energy sector and allocate financial resources for environment friendly businesses rather than wasting them in consumer financing. |
| Keywords: | Financial development, Growth, Energy, CO2 emissions |
| JEL: | A1 A10 |
| Date: | 2016–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73394&r=env |
| By: | Elena Verdolini (Fondazione Eni Enrico Mattei and Centro Euro-Mediterraneo per i Cambiamenti Climatici); Francesco Vona (OFCE Sciences-Po and SKEMA Business School); David Popp (Syracuse University and NBER) |
| Abstract: | The diffusion of renewable energy in the power system implies high supply variability. Lacking economically viable storage options, renewable energy integration has so far been possible thanks to the presence of fast-reacting mid-merit fossil-based technologies, which act as back-up capacity. This paper discusses the role of fossil-based power generation technologies in supporting renewable energy investments. We study the deployment of these two technologies conditional on all other drivers in 26 OECD countries between 1990 and 2013. We show that a 1% percent increase in the share of fast-reacting fossil generation capacity is associated with a 0.88% percent increase in renewable in the long run. These results are robust to various modifications in our empirical strategy, and most notably to the use of system-GMM techniques to account for the interdependence of renewable and fast-reacting fossil investment decisions. Our analysis points to the substantial indirect costs of renewable energy integration and highlights the complementarity of investments in different generation technologies for a successful decarbonization process. |
| Keywords: | Renewable Energy Investments, Fossil Energy Investments, Complementarity, Energy and Environmental Policy |
| JEL: | Q42 Q48 Q55 O33 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.51&r=env |
| By: | Francisco Estrada (Universidad Nacional AutoÌ noma de MeÌ xico and Vrije Universiteit, Amsterdam); Pierre Perron (Boston University) |
| Abstract: | An ever growing body of evidence regarding observed changes in the climate system has been gathered over the last three decades and large modeling efforts have been carried to explore how climate may evolve during the present century (IPCC, 2001; 2007a). The impacts from both observed weather and climate endured during the 20th century and the magnitude of the potential future impacts of climate change have made this phenomenon of high interest for policy-makers and the society at large (IPCC, 2007b). Two fundamental questions arise for understanding the nature of this problem and the appropriate strategies to address it: is there a long-term warming signal in the observed climate, or is it the product of natural variability alone? if so, how much of this warming signal can be attributed to anthropogenic activities? As discussed in this review, these questions are intrinsically related to the study of the time-series properties of climate and radiative forcing variables and of the existence of common features such as secular co-movements. This paper presents a brief summary of how detection and attribution studies have evolved in the climate change literature and an overview of the time series and econometric methods that have been applied for these purposes. |
| URL: | http://d.repec.org/n?u=RePEc:bos:wpaper:wp2013-015&r=env |
| By: | Stefano Bosi (EPEE, University of Evry); David Desmarchelier (Economix, University of Paris Ouest Nanterre La Défense) |
| Abstract: | Recent empirical contributions highlight the negative impact of pollution on labor supply. This relationship is explained by two mechanisms: (1) pollution modifies agents' work-leisure trade-off as it deteriorates their working conditions (incentive effect); (2) a polluted environment is likely to generate more frequent epidemic outbreaks and to affect agents' immune systems (health effect). Bosi et al. (2015) explore the aggregate consequences of the incentive effect and show that it can generate endogenous fluctuations of the economic activity. The present paper rather focuses on the health effect as we study a Ramsey model augmented with the spread of infectious disease. We find that industrial pollution may generate limit cycles around an endemic steady state. More precisely, the economic system may undergo a transcritical bifurcation followed by two Hopf bifurcations near this steady state. |
| Keywords: | Pollution, SIS model, Ramsey model, Hopf bifurcation, Transcritical bifurcation |
| JEL: | D9 Q5 I1 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2016.22&r=env |
| By: | Marc Germain (LEM-CNRS (UMR 9221), Université de Lille 3) |
| Abstract: | With the help of a growth model à la Ramsey with a natural resource and pollution and relying on the postulates of ecological economics, this paper studies the impact of voluntary degrowth policies on production and welfare. The instrument of these policies is a tax levied on the natural resource. These policies are assumed to be applied by the public authorities after the downturn of the households'utility function due to the increase of pollution. With respect to the laissez-faire situation, their impact is to simultaneously decrease production and pollution on the one hand and increase welfare on the other. A delayed reaction of the public authorities after the turnover of the households'utility function implies a higher tax rate on the resource during the first periods. If the authorities'preference for the future is higher, then welfare gains from the degrowth policy are lower for the first generations of the dynasty and higher for the later. The impact of technical progress saving the resource or improving the pollution treatment is also analysed. |
| Keywords: | degrowth, ecological econonomic, steady state economics, pollution tax |
| JEL: | O44 O49 Q57 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2016.21&r=env |
| By: | Francesco Vona (OFCE-SciencesPo, Sophia Antipolis); Giovanni Marin (IRCrES-CNR, Milan); Davide Consoli (INGENIO CSIC-UPV, Valencia) |
| Abstract: | This paper explores the nature and the key empirical regularities of green employment in US local labor markets between 2006 and 2014. We construct a new measure of green employment based on the task content of occupations. Descriptive analysis reveals the following: 1. the share of green employment oscillates between 2 and 3 percent, and its trend is strongly pro-cyclical; 2. green jobs yield a 4 percent wage premium; 3. despite moderate catching-up across areas, green jobs remain more geographically concentrated than similar non-green jobs; and 4. the top green areas are mostly high-tech. As regards the drivers, changes in environmental regulation are a secondary force compared to the local endowment of green knowledge and resilience in the face of the great recession. To assess the impact of moving to greener activities, we estimate that one additional green job is associated with 4.2 (2.4 in the crisis period) new jobs in non-tradable activities in the local economies. |
| Keywords: | Green Employment, Local Labor Markets, Environmental Regulation, Environmental Technologies, Local Multipliers |
| JEL: | J23 O33 Q52 R23 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.48&r=env |
| By: | Eggert, Håkan (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (Department of Economics, School of Business, Economics and Law, Göteborg University); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Do Environmental Protection Agency (EPA) bureaucrats represent the general public or are they more in line with an interest group? We study preferences for environmental policy using a choice experiment (CE) on three populations; the general public, Swedish EPA bureaucrats, and recreational anglers. We also test for existence of multiple preference orderings, i.e., whether responses differ depending on the decision role assigned. Half of the respondents were asked to choose the alternatives that best corresponded with their opinion, and the other half was asked to take the role of a policymaker and make recommendations for environmental policy. The SEPA bureaucrats have the highest marginal willingness to pay (MWTP) to improve environmental quality. These differences are robust and not due to differences in socio-economic characteristics across the populations. We found little evidence of multiple preference orderings, but in one case the difference in MWTP between the two roles was substantial. |
| Keywords: | choice experiment; distribution; environmental valuation; Homo Economicus; Homo Politicus; multiple preference orderings; willingness to pay |
| JEL: | D61 H41 Q51 Q58 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0669&r=env |
| By: | David Anthoff (Energy and Resources Group, University of California); Johannes Emmerling (Fondazione Eni Enrico Mattei (FEEM)) |
| Abstract: | This paper presents a novel way to disentangle inequality aversion over time from inequality aversion between regions in the computation of the Social Cost of Carbon. Our approach nests a standard efficiency based Social Cost of Carbon estimate and an equity weighted Social Cost of Carbon estimate as special cases. We also present a methodology to incorporate more fine grained regional resolutions of income and damage distributions than typically found in integrated assessment models. Finally, we present quantitative estimates of the Social Cost of Carbon that use our disentangling of different types of inequality aversion. We use two integrated assessment models (FUND and RICE) for our numerical exercise to get more robust findings. Our results suggest that inequality considerations lead to a higher (lower) SCC values in high (low) income regions relative to an efficiency based approach, but that the effect is less strong than found in previous studies that use equity weighting. Our central estimate is that the Social Cost of Carbon increases roughly by a factor of 2.5 from a US perspective when our disentangled equity weighting approach is used. |
| Keywords: | Social Cost of Carbon, Inequality, Climate Change, Discounting, Equity Weighting, Integrated Assessment Model |
| JEL: | D63 H43 Q54 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.54&r=env |
| By: | Sam Fankhauser; Caterina Gennaioli; Murray Collins |
| Abstract: | Climate change is now a major aspect of public policy. There are almost 500 identified climate change laws in the world’s leading economies. This paper reviews the main domestic factors that drive this legislation. The analysis is based on a unique dataset of climate legislation in 66 national jurisdictions for the period 1990–2013. We find that the passage of new climate laws is influenced by several factors. One important factor is the quantity and quality of previous legislation: the propensity to pass more laws decreases non-linearly with the stock of existing legislation, but increases in the presence of a strategic “flagship law” that sets an overall framework for climate policy. Contrary to widespread belief, political orientation is not a decisive factor. We find no significant difference in the number of laws passed by left-wing and right-wing governments, except perhaps in Anglo-Saxon countries. However, left-leaning governments are more inclined to pass laws in difficult economic times. Despite these elements of bipartisanship, political economy factors still matter: In democracies climate laws are less likely to be passed immediately before an election and legislation is aided by a strong executive that can take on vested interests. |
| Keywords: | climate change legislation; climate politics; political economy |
| JEL: | N0 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:63352&r=env |
| By: | Vera Angelova; Giuseppe Attanasi; Yolande Hiriart |
| Abstract: | We compare the performance of liability rules for managing environmental disasters when third parties are harmed and cannot always be compensated. A firm can invest in safety to reduce the likelihood of accidents. The firm’s investment is unobservable to authorities. Externality and asymmetric information call for public intervention to define rules aimed at increasing prevention. We determine the investment in safety under No Liability, Strict Liability and Negligence, and compare it to the first best. Additionally, we investigate how the (dis)ability of the firm to fully cover potential damages affects the firm’s behavior. An experiment tests the theoretical predictions. In line with theory, Strict Liability and Negligence are equally effective; both perform better than No Liability; investment in safety is not sensitive to the ability of the firm to compensate potential victims. In contrast with theory, prevention rates absent liability are much higher and liability is much less effective than predicted. |
| JEL: | D82 K13 K32 Q58 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2016-028&r=env |
| By: | Christian Vossler (Department of Economics, University of Tennessee); J. Scott Holladay (Department of Economics, University of Tennessee) |
| Abstract: | The single binary choice (SBC), referendum format has long been the recommended approach for eliciting values in stated preference surveys, based on respondent familiarity and incentive compatibility arguments. Nevertheless, researchers and practitioners commonly use alternative elicitation formats, and defend their design choices on the basis of efficiency or other criterion. While we are agnostic as to what format is best, in this paper we seek to advance the idea that incentive compatible elicitation using alternative formats is possible, and that designing surveys through the lens of theory can be beneficial. We highlight this paradigm by identifying a set of conditions under which two continuous response formats – purely open-ended (OE) questions and payment cards (PCs) – are incentive compatible. We then implement theory-informed value elicitations in the context of a flood control policy for New York City. We fail to reject convergent validity when comparing the theory-driven OE format with SBC, but reject convergent validity between the theory-driven PC and SBC formats. As an informative counterfactual, we find that a “standard” OE elicitation congruent with prior work leads to significantly lower values and a lower proportion of respondents who view the elicitation as consequential. |
| Keywords: | contingent valuation, mechanism design, field experiment, flood protection |
| JEL: | H41 Q51 C93 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ten:wpaper:2016-02&r=env |