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on Resource Economics |
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Issue of 2019‒09‒16
seven papers chosen by |
| By: | Yongyang Cai; William Brock; Anastasios Xepapadeas; Kenneth Judd |
| Abstract: | We build a novel stochastic dynamic regional integrated assessment model (IAM) of the climate and economic system including a number of important climate science elements that are missing in most IAMs. These elements are spatial heat transport from the Equator to the Poles, sea level rise, permafrost thaw and tipping points. We study optimal policies under cooperation and noncooperation between two regions (the North and the Tropic-South) in the face of risks and recursive utility. We introduce a new general computational algorithm to find feedback Nash equilibrium. Our results suggest that when the elements of climate science are ignored, important policy variables such as the optimal regional carbon tax and adaptation could be seriously biased. We also find the regional carbon tax is significantly smaller in the feedback Nash equilibrium than in the social planner's problem in each region, and the North has higher carbon taxes than the Tropic-South. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1909.04009&r=all |
| By: | Julia M. Puaschunder (The New School, Department of Economics) |
| Abstract: | This paper introduces Mental Temporal Accounting – the behavioral economics application of mental accounting in the time domain. While most discounting studies are in the finance domain, social and environmental components have not gotten as much attention as appearing to require based on the novel perspectives this research grants. Theoretically we may also derive conclusions for contact theory and point at opening monetary gains focuses to social and environmental cues that may nudge people to perceive time differently and act on it accordingly. As mental accounting was successfully introduced to be extendable onto time, traditional mental accounting theory (Thaler 1999) should be revisted for attention to time discounting in the social and environmental spheres alongside the economic attention. Elucidating how contexts and experiencing critical life stages of parenthood influence temporal activity allocation choices promises to improve manifold decisions on education, health, asset management, career paths and common goods preservation throughout life for this generation and the following. |
| Keywords: | discounting, economic time, environmental time, mental temporal discounting, social time, time |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:smo:dpaper:014jp&r=all |
| By: | Dietrich Earnhart (University of Kansas); Sarah Jacobson (Williams College); Yusuke Kuwayama (Resources for the Future); Richard T. Woodward (Department of Agricultural Economics, Texas A&M University) |
| Abstract: | We develop a model of firm and regulator behavior to examine theoretically the use and consequences of discretionary exemptions (also known as variances, waivers, or exceptions) in environmental regulation. Many environmental protection laws, such as the Clean Water Act, impose limits on harmful activities yet include "safety valve" provisions giving the regulator discretion to grant full or partial exemptions that provide permanent or temporary relief from these limits. This discretion begets flexibility over the stringency of environmental protection laws. Our model places a profit-maximizing discharger of pollution under the purview of a fully informed regulator who may seek to maximize social welfare by imposing limits. We show that when a regulation does not otherwise allow flexibility, an exemption that relaxes the limit for firms with high abatement costs can improve social welfare by reducing the costs of achieving the given level of environmental quality. We further demonstrate that if the effectiveness of abatement technology improves over time, a temporary exemption can increase social welfare by adjusting allowable pollution in response to these dynamic conditions. We also show that if the labor market is sticky, exemptions can benefit workers. Driven by an unequally weighted social welfare function, the regulator may use exemptions to meet redistributive ends. However, these beneficial impacts of exemptions rely on a fully informed and benevolent regulator; otherwise, the discretionary nature of exemptions leaves them open to abuse. A regulator who is captured by industry, focused only on her own jurisdiction or answerable only to a set of elites, can abuse exemptions in ways that reduce social welfare, such as allowing inefficiently high pollution or inducing a cost-ineffective pattern of abatement. |
| Keywords: | variance, exemption, regulation, flexibility, discretion, welfare |
| JEL: | D21 D62 K32 Q52 Q53 Q58 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2019-11&r=all |
| By: | Philippe Levasseur (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - IRD - Institut de Recherche pour le Développement - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - AgroParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement); Katrin Erdlenbruch (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - IRD - Institut de Recherche pour le Développement - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - AgroParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Christelle Gramaglia (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - IRD - Institut de Recherche pour le Développement - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - AgroParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement) |
| Abstract: | Poverty is a major determinant for pollution exposure, according to the US location choice literature. In this paper, we assess the impact of poverty on location choices in the European context. Our analysis is based on an original dataset of 1194 households living in polluted and non-polluted areas in three European countries: Spain, Portugal and France. We use instrumental variable strategies to identify the socioeconomic causes of location choices. We show that low education, wealth and income are main reasons for living in polluted areas. However, we also highlight several reasons why intermediate social groups (especially young couples) prefer living in polluted areas, such as greater housing surfaces or non-environmental amenities. Similarly, we show that middle-income households have lower move-out intentions than other income groups, next to households with strong community attachment or long lengths of residence in the area. |
| Keywords: | soil pollution exposure,residential choice,socioeconomic status,environmental inequalities,instrumental variables strategy. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-02277633&r=all |
| By: | John K. Stranlund (University of Massachusetts Amherst); James J. Murphy (Department of Economics, University of Alaska Anchorage); John M. Spraggon (University of Massachusetts Amherst); Nikolaos Zirogiannis (Indiana University Bloomington) |
| Abstract: | We present results from laboratory emissions permit markets designed to investigate the transmission of abatement cost risk to firms’ compliance behavior and regulatory enforcement strategies. With a fixed expected marginal penalty, abatement cost shocks produced significant violations and emissions volatility as predicted. Tying the monitoring probability to average permit prices effectively eliminated noncompliance, but transmitted abatement cost risk to monitoring effort. Tying the penalty to average prices reduced violations, but did not eliminate them. Some individuals in these treatments sold permits at low prices, presumably in an attempt to weaken enforcement. While tying sanctions directly to prevailing permit prices has theoretical and practical advantages over tying monitoring to prices, our results suggest that this strategy may not be as effective as predicted without additional modifications. |
| Keywords: | experimental economics, Emissions markets, risk and uncertainty, incomplete information, permit markets, compliance, enforcement, laboratory experiments. |
| JEL: | C92 L51 Q58 D62 H23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2018-05&r=all |
| By: | Sahan T. M. Dissanayake (Portland State University); Sarah Jacobson (Williams College) |
| Abstract: | Payments for ecosystem service programs use a market-based approach to pursue environmental goals. While they are common policy tools, key concepts that can determine their efficacy are nuanced and hard to grasp. We present a new interactive game that explores the functioning and implications of payments for ecosystem service programs. Participants play the role of rural households in a developing country. They decide individually or as groups whether to enter into contracts to receive payment from the United Nations REDD+ program to refrain from harvesting from a local forest. The game explores topics including: payments for ecosystem services programs; climate change; tropical deforestation; cost-effectiveness; additionality; contract fraud and enforcement; and community resource management. We provide customizable materials, a detailed reading list, and prompts for discussion. |
| Keywords: | classroom game, payments for ecosystem services, REDD+, market-based regulation |
| JEL: | A22 Q23 Q54 Q56 Q57 Q58 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2019-09&r=all |
| By: | Carlos A. Chávez (Universidad de Talca); James J. Murphy (Department of Economics, University of Alaska Anchorage); John K. Stranlund (University of Massachusetts Amherst) |
| Abstract: | This work presents the results of framed field experiments designed to study the co-enforcement of access to common pool resources. The experiments were conducted in the field with participants in the territorial use rights in fisheries (TURFs) management scheme that regulates access to nearshore fisheries along the coast of Chile. In the experiments, TURF members not only decided on harvest but also invested in monitoring to deter poaching by outsiders. Treatments varied whether the monitoring investment was an individual decision or determined by a group vote. Per-unit sanctions for poaching were exogenous as if provided by a government authority, and we varied the sanction level. Our results suggest that co-enforcement, in which monitoring for poaching is provided by resource users and sanctions are levied by the government, can reduce poaching levels. Monitoring investments were not high enough to lift the expected marginal penalty for poaching above the marginal gain from poaching when the sanction for poaching was low, but expected marginal penalties were higher than the marginal gain from poaching when the sanction was high. Despite this, poaching levels were not sensitive to changes in monitoring levels and sanctions. While co-enforcement did not eliminate poaching, it did eliminate the gains from poaching in all but one treatment. |
| Keywords: | experimental economics, Common pool resources; enforcement; field experiments; poaching; territorial use rights fisheries; social dilemma; fisheries management; development economics; co-enforcement |
| JEL: | C72 C90 C93 D70 K42 Q22 Q28 Q56 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2019-01&r=all |