|
on Environmental Economics |
| By: | Nelson, Gerald C.; Robertson, Richard; Msangi, Siwa; Zhu, Tingju; Liao, Xiaoli; Jawajar, Puja |
| Abstract: | "By some estimates, agricultural practices account for 20 percent of India's total greenhouse gas (GSG) emissions; thus, cost-effective reductions in agricultural emissions could significantly lower India's overall emissions. We explore mitigation options for three agricultural sources of GHGs—methane (CH4) emissions from irrigated rice production, nitrous oxide (N2O) emissions from the use of nitrogenous fertilizers, and the release of carbon dioxide (CO2) from energy sources used to pump groundwater for irrigation. We also examine how changes in land use would affect carbon sequestration. We find great opportunities for cost-effective mitigation of GHGs in Indian agriculture, but caution that our results are based on a variety of data sources, some of which are of poor quality." from authors' abstract |
| Keywords: | Greenhouse gas, Climate change, Mitigation, Sequestration, Mid-season drying, groundwater, Pumping, Payments for environmental services, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:900&r=env |
| By: | Nektarios Aslanidis (University Rovira Virgili) |
| Abstract: | The empirical finding of an inverse U-shaped relationship between per capita income and pollution, the so-called Environmental Kuznets Curve (EKC), suggests that as countries experience economic growth, environmental deterioration decelerates and thus becomes less of an issue. Focusing on the prime example of carbon emissions, the present article provides a critical review of the new econometric techniques that have questioned the baseline polynomial specification in the EKC literature. We discuss issues related to the functional form, heterogeneity, “spurious” regressions and spatial dependence to address whether and to what extent the EKC can be observed. Despite these new approaches, there is still no clear-cut evidence supporting the existence of the EKC for carbon emissions. |
| Keywords: | Environmental Kuznets Curve, Carbon Emissions, Functional Form, Heterogeneity, “Spurious” Regressions, Spatial Dependence |
| JEL: | C20 Q32 Q50 O13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.75&r=env |
| By: | Schöb, Ronnie |
| Abstract: | Climate protection should use environmental policy instruments that raise revenues, which can be used, for instance, to cut labour taxes to alleviate unemployment in economies suffering from high and persistent unemployment. This paper elaborates the possibilities of an employment dividend of climate policies and shows the potential importance of such a second dividend for a comprehensive cost-benefit analysis of climate policy. It is argued that national attempts to reap such a double dividend may be bound to fail if resource suppliers can respond in a way that leads to a large-scale international reallocation of environmental rents. Only a internationally coordinated uniform base tax on CO2 that complements already existing emission trading systems could keep revenues from climate policy in those countries bearing the cost of fighting global warming and thus leave them with the option on a second dividend. |
| Keywords: | Climate policy,double-dividend hypothesis,employment dividend,supplier responses |
| JEL: | Q54 H20 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:200910&r=env |
| By: | Kuhl Teles, Vladimir; A. Arraes, Ronaldo |
| Abstract: | This paper explores the link between environmental policy and economic growth by employing an extension of the AK Growth Model. We include a state equation for renewable natural resources. We assume that the change in environmental regulations induces costs and that economic agents also derive some utility from capital stock accumulation vis-`a-vis the environment. Using the Hopf bifurcation theorem, we show that cyclical environmental policy strategies are optimal, providing theoretical support for the Environmental Kuznets Curve. |
| Date: | 2009–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:eesptd:194&r=env |
| By: | Henry Tulkens (CORE, Université catholique de Louvain); Vincent van Steenberghe (Belgian Federal Ministry for the Environment) |
| Abstract: | The usually assumed two categories of costs involved in climate change policy analysis, namely abatement and damage costs, hide the presence of a third category, namely adaptation costs. This dodges the determination of an appropriate level for them. Including adaptation costs explicitly in the total environmental cost function allows one to characterize the optimal (cost minimizing) balance between the three categories, in statics as well as in dynamics. Implications are derived for cost benefit analysis of adaptation expenditures. |
| Keywords: | Climate Change, Mitigation, Adaptation, Suffering |
| JEL: | Q5 H0 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.79&r=env |
| By: | Joan Canton (University of Ottawa) |
| Abstract: | In this partial equilibrium and static model, the impact of environmentalism on two countries' environmental policies is presented. First, the only (indirect) way environmentalists influence the choice of pollution taxes is through a negative term in the welfare function in Home. It is defined as passive environmentalism (PE). Second, this article is a first attempt to consider domestic environmentalists lobbying a foreign government. It is defined as active environmentalism (AE). Our contribution is threefold. We emphasize first that the way environmentalists act is paramount to study the consequences of their actions. Passive or active environmentalisms have very different impacts on environmental policies. Second, we show that lobbying activities can be counter-productive for environmentalists. Third, we characterize cases in which the presence of environmentalists has a non-ambiguous positive impact on welfare. |
| Keywords: | Environmentalism, Lobby Groups, Positive Environmental Economics, Strategic Environmental Policy |
| JEL: | H23 D72 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.76&r=env |
| By: | Liverani, Andrea |
| Abstract: | Climate change is anthropogenic - the product of billions of acts of daily consumption. That solutions need to be anthropogenic too is well accepted. Yet, suggested solutions are normally cast in the realms of finance and technology, often neglecting the primal root of the problem: individual behavior. An emerging body of social-psychology scholarship has examined the barriers and drivers of individual behavior in relation to both adaptation and mitigation. This paper reviews some of its conclusions, and suggests policy areas that should be considered in devising appropriate interventions. |
| Keywords: | Environmental Economics&Policies,Climate Change,Transport and Environment,Energy Production and Transportation,Environment and Energy Efficiency |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5058&r=env |
| By: | Jan von der Goltz |
| Abstract: | Developing countries with large greenhouse gas emissions play a decisive role in negotiating a post-Kyoto climate agreement. No effective program to reduce global emissions is possible without their support. At the same time, developing countries face a delicate task in balancing their growing responsibility for a livable climate with the pursuit of continued economic development. This article discusses the negotiating positions major developing country emitters are taking on core issues. Among the most vital unsettled questions are burden sharing between developed and developing countries, the role of the market in the international climate architecture, as well as implementation arrangements. An annex discusses current mitigation policies of major developing country emitters, and argues that developing countries are already taking meaningful action to limit the growth of their greenhouse gas emissions. |
| Keywords: | climate change; negotiations; Copenhagen; developing countries; emissions; economic development |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:177&r=env |
| By: | Gbetibouo, Glwadys Aymone; Ringler, Claudia |
| Abstract: | "This paper analyzes the vulnerability of South African farmers to climate change and variability by developing a vulnerability index and comparing vulnerability indicators across the nine provinces of the country. Nineteen environmental and socio-economic indicators are identified to reflect the three components of vulnerability: exposure, sensitivity, and adaptive capacity. The results of the study show that the region's most vulnerable to climate change and variability also have a higher capacity to adapt to climate change. Furthermore, vulnerability to climate change and variability is intrinsically linked with social and economic development. The Western Cape and Gauteng provinces, which have high levels of infrastructure development, high literacy rates, and low shares of agriculture in total GDP, are relatively low on the vulnerability index. In contrast, the highly vulnerable regions of Limpopo, KwaZulu Natal and the Eastern Cape are characterized by densely populated rural areas, large numbers of small-scale farmers, high dependency on rainfed agriculture and high land degradation. These large differences in the extent of vulnerability among provinces suggest that policy makers should develop region-specific policies and address climate change at the local level." from authors' abstract |
| Keywords: | Climate change, Agriculture, Vulnerability, Adaptive capacity, Exposure, Sensitivity, Climate variability, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:885&r=env |
| By: | Shalizi, Zmarak; Lecocq, Franck |
| Abstract: | Mitigation investments in long-lived capital stock (LLKS) differ from other types of mitigation investments in that, once established, LLKS can lock-in a stream of emissions for extended periods of time. Moreover, historical examples from industrial countries suggest that investments in LLKS projects or networks tend to be lumpy, and tend to generate significant indirect and induced emissions besides direct emissions. Looking forward, urbanization and rapid economic growth suggest that similar decisions about LLKS are being or will soon be made in many developing countries. In their current form, carbon markets do not provide correct incentives for mitigation investments in LLKS because the constraint on carbon extends only to 2012, and does not extend to many developing countries. Targeted mitigation programs in regions and sectors in which LLKS is being built at rapid rate are thus necessary to avoid getting locked into highly carbon-intensive LLKS. Even if the carbon markets were extended (geographically, sectorally, and over time), public intervention would still be required, for three main reasons. First, to ensure that indirect and induced emissions associated with LLKS are taken into account in investor’s financial cost-benefit analysis. Second, to facilitate project or network financing to bridge the gap between carbon revenues that accrue over time as the project/network unfolds and the capital needed upfront to finance lumpy investments. Third, to internalize other non-carbon externalities (e.g., local pollution) and/or to lift barriers (e.g., lack of capacity to handle new technologies) that penalize the low-carbon alternatives relative to the high-carbon ones. |
| Keywords: | Transport Economics Policy&Planning,Energy Production and Transportation,Energy and Environment,Environment and Energy Efficiency,Carbon Policy and Trading |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5063&r=env |
| By: | Kelly C. de Bruin (Wageningen University); Rob B. Dellink (Environmental Economics and Natural Resources Group, Wageningen University and Institute for Environmental Studies, VU University Amsterdam) |
| Abstract: | The dominant assumption in economic models of climate policy remains that adaptation will be implemented in an optimal manner. There are, however, several reasons why optimal levels of adaptation may not be attainable. This paper investigates the effects of suboptimal levels of adaptation, i.e. adaptation restrictions, on the composition and level of climate change costs and on welfare. Several adaptation restrictions are identified and then simulated in a revised DICE model, extended with adaptation (AD-DICE). We find that especially substantial over-investment in adaptation can be very harmful due to sharply increasing marginal adaptation costs. Furthermore the potential of mitigation to offset suboptimal adaptation is investigated. When adaptation is not possible at extreme levels of climate change, it is cost-effective to use more stringent mitigation policies in order to keep climate change limited, thereby making adaptation possible. Furthermore not adjusting the optimal level of mitigation to these adaptation restrictions may double the costs of adaptation restrictions, and thus in general it is very harmful to ignore existing restrictions on adaptation when devising (efficient) climate policies. |
| Keywords: | Integrated Assessment Modelling, Adaptation, Climate Change |
| JEL: | Q25 Q28 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.58&r=env |
| By: | Charles Palmer (IED Institute for Environmental Decisions, ETH Zurich); Markus Ohndorf (IED Institute for Environmental Decisions, ETH Zurich); Ian A. MacKenzie (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland) |
| Abstract: | As carbon sinks, forests play a critical role in helping to mitigate the growing threat from anthropogenic climate change. Forest carbon offsets transacted between GHG emitters in industrialised countries and sellers in developing countries have emerged as a useful climate policy tool. A model is developed that investigates the role of incentives in forestry carbon sequestration contracts. It considers the optimal design of contracts to ensure landowner participation and hence, permanence in forest carbon sinks in a context of uncertain opportunity costs and incomplete contract enforcement. The optimal contract is driven by the quality of the institutional framework in which the contract is executed, in particular, as it relates to contract enforcement. Stronger institutional frameworks tend to distort the seller’s effort upwards away from the full enforcement outcome. This also leads to greater amounts of carbon sequestered and higher conditional payments made to the seller. Further, where institutions are strong, there is a case for indexing the payment to the carbon market price if permanence is to be ensured. That is, as the carbon price increases, the payment could be raised and vice versa. |
| Keywords: | forest carbon offsets, permanence, contract design, incomplete enforcement |
| JEL: | K12 Q15 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:09-113&r=env |
| By: | Gilmore, Richard; Williams, Dawson; Tanger, Kyle |
| Abstract: | Presented to USDA Economists Group, Washington, DC, 16 July 2009 |
| Keywords: | Carbon Market, index, emissions, Agribusiness, Financial Economics, Resource /Energy Economics and Policy, Risk and Uncertainty, Q, C, G, |
| Date: | 2009–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usdags:53118&r=env |
| By: | Anastasios Xepapadeas (Athens University of Economics and Business); Efthymia Kyriakopoulou (Athens University of Economics and Business) |
| Abstract: | We explain the spatial concentration of economic activity, in a model of economic geography, when the cost of environmental policy - which is increasing in the concentration of emissions - and an immobile production factor act as centrifugal forces, while positive knowledge spillovers and iceberg transportation costs act as centripetal forces. We study the agglomeration effects caused by trade-offs between centripetal and centrifugal forces. The above effects govern firms’ location decisions and as a result, they define the distribution of economic activity across space. We derive the rational expectations equilibrium and the social optimum, compare the outcomes and characterize the optimal spatial policies. |
| Keywords: | Agglomeration, Spatial Economics, Environmental Policy, Knowledge Spillovers, Transportation Cost |
| JEL: | R3 Q5 H2 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.70&r=env |
| By: | Paulo A.L.D. Nunes (Center for Environmental Economics and Management, Ca’ Foscari University of Venice and Fondazione Eni Enrico Mattei); Helen Ding (Ca’ Foscari University of Venice and Fondazione Eni Enrico Mattei); Anil Markandya (University of Bath, UK BC3 Basque Centre for Climate Change) |
| Abstract: | In a democratic system, policy makers have to take the preferences of the citizens into account. Since we live in a world with scarce resources, one is asked to make choices regarding the use and management of these resources. In this context, if policy makers decide to invest in the protection of marine ecosystems, less financial resources will be available for other policy areas, for example national health. Moreover, the investment in the protection of marine ecosystems brings along with it the provision of a wide range of benefits to humans though most are not priced in the existing markets – for example climate regulation and provision of habitat for biodiversity. Given that most human activities are priced in one way or other, in some decision contexts, the temptation exists to downplay or ignore these important marine ecosystem benefits on the basis of the non-existence of prices. The simple and simplistic idea in the minds of many policymakers is that a lack of prices is equivalent to a lack of values. Clearly, this is a biased perspective. Against this background, this paper explores the motivation for an economic valuation of this complex resource. The state-of-the-art economic valuation methodologies follow the guidelines proposed by the Millennium Ecosystem Assessment, taking into account the existing scientific knowledge on the functioning of marine ecosystems, marine ecosystem goods and services and its impacts on human welfare. Finally, we critically review some economic valuation studies, arguing that the economic valuation of marine ecosystem services and biodiversity can make sense if and only if important guidelines are observed. |
| Keywords: | Economic Valuation, Marine Ecosystem, Millennium Ecosystem Assessment Approach, Europe |
| JEL: | Q50 Q57 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.68&r=env |
| By: | Randy Becker; John Tang |
| Abstract: | This paper explores whether environmental regulation affects where pollution-intensive goods are produced. Here we examine chlorodifluoromethane (HCFC-22), a chemical designated as toxic in 1994 by the U.S. Environmental Protection Agency’s Toxics Release Inventory (TRI). Trends show a decline in the number of domestic producers of this chemical, a decline in the number of manufacturing facilities using it, and an increase in the number (and share) of facilities claiming to import it. Transaction-level trade data show an increase in the import of HCFC-22 imports since its TRI listing – an increase that is faster than that of all non-TRI listed chemicals. This is suggestive of a pollution haven effect. Meanwhile, we find that the vast majority of U.S. imports of HCFC-22 come from OECD countries. However, an increase in the share of imports from non-OECD countries since the chemical’s listing suggests a shift of production to countries with more lax environmental standards. While the findings here are suggestive of regulatory effects, more rigorous analyses are needed to rule out other possible explanations. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-29&r=env |
| By: | International Rivers Network IRN |
| Abstract: | This new report discusses the experience with environmental standards and how it can be useful for new financiers. It contains ten papers written by experts from civil society, financial institutions and academia. The authors present case studies of overseas projects funded by Chinese, Indian and Thai financiers, and analyze the experience with environmental standards which could be applied by these financiers. |
| Keywords: | financiers, financial instituions, academia, china, india, chinese, indian, Thai, environmental standards, civil society, hydropower development, dams, Social, Socially Responsible Investment, Thailand, Environmental |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2228&r=env |
| By: | Xavier Labandeira Villot; Pedro Linares; Miguel Rodríguez |
| Abstract: | The present paper aims to reliably depict the impact of the European Union Emissions Trading Scheme (EU ETS) on Spain under different assumptions about the industries involved. Prior analyses, based either on highly aggregated macroeconomic or specific electricity industry models, have been limited in degree of detail or scope. Two types of modeling were combined in the present study: general equilibrium was used to assess the impact on different industries and to explain cross-industry changes, and partial equilibrium to suitably model the complex and crucial electricity system. Combining and interrelating these two models yields the effects on price, carbon dioxide (CO2) emissions and distributional patterns in Spain of both the current policy and an alternative in which all industries take part in the EU ETS. Since Spain is a key participant in this scheme, the conclusions and policy implications stemming from this paper are relevant to and useful for post-Kyoto arrangements. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2009-29&r=env |
| By: | Julien Chevallier; Yannick Le Pen; Benoît Sévi |
| Abstract: | To improve risk management in the European Union Emissions Trading Scheme (EU ETS), the European Climate Exchange (ECX) has introduced option instruments in October 2006 after regulatory authorization. The central question we address is: can we identify a potential destabilizing effect of the introduction of options on the underlying market (EU ETS futures)? Indeed, the literature on commodities futures suggest that the introduction of derivatives may either decrease (due to more market depth) or increase (due to more speculation) volatility. As the identi¯cation of these effects ultimately remains an empirical question, we use daily data from April 2005 to April 2008 to document volatility behavior in the EU ETS. By instrumenting various GARCH models, endogenous break tests, and rolling window estimations, our results overall suggest that the introduction of the option market had no effect on the volatility in the EU ETS. These finding are robust to other likely in°uences linked to energy and commodity markets. |
| Keywords: | EU ETS, Option prices, Volatility, GARCH, Rolling Estimation, Endogenous Structural Break Detection |
| JEL: | Q48 Q57 Q58 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2009-33&r=env |
| By: | Valentina Bosetti (Princeton University, FEEM and CCMC); Carlo Carraro (University of Venice, FEEM, CEPR, CESifo and CMCC); Enrica De Cian (FEEM); Romain Duval (OECD); Emanuele Massetti (FEEM and CCMC); Massimo Tavoni (Princeton University, FEEM and CCMC) |
| Abstract: | This paper uses WITCH, an integrated assessment model with a game-theoretic structure, to explore the prospects for, and the stability of broad coalitions to achieve ambitious climate change mitigation action. Only coalitions including all large emitting regions are found to be technically able to meet a concentration stabilisation target below 550 ppm CO2eq by 2100. Once the free-riding incentives of non-participants are taken into account, only a “grand coalition” including virtually all regions can be successful. This grand coalition is profitable as a whole, implying that all countries can gain from participation provided appropriate transfers are made across them. However, neither the grand coalition nor smaller but still environmentally significant coalitions appear to be stable. This is because the collective welfare surplus from cooperation is not found to be large enough for transfers to offset the free-riding incentives of all countries simultaneously. Some factors omitted from the analysis, which might improve coalition stability, include the co-benefits from mitigation action, the costless removal of fossil fuel subsidies, as well as alternative assumptions regarding countries’ bargaining behaviour. |
| Keywords: | Climate Policy, Climate Coalition, Game Theory, Free Riding |
| JEL: | C68 C72 D58 Q54 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.64&r=env |
| By: | Thurlow, James; Zhu, Tingju; Diao, Xinshen |
| Abstract: | "We combined a hydro-crop model with a dynamic general equilibrium (DCGE) model to assess the impacts of climate variability and change on economic growth and poverty reduction in Zambia. The hydro-crop model is first used to estimate the impact of climate variability on crop yields over the past three decades and such analysis is done at the crop level for each of Zambia's five agroecological zones, supported by the identification of zonal-level extreme weather events using a drought index analysis. Agricultural production is then disaggregated into these five agroelcological zones in the DCGE model. Drawing on the hydro-crop model results at crop level across the five zones, a series of simulations are designed using the DCGE model to assess the impact of climate variability on economic growth and poverty. We find that climate variability costs the country US$4.3 billion over a 10-year period. These losses reach as high as US$7.1 billion under Zambia's worst rainfall scenario. Moreover, most of the negative impacts of climate variability occur in the southern and central regions of the country, where food insecurity is most vulnerable to climate shocks. Overall, climate variability keeps 300,000 people below the national poverty line by 2016. A similar method is also used to examine the potential impact of climate change on the economy based on projections of a well-known global climate model and two hypothetical scenarios. We find that the effects of current patterns of climate variability dominate over those of potential climate change in the near future (until 2025). Differences in assumptions regarding rainfall changes influence both the size (to a large degree) and direction (to a lesser extent) of the economic impact of climate change. If rainfall declines by 15 percent, then climate change enhances the negative effects of climate variability by a factor of 1.5 and pushes an additional 30,000 people below the poverty line over a 10-year period. Moreover, the effects of climate change and variability compound each other, with the number of poor people rising to 74,000 if climate change is coupled with Zambia's worst 10-year historical rainfall pattern." from authors' abstract |
| Keywords: | Climate variability, General equilibrium model, Agriculture, Poverty, Climate change, Development strategies, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:890&r=env |
| By: | Ordás Criado, Carlos; Valente, Simone; Stengos, Thanasis |
| Abstract: | The pollution-convergence hypothesis is formalized in a neoclassical growth model with optimal emissions reduction: pollution growth rates are positively correlated with output growth (scale effect) but negatively correlated with emission levels (defensive effect). This dynamic law is empirically tested for two major and regulated air pollutants - nitrogen oxides (NOX) and sulfur oxides (SOX) - with a panel of 25 European countries spanning over years 1980-2005. Traditional parametric models are rejected by the data. However, more flexible regression techniques - semiparametric additive specifications and fully nonparametric regressions with discrete and continuous factors - confirm the existence of the predicted positive and defensive effects. By analyzing the spatial distributions of per capita emissions, we also show that cross-country pollution gaps have decreased over the period for both pollutants and within the Eastern as well as the Western European areas. A Markov modeling approach predicts further cross-country absolute convergence, in particular for SOX. The latter results hold in the presence of spatial non-convergence in per capita income levels within both regions. |
| Keywords: | Air pollution; convergence; economic growth; mixed nonparametric regressions; distribution dynamics. |
| JEL: | C14 C23 Q53 |
| Date: | 2009–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17492&r=env |
| By: | Calzadilla, Alvaro; Zhu, Tingju; Rehdanz, Katrin; Tol, Richard S.J.; Ringler, Claudia |
| Abstract: | "Two possible adaptation options to climate change for Sub-Saharan Africa are analyzed under the SRES B2 scenario. The first scenario doubles the irrigated area in Sub-Saharan Africa by 2050, compared to the baseline, but keeps total crop area constant. The second scenario increases both rainfed and irrigated crop yields by 25 percent for all Sub-Saharan African countries. The two adaptation scenarios are analyzed with IMPACT, a partial equilibrium agricultural sector model combined with a water simulation module, and with GTAP-W, a general equilibrium model including water resources. The methodology combines the advantages of a partial equilibrium approach, which considers detailed water-agriculture linkages, with a general equilibrium approach, which takes into account linkages between agriculture and nonagricultural sectors and includes a full treatment of factor markets. The efficacy of the two scenarios as adaptation measures to cope with climate change is discussed. Due to the limited initial irrigated area in the region, an increase in agricultural productivity achieves better outcomes than an expansion of irrigated area. Even though Sub-Saharan Africa is not a key contributor to global food production or irrigated food production, both scenarios help lower world food prices, stimulating national and international food markets." from authors' abstract |
| Keywords: | Computable general equilibrium, Climate change, Agriculture, integrated assessment, Sub-Saharan Africa, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:873&r=env |
| By: | Ruslana Rachel Palatnik (Fondazione Eni Enrico Mattei); Roberto Roson (Universitá Ca’ Foscari di Venezia) |
| Abstract: | Agricultural sectors play a key role in the economics of climate change. Land as an input to agricultural production is one of the most important links between economy and the biosphere, representing a direct projection of human action on the natural environment. Agricultural management practices and cropping patterns have a vast effect on biogeochemical cycles, freshwater availability and soil quality. Agriculture also plays an important role in emitting and storing greenhouse gases. Thus, to consistently investigate climate policy and future pathways for the economic and natural environment, a realistic representation of agricultural land-use is essential. Computable General Equilibrium (CGE) models have increasingly been used to this purpose. CGE models simulate the simultaneous equilibrium in a set of interdependent markets, and are especially suited to analyze agricultural markets from a global perspective. However, modelling agricultural sectors in CGE models is not a trivial task, mainly because of differences in temporal and geographical aggregation scales. The aim of this study is to overview some proposed modelling strategies, by reviewing the available literature and highlighting the different trade-offs involved in the various approaches. |
| Keywords: | Computable General Equilibrium (CGE), Partial Equilibrium (PE), Agriculture, Land Use, Climate Change |
| JEL: | C68 D58 Q24 Q51 Q54 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.67&r=env |
| By: | Nick Hanley (Department of Economics, University of Stirling, Scotland, UK); Ian A. MacKenzie (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland) |
| Abstract: | The establishment of a tradable permit market requires the regulator to select a level of aggregate emissions and then distribute the associated permits (rent) to specific groups. In most circumstances, these decisions are often politically contentious and frequently influenced by rent seeking behaviour. In this paper, we use a contest model to analyse the effects of rent seeking effort when permits are freely distributed (grandfathered). Rent seeking behaviour can influence both the share of permits which an individual firm receives and also the total supply of permits. This latter impact depends on the responsiveness of the regulator to aggregate rent seeking effort. Using a three-stage game, we show that rent seeking can influence both the distribution of rents and the ex post value of these rents, whilst welfare usually decreases in the responsiveness of the regulator. |
| Keywords: | tradable permit market, rent seeking, initial allocation |
| JEL: | D72 D78 Q53 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:09-112&r=env |
| By: | Susmita Dasgupta; Benoit Laplante; Siobhan Murray; David Wheeler |
| Abstract: | As the climate changes during the 21st century, larger cyclonic storm surges and growing populations may collide in disasters of unprecedented size. As conditions worsen, variations in coastal morphology will magnify the effects in some areas, while largely insulating others. In this paper, we explore the implications for 84 developing countries and 577 of their cyclone-vulnerable coastal cities with populations greater than 100,000. Combining the most recent scientific and demographic information, we estimate the future impact of climate change on storm surges that will strike coastal populations, economies and ecosystems. We focus on the distribution of heightened impacts, because we believe that greater knowledge of their probable variation will be useful for local and national planners, as well as international donors. Our results suggest gross inequality in the heightened impact of future disasters, with the most severe effects limited to a small number of countries and a small cluster of large cities. |
| Keywords: | climate change; developing countries; disasters; coastal cities; storm surges; coastal populations; economic activity |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:182&r=env |
| By: | Strand, Jon |
| Abstract: | This paper discusses possible macroeconomic implications for low-income countries of increased revenue inflows that may follow from implementing certain global greenhouse gas mitigation policies. Such revenue sources include revenue from emissions offset mechanisms, direct investments, and financial transfers that form parts of possible future mitigation treaties. In the short run such revenue will come mainly from offset markets and donor-sponsored programs, with some additional financial inflows due to foreign direct investments. In the longer run, comprehensive global cap-and-trade or carbon tax schemes could provide a potentially much larger revenue flow to many low-income countries. The author argues that the macroeconomic implications of such flows are manageable in the short run, but the larger revenues resulting from global emissions schemes could overwhelm this capacity and lead to a number of potential macroeconomic management problems. |
| Keywords: | Debt Markets,Emerging Markets,Economic Theory&Research,,Access to Finance |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5053&r=env |
| By: | Kato, Edward; Ringler, Claudia; Yesuf, Mahmud; Bryan, Elizabeth |
| Abstract: | "This study investigates the impact of different soil and water conservation technologies on the variance of crop production in Ethiopia to determine the risk implications of the different technologies in different regions and rainfall zones. Given the production risks posed by climate change, such information can be used by decision makers to identify appropriate agricultural practices that act as a buffer against climate change. Using a household- and plot-level data set, we apply the Just and Pope framework using a Cobb-Douglas production function to investigate the impact of various soil and water conservation technologies on average crop yields and the variance of crop yields, while controlling for several household- and plot-level factors. Results show that soil and water conservation investments perform differently in different rainfall areas and regions of Ethiopia, which underscores the importance of careful geographical targeting when promoting and scaling up soil and water conservation technologies. We find that although soil bunds, stone bunds, grass strips, waterways, and contours all have very significant positive impacts on average crop yields in low-rainfall areas, only soil bunds have significant risk-reducing effects in these areas with low agricultural potential. We also find that irrigation and use of improved seeds have insignificant risk-reducing effects in low-rainfall areas, suggesting that—as currently implemented—these interventions may not be appropriate adaptation strategies for these environments. Regionally, in the low-rainfall areas we find significant spatial heterogeneity, with soil bunds being risk reducing in Oromiya and Amhara, and stone bunds, grass strips, and waterways being risk reducing in the Southern Nations, Nationalities, and Peoples Region. Irrigation was only risk reducing in the high-rainfall areas of Benishangul-Gumuz. These results remain robust even after controlling for the major crops grown on the plot. Results show that soil and water conservation technologies have significant impacts on reducing production risk in Ethiopia and could be part of the country's climate-proofing strategy. However, results also show that one-size-fits-all recommendations are not appropriate given the differences in agro-ecology and other confounding factors." from authors' abstract |
| Keywords: | Just and Pope, Risk increasing, Risk reducing, Stone bunds, Soil bunds, Waterways, Grass strips, Contours, Soil and water conservation, Low-rainfall areas, High-rainfall areas, Climate change, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:871&r=env |
| By: | Rocío del Pilar Moreno Sánchez; Jorge Higinio Maldonado |
| Abstract: | Complexities associated with the management of common pool resources (CPR)threaten governance at some marine protected areas (MPA). In this paper, using economic experimental games (EEG), we investigate the effects of both external regulation and the complementarities between internal regulation and non-coercive authority intervention—what we call co-management—on fishermen’s extraction decisions. We perform EEG with fishermen inhabiting the influence zone of an MPA in the Colombian Caribbean. The results show that co- management exhibits the best results, both in terms of resource sustainability and reduction in extraction, highlighting the importance of strategies that recognize communities as key actors in the decision-making process for the sustainable use and conservation of CPR in protected areas. |
| Date: | 2009–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:005852&r=env |
| By: | Rocío del Pilar Moreno Sánchez; Jorge Higinio Maldonado |
| Abstract: | Complexities associated with the management of common pool resources (CPR)threaten governance at some marine protected areas (MPA). In this paper, using economic experimental games (EEG), we investigate the effects of both external regulation and the complementarities between internal regulation and non-coercive authority intervention—what we call co-management—on fishermen’s extraction decisions. We perform EEG with fishermen inhabiting the influence zone of an MPA in the Colombian Caribbean. The results show that co- management exhibits the best results, both in terms of resource sustainability and reduction in extraction, highlighting the importance of strategies that recognize communities as key actors in the decision-making process for the sustainable use and conservation of CPR in protected areas. |
| Date: | 2009–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:005853&r=env |
| By: | Jacob K. Goeree; Charles A. Holt; Karen Palmer; William Shobe; Dallas Burtraw |
| Abstract: | We experimentally study auctions versus grandfathering in the initial assignment of pollution permits that can be traded in a secondary spot market. Low and high emitters compete for permits in the auction, while permits are assigned for free under grandfathering. In theory, trading in the spot market should erase inefficiencies due to initial mis-allocations. In the experiment, high emitters exercise market power in the spot market and permit holdings under grandfathering remain skewed towards high emitters. Furthermore, the opportunity costs of “free” permits are fully “passed through.” In the auction, the majority of permits are won by low emitters, reducing the need for spot-market trading. Auctions generate higher consumer surplus and slightly lower product prices in the laboratory markets. Moreover, auctions eliminate the large “windfall profits” that are observed in the treatment with free, grandfathered permit allocations. |
| Keywords: | Pollution permits, auctions, grandfathering, experiments |
| JEL: | C92 D43 D44 Q58 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:429&r=env |
| By: | Okmyung Bin; Ben Poulter; Christopher F. Dumas; John C. Whitehead |
| Abstract: | This study uses a unique integration of geospatial and hedonic property data to estimate the impact of sea-level rise on coastal real estate in North Carolina. North Carolina’s coastal plain is one of several large terrestrial systems around the world threatened by rising sea-levels. High-resolution topographic LIDAR (Light Detection and Ranging) data are used to provide accurate inundation maps for all properties that will be at risk under six different sea-level rise scenarios. A simulation approach based on spatial hedonic models is used to provide consistent estimates of the property value losses. Results indicate that the northern part of the North Carolina coastline is comparatively more vulnerable to the effect of sea-level rise than the southern part. Low-lying and heavily developed areas in the northern coastline are especially at high risk from sea-level rise. Key Words: Climate change, coastal real estate, sea-level rise, spatial hedonic models |
| JEL: | D61 Q24 Q54 R14 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:09-24&r=env |
| By: | P. Dumas (Centre International de Recherche sur l’Environnement et le Développement (CIRED)); S. Hallegatte (Ecole Nationale de la Météorologie, Météo-France and CIRED) |
| Abstract: | This paper shows that, counter-intuitively, a higher elasticity of substitution in model production function can lead to reduced economic resilience and larger vulnerability to shocks in production factor prices. This result is due to the fact that assuming a higher elasticity of substitution requires a recalibration of the production function parameters to keep the model initial state unchanged. This result has consequences for economic analysis, e.g., on the economic vulnerability to climate change. |
| Keywords: | Substitution, Calibration, Constant Elasticity of Substitution, Shock |
| JEL: | D24 E17 E23 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.66&r=env |
| By: | People's Science Institute PSI |
| Abstract: | India is home to fantastic water harvesting traditions that have evolved over millennia. The central western Himalayan states of Himachal Pradesh and Uttarakhand are no exceptions to these traditions. The present review describes a variety of water harvesting structures found in this region. It highlights their features with reference to specific structures. Traditionally, local communities exercised rights of ownership, use and management over their natural resources. They devised a variety of management systems suited to their own specific situation. Examples of innovative management systems are cited for traditional farmer managed irrigation systems. |
| Keywords: | India, traditions, central, western Himalayan, Himalayas, Himachal Pradesh, Uttarakhand, harvesting structures, local communities, management, natural resources, farmer, traditional, irrigation systems, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2217&r=env |
| By: | Anil Markandya (University of Bath and Fondazione Eni Enrico Mattei); S. Arnold (University of Bath); M. Cassinelli (Fondazione Eni Enrico Mattei); T. Taylor (University of Bath) |
| Abstract: | This paper examines existing measures taken to protect the coastal zones of the Mediterranean Sea and assesses their success. A summary of the main pressures facing these zones is given, followed by an analysis of the legislation covering coastal zone development in ten countries: Algeria, Croatia, Egypt, France, Israel, Italy, Malta, Spain, Tunisia and Turkey. We find that not all of these states have legislation specifically covering coastal zones, but there is concern in all areas that the legislation is not working, We also look at the costs and benefits of controlling coastal development. Firstly, a literature review of valuation studies identifies a range of values placed on developed and undeveloped coastline for both users and local property owners. These values were then used in a model to evaluate policy options to control development of a stretch of coastline. The model indicates that a stricter control regime of coastal development may provide significant benefits. |
| Keywords: | Coastal Zone Management, Legislation, Littoral, Mediterranean, Recreation |
| JEL: | Q5 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.71&r=env |
| By: | Rotfuß, Waldemar; Conrad, Christian; Rittler, Daniel |
| Abstract: | This paper empirically examines price formation in the European Union Emissions Trading Scheme (EU ETS). Our analysis shows that unexpected allocations of European Union Allowances (EUAs) lead to pronounced price reactions of the expected signs. Moreover, we find evidence that the adjustment of EUA prices to the European Commission's decisions on second National Allocation Plans (NAPs) is not instantaneous, but takes up to six hours after the decision announcement. |
| Keywords: | EU ETS,price formation,European Union Allowance (EUA),European Commission |
| JEL: | G13 G14 G15 G19 Q4 Q5 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09045&r=env |
| By: | William R Cline |
| Abstract: | There is a growing recognition that global warming is a problem, but little attention has been paid to the likely impact at the country level, especially in the developing world. The stakes for world agriculture, with special attention to China, India, Brazil, and the poor countries of the tropical belt in Africa and Latin America are discussed. |
| Keywords: | Industrialized Countries, agricultural productivity, global warming, India, Technological Change, China, Brazil, Africa, Latin America, agriculture, developing world, poor countries, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2221&r=env |