Optimal Unilateral Carbon Policy

We derive the optimal unilateral policy in a general equilibrium model of trade and climate change where one region of the world imposes a climate policy and the rest of the world does not. A climate policy in one region shifts activities—extraction, production, and consumption—in the other region. The optimal policy trades off the costs of these distortions. The optimal policy can be implemented through: (i) a nominal tax on extraction at a rate equal to the global marginal harm from emissions, (ii) a tax on imports of energy and goods, and a rebate of taxes on exports of energy but not goods, both at a lower rate than the extraction tax rate, and (iii) a goods-speciï¬ ..

Resource Economics

Green Public Procurement: An empirical analysis of the uptake of organic food policy

This paper analyses the uptake of a national and voluntary green public procurement policy among Swedish municipalities. The policy, decided in 2006, was intended to contribute to increased organic farming by stipulating that at least 25 percent of public food purchases be organic. Based on survey data on the municipalities’ organic food purchases for the period 2003–2016, supplemented with municipal characteristics, we analyse the determinants underpinning uptake of the policy, accounting for potential selection bias. The main finding is that political goals have a significant and positive effect on the share of organic food purchases, suggesting that there is an uptake and that the vol..

Resource Economics

The Swedish consumer market for organic and conventional milk: A demand system analysis

Increasing the production of organic food is becoming an important environmental target for many governments, and consumer demand for organic food is pivotal in reaching these targets. This paper studies consumer demand for organic and conventional milk, using weekly scanner data from the Swedish retail market for the years 2011–2017. Own- and cross-price elasticities of demand are estimated using a quadratic almost ideal demand system. While previous studies on this topic show that demand for organic milk is commonly more price elastic than for its conventional alternative, this paper complements previous literature by (i) studying a market with relatively small organic price premiums, (i..

Resource Economics

Endogenous preferences and environmental policy

This paper investigates environmental policy in the presence of endogenous preferences. The optimal time trajectory is achieved if and only if the consumer is perfectly time-consistent. The suboptimal trajectories do not only differ from the optimal path during the transition between two equilibria, but also the new stationary states differ. A key difference is more pollution in the suboptimal equilibrium. If the consumer is less than perfectly time-consistent, the standard Pigou tax can be complimented with taxes and subsidies to implement the optimal time trajectory. If this option is unavailable to the regulator, a second-best option is a single tax that is above the Pigouvian level. The ..

Resource Economics

Emission distribution and incidence of national mitigation policies among households in Austria

One major barrier for the feasibility of national climate policies is limited public acceptance because of distributional concerns. In the literature, different approaches are used to investigate the incidence of climate policies across income groups. We apply three approaches of incidence analysis to the case of Austria, that vary in terms of data and computational intensity: (i) household fuel expenditure analysis, (ii) household carbon footprints and (iii) macroeconomic general equilibrium modelling with heterogeneous households. As concerns about heterogeneity within low-income groups (horizontal equity) were recently articulated as main objection for effective redistributive revenue rec..

Resource Economics

Time Preferences, Illness, and Death

This paper investigates the predictive power of time preferences on the risk of early mortality and illness in adulthood. Using a unique Swedish cohort of 12,956 individuals born in 1953, interviewed in 1966, and followed with register data up to 2018, the paper finds that patient adolescents are 17–21% less likely to die before age 65. Patient adolescents have fewer hospitalizations and diagnoses in their adult life and are less likely to be diagnosed with conditions associated with lifestyle risk factors. Patient adolescents are also more in favor of sports activities and school rules on smoking. The investigated channels for the relationship between time preferences and future health in..

Resource Economics

Economic Production and Biodiversity in the United States

Species extinctions and ecological degradation are accelerating to a degree unprecedented in human history. Despite such trends, causal evidence for economic drivers of biodiversity loss and effective policy responses remains sparse. Here we study the relationship between economic production and biodiversity using a novel panel dataset that contains detailed and consistently reported information on the types and quantities of wildlife at thousands of locations across the United States between 1960 and 2015. Our research design exploits well- understood sources of change to local economic output – including those induced by fiscal shocks and environmental regulations – to identify how loc..

Resource Economics

Transportation and Quality of Life: Evidence from Denmark

This paper investigates the importance of transportation for quality of life in Denmark. We first calibrate a simple general equilibrium model to analyse how local wage levels, housing costs, and commuting costs vary across urban areas as well as to construct a quality of life index that measures a representative household's willingness to pay for local amenities. We find that the quality of life is high in large cities. Wages and rents are also substantially higher in the urban areas that are dense. We then regress the quality of life index on observed amenities to infer how much quality of life is associated with transportation. Our empirical results suggest that the quality of the public ..

Resource Economics

Climate Protection versus Convergence?

Global economic convergence and protection of the climate are both worthwhile goals. Yet, there is an inherent tension between them. Greenhouse gases are a waste product that is often emitted in the production process. Limiting such emissions therefore hampers the accumulation of income and capital. I expand Solow's growth model to accommodate green house gases, and use this to estimate the contribution of such emissions to economic development. The sobering insight is that we would not have witnessed any convergence in the last 45 years if poorer countries had not increased greenhouse gas emissions.

Resource Economics

Water Conservation and the Common Pool Problem: Can Pricing Address Free-Riding in Residential Hot Water Consumption?

Water is an increasingly scarce resource. It is often distributed such that consumers do not face any marginal cost of consumption, creating a common pool problem. For instance, tenants in multi-family buildings can often consume both hot and cold water at zero marginal cost. Using high-frequency data over many years, we analyze how the introduction of apartment-level metering and billing (IMB) affects hot water consumption. We find that introducing a marginal cost, reflecting the market price, decreases consumption drastically by 26%. Hence, price interventions can curb free-riding behavior and help the conservation of cheap but precious resources. Our results also show that heavy water use..

Resource Economics

Pro-environmental Attitudes, Local Environmental Conditions and Recycling Behavior

We investigate some motivations of recycling, using Italian survey data. We find that people declaring an interest in environmental issues or belonging to an environmental association are more likely to recycle. This suggests that the motivations for behaving pro-environmentally have an expressive and noninstrumental motivation. However, we also find that if people perceive to live in a deteriorated environment, they are less likely to recycle. We discuss possible explanations for this finding.

Resource Economics

The economic impact of weather and climate

Video discussion of stochastic frontier analysis of the impact of climate and weather on economic output.

Resource Economics

Construcción de una Matriz de Contabilidad Social para Argentina para el Año 2018

En este trabajo, se describe el procedimiento que, utilizando los cuadros de oferta y utilización recientemente publicados por el INDEC, seguimos para la construcción de una Matriz de Contabilidad Social (MCS) para Argentina para el año 2018. La MCS resultante identifica 107 actividades, 223 productos, 11 factores de producción – incluyendo tres categorías de trabajo --y 6 hogares representativos. La MCS se construyó para ser utilizada como insumo para la calibración de IEEM (Integrated Economic-Environmental Modeling Platform), un modelo de equilibrio general computable extendido para considerar las interacciones, de ida y vuelta, entre la economía y el medio ambiente.

Resource Economics

Prices vs. Quantities in International Pollution Regulation

In simple models of pollution regulation, both emission taxes and systems of tradable emission permits are minimum-cost methods of achieving a target level of pollution reduction. In this paper, I identify a source of asymmetry between permits and taxes based on the expectation a nation holds for the effect of its policy on interntational prices and pollution levels. Taxes allow for flexibility in the quantity of pollution produced and permits do not. In the context of international pollution policy, this means that a country may reasonably anticipate no foreign emission response to domestic abatement changes when the world’s abatement programs are denominated in terms of permits beca..

Resource Economics

Green technologies, complementarities, and policy

The present study explores the technological complementarities between green and non-green inventions. First, we look at whether inventive activities in climate-friendly domains depend on patenting in related technological domains that are not green. Based on patent data filed over the 1978–2014 period, we estimate a spatial autoregressive model using co-occurrence matrices to capture technological interdependencies. Our first finding highlights that the development of green technologies strongly relies on advances in other green and in particular non-green technological domains, whose relevance for the green economy is usually neglected. Building on this insight, we detect the non-gr..

Resource Economics

River pollution abatement: A decentralized solution through smart contracts

In river systems, costly upstream pollution abatement creates downstream welfare gains. Absent adequate agreement on how to share the gains, upstream regions lack incentives to reduce pollution levels. We develop a model that makes explicit the impact of water quality on production benefits and suggest a solution for sharing the gains of optimal pollution abatement, namely the Shapley value of an underlying convex cooperative game. We provide a decentralized implementation through a smart contract to automate negotiations and payments. In effect, it ensures a socially optimal agreement supported by fair compensations to regions that turn to cleaner production from those that pollute.

Resource Economics

Long-Term Air Pollution Exposure and COVID-19 Mortality in Latin America

Ambient air pollution is a major problem in many countries of the developing world. This study examines the relationship between long-term exposure to air pollution and COVID-19-related deaths in four countries of Latin America that have been highly affected by the pandemic: Brazil, Chile, Colombia, and Mexico. Relying on historical satellite-based measures of fine particulate matter concentrations and official vital statistics, our results suggest that an increase in long-term exposure of 1 μg/m3 of fine particles is associated with a 2.7 percent increase in the COVID-19 mortality rate. This relationship is found primarily in municipalities of metropolitan areas, where urban air pollutio..

Resource Economics

Optimal Mix of Policy Instruments and Green Technology Transitions

Green innovation is a key element in fighting climate change. But there are several challenges that need to be addressed in managing a green technology transition, both in terms of interacting market failures (environmental externality, public good nature of innovation, strategic behaviour of incumbents protecting an emission-intensive technology) and as the structure of the technology market (whether the new technology is offered by a monopolistic incumbent or whether there is some competition induced by market entrants) will evolve throughout the transition. In this paper, we investigate the question what constitutes the optimal policy at different stages of the technology transition and f..

Resource Economics

Attribute valence framing to promote pro-environmental transport behavior

The transportation sector constitutes one of the main contributors to CO2 emissions. Several incentive measures have been already proposed by economists to mitigate these emissions. But, as we all know, these tools have met with mixed success. This paper proposes the use of attribute valence framing, i.e. a description of the same object/characteristics positively or negatively, in order to reduce CO2 emissions. This so-called nudge is easier to implement than more traditional tools, such as taxation, and does not rely on the stringent assumption that individuals are fully rational. The findings from a discrete choice experiment focusing on long-distance travel choice are reported herein. Re..

Resource Economics

Attribute valence framing to promote pro-environmental transport behavior

The transportation sector constitutes one of the main contributors to CO2 emissions. Several incentive measures have been already proposed by economists to mitigate these emissions. But, as we all know, these tools have met with mixed success. This paper proposes the use of attribute valence framing, i.e. a description of the same object/characteristics positively or negatively, in order to reduce CO2 emissions. This so-called nudge is easier to implement than more traditional tools, such as taxation, and does not rely on the stringent assumption that individuals are fully rational. The findings from a discrete choice experiment focusing on long-distance travel choice are reported herein. Re..

Resource Economics

Assessing Multiple Inequalities and Air Pollution Abatement Policies

Addressing inequality is recognized a worldwide development objective. The literature has primarily focused on examining economic or social inequality, but rarely on environmental inequality. Since inequality is multidimensional, several facets may overlap imposing a disproportionate burden on vulnerable communities. This study investigates the magnitude of air-quality inequality in conjunction with economic and social inequalities in Bogota (Colombia). It explores where inequalities overlap and assesses alleviation measures by tackling air pollution. We develop a composite index to estimate performance in socioeconomic and air quality characteristics across the city and evaluate inequality ..

Resource Economics

Carbon Taxation and Inflation: Evidence from the European and Canadian Experience

What is the effect of climate policies on inflation and economic activity? Answering this question is critical for central banks trying to achieve price stability. This paper studies the experience from existing carbon taxes in Canada and Europe, introduced over the last 30 years. Based on two separate empirical approaches, we find that carbon taxes do not have to be inflationary and may even have deflationary effects. In particular, our evidence suggests that the increase in energy prices was more than offset by a fall in the prices of services and other non-tradables. Our results are robust for Europe and Canada, as well as a number of different country groupings. At least in case of Briti..

Resource Economics

The effect of a carbon tax on per capita carbon dioxide emissions: evidence from Finland

This paper is a quasi-replication of Andersson (2019). I use the synthetic control method to estimate the effect of a carbon tax starting at $1.41 per tonne of CO2 and increased through successive reforms to $20 by 2011. The results show that, one year after the intervention, the tax reduced CO2 emissions from transport by around 10% relative to the synthetic counterfactual, composed from the weighted average of OECD countries. Five years after the intervention, the effect increases to almost 20% and in 2005, the last year of the dataset, the estimated effect is of around 48%. After some robustness checks, the estimated effect is a 15% reduction in 2005. My results are consistent with Anders..

Resource Economics

Green Technology Policies versus Carbon Pricing: An Intergenerational Perspective

Technology policy is the most widespread form of climate policy and is often preferred over seemingly efficient carbon pricing. We propose a new explanation for this observation: gains that predominantly accrue to households with large capital assets and that influence majority decisions in favor of technology policy. We study climate policy choices in an overlapping generations model with heterogeneous energy technologies and distortionary income taxation. Compared to carbon pricing, green technology policy leads to a pronounced capital subsidy effect that benefits most of the current generations but burdens future generations. Based on majority voting which disregards future generations, g..

Resource Economics

Nudging for cleaner air: experimental evidence from an RCT on wood stove usage

Air pollution from wood burning is a serious problem in the developing world. In the cities of south-central Chile, households experience extremely high ambient air pollution levels due to massive combustion of wood as fuel for residential heating. To address this problem, in recent years new residential wood stoves—equipped with improved combustion technologies that are designed to be less-polluting—have replaced high-polluting ones. However, users’ behaviour in operating these improved stoves is a key factor that drives actual emissions. When users ‘choke the damper’ to extend the burning time of their wood fuel, it constrains the air flow in the wood stoves and creates a highly ..

Resource Economics

North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling

This study examines the effect of a tightening of the U.S. air-quality standard for lead in 2009 on the relocation of battery recycling to Mexico and on infant health in Mexico. In the U.S., airborne lead dropped sharply near affected plants, most of which were battery-recycling plants. Exports of used batteries to Mexico rose markedly. In Mexico, production increased at battery-recycling plants, relative to comparable industries, and birth outcomes deteriorated within two miles of those plants, relative to areas slightly farther away. The case provides a salient example of a pollution-haven effect between a developed and a developing country.

Resource Economics

The effects of extractive industries rent on deforestation in developing countries

The extractive industries (oil, gas, and mining) play a dominant economic, social, and political role in the lives of approximately 3.5 billion people living in 81 countries across the world. However, the benefits come at a cost that is no longer limited to the problems of the ‘curse of natural resources', but also includes the damage of greenhouse gas emissions, pollution, and biodiversity that extraction wreaks on the environment. This paper revisits the links between man-made and natural capital in developing countries, focusing on the case of forest cover loss . Considering a theoretical model of income maximization, we assess through empirical observation the impact of extractive indu..

Resource Economics

Do Market Failures Create a ‘Durability Gap’ in the Circular Economy?

Circular Economy literature recommends longer lasting products, in order to reduce pollution from extraction, production, and disposal. Our economic analysis finds conditions where consumers choose lives that are too short – a “durability gap”. Then policies targeting durability raise welfare. While externalities are corrected by Pigovian taxes that ignore durability, raising the output tax nonetheless induces consumers to pay more for goods that last longer. Second, if the tax is suboptimal, a durability mandate raises welfare. Third, internalities have ambiguous effects. Fourth, a social discount rate less than private discount rate is the strongest case for policy to favor durabilit..

Resource Economics

Why Are Pollution Damages Lower in Developed Countries? Insights from High-Income, High-Particulate Matter Hong Kong

Conventional wisdom suggests that marginal damages from particulate matter pollution are high in less-developed countries because they are highly polluted. Using administrative data on the universe of births and deaths, we explore birthweight and mortality effects of gestational particulate matter exposure in high-pollution yet high-income Hong Kong. The marginal effects of particulates on birthweight are large but we fail to detect an effect on neonatal mortality. We interpret our stark mortality results in a comparative analysis of pollution-mortality relationships across studies. We provide early evidence that marginal mortality damages from pollution are high in less-developed countries ..

Resource Economics

The informational value of environmental taxes

We propose informational spillovers as a new rationale for the use of multiple policy instruments to mitigate a single externality. We investigate the design of a pollution standard when the firms' abatement costs are unknown and emissions are taxed. A firm might abate pollution beyond what is required by the standard by equalizing its marginal abatement costs to the tax rate, thereby revealing information about its abatement cost. We analyze how a regulator can take advantage of this information to design the standard. In a dynamic setting,the regulator relaxes the initial standard in order to induce more information revelation, which would allow her to set a standard closer to the first be..

Resource Economics