Sunday, March 12, 2006

Economic Literature on Environment

Interesting articles published include a worldwide analysis of participation in environmental organizations, banking behavior under the US acid rain program, the contribution of cultural capital to sustainability and willingness to pay for billboard removal.

Contents.

  1. Date: 2006
    By: Peter A. Groothuis
    Jana D. Groothuis
    John C. Whitehead
    URL: http://d.repec.org/n?u=RePEc:apl:wpaper:06-04&r=env
    We use the contingent valuation method to measure the amount citizens are willing to pay to improve mountain-view aesthetics through the removal of billboards. Our approach addresses both the perceived property rights as well as the perceptions of the status quo in the southern Appalachian Mountains. We find that individuals who retire to the mountains have different preferences for land use and mountain views than individuals who have ancestors who lived in Watauga County. In the aggregate, we find that citizens are willing to pay up almost one-half million dollars to remove billboards from Watauga County roadsides. This study provides insights to the debate surrounding land use in the mountains.
  2. Date: 2006
    By: Fabio Cerina
    URL: http://d.repec.org/n?u=RePEc:cns:cnscwp:200602&r=env
    This study focuses on the dynamic behaviour of a small open economy specialized in tourism based on natural resources when tourist services are supplied to foreign tourists who are crowding-averse and care for the environment. We analyse the steady-state properties of the model and a unique locally saddle-point equilibrium is found for both the market and the central planner solution. Then we compare the effects of two policies aiming at improving the market solution: in the first the government poses a corrective tax on residents' income and then redistributes the tax gains with lump-sum transfers while, in the second, the government taxes residents' income and employs the tax gains in pollution abatement technology. We find that the first policy is able to direct the economy towards its first-best dynamic path but the second policy, by relaxing the dynamic constraint on the environment, yields a higher steady-sta te utility when the externality effects and/or the natural regeneration rate of the environmental asset are low enough. Both policies, insofar they lead to an increase in tourists' willingness to pay, might work as an "implicit" tourist tax paid by tourists, with the difference that the first policy always leads to to this result, while the second obtains it only when tourists' aversion to crowding is not too high.
    Keywords: Tourism Specialization, Sustainability, Environment, Taxation, Crowding, Pollution Abatement
    JEL: H23 L83 O41 Q26 Q56
  3. Date: 2006-02
    By: Benno Torgler
    Maria A.Garcia-Valinas
    URL: http://d.repec.org/n?u=RePEc:cra:wpaper:2006-06&r=env
    The literature on volunteering has strongly increased in the last few years. However, there is still a lack of substantial empirical evidence about the determinants of environmental participation. This empirical study analyses a cross-section of individuals using micro-data of the World Values Survey wave III (1995-1997), covering 38 countries, to investigate this question. The results suggest that not only socio-demographic and socio-economic factors have an impact on individuals’ active participation in environmental organizations, but also political attitudes. Furthermore, regional differences are observed.
    Keywords: Environment; Environmental Participation; International Perspective; Political Interest; Social Capital
    JEL: Q26 R22 Z13 I21
  4. Date: 2006-02
    By: C. Mónica Capra
    Tomomi Tanaka
    URL: http://d.repec.org/n?u=RePEc:emo:wp2003:0602&r=env
    Non-binding communication, or cheap talk, has been associated with the resolution of coordination failures and social dilemmas in both laboratory and field experiments (see Cooper, et al., 1992, and Clark, Kay, and Sefton, 2000; Isaac and Walker, 1991, Ostrom and Walker, 1991, Ostrom, Gardner and Walker, 1994, and Cardenas, Ahn, and Ostrom, 2003). In simple coordination games, communication is expected to reduce the uncertainty of what other players are likely to do and hence facilitate coordination in the better equilibrium. In social dilemma games, the reasons why communication works are still unclear. Perhaps communication results in an increased sense of group identity, an enhancement of normative orientations toward cooperation, or a necessity to avoid (seek) verbal reprimand (approval) when promises of cooperation are violated (fulfilled). In this paper we use a simple neoclassical growth model with multiple equilibria to investigate the mechanism by which non-binding communication results in lower equilibrium resource extraction. We use a growth model because it provides an adequate dynamic framework for modeling extraction of a natural resource with threshold externalities.
  5. Date: 2005-09-03
    By: Laura Marsiliani (University of Durham)
    Thomas I Renstrom (University of Durham and CEPR)
    URL: http://d.repec.org/n?u=RePEc:mmf:mmfc05:38&r=env
  6. Date: 2006-01
    By: Alexandrine Jamin (CES-CERMSEM)
    Antoine Mandel (CES-CERMSEM)
    URL: http://d.repec.org/n?u=RePEc:mse:wpsorb:b06003&r=env
    Each Party of the Kyoto Protocol on Climate Change must achieve quantified green-house gases emission reduction. one of the major policy instrument to be used to comply with these commitments is the opening of an emission allowances market. This paper analyzes, in the general equilibrium framework, the effects of the opening of such a market on the economic equilibrium.
    Keywords: General Equilibrium Theory, emission allowances, general pricing rules, sensitivity.
    JEL: D59 Q58
  7. Date: 2005-12
    By: Giovanni B. Concu (Risk and Sustainable Management Group, University of Queensland)
    URL: http://d.repec.org/n?u=RePEc:rsm:murray:m05_6&r=env
    This article tests for the effect of distance on non-use values using a Choice Modelling (CM) experiment. Estimating a distance decay relationship for non-use values (NUVs) is important because it would define the market area for an environmental good, i.e. identify the limits for aggregating individual benefit estimates. In contrast to the common definition of NUVs as non-usersÕ values, the CM experiment designs the environmental attributes so that NUV changes can be disentangled from Use Value (UV) changes. The experiment also allows for testing different specification of the distance covariates. Data are obtained from a geographically representative sample. Results show that NUVs do not depend on distance. Aggregation of NUVs is based on income and individualsÕ environmental attitudes.
    Keywords: choice modelling, non-use values, aggregation, distance, geographical sampling.
    JEL: Q51 Q58
  8. Date: 2005-12
    By: Giovanni B. Concu (Risk and Sustainable Management Group, University of Queensland)
    URL: http://d.repec.org/n?u=RePEc:rsm:murray:m05_7&r=env
    This paper describes a Choice Modelling experiment set up to investigate the relationship between distance and willingness to pay for environmental quality changes. The issue is important for the estimation and transfer of benefits. So far the problem has been analysed through the use of Contingent Valuation-type of experiments, producing mixed results. The Choice Modelling experiment allows testing distance effects on parameters of environmental attributes that imply different trade-offs between use and non-use values. The sampling procedure is designed to provide a Ògeographically balancedÓ sample. Several specifications of the distance covariate are compared and distance effects are shown to take complex shapes. Welfare analysis also shows that disregarding distance produces under-estimation of individual and aggregated benefits and losses, seriously hindering the reliability of costbenefit analyses.
    Keywords: choice Modelling techniques, distance, aggregation, sampling, functional forms.
    JEL: Q51 Q58
  9. Date: 2006
    By: Olivier ROUSSE
    Benoît SEVI
    URL: http://d.repec.org/n?u=RePEc:mop:credwp:06.63&r=env
    The aim of this paper is to examine portfolio management of emission allowances in the US Sulfur Dioxide Emissions Allowance Trading Program, to determine whether utilities have a real motive to bank when risk increases. We test a theoretical model linking the motivation of the firm to accumulate permits in order to prepare itself to face a risky situation in the future. Empirical estimation using data for years 2001 to 2004 provides evidence of a relationship between banking behavior and uncertainty the utility is facing with.
    Keywords: Emissions Trading, Permits Banking, Acid Rain Program Uncertainty, Risk Aversion, Prudence.
    JEL: D81 G11 Q28
  10. By: Cesare Dosi
    Michele Moretto
    URL: http://d.repec.org/n?u=RePEc:ubs:wpaper:ubs0406&r=env
    The paper analyses the timing of spontaneous environmental innovation when second-mover advantages, arising from the expectation of declining investment costs, increase the option value of waiting created by investment irreversibility and uncertainty about private payoffs. We then focus on the design of public subsidies aimed at bridging the gap between the spontaneous time of technological change and the socially desirable one. Under network externalities and incomplete information about firms' switching costs, auc- tioning investment grants appears to be a cost-effective way of accelerating pollution abatement, in that it allows targeting grants instead of subsidizing the entire industry indiscriminately
  11. Date: 2005-05
    By: Alison Stegman (Department of Economics, Macquarie University)
    URL: http://d.repec.org/n?u=RePEc:mac:wpaper:0505&r=env
    In late 2003 and early 2004 the Economic Society of Australia surveyed the Heads of Economics Departments in Australia to determine their views on three main issues: student standards, major factors affecting these standards, and policy implications. This paper describes the main results of the survey, reviews the conduct and value of this kind of survey, and discusses policy implications for economics in universities. Most respondents considered that student standards have declined and that the main causes include lower entry standards, high student-staff ratios, and a declining culture of study. However some respondents argued that standards are multi-dimensional and that people may properly attach different weights to different attributes. Strong processes assuring anonymity to respondents minimized strategic responses, but may not have eliminated them entirely. However, these views are based largely on experien ce rather than evidence and a major finding of this paper is the need for more evidence on standards and on the factors that influence them. Most respondents favour a decentralised university-based approach to dealing with these issues, contending that centralised accreditation is inappropriate and that market forces would promote quality issues. In the writer's view, externally set and assessed exams as part of university examination procedures would lift standards and send out improved market signals.
    Keywords: Emissions, distribution dynamics, convergence, stochastic kernel
    JEL: C10 C14 Q54
  12. Date: 2005-07
    By: David Throsby (Department of Economics, Macquarie University)
    URL: http://d.repec.org/n?u=RePEc:mac:wpaper:0510&r=env
    The concept of sustainable development as defined in ecological terms can be extended to apply to culture by recognising parallels between the concepts of natural and cultural capital. This paper reviews the definitions of both these forms of capital and shows how they contribute to sustainability. Criteria for weak and strong sustainability are considered, on the basis of which a strong sustainability rule for cultural capital is derived. It is speculated that certain cultural indicators may be useful in providing first approximations to variables that would need to be quantified in any eventual empirical application of this model.
    Keywords: Natural capital, cultural capital, sustainability, sustainable development
    JEL: Q01 Q57 Z11

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