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NEP: New Economics Papers
Agricultural Economics
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Edited by: Angelo Zago
http://ideas.repec.org/e/pza49.html
Universita degli Studi di Verona
Date: 2007-01-23
Papers: 18
This document is in the public domain, feel free to circulate it.
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In this issue we have:
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1. Combining revealed and stated preference methods to assess
the private value of agrobiodiversity in Hungarian home gardens
Birol, Ekin; Kontoleon, Andreas; Smale, Melinda
2. A Policy Impact Evaluation Model For Scotland: Decoupling
Single Farm Payments
Gelan, Ayele; Schwarz, Gerald
3. Get a GRIP: Should Area Revenue Coverage Be Offered through
the Farm Bill or as a Crop Insurance Program?
Paulson, Nicholas; Babcock, Bruce A.
4. The Demand for Organic, Integrated-Agriculture, and
Conventional Fresh Vegetables: A Censored Inverse Almost Ideal
Demand System
Vasiliki Fourmouzi; Margarita Genius; Vangelis Tzouvelekas
5. Ambiguity Aversion as a Predictor of Technology Choice:
Experimental Evidence from Peru
Jim Engle-Warnick; Javier Escobal; Sonia Laszlo
6. Migration, Risk and the Intra-Household Allocation of Labor
in El Salvador
Timothy J. Halliday
7. Governance and Water Management: Progress and Tools in
Mediterranean Countries
Alessandra Sgobbi; Gregorio Fraviga
8. Marginal Cost Versus Average Cost Pricing with Climatic
Shocks in Senegal: A Dynamic Computable General Equilibrium
Model Applied to Water
Anne Briand
9. Buyer power and pass-through of large retailing groups in the
Portuguese food sector
Jorge Rodrigues
10. Cost Effectiveness in River Management: Evaluation of
Integrated River Policy System in Tidal Ouse
Tao Wang
11. The Internalization of Externalities in The Production of
Electricity: Willingness to Pay for the Attributes of a
Policy for Renewable Energy
Alberto Longo; Anil Markandya; Marta Petrucci
12. Climate Change and Water Resources ? An International
Perspective
Marianne Keudel
13. Renewable Resources, Pollution and Trade in a Small Open
Economy
Horatiu A. Rus
14. The Economic Impact of the South-North Water Transfer
Project in China: A Computable General Equilibrium Analysis
Maria Berrittella; Katrin Rehdanz; Richard S.J. Tol
15. Sustainable Development Policies in Europe
Pietro Caratti; Gabriella Lo Cascio
16. Economy-Wide Estimates of the Implications of Climate Change:
A Joint Analysis for Sea Level Rise and Tourism
Francesco Bosello; Andrea Bigano; Roberto Roson; Richard S.
J. Tol
17. A Modified Environmental Kuznets Curve for Sustainable
Development Assessment Using Panel Data
Valeria Costantini; Chiara Martini
18. Costs of alternative environmental policy instruments in the
presence of industry compensation requirements
Bovenberg,Lans; Goulder,Lawrence H.; Jacobson,Mark R.
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1. Combining revealed and stated preference methods to assess
the private value of agrobiodiversity in Hungarian home gardens
Birol, Ekin
Kontoleon, Andreas
Smale, Melinda
" Hungarian home gardens are small-scale farms managed by farm
households using traditional management practices and family
labor. They generate private benefits for farmers by enhancing
diet quality and providing food when costs of transacting in
local markets are high. Home gardens also generate public
benefits for society by supporting long-term productivity
advances in agriculture. In this paper, we estimate the private
value to farmers of agrobiodiversity in home gardens. Building on
the approach presented in EPTD Discussion Paper 117 (2004), we
combine a stated preference approach (a choice experiment model)
and a revealed preference approach (a discrete-choice, farm
household model). Both models are based on random utility theory.
To combine the models, primary data were collected from the same
239 farm households in three regions of Hungary. Combining
approaches leads to a more efficient and robust estimation of the
private value of agrobiodiversity in home gardens. Findings can
be used to identify those farming communities, which would
benefit most from agri-environmental schemes that support
agrobiodiversity maintenance, at least public cost." Authors'
abstract
Keywords: Home gardens, Small-scale farmers, Diet quality,
Agricultural productivity, Agrobiodiversity, Household
surveys, Private value, Choice experiment model, Farm
household model, Revealed and stated preference methods,
Date: 2006
URL: http://d.repec.org/n?u=RePEc:fpr:eptddp:156&r=agr
2. A Policy Impact Evaluation Model For Scotland: Decoupling
Single Farm Payments
Gelan, Ayele
Schwarz, Gerald
The purpose of this paper is to assess the impacts of decoupling
single farm payments in Scotland. It focuses on aggregate impacts
on the agricultural products in domestic and external markets and
the spill-over effect of this on the non-agricultural sector as
well as an aggregate impact on the Scottish GDP. In order to
capture system-wide impacts of the policy reform, a CGE model was
formulated and implemented using a social accounting matrix
constructed for Scotland. The simulation results suggest that the
Scottish agricultural sector may encounter declines in output and
factor us as a result of the policy reform. However, this
critically depends on two factors: (a) the price effect of the
policy reform on Scottish agricultural products relative to the
EU average as well as the conditions of changes in world
agricultural market prices; and (b) the extent to which customers
would be sensitive to price effects of the policy reform. As far
as the spill-over effect to the non-agricultural sector is
concerned, decoupling of direct payments seems to have a positive
spill-over effect. Similarly, the aggregate GDP effect is
positive under all simulation scenarios. Critically, the
simulation experiments indicate that policy shock may have a
symmetrical outcome across the two sectors, with contractions in
agriculture being accompanied by expansions in the non-
agricultural sector, mainly because of factor market interactions
between the two sectors.
Keywords: Cap reform; single farm payments; spill-over effects;
Scotland
JEL: Q18 Q11 R00 Q10 H00
Date: 2006
URL: http://d.repec.org/n?u=RePEc:pra:mprapa:1491&r=agr
3. Get a GRIP: Should Area Revenue Coverage Be Offered through
the Farm Bill or as a Crop Insurance Program?
Paulson, Nicholas
Babcock, Bruce A.
The successful expansion of the U.S. crop insurance program has
not eliminated ad hoc disaster assistance. An alternative
currently being explored by members of Congress and others in
preparation of the 2007 farm bill is to simply remove the ?ad
hoc? part of disaster assistance programs by creating a
standing program that would automatically funnel aid to hard-hit
regions and crops. One form such a program could take can be
found in the area yield and area revenue insurance programs
currently offered by the U.S. crop insurance program. The Group
Risk Plan (GRP) and Group Risk Income Protection (GRIP) programs
automatically trigger payments when county yields or revenues,
respectively, fall below a producer-elected coverage level. The
per-acre taxpayer costs of offering GRIP in Indiana, Illinois,
and Iowa for corn and soybeans through the crop insurance program
are estimated. These results are used to determine the amount of
area revenue coverage that could be offered to farmers as part of
a standing farm bill disaster program. Approximately 55% of
taxpayer support for GRIP flows to the crop insurance industry. A
significant portion of this support comes in the form of net
underwriting gains. The expected rate of return on money put at
risk by private crop insurance companies under the current
Standard Reinsurance Agreement is approximately 100%. Taking this
industry support and adding in the taxpayer support for GRIP that
flows to producers would fund a county target revenue program at
the 93% coverage level.
Keywords: area revenue insurance, commodity programs, crop
insurance, Group Risk Income Protection.
Date: 2007-01-16
URL: http://d.repec.org/n?u=RePEc:isu:genres:12708&r=agr
4. The Demand for Organic, Integrated-Agriculture, and
Conventional Fresh Vegetables: A Censored Inverse Almost Ideal
Demand System
Vasiliki Fourmouzi (Department of Economics, University of
Crete)
Margarita Genius (Department of Economics, University of
Crete, Greece)
Vangelis Tzouvelekas (Department of Economics, University of
Crete, Greece)
The Inverse Almost Ideal Demand System is employed for the
empirical analysis of the demand for organic, integrated-
agriculture, and conventional fresh vegetables, using a cross
section data surveyed in Rethymno, Greece during the 2005-06
period. The demand system is estimated by employing the Amemiya-
Tobin model by Wales and Woodland for the estimation of censored
equation systems, which ensures that the adding-up restriction is
satisfied for both the latent and the observed expenditure shares.
The problem regarding the logarithm of quantities when zero
purchases are reported, is resolved in a theoretically consistent
way that allows full-sample estimation and yields unbiased
parameter estimates. The empirical results suggest that
integrated-agriculture fresh vegetables are luxury goods, whereas
the cross-quantity uncompensated flexibilities indicate that
consumers are not regular buyers of any of the three types of
fresh vegetables. Both groups of consumers who currently buy
integrated-agriculture vegetables and those who buy conventional
vegetables can be easily induced to buy organic vegetables.
Date: 2006-10-01
URL: http://d.repec.org/n?u=RePEc:crt:wpaper:0618&r=agr
5. Ambiguity Aversion as a Predictor of Technology Choice:
Experimental Evidence from Peru
Jim Engle-Warnick
Javier Escobal
Sonia Laszlo
The lack of adoption of new farming technologies despite known
benefis is a well-documented phenomenon in development economics.
In addition to a number of market constraints, risk aversion
predominates the discussion of behavioral determinants of
technology adoption. We hypothesize that ambiguity aversion may
also be a determinant, since farmers may have less information
about the distribution of yield outcomes from new technologies
compared with traditional technologies. We test this hypothesis
with a laboratory experiment in the field in which we measure
risk and ambiguity preferences. We combine our experiment with a
survey in which we collect information on farm decisions and
identify market constraints. We find that ambiguity aversion does
indeed predict actual technology choices on the farm. <P>Un
ph?nom?ne bien document? en ?conomie du d?veloppement est le
nombre peu ?lev? d?agriculteurs qui d?cident d?adopter de
nouvelles technologies en agriculture, malgr? leurs avantages
connus. En plus des nombreuses contraintes impos?es par le
march?, l?aversion au risque pr?domine la discussion sur les
d?terminants de l?adoption de nouvelles technologies. Nous
?mettons l?hypoth?se que l?aversion ? l?ambigu?t?
pourrait aussi ?tre un d?terminant puisqu?il est possible que
les agriculteurs aient moins d?information sur la distribution
du rendement des nouvelles technologies que sur celle des
technologies traditionnelles. Nous testons la validit? de cette
hypoth?se avec une exp?rience en laboratoire sur le terrain o?
nous mesurons les pr?f?rences vis-?-vis du risque et de
l?ambigu?t?. Nous combinons notre exp?rience ? un sondage
portant sur les d?cisions prises en mati?re d?agriculture et
identifiant les contraintes du march?. Nous constatons
qu?effectivement, l?aversion ? l?ambigu?t? dicte les
choix technologiques r?els relatifs ? la ferme.
Keywords: experimental economics, risk measurement instruments,
risk preferences, rural development, technology choice,
choix technologiques, d?veloppement rural, ?conomie
exp?rimentale, instruments de mesure du risque,
pr?f?rences vis-?-vis du risque
JEL: O33 O18 C91
Date: 2007-01-01
URL: http://d.repec.org/n?u=RePEc:cir:cirwor:2007s-01&r=agr
6. Migration, Risk and the Intra-Household Allocation of Labor
in El Salvador
Timothy J. Halliday (Department of Economics, University of
Hawaii at Manoa) (John A. Burns School of Medicine)
We investigate how the gender composition of migrant flows and
the intra-household allocation of labor are employed as risk-
coping strategies in El Salvador. We show that agricultural
productivity shocks primarily increased male migration to the US
and, at the same time, increased the number of hours that the
household devoted to agricultural activities. In contrast, damage
sustained from the 2001 earthquakes exclusively stunted female
migration. We argue that the reasons for this were that the
earthquakes increased the demand for home production and that the
costs of retaining women at home in the disaster's wake were
lower than for men.
Date: 2007-01-04
URL: http://d.repec.org/n?u=RePEc:hai:wpaper:200701&r=agr
7. Governance and Water Management: Progress and Tools in
Mediterranean Countries
Alessandra Sgobbi (Fondazione Eni Enrico Mattei)
Gregorio Fraviga (Universit? Cattolica del Sacro Cuore di
Milano)
This paper reviews the progress with respect to Integrated Water
Resource Management (IWRM) in Mediterranean countries, as
addressed within the activities of the Nostrum-Dss project, a
Coordination Action funded by the 6th Framework Programme of the
EC, with a particular emphasis on the current use of decision
support tools (DSS). The IWRM paradigm is a comprehensive
management framework, which integrates the different aspects of
water resources ? from the underlying ecological and physical
aspects, to the socio-economic values and needs (horizontal
integration); and calls for increasing decentralisation and
privatisation of water services (vertical integration), and the
devolution of planning authority, without however forgetting the
need to ensure equitable access to water resources. Substantial
progress has been made in the last decades in Nostrum-Dss Partner
countries, although a disparity can still be seen between the
Northern and Southern banks. New institutions have been
established for implementing IWRM, existing institutions have
been reformed, and decision making processes increasingly require
public participation. Decentralisation of decision making,
implementation and monitoring are also well underway, although
improvements are still needed to ensure that the traditional
power structures do not prevail. More efficient technologies and
infrastructures are in place, especially for the production of
high value goods or in agriculture. Finally, several DSS have
been developed: yet, while operational/technical DSS instruments
have been successfully employed, DSSs tools developed in a
participatory way, or tackling more complex, political as well as
environmental and economic problems are still de-linked from
actual decision making processes. Laws and regulations for water
management in most Mediterranean countries embrace and support
the paradigms of IWRM ? and EU framework directives have played
an important role in fostering this shift from more traditional,
vertical governance to new, horizontal governance based on soft
laws. Yet, the implementation of such laws and regulations is
often only partial ? often because of the lack of a clear
monitoring and enforcement strategy, but also because of
governments? financial and human resources constraints. Strong
overlaps of roles and competences among different government
institutions remain, hampering effective implementation of water
management. The tendency to centralisation of decision making
persists, and actors? involvement is scanty. The shift towards
the use of demand side policies as opposed to supply side
policies is not yet completed: yet, supply side policies are very
costly, as they are based on greater mobilisation of financial
resources. Full cost recovery pricing is not practiced widely.
This reluctance to introduce full cost recovery pricing in
developing countries may be due to ethical and moral
considerations, but in developed countries it is often associated
with strong lobbying power of interest groups. This study was
supported by funding under the Sixth Research Framework of the
European Union within the project "Network on Governance, Science
and Technology for Sustainable Water Resource Management in the
Mediterranean- The role of Dss tools? (NOSTRUM-Dss, contract
number INCO-CT-2004-509158).
Keywords: Integrated Water Resources Management, Decision
Support Systems, Environmental Governance
JEL: Q01 Q25 Q28
Date: 2006-12
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.151&r=agr
8. Marginal Cost Versus Average Cost Pricing with Climatic
Shocks in Senegal: A Dynamic Computable General Equilibrium
Model Applied to Water
Anne Briand (University of Rouen)
The model simulates on a 20-year horizon, a first phase of
increase in the water resource availability taking into account
the supply policies by the Senegalese government and a second
phase with hydrologic deficits due to demand evolution (
demographic growth). The results show that marginal cost water
pricing (with a subsidy ensuring the survival of the water
production sector) makes it possible in the long term to absorb
the shock of the resource shortage, GDP, investment and welfare
increase. Unemployment drops and the sectors of rain rice, market
gardening and drinking water distribution grow. In contrast, the
current policy of average cost pricing of water leads the long-
term economy in a recession with an agricultural production
decrease, a strong degradation of welfare and a rise of
unemployment. This result questions the basic tariff (average
cost) on which block water pricing is based in Senegal.
Keywords: Computable General Equilibrium Model, Dynamic,
Imperfect Competition, Water, Pricing, Sub Saharan
Africa
JEL: C68 O13
Date: 2006-11
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.144&r=agr
9. Buyer power and pass-through of large retailing groups in the
Portuguese food sector
Jorge Rodrigues (Autoridade da Concorr?ncia)
Date: 2006-09
URL: http://d.repec.org/n?u=RePEc:pca:wpaper:14&r=agr
10. Cost Effectiveness in River Management: Evaluation of
Integrated River Policy System in Tidal Ouse
Tao Wang (University of York)
The River Ouse forms a significant part of Humber river system,
which drains about one fifth the land area of England and
provides the largest fresh water source to the North Sea from UK.
The river quality in the tidal river suffered from sag of
dissolved oxygen (DO) during last few decades, deteriorated by
the effluent discharges. The Environment Agency (EA) proposed to
increase the water quality of Ouse by implementing more potent
environmental policies. This paper explores the cost
effectiveness of water management in the Tidal Ouse through
various options by taking into account the variation of
assimilative capacity of river water, both in static and dynamic
scope of time. Reduction in both effluent discharges and water
abstraction were considered along side with choice of effluent
discharge location. Different instruments of environmental policy,
the emission tax-subsidy (ETS) scheme and tradable pollution
permits (TPP) systems were compared with the direct quantitative
control approach. This paper at the last illustrated an empirical
example to reach a particular water quality target in the tidal
Ouse at the least cost, through a solution of constrained
optimisation problem. The results suggested significant
improvement in the water quality with less cost than current that
will fail the target in low flow year.
Keywords: Water Quality Management, Tradable Pollution Permits,
Tax and Subsidy, Effluent Discharge, Water Abstraction,
Dynamic Equilibrium, Integrated River Policy, Cost
Effectiveness
JEL: C31 C61 L51 R19
Date: 2006-11
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.142&r=agr
11. The Internalization of Externalities in The Production of
Electricity: Willingness to Pay for the Attributes of a
Policy for Renewable Energy
Alberto Longo (Queen?s University Belfast and University
of Bath)
Anil Markandya (University of Bath and Fondazione Eni Enrico
Mattei)
Marta Petrucci (University of Bath)
This paper investigates the willingness to pay of a sample of
residents of Bath, England, for a hypothetical program that
promotes the production of renewable energy. Using choice
experiments, we assess the preferences of respondents for a
policy for the promotion of renewable energy that (i) contributes
to the internalization of the external costs caused by fossil
fuel technologies; (ii) affects the security of energy supply; (
iii) has an impact on the employment in the energy sector; (iv)
and leads to an increase in the electricity bill. Responses to
the choice questions show that our respondents are in favour of a
policy for renewable energy and that they attach a high value to
a policy that brings private and public benefits in terms of
climate change and energy security benefits. Our results
therefore suggest that consumers are willing to pay a higher
price for electricity in order to internalize the external costs
in terms of energy security, climate change and air pollution
caused by the production of electricity.
Keywords: Non Market Valuation, Choice Experiments, Willingness
to Pay, Renewable Energy, Energy Security, Greenhouse
Gases Emissions
JEL: Q42 Q48 Q51
Date: 2006-11
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.132&r=agr
12. Climate Change and Water Resources ? An International
Perspective
Marianne Keudel
Climate change and its consequences are the focus of many
environmental policies in the European Union but also in other
countries. Whereas in the US marketable instruments like permit
trading have already been implemented since the 1980s, the EU
first implemented permit trading for CO2 emissions in 2005.
Climate change also influences the availability of water
resources; water levels of rivers in the EU are assumed to
decrease in the next decades. Decreasing water levels, in turn,
heavily influence the quality of these water resources. In some
countries the instrument of permit trading is also applied to the
regulation of water resources (quantity and quality). This paper
gives an overview of existing systems in order to show how such
trading systems can create incentives for the efficient use of
resources by means of pricing.
Keywords: river basin management, water trading, water quality
trading
JEL: Q25 Q53
Date: 2007-01
URL: http://d.repec.org/n?u=RePEc:kln:iwpdip:dp02/07&r=agr
13. Renewable Resources, Pollution and Trade in a Small Open
Economy
Horatiu A. Rus (University of British Columbia)
Industrial pollution can have damaging effects on resource-based
productive sectors. International trade creates opportunities for
overexploitation of the open-access renewable resources but also
for separating the sectors spatially. The paper shows that,
depending on the relative damage inflicted by the two industries
on the environment, it is possible that the production
externality will persist and that specialization in the dirty
good may not be the obvious choice from a welfare perspective.
Also, the resource exporter does not necessarily have to lose
from trade even when specializing incompletely, due to the
partially offsetting external effects.
Keywords: Renewable Resources, Pollution, Production
Externalities, Environment, International Trade
JEL: Q27 Q22 Q53
Date: 2006-11
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.140&r=agr
14. The Economic Impact of the South-North Water Transfer
Project in China: A Computable General Equilibrium Analysis
Maria Berrittella (University of Palermo)
Katrin Rehdanz (Hamburg University)
Richard S.J. Tol (Economic and Social Research Institute)
Water resources are unevenly spread in China. Especially the
basins of the Yellow, Hui and Hai rivers in the North are rather
dry. To increase the supply of water in these basins, the South-
to-North Water Transfer project (SNWT) was launched. Using a
computable general equilibrium model this study estimates the
impact of the project on the economy of China and the rest of the
world. We contrast three alternative groups of scenarios. All are
directly concerned with the South-to-North water transfer project
to increase water supply. In the first group of scenarios
additional supply implies productivity gains. We call it the
?non-market? solution. The second group of scenarios is
called ?market solution?. The market price for water adjusts
such that supply and demand are equated again. In the third group
of simulations the economic implications of China?s capital
investment in infrastructure for the water South-North water
transfer project is analyzed. Finally, the investment is combined
with the increased capacity of water. If an increase in water
supply in China leads to an increase in productivity of their
water-intensive goods and services (non-market solution) this
would result in a huge positive welfare effect from increased
production and export. The effect on China?s welfare would
still be positive, if a market for water would exist (market
solution), but the world as a whole would lose. The negative
effect for the rest of the world is largely explained by a
deterioration of its terms-of-trade. Well functioning water
markets in China are unlikely to exist.
Keywords: Computable General Equilibrium, South-North Water
Transfer Project, Water Policy, Water Scarcity
JEL: D58 R13 Q25 Q28
Date: 2006-12
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.154&r=agr
15. Sustainable Development Policies in Europe
Pietro Caratti (Fondazione Eni Enrico Mattei)
Gabriella Lo Cascio (Fondazione Eni Enrico Mattei)
The objective of this paper is to investigate the actual
situation in the shift towards the implementation of Sustainable
Development Policies in Europe. The aim is to highlight the key
role of the European Union in bringing about sustainable
development within Europe and also on the wider global stage. It
will show how the European Commission performs its commitment in
reaching a sustainable regulation by issuing some documents and
declarations. The paper frames the EU action into an
international framework of strategies, agreements and policies on
SD and, at the same time, provides an overview on experiences of
SD strategy implementations at the national level, according to
the commission pressing on MS to produce their own SD strategy
and implement it. Indicators systems, issues of interest and
fields of actions are compared: the analysis of these elements
aims to highlight common scenarios of SD strategies that reveal
the trends towards a more sustainable growth in the European
Union.
Keywords: Sustainable Development, Globalization, Environment
Policy, Strategy for Sustainable Development, Good
Governance, Participation
JEL: Q01 Q5 Q56
Date: 2006-12
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.152&r=agr
16. Economy-Wide Estimates of the Implications of Climate Change:
A Joint Analysis for Sea Level Rise and Tourism
Francesco Bosello (Fondazione Eni Enrico Mattei and
Ca?Foscari University of Venice)
Andrea Bigano (Fondazione Eni Enrico Mattei and REF,
Ricerche per l'Economia e la Finanza)
Roberto Roson (Fondazione Eni Enrico Mattei and Ca?Foscari
University of Venice)
Richard S.J. Tol (Vrije Universiteit)
Climate change impacts on human life have well defined and
different origins, nevertheless in the determination of their
final effects, especially those involving social-economic
responses, interactions among impacts are likely to play an
important role. This paper is one of the first attempts to
disentangle and highlight the role of these interactions. It
focuses on the economic assessment of two specific climate change
impacts: sea-level rise and changes in tourism flows. By using a
CGE model the two impacts categories are first analyzed
separately and then jointly. Comparing the results it is shown
that, even though qualitatively joint effects follow the outcomes
of the disjoint exercises, quantitatively impact interactions do
play a significant role. Moreover it has been also possible to
disentangle the relative contribution of each single impact
category to the final result. In the case under scrutiny demand
shocks induced by changes in tourism flows outweigh the supply
side shock induced by the loss of coastal land.
Keywords: Climate Change, Sea Level Rise, Tourism, Computable
General Equilibrium Models
JEL: C68 D58 Q25
Date: 2006-11
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.135&r=agr
17. A Modified Environmental Kuznets Curve for Sustainable
Development Assessment Using Panel Data
Valeria Costantini (University of Roma Tre)
Chiara Martini (University of Roma Tre)
Sustainable development is a concept strictly connected with
basic needs of the individuals. During the last years a number of
empirical studies have tried to discover and quantify the causal
relations between economic growth and environmental consumption
and degradation. The most widely used empirical model is the so-
called Environmental Kuznets Curve (EKC), nowadays applied to
different polluting elements. Despite the huge diffusion of EKC
studies, this model has been criticised for incompleteness of a
sustainable development analysis. The aim of this paper is to
build a Modified EKC (MEKC) in order to consider a wider concept
of development rather than pure economic growth, including well-
being aspects and sustainability of the development process.
Using a macroeconomic measure of sustainability such as the World
Bank?s Genuine Saving and a measure of well-being such as the
United Nations? Human Development Index, we build a model in
order to analyse linkages between higher welfare levels and
natural resources consumption, verifying the sustainability of
human development. A panel analysis for three years (1990-1995-
2000) for a wide range of countries (including developed and
developing countries) has been applied in order to respond to
criticisms related to conjunctural results linked to pure cross-
section studies. Comparisons among alternative pollutants (i.e.,
CO2, NOX, and SOX) and GS are described, and the robustness of
the MEKC clearly emerges. Furthermore, in order to respond to
criticisms for the reduced form of the EKC, an Instrumental
Variables model has been tested both on CO2 and GS, while a
system of equations has been tested considering simultaneously a
traditional EKC and a MEKC for a longer time period (1996-2004).
Unit root tests for non-stationary series have been computed,
showing that the IV model gives satisfactory results. An
indicator for technological capabilities has been added at this
stage, accounting for diffusion of technical progress and import
technology as suggested by Archibugi and Coco (2004). Causal
relations identified within a MEKC allow to identify correlation
between human development and sustainable development, following
the classic inverted U-shaped curve of the EKC. Nonetheless,
comparing the turning points of the MEKC and EKC, respectively,
it seems that using this alternative specification some useful
policy implications apply. The threshold level of human
development in the MEKC corresponds to an income per capita level
lower than the threshold level for the EKC, confirming the
possibility of ?tunnelling through the curve? as suggested in
Munasinghe (1999). Our results show that human development should
be the first objective of international development policies, and
an increase in human well-being is necessary to provide a
sustainability path.
Keywords: Environmental Kuznets Curve, Sustainable development,
Human development, Genuine saving, Panel data
JEL: O15 Q01 Q56
Date: 2006-11
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.148&r=agr
18. Costs of alternative environmental policy instruments in the
presence of industry compensation requirements
Bovenberg,Lans
Goulder,Lawrence H.
Jacobson,Mark R. (Tilburg University, Center for Economic
Research)
This paper explores how the costs of meeting given aggregate
targets for pollution emissions change with the imposition of the
requirement that key pollution-related industries be compensated
for potential losses of profit from the pollution regulation.
Using analytically and numerically solved equilibrium models, we
compare the incidence and costs of emissions taxes, fuel (
intermediate input) taxes, performance standards and mandated
technologies in the absence and presence of this compensation
requirement. Compensation is provided either through industry tax
credits or industry-specific cuts in capital tax rates. We
decompose the added costs from the compensation requirement into (
1) an increase in "intrinsic abatement cost," reflecting a
lowered efficiency of pollution abatement, and (2) a "lump-sum
compensation cost" that captures the efficiency costs of
financing the compensation. The compensation requirement affects
these components differently, depending on the policy instrument
involved and the required extent of pollution abatement. As a
result, it can change the cost-rankings of the different
instruments. In particular, when compensation is provided through
tax credits, the lump-sum compensation cost is higher under the
emissions tax than under the command-andcontrol policies (
performance standards and mandated technologies) - a reflection
of the higher compensation requirements under the emissions tax.
When the required pollution reduction is modest, imposing the
compensation requirement causes the emissions tax to lose its
status as the least costly instrument and to become more costly
than command and control policies. In contrast, when required
abatement is extensive, the emissions tax again becomes the most-
cost effective instrument because of its advantages in terms of
lower intrinsic abatement cost.
Keywords: environmental instrument choice;pollution control;
compensation requirements; emissions abatement costs
JEL: Q58 H23 H21
Date: 2006
URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:2006127&r=agr
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