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Policy instruments

2011-12-21

Ecotourism and the development of indigenous communities: The good, the bad, and the ugly.

A large part of the literature analyzing the links between biodiversity conservation and community development assumes that nature-based tourism managed by indigenous communities will result not only in conservation of natural resources but also in increased development. In practice, ecotourism has often failed to deliver the expected benefits to indigenous communities due to a combination of factors, including shortages in the endowments of human, financial and social capital within the community, lack of mechanisms for a fair distribution of the economic benefits of ecotourism, and land insecurity.

2011-12-09

The future of oil in a carbon constrained world

Global climate is changing. This fact is supported by robust scientific evidence, and there is no real doubt that the main reason is the increased concentration of greenhouse gases in the atmosphere caused by human activity, primarily related to the combustion of fossil fuels.

2011-12-08

Fuel Taxes and the Poor

Fuel Taxes and the Poor,The Distributional Effects of Gasoline Taxation and Their Implications for Climate Policy, challenges the conventional wisdom that gasoline taxation, an important and much-debated instrument of climate policy, has a disproportionately detrimental effect on poor people.

2011-11-06

Should we tax or let firms trade emissions? An experimental analysis with policy implications for developing countries

In this paper we use laboratory experiments to test the theoretical predictions derived by Villegas-Palacio and Coria (2010) about the effects of the interaction between technology adoption and incomplete enforcement. They show that under Tradable Emissions Permits (TEPs), and in contrast to taxes, the fall in permit price produced by adoption of environmentally friendly technologies reduces the benefits of violating the environmental regulation at the margin and leads firms to improve their compliance behavior. Moreover, when TEPs are used, the regulator can speed up the diffusion of new technologies since the benefits from adopting the new technology increase with the enforcement stringency.

2011-10-24

A Fair Share - Burden-Sharing Preferences in the United States and China

Using a choice experiment, we investigated preferences for distributing the economic burden of decreasing CO2 emissions in the two largest CO2-emitting countries: the United States and China. We asked respondents about their preferences for four burden-sharing rules to reduce CO2 emissions according to their country’’s 1) historical emissions, 2) income level, 3) equal right to emit per person, and 4) current emissions.

2011-10-16

Controlling Urban Air Pollution Caused by Households: Uncertainty, Prices, and Income

We examine the control of air pollution caused by households burning wood for heating and cooking in the developing world. Since the problem is one of controlling emissions from nonpoint sources, regulations are likely to be directed at household choices of wood consumption and combustion technologies. Moreover, these choices are subtractions from, or contributions to, the pure public good of air quality. Consequently, the efficient policy design is not independent of the distribution of household income.

2011-05-02

Paying for Mitigation: A Multiple Country Study

Unique survey data from a contingent valuation study conducted in three different countries (China, Sweden, and the United States) were used to investigate the ordinary citizen’s willingness to pay (WTP) for reducing CO2 emissions. We found that a large majority of the respondents in all three countries believe that the mean global temperature has increased over the last 100 years and that humans are responsible for the increase.

2011-04-15

Engagements volontaires et croissance verte dans l’ère d’après Copenhague

Hopes for a climate deal were mercilessly shattered at Copenhagen and each of the successive COPs since then. One result is that “green growth” is promoted almost as if it were an alternative path. Obviously, green growth is in fact the goal, but the phrase is not a magic wand. The world economy will require tough policy instruments to become green — and it is naïve to think otherwise.

2011-02-14

The Truth, the Whole Truth, and Nothing but the Truth: A Multiple-Country Test of an Oath Script

Hypothetical bias is one of the main issues bedeviling the field of nonmarket valuation. The general criticism is that survey responses reflect how people would like to behave, rather than how they actually behave. In our study of climate change and emissions reductions, we took advantage of the increasing bulk of evidence from psychology and economics that addresses the effects of making promises, in order to investigate the effect of an oath script in a contingent valuation survey.

2011-01-31

Decoupling: Is there a Separate Contribution from Environmental Taxation

Decoupling is a crucial topic in the analysis of sustainable development. Without decoupling, continuing and increasing economic growth in developed and developing countries would come with ever increasing environmental pressures, unavoidably destroying the carrying capacity of ecosystems with corresponding detrimental effects on the environment and societies.

2011-01-26

Natural Resource Management: Challenges and Policy Options

Much of the improvement in living standards in developed and developing countries alike is attributable to the exploitation of nonrenewable and renewable resources. The problem is to know when the exploitation occurs at rates and with technologies that are sustainable.

2010-11-29

To trade or Not to Trade: A Firm-Level Analysis of Emissions Trading in Santiago, Chile

The authors surveyed firms participating in emissions trading programs in Santiago, Chile, to explore further whether tradable permits are appropriate for transition and developing economies. Their survey information revealed serious implementation and design flaws in Chile’s trading, but they are not more severe than the EU or U.S. systems. Countries with similar income levels and institutional maturity as Chile should be able to develop well-functioning permit trading schemes.

2010-11-29

Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile

Santiago was one of the first cities outside the OECD to implement a tradable permit program to control air pollution. This paper looks closely at the program’s performance over the past 10 years, stressing its similarities and discrepancies with trading programs in developed countries, and analyzing how it has reacted to regulatory adjustments and market shocks. Studying Santiago’s experience allows us to discuss the drawbacks and advantages of applying tradable permits in less developed countries.

2010-09-30

Consequences of Subpopulation Structure on Fisheries Management: Cod (Gadus morhua) in the Kattegat and Öresund (North Sea)

This study shows how cod subpopulations may have been eradicated as a consequence of the use of imperfect models for assessing stock assessment, depleting what was formerly a productive sea. The Kattegat and resund (North Sea) were chosen as study objects due to the combination of different exploitation patterns and the possible existence of separate stock units. The scenario was further elaborated by simulating the potential harvest of fishing for different long-run levels of fishing effort as well as stock size. The study clearly indicated that new policy instruments are needed but these instruments need to be carefully fine-tuned to take into account real biological as well as social factors.

2010-09-30

The Progress of GHG Markets: Opportunities and Risks

The purpose of this report is to build knowledge about the effects of the development of regional and international carbon markets and the auxiliary technology agreements that might be needed. Among the topics we address are: the evolution and integration of carbon markets, the impacts of policy and technology cost uncertainty on the cost of meeting targets through a carbon market mechanism, the effect of banking, price floors and ceilings, institutional constraints and technological change in the further development of carbon markets and their links to other environmental policy instruments, and the potential of REDD-plus to encourage sustainable forest development and climate mitigation.

2010-06-04

Paying for Mitigation: A Multiple Country Study

Unique survey data from a contingent valuation study conducted in three different countries (China, Sweden, and the United States) were used to investigate the ordinary citizen’s willingness to pay (WTP) for reducing CO2 emissions. We found that a large majority of the respondents in all three countries believe that the mean global temperature has increased over the last 100 years and that humans are responsible for the increase.

2009-11-09

To trade or Not to Trade: A Firm-Level Analysis of Emissions Trading in Santiago, Chile

The authors surveyed firms participating in emissions trading programs in Santiago, Chile, to explore further whether tradable permits are appropriate for transition and developing economies. Their survey information revealed serious implementation and design flaws in Chile’s trading, but they are not more severe than the EU or U.S. systems. Countries with similar income levels and institutional maturity as Chile should be able to develop well-functioning permit trading schemes.

2009-09-29

Which Firms are More Sensitive to Public Disclosure Schemes for Pollution Control? Evidence from Indonesia’s PROPER Program

This paper analyzes differences in firms’ responsiveness to PROPER, Indonesia’s public disclosure program for industrial pollution control. The overall effectiveness of this program at achieving emissions reductions and its low regulatory costs have earned it a good reputation around the world. PROPER had no deterrents or incentives other than those that arose indirectly from publicly disclosing information about the environmental performances of firms.

2008-12-18

Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile

Santiago was one of the first cities outside the OECD to implement a tradable permit program to control air pollution. This paper looks closely at the program’s performance over the past 10 years, stressing its similarities and discrepancies with trading programs in developed countries, and analyzing how it has reacted to regulatory adjustments and market shocks. Studying Santiago’s experience allows us to discuss the drawbacks and advantages of applying tradable permits in less developed countries.

2008-10-22

Environmental Policy, Fuel Prices, and the Switch to Natural Gas in Santiago, Chile

The author analyzes the role of environmental policies and energy cost savings in the switch to natural gas by stationary sources in Chile. There is skepticism about using market-based policies (economic instruments) in the developing world—permit trading programs versus emissions fees. This paper produces new evidence of the role of environmental regulations and market forces in a successful air-quality improvement program in Chile, a less-developed country.

2008-10-22

Taxes, Permits, and the Diffusions of a New Technology

The author looks at the effects of the choice between taxes and permits on the pattern of adoption of a new emissions abatement technology. The regulator determines the optimal ex-post amount of emissions before firms start to adopt the technology. Each firm decides when to adopt, considering benefits, costs, and advantage gained over their rivals, producing a sequence of adoption that is “diffused” into the industry over time.

2008-06-19

Production Function Analysis of Soil Properties and Soil Conservation Investments in Tropical Agriculture

This paper integrates traditional economic variables, soil properties, and variables on soil conservation technologies to estimate agricultural output among small-scale farmers in Kenya’s central highlands. The study finds that integrating traditional economics and soil science is invaluable, especially as omitting measures of soil capital can cause omitted-variable bias. The central policy implication is that while fertilizers are generally beneficial, their application is a complex art, and more is not necessarily better.

2008-04-08

What Kinds of Firms Are More Sensitive to Public Disclosure Programs for Pollution Control? The Case of Indonesia’s PROPER Program

Analysis of the differences in firms’ responsiveness to PROPER (Indonesia’s successful public disclosure program for industrial pollution control) showed that foreign-owned firms and firms in densely populated areas were more likely to respond to public environmental ratings. Firms with bad environmental performances felt pressure to improve, but this incentive diminished after the initial abatement steps.

2007-12-15

Are demand elasticities affected by politically determined tax levels?

Raising the price of fossil fuels is a key component of any effective policy to deal with climate change. Just how effective such policies are is decided by the price elasticities of demand. Many papers have studied this without recognising that not only is there a demand side response: quantities are decided by the price but also there is a reverse causality: the level of consumtion affects the political acceptability of the taxes which are the main component of the final price. Thus prices affect consumption levels, in turn, have an affect on taxes and thus consumer prices. This paper estimates these functions simultaneously to show that there is indeed an effect on the demand elasticity.

2007-10-01

Discounting and relative prices

Environmentalists are often upset at the effect of discounting costs of future environmental damage, e.g., due to climate change. An often-overlooked message is that we should discount costs but also take into account the increase in the relative price of the ecosystem service endangered.

2003-03-01

Environmental Taxes in Europe

This paper provides an overview and a discussion of environmental taxes in Europe. On the whole, most European countries have fairly high levels of environmental taxation – at least compared to the US.

2019-05-14

    Carbon pricing: a policy tool for sustainable growth (2019)

    Putting a price on carbon in global markets allows for the trade in carbon to be taxed. Carbon taxing is an effective economic tool to drive down countries’ emissions. Developing world countries are far behind the Global North in terms of testing different approaches to carbon taxes and emissions trading.

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