September 21, 2010

Markets for Anthropogenic Carbon Within the Larger Carbon Cycle

by Severin Borenstein

- Scientific research now indicates that humans are also impacting the natural carbon cycle through less-direct, but very important, mechanisms that are more difficult to monitor and control. I explore the challenges this presents to market or regulatory mechanisms that might be used to reduce greenhouse gases: scientific uncertainty about these indirect processes, pricing heterogeneous impacts of similar human behaviors, and the difficulty of assigning property rights to a far larger set of activities than has previously been contemplated.

Borenstein, S. (2010). "Markets for Anthropogenic Carbon Within the Larger Carbon Cycle." NBER Working Paper No. 16104, Jun 2010.

Belts and Suspenders: Interactions Among Climate Policy Regulations

by Arik Levinson

- With few exceptions, economic analyses of "cap-and-trade" permit trading mechanisms for climate change mitigation have been based on first-best scenarios without pre-existing distortions or regulations. This paper discusses interactions between these instruments, and begins to lay out a framework for thinking about them systematically. The most important determinant of how the two types of instruments interact involves whether or not the cap-and-trade permit price would induce more or less abatement than mandated by the traditional standards alone.

Levinson, A. (2010). "Belts and Suspenders: Interactions Among Climate Policy Regulations." NBER Working Paper No. 16109, Jun 2010.

Climate Policy and Labor Markets

by Olivier Deschenes

- An important component of the debate surrounding climate legislation in the United States is its potential impact on labor markets. This paper provides some new evidence on this question by estimating the relationship between real electricity prices and indicators of labor market activity using data for 1976-2007. The main finding is that employment rates are weakly related to electricity prices with implied cross elasticity of full-time equivalent (FTE) employment with respect to electricity prices ranging from -0.16% to -0.10%. I conclude by interpreting these empirical estimates in the context of increases in electricity prices consistent with H.R. 2454, the American Clean Energy and Security Act of 2009. The preferred estimates in this paper suggest that in the short-run, an increase in electricity price of 4% would lead to a reduction in aggregate FTE employment of about 460,000 or 0.6%.

Deschenes, O. (2010). "Climate Policy and Labor Markets." NBER Working Paper No. 16111, Jun 2010.

Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?

by Lucas W. Davis

- While public discussion of HR 2454 (the "Waxman Markey" bill) has focused on the cap-and-trade program that would be established for carbon emissions, the bill also includes provisions that would tighten energy efficiency standards for consumer appliances. Supporters argue that appliance standards help address a number of market failures. In particular, many studies have pointed out that landlords may buy cheap inefficient appliances when their tenants pay the utility bill. Although this landlord-tenant problem has been widely discussed in the literature, there is little empirical evidence on the magnitude of the distortion. This paper compares appliance ownership patterns between homeowners and renters using household-level data from the Residential Energy Consumption Survey. The results show that, controlling for household income and other household characteristics, renters are significantly less likely to have energy efficient refrigerators, clothes washers and dishwashers.

Davis, L.W. (2010). "Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?" NBER Working Paper No. 16114, Jun 2010.

Upstream versus Downstream Implementation of Climate Policy

by Erin T. Mansur

- This paper examines the tradeoffs of regulating upstream (e.g., coal, natural gas, and refined petroleum product producers) versus regulating downstream (e.g., direct sources of greenhouse gases (GHG)). In general, regulating at the source provides polluters with incentives to choose among more opportunities to abate pollution. This paper develops a simple theoretical model that shows why this added flexibility achieves the lowest overall costs. I broaden the theory to incorporate several reasons why these potential gains from trade may not be realized--transactions costs, leakage, and offsets--in the context of selecting the vertical segment of regulation.

Mansur, E.T. (2010). "Upstream versus Downstream Implementation of Climate Policy." NBER Working Paper No. 16116, Jun 2010.

Climate Policy and Voluntary Initiatives: An Evaluation of the Connecticut Clean Energy Communities Program

by Matthew J. Kotchen

- Can simple government programs effectively promote voluntary initiatives to reduce greenhouse-gas emissions? This paper provides an evaluation of how the Connecticut Clean Energy Communities program affects household decisions to voluntarily purchase "green" electricity, which is electricity generated from renewable sources of energy. The results suggest that, within participating communities, subsidizing municipal solar panels as matching grants for reaching green-electricity enrollment targets increases the number of household purchases by 35 percent. The Clean Energy Communities program thus demonstrates how mostly symbolic incentives can mobilize voluntary initiatives within communities and promote demand for renewable energy.

J. Kotchen, M.J. (2010). "Climate Policy and Voluntary Initiatives: An Evaluation of the Connecticut Clean Energy Communities Program." NBER Working Paper No. 16117, Jun 2010.

Buy Coal? Deposit Markets Prevent Carbon Leakage

by Bård Harstad

- If a coalition of countries implements climate policies, nonparticipants tend to consume more, pollute more, and invest too little in renewable energy sources. In response, the coalition's equilibrium policy distorts trade and is not time-consistent. This paper derives conditions for when trading fossil fuel deposits increase efficiency. In isolation, a bilateral transaction may occur too often or too seldom compared to the optimum. However, when the market clears, the above-mentioned problems vanish, the first-best is implemented, and the coalition finds it optimal to rely entirely on supply-side policies, which are simple to implement in practice.

Bård Harstad (2010). "Buy Coal? Deposit Markets Prevent Carbon Leakage." NBER Working Paper No. 16119, Jun 2010.

Setting the Initial Time-Profile of Climate Policy: The Economics of Environmental Policy Phase-Ins

by Roberton C. Williams III

- This paper considers the question of under what circumstances a new environmental regulation should "phase in" gradually over time, rather than being immediately implemented at full force. The paper focuses particularly on climate policy, though its insights are more general. It shows that while adjustment costs provide a strong efficiency argument for phasing in a quantity-based regulation (or allowing intertemporal flexibility that creates the equivalent of a phase-in), this argument does not apply for price-based regulation. Indeed, in many cases, it will be more efficient to do just the opposite, setting an initially very high emissions price that then falls as the policy phases in.

Williams, R.C. III (2010). "Setting the Initial Time-Profile of Climate Policy: The Economics of Environmental Policy Phase-Ins." NBER Working Paper No. 16120, Jun 2010.

Monitoring and Enforcement of Climate Policy

by Hilary Sigman

- Climate policies present the novel problem of integrating emissions reductions that are relatively easy to monitor (such as carbon dioxide emissions from fossil fuels) with those that may be very difficult to monitor (such as some emissions of other greenhouse gases). The paper documents the heterogeneity in monitoring costs across different parts of current carbon markets. It argues that a broad emission trading system that includes more difficult-to-enforce components can provide less incentive to violate the law than a narrower program; thus, the government may not find it more costly to assure compliance with a broader program.

Sigman, H. (2010). "Monitoring and Enforcement of Climate Policy." NBER Working Paper No. 16121, Jun 2010.

Interactions between State and Federal Climate Change Policies

by Lawrence H. Goulder and Robert N. Stavins

- Federal action addressing climate change is likely to emerge either through new legislation or via the U.S. EPA’s authority under the Clean Air Act. The prospect of federal action raises important questions regarding the interconnections between federal efforts and state-level climate policy developments. In the presence of federal policies, to what extent will state efforts be cost-effective? How does the co-existence of state- and federal-level policies affect the ability of state efforts to achieve emissions reductions? This paper addresses these questions.

Goulder, L.H. and R.N. Stavins (2010). "Interactions between State and Federal Climate Change Policies." NBER Working Paper No. 16123, Jun 2010.

Urban Policy Effects on Carbon Mitigation

by Matthew E. Kahn

- The geographical location of economic activity within the United States has important implications for carbon mitigation. This study uses three data sets reporting on household driving, public transit use and residential electricity consumption to provide evidence in support of the claim of a negative association between center city living and a household’s carbon footprint.

Kahn, M.E. (2010). "Urban Policy Effects on Carbon Mitigation." NBER Working Paper No. 16131, Jun 2010.

GHG Targets as Insurance Against Catastrophic Climate Damages

by Martin L. Weitzman

- A critical issue in climate-change economics is the specification of the so-called "damages function" and its interaction with the unknown uncertainty of catastrophic outcomes. This paper asks how much we might be misled by our economic assessment of climate change when we employ a conventional quadratic damages function and/or a thin-tailed probability distribution for extreme temperatures. The paper gives some numerical examples of the indirect value of various GHG concentration targets as insurance against catastrophic climate-change temperatures and damages. These numerical examples suggest that we might be underestimating considerably the welfare losses from uncertainty by using a quadratic damages function and/or a thin-tailed temperature distribution.

Martin L. Weitzman (2010). "GHG Targets as Insurance Against Catastrophic Climate Damages." NBER Working Paper No. 16136, Jun 2010.

September 12, 2010

Taxes, Permits, and Climate Change

by Louis Kaplow

- This essay revisits the question of instrument choice for the regulation of externalities in the context of climate change. The central point is that the Pigouvian prescription to equate marginal control costs with the expected marginal benefits of damage reduction should guide the design of both carbon taxes and permit schemes. Because expected marginal damage rises nonlinearly, a corresponding nonlinear tax - or an equivalent price implemented through a quantity-adjusted permit scheme - is second best. Also considered are political factors, distinctive features of regulating a stock pollutant, and ex ante distortions due to the anticipation of transition relief (such as by receiving more free permits for greater emissions).

Kaplow, L. (2010). "Taxes, Permits, and Climate Change." NBER Working Paper No. 16268, Aug 2010.

Updating the Allocation of Greenhouse Gas Emissions Permits in a Federal Cap-and-Trade Program

by Meredith Fowlie

- U.S. adoption of a cap-and-trade program for greenhouse gases could place some domestic producers at a disadvantage relative to international competitors who do not face similar regulation. To address this issue, proposed federal climate change legislation includes a provision that would freely allocate (or rebate) emission allowances to eligible sectors using a continuously updating output-based formula. This article investigates both the benefits and the costs of output-based updating.

Fowlie, M. (2010). "Updating the Allocation of Greenhouse Gas Emissions Permits in a Federal Cap-and-Trade Program." NBER Working Paper No. 16307, Aug 2010.

The Economics of Carbon Offsets

by James B. Bushnell

- Although international programs for carbon offsets play an important role in current and prospective climate-change policy, they continue to be very controversial. Asymmetric information creates several incentive problems, include adverse selection and moral hazard, in offset markets. The current regulatory focus on additionality tends to paint all these problems with a broad brush without proper consideration of the context or their implications.

Bushnell, J.B. (2010). "The Economics of Carbon Offsets." NBER Working Paper No. 16305, Aug 2010.

Limiting Emissions and Trade: Some Basic Ideas

by Kala Krishna

- The computable general equilibrium models used in the literature tend to be a bit of a black box. This paper provides some intuition behind what goes on in these black boxes by laying out a simple general equilibrium model and intuitively explaining what lies behind the demand for emissions. It traces out how a reduction in total emissions allowed in one country aspects the general equilibrium and the determinants of the extent of leakage in the model as well as more generally. It concludes with some implications for policy.

Krishna, K. (2010). "Limiting Emissions and Trade: Some Basic Ideas." NBER Working Paper No. 16147, Jul 2010.

Spillovers from Climate Policy

by Stephen P. Holland

- Climate policy spillovers can be either positive or negative since firms change their production processes in response to climate policies, which may either increase or decrease emissions of other pollutants. Understanding these ancillary benefits or costs has important implications for climate policy design, modeling, and benefit-cost analysis. This paper shows how spillovers can be decomposed into output effects (which have ancillary benefits) and substitution effects (which may have ancillary benefits or ancillary costs). The ambiguous net effect highlights the importance of polluters' responses to climate policy. I then test for climate policy spillovers in electricity power generation. The estimates are consistent with ancillary benefits from climate policy arising primarily from reductions in output (primarily at older plants) rather than from changes in emissions rates.

Holland, S.P. (2010). "Spillovers from Climate Policy." NBER Working Paper No. 16158, Jul 2010.

Are Building Codes Effective at Saving Energy? Evidence from Residential Billing Data in Florida

by Grant D. Jacobsen and Matthew J. Kotchen

- This paper provides the first evaluation of an energy-code change that uses residential billing data on both electricity and natural gas, combined with data on observable characteristics of each residence. The study takes place in Gainesville, Florida, and the empirical strategy is based on comparisons between residences constructed just before and just after Florida increased the stringency of its energy code in 2002. We find that the increased stringency of the energy code is associated with a 4-percent decrease in electricity consumption and a 6-percent decrease in natural-gas consumption.

Jacobsen, G.D. and M.J. Kotchen (2010). "Are Building Codes Effective at Saving Energy? Evidence from Residential Billing Data in Florida." NBER Working Paper No. 16194, Jul 2010.

Impacts of the EU Biofuel Target on Agricultural Markets and Land Use: a Comparative Modelling Assessment

by María Blanco Fonseca, Alison Burrell, Hubertus Gay, Martin Henseler, Aikaterini Kavallari, Robert M'Barek, Ignácio Pérez Domínguez and Axel Tonini

- The Renewable Energy Directive (2009/28/EC) requires that 20% of the EU's energy needs should come from renewable sources by 2020, and includes a target for the transport sector of 10% from biofuels. This report analyses and discusses the global impacts of this biofuel target on agricultural production, markets and land use, as simulated by three agricultural sector models, AGLINK-COSIMO, ESIM and CAPRI. With the EU biofuel target, global use of land for crop cultivation is higher by 5.2 million hectares. About one quarter is area within the EU, some of which would otherwise have left agriculture.

Blanco Fonseca, M., A. Burrell, H. Gay, M. Henseler, A. Kavallari, R. M'Barek, I. Pérez Domínguez and A. Tonini (2010). "Impacts of the EU Biofuel Target on Agricultural Markets and Land Use: a Comparative Modelling Assessment." EUR Number: 24449 EN, Jul 2010.

The Potential Global and Developing Country Impacts of Alternative Emission Cuts and Accompanying Mechanisms for the Post Copenhagen Process

by Huifang Tian and John Whalley

- We report numerical simulation results using a multiyear global multi country modeling framework which we use to assess the impacts of alternative emissions cuts which will likely come under consideration for the process to follow the December 2009 UNFCCC negotiation in Copenhagen. The Copenhagen Accord sets out prior country unilateral commitments, and provides a framework for further negotiation of mutually agreed cuts. We also consider possible financial transfers under the Adaptation Fund and possible trade linked border measures against non participants.

Tian, H. and J. Whalley (2010). "The Potential Global and Developing Country Impacts of Alternative Emission Cuts and Accompanying Mechanisms for the Post Copenhagen Process." NBER Working Paper No. 16090, Jun 2010.

How Can Policy Encourage Economically Sensible Climate Adaptation?

by V. Kerry Smith

- This paper considers the role of incentive based climate adaptation policies. It uses the early literature on pricing and capacity choices under demand uncertainty to describe how revised price structures for the substitutes for climate services can be treated as anticipatory adaptation. In many situations the policies determining the prices of these services make them difficult to adjust. Thus, excess demand will not be managed through price adjustment. The lesson drawn from these models is that reform of pricing policy for climate substitutes offers a ready basis for incentive based adaptation policy.

Smith, K.V. (2010). "How Can Policy Encourage Economically Sensible Climate Adaptation?" NBER Working Paper No. 16100, Jun 2010.

Distributional Impacts in a Comprehensive Climate Policy Package

by Gilbert E. Metcalf, Aparna Mathur, Kevin A. Hassett

- This paper provides a simple analytic approach for measuring the burden of carbon pricing that does not require sophisticated and numerically intensive economic models but which is not limited to restrictive assumptions of forward shifting of carbon prices. Many distributional analyses of carbon pricing focus on the uses-side incidence of carbon pricing. This is the differential burden resulting from heterogeneity in consumption across households. Once one allows for sources-side incidence (i.e. differential impacts of changes in real factor prices), carbon policies look more progressive.

Metcalf, G.E., A. Mathur and K.A. Hassett (2010). "Distributional Impacts in a Comprehensive Climate Policy Package." NBER Working Paper No. 16101, Jun 2010.

September 5, 2010

Institutional Path Dependence in Climate Adaptation: Coman's 'Some Unsettled Problems of Irrigation'

by Gary D. Libecap

- Katharine Coman's 'Some Unsettled Problems of Irrigation' published in March 1911 in the first issue of the American Economic Review addressed issues of water supply, rights, and organization. These same issues have relevance today 100 years later in face of growing concern about the availability of fresh water worldwide as demand grows and as supplies become more uncertain due to the potential effects of climate change. The central point of this article is that appropriative water rights and irrigation districts that emerged in the American West in the late 19th and early 20th centuries in response to aridity to facilitate agricultural water delivery, use, and trade raise the transaction costs today of water markets.

Libecap, G.D. (2010). "Institutional Path Dependence in Climate Adaptation: Coman's 'Some Unsettled Problems of Irrigation'." NBER Working Paper No. 16324, Sept 2010.

Advanced Biofuel Technologies: Status and Barriers

by Jay J. Cheng, Govinda R. Timilsina

- This study reviews the current status of several advanced biofuel technologies. Serious technical barriers limit the near-term commercial application of advanced biofuels technologies. Key technical barriers include low conversion efficiency from biomass to fuel, limits on supply of key enzymes used in conversion, large energy requirements for operation, and dependence in many cases on commercially unproven technology. Despite a large future potential, large-scale expansion of advanced biofuels technologies is unlikely unless and until further research and development lead to lowering these barriers.

Cheng, J.J. and G.R. Timilsina (2010). "Advanced Biofuel Technologies: Status and Barriers." World Bank Policy Research Working Paper No. WPS 5411, Sept 2010.

Costs of Taxation and Benefits of Public Goods with Multiple Taxes and Goods

by James E. Anderson and Will Martin

- This paper uses a model with multiple public goods and taxes to derive consistent measures of the marginal benefits of publicly-provided goods and their marginal social costs. With this model, the authors show that either compensated approaches excluding these income effects or uncompensated approaches including them may be used. If an uncompensated measure of the marginal cost of funds is used, however, the benefits of providing public goods should be adjusted with a simple, benefit multiplier not previously seen in the literature. Once this is done, the optimal level of public provision is independent of whether compensated or uncompensated approaches are used.

Anderson, J.E. and W. Martin (2010). "Costs of Taxation and Benefits of Public Goods with Multiple Taxes and Goods." World Bank Policy Research Working Paper No. WPS 5410, Sept 2010.

Is Agricultural Production Becoming More or Less Sensitive to Extreme Heat? Evidence from U.S. Corn and Soybean Yields

by Michael J. Roberts and Wolfram Schlenker

- Extreme heat is the single best predictor of corn and soybean yields in the United States. While average yields have risen continuously since World War II, we find no evidence that relative tolerance to extreme heat has improved between 1950 and 2005. Climate change forecasts project a sharp increase in extreme heat by the end of the century, with the potential to significantly reduce yields under current technologies.

Roberts, M.J. and W. Schlenker (2010). "Is Agricultural Production Becoming More or Less Sensitive to Extreme Heat? Evidence from U.S. Corn and Soybean Yields." NBER Working Paper No. 16308, Aug 2010.

Voluntary Carbon Markets: How can they Serve Climate Policies?

by Pierre Guigon

- In this paper, we aim to examine how voluntary carbon markets can provide a valuable contribution to strengthening domestic and international climate policies. Voluntary markets are defined as small and unregulated segments of an established carbon market that are driven by voluntary offsetting of GHG emissions.

Guigon, P. (2010). "Voluntary Carbon Markets: How can they Serve Climate Policies?" OECD Environment Working Paper No 19, Aug 2010.

The Value of Luminosity Data as a Proxy for Economic Statistics

by Xi Chen and William D. Nordhaus

- One of the pervasive issues in social and environmental research has been to improve the quality of socioeconomic data in developing countries. Because of the shortcoming of standard data sources, the present study examines luminosity (measures of nighttime lights) as a proxy for standard measures of output.

Chen, X. and W.D. Nordhaus (2010). "The Value of Luminosity Data as a Proxy for Economic Statistics." NBER Working Paper No. 16317, Aug 2010.

Total Costs and Budgetary Effects of Adaptation to Climate Change: An Assessment for the European Union

by Daniel Osberghaus and Christiane Reif

- Adaptation to climate change is gaining increasing relevance in the public debate of climate policy. However, detailed and regionalised cost estimates as a basis for cost-benefit-analyses are rare. We compose available cost estimates for adaptation in Europe, and in particular Germany, Finland and Italy. Furthermore, a systematic overview on fiscal aspects of adaptation is provided, with focus on budgetary effects of adaptation in the different impact sectors.

Osberghaus, D. and C. Reif (2010). "Total Costs and Budgetary Effects of Adaptation to Climate Change: An Assessment for the European Union." CESifo Working Paper No. 3143, Aug 2010.

Benefit-Cost Analysis of Environmental Projects: A Plethora of Systematic Biases

by Philip E. Graves

- There are many reasons to suspect that benefit-cost analysis applied to environmental policies will result in policy decisions that will reject those environmental policies. The important question, of course, is whether those rejections are based on proper science. The present paper explores sources of bias in the methods used to evaluate environmental policy in the United States, although most of the arguments translate immediately to decision-making in other countries.

Graves, P.E. (2010). "Benefit-Cost Analysis of Environmental Projects: A Plethora of Systematic Biases." CESifo Working Paper No. 3144, Aug 2010.

Regulatory Choice with Pollution and Innovation

by Charles D. Kolstad

- This paper develops a simple model of a polluting industry and an innovating firm. The polluting industry is faced with regulation and costly abatement. Regulation may be taxes or marketable permits. The innovating firm invests in R&D and develops technologies which reduce the cost of pollution abatement. The innovating firm can patent this innovation and use a licensing fee to generate revenue. In a world of certainty, the first best level of innovation and abatement can be supported by either a pollution tax or a marketable permit. However, the returns to the innovator from innovation are not the same under the two regimes. A marketable permit system allows the innovator to capture all of the gains to innovation; a tax system involves sharing the gains of innovation between the innovator and the polluting industry.

Kolstad, C.D. (2010). "Regulatory Choice with Pollution and Innovation." NBER Working Paper No. 16303, Aug 2010.

Three Key Elements of Post-2012 International Climate Policy Architecture

by Sheila M. Olmstead, Robert N. Stavins

- We describe three essential elements of an effective post-2012 international global climate policy architecture: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change.

Olmstead, S.M. and R.N. Stavins (2010). "Three Key Elements of Post-2012 International Climate Policy Architecture." FEEM Note di lavoro No. 2010.097, Aug 2010.

On the Correlation between Forcing and Climate Sensitivity

by A.P. Sokolov

- The possible correlation between climate sensitivity and radiative forcing is studied using versions of the NCAR Community Atmospheric Model (CAM) model with different climate sensitivities. No such correlation was found for the CO2 forcing. A weak correlation for the direct sulfate aerosol forcing is associated with differences in cloud cover in control climate simulations with different versions of the model. Presented results suggest that correlation between sensitivity and radiative forcing in the 20th century simulations with different AOGCMs is not a reflection of physical reality but is a result of different treatments of forcing agents, primarily aerosols.

Sokolov, A.P. (2010). "On the Correlation between Forcing and Climate Sensitivity." MIT Joint Program Report Series, Jul 2010.

Long-Term Risks and Short-Term Regulations: Modeling the Transition from Enhanced Oil Recovery to Geologic Carbon Sequestration

by Alexander Bandza and Shalini Vajjhala

- Recent policy debates suggest that geologic carbon sequestration (GS) will play an important role in any carbon-constrained future. As GS evolves from its current role as an end-stage process within enhanced oil recovery (EOR) operations to a long-term, dedicated emissions mitigation option, regulations must simultaneously evolve to address the risks of potential carbon dioxide (CO2) migration underground and leakage to the surface. Because CO2 injection practices are currently based on petroleum industry extraction techniques, risk assessment and regulatory frameworks are also derived from these experiences, and EOR serves as a critical point of departure for GS. In this paper, we develop a basic engineering-economic model of four strategies associated with key deployment pathways in the portfolio of EOR and GS projects.

Bandza, A. and S. Vajjhala (2010). "Long-Term Risks and Short-Term Regulations: Modeling the Transition from Enhanced Oil Recovery to Geologic Carbon Sequestration." RFF Discussion Paper DP 08-29 REV, July 2010.

On the Optimal Taxation of Common-Pool Resources

by Georgios Kossioris, Michael Plexousakis, Anastasios Xepapadeas and Aart de Zeeuw

- Recent research developments in common-pool resource models emphasize the importance of links with ecological systems and the presence of non-linearities, thresholds and multiple steady states. In a recent paper Kossioris et al. (2008) develop a methodology for deriving feedback Nash equilibria for non-linear differential games and apply this methodology to a common-pool resource model of a lake where pollution corresponds to benefits and at the same time affects the ecosystem services. This paper studies the structure of optimal state- dependent taxes that steer the combined economic-ecological system towards the trajectory of optimal management, and provides an algorithm for calculating such taxes.

Kossioris, G., M. Plexousakis, A. Xepapadeas and A. de Zeeuw (2010). "On the Optimal Taxation of Common-Pool Resources." FEEM Note di lavoro No. 2010.101, Aug 2010.

Liberalizing Climate-Friendly Goods and Technologies in the WTO: Product Coverage, Modalities, Challenges and the Way Forward

by ZhongXiang Zhang

- The Doha Round Agenda (paragraph 31(3)) mandates to liberalize environmental goods and services. This mandate offers a good opportunity to put climate-friendly goods and services on a fast track to liberalization. Agreement on this paragraph should represent one immediate contribution that the WTO can make to fight against climate change. This paper presents the key issues surrounding liberalized trade in climate-friendly goods and technologies in WTO environmental goods negotiations. It begins with what products to liberalize and how.

Zhang, Z. (2010). "Liberalizing Climate-Friendly Goods and Technologies in the WTO: Product Coverage, Modalities, Challenges and the Way Forward." FEEM Note di lavoro No. 2010.102, Jul 2010.