This paper takes as its starting point the observation that fuel prices – and thus taxes – are important for good management of climate change and other environmental problems. To economists this should be no surprise yet it seems that the role of fuel taxation as an instrument of climate policy has not been fully appreciated. It is however one of the few policy instruments that, since several decades, has actually reduced fuel consumption appreciably.
In this paper, we analyze the effects of the choice of price (taxes) versus quantity (tradable permits) instruments on the policy response to technological change. We show that if policy responses incur transactional and political adjustment costs, environmental targets are less likely to be adjusted under tradable permits than under emission taxes. This implies that the total level of abatement over time might remain unchanged under tradable permits while it will increase under emission taxes.
This book by Thomas Sterner and Jessica Coria is an attempt to encourage more widespread and careful use of economic policy instruments. The book compares the accumulated experiences of the use of economic policy instruments in the U.S. and Europe, as well as in rich and poor countries in Asia, Africa, and Latin America. Ambitious in scope, it discusses the design of instruments that can be employed in any country in a wide range of contexts, including transportation, industrial pollution, water pricing, waste, fisheries, forests, and agriculture.
We use survey data to investigate how urban households in Ethiopia coped with the food price shock in 2008. Qualitative data indicate that the high food price inflation was by far the most adverse economic shock between 2004 and 2008, and that a significant proportion of households had to adjust food consumption in response. Regression results indicate that households with low asset levels, and casual workers, were particularly adversely affected by high food prices.
What Do Respondents Bring to Contingent Valuation? A Comparison of Monetary and Labor Payment Vehicles
With contingent valuation, both the goods being valued and the payment vehicles used to value them are mostly hypothetical. However, although numerous studies have examined the impact of experience with the good on willingness to pay, less attention has been given to experience with payment vehicles.
Researchers using stated preference (SP) techniques have increasingly come to rely on what we call "hypothetical baselines".
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.
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.
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.
Treatment effects of Climate Change risk on mitigation and adaptation behaviour in an experimental setting
The authors studied the potential tradeoff between countries’ investments in mitigation versus adaptation to climate change. Mitigating greenhouse gases may be a public good, but adaptation to climate change is a private good, benefiting only the country or individual.
Fuel Taxes and the Poor challenges the conventional wisdom that gasoline taxation, an important and much-debated instrument of climate policy, has a disproportionately detrimental effect on poor people.
Fuel Taxes and the Poor challenges the conventional wisdom that gasoline taxation, an important and much-debated instrument of climate policy, has a disproportionately detrimental effect on poor people.
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.
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.
This paper analyses the economic impacts of climate change on Ethiopia’s agriculture using a countrywide computable general equilibrium model.
The objective of the report is to review the literature on the links between energy access, welfare, and gender in order to provide evidence on where gender considerations in the energy sector matter and how they might be addressed. Prepared as a background document for the 2012 World Development Report on Gender Equality and Development, as well as a part of the Social Development Department’s ongoing work on gender and infrastructure, the report describes and evaluates the evidence on the links between gender and energy focusing on the following areas: increased access to woodfuel through planting of trees and forest management; improved cooking technologies; and access to electricity and motive energy.
This is the activity report for the agreement between Sida and the Environmental Economics Unit for 2010. It is an extension of the agreement for the period 2007 – 2009 in support of programs pertaining to environmental economics activities (Sida ref: 2006-002684, Komponent:73000988). The overall development objective for the program is to improve welfare among poor people in developing countries by preventing pollution and natural resource depletion, and to promote sustainable use of natural resources and ecosystems through the use of environmental economics tools.
Does Positional Concern Matter in Poor Societies? Evidence from a Survey Experiment in Rural Ethiopia
We investigate attitudes toward positionality among rural farmers in Northern Ethiopia using a survey experiment.
We investigate risk and ambiguity attitudes among Ethiopian farmers in one of the poorest regions of the world.
The Forest Carbon Partnership Facility has recently proposed the application of strategic environmental social assessment (SESA) for incorporating environmental and social considerations in the preparation of REDD+ initiatives. This paper discusses the potential contribution of SESA to REDD+ initiatives drawing on experiences from earlier attempts to large scale forestry sector reforms and a recent World Bank pilot program on strategic environmental assessment. The paper suggests that SESA can be a useful approach for strengthening institutions and governance needed for managing diverse environmental and social impacts related to REDD+.
What do respondents bring into contingent valuation? A comparison of monetary and labour payment vehicles
In the Contingent Valuation Method (CVM), both the goods being valued and the payment vehicles used to value them are mostly hypothetical. However, although numerous studies have examined the impact of experience with the good on the willingness to pay, less attention has been given to experience with the payment vehicles. This paper examines how experience with payment vehicles influences responses to a CV scenario on the maintenance of irrigation canals. Specifically, the paper uses a split-sample survey to investigate the effects of experience with monetary and labour payment vehicles on the acceptance of a CV scenario and protest bids. Using convergent validity tests, we found that experience acquired from using both monetary and labour payment vehicles reduces the asymmetries in acceptance rates. These findings suggest that experience with payment vehicles reduces time/money response asymmetries in the CVM.
The new fertilizer subsidies in Sub-Saharan Africa are intended to increase agricultural production and ensure fertilizer market development. Fertilizer adoption requires complementary inputs such as investment in soil and water conservation for efficient and optimal nutrient uptake, and many fertilizer subsidy programmes implicitly assume that fertilizer subsidies crowd in such investments. The present study, therefore, evaluates the impact of fertilizer subsidies on the provision of soil and water conservation efforts in Ghana.
Does relative income have an impact on subjective well-being among extremely poor people? Contrary to the findings in developed countries, where relative income has shown a significant and negative impact on subjective well-being, this study (based on different definitions of reference groups) suggests that relative income does not affect subjective well-being among the very poor people in northern Ethiopia.
Using a random sample of individuals in rural Bangladesh, this paper investigates people's ethical preferences regarding relative values of lives when it comes to saving lives of individuals of different ages. By assuming that an individual has preferences concerning different states of the world, and that these preferences can be described by an individual social welfare function, the individuals' preferences for life-saving programs are elicited using a pair-wise choice experiment involving different life-saving programs.
Everyone wants to blame the undervalued Yuan for global problems. Economists have claimed it will prolong the global recession. Pundits link the export-driven economy to lax environmental regulations and low labor standards. US Treasury Secretary Timothy Geithner called it a contributing factor in a round of capital controls and currency-market interventions by emerging economies.
A review by the CO2Scorecard Group has revealed substantial discrepancies between the top publicly available global databases of CO2 emissions.
It has been widely reviewed, reported, and vociferously condemned that the World Bank Group (WBG) is investing heavily in coal. In South Africa, Botswana and India, the Bank has issued over $4 billion in loans for new coal-fired power plants since 2008. As a result, the Bank’s brand name is now tied to more than a billion tons of CO2 emissions over the next four to five decades.
Policy makers are under increasing pressure to deliver policies that not only foster employment and growth but also are environmentally sustainable. Green growth seeks for even more ambitious results where employment and growth are stimulated by technological and institutional changes arising from better environmental stewardship and adaptation to and mitigation of climate change. As green growth may become the growth paradigm for the 21st century, policy makers require policy tools for addressing this challenge. Strategic environmental assessment of policies (policy SEA) is one of these tools.
We conducted a survey in the Guangdong province in China to measure happiness among preadolescents and their parents. The objective of this study was to investigate what explains preadolescents’ happiness level and whether their happiness is related to the happiness level of their parents. We do not find any significant relationship with respect to the latter, and the factors that explain the variation in happiness among parents do not explain the variation among children. In general, children´s happiness is not explained by socio-economic factors, in fact not even by having divorced parents, which is a situation that clearly decreases the happiness level of parents. Instead, relations with parents and friends are important for the well-being of preadolescents.
A personal carbon allowance (PCA) scheme targets emissions from individual consumption and allocates allowances directly to individuals by dividing the carbon budget on a per capita basis. In this study we analyse the results of a survey sent out to a representative sample of the Swedish population regarding attitudes to a potential PCA scheme.
This report reviews the current status of second generation biofuels. First generation biofuels continue to be substantially subsidized, and this has contributed to the increasing use of such fuel. However, recent studies claim that the future of biofuels lies in second generation biofuels, in particular biochemical ethanol made from cellulose.
Funding a New Bridge in Rural Vietnam: A field experiment on conditional cooperation and default contributions
The ability to provide public goods is essential for economic and social development, yet there is very limited empirical evidence regarding contributions to a real local public good in developing countries. This paper analyzes a field experiment where 200 households in rural Vietnam could make real contributions to an archetypical public good, a bridge.
Sustainable Agricultural Practices and Agricultural Productivity in Ethiopia: Does Agroecology Matter?
This paper uses data from household- and plot-level surveys conducted in the highlands of the Tigray and Amhara regions of Ethiopia to examine the contribution of sustainable land-management practices to net values of agricultural production in areas with low- and high-agricultural potential.
Agricultural Investment and Productivity provides a deep and systematic look at the opportunities for and constraints to investments in sustainable agriculture in East Africa, offering important insights into what works and how to analyze agricultural investments in one of the poorest regions of the world. The book critically examines the reasons behind East Africa's stagnant agricultural productivity over the past forty-five years, using the primary lens of investments in fertilizers, seeds, and sustainable land management technologies, These investments have a tremendous impact on production volume, ultimately affecting the income of millions of families throughout the region.
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.
This paper uses a choice experiment to study citizens' preferences for effort-sharing rules for reducing carbon dioxide emissions. For a given global cost and level of emission reduction, we study the willingness to pay for various rules that imply different distributions of the cost between EU, the US, China and Africa.
The paper reviews the current use of instruments for environmental fiscal reform (EFR) in selected East and Southern African countries and analyzes the effects on income distribution from fuel taxes. Theoretical arguments for introducing taxes on environmental and fiscal grounds as well as potential trade-offs between environmental and fiscal objectives are discussed.
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.
Fishers in developing countries do not have the resources to acquire advanced technologies to exploit offshore fish stocks. As a result, the United Nations Convention on the Law of the Sea requires countries to sign partnership agreements with distant water fishing nations (DWFNs) to exploit offshore stocks. However, for migratory stocks, the offshore may serve as a natural marine reserve (i.e., a source) to the inshore (i.e., sink); hence these partnership agreements generate spatial externality.
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.
Effects of land use changes are starting to be included in estimates of life-cycle greenhouse gas (GHG) emissions, so-called carbon footprints (CFs), from food production. Their omission can lead to serious underestimates, particularly for meat. Here we estimate emissions from the conversion of forest to pasture in the Legal Amazon Region (LAR) of Brazil and present a model to distribute the emissions from deforestation over products and time subsequent to the land use change.
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.
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.
Does Environmental Economics Produce Aeroplanes Without Engines? - On the Need for an Environmental Social Science
In this paper we first critically review conventional environmental economics. We conclude that the standard theory offers too narrow a perspective for many real world problems and that many theories are not empirically tested. Consequently, environmental economics is at risk of producing aeroplanes without engines.
While Africa has contributed marginally to climate change, the continent will be disproportionately affected by it, particularly the agricultural sector. Climate change demands policy action to address mitigation and adaptation needs, and it poses opportunities in implementation of international instruments.
This paper analyzes the effects of the interaction between technology adoption and incomplete enforcement on the extent of violations and the rate of abatement technology adoption.
We investigate whether Swedish Environmental Protection Agency (EPA) administrator recommendations regarding improvements in environmental quality differ from citizen preferences.
Climate Change and Total Factor Productivity in the Tanzanian Economy: A Computable General Equilibrium Analysis
The paper analyses the economic impacts of climate change-induced adjustments on the performance of the Tanzanian economy, using a country-wide CGE model. The general equilibrium framework enables comparison of the effects of climate change to the overall growth of the economy, as responsiveness to shocks is likely to depend on the macroeconomic structure of the economy.
Fuel taxes are one of the most powerful climate policies. Yet, these taxes have not been given very much attention in the global debate regarding climate policy, compared with other instruments, such as tradable emission permits. This article shows, however, that the immense media coverage during fall 2006 significantly affected people's attitudes towards the CO2 tax on gasoline.