Review of Environmental Economics and Policy - current issue

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Sun, 12 Jul 2009 21:15:43 PDT

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Sun, 12 Jul 2009 21:15:43 PDT

Introduction to the Issue

Stavins, R., Carraro, C., Kolstad, C. — Sun, 12 Jul 2009 21:15:43 PDT

Understanding Oil Price Behavior through an Analysis of a Crisis

Maugeri, L. — Sun, 12 Jul 2009 21:15:43 PDT

This article seeks to identify and explain both the fundamental and the more controversial elements that shape the dynamics of the oil market, using the recent oil crisis as the basic framework for analysis. The article suggests that the price of oil is essentially a function of the current and future spare capacity of oil. However, spare capacity alone cannot fully explain the extent and timing of oil price movements. Other important factors must be taken into account, including, above all, the expectations of market operators, who tend to be influenced by both the perceived current and future level of spare capacity and the unreliable data that have plagued the oil world since its inception. The article also suggests that bottlenecks in the oil refining system may play an important role in oil price movements, but tends to downgrade the importance of other factors, such as the influence of OPEC and financial speculation. Finally, the article suggests some reforms to make the oil market more transparent and possibly more stable, which is a prerequisite for making investments in energy efficiency and renewables in the near future.

Greenhouse Gas Auctions and Taxes: Some Political Economy Considerations

Hahn, R. W. — Sun, 12 Jul 2009 21:15:43 PDT

Many economists suggest that a cap-and-trade program and a carbon tax represent promising mechanisms for addressing climate change. A potentially attractive feature of both policies is that they have the potential to recycle revenues in an efficient manner. In the case of cap and trade, this would involve using auction revenues; in the case of a tax, it would involve using tax revenues. This article evaluates various arguments for auctions and taxes in light of political realities and finds that the enthusiasm for auctions and taxes has not been accompanied by sober assessments of whether and how the revenues would actually be used. Most of the evidence suggests that at least some of the revenues would not be spent wisely. Specifically, the article urges the government to compare a realistic set of policy options, while recognizing that the feasibility of different types of mechanisms can change over time. Furthermore, it is suggested that the introduction of political economy considerations may lead to an optimal level of pollution control that is less stringent than conventional economic analysis would suggest.

The Local and Global Benefits of Green Tax Policies in China

Cao, J., Ho, M. S., Jorgenson, D. W. — Sun, 12 Jul 2009 21:15:43 PDT

This article describes a multidisciplinary study of market-based policies for controlling air pollution in China. While previous studies have examined the costs and benefits of pollution control separately, this approach determines them together using an economy–environment model for China. We employ air dispersion simulations and population maps to calculate health damages due to air pollution. This provides estimates of incremental damages for industry output and fuel use. Based on these marginal damages, we simulate the effect of "green taxes" on the economy and show that the environmental benefits exceed the aggregate costs, ignoring adjustment costs for individual sectors.

Environmental Pollution in China: Status and Trends

Vennemo, H., Aunan, K., Lindhjem, H., Seip, H. M. — Sun, 12 Jul 2009 21:15:43 PDT

The state of China's environment is receiving attention from all over the world. This article reviews the current status and trends of environmental pollution in China. We argue that China is able to contain, and to some extent improve, air and water quality for the urban population at the local level. The situation is uneven when it comes to problems at the regional level. On the one hand, surface water quality in the South is improving and particle emissions are stable. On the other hand, nitrogen oxide emissions are increasing rapidly and sulfur oxide emissions have been on the rise until very recently, despite intense official pressure to bring sulfur emissions down. China's CO₂ emissions have grown rapidly in recent years, causing global concern. However, we argue that future growth in CO₂ emissions is likely to be slower. Overall, China appears to be following a path similar to the one taken by more industrialized countries.

China's 11th Five-Year Plan and the Environment: Reducing SO2 Emissions

Cao, J., Garbaccio, R., Ho, M. S. — Sun, 12 Jul 2009 21:15:44 PDT

China's rapid economic growth has been accompanied by a high level of environmental degradation. One of the major sources of health and ecosystem damages is sulfur dioxide (SO₂). Reducing SO₂ emissions is a priority of China's environmental authorities, and the 11th Five-Year Plan (2006–2010) includes the target of reducing total SO₂ emissions by 10 percent from the 2005 level. Given the rapid increase in SO₂ emissions that is expected to occur in absence of intervention, attaining this target will require a significant effort. This article examines the two major policy measures the government is taking to achieve the SO₂ target: a shutdown of many small, inefficient power plants and the installation of desulfurization equipment on existing and new coal-fired plants. We present results from a joint U.S.–China study that we participated in, which estimated the costs and benefits of these policies. We then estimate the economy-wide impacts of the two policies using a multisector model of the Chinese economy. We find that in the aggregate, the economic benefits of the shutdown of the small power plants are large enough to offset the costs of the desulfurization equipment, even without considering the substantial environmental benefits from the reduction of emissions of SO₂ and other pollutants.

The State of Environmental and Resource Economics: A Google Scholar Perspective

Auffhammer, M. — Sun, 12 Jul 2009 21:15:44 PDT

Until recently, ISI Thompson's Web of Science/Social Sciences Citation Index was the only rigorous tool for tracking citation counts of academic research papers. The recent emergence of Google Scholar provides an alternative measure for tracking citation counts for refereed journal articles, conference proceedings, working papers, and government reports. This article provides an overview of the state of environmental and resource economics using the Google Scholar measure of citations. It ranks and compares the major field journals, and the most cited papers in these journals, the most cited papers in the field that have been published in general economics journals, and the most cited technical books and textbooks, as well as the most cited researchers in the field.

Evaluating Environmental and Resource Economics Journals: A TOP-Curve Approach

Rousseau, S., Verbeke, T., Rousseau, R. — Sun, 12 Jul 2009 21:15:44 PDT

This article applies an alternative approach to the measurement of scholarly quality, namely the use of TOP-curves, in order to rank journals in the field of environmental and resource economics. This measure summarizes the incidence, intensity, and inequality of these journals’ highly cited articles. Moreover, TOP-curves allow analysts to rank journals according to TOP-dominance. The journal ranking based on the TOP-dominance criterion does not match the ranking based on the journals’ impact factors. Indeed, TOP-curves provide more detailed information on the relative ranking of journals since they take into account the composition and the distribution of citations within the top group.

Policy Monitor: U.S. Experience with Transferable Development Rights

McConnell, V., Walls, M. — Sun, 12 Jul 2009 21:15:44 PDT

To address the externalities that arise from local land uses, some communities in the United States have turned to Transferable Development Rights (TDRs) as a promising policy tool. TDRs separate the right to develop from the land itself, and create a market that allows those rights to be transferred from one location to another. If the markets work well, targeted areas are protected from development, thereby maintaining them as open space, buffers for water pollution control, wildlife habitat, or scenic vistas, or for other uses; the transferred rights are used to develop other areas more densely than would otherwise be the case. While TDRs have been established in many communities in the last 30 years, only a handful have been successful in achieving local land use goals. The design of TDR markets is complex because they must be integrated with local zoning regulations and they depend critically on local economic conditions in the housing and land markets. This article summarizes the key elements in the design of TDR programs and reviews a number of existing markets to identify which have performed well and which have not. The evolution of the successful markets is described, and lessons learned for future TDR programs are presented.

Reflections--Energy Efficiency Policy: Pipe Dream or Pipeline to the Future?

Tietenberg, T. — Sun, 12 Jul 2009 21:15:44 PDT

In recent years, the amount of both private and public money dedicated to promoting energy efficiency has increased a great deal. Is this a good investment? This "Reflections" article examines the potential for further investment opportunities, the case for government intervention, and the evidence on the effectiveness of the various forms of intervention. The evidence suggests that the challenge of breaking down the barriers is more difficult than conventional wisdom would have us believe. Internalizing externalities and assuring an adequate flow of information is helpful, but not likely to be sufficient. The significant challenges posed by these barriers suggest that policy makers must recognize an expanded set of barriers and respond with some ingenuity in applying an expanded set of available instruments.

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Sun, 12 Jul 2009 21:15:44 PDT