Template-Type: ReDIF-Paper 1.0 Number: 2014.01 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-001.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.01 Title: Facing the Experts: Survey Mode and Expert Elicitation Author-Name: Erin Baker Author-X-Name-First: Erin Author-X-Name-Last: Baker Author-WorkPlace-Name: University of Massachusetts at Amherst Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Centro Euro-Mediterraneo per i Cambiamenti Climatici and Università Bocconi Author-Name: Karen E. Jenni Author-X-Name-First: Karen E. Author-X-Name-Last: Jenni Author-WorkPlace-Name: Insight Decisions LLC Author-Name: Elena Claire Ricci Author-X-Name-First: Elena Claire Author-X-Name-Last: Ricci Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Centro Euro-Mediterraneo per i Cambiamenti Climatici and Università degli Studi di Milano Abstract: In this paper we compare the results of two different expert elicitation methods: in-person interviews and a self-administered web-based survey. Traditional expert elicitation has been done face to face, with an elicitor meeting with an expert for a few hours to several days, depending on the complexity of the analysis. Recently, however, some groups have been using other methods to solicit expert judgments, including self-administered surveys (written, emailed, and web-based), and the use of interactive web tools to facilitate interactions during an elicitation. These elicitations require fewer resources from the assessment team than in-person interviews, and often allow participating experts to provide input on their own schedules, perhaps with additional time to think about their responses. Thus they open up the possibility of using expert elicitation to obtain inputs relevant to a broader set of decisions. To our knowledge, these newer survey-based methods have not been rigorously evaluated for efficacy. We find, much like the results in the literature on different survey modes, different results from two different modes we examined, but no clear indication of which method might be preferred. We suggest future work including some controlled, lab-based experiments and real EEs well designed to avoid sample selection biases and specifically targeted to capture survey mode effects. Such studies would help us determine whether and when the different survey modes are most effective. Keywords: Expert Elicitation, Interviews, Web Surveys, Carbon Capture and Storage Classification-JEL: D81, O32, Q55, Q40 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.02 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-002.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.02 Title: Turkey as a Regional Natural Gas Hub: Myth or Reality? An Analysis of the Regional Gas Market Outlook, beyond the Mainstream Rhetoric Author-Name: Simone Tagliapietra Author-X-Name-First: Simone Author-X-Name-Last: Tagliapietra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Italy Abstract: Over the last years Turkey has been increasingly associated in the international political and economic debate with concepts such as “gas corridor” and “gas hub”. This characterization of Turkey is clearly mainly due to its unique geographical position at the crossroads the Caspian region, the Middle East and Europe. In particular, this argument is often advanced in the political discussion on the rise of Turkey as a leading regional power and in the debate on the future prospects for the EU-Turkey relations. However, by going beyond the political slogans and by focusing on the concrete gas realities around Turkey this picture could be seriously put into question. The aim of this paper is to explore the real potential role of Turkey in the regional gas markets, firstly focusing on the current situation of gas producing countries around Turkey and then moving to the future prospects of gas cooperation in the region. To this end, the paper will provide an assessment of both the current situation and outlook of gas markets in Azerbaijan, Turkmenistan, Iraq, Iran, Israel and Cyprus, subsequently providing a discussion of the future prospects of the Southern Gas Corridor and of the potential Eastern Mediterranean Gas Corridor. This analysis will indicate that Turkey will hardly have the potential to become a regional gas hub in the medium term (up to 2020-2025). However, Turkey could have the potential to play an important role in the regional gas markets in the longer term (after 2025-2030) if a number of infrastructural, commercial and political barriers described in the paper are overcome and -last but not the least- if the EU gas demand recovers and the EU market actually needs more natural gas supplies. Keywords: Natural Gas Markets, Southern Gas Corridor, Eastern Mediterranean Gas Corridor, Turkey Gas Outlook, EU Energy Policy, EU Security of Gas Supply Classification-JEL: Q40, Q42, Q48 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.03 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-003.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.03 Title: Quantifying the Long-Term Economic Benefits of European Electricity System Integration Author-Name: Eva Schmid Author-X-Name-First: Eva Author-X-Name-Last: Schmid Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Author-Name: Brigitte Knopf Author-X-Name-First: Brigitte Author-X-Name-Last: Knopf Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Abstract: This paper analyses a set of model-based decarbonization scenarios in order to quantify the long-term economic benefits that arise from an increasing integration of the pan-European electricity system. It thereby focuses on the interplay between transmission infrastructure and renewable generation capacity expansion. We confirm earlier findings that, on aggregate, pan-European transmission capacity expansion constitutes a no-regret option for integrating increasing shares of variable renewables in mitigation scenarios with positive social returns on investment. However, it turns out that the change in total discounted system costs that occurs as transmission capacity expansion increases is modest in magnitude, with a maximum of 3.5% for a case with no expansion compared to one with massive expansion. In technical terms this means that the optimum is rather flat and that taking into account regional and local benefits and distributional aspects, could alter the evaluation of the economic benefits considerably. A crucial finding in this context is that the configuration of pan-European transmission infrastructure and the importance of specific country-connections, i.e. a “Southern” versus a “Northern” solution, crucially hinges on the relative development of specific investment costs for solar and wind technologies over the next decades. Keywords: Transmission Infrastructure Planning, European Energy Policy Targets, Mitigation Classification-JEL: Q42, Q48, Q54 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.04 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-004.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.04 Title: A Sub-national CGE Model for Italy Author-Name: Gabriele Standardi Author-X-Name-First: Gabriele Author-X-Name-Last: Standardi Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change and Fondazione Eni Enrico Mattei Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei and University of Milan Author-Name: Fabio Eboli Author-X-Name-First: Fabio Author-X-Name-Last: Eboli Author-WorkPlace-Name: Euro-Mediterranean Center on Climate Change and Fondazione Eni Enrico Mattei Abstract: This paper describes a methodology to develop a Computable General Equilibrium model with a sub-national detail starting from a global database and model presenting the country-level as the highest resolution. This procedure is demonstratively applied to Italy, but can be transferred to any country/macro-region, provided regional data availability. Increasing the spatial resolution of a CGE model can be particularly useful to capture local specificities not only in response to given policy shocks, but also to environmental impacts, as, for instance, those originated by climate change, which are highly differentiated spatially. Conceptual and practical issues are treated: we use an innovative method to estimate bilateral trade flows across sub-national areas and analyse the implications of different assumptions on both factor and good intra-country mobility. We carry out a simple experiment to test the robustness of our regionalized structure. Keywords: CGE Models, Regional Economics Classification-JEL: C68, D58, R11, R12, R13 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.05 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-005.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.05 Title: The Stability and Effectiveness of Climate Coalitions: A Comparative Analysis of Multiple Integrated Assessment Models Author-Name: Kai Lessmann Author-X-Name-First: Kai Author-X-Name-Last: Lessmann Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Author-Name: Ulrike Kornek Author-X-Name-First: Ulrike Author-X-Name-Last: Kornek Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Università Bocconi and Fondazione Eni Enrico Mattei (FEEM) Author-Name: Rob Dellink Author-X-Name-First: Rob Author-X-Name-Last: Dellink Author-WorkPlace-Name: Environmental Economics and Natural Resources Group, Department of Economics, Wageningen University Author-Name: Johannes Emmerling Author-X-Name-First: Johannes Author-X-Name-Last: Emmerling Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC) Author-Name: Johan Eyckmans Author-X-Name-First: Johan Author-X-Name-Last: Eyckmans Author-WorkPlace-Name: KU Leuven – Center for Economics and Corporate Sustainability (CEDON) Author-Name: Miyuki Nagashima Author-X-Name-First: Miyuki Author-X-Name-Last: Nagashima Author-WorkPlace-Name: Research Institute of Innovative Technology for the Earth Author-Name: Hans-Peter Weikard Author-X-Name-First: Hans-Peter Author-X-Name-Last: Weikard Author-WorkPlace-Name: Environmental Economics and Natural Resources Group, Department of Economics, Wageningen University Author-Name: Zili Yang Author-X-Name-First: Zili Author-X-Name-Last: Yang Author-WorkPlace-Name: Department of Economics, State University of New York at Binghamton Abstract: In this paper we report results from a comparison of numerically calibrated game theoretic integrated assessment models that explore stability and performance of international coalitions for climate change mitigation. Specifically, by means of this ensemble of models we are able to identify robust results concerning incentives of nations to commit themselves to a climate agreement, and to estimate what stable agreements can achieve in terms of greenhouse gas mitigation. We also assess the potential of transfers that redistribute the surplus of cooperation in order to foster stability of climate coalitions. In contrast to much of the existing analytical game theoretical literature, we find substantial scope for self-enforcing climate coalitions in most models that close much of the abatement and welfare gap between complete absence of cooperation and full cooperation. This more positive message follows from the use of transfer schemes that are designed to counteract free riding incentives. Keywords: Coalition Stability, International Environmental Agreements, Numerical modeling, Transfers Classification-JEL: Q5, Q58, C7 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.06 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-006.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.06 Title: Urban Network Economics and the Environment: Insights and Perspectives Author-Name: Sergio Currarini Author-X-Name-First: Sergio Author-X-Name-Last: Currarini Author-WorkPlace-Name: Department of Economics, University of Leicester Author-Name: Carmen Marchiori Author-X-Name-First: Carmen Author-X-Name-Last: Marchiori Author-WorkPlace-Name: Department of Geography and Environment, London School of Economics and Political Science, Grantham Research Institute on Climate Change and the Environment, Fondazione Eni Enrico Mattei Author-Name: Alessandro Tavoni Author-X-Name-First: Alessandro Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, Fondazione Eni Enrico Mattei Abstract: Recent research in the field of network economics has shown how explicitly modelling the network structure of social and economic relations can provide significant theoretical insights, as well as account for previously unexplained empirical evidence. Despite their critical importance to many environmental problems, network structures and dynamics have been largely disregarded by the environmental economics literature. This paper aims to begin to fill this gap by analyzing how networks can provide new insights for both theory and practice, and identifying several avenues for future research. The paper addresses questions pertaining to a wide range of issues, including the adoption and diffusion of green technologies, access to and distribution of natural resources, common-pool resource management and governance, and the stability of international environmental coalitions. Keywords: Networks, Environmental Externalities, Technological Diffusion, Gas Pipelines Common-pool Resources, Multi-level Governance, Coalitions Classification-JEL: L14, Q5, O3 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.07 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-007.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.07 Title: Linkage of Greenhouse Gas Emissions Trading Systems: Learning from Experience Author-Name: Matthew Ranson Author-X-Name-First: Matthew Author-X-Name-Last: Ranson Author-WorkPlace-Name: Abt Associates Inc. Author-Name: Robert N. Stavins Author-X-Name-First: Robert N. Author-X-Name-Last: Stavins Author-WorkPlace-Name: Harvard Kennedy School Abstract: The last ten years have seen the growth of linkages between many of the world’s cap-and-trade systems for greenhouse gases (GHGs), both directly between systems, and indirectly via connections to credit systems such as the Clean Development Mechanism. If nations have tried to act in their own self-interest, this proliferation of linkages implies that for many nations, the expected benefits of linkage outweighed expected costs. In this paper, we draw on the past decade of experience with carbon markets to test a series of hypotheses about why systems have demonstrated this revealed preference for linking. Linkage is a multi-faceted policy decision that can be used by political jurisdictions to achieve a variety of objectives, and we find evidence that many economic, political, and strategic factors — ranging from geographic proximity to integrity of emissions reductions — influence the decision to link. We also identify some potentially important effects of linkage, such as loss of control over domestic carbon policies, which do not appear to have deterred real-world decisions to link. These findings have implications for the future role that decentralized linkages may play in international climate policy architecture. The Kyoto Protocol has entered what is probably its final commitment period, covering only a small fraction of global GHG emissions. Under the Durban Platform for Enhanced Action, negotiators may now gravitate toward a hybrid system, combining top-down elements for establishing targets with bottom-up elements of pledge-and-review tied to national policies and actions. The incentives for linking these national policies are likely to continue to produce direct connections among regional, national, and sub-national cap-and-trade systems. The growing network of decentralized, direct linkages among these systems may turn out to be a key part of a future hybrid climate policy architecture. Keywords: Greenhouse Gas Emissions, Trading Systems Classification-JEL: Q5, Q58 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.08 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-008.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.08 Title: Spatial Policies and Land Use Patterns: Optimal and Market Allocations Author-Name: Efthymia Kyriakopoulou Author-X-Name-First: Efthymia Author-X-Name-Last: Kyriakopoulou Author-WorkPlace-Name: University of Gothenburg and Beijer Institute of Ecological Economics Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Athens University of Economics and Business and Beijer Fellow Abstract: We study the optimal and equilibrium distribution of industrial and residential land in a given region. The trade-off between the agglomeration and dispersion forces, in the form of pollution from stationary forces, environmental policy, production externalities, and commuting costs, determines the emergence of industrial and residential clusters across space. In this context, we define two kinds of spatial policies that can be used in order to close the gap between optimal and market allocations. More specifically, we show that the joint implementation of a site-specific environmental tax and a site-specific labor subsidy can reproduce the optimum as an equilibrium outcome. We also propose a novel approach that allows for endogenous determination of land use patterns and provides more precise results compared to previous studies. Keywords: Spatial Policies, Agglomeration, Land Use, Pollution, Environmental Tax, Labor Subsidy Classification-JEL: R14, R38, H23 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.09 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-009.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.09 Title: Policies and Practices of Low Carbon City Development in China Author-Name: Can Wang Author-X-Name-First: Can Author-X-Name-Last: Wang Author-WorkPlace-Name: State Key Joint Laboratory of Environment Simulation and Pollution Control, School of Environment, Tsinghua University, Ministry of Education Key Laboratory for Earth System Modeling, Center for Earth System Science, Tsinghua University, China Author-Name: Jie Lin Author-X-Name-First: Jie Author-X-Name-Last: Lin Author-WorkPlace-Name: State Key Joint Laboratory of Environment Simulation and Pollution Control, School of Environment, Tsinghua University, China Author-Name: Wenjia Cai Author-X-Name-First: Wenjia Author-X-Name-Last: Cai Author-WorkPlace-Name: Ministry of Education Key Laboratory for Earth System Modeling, Center for Earth System Science, Tsinghua University, China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Department of Public Economics, School of Economics, Fudan University, China Abstract: Globally as well as in China, cities have contributed to most of the economic output and have accordingly given rise to most CO2 emissions. In particular, given unprecedented urbanization, cities will play an even greater role in shaping energy demand and CO2 emissions. Therefore, cities are the key to meeting its proposed carbon intensity target in 2020 and whatever climate commitments beyond 2020 that China may take. Given the paramount importance of cities, China is practicing low carbon city (LCC) development. Against this background, this paper first summarizes the general situation and main characteristics of China’s LCC development. The paper then identifies eight problems and challenges for China’s LCC development including the absence of sound carbon accounting systems, lack of low-carbon specific evaluation system, rare use of market-based instruments, insufficient government-enterprise interactions, excessive budget dependence on land concession, increasing difficulty in further carbon mitigation, inevitable emissions growth due to rising living standards, and coal-dominant energy structure in the foreseeable future. Since these challenges are not applied to one or few cities, but are to all cities across the country, finally, the paper discusses how governments, in particular the central government, should address these problems and challenges. Given that China has faced great difficulty ensuring that local governments act in accordance with centrally-directed policies, the paper in particular discusses ways to incentivize local governments not to focus on economic growth alone and to move away from a heavy reliance on land concession. The paper ends with emphasizing on putting a price on carbon a crucial step for China’s endeavor of harnessing the market forces to reduce its energy consumption and carbon emissions and genuinely transiting into a low-carbon economy. Keywords: Policies, Practices, Low carbon city, Market-based instruments, Energy, Governments, China Classification-JEL: Q42, Q43, Q48, Q54, Q55, Q56, Q58, O13, O53, R52, R58 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.10 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-010.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.10 Title: Trust as a Key Variable of Sustainable Development and Public Happiness: A Historical and Theoretical Example Regarding the Creation of Money Author-Name: Nicola Genovese Author-X-Name-First: Nicola Author-X-Name-Last: Genovese Author-WorkPlace-Name: Professor of Economics, University of Messina Author-Name: Maria Grazia La Spada Author-X-Name-First: Maria Grazia Author-X-Name-Last: La Spada Author-WorkPlace-Name: University of Messina, Department of Economics, SEAM Abstract: This article purports to trace the origin of money on the basis of factors in interpersonal relationships, affecting a sustainable development and public happiness, namely trust, reciprocity and the concept of we-rationality. Both the historical approach and the one based on traditional economic theory have been found inadequate mainly because they did not take into account these factors. The hypothesis expounded in the paper is that these values underlaid the beginning of economic activity. Initially economic activity was carried out within small human groups. In such groups interpersonal relations were not based on individual self-interest. As a matter of fact, there is historical evidence supporting the notion that the first exchanges were gift-giving and were made possible by trust and reciprocity as expounded by Polanyi (1957) and Sudgen (2000) among others. When the exchanges strengthened between elements of various groups all with the same values and moral characteristics the process toward the creation of money started, without any intrinsic value and the presence of any superior authority. In the paper it is also hypothesized that the creation of money is one of the basic factors in the progress of economic and social activity, together with ancient phenomena as language ad writing. Finally, the paper advocates that in future the economic activity be permeated by those moral values on which a sustainable development can be based. This will, in turn, increase the rate of economic and social growth. Keywords: Sustainable Development, Public Happiness, Origin of Money, Behaviour Economics, Exchanges Between Primitive Populations Classification-JEL: Q01, A13, B15, E40 Creation-Date: 201401 Template-Type: ReDIF-Paper 1.0 Number: 2014.11 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-011.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.11 Title: Does the Quality of Electricity Matter? Evidence from Rural India Author-Name: Ujjayant Chakravorty Author-X-Name-First: Ujjayant Author-X-Name-Last: Chakravorty Author-WorkPlace-Name: Department of Economics, Tufts University Author-Name: Martino Pelli Author-X-Name-First: Martino Author-X-Name-Last: Pelli Author-WorkPlace-Name: Department of Economics, Université de Sherbrooke Author-Name: Beyza Ural Marchand Author-X-Name-First: Beyza Author-X-Name-Last: Ural Marchand Author-WorkPlace-Name: Department of Economics, University of Alberta Abstract: This paper estimates the returns to household income due to improved access to electricity in rural India. We examine the effect of connecting a household to the grid and the quality of electricity, defined as hours of daily supply. The analysis is based on two rounds of a representative panel of more than 10,000 households. We use the district-level density of transmission cables as instrument for the electrification status of the household. We find that a grid connection increases non-agricultural incomes of rural households by about 9 percent during the study period (1994-2005). However, a grid connection and a higher quality of electricity (in terms of fewer outages and more hours per day) increases non-agricultural incomes by about 28.6 percent in the same period. Keywords: Electricity Supply, Quality, India, Energy and Development, Infrastructure Classification-JEL: O12, O18, Q48 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.12 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-012.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.12 Title: From Outsourcing to Productivity, Passing Through Training: Microeconometric Evidence from Italy Author-Name: Roberto Antonietti Author-X-Name-First: Roberto Author-X-Name-Last: Antonietti Author-WorkPlace-Name: Department of Economics and Management “Marco Fanno”, Italy Abstract: The aim of this paper is to provide firm-level evidence on the short-run link between outsourcing and labor productivity using an original dataset of Italian manufacturing firms, and applying a two-stage probit least squares estimator. We find a positive effect on productivity from outsourcing only if firms provide training for the workforce. This indirect impact on productivity is independent of the type of activity outsourced and is bigger in the case of service outsourcing. This can be explained by the different feedback effect of labor productivity on training and by the different type of training provided. While production outsourcing induces an organizational change which stimulates off-the-job training for plant operators, service outsourcing induces firms to train a broader range of occupational profiles - both off and on the job. Similar results emerge for the case of joint outsourcing of both production and service activities. Therefore, we find that outsourcing generates positive productivity effects only if it is part of a broader knowledge management strategy that involves upgrading of workers’ skills. Keywords: Outsourcing, Productivity, Training, Two-Stage Probit Least Squares Classification-JEL: J24, L24, L25, L60 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.13 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-013.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.13 Title: On The Economics of Forest Carbon: Renewable and Carbon Neutral But Not Emission Free Author-Name: Jussi Lintunen Author-X-Name-First: Jussi Author-X-Name-Last: Lintunen Author-WorkPlace-Name: Finnish Forest Research Institute, Finland Author-Name: Jussi Uusivuori Author-X-Name-First: Jussi Author-X-Name-Last: Uusivuori Author-WorkPlace-Name: Finnish Forest Research Institute, Finland Abstract: First-best optimal forest sector carbon policy is examined. Using a comprehensive forest sector model with a detailed carbon cycle section we show that the renewability and carbon neutrality arguments do not warrant emission free treatment of forest bioenergy. However, under the biomass stock change carbon accounting convention followed by UNFCCC and IPCC, the forest owners pay for the roundwood emissions and, to avoid double counting, the use of roundwood is treated as emission free. The bioenergy from harvest residues cannot be treated as emission free either. Their emission factors are determined through the decay time-scales specific to residue fractions and discount rate used in welfare assessment. In addition, we show that an optimal policy subsidizes the production of wood products sequestering carbon. The relative magnitude of the subsidy is based on the fraction of the carbon stored, the lifetime of the products and the discount rate. Correspondingly, the carbon removals by biomass growth are subsidized and the harvest residue generation taxed. Further, we show that the supply side policies are independent of final use of harvested timber. Numerical solution of the model shows that, although the use of wood is not emission free, it is optimal to increase the use of wood, possibly also in the energy sector. Before the wood use can be increased, the forest biomass has to be increased. This initial carbon sink speeds up the convergence to the lower steady-state atmospheric carbon stock. Keywords: Optimal Policy, Forest Carbon, Effective Emission Factor, Age-Structured Forest Classification-JEL: Q23, Q43, Q50, Q54 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.14 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-014.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.14 Title: Transforming the European Energy System: Member States’ Prospects Within the EU Framework Author-Name: Brigitte Knopf Author-X-Name-First: Brigitte Author-X-Name-Last: Knopf Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Author-Name: Bjørn Bakken Author-X-Name-First: Bjørn Author-X-Name-Last: Bakken Author-WorkPlace-Name: SINTEF Energy Research Author-Name: Samuel Carrara Author-X-Name-First: Samuel Author-X-Name-Last: Carrara Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change Author-Name: Amit Kanudia Author-X-Name-First: Amit Author-X-Name-Last: Kanudia Author-WorkPlace-Name: KanORS-EMR Author-Name: Ilkka Keppo Author-X-Name-First: Ilkka Author-X-Name-Last: Keppo Author-WorkPlace-Name: University College London Author-Name: Tiina Koljonen Author-X-Name-First: Tiina Author-X-Name-Last: Koljonen Author-WorkPlace-Name: VTT Technical Research Centre of Finland Author-Name: Silvana Mima Author-X-Name-First: Silvana Author-X-Name-Last: Mima Author-WorkPlace-Name: PACTE-EDDEN, CNRS, Université Grenoble Alpes Author-Name: Eva Schmid Author-X-Name-First: Eva Author-X-Name-Last: Schmid Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Author-Name: Detlef van Vuuren Author-X-Name-First: Detlef Author-X-Name-Last: van Vuuren Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency and Utrecht University, Department of Geosciences Abstract: The Energy Modeling Forum 28 (EMF28) performed a large-scale model comparison exercise to illustrate different technology pathways for cutting European greenhouse gas emissions by 80% by 2050. Focusing on selected countries (France, Germany, Italy, Sweden and UK), this paper first analyses climate and energy policy objectives and debates in the respective countries. It then compares EMF28 model results to the short-term projections of the National Renewable Energy Action Plans (NREAPs) and the long-term transformation pathway given in the European Commission’s “Energy Roadmap 2050”. It concludes that there is sufficient agreement with the NREAPs and national policies to accept the model results as conceivable scenarios. The scenarios suggest that in the future a variety of different national energy mixes will continue to reflect the different resource bases and preferences of individual Member States. In order to ensure a cost-efficient transformation, it is important to improve coordination between Member State policies and those at EU level. Keywords: European Climate and Energy Policy, National Renewable Action Plans (Nreaps), Environmental Federalism, Mitigation Scenarios Classification-JEL: Q2, Q4 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.15 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-015.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.15 Title: Beyond 2020 - Strategies and Costs for Transforming the European Energy System Author-Name: Brigitte Knopf Author-X-Name-First: Brigitte Author-X-Name-Last: Knopf Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Author-Name: Yen-Heng Henry Chen Author-X-Name-First: Yen-Heng Author-X-Name-Last: Henry Chen Author-WorkPlace-Name: Massachusetts Institute of Technology (MIT), Joint Program on the Science and Policy of Global Change Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change Author-Name: Hannah Förster Author-X-Name-First: Hannah Author-X-Name-Last: Förster Author-WorkPlace-Name: Öko-Institut Author-Name: Amit Kanudia Author-X-Name-First: Amit Author-X-Name-Last: Kanudia Author-WorkPlace-Name: KanORS-EMR Author-Name: Ioanna Karkatsouli Author-X-Name-First: Ioanna Author-X-Name-Last: Karkatsouli Author-WorkPlace-Name: Massachusetts Institute of Technology (MIT), Joint Program on the Science and Policy of Global Change Author-Name: Ilkka Keppo Author-X-Name-First: Ilkka Author-X-Name-Last: Keppo Author-WorkPlace-Name: University College London Author-Name: Tiina Koljonen Author-X-Name-First: Tiina Author-X-Name-Last: Koljonen Author-WorkPlace-Name: VTT Technical Research Centre of Finland Author-Name: Katja Schumacher Author-X-Name-First: Katja Author-X-Name-Last: Schumacher Author-WorkPlace-Name: Öko-Institut Author-Name: Detlef van Vuuren Author-X-Name-First: Detlef Author-X-Name-Last: van Vuuren Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency and Utrecht University, Department of Geosciences Abstract: The Energy Modeling Forum 28 (EMF28) study systematically explores the energy system transition required to meet the European goal of reducing greenhouse gas (GHG) emissions by 80% by 2050. The 80% scenario is compared to a reference case that aims to achieve a 40% GHG reduction target. The paper investigates mitigation strategies beyond 2020 and the interplay between different decarbonization options. The models present different technology pathways for the decarbonization of Europe, but a common finding across the scenarios and models is the prominent role of energy efficiency and renewable energy sources. In particular, wind power and bioenergy increase considerably beyond current deployment levels. Up to 2030, the transformation strategies are similar across all models and for both levels of emission reduction. However, mitigation becomes more challenging after 2040. With some exceptions, our analysis agrees with the main findings of the “Energy Roadmap 2050” presented by the European Commission. Keywords: European Decarbonisation, Mitigation Scenarios, Model Comparison, Climate Change, EU Energy Roadmap 2050 Classification-JEL: Q2, Q4 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.16 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-016.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.16 Title: Does the Swiss Car Market Reward Fuel Efficient Cars? Evidence from Hedonic Pricing Regressions, a Regression Discontinuity Design, and Matching Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: AREC, University of Maryland, Centre for Energy Policy and Economics (CEPE), ETH Zürich, and Fondazione Eni Enrico Mattei Author-Name: Markus Bareit Author-X-Name-First: Markus Author-X-Name-Last: Bareit Author-WorkPlace-Name: CEPE, ETH Zürich Author-Name: Massimo Filippini Author-X-Name-First: Massimo Author-X-Name-Last: Filippini Author-WorkPlace-Name: CEPE, ETH Zürich, and University of Lugano Abstract: To correct market failures due to the presence of negative externalities associated with energy consumption, governments have adopted a variety of policies, including taxes, subsidies, regulations and standards, and information-based policies. For example, labels that clearly convey energy consumption rates, associated costs, and emissions of conventional pollutants and CO2, have been devised and used in the last two decades in several countries. In 2003, Switzerland introduced a system of fuel economy labels, based on grades ranging from A to G, where is A best and G is worst, to assist consumers in making decisions that improve the fleet’s fuel economy and lower emissions. We use a dataset documenting all passenger cars approved for sale in Switzerland each year from 2000 to 2011 to answer three key research questions. First, what is the willingness to pay for fuel economy? Second, do Swiss drivers—or Swiss auto importers on their behalf—appear to do a one-to-one tradeoff between car purchase price and savings on fuel costs over the lifetime of the car? Third, does the label have an additional effect on price, all else the same, above and beyond that of fuel efficiency alone? Hedonic pricing regressions that exploit the variation in fuel economy across make-models, and over time within make-models, suggest that there is a (modest) capitalization of fuel economy into car prices. The diesel premium, however, exceeds the future fuel cost savings made possible by diesel cars, even at zero discount rates. An alternate calculation suggests that the fuel economy premium is consistent with a very low discount rate (2.5%). We use a sharp regression discontinuity design (RDD) based on the mechanism used by the Swiss Federal Office of Energy to assign cars to the fuel economy label to see if the label has an independent effect on price, above and beyond that of the fuel economy. The RDD approach estimates the effect to be 6-11%. To broaden the fuel economy range over which we assess the effect of the A label, we also deploy matching estimators, and find that the effect of an A label on car price is approximately 5%. Keywords: Fuel Economy, CO2 Emissions, Passenger Vehicles, Hedonic Pricing Model, Matching Estimator, Regression Discontinuity Design, Fuel Efficiency Premium, Discounted Future Fuel Costs Classification-JEL: Q48, Q53, Q54 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.17 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-017.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.17 Title: Is Participation in Tourism Market an Opportunity for Everyone? Some Evidence from Italy Author-Name: Cristina Bernini Author-X-Name-First: Cristina Author-X-Name-Last: Bernini Author-WorkPlace-Name: Department of Statistical Sciences, University of Bologna, Italy Author-Name: Maria Francesca Cracolici Author-X-Name-First: Maria Francesca Author-X-Name-Last: Cracolici Author-WorkPlace-Name: Department of Economics, Business and Statistics, Italy Abstract: Exploring the main determinants of tourism participation at national and international level, the paper investigates if there are differences in tourism consumption behavior among Italian families which reflect disparities in their standard of living. To achieve this a Heckman model has been used on a huge sample of Italian households over the period 1997-2007. Results show that participation in the tourism market is strongly affected by the personal characteristics of individuals and that tourism consumption is an income sensitive good. The analysis reveals that tourism is generally a luxury good reflecting the disparities in the standard of living among Italian families. We have found that participation in the tourism market is affected not only by economic constraints, but also by cultural and territorial factors. Keywords: Tourism Consumption, Income Elasticity, Household Characteristics, Domestic and International Travels, Standard of Living Classification-JEL: D10, C23, C24, L83 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.18 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-018.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.18 Title: Explaining the Slow Pace of Energy Technological Innovation: Why Market Conditions Matter? Author-Name: Wei Jin Author-X-Name-First: Wei Author-X-Name-Last: Jin Author-WorkPlace-Name: Research School of Public Economics and Policy College of Public Policy and Administration, Zhejiang University, China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Department of Public Economics, School of Economics, Fudan University, China Abstract: As a useful complement to numerous innovation policy studies from a normative perspective, this paper provides a positive framework to analyze the basic economic mechanism of energy technological innovation and explains its slow pace of technological progress. We find that the capital-intensiveness of energy technology is an inhibiting factor to catalyze market size effect and slows innovations and diffusions of energy technology in the market. We also show that the substantial homogeneity of energy products leads to both a monopolistic market structure on the supply side and a weak level of positive pecuniary externality on the demand side, both dampening the incentive of innovation. On the basis of our economic analysis, we recommend that a package of policy responses to accelerating energy innovation should include 1) downsizing “heavy” assets of energy technologies; 2) deregulating monopolistic energy-supplying markets; and 3) differentiating the homogenous energy products. Keywords: The Economics of Technological Innovation, Market Size Effect, Love-for-variety effect, Energy Technology, IT Technology Classification-JEL: Q55, Q58, Q43, Q48, O31 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.19 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-019.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.19 Title: Time is of the Essence: Adaptation of Tourism Demand to Climate Change in Europe Author-Name: Salvador Barrios Author-X-Name-First: Salvador Author-X-Name-Last: Barrios Author-WorkPlace-Name: Institute for Prospective Technological Studies, Joint Research Centre, European Commission Author-Name: J. Nicolás Ibañez Author-X-Name-First: J. Nicolás Author-X-Name-Last: Ibañez Author-WorkPlace-Name: Institute for Prospective Technological Studies, Joint Research Centre, European Commission Abstract: This study analyses the potential impact of climate change on EU tourism demand and provides long-term (2100) scenarios accounting for adaptation in terms of holiday duration. Our long-term projections for tourism demand are based on hedonic valuation of climatic conditions combining hotel price information and travel cost estimations. This approach allows us to analyse together the climatic aspect of recreational demand and its travel cost dimension and thus to draw alternative hypotheses regarding the time dimension of tourism demand. We derive alternative scenarios for adaptation of holiday in terms of holiday frequency and duration. We find that the climate dimension plays a significant (economically and statistically) role in explaining hedonic valuations of tourism services and, as a consequence, its variation in the long-term are likely to affect the relative attractiveness of EU regions for recreational demand. In certain cases, most notably the Southern EU Mediterranean countries climate condition in 2100 could under current economic conditions, lower tourism revenues for up to -0.45% of GDP per year. On the contrary, other areas of the EU, most notably Northern European countries would gain from altered climate conditions, although these gains would be relatively more modest, reaching up to 0.32% of GDP on an annual basis. Overall our results suggest that the change in holiday duration appears to be more beneficial than the change in the frequency of holidays in view of mitigating the cost of climate change for the tourism sector. These two time dimensions of adaptation are likely to be conditioned by broader societal and institutional factors, however. Keywords: Tourism demand, Climate change Classification-JEL: L8, Q5 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.20 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-020.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.20 Title: Climate Amenities and Adaptation to Climate Change: A Hedonic-Travel Cost Approach for Europe Author-Name: Salvador Barrios Author-X-Name-First: Salvador Author-X-Name-Last: Barrios Author-WorkPlace-Name: Institute for Prospective Technological Studies, Joint Research Centre, European Commission Author-Name: J. Nicolás Ibañez Rivas Author-X-Name-First: J. Nicolás Author-X-Name-Last: Ibañez Rivas Author-WorkPlace-Name: Institute for Prospective Technological Studies, Joint Research Centre, European Commission Abstract: We investigate the impact of climatic change on welfare in European regions using a hedonic travel-cost framework and focusing on tourism demand. Our hedonic price estimations combine detailed hotel price information with tourism-specific travel cost estimations for each pair of EU region. This approach allows us to estimate different valuations of climate amenities depending on time duration of holidays. In our analysis of adaptation to climate change we therefore consider holiday duration as variable of adaptation. Our findings suggest that the rise in temperature in preferred destination choices during the summer season (i.e. southern EU) is likely to yield significant welfare losses. As a result European tourists are more likely to spend shorter (and more frequent) holidays and to diversify their destination choices in order to mitigate these losses. Keywords: Climate Change, Hedonic Prices, Travel Cost, Tourism, Europe Classification-JEL: L8, Q5 Creation-Date: 201402 Template-Type: ReDIF-Paper 1.0 Number: 2014.21 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-021.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.21 Title: Forecasting the Oil-gasoline Price Relationship: Should We Care about the Rockets and the Feathers? Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: University of Milan and FEEM Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and IEFE-Bocconi Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: University of Milan-Bicocca and FEEM Abstract: According to the Rockets and Feathers hypothesis (RFH), the transmission mechanism of positive and negative changes in the price of crude oil to the price of gasoline is asymmetric. Although there have been many contributions documenting that downstream prices are more reactive to increases than to decreases in upstream prices, little is known about the forecasting performance of econometric models incorporating asymmetric price transmission from crude oil to gasoline. In this paper we fill this gap by comparing point, sign and probability forecasts from a variety of Asymmetric-ECM (A-ECM) and Threshold Autoregressive ECM (TAR-ECM) specifications against a standard ECM. Forecasts from A-ECM and TAR-ECM subsume the RFH, while the ECM implies symmetric price transmission from crude oil to gasoline. We quantify the forecast accuracy gains due to incorporating the RFH in predictive models for the prices of gasoline and diesel. We show that the RFH is useless for point forecasting, while it can be exploited to produce more accurate sign and probability forecasts. Finally, we highlight that the forecasting performance of the estimated models is time-varying. Keywords: Asymmetries, Forecast Evaluation, Gasoline, Crude Oil, Rockets and Feathers Classification-JEL: C22, C32, C53, Q40, Q47 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.22 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-022.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.22 Title: Wage Incentive Profiles in Dual Labor Markets Author-Name: Marco Di Cintio Author-X-Name-First: Marco Author-X-Name-Last: Di Cintio Author-WorkPlace-Name: Department of Management, Economics, Mathematics and Statistics, University of Salento, Italy Author-Name: Emanuele Grassi Author-X-Name-First: Emanuele Author-X-Name-Last: Grassi Author-WorkPlace-Name: Department of Management, Economics, Mathematics and Statistics, University of Salento, Italy Abstract: This paper formalizes the use of flexible labor contracts in an efficiency wage framework and derives market dualism as an endogenous outcome. By allowing temporary contracts to be either renewed or converted into permanent contracts, new theoretical insights emerge both on the equilibrium wage structure and the incentive problem faced by workers and firms. Since temporary workers weigh the outside option of entering the labor market through permanent positions, the rate at which fixed-term contracts are converted into open-ended contracts is itself an incentive device which acts as a substitute for the wage. It follows that, even if temporary workers face a higher job loss risk, firms pay a wage differential in favor of permanent workers. The model also predicts that in equilibrium firms hire exclusively under flexible contracts, then half of them is converted into stable contracts while the remaining contracts are left to expire. Thus, in steady state, firms let permanent positions to survive in order to sustain the wage incentive structure. Keywords: Dual Labor Market, Efficiency Wages, Wage Differentials, Flexible Contracts Classification-JEL: J31, J41, J63 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.23 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-023.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.23 Title: Farmland Investments in Africa: What’s the Deal? Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Department of Economics, Swedish University of Agricultural Sciences, Sweden Author-Name: Sebastian Hess Author-X-Name-First: Sebastian Author-X-Name-Last: Hess Author-WorkPlace-Name: Department of Economics, Swedish University of Agricultural Sciences, Sweden Abstract: Large-scale foreign investments in African farmland are rising and may contribute to agricultural productivity growth and economic development. However, host countries sometimes have to wait longer for the economic benefits to arrive than initially expected. In this respect, the timing of project development is crucial and depends on the economic incentives provided to the investors. We therefore present a dynamic stochastic programming model that reflects the typical bargaining situation concerning large land deals in Africa and allows the effect of market- and country-specific risks and taxation to be assessed. The model shows that commodity price volatility increases the value of the land development option, but slows down the land development process. Furthermore, it shows that host country attempts to negotiate fixed commitments to the speed of project development may run counter to the structure of economic incentives at the project site. The applicability of the model is demonstrated for a recent 10,000-hectare cotton project in Ethiopia. Response surface estimations suggest that Ethiopia has negotiated a contract under which it will receive about half the expected total project value, as long as it levies the regular corporate tax rate. Keywords: Foreign Direct Investment, Land Leasing, Real Options, Nash Bargaining Classification-JEL: C61, D81, F23, Q24 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.24 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-024.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.24 Title: What are Households Willing to Pay for Better Tap Water Quality? A Cross-Country Valuation Study Author-Name: Olivier Beaumais Author-X-Name-First: Olivier Author-X-Name-Last: Beaumais Author-WorkPlace-Name: EconomiX, CNRS – France and LISA, CNRS, France Author-Name: Anne Briand Author-X-Name-First: Anne Author-X-Name-Last: Briand Author-WorkPlace-Name: CREAM, University of Rouen, France Author-Name: Katrin Millock Author-X-Name-First: Katrin Author-X-Name-Last: Millock Author-WorkPlace-Name: Paris School of Economics, CNRS, Centre d’Economie de la Sorbonne, France Author-Name: Céline Nauges Author-X-Name-First: Céline Author-X-Name-Last: Nauges Author-WorkPlace-Name: The University of Queensland, Australia Abstract: We estimate willingness to pay (WTP) for better quality of tap water on a unique cross-section sample from 10 OECD countries. On the pooled sample, households are willing to pay 7.5% of the median annual water bill to improve the tap water quality. The highest relative WTP for better tap water quality was found in the countries with the highest percentage of respondents being unsatisfied with tap water quality because of health concerns. The expected WTP increased with income, education, environmental concern, and health and taste concerns with the tap water. Keywords: Contingent Valuation, Household Data, Interval Model, Water Quality, Willingness to Pay Classification-JEL: C24, D12, Q25, Q51 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.25 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-025.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.25 Title: World Tariff Liberalization in Agriculture: An Assessment Following a Global CGE Trade Model for EU15 Regions Author-Name: Gabriele Standardi Author-X-Name-First: Gabriele Author-X-Name-Last: Standardi Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Federico Perali Author-X-Name-First: Federico Author-X-Name-Last: Perali Author-WorkPlace-Name: University of Verona, Department of Economic Sciences Author-Name: Luca Pieroni Author-X-Name-First: Luca Author-X-Name-Last: Pieroni Author-WorkPlace-Name: University of Perugia, Department of Economics, Finance and Statistics Abstract: This paper aims at modeling a global CGE trade model for the EU15 subnational regions. This model is used to assess production reallocation across sectors in each EU15 region, assuming a scenario in which world tariff liberalization is implemented in the agricultural sector. The model is parsimonious in terms of data, focusing on unskilled and skilled labor as the source of heterogeneity across regions. A stylized model is built to interpret trade policy effects. Results show decreases in agricultural production in the EU15 of about 0.93%. All regions reduce agriculture but show different magnitudes in the relative changes of production. Large reallocation effects are observed between manufactures and services, some regions specializing in the former and others in the latter. In addition, the introduction of labor mobility within the EU15 and the EU27 causes strong amplification effects in manufactures and services. Keywords: CGE modeling; International trade; Agriculture Classification-JEL: F13, D58, Q17 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.26 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-026.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.26 Title: Free-Riding in Tax Credits For Home Insulation in France: An Econometric Assessment Using Panel Data Author-Name: Marie-Laure Nauleau Author-X-Name-First: Marie-Laure Author-X-Name-Last: Nauleau Author-WorkPlace-Name: CIRED Abstract: This econometric study assesses the efficiency of the income tax credit system implemented in France in 2005 on households’ retrofitting investment decisions, focusing on insulation measures. A logit model with random individual effects is estimated using an unbalanced panel of 23,879 households surveyed over the period 2002-2011. An estimation in difference is performed to identify the impact of the policy. The tax credit had no significant effect during the first two years, suggesting a latency period related to inertia in households’ investment decisions, possibly due to the complexity of the tax credit scheme. The tax credit had an increasing, significant positive effect from 2007 to 2010, before slightly decreasing in 2011. This is in line with changes in the tax credit rates, suggesting a correlation with the level of subsidy. Defined as the situation in which the subsidized household would have invested even in the absence of the subsidy, free-riding progressively decreased over the period and was lower for insulation of opaque surfaces (roofs, walls, etc.) than for insulation of windows. The estimated average proportion of free-riders varies between 40% and 85% after 2006. Finally, we assess the potential bias caused by time-varying unobservable variables and conclude that our estimates of the impacts of the policy are conservative. Keywords: Energy Conservation, Residential Sector, Thermal Insulation, Tax Credit, Free-Riding, Difference Estimation, Panel Data, France Classification-JEL: Q48, R22, D12 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.27 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-027.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.27 Title: European Energy Efficiency and Decarbonization Strategies Beyond 2030 – A Sectoral Multi-model Decomposition Author-Name: Hannah Förster Author-X-Name-First: Hannah Author-X-Name-Last: Förster Author-WorkPlace-Name: Öko-Institut e.V., Germany Author-Name: Katja Schumacher Author-X-Name-First: Katja Author-X-Name-Last: Schumacher Author-WorkPlace-Name: Öko-Institut e.V., Germany Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), Italy and Centro Mediterraneo per i Cambiamenti Climatici (CMCC), Italy Author-Name: Michael Hübler Author-X-Name-First: Michael Author-X-Name-Last: Hübler Author-WorkPlace-Name: Centre for European Economic Research, Mannheim, Germany Author-Name: Ilkka Keppo Author-X-Name-First: Ilkka Author-X-Name-Last: IKeppo Author-WorkPlace-Name: University College London, UCL Energy Institute, UK Author-Name: Silvana Mima Author-X-Name-First: Silvana Author-X-Name-Last: Mima Author-WorkPlace-Name: PACTE-EDDEN-CNRS-UPMF, France Author-Name: Ronald D. Sands Author-X-Name-First: Ronald D. Author-X-Name-Last: Sands Author-WorkPlace-Name: U.S. Department of Agriculture, Economic Research Service, USA Abstract: Energy efficiency and decarbonization are important elements of climate change mitigation. We draw on European mitigation scenarios from the EMF28 modeling exercise to decompose economy-wide and sectoral emissions into their main components. We utilize the Logarithmic Mean Divisia Index (LMDI) to gain insights into five effects: affluence, energy intensity, carbon intensity, conversion efficiency, and structural change. Economy-wide analysis suggests that energy efficiency improvements (including end-use efficiency of economic production and structural change of the economy) determine emission reductions short to medium term while decarbonization becomes more important in the long run. Sectoral analysis suggests that electricity generation holds the largest potential for decarbonization. Mitigation in the transport and energy-intensive sectors is limited by technology availability, forcing output and energy inputs to decline to meet the given mitigation pathways. We conclude that energy efficiency improvements could bridge the time until carbon-free technologies mature, while their quick development remains essential. Keywords: Decomposition Analysis, Decarbonization, Model Intercomparison Classification-JEL: Q4, Q5, Q51 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.28 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-028.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.28 Title: The Effect of African Growth on Future Global Energy, Emissions, and Regional Development Author-Name: Katherine Calvin Author-X-Name-First: Katherine Author-X-Name-Last: Calvin Author-WorkPlace-Name: Joint Global Change Research Institute/PNNL Author-Name: Shonali Pachauri Author-X-Name-First: Shonali Author-X-Name-Last: Pachauri Author-WorkPlace-Name: Organization International Institute for Applied Systems Analysis/IIASA Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change/CMCC Author-Name: Ioanna Mouratiadou Author-X-Name-First: Ioanna Author-X-Name-Last: Mouratiadou Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research/PIK Abstract: Today Africa is a small emitter, but it has a large and faster-than-average growing population and per capita income that could drive future energy demand and, if unconstrained, emissions. This paper uses a multi-model comparison to characterize the potential future energy development for Continental and Sub-Saharan Africa under different assumptions about population and income. Our results suggest that population and economic growth rates will strongly influence Africa’s future energy use and emissions. We show that affluence is only one face of the medal and the range of future emissions is also contingent on technological and political factors. Higher energy intensity improvements occur when Africa grows faster. In contrast, climate intensity varies less with economic growth and it is mostly driven by climate policy. African emissions could account for between 5% and 20% of global emissions, with Sub-Saharan Africa contributing between 4% and 10% of world emissions in 2100. In all scenarios considered, affluence levels remain low until the middle of the century, suggesting that the population could remain dependent on traditional bioenergy to meet most residential energy needs. Although the share of electricity in final energy, electric capacity and electricity use per capita all rise with income, even by mid-century they do not reach levels observed in developed countries today. Keywords: African Growth, Global Energy, Emissions Classification-JEL: Q4, Q5, Q51 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.29 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-029.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.29 Title: Global Energy Security under Different Climate Policies, GDP Growth Rates and Fossil Resource Availabilities Author-Name: Aleh Cherp Author-X-Name-First: Aleh Author-X-Name-Last: Cherp Author-WorkPlace-Name: Central European University and Lund University Author-Name: Jessica Jewell Author-X-Name-First: Jessica Author-X-Name-Last: Jewell Author-WorkPlace-Name: International Institute for Applied Systems Analysis and Central European University Author-Name: Vadim Vinichenko Author-X-Name-First: Vadim Author-X-Name-Last: Vinichenko Author-WorkPlace-Name: Central European University Author-Name: Nico Bauer Author-X-Name-First: Nico Author-X-Name-Last: Bauer Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research (PIK) Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change (CMCC) Abstract: Energy security is one of the main drivers of energy policies. Understanding energy security implications of long-term scenarios is crucial for informed policy making, especially with respect to transformations of energy systems required to stabilize climate change. This paper evaluates the global energy security under several global energy scenarios, modeled in the REMIND and WITCH integrated assessment models. The paper examines the effects of long-term climate policies on energy security under different assumptions about GDP growth and fossil fuel availability. It uses a systematic energy security assessment framework and a set of global and regional indicators for risks associated with energy trade and resilience associated with diversity of energy options. The analysis shows that climate policies significantly reduce the risks and increase the resilience of energy systems in the first half of the century. Climate policies also make energy supply, energy mix, and energy trade less dependent upon assumptions of fossil resource availability and GDP growth, and thus more predictable than in the baseline scenarios. Keywords: Energy Security, Energy Scenarios, Long-Term Climate Policies, Fossil Resources Assumptions Classification-JEL: Q4, Q5, Q51 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.30 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-030.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.30 Title: European-Led Climate Policy Versus Global Mitigation Action. Implications on Trade, Technology, and Energy Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), Italy and Euro-Mediterranean Center on Climate Change (CMCC), Italy Author-Name: Ilkka Keppo Author-X-Name-First: Ilkka Author-X-Name-Last: Keppo Author-WorkPlace-Name: University College London, UCL Energy Institute, UK Author-Name: Johannes Bollen Author-X-Name-First: Johannes Author-X-Name-Last: Bollen Author-WorkPlace-Name: CPB, Den Haag, Netherlands Author-Name: Samuel Carrara Author-X-Name-First: Samuel Author-X-Name-Last: Carrara Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), Italy and Euro-Mediterranean Center on Climate Change (CMCC), Italy Author-Name: Hannah Förster Author-X-Name-First: Hannah Author-X-Name-Last: Förster Author-WorkPlace-Name: Öko-Institut, Germany Author-Name: Michael Hübler Author-X-Name-First: Michael Author-X-Name-Last: Hübler Author-WorkPlace-Name: Centre for European Economic Research (ZEW), Mannheim, Germany Author-Name: Amit Kanudia Author-X-Name-First: Amit Author-X-Name-Last: Kanudia Author-WorkPlace-Name: KanORS-EMR, New Delhi, India Author-Name: Sergey Paltsev Author-X-Name-First: Sergey Author-X-Name-Last: Paltsev Author-WorkPlace-Name: Massachusetts Institute of Technology (MIT), Joint Program on the Science and Policy of Global Change, US Author-Name: Ronald Sands Author-X-Name-First: Ronald Author-X-Name-Last: Sands Author-WorkPlace-Name: U.S. Department of Agriculture, Economic Research Service, USA Author-Name: Katja Schumacher Author-X-Name-First: Katja Author-X-Name-Last: Schumacher Author-WorkPlace-Name: Öko-Institut, Germany Abstract: This paper examines how changes in an international climate regime would affect the European decarbonization strategy and costs through the mechanisms of trade, technology, and innovation. We present the results from the Energy Modeling Forum (EMF) model comparison study on European climate policy to 2050. Moving from a no-policy scenario to an existing-policies case reduces all energy imports, on average. Introducing a more stringent climate policy target for the EU only leads to slightly greater global emission reductions. Consumers and producers in Europe bear most of the additional burden and inevitably face some economic losses. More ambitious mitigation action outside Europe, especially when paired with a well-operating global carbon market, could reduce the burden for Europe significantly. Because of global learning, the costs of wind and especially solar-PV in Europe would decline below the levels observed in the existing-policy case and increased R&D spending outside the EU would leverage EU R&D investments as well. Keywords: Climate Change, Stabilization Policy, International Participation Classification-JEL: Q5, Q54 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.31 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-031.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.31 Title: Iran after the (Potential) Nuclear Deal: What’s Next for the Country’s Natural Gas Market? Author-Name: Simone Tagliapietra, Author-X-Name-First: Simone Author-X-Name-Last: Tagliapietra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: Iran is the perennial “elephant in the room” of international gas trade. The country could well become, one day, a major game changer of international gas markets but today its potential still remains fundamentally untapped due to a number of geopolitical and commercial reasons. Iran owns the first largest proven gas reserves in the world, but since 1997 it is basically a net-importer of gas. This paradoxical situation is due to a number of internal and external factors, which will be widely discussed in the paper. However, the main cause of the current under-exploitation of Iran’s gas resources is certainly linked to the international isolation of the country due to the well-known international dispute over its nuclear program. For this reason, if the positive outcome of the recent nuclear talks turn into a complete nuclear deal, great opportunities will likely open up in Iran also with regard to the gas market. The aim of this paper is to analyze the country’s gas outlook in the aftermath of a potential nuclear deal, looking at the potential production trends, at the potential export options, but also at the political and commercial barriers that such a development will likely have to face. In fact, a full resolution of the nuclear issue will unlikely automatically change the Iranian gas market in the short term, as a number of commercial issues will continue to remain on the table. In other words, the “elephant” will need a bit of time to move. However, it is sure that its movement will ultimately have a profound and long-lasting impact on international gas markets. Keywords: Iran Gas Market, International Gas Markets, World Energy Outlook, Nuclear Talks Classification-JEL: Q40, Q42, Q48 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.32 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-032.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.32 Title: Does a Renewable Fuel Standard for Biofuels Reduce Climate Costs? Author-Name: Mads Greaker Author-X-Name-First: Mads Author-X-Name-Last: Greaker Author-WorkPlace-Name: Statistics Norway Author-Name: Michael Hoel Author-X-Name-First: Michael Author-X-Name-Last: Hoel Author-WorkPlace-Name: University of Oslo Author-Name: Knut Einar Rosendahl Author-X-Name-First: Knut Einar Author-X-Name-Last: KRosendahl Author-WorkPlace-Name: Statistics Norway Abstract: Recent literature on biofuels has questioned whether biofuels policies are likely to reduce the negative effects of climate change. In this paper we make two contributions to the literature. First, we study the market effects of a renewable fuel standard in a dynamic model taking into account that oil is a non-renewable resource. Second, we model emissions from land use change explicitly when we evaluate the climate effects of the renewable fuel standard. We find that global extraction of oil is postponed as a consequence of the renewable fuel standard. Thus, if emissions from biofuels are negligible, the standard will have beneficial climate effects. Furthermore, we find that the standard also tends to reduce total fuel (i.e., oil plus biofuels) consumption initially. Hence, even if emissions from biofuels are non-negligible, a renewable fuel standard may still reduce climate costs. In fact our simulations show that even for biofuels that are almost as emissions-intensive as oil, a renewable fuel standard has beneficial climate effects. Keywords: Blending Mandate, Renewable Fuel Standard, Biofuels, Climate Costs Classification-JEL: Q27, Q41, Q54 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.33 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-033.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.33 Title: Optimal Climate Policy for a Pessimistic Social Planner Author-Name: Edilio Valentini Author-X-Name-First: Edilio Author-X-Name-Last: Valentini Author-WorkPlace-Name: Department of Economics, University G. d'Annunzio of Chieti-Pescara Author-Name: Paolo Vitale Author-X-Name-First: Paolo Author-X-Name-Last: Vitale Author-WorkPlace-Name: Department of Economics, University G. d'Annunzio of Chieti-Pescara Abstract: In this paper we characterize the preferences of a pessimistic social planner concerned with the potential costs of extreme, low-probability climate events. This pessimistic attitude is represented by a recursive optimization criterion à la Hansen and Sargent (1995) that introduces supplementary curvature in the social preferences of standard linear-quadratic optimization analysis and, under certain conditions, it can be shown to correspond to the Epstein-Zin recursive utility. The introduction of extra convexity and the separation between risk-aversion and time-preference implies that, independently of the choice of the discount rate, a sharp, early and steady mitigation effort arises as the optimal climate policy, supporting the main recommendation of the Stern Review (Stern, 2007). Nonetheless, we accommodate for its main criticism of using a too low and questionable discount rate (Nordhaus, 2007), while preserving the assumption of a normal (thin-tailed) probability distribution (Weitzman, 2009). Finally, we argue that our theoretical framework is sufficiently general and robust to possible mis-specifications of the model. Keywords: Climate Change, Climate Policy Targets, Risk Aversion, Pessimism Classification-JEL: C61, Q54 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.34 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-034.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.34 Title: Which Factors Explain the Rising Ethnic Heterogeneity in Italy? An Empirical Analysis at Province Level Author-Name: Cristina Cattaneo Author-X-Name-First: Cristina Author-X-Name-Last: Cattaneo Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Abstract: The paper investigates the determinants of ethnic heterogeneity of the Italian provinces. Among other factors, the paper tests empirically whether gradual improvements in distant communication boost the generation of ethnically heterogeneous provinces. Consequently to easier communication, movers increasingly rely on an enlarged community for identity transmission, rather than on localized peer effects of the ethnic enclaves. The empirical estimation provides support to this hypothesis. Improvements in internet communications are found to increase the ethnic diversity of the Italian provinces. Keywords: Immigration, Ethnic Diversity, Productivity Classification-JEL: F22, J61, R11 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.35 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-035.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.35 Title: Environmental Research Joint Ventures and Time-Consistent Emission Tax Author-Name: Yasunori Ouchida Author-X-Name-First: Yasunori Author-X-Name-Last: Ouchida Author-WorkPlace-Name: Department of Economics, Hiroshima University Author-Name: Daisaku Goto Author-X-Name-First: Daisaku Author-X-Name-Last: Goto Author-WorkPlace-Name: Graduate School for International Development and Cooperation Hiroshima University Abstract: This paper presents an examination of the socially efficient formation of environmental R&D in Cournot duopoly in a setting where a regulator has no precommitment ability for an emission tax. The results reveal that if the environmental damage is slight, alternatively, given severe environmental damage and large inefficiency in environmental R&D costs, then environmental research joint venture (ERJV) cartelization is socially efficient. However, if environmental damage is severe, and if a firm’s R&D costs are limited, then, in stark contrast to results of previous studies, environmental R&D competition is socially more efficient than the other three scenarios (i.e., environmental R&D cartelization, ERJV competition, and ERJV cartelization), although R&D competition is the case of “NO information sharing and NO R&D coordination.” Keywords: Environmental Research Joint Venture, Environmental R&D, Time-consistent Emission Tax, Competition Policy, Cournot Duopoly Classification-JEL: O32, L13, Q55, Q58 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.36 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-036.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.36 Title: Barriers to Trade in Environmental Goods and Environmental Services: How Important Are They? How Much Progress at Reducing Them? Author-Name: Jaime de Melo Author-X-Name-First: Jaime Author-X-Name-Last: de Melo Author-WorkPlace-Name: FERDI Author-Name: Mariana Vijil Author-X-Name-First: Mariana Author-X-Name-Last: Vijil Author-WorkPlace-Name: FERDI Abstract: Barriers to trade in Environmental Goods (EGs) and Environmental Services (ESs) are documented for a large sample of countries and compared with barriers to trade in other goods and other services. Some progress at reduction in barriers has occurred at the national, regional and sectoral levels but not at the multilateral level, where countries have been unable to agree on an approach to reduce barriers to trade. For EGs, tariffs and NTBs are highest for low-income countries and low for high-income countries. First-order estimates of the import response to a 50% reduction in tariffs for low-income countries suggest an increase in imports of around 4%. For ESs, estimates draw on the comparison of an Environment Services Liberalization index calculated across modes and services sub-sectors. The limitations of this ordinal index coupled with the inadequacy of the UN CPC list where services are defined in an exclusionary manner so that they cannot appear on two lists, casts greater uncertainty as to the informational content of the commitment measures presented here which, at best, indicate bindings on market access and national treatment rather than actual policies. It would appear nonetheless that at least as great, and probably greater commitments took place in the environmental sectors (as defined by the CPC) both multilaterally and regionally than for ‘other’ services with the same pattern across income groups: greater commitments observed for HIC than for MICs and LICs although it is widely recognized that GATS commitments by HICs largely amounted to consolidated members’ unilateral services policies. North-South Regional Trade Agreements resulted mostly in commitments by the Southern partners indicating greater prospects for reducing barriers to trade in a regional than in a multilateral context. Keywords: Environmental Goods, Environmental Services, Doha Round, Tariff Reductions Classification-JEL: F18, Q56 Creation-Date: 201403 Template-Type: ReDIF-Paper 1.0 Number: 2014.37 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-037.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.37 Title: Environment and Growth Author-Name: Ryo Horii Author-X-Name-First: Ryo Author-X-Name-Last: Horii Author-WorkPlace-Name: Graduate School of Economics and Management, Tohoku University Author-Name: Masako Ikefuji Author-X-Name-First: Masako Author-X-Name-Last: Ikefuji Author-WorkPlace-Name: Department of Environmental and Business Economics, University of Southern Denmark Abstract: This paper examines the implications of the mutual causality between environmental quality and economic growth. While economic growth deteriorates the environment through increasing amounts of pollution, the deteriorated environment in turn limits the possibility of further economic growth. In a less developed country, this link, which we call “limits to growth,” emerges as the “poverty-environment trap,” which explains the persistent international inequality both in terms of income and environment. This link also threatens the sustainability of the world’s economic growth, particularly when the emission of greenhouse gases raises the risk of natural disasters. Stronger environmental policies are required to overcome this link. While there is a trade-off between the environment and growth in the short run, we show that an appropriate policy can improve both in the long run. Keywords: Environmental Kuznets Curve, Limits to Growth, Poverty-Environment Trap, Sustainability, Natural Disasters Classification-JEL: Q5 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.38 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-038.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.38 Title: Energy from Waste: Generation Potential and Mitigation Opportunity Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and University of Milan Author-Name: Lorenza Campagnolo Author-X-Name-First: Lorenza Author-X-Name-Last: Campagnolo Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and University of Venice Ca’ Foscari Author-Name: Fabio Eboli Author-X-Name-First: Fabio Author-X-Name-Last: Eboli Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and University of Venice Ca’ Foscari Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and University of Venice Ca’ Foscari Abstract: The present research proposes a macroeconomic assessment of the role of waste incineration with energy recovery (WtE) and controlled landfill biogas to electricity generation and their potential contribution to a CO2 emission reduction policy, within a recursive-dynamic computable general equilibrium model. From the modelling viewpoint, introducing these energy sectors in such a framework required both the extension of the GTAP7 database and the improvement of the ICES production nested function. We focus our analysis on Italy as a signatory of the GHG reduction commitment of 20% by 2020 wrt 1990 levels proposed by the European Community; the rest of the world is represented by 21 geo-political countries/regions. It is shown that albeit in the near future WtE and landfill biogas will continue to represent a limited share of energy inputs in electricity sector (in Italy, around 2% for WtE and 0.6% for biogas in 2020) they could play a role in a mitigation policy context. The GDP cost of the EU emission reduction target for the Italian economy can indeed be reduced by 1% when the two energy generating options are available. In absolute terms, this translates into an annuitized value of 87-122 million €. Keywords: Climate Change, Mitigation, Energy From Waste Classification-JEL: C68, E27, Q42, Q43, Q54 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.39 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-039.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.39 Title: Why Wind Is Not Coal: On the Economics of Electricity Author-Name: Lion Hirth Author-X-Name-First: Lion Author-X-Name-Last: Hirth Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research and Vattenfall GmbH, Geremany Author-Name: Falko Ueckerdt Author-X-Name-First: Falko Author-X-Name-Last: Ueckerdt Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research, Germany Author-Name: Ottmar Edenhofer Author-X-Name-First: Ottmar Author-X-Name-Last: Edenhofer Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research, Chair Economics of Climate Change, Technische Universität Berlin and Mercator Research Institute on Global Commons and Climate Change (MCC), Germany Abstract: The economics of electricity is shaped by its physics. A well know example is the non-storability of electricity that causes its price to fluctuate widely. More generally, physical constraints cause electricity to be a heterogeneous good along three dimensions - time, space, and lead-time. Consequently, different generation technologies, such as coal and wind power, produce different economic goods that have a different marginal economic value. Welfare maximization or competitiveness analyses that ignore heterogeneity deliver biased estimates. This paper provides an analytical welfare-economic framework that accounts for heterogeneity for unbiased assessments of power generators. The framework offers a rigorous interpretation of commonly used cost indicators such as ‘levelized electricity costs’ and ‘grid parity’. Heterogeneity is relevant for all generators, but especially for variable renewables such as wind and solar power. We propose a definition of ‘variability’, derive the opportunity costs of variability, and link that concept to the ‘integration cost’ literature. A literature review shows that variability can reduce the value of wind power by 20-50%. Thus it is crucial that economic analysis accounts for the physics of electricity. Keywords: Power Generation, Electricity Sector, Integrated Assessment Modeling, Variable Renewables, Integration Costs, Welfare Economics, Power Economics, Levelized Electricity Cost, Grid Parity Classification-JEL: Q42, D61, C61 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.40 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-040.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.40 Title: On the Mechanism of International Technology Diffusion for Energy Productivity Growth Author-Name: Wei Jin Author-X-Name-First: Wei Author-X-Name-Last: Jin Author-WorkPlace-Name: College of Public Policy and Administration, Zhejiang University Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Department of Public Economics School of Economics, Fudan University Abstract: International diffusion of advanced environment and energy-related technologies has received much attention in recent environmental economics studies. As a much needed complement to the “black box” complex numerical modelling, this paper contributes to developing a simple, intuitive analytical framework to unveil the mechanism of international technology diffusion for energy productivity growth. We draw on the Solow growth model to build a benchmark exogenous framework to explore the basic mechanism of energy technology diffusion. This exogenous model is then extended to a Romer-type endogenous one where the R&D-induced expansion of energy technology varieties is used to represent the deep structure of technology diffusion. We show that the growth rates of energy productivity are the same across countries in the balanced growth path equilibrium, but the cross-country differences in the efficiency of foreign technology absorption and indigenous innovation lead to cross-country divergence in the levels of energy productivity. The economy that has a stronger capacity of assimilating foreign technology diffusion and undertaking indigenous innovation tends to gain a higher level of energy productivity. Keywords: Technological Innovation, Energy Technology Diffusion, Solow Growth Model, Endogenous Growth Model Classification-JEL: Q55, Q58, Q43, Q48, O13, O31, O33, O44, F18 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.41 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-041.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.41 Title: Sharing R&D Investments in Cleaner Technologies to Mitigate Climate Change Author-Name: Abeer El-Sayed Author-X-Name-First: Abeer Author-X-Name-Last: El-Sayed Author-WorkPlace-Name: Department of Economic Analysis and ERICES, University of Valencia, Spain Author-Name: Santiago J. Rubio Author-X-Name-First: Santiago J. Author-X-Name-Last: Rubio Author-WorkPlace-Name: Department of Economic Analysis and ERICES, University of Valencia, Spain Abstract: This paper examines international cooperation on technological development as an alternative to international cooperation on GHG emission reductions. It is assumed that when countries cooperate they coordinate their investments so as to minimize the agreement costs of controlling emissions and that they also pool their R&D efforts so as to fully internalize the spillover effects of their investments in R&D. In order to analyze the scope of cooperation, an agreement formation game is solved in three stages. First, countries decide whether or not to sign the agreement. Then, in the second stage, signatories (playing together) and non-signatories (playing individually) select their investment in R&D. Finally, in the third stage, each country decides its level of emissions non-cooperatively. For linear environmental damages and quadratic investment costs, our findings show that the maximum participation in a R&D agreement consists of six countries and that participation decreases as the coalition information exchange decreases until a minimum participation consisting of three countries is reached. We also find that the grand coalition is stable if the countries sign an international research joint venture but in this case the effectiveness of the agreement is very low. Keywords: International Environmental Agreements, R&D Investment, Technology Spillovers, Coalition Information Exchange, Research Joint Ventures Classification-JEL: D74, F53, H41, Q54, Q55 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.42 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-042.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.42 Title: Are Regional Systems Greening the Economy? the Role of Environmental Innovations and Agglomeration Forces Author-Name: Davide Antonioli Author-X-Name-First: Davide Author-X-Name-Last: Antonioli Author-WorkPlace-Name: University of Ferrara Author-Name: Simone Borghesi Author-X-Name-First: Simone Author-X-Name-Last: Borghesi Author-WorkPlace-Name: University of Siena Author-Name: Massimiliano Mazzanti Author-X-Name-First: Massimiliano Author-X-Name-Last: Mazzanti Author-WorkPlace-Name: University of Ferrara Abstract: The adoption and diffusion of environmental innovations (EIs) is crucial to greening the economy and achieving win-win environmental – economic gains. A large and increasing literature has focused on the levers underlying EIs that are external to the firm, such as stakeholders’ pressure and policy pressure. Little attention, however, has been devoted so far to the possible role of local spatial spillovers which are one of the factors affecting sector/geographical specialisations. We analyse a rich dataset that covers the innovative activities and economic performances of firms in the Emilia-Romagna region in Italy, an area rich of manufacturing districts. We analyse EIs drivers and effects on firms’ performances through a two-step procedure. First, we look at the relevance of spatial levers, namely whether the agglomeration of EIs induces EIs in a given firm. Second, we test whether EIs are significantly related to firms’ economic performances. As to the importance of spatial levers, the role of agglomeration turns out to be fairly local in nature: we find that spillovers are significantly inducing innovation within municipal boundaries. Regarding economic performances, firms' productivity is positively related to EI adoption; in particular, firms that jointly adopt EIs and organizational changes show a better economic performance. Keywords: Environmental Innovations, Firm Economic Performances, Local Spillovers, Manufacturing, Agglomeration. Classification-JEL: Q5, Q55 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.43 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-043.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.43 Title: The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries Author-Name: Donatella Baiardi Author-X-Name-First: Donatella Author-X-Name-Last: Baiardi Author-WorkPlace-Name: Department of Economics, Management and Statistics, University of Milano-Bicocca, Italy Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: Department of Economics, Management and Statistics, University of Milano-Bicocca and Fondazione Eni Enrico Mattei, Italy Author-Name: Mario Menegatti Author-X-Name-First: Mario Author-X-Name-Last: Menegatti Author-WorkPlace-Name: Department of Economics, University of Parma, Italy Abstract: This paper empirically estimates a micro-founded model which studies the macroeconomic impact of environmental and financial risks on consumption choices in the Mediterranean Region. The analysis is carried out using time series aggregate data for fourteen Mediterranean countries over the period 1965-2008. Our results indicate that both risks and their interaction significantly influence consumption dynamics. Our estimates of the indexes of relative risk aversion and relative prudence, as well as the relative preference for the quality of environment suggest marked cross-country heterogeneity. Keywords: Consumption, Environmental Risk, Financial Risk, Prudence, Relative Risk Aversion, Relative Preference for the Quality of Environment Classification-JEL: Q50, D81, E21 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.44 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-044.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.44 Title: From Expert Elicitations to Integrated Assessment: Future Prospects of Carbon Capture Technologies Author-Name: Elena Claire Ricci Author-X-Name-First: Elena Claire Author-X-Name-Last: Ricci Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC) and Università degli Studi di Milano, Italy Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and IEFE, Bocconi University, Italy Author-Name: Erin Baker Author-X-Name-First: Erin Author-X-Name-Last: Baker Author-WorkPlace-Name: University of Massachusetts at Amherst, USA Abstract: This paper analyzes the future prospects of carbon capture technologies. The first part of the analysis presents and discusses the results of an expert elicitation survey on a broad range of carbon capture options. The survey collected probabilistic estimates on the future values of energy penalty under three different scenarios of R&D investments and climate policies from twelve leading European experts from both academia and industry. In the second part of the analysis, the elicitation results are used as input to an integrated assessment model. This allows us to evaluate the potentials of success of this technology within a broad mitigation portfolio of options and under different policy assumptions, in an intertemporal optimizing setting. Both parts of the work provide results that are of interest to policy-makers, integrated-assessment and energy modelers. Keywords: Carbon Capture, Expert Elicitation, Integrated Assessment Modeling Classification-JEL: Q5, Q55 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.45 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-045.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.45 Title: Rent Seeking and Power Hierarchies: A Noncooperative Model of Network Formation with Antagonistic Links Author-Name: Kenan Huremovic Author-X-Name-First: Kenan Author-X-Name-Last: Huremovic Author-WorkPlace-Name: Department of Economics, European University Institute, Italy Abstract: Network structure has a significant role in determining the outcomes of many socioeconomic relationships, including the antagonistic ones. In this paper we study a situation in which agents, embedded in a network, simultaneously play interrelated bilateral contest games with their neighbors. Interrelatedness of contests induces complex local and global network effects. We first characterize the equilibrium of a game on an arbitrary fixed network. Then we study a dynamic network formation model, introducing a novel but intuitive link formation protocol. As links represent antagonistic relationships, link formation is unilateral while link destruction is bilateral. A complete k-partite network is the unique stable network topology. As a result, the model provides a micro-foundation for the structural balance concept in social psychology, and the main results go in line with theoretical and empirical findings from other disciplines, including international relations, sociology and biology. Keywords: Network Formation, Structural Balance, Contest Classification-JEL: D85, D74 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.46 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-046.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.46 Title: Networks of Military Alliances, Wars, and International Trade Author-Name: Matthew O. Jackson Author-X-Name-First: Matthew O. Author-X-Name-Last: Jackson Author-WorkPlace-Name: Department of Economics, Stanford University, Santa Fe Institute and CIFAR Author-Name: Stephen Nei Author-X-Name-First: Stephen Author-X-Name-Last: Nei Author-WorkPlace-Name: Department of Economics, Stanford University Abstract: We investigate the role of networks of military alliances in preventing or encouraging wars between groups of countries. A country is vulnerable to attack if there is some fully-allied group of countries that can defeat that country and its (remaining) allies based on a function of their collective military strengths. Even with such a demanding notion of vulnerability, we show that there do not exist any networks that are stable against the addition and deletion of alliances. We then show that economic benefits from international trade can provide incentives to form alliances in ways that restore stability and prevent wars. In closing, we briefly examine the historical data on interstate wars and trade, noting that a dramatic (more than ten-fold) drop in the rate of interstate wars since 1960 is paralleled by an unprecedented growth in trade over the same period. Keywords: Alliances, Conflict, War, Networks, International Trade, Treaties Classification-JEL: D74, D85, F10 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.47 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-047.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.47 Title: Risk Allocation under Liquidity Constraints Author-Name: Péter Csóka Author-X-Name-First: Péter Author-X-Name-Last: Csóka Author-WorkPlace-Name: Department of Finance, Corvinus University of Budapest and “Momentum” Game Theory Research Group, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Hungary Author-Name: P. Jean-Jacques Herings Author-X-Name-First: P. Jean-Jacques Author-X-Name-Last: Herings Author-WorkPlace-Name: Department of Economics, Maastricht University, The Netherlands Abstract: Risk allocation games are cooperative games that are used to attribute the risk of a financial entity to its divisions. In this paper, we extend the literature on risk allocation games by incorporating liquidity considerations. A liquidity policy specifies state-dependent liquidity requirements that a portfolio should obey. To comply with the liquidity policy, a financial entity may have to liquidate part of its assets, which is costly. The definition of a risk allocation game under liquidity constraints is not straight- forward, since the presence of a liquidity policy leads to externalities. We argue that the standard worst case approach should not be used here and present an alternative definition. We show that the resulting class of transferable utility games coincides with the class of totally balanced games. It follows from our results that also when taking liquidity considerations into account there is always a stable way to allocate risk. Keywords: Market Microstructure, Coherent Measures of Risk, Market Liquidity, Portfolio Performance Evaluation, Risk Capital Allocation, Totally Balanced Games Classification-JEL: C71, G10 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.48 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-048.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.48 Title: Pairing Games and Markets Author-Name: Ahmet Alkan Author-X-Name-First: Ahmet Author-X-Name-Last: Alkan Author-WorkPlace-Name: Sabanci University, Istanbul Author-Name: Alparslan Tuncay Author-X-Name-First: Alparslan Author-X-Name-Last: Tuncay Author-WorkPlace-Name: Sabanci University, Istanbul Abstract: Pairing Games or Markets studied here are the non-two-sided NTU generalization of assignment games. We show that the Equilibrium Set is nonempty, that it is the set of stable allocations or the set of semistable allocations, and that it has several notable structural properties. We also introduce the solution concept of pseudostable allocations and show that they are in the Demand Bargaining Set. We give a dynamic Market Procedure that reaches the Equilibrium Set in a bounded number of steps. We use elementary tools of graph theory and a representation theorem obtained here. Keywords: Stable Matching, Competitive Equilibrium, Market Design, NTU Assignment Game, Roommate Problem, Coalition Formation, Bargaining Set, Bilateral Transaction, Gallai Edmonds Decomposition Classification-JEL: C71, C78 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.49 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-049.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.49 Title: Individual Search and Social Networks Author-Name: Sanjeev Goyal Author-X-Name-First: Sanjeev Author-X-Name-Last: Goyal Author-WorkPlace-Name: Faculty of Economics and Christ's College, University of Cambridge Author-Name: Stephanie Rosenkranz Author-X-Name-First: Stephanie Author-X-Name-Last: Rosenkranz Author-WorkPlace-Name: Department of Economics, Utrecht University Author-Name: Utz Weitzel Author-X-Name-First: Utz Author-X-Name-Last: Weitzel Author-WorkPlace-Name: Department of Economics, Radboud University Nijmegen Author-Name: Vincent Buskens Author-X-Name-First: Vincent Author-X-Name-Last: Buskens Author-WorkPlace-Name: Department of Sociology, Utrecht University Abstract: The explosion in online social networks motivates an enquiry into their structure and their welfare effects. A central feature of these networks is information sharing: online social networks lower the cost of getting information from others. These lower costs affect the attractiveness of individual search vis-a-vis a reliance on social networks. The paper reports the findings of an experiment on these effects. Our experiment shows that online networks can have large effects. Information acquisition is more dispersed and it is accompanied by denser social networks. Aggregate investment in information acquisition falls, but information available to individuals remains stable, due to increased networking. The overall effect is a significant increase in individual utility and aggregate welfare. Keywords: Social networks Classification-JEL: D83, D85 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.50 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-050.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.50 Title: Trust and Manipulation in Social Networks Author-Name: Manuel Förster Author-X-Name-First: Manuel Author-X-Name-Last: Förster Author-WorkPlace-Name: CES, Université Paris 1 Panthéon-Sorbonne, France, and CORE, University of Louvain Louvain-la-Neuve, Belgium Author-Name: Ana Mauleon Author-X-Name-First: Ana Author-X-Name-Last: Mauleon Author-WorkPlace-Name: CEREC, Saint-Louis University, Brussels, CORE, University of Louvain, Louvain-la-Neuve, Belgium Author-Name: Vincent J. Vannetelbosch Author-X-Name-First: Vincent J. Author-X-Name-Last: Vannetelbosch Author-WorkPlace-Name: CORE, University of Louvain, Louvain-la-Neuve, CEREC, Saint-Louis University, Brussels, Belgium Abstract: We investigate the role of manipulation in a model of opinion formation. Agents repeatedly communicate with their neighbors in the social network, can exert effort to manipulate the trust of others, and update their opinions about some common issue by taking weighted averages of neighbors' opinions. The incentives to manipulate are given by the agents' preferences. We show that manipulation can modify the trust structure and lead to a connected society. Manipulation fosters opinion leadership, but the manipulated agent may even gain influence on the long-run opinions. Finally, we investigate the tension between information aggregation and spread of misinformation. Keywords: Social networks, Trust, Manipulation, Opinion leadership, Consensus, Wisdom of Crowds Classification-JEL: D83, D85, Z13 Creation-Date: 201404 Template-Type: ReDIF-Paper 1.0 Number: 2014.51 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-051.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.51 Title: Opinion Dynamics and Wisdom under Conformity Author-Name: Berno Buechel Author-X-Name-First: Berno Author-X-Name-Last: Buechel Author-WorkPlace-Name: Department of Economics, University of Hamburg Author-Name: Tim Hellmann Author-X-Name-First: Tim Author-X-Name-Last: Hellmann Author-WorkPlace-Name: Institute of Mathematical Economics, Bielefeld University Author-Name: Stefan Kölßner Author-X-Name-First: Stefan Author-X-Name-Last: Kölßner Author-WorkPlace-Name: Statistics and Econometrics, Saarland University Abstract: We study a dynamic model of opinion formation in social networks. In our model, boundedly rational agents update opinions by averaging over their neighbors' expressed opinions, but may misrepresent their own opinion by conforming or counter-conforming with their neighbors. We show that an agent's social influence on the long-run group opinion is increasing in network centrality and decreasing in conformity. Concerning efficiency of information aggregation or “wisdom" of the society, it turns out that misrepresentation of opinions need not undermine wisdom, but may even enhance it. Given the network, we provide the optimal distribution of conformity levels in the society and show which agents should be more conforming in order to increase wisdom. Keywords: Opinion Leadership, Wisdom Of Crowds, Consensus, Social Networks, Conformity, Eigenvector Centrality Classification-JEL: C72, D83, D85, Z13 Creation-Date: 201405 Template-Type: ReDIF-Paper 1.0 Number: 2014.52 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-052.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.52 Title: Formation of Bargaining Networks Via Link Sharing Author-Name: Sofia Priazhkina Author-X-Name-First: Sofia Author-X-Name-Last: Priazhkina Author-WorkPlace-Name: Department of Economics, Indiana University Author-Name: Frank Page Author-X-Name-First: Frank Author-X-Name-Last: Page Author-WorkPlace-Name: Department of Economics, Indiana University Abstract: This paper presents a model of collusive bargaining networks. Given a status quo network, game is played in two stages: in the first stage, pairs of sellers form the network by signing two-sided contracts that allow sellers to use connections of other sellers; in the second stage, sellers and buyers bargain for the product. We extend the notion of a pairwise Nash stability with transfers to pairwise Nash stability with contracts and characterize the subgame perfect equilibria. The equilibrium rents are determined for all firms based on their collateral and bargaining power. When a stable equilibrium exists, sharing always generates maximum social welfare and eliminates the frictions created by the network structure. The equilibria depend on the initial network setup, likewise bargaining and contractual procedures. In the homogeneous case, equilibria exist when the number of buyers and sellers are relatively unequal. When the number of buyers exceeds number of sellers, bargaining privileges of sellers over buyers and a low sharing transfer are required for the equilibrium to exist. In the networks with relatively few monopolized sellers, sharing leads to a complete reallocation of surplus to sellers and a zero sharing transfer. When the global market is dominated by sellers, surplus is divided relatively equitably. It is also shown that in the special case of the model with only one monopolistic seller and no market entry, the sharing process organizes sellers in the supply chain order. Keywords: Social Networks, Oligopoly Pricing, Collusion, Market Sharing Agreements Classification-JEL: L11, L140, L120 Creation-Date: 201405 Template-Type: ReDIF-Paper 1.0 Number: 2014.53 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-053.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.53 Title: Rugby League in Australia between 2001 and 2012: an Analysis of Home Advantage and Salary Cap Violations Author-Name: Thomas Longden Author-X-Name-First: Thomas Author-X-Name-Last: Longden Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Centre for Climate Change and Metrical Analysis Author-Name: Greg Kannard Author-X-Name-First: Greg Author-X-Name-Last: Kannard Author-WorkPlace-Name: Independent Researcher Abstract: Within this paper, we review whether incidences of salary cap circumvention within the Australian professional rugby league competition led to improved home team wins during the period between 2001 and 2012. In doing so, we show that while the salary cap breach amounts can be attributed to an improved home team win record in the case of the Melbourne Storm, success during the period can also be attributed with other factors such as the management of the club, talent identification and the quality of the coach and/or captain. This raises an important issue surrounding the effectiveness of a salary cap to create a level playing field when uncertainty over the quality and performance of players exists. A notable role of the salary cap violations was the retention of a core group of players that were instrumental in the success that occurred in the 2007 season. As part of the analysis we also review home team advantage. A focus on the NRL is justified due to the peculiar nature of having multiple stadium types within the same city and team. For the year 2012 we find that a match at a traditional Sydney stadium against a non-Sydney team had the highest probability of a home team win when the two teams have had a similar level of success during the season. Keywords: Salary Cap, Home Advantage, Rugby League Classification-JEL: J31, D39, C23 Creation-Date: 201405 Template-Type: ReDIF-Paper 1.0 Number: 2014.54 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-054.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.54 Title: What Happens to the Careers of European Workers when Immigrants "Take their Jobs"? Author-Name: Cristina Cattaneo Author-X-Name-First: Cristina Author-X-Name-Last: Cattaneo Author-WorkPlace-Name: FEEM Author-Name: Carlo V. Fiorio Author-X-Name-First: Carlo V. Author-X-Name-Last: Fiorio Author-WorkPlace-Name: University of Milano and Econpubblica Author-Name: Giovanni Peri Author-X-Name-First: Giovanni Author-X-Name-Last: Peri Author-WorkPlace-Name: University of California, Davis and NBER Abstract: Following a representative longitudinal sample of native European residents, over the period 1995-2001, we identify the effect of the inflows of immigrants on their career, employment and wages. We use the 1991 distribution of immigrants by nationality across European labor markets to construct an imputed inflow of the foreign-born population that is exogenous to local demand shocks. We also control for .fixed effects that absorb individual, country-year, occupation group-year and occupation group-country heterogeneity and shocks. We find that native European workers are more likely to move to occupations associated with higher skills and status when a larger number of immigrants enter their labor market. As a consequence of this upward mobility their wage income also increases with a 1-2 years lag. We find no evidence of an increase in their probability of becoming unemployed. Keywords: Immigrants, Job Upgrading, Mobility, Self-employment, Europe Classification-JEL: J61, O15 Creation-Date: 201405 Template-Type: ReDIF-Paper 1.0 Number: 2014.55 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-055.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.55 Title: Unilateral Climate Policy and Foreign Direct Investment with Firm and Country Heterogeneity Author-Name: Francesca Sanna-Randaccio Author-X-Name-First: Francesca Author-X-Name-Last: Sanna-Randaccio Author-WorkPlace-Name: Department of Computer, Control & Management Engineering, Sapienza University of Rome Author-Name: Roberta Sestini Author-X-Name-First: Roberta Author-X-Name-Last: Sestini Author-WorkPlace-Name: Sapienza University of Rome. Department of Computer, Control & Management Engineering Author-Name: Ornella Tarola Author-X-Name-First: Ornella Author-X-Name-Last: Tarola Author-WorkPlace-Name: Sapienza University of Rome, DISSE Abstract: We contribute to the debate on the impact of unilateral climate policy with a two-country two-firm international oligopoly model accounting for endogenous plant location and heterogeneity in both country size and firm’s emissions technology. Our results suggest that, if the carbon price differential is moderate as compared to unit transport costs and the relative size of the highly regulated country is big enough, a no relocation equilibrium may prevail also in the long run. A large market asymmetry coupled with a small technology gap emerges as the only configuration in which unilateral climate policy leads to a fall in world emissions irrespective of the optimal location choice. Thus for being effective and not leading to production relocation, unilateral climate policy should be moderate, implemented by a sufficiently large area and complemented by mechanisms for promoting the international transfer of clean technologies. Welfare implications are also discussed. Keywords: Foreign Direct Investment. Carbon leakage. Climate Policy, Emissions Technologies Classification-JEL: F12, F23, Q58 Creation-Date: 201405 Template-Type: ReDIF-Paper 1.0 Number: 2014.56 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-056.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.56 Title: Immigration and Careers of European Workers: Effects and the Role of Policies Author-Name: Cristina Cattaneo Author-X-Name-First: Cristina Author-X-Name-Last: Cattaneo Author-WorkPlace-Name: FEEM, Italy Author-Name: Carlo V. Fiorio Author-X-Name-First: Carlo V. Author-X-Name-Last: Fiorio Author-WorkPlace-Name: University of Milano, Italy Author-Name: Giovanni Peri Author-X-Name-First: Giovanni Author-X-Name-Last: Peri Author-WorkPlace-Name: UC, Davis. USA Abstract: In this paper we analyze the response of career, employment and wage of native Europeans to immigration. We then ask how individual country’s policies affect these responses. We use data on 11 EU countries, over the period 1995-2001. We also use the 1991 distribution of immigrants by nationality across European labor markets to construct a version of the enclave-based instrument to proxy for the flow of immigrants, that is exogenous to local demand shocks. We find that native Europeans are more likely to upgrade to more skilled and better paid occupations, when a larger number of immigrants enter their labor market. We find no evidence of an increased likelihood of non-employment or geographical mobility. We find that more flexible labor markets in a country are a key factor to have employment upgrading in response to immigration. Keywords: Immigrants, Europe, Occupation Upgrading, Mobility, Labor Market Policies Classification-JEL: J61, O15 Creation-Date: 201406 Template-Type: ReDIF-Paper 1.0 Number: 2014.57 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-057.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.57 Title: Drought Management Plans and Water Availability in Agriculture. A Risk Assessment Model for a Southern European Basin Author-Name: Carlos Dionisio Pérez Blanco Author-X-Name-First: Carlos Dionisio Author-X-Name-Last: Pérez Blanco Author-WorkPlace-Name: University of Alcalá de Henares and Madrid Institute for Advanced Studies in Water Technologies (IMDEA-Water) Author-Name: Carlos Mario Gómez Gómez Author-X-Name-First: Carlos Mario Author-X-Name-Last: Gómez Gómez Author-WorkPlace-Name: University of Alcalá de Henares and Madrid Institute for Advanced Studies in Water Technologies Abstract: The Drought Management Plans (DMPs) are a regulatory instrument that establishes priorities among the different water uses and defines more stringent constraints to access to publicly provided water during droughts, especially for non-priority uses such as agriculture. These plans have recently become widespread across EU southern basins. Shockingly, in some of these basins the plans were approved without an assessment of the potential impacts that they may have over the economic activities exposed to water restrictions. This paper develops a stochastic methodology to estimate the expected water availability in agriculture that results from the decision rules of the recently approved DMPs. The methodology is applied to the particular case of the Guadalquivir River Basin in southern Spain. Results show that if the DMPs are successfully enforced, available water will satisfy in average 62.2% of the annual demand. This is much lower than the minimum water access reliability of 90% that the Spanish law has assured to irrigators so far. Keywords: Agricultural Economics, Water Economics, Risk Management, Guadalquivir River Basin. Classification-JEL: Q1, Q25 Creation-Date: 201406 Template-Type: ReDIF-Paper 1.0 Number: 2014.58 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-058.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.58 Title: The Comparative Impact of Integrated Assessment Models' Structures on Optimal Mitigation Policies Author-Name: Baptiste Perrissin Fabert Author-X-Name-First: Baptiste Author-X-Name-Last: Perrissin Fabert Author-WorkPlace-Name: Centre International de Recherche sur l'Environnement et le Développement (CIRED) Author-Name: Etienne Espagne Author-X-Name-First: Etienne Author-X-Name-Last: Espagne Author-WorkPlace-Name: CIRED Author-Name: Antonin Pottier Author-X-Name-First: Antonin Author-X-Name-Last: Pottier Author-WorkPlace-Name: CIRED Author-Name: Patrice Dumas Author-X-Name-First: Patrice Author-X-Name-Last: Dumas Author-WorkPlace-Name: Centre International de Recherche Agronomique pour le Développement Abstract: This paper aims at providing a consistent framework to appraise alternative modeling choices that have driven the so-called “when flexibility" controversy since the early 1990s dealing with the optimal timing of mitigation efforts and the Social Cost of Carbon (SCC). The literature has emphasized the critical impact of modeling structures on the optimal climate policy. But, to our knowledge, there has been no contribution trying to estimate the comparative impact of modeling structures within a unified framework. In this paper, we use the Integrated Assessment Model (IAM) RESPONSE to bridge this gap and investigate the structural modeling drivers of differences in climate policy recommendations. RESPONSE is both sufficiently compact to be easily tractable and detailed enough to capture a wide array of modeling choices. Here, we restrict the analysis to the following emblematic modeling choices: the forms of the damage function (quadratic vs. sigmoid) and the abatement cost (with or without inertia), the treatment of uncertainty, and the decision framework (one-shot vs. sequential). We define an original methodology based on an equivalence criterion to carry out a sensitivity analysis over modeling structures in order to estimate their relative impact on two output variables: the optimal SCC and abatement trajectories. This allows us to exhibit three key findings: (i) IAMs with a quadratic damage function are insensitive to changes of other features of the modeling structure, (ii) IAMs involving a non-convex damage function entail contrasting climate strategies, (iii) Precautionary behaviours can only come up in IAMs with non-convexities in damages. Keywords: Integrated Assessment Models, Mitigation Classification-JEL: Q5, Q58 Creation-Date: 201406 Template-Type: ReDIF-Paper 1.0 Number: 2014.59 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-059.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.59 Title: Green Technology and Optimal Emissions Taxation Author-Name: Stuart McDonald Author-X-Name-First: Stuart Author-X-Name-Last: McDonald Author-WorkPlace-Name: School of Economics, The Universty of Queensland Author-Name: Joanna Poyago-Theotoky Author-X-Name-First: Joanna Author-X-Name-Last: Poyago-Theotoky Author-WorkPlace-Name: School of Economics, La Trobe University Rimini Centre for Economic Analysis (RCEA) Abstract: We examine the impact of an optimal emissions tax on research and development of emission reducing green technology (E-R&D) in the presence of R&D spillovers. We show that the size and effectiveness of the optimal emissions tax depends on the type of the R&D spillover: input or output spillover. In the case of R&D input spillovers (where only knowledge spillovers are accounted for), the optimal emissions tax required to stimulate R&D is always higher than when there is an R&D output spillover (where abatement and knowledge spillovers exist simultaneously). We also find that optimal emissions taxation and cooperative R&D complement each other when R&D spillovers are small, leading to lower emissions. Keywords: Environmental R&D, Green Technology, R&D Spillover, Emissions Tax Classification-JEL: H23, L11, Q55 Creation-Date: 201406 Template-Type: ReDIF-Paper 1.0 Number: 2014.60 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-060.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.60 Title: Programs, Prices and Policies Towards Energy Conservation and Environmental Quality in China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Distinguished University Professor and Chairman, School of Economics, Fudan University, Shanghai, China Abstract: China has gradually recognized that the conventional path of encouraging economic growth at the expense of the environment cannot be sustained. It has to be changed. This article focuses on China’s efforts towards energy conservation and environmental quality. The article discusses a variety of programs, prices, market-based instruments, and other economic and industrial policies and measures targeted for energy saving and pollution cutting, and the associated implementation and reliability issues. The article ends with some concluding remarks and recommendations. Keywords: Energy Saving; Environmental Quality, Low-Carbon Development, Power Generation, Energy Prices, Market-Based Instruments, Economic Policies, Industrial Policies, Resource Taxes, Implementation and Reliability, China Classification-JEL: H23, H71, O13, O53, P28, Q43, Q48, Q52, Q53, Q54, Q56, Q58 Creation-Date: 201406 Template-Type: ReDIF-Paper 1.0 Number: 2014.61 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-061.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.61 Title: Measuring Gender Differences in Information Sharing Using Network Analysis: the Case of the Austrian Interlocking Directorship Network in 2009 Author-Name: Carlo Drago Author-X-Name-First: Carlo Author-X-Name-Last: Drago Author-WorkPlace-Name: University of Rome “Niccolò Cusano” Author-Name: Livia Amidani Aliberti Author-X-Name-First: Livia Author-X-Name-Last: Amidani Aliberti Author-WorkPlace-Name: Nedcommunity – amministratori non esecutivi ed indipendenti Author-Name: Davide Carbonai Author-X-Name-First: Davide Author-X-Name-Last: Carbonai Author-WorkPlace-Name: Universidade Federal do Pampa Abstract: In recent literature a relevant problem has been the relationship between career/personal contactnetworks and different career paths. In addition the recent advances in social capital theory have shown the way in which networks impact on personal careers. In particular women’s careers appear to be negatively affected by the informational network structure. The main contribution of this work is to propose empirical evidence of this phenomenon by considering the gendered directorship network with relation to Austria and to show the structural differences by gender in the network. By using community detection techniques we have found various communities in which females seem not to be present at all, where females show significantly fewer contacts than males in the network, and finally where the proportion of males exceeds 91%. The results show the predominant role in the network of male directors;these differences are very relevant if we consider the network as a tool of vehicle information and as a power mechanism. In this paper we wish to make an original contribution to the debate of the well-known “glass-ceiling” effect. Keywords: Glass ceiling, Gender Diversity, Social Network Analysis Classification-JEL: M14, M5, C60, C4 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.62 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-062.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.62 Title: An Integrated Risk Assessment Model for the Implementation of Drought Insurance Markets in Spain Author-Name: Carlos Dionisio Pérez Blanco Author-X-Name-First: Carlos Dionisio Author-X-Name-Last: Pérez Blanco Author-WorkPlace-Name: University of Alcalá de Henares and Madrid Institute for Advanced Studies in Water Technologies (IMDEA-Water) Author-Name: Carlos Mario Gómez Gómez Author-X-Name-First: Carlos Mario Author-X-Name-Last: Gómez Gómez Author-WorkPlace-Name: University of Alcalá de Henares and Madrid Institute for Advanced Studies in Water Technologies (IMDEA-Water) Abstract: Water is a key input in the production of many goods and services and under certain conditions can become a critical limiting factor with significant impacts on regional development. This is the case of many agricultural European Mediterranean basins, where water deficit during drought events is partially covered by illegal abstractions, mostly from aquifers, which are tolerated by the authorities. Groundwater overexploitation for irrigation has created in these areas an unprecedented environmental catastrophe that threatens ecosystems sustainability, urban water supply and the current model of development. Market-based drought insurance systems have the potential to introduce the necessary incentives to reduce overexploitation during drought events and remove the high costs of the drought indemnity paid by the government. This paper develops a methodology to obtain the optimum risk premium based on concatenated stochastic models. The methodology is applied to the agricultural district of Campo de Cartagena (Segura River Basin, Spain). Results show that the prices in a hypothetic competitive private drought insurance market would be reasonable and the expected environmental outcomes significant. Keywords: Drought Insurance, Stochastic Models, Groundwater, Agriculture, Drought Contingency Plan Classification-JEL: Q5, Q25 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.63 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-063.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.63 Title: The Time Path of the Saving Rate: Hyperbolic Discounting and Short-Term Planning Author-Name: Y. Hossein Farzin Author-X-Name-First: Y. Hossein Author-X-Name-Last: Farzin Author-WorkPlace-Name: Department of Agricultural and Resource Economics, UC Davis, U.S.A. and Oxford Centre for the Analysis of Resource Rich Economies (OxCarre), Department of Economics, University of Oxford, UK Author-Name: Ronald Wendner Author-X-Name-First: Ronald Author-X-Name-Last: Wendner Author-WorkPlace-Name: Department of Economics, University of Graz, Austria Abstract: The standard neoclassical growth model with Cobb-Douglas production predicts a monotonically declining saving rate, when reasonably calibrated. Ample empirical evidence, however, shows that the transition paths of most countries’ saving rates exhibit a statistically significant hump-shaped pattern. Prior literature shows that CES production may imply a hump-shaped pattern of the saving rate (Goméz, 2008). However, the implied magnitude of the hump falls short of what is seen in empirical data. We introduce two non-standard features of preferences into a neoclassical growth model with CES production: hyperbolic discounting and short planning horizons. We show that, in contrast to the commonly accepted argument, in general (except for the special case of logarithmic utility) a model with hyperbolic discounting is not observationally equivalent to one with exponential discounting. We also show that our framework implies a hump-shaped saving rate dynamics that is consistent with empirical evidence. Hyperbolic discounting turns out to be a major factor explaining the magnitude of the hump of the saving rate path. Numerical simulations employing a generalized class of hyperbolic discount functions, which we term regular discount functions, support the results. Keywords: Saving Rate Dynamics, Non-Monotonic Transition Path, Hyperbolic Discounting, Regular Discounting, Short-Term Planning, Neoclassical Growth Model Classification-JEL: D91, E21, O40 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.64 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-064.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.64 Title: Climate Change Impacts and Market Driven Adaptation: the Costs of Inaction Including Market Rigidities Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Center on Climate Change and University of Milan Author-Name: Ramiro Parrado Author-X-Name-First: Ramiro Author-X-Name-Last: Parrado Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change Abstract: This paper presents a first exercise comparing the cost of climate change stemming from integrated assessment models using reduced-form climate change damage functions with that performed by a CGE model. Furthermore, it investigates the role of market driven adaptation, which CGE models explicitly capture through their endogenous price setting mechanism, in determining these estimates. It is shown that world GDP losses computed by the CGE model are not significantly different from that used by some well-established hard-linked integrated assessment models when they consider the same impact categories. Specifically, the major driver of impacts is the modelling of catastrophic outcomes. Then, rigidities in market adjustments, differently said, in market-driven adaptation, are introduced. This is done restricting the elasticity of input substitution in the production function, the substitutability of domestic and imported inputs, and finally sectoral workforce mobility. We demonstrate that notwithstanding these frictions do increase the cost of climate change impacts they do not change substantively neither the qualitative nor the quantitative picture. Keywords: Climate Change Costs, Adaptation, Computable General Equilibrium Models Classification-JEL: C68, Q54 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.65 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-065.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.65 Title: Bidding for Conservation Contracts Author-Name: Author-Name: Luca Di Corato Author-X-Name-First: Luca Author-X-Name-Last: Di Corato Author-WorkPlace-Name: Department of Economics, Swedish University of Agricultural Sciences, Sweden Author-Name: Cesare Dosi Author-X-Name-First: Cesare Author-X-Name-Last: Dosi Author-WorkPlace-Name: Department of Economics and Management, University of Padova and Centro di Ricerca Interuniversitario sull’Economia Pubblica (CRIEP), Italy Author-Name: Michele Moretto Author-X-Name-First: Michele Author-X-Name-Last: Moretto Author-WorkPlace-Name: Department of Economics and Management, University of Padova, Fondazione Eni Enrico Mattei (FEEM) and Centro Studi Levi-Cases, Italy Abstract: Contracts providing payments for not developing natural areas, or for removing cropland from production, generally require long-term commitments. Landowners, however, can decide to prematurely terminate the contract when the opportunity cost of complying with conservation requirements increases. The paper investigates how this can affect bidding behavior in multi-dimensional auctions, where agents bid on both the conservation plan and the required payment, when contracts do not provide for sufficiently strong incentives against early exit. Integrating the literature on scoring auctions with that which views non-enforcement of contract terms as a source of real-options, the paper offers the following contributions. First, it is shown that bidders’ expected payoff is higher when facing enforceable project deadlines. Second, that failure to account for the risk of opportunistic behavior could lead to the choice of sellers who will not provide the contracting agency with the highest potential payoff. Finally, we examine the role that eligibility rules and the degree of competition can play in avoiding such potential bias in contract allocation. Keywords: Conservation Contracts, Scoring Auctions, Non-enforceable Contract Duration, Real Options Classification-JEL: C61, D44, D86, Q24, Q28 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.66 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-066.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.66 Title: What’s the Damage? Environmental Regulation with Policy-Motivated Bureaucrats Author-Name: Achim Voß Author-X-Name-First: Achim Author-X-Name-Last: Voß Author-WorkPlace-Name: University of Münster, Germany Author-Name: Jörg Lingens Author-X-Name-First: Jörg Author-X-Name-Last: Lingens Author-WorkPlace-Name: University of Münster, Germany Abstract: Many environmental-policy problems are characterized by complexity and uncertainty. Government’s choice concerning these policies commonly relies on information provided by a bureaucracy. Environmental bureaucrats often have a political motivation of their own, so they might be tempted to misreport environmental effects in order to influence policy. This transforms a problem of uncertainty into one of asymmetric information. We analyze the ensuing principal-agent relationship and derive the government’s optimal contract, which conditions policy and rewards on reported environmental effects. We find that agents who are more environmentalist than the government are rewarded for admitting that the environmental impact is low (and vice versa). With higher uncertainty, the bureaucrat has a stronger influence on policy. For some values of the environmental impact, the bureau is permitted to set its own preferred policy (optimal delegation). Keywords: Environmental Policy, Political Economy, Delegation, Bureaucracy, Regulatory Agency, Mechanism Design, Type-dependent Participation Constraint, Pure State Constraints in Optimal Control Classification-JEL: D73, D82, C61, Q52, Q58 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.67 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-067.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.67 Title: Environmental and Technology Policy Options in the Electricity Sector: Interactions and Outcomes Author-Name: Carolyn Fischer Author-X-Name-First: Carolyn Author-X-Name-Last: Fischer Author-WorkPlace-Name: Resources for the Future, Washington DC, Gothenburg University and CESifo Research Network, München Author-Name: Richard G. Newell Author-X-Name-First: Richard G. Author-X-Name-Last: Newell Author-WorkPlace-Name: Duke University and National Bureau of Economic Research, Cambridge MA Author-Name: Louis Preonas Author-X-Name-First: Louis Author-X-Name-Last: Preonas Author-WorkPlace-Name: Resources for the Future, Washington DC and University of California, Berkeley Abstract: Myriad policy measures aim to reduce greenhouse gas emissions from the electricity sector, promote generation from renewable sources, and encourage energy conservation. To what extent do innovation and energy efficiency (EE) market failures justify additional interventions when a carbon price is in place? We extend the model of Fischer and Newell (2008) with advanced and conventional renewable energy technologies and short and long-run EE investments. We incorporate both knowledge spillovers and imperfections in the demand for energy efficiency. We conclude that some technology policies, particularly correcting R&D market failures, can be useful complements to emissions pricing, but ambitious renewable targets or subsidies seem unlikely to enhance welfare when placed alongside sufficient emissions pricing. The desirability of stringent EE policies is highly sensitive to the degree of undervaluation of EE by consumers, which also has implications for policies that tend to lower electricity prices Even with multiple market failures, emissions pricing remains the single most cost-effective option for reducing emissions Keywords:Climate Change, Cap-and-Trade, Renewable Energy, Portfolio Standards, Subsidies, Spillovers, Energy Efficiency, Electricity Classification-JEL: Q42, Q52, Q55, Q58 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.68 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-068.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.68 Title: The Flushing Flow Cost: A Prohibitive River Restoration Alternative? The Case of the Lower Ebro River Author-Name: Carlos M. Gómez Author-X-Name-First: Carlos M. Author-X-Name-Last: Gómez Author-WorkPlace-Name: University of Alcalá and Madrid Institute for Advanced Studies in Water Technologies (IMDEA-Water), Spain Author-Name: C. Dionisio Pérez-Blanco Author-X-Name-First: C. Dionisio Author-X-Name-Last: Pérez-Blanco Author-WorkPlace-Name: University of Alcalá and Madrid Institute for Advanced Studies in Water Technologies (IMDEA-Water), Spain Author-Name: Ramon J. Batalla Author-X-Name-First: Ramon J. Author-X-Name-Last: Batalla Author-WorkPlace-Name: University of Lleida, Forest Science Centre of Catalonia and Catalan Institute for Water Research, Girona, Spain Abstract: Although the effectiveness of flushing floods in restoring basic environmental functions in highly engineered rivers has been extensively tested, the opportunity cost is still considered to represent an important limitation to putting these actions into practice. In this paper, we present a two-stage method for the assessment of the opportunity cost of the periodical release of flushing flows in the lower reaches of rivers with regimes that are basically controlled by series of dams equipped with hydropower generation facilities. The methodology is applied to the Lower Ebro River in Spain. The results show that the cost of the reduced power generation resulting from the implementation of flushing floods is lower than the observed willingness to pay for river restoration programmes. Keywords: River Restoration, Flushing Flows, Opportunity Costs, Hydropower, Ebro River Classification-JEL: Q2, Q25 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.69 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-069.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.69 Title: Size, Age and the Growth of Firms: New Evidence from Quantile Regressions Author-Name: Roberta Distante Author-X-Name-First: Roberta Author-X-Name-Last: Distante Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Milan, Italy Author-Name: Ivan Petrella Author-X-Name-First: Ivan Author-X-Name-Last: Petrella Author-WorkPlace-Name: University of London, UK Author-Name: Emiliano Santoro Author-X-Name-First: Emiliano Author-X-Name-Last: Santoro Author-WorkPlace-Name: Catholic University of Milan, Italy and University of Copenhagen, Denmark Abstract: The nexus between firm growth, size and age in U.S. manufacturing is examined through the lens of quantile regression models. A number of interesting features are unveiled that linear frameworks could not detect. Size pushes both low and high performing firms towards the median rate of growth, while age is never advantageous, and more so as firms grow faster. Keywords: Firm Growth, Size, Age, Conditional Quantile Classification-JEL: C14, L1 Creation-Date: 201407 Template-Type: ReDIF-Paper 1.0 Number: 2014.70 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-070.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.70 Title: The Critical Mass Approach to Achieve a Deal on Green Goods and Services: What is on the Table? How Much to Expect? Author-Name: Jaime de Melo Author-X-Name-First: Jaime Author-X-Name-Last: de Melo Author-WorkPlace-Name: Fondation pour les Etudes et Recherches sur le Développement International (FERDI) Author-Name: Mariana Vijil Author-X-Name-First: Mariana Author-X-Name-Last: Vijil Author-WorkPlace-Name: DG Treasury, French Ministry for the Economy and Finance and FERDI Abstract: At the Davos forum of January 2014, a group of 14 countries pledged to launch negotiations on liberalising trade in ‘green goods’ (also known as `environmental goods’(EGs)), focussing on the elimination of tariffs for an ‘APEC list’ of 54 products. The paper shows that the ‘Davos group’, with an average tariff of 1.8%, has little to offer as countries have avoided submitting products with tariffs peaks for tariff reductions. Even if the list were extended to the 411 products on the ‘WTO list’, taking into account tariff dispersion, their tariff structure on EGs would be equivalent to a uniform tariff of 3.4%, about half the uniform tariff-equivalent for non EGs products. Enlarging the number of participants to low-income countries might be possible as, on average, their imports would not increase by more than 8 percent. However, because of the strong complementarities between trade in Environmental Goods and trade in Environmental Services, these should also be brought to the negotiation table even though difficulties in reaching agreement on their scope are likely to be great Keywords: Environmental Goods, Environmental Services, Doha Round, APEC, Davos Initiative, Tariff Reductions Classification-JEL: F18, Q56 Creation-Date: 201408 Template-Type: ReDIF-Paper 1.0 Number: 2014.71 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-071.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.71 Title: Integration of Power Generation Capacity Expansion in an Applied General Equilibrium Model Author-Name: Gauthier de Maere d'Aertrycke Author-X-Name-First: Gauthier Author-X-Name-Last: de Maere d'Aertrycke Author-WorkPlace-Name: GDF-SUEZ, Center of Expertise in Economic Modelling and Studies, Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC) Author-Name: Olivier Durand-Lasserve Author-X-Name-First: Olivier Author-X-Name-Last: Durand-Lasserve Author-WorkPlace-Name: GDF-SUEZ, Center of Expertise in Economic Modelling and Studies Author-Name: Marco Schudel Author-X-Name-First: Marco Author-X-Name-Last: Schudel Author-WorkPlace-Name: GDF-SUEZ, Center of Expertise in Economic Modelling and Studies Abstract: This paper presents a version of a hybrid (top-down bottom-up), multi-region multi-period forward looking applied general equilibrium model, MERGE, that includes a capacity expansion submodel of the electricity sector with demand represented by various time segments. This model is solved numerically using the decomposition method proposed by Bohringer and Rutherford (2006). In the decomposition, the bottom-up (energy) submodel of MERGE is embedded in a quadratically constrained program (QCP) that maximizes a welfare function calibrated on a linear approximation, around a benchmark point, of aggregated energy and capital demand . This latter is provided by constraining energy supply in a nonlinear programming problem (NLP) that essentially contains the MERGE top-down (macro) submodel. The method is illustrated with a simulation that provides projections of load duration curves and hours of activity of various electricity technologies. Keywords: Power Generation, Equilibrium Model Creation-Date: 201408 Template-Type: ReDIF-Paper 1.0 Number: 2014.72 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-072.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.72 Title: Energy Prices, Subsidies and Resource Tax Reform in China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: ZhongXiang Zhang, Fudan University, Shanghai (China) Abstract: The Chinese leadership in November 2013 determined to embark upon a new wave of comprehensive reforms in China. This is clearly reflected by the key decision of the Third Plenum of the 18th Central Committee of Communist Party of China to assign the market a decisive role in allocating resources. To have the market to play that role, getting the energy prices right is crucial because it sends clear signals to both producers and consumers of energy. While the overall trend of China’s energy pricing reform since 1984 has been moving away from the pricing completely set by the central government in the centrally planned economy towards a more market-oriented pricing mechanism, the pace and scale of the reform differ across energy types. This paper discusses the evolution of price reforms for coal, petroleum products, natural gas and electricity in China, provides some analysis of these energy price reforms, and suggests few areas of reforms could take place in order to have the market to play a decisive role in allocating resources and to help China’s transition to a low-carbon economy. Keywords: Energy Prices, Tiered Prices, Differentiated Tariffs, Subsidies, Coal, Electricity, Natural Gas, Petroleum Products, Resource Taxes, Desulfurization and Denitrification, State-Owned Enterprises, China Classification-JEL: H23, H71, O13, O53, P2, Q41, Q43, Q48, Q53, Q58 Creation-Date: 201408 Template-Type: ReDIF-Paper 1.0 Number: 2014.73 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-073.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.73 Title: Directed Technical Change With Capital-Embodied Technologies: Implications For Climate Policy Author-Name: James A. Lennox Author-X-Name-First: James A. Author-X-Name-Last: Lennox Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Author-Name: Jan Witajewski Author-X-Name-First: Jan Author-X-Name-Last: Witajewski Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Abstract: We develop a theoretical model of directed technical change in which clean (zero emissions) and dirty (emissions-intensive) technologies are embodied in long-lived capital. We show how obsolescence costs generated by technological embodiment create inertia in a transition to clean growth. Optimal policies involve higher and longer-lasting clean R&D subsidies than when technologies are disembodied. From a low level, emissions taxes are initially increased rapidly, so they are higher in the long run. There is more warming. Introducing spillovers from an exogenous technological frontier representing non-energy-intensive technologies reduces mitigation costs. Optimal taxes and subsidies are lower and there is less warming. Keywords: Climate Change Mitigation, Directed Technical Change, Capital-Embodiment, Investment-Specific Technological Change, Obsolescence Classification-JEL: O33, O44, Q54, Q55, Q58 Creation-Date: 201408 Template-Type: ReDIF-Paper 1.0 Number: 2014.74 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-074.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.74 Title: Going Forward by Looking Backwards on the Environmental Kuznets Curve: an Analysis of CFCs, CO2 and the Montreal and Kyoto Protocols Author-Name: Thomas Longden Author-X-Name-First: Thomas Author-X-Name-Last: Longden Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Abstract: The success of the Montreal Protocol in comparison to the stagnation seen in negotiations surrounding the Kyoto Protocol highlights the importance of a supportive industry group, pre-existing legislation and commitment by a lead nation, affordable and available substitutes, as well as acceptance of the underlying scientific explanation of the link between emissions and a key detrimental impact. The focus on these contrasting intergovernmental agreements within this paper is driven, in part, by the intention to establish that successful emission reductions tend to be associated with a concerted policy effort rather than the level of per capita income. This is in contrast to the concept of the Environmental Kuznets Curve (EKC) which contends that a significant negative relationship exists between high levels of national income and per capita emissions. While a nation’s level of development and national income are likely to be linked to an ability to make structural changes and/or the implementation of environmental policy, this paper finds no evidence of an EKC consistent quadratic relationship between income and CFC emissions once key considerations, such as biased estimations and policy effort, have been accounted for. Keywords: Environmental Kuznets Curve, Montreal Protocol, Kyoto Protocol Classification-JEL: Q5, Q50, Q58 Creation-Date: 201409 Template-Type: ReDIF-Paper 1.0 Number: 2014.75 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-075.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.75 Title: The EU-Turkey Energy Relations After the 2014 Ukraine Crisis. Enhancing The Partnership in a Rapidly Changing Environment Author-Name: Simone Tagliapietra Author-X-Name-First: Simone Author-X-Name-Last: Tagliapietra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Abstract: Over the last two decades energy has emerged as an increasingly important component of the overall EU-Turkey relations. In particular, the Southern Gas Corridor (SGC) and its flagship project, Nabucco, soon became the pivotal element of the EU-Turkey energy relations. After years of strong cooperation, the failure of Nabucco and the emergence of TANAP have ultimately outlined a divergence in the way the EU and Turkey perceive not only the SGC but also their energy relations. This divergence represents a serious risk for the strategic interests of both the EU and Turkey, and for this reason there is a need to rethink the EU-Turkey energy relations. This need is now particularly urgent, as the market and political environment on which Nabucco was conceptualized is rapidly changing, potentially opening up new opportunities of energy cooperation for the EU and Turkey. On the supply side, new major gas reserves have been discovered in the Kurdistan Region of Iraq (KRI) and in offshore Israel, while on the demand side the unprecedented political standoff between the Western world and Russia resulted by the 2014 Ukraine crisis might reinvigorate the EU’s quest to diversify its gas supply portfolio. These developments can potentially converge to reshape the EU-Turkey energy relations. In fact, in this scenario the SGC could eventually gain a new momentum, with the gas reserves of the KRI and Israel as primary target. However, after the failure of Nabucco the unconditional support of Turkey should not be taken for granted by the EU, as the country might prefer to secure its own energy supply on a bilateral basis with gas producing countries. In order to avoid the risk of a further fragmentation of the SGC, a new “EU-Turkey Natural Gas Initiative” -such as the one proposed in this paper- seems to be urgently needed, for the benefit of both the EU and Turkey. Keywords: EU-Turkey Energy Relations, EU Energy Security, Southern Gas Corridor Classification-JEL: Q40, Q42, Q48 Creation-Date: 201409 Template-Type: ReDIF-Paper 1.0 Number: 2014.76 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-076.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.76 Title: Delineating Spring Recharge Areas in a Fractured Sandstone Aquifer (Luxembourg) Based on Pesticide Mass Balance Author-Name: Julien Farlin Author-X-Name-First: Julien Author-X-Name-Last: Farlin Author-WorkPlace-Name: CRP Henri Tudor, CRTE (Luxembourg) Author-Name: Laurent Drouet Author-X-Name-First: Laurent Author-X-Name-Last: Drouet Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: T. Gallé Author-X-Name-First: T. Author-X-Name-Last: Gallé Author-WorkPlace-Name: CRP Henri Tudor, CRTE (Luxembourg) Author-Name: D. Pittois Author-X-Name-First: D. Author-X-Name-Last: Pittois Author-WorkPlace-Name: CRP Henri Tudor, CRTE (Luxembourg) Author-Name: M. Bayerle Author-X-Name-First: M. Author-X-Name-Last: Bayerle Author-WorkPlace-Name: CRP Henri Tudor, CRTE (Luxembourg) Author-Name: C. Braun Author-X-Name-First: C. Author-X-Name-Last: Braun Author-WorkPlace-Name: CRP Henri Tudor, CRTE (Luxembourg) Author-Name: P. Maloszewski Author-X-Name-First: P. Author-X-Name-Last: Maloszewski Author-WorkPlace-Name: Helmholtz Zentrum, Institute for Groundwater Ecology, Munich (Germany) Author-Name: J. Vanderborght Author-X-Name-First: J. Author-X-Name-Last: Vanderborght Author-WorkPlace-Name: Helmholtz Zentrum, Institute of Bio-and Geosciences, Jülich (Germany) Author-Name: M. Elsner Author-X-Name-First: M. Author-X-Name-Last: Elsner Author-WorkPlace-Name: Helmholtz Zentrum, Institute for Groundwater Ecology, Munich (Germany) Author-Name: A. Kies Author-X-Name-First: A. Author-X-Name-Last: Kies Author-WorkPlace-Name: University of Luxembourg Abstract: A simple method to delineate the recharge areas of a series of springs draining a fractured aquifer is presented. Instead of solving the flow and transport equations, the delineation is reformulated as a mass balance problem assigning arable land in proportion to the pesticide mass discharged annually in a spring at minimum total transport cost. The approach was applied to the Luxembourg Sandstone, a fractured-rock aquifer supplying half of the drinking water for Luxembourg, using the herbicide atrazine. Predictions of the recharge areas were most robust in situations of strong competition by neighbouring springs while the catchment boundaries for isolated springs were extremely sensitive to the parameter controlling flow direction. Validation using a different pesticide showed the best agreement with the simplest model used, whereas using historical crop-rotation data and spatially distributed soil-leaching data did not improve predictions. The whole approach presents the advantage of integrating objectively information on land use and pesticide concentration in spring water into the delineation of groundwater recharge zones in a fractured-rock aquifer. Keywords: Spring Protection Zones, Atrazine, Luxembourg, Fractured Rock, Groundwater Pollution Classification-JEL: Q5, Q53 Creation-Date: 201409 Template-Type: ReDIF-Paper 1.0 Number: 2014.77 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-077.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.77 Title: Reaping the Carbon Rent: Abatement and Overallocation Profits in the European Cement Industry, Insights from an LMDI Decomposition Analysis Author-Name: Frédéric Branger Author-X-Name-First: Frédéric Author-X-Name-Last: Branger Author-WorkPlace-Name: CIRED and AgroParistech ENGREF (France) Author-Name: Philippe Quirion Author-X-Name-First: Philippe Author-X-Name-Last: Quirion Author-WorkPlace-Name: CIRED and CNRS (France) Abstract: We analyse variations of carbon emissions in the European cement industry from 1990 to 2011, at the European level (EU 27), and at the national level for six major producers (Germany, France, Spain, United Kingdom, Italy and Poland). We apply a Log-Mean Divisia Index (LMDI) method, crossing data from three databases: the Getting the Numbers Right (GNR) database developed by the Cement Sustainability Initiative, the European Union Transaction Log (EUTL), and the Eurostat International Trade database. Our decomposition method allows disentangling seven channels of emissions change: activity, clinker trade, clinker share, alternative fuels, thermal and electric energy efficiency, and electricity decarbonisation. We find that, apart from a slow trend of emissions reductions coming from technological improvements (first from a decrease in the clinker share, then from an increase in alternative fuels), most of the emissions changes can be attributed to the activity effect. Using counterfactual scenarios, we estimate that the introduction of the EU ETS brought small but positive technological abatement (2.0% ± 1.1% between 2005 and 2011). Moreover, we find that the European cement industry have ained 3.5 billion euros of “overallocation profits”, mostly due to the slowdown of production. Based on these findings, we advocate for output-based allocations, based on a stringent hybrid clinker and cement benchmarking. Keywords: Cement Industry, LMDI, EU ETS, Abatement, Overallocation, Windfall Profits, Overallocation Profits, Carbon Emissions, Energy Efficiency Classification-JEL: Q4, Q48, Q55 Creation-Date: 201409 Template-Type: ReDIF-Paper 1.0 Number: 2014.78 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-078.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.78 Title: Sharing of Climate Risks across World Regions Author-Name: Johannes Emmerling Author-X-Name-First: Johannes Author-X-Name-Last: Emmerling Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Abstract: Uncertainty is prevalent in the context of climate change impacts. Moreover, the distribution across the globe is not uniform. We analyze how climate risks could be reduced via an insurance scheme at the global scale across regions and quantify the potential welfare gains from such a scheme. Starting from the standard welfare analysis in Integrated Assessment Models (IAMs), which assumes no risk sharing across region, we introduce global risk sharing via a market for state-dependent Arrow-Debreu securities. We show that this allows equalizing relative consumption differences between states of the world across regions. We estimate that such risk sharing scheme of climate risks could lead to welfare gains reducing the global costs of climate change by up to one third, while the amount of transfers required is substantial. This provides arguments for considering risk sharing in IAMs, but also for potentially welfare increasing negotiations about sharing risks of climate change at the global level. Keywords: Uncertainty, Risk Sharing, Insurance, Climate Change, Risk Aversion Classification-JEL: Q54, D81, D63 Creation-Date: 201409 Template-Type: ReDIF-Paper 1.0 Number: 2014.79 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-079.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.79 Title: The European Emissions Trading System (EU ETS): Ex-Post Analysis, the Market Stability Reserve and Options for a Comprehensive Reform Author-Name: Brigitte Knopf Author-X-Name-First: Brigitte Author-X-Name-Last: Knopf Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Author-Name: Nicolas Koch Author-X-Name-First: Nicolas Author-X-Name-Last: Koch Author-WorkPlace-Name: Mercator Research Institute on Global Commons and Climate Change; Berlin Author-Name: Godefroy Grosjean Author-X-Name-First: Godefroy Author-X-Name-Last: Grosjean Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Author-Name: Sabine Fuss Author-X-Name-First: Sabine Author-X-Name-Last: Fuss Author-WorkPlace-Name: Mercator Research Institute on Global Commons and Climate Change, Berlin and International Institute for Applied Systems Analysis, Laxenburg Author-Name: Christian Flachsland Author-X-Name-First: Christian Author-X-Name-Last: Flachsland Author-WorkPlace-Name: Mercator Research Institute on Global Commons and Climate Change, Berlin Author-Name: Michael Pahle Author-X-Name-First: Michael Author-X-Name-Last: Pahle Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research Author-Name: Michael Jakob Author-X-Name-First: Michael Author-X-Name-Last: Jakob Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research and Mercator Research Institute on Global Commons and Climate Change, Berlin Author-Name: Ottmar Edenhofer Author-X-Name-First: Ottmar Author-X-Name-Last: Edenhofer Author-WorkPlace-Name: Potsdam Institute for Climate Impact Research, Mercator Research Institute on Global Commons, Berlin and Climate Change and Technische Universität, Berlin Abstract: The central pillar of European climate policy, the European Emissions Trading System (EU ETS), is currently under scrutiny, as the allowance price is persistently low at around 5€/tCO2. The cap was met and emissions actually declined in recent years, ensuring the environmental effectiveness of the scheme. However, the low price may affect the long-term cost-effectiveness of the instrument by reducing the incentive for investment and deployment of low carbon technologies. No significant increase in the allowance price is expected before 2020, and probably not beyond, without reform. While the reasons for the price decline are controversial, empirical analysis shows that only a small portion of price fluctuations can be explained by factors such as the economic crisis, renewable deployment or international offsets. Therefore, it is likely that political factors and regulatory uncertainty have played a key role in the price decline. As a consequence, any reform of the EU ETS has to deliver a mechanism that reduces such uncertainty and stabilizes expectations of market participants. The Market Stability Reserve proposed by the EU Commission is unlikely to address the current problem of price uncertainty and insufficient dynamic efficiency. The key element of the alternative reform proposal described in this paper is to set a price collar in the EU ETS with lower and upper boundaries. This is likely to reinforce the long-term credibility and reliability of the price signal. In addition, a price for GHG emissions not covered by the EU ETS has to be set. If additional market failures prevent the market from functioning efficiently, specific policy instruments related to innovation and technology diffusion should be implemented in addition to carbon pricing. Carbon leakage could be addressed through tailor-made trade policies. In parallel, increasing the coalition of countries included in the carbon pricing should remain a priority. This reform package would bring the EU ETS back to life, while avoiding a relapse into potentially costly and inefficient national climate and energy policies. Keywords: EU ETS, Emissions Trading, Carbon Price, Price Collar, Market Stability Reserve, Credibility Classification-JEL: Q42, Q48, Q54, Q58 Creation-Date: 201409 Template-Type: ReDIF-Paper 1.0 Number: 2014.80 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-080.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.80 Title: Environmental Regulation and Competitiveness: Empirical Evidence on the Porter Hypothesis from European Manufacturing Sectors Author-Name: Yana Rubashkina Author-X-Name-First: Yana Author-X-Name-Last: Rubashkina Author-WorkPlace-Name: Catholic University of Milan Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and IEFE-Bocconi Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC Abstract: This paper represents an empirical investigation of the “weak” and “strong” Porter Hypothesis (PH) focusing on the manufacturing sectors of European countries between 1997 and 2009. By and large, the literature has analyzed the impact of environmental regulation on innovation and on productivity generally in separate analyses and mostly focusing on the USA. The few existing studies focusing on Europe investigate the effect of environmental regulation either on green innovation or on performance indicators such as exports. We instead look at overall innovation and productivity impact that are the most relevant indicators for the “strong” PH. This approach allows us to account for potential opportunity costs of induced innovations. As a proxy of environmental policy stringency we use pollution abatement and control expenditures (PACE), which represent one of the few indicators available at the sectoral level. We remedy upon its main drawback, that of potential endogeneity of PACE, by adopting an instrumental variable estimation approach. We find evidence of a positive impact of environmental regulation on the output of innovation activity, as proxied by patents, thus providing support in favor of the “weak” PH in line with most of the literature. On the other front, we find no evidence in favor or against the “strong” PH, as productivity appears to be unaffected by the degree of pollution control and abatement efforts. Keywords: Environmental Regulation, Innovation, Productivity, Competitiveness, Porter Hypothesis Classification-JEL: Q50, Q52, Q55, Q58, O31 Creation-Date: 201409 Template-Type: ReDIF-Paper 1.0 Number: 2014.81 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-081.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.81 Title: E-participation: Social Capital and the Internet Author-Name: Fabio Sabatini Author-X-Name-First: Fabio Author-X-Name-Last: Sabatini Author-WorkPlace-Name: Department of Economics and Law, Sapienza University of Rome (Italy) and Laboratory for Comparative Social Research (LCSR), National Research University Higher School of Economics, Moscow and Saint Petersburg (Russia) Author-Name: Francesco Sarracino Author-X-Name-First: Francesco Author-X-Name-Last: Sarracino Author-WorkPlace-Name: Institut National de la Statistique et des Études Économiques du Grand-Duché du Luxembourg (STATEC), Laboratory for Comparative Social Research (LCSR), National Research University Higher School of Economics, Moscow and Saint Petersburg (Russia) Abstract: Studies in the social capital literature have documented two stylised facts: first, a decline in measures of social participation has occurred in many OECD countries. Second, and more recently, the success of social networking sites (SNSs) has resulted in a steep rise in online social participation. Our study adds to this body of research by conducting the first empirical assessment of how online networking affects two economically relevant aspects of social capital, i.e. trust and sociability. We address endogeneity in online networking by exploiting technological characteristics of the pre-existing voice telecommunication infrastructures that exogenously determined the availability of broadband for high-speed Internet. We find that participation in SNSs such as Facebook and Twitter has a positive effect on face-to-face interactions. However, social trust decreases with online interactions. We argue that the rising practice of hate speech may play a crucial role in the destruction of trust Keywords: Social Participation, Online Networks, Facebook, Social Trust, Social Capital, Broadband, Digital Divide, Hate Speech Classification-JEL: C36, D85, O33, Z1 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.82 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-082.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.82 Title: Assessing Direct and Indirect Economic Impacts of a Flood Event Through the Integration of Spatial and Computable General Equilibrium Modelling Author-Name: Lorenzo Carrera Author-X-Name-First: Lorenzo Author-X-Name-Last: Carrera Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Ca’ Foscari University of Venice and Euro-Mediterranean Centre on Climate Change Author-Name: Gabriele Standardi Author-X-Name-First: Gabriele Author-X-Name-Last: Standardi Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre on Climate Change Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: Fondazione Eni Enrico Mattei, Euro-Mediterranean Centre Climate Change and University of Milan Author-Name: Jaroslav Mysiak Author-X-Name-First: Jaroslav Author-X-Name-Last: Mysiak Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre on Climate Change Abstract: In this paper we developed and tested an integrated methodology for assessing direct and indirect economic impacts of flooding. The methodology combines a spatial analysis of damage to physical stocks with a general economic equilibrium approach using a regionally-calibrated (to Italy) version of a Computable General Equilibrium (CGE) global model. We applied the model to the 2000 Po river flood. To account for the uncertainty in the induced effects on regional economies, we explored three disruption and two recovery scenarios. The results prove that: i) indirect losses are a significant share of direct losses, and ii) the model is able to capture both positive and negative economic effects of a disaster in different areas of the same country. The assessment of indirect impacts is essential for a full understanding of the economic outcomes of natural disasters. Keywords: Flood Risk, Indirect Impacts, Computable General Equilibrium, Natural Disasters Classification-JEL: Q5, Q54 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.83 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-083.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.83 Title: Distortion Effects of Export Quota Policy: an Analysis of the China - Raw Materials Dispute Author-Name: Christophe Charlier Author-X-Name-First: Christophe Author-X-Name-Last: Charlier Author-WorkPlace-Name: Université Nice Sophia Antipolis and GREDEG/CNRS Author-Name: Sarah Guillou Author-X-Name-First: Sarah Author-X-Name-Last: Guillou Author-WorkPlace-Name: OFCE - Sciences-Po Paris, GREDEG/CNRS and SKEMA Business School Abstract: The China - Raw Materials dispute recently arbitrated by the WTO opposed China as defendant to the US, the EU and Mexico as claimants on the somewhat unusual issue of export restrictions on natural resources. For the claimants, Chinese export restrictions on various raw materials, of which the country is a major producer, create shortages in foreign markets increasing the prices of these goods. China defends export limitations by presenting them as a natural resource conserving policy. This paper offers a theoretical analysis of the dispute with the help of a model of a monopoly extracting a non-renewable resource and selling it on both the domestic and foreign markets. The theoretical results focus on the effects of imposing an export quota on quantities, prices and price distortion. Given the crucial importance of demand elasticity in this theoretical understanding of the conflict, the empirical part of the paper provides estimates of import demand elasticity of the parties for each product concerned in the case. The model and the empirical results challenge the ideas that an export quota always favours conservation of natural resource, that a higher foreign price necessarily follows this policy and that it inherently increases price distortion and therefore discrimination. Keywords: Export Restrictions, WTO, Exhaustible Natural Resources, Price Discrimination, Article XX of the GATT 1994 Classification-JEL: F130, F180, F510, K330, Q370 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.84 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-084.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.84 Title: Loss & Damage: a Critical Discourse Analysis Author-Name: Elisa Author-X-Name-First: Elisa Author-X-Name-Last: Calliari Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change, Venice, Italy Abstract: The years-long negotiations on an international mechanism for loss and damage (L&D) associated with climate change impacts got to a milestone during the nineteenth session of the UNFCCC Conference of the Parties (COP-19), held in Warsaw in November 2013. The COP established the Warsaw international mechanism, aiming to address L&D associated with the adverse effects of climate change, including extreme events and slow onset events, in vulnerable developing countries (Decision 2/CP.19). The paper performs a Critical Discourse Analysis (CDA) of COP decision 2/CP.19 in order to reconstruct developing and developed countries’ positions on L&D and reflect on how the Warsaw mechanism could be implemented. The analysis builds on Fairclough’s (1992) three-dimensional model for CDA, and makes use of a wide range of materials including previous COP decisions, High Level Segment statements and Parties submissions to COP 19, press releases and other relevant documents. The analysis highlights the lack of a common understanding and representation of L&D by developed and developing countries, with this fact ultimately hampering the possibility to define specific tools to address the issue within the mechanism. The difficulty to come to a shared meaning on L&D is due to its connection to other controversial discourses under the UNFCCC, including that of compensation for climate change impacts. As the concept of compensation pertains to the field of international law, the paper explores the appropriateness of the notions of State Responsibility for wrongful acts and State liability for acts not prohibited by international law to effectively deal with L&D. The paper concludes by discussing some strategic options for developing countries to advance the L&D discourse within international talks. Classification-JEL: F130, F180, F510, K330, Q370 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.85 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-085.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.85 Title: Price versus Quantities versus Indexed Quantities Author-Name: Frédéric Branger Author-X-Name-First: Frédéric Author-X-Name-Last: Branger Author-WorkPlace-Name: AgroParistech ENGREF and CIRED (France) Author-Name: Philippe Quirion Author-X-Name-First: Philippe Author-X-Name-Last: Quirion Author-WorkPlace-Name: CIRED and CNRS (France) Abstract: We develop a stochastic model to rank different policies (tax, fixed cap and relative cap) according to their expected total social costs. Three types of uncertainties are taken into account: uncertainty about abatement costs, business-as-usual (BAU) emissions and future economic output (the two latter being correlated). Two parameters: the ratio of slopes of marginal benefits and marginal costs, and the above-mentioned correlation, are crucial to determine which instrument is preferred. When marginal benefits are relatively flatter than marginal costs, prices are preferred over fixed caps (Weitzman’s result). When the former correlation is higher than a parameter- dependent threshold, relative caps are preferred to fixed caps. An intermediate condition is found to compare the tax instrument and the relative cap. The model is then empirically tested for seven different regions (China, the United States, Europe, India, Russia, Brazil and Japan). We find that tax is preferred to caps (absolute or relative) in all cases, and that relative caps are preferred to fixed caps in the US and emerging countries (except Brazil where it is ambiguous), whereas fixed cap are preferred to relative cap in Europe and Japan. Keywords: Instrument, Price, Quantity, Intensity Target, Regulation, post-Kyoto, Uncertainty, Climate Policy Classification-JEL: Q5, Q58 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.86 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-086.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.86 Title: The Passive Use Value of the Mediterranean Forest Author-Name: Vladimir Otrachshenkoy Author-X-Name-First: Vladimir Author-X-Name-Last: Otrachshenkoy Author-WorkPlace-Name: Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC), Fondazione Eni Enrico Mattei (FEEM) and Nova School of Business and Economics (Portugal) Abstract: In this study we estimate the passive use value of forest in different ecological zones in the Mediterranean region. We estimate these values for forests using meta-analysis. These estimates are used to reveal the annual monetary values per hectare for each country. The total annual amount of passive use value of the Mediterranean forest is about one billion international dollars. The estimated passive use value of the forest from this study can be used to account for the social welfare loss caused by fire, insects, diseases, biotic agents, and abiotic factors. Keywords: Forest, Mediterranean Region, Passive Use, Welfare Loss Classification-JEL: Q23 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.87 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-087.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.87 Title: Partnerships for a Better Governance of Natural Hazard Risks Author-Name: Elisa Calliari Author-X-Name-First: Elisa Author-X-Name-Last: Calliari Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Jaroslav Mysiak Author-X-Name-First: Jaroslav Author-X-Name-Last: Mysiak Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: Silvia Santato Author-X-Name-First: Silvia Author-X-Name-Last: Santato Author-WorkPlace-Name: Fondazione Eni Enrico Mattei Author-Name: María Máñez Costa Author-X-Name-First: María Author-X-Name-Last: Máñez Costa Author-WorkPlace-Name: Helmholtz-Zentrum Geesthacht (HZG), Centre for Materials and Coastal Research (Germany) Abstract: This paper discusses the role played by decentralized, voluntary multi-stakeholder partnerships between public authorities and agencies and/or public authorities and civil society for disaster risk reduction. We pay attention to Public – Public Partnerships (PuP), a term coined for public alliances in the early 2000s although arguably building upon community-based natural resource management (CBNRM) and disaster risk reduction (CBDRR), as well as other cooperative initiatives. In many respects PuPs became known as a counterpart of PPPs and quickly spread in public water and health service provision. While the concept of PuPs match to some extent the European Union’s efforts to expand horizontal cooperation and collaboration, it appears too narrow to capture the sense of European initiatives. In particular, the strict exclusion of business and commercial undertakings in the essence of PuPs by early scholars is not compatible with the call for truly cooperative multi-governance arrangements. The paper examines the concept of PuP, its objectives and defining characteristics, partners involved and relationship tying them. It then moves to understand to what extent partnerships meant to improve cooperation and coordination have permeated the EU legislation and policies, focusing especially on the role of inclusive governance and territorial cooperation. The analysis is complemented by examples of PuPs addressed in the ENHANCE case studies in which disaster risk reduction plays a role. Keywords: Public-public partnerships, Disaster Risk Reduction, Smart Regulation, Cohesion Policy and Territorial Cooperation, Po River Basin, Jucar River Basin, Wadden Sea, Natural Hazard Partnership Classification-JEL: Q54, Q58 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.88 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-088.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.88 Title: Renewable Energy, Subsidies, and the WTO: Where Has the ‘Green’ Gone? Author-Name: Patrice Bougette Author-X-Name-First: Patrice Author-X-Name-Last: Bougette Author-WorkPlace-Name: Université Nice Sophia Antipolis and GREDEG/CNRS Author-Name: Christophe Charlier Author-X-Name-First: Christophe Author-X-Name-Last: Charlier Author-WorkPlace-Name: Université Nice Sophia Antipolis and GREDEG/CNRS Abstract: Faced with the energy transition imperative, governments have to decide about public policy to promote renewable electrical energy production and to protect domestic power generation equipment industries. For example, the Canada – Renewable energy dispute is over Feed-in tariff (FIT) programs in Ontario that have a local content requirement (LCR). The EU and Japan claimed that FIT programs constitutesubsidies that go against the SCM Agreement, and that the LCR is incompatible with the non-discrimination principle of the World Trade Organization (WTO). This paper investigates this issue using an international quality differentiated duopoly model in which power generation equipment producers compete on price. FIT programs including those with a LCR are compared for their impacts on trade, profits, amount of renewable electricity produced, and welfare. When ‘quantities’ are taken into account, the results confirm discrimination. However, introducing a difference in the quality of the power generation equipment produced on both sides of the border provides more mitigated results. Finally, the results enable discussion of the question of whether environmental protection can be put forward as a reason for subsidizing renewable energy producers in light of the SCM Agreement. Keywords: Feed-in Tariffs, Subsidies, Local Content Requirement, Industrial Policy, Canada – Renewable Energy Dispute, Trade Policy Classification-JEL: F18, L52, Q42, Q48, Q56 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.89 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-089.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.89 Title: Corporate Preferences for Domestic Policy Instruments under a Sectoral Market Mechanism: A Case Study of Shanxi Province in China Author-Name: Shuai Gao Author-X-Name-First: Shuai Author-X-Name-Last: Gao Author-WorkPlace-Name: State Key Joint Laboratory of Environment Simulation and Pollution Control (SKLESPC) and School of Environment, Tsinghua University, Beijing, China Author-Name: Wenjia Cai Author-X-Name-First: Wenjia Author-X-Name-Last: Cai Author-WorkPlace-Name: Ministry of Education Key Laboratory for Earth System Modeling, Center for Earth System Science, Tsinghua University, China Author-Name: Wenling Liu Author-X-Name-First: Wenling Author-X-Name-Last: Liu Author-WorkPlace-Name: State Key Joint Laboratory of Environment Simulation and Pollution Control (SKLESPC), and School of Environment, Tsinghua University, Beijing, China Author-Name: Can Wang Author-X-Name-First: Can Author-X-Name-Last: Wang Author-WorkPlace-Name: State Key Joint Laboratory of Environment Simulation and Pollution Control, School of Environment, Tsinghua University, Ministry of Education Key Laboratory for Earth System Modeling, Center for Earth System Science, Tsinghua University, China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: Department of Public Economics, School of Economics, Fudan University, China Abstract: Understanding companies’ preferences for various domestic policy instruments is crucial to designing and planning Sectoral Market Mechanism (SMM) in China. Based on a detailed overview of domestic policy instruments under SMM, this paper evaluates corporate preferences for diverse domestic policy instruments and identifies potential influencing factors through econometric analysis. The data were collected from 113 respondents in all 11 prefecture-level cities of Shanxi province, China. Regarding policy instruments under the system of government receiving tradable units, corporate energy saving potential, learning capacity and companies’ characteristics have shown significant influences on companies’ preferences. Dissemination and the popularization of knowledge are also important to help companies learn how to improve energy efficiency. In terms of policy measures with voluntary installation-level targets, corporate competition level, organizational size and ownership are the main factors influencing companies’ preferences. Reducing inequality in the distribution of responsibility is especially important to gain companies’ support. Under the policy with mandatory installation-level targets, it suggests that policymakers should focus on status of energy use management and internationalization orientation. Policy instruments familiar to companies that are able to relieve corporate financial pressures might be good options to gain higher acceptance. Moreover, our results show that it is very important to choose an issuance frequency of one to three years under sectoral crediting. Keywords: Sectoral Market Mechanism, Domestic Policy Instruments, Policy Preference, Company, China Classification-JEL: D22, O13, P28, Q43, Q48, Q53, Q58 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.90 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-090.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.90 Title: Environmental Policy Performance and its Determinants: Application of a Three-level Random Intercept Model Author-Name: Marzio Galeotti Author-X-Name-First: Marzio Author-X-Name-Last: Galeotti Author-WorkPlace-Name: University of Milan and IEFE-Bocconi Author-Name: Yana Rubashkina Author-X-Name-First: Yana Author-X-Name-Last: Rubashkina Author-WorkPlace-Name: Catholic University of Milan Author-Name: Silvia Salini Author-X-Name-First: Silvia Author-X-Name-Last: Salini Author-WorkPlace-Name: University of Milan Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC Abstract: We propose the use of a three-level random intercept model to measure the degree of environmental policy performance of different countries and to study its determinants. Inspired by the literature on multilevel latent models and Item Response Theory (IRT), this framework treats policy commitment as a latent variable which is estimated conditional on the difficulty of the policy portfolio implemented by each country. We contribute to the study and scoring of environmental and energy policies in three main ways. First, the model results in a ranking of countries which is conditional on the complexity of their chosen policy portfolio. Second, we provide a unified framework in which to construct a policy indicator and to study its determinants through a latent regression approach. The resulting country ranking can thus be cleaned from the effect of economic and institutional observables which affect policy design and implementation. Third, the model estimates parameters which can be used to describe and compare policy portfolios across countries. We apply this methodology to the case of energy efficiency policies in the industrial sectors of 29 EU countries between 2004 and 2011. We conclude by highlighting the future possible applications of this approach, which are not confined to the realm of environmental and energy policy. Keywords: Energy Policy, Environmental Policy, Ranking, Policy Portfolios Classification-JEL: Q58, O57, C33 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.91 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-091.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.91 Title: Energy Technology Expert Elicitations for Policy: Workshops, Modeling, and Meta-analysis Author-Name: Laura Diaz Anadon Author-X-Name-First: Laura Author-X-Name-Last: Diaz Anadon Author-WorkPlace-Name: Belfer Center for Science and International Affairs, Harvard Kennedy School, Harvard University Author-Name: Valentina Bosetti Author-X-Name-First: Valentina Author-X-Name-Last: Bosetti Author-WorkPlace-Name: Department of Economics, Bocconi University, Milan, Italy, Fondazione Eni Enrico Mattei, Milan, Italy and CMCC, Lecce, Italy Author-Name: Gabe Chan Author-X-Name-First: Gabe Author-X-Name-Last: Chan Author-WorkPlace-Name: Belfer Center for Science and International Affairs, Harvard Kennedy School, Harvard University Author-Name: Gregory Nemet Author-X-Name-First: Gregory Author-X-Name-Last: Nemet Author-WorkPlace-Name: LaFollette School of Public Affairs, University of Madison-Wisconsin Author-Name: Elena Verdolini Author-X-Name-First: Elena Author-X-Name-Last: Verdolini Author-WorkPlace-Name: Fondazione Eni Enrico Mattei and CMCC Abstract: Characterizing the future performance of energy technologies can improve the development of energy policies that have net benefits under a broad set of future conditions. In particular, decisions about public investments in research, development, and demonstration (RD&D) that promote technological change can benefit from (1) an explicit consideration of the uncertainty inherent in the innovation process and (2) a systematic evaluation of the tradeoffs in investment allocations across different technologies. To shed light on these questions, over the past five years several groups in the United States and Europe have conducted expert elicitations and modeled the resulting societal benefits. In this paper, we discuss the lessons learned from the design and implementation of these initiatives in four respects. First, we discuss lessons from the development of ten energy-technology expert elicitation protocols, highlighting the challenge of matching elicitation design with a particular modeling tool. Second, we report insights from the use of expert elicitations to optimize RD&D investment portfolios. These include a discussion of the rate of decreasing marginal returns to research, the optimal level of overall investments, and the sensitivity of results to policy scenarios and selected metrics for evaluation. Third, we discuss the effect of combining online elicitation tools with in-person group discussions on the usefulness of the results. Fourth, we summarize the results of a meta-analysis of elicited data across research groups to identify the association between expert characteristics and elicitation results. Keywords: Expert Elicitations, Energy Technology Innovation, Public R&D, Meta-analysis, Optimization Classification-JEL: O32, Q40 Creation-Date: 201410 Template-Type: ReDIF-Paper 1.0 Number: 2014.92 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-092.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.92 Title: Clean Energy - Bridging to Commercialization: The Key Potential Role of Large Strategic Industry Partners Author-Name: Lawrence M. Murphy Author-X-Name-First: Lawrence M. Author-X-Name-Last: Murphy Author-WorkPlace-Name: NREL Author-Name: Ron Ondechek Jr. Author-X-Name-First: Ron Author-X-Name-Last: Ondechek Jr. Author-WorkPlace-Name: Kidron Corporate Advisors Author-Name: Ricardo Bracho Author-X-Name-First: Ricardo Author-X-Name-Last: Bracho Author-WorkPlace-Name: NREL Author-Name: John McKenna Author-X-Name-First: John Author-X-Name-Last: McKenna Author-WorkPlace-Name: Hamilton Clark Abstract: This white paper explores a range of potentially attractive partnerships, including those between established US industry members, the entrepreneurial CE (clean energy) community, and the financial industry. These partnerships, include those that can leverage a wide range of entrepreneurial and industry resources that are needed to promote the development and commercialization of innovative new technologies - partnerships that in turn can lead to accelerated, global utilization of CE, as well as US global leadership for the CE industry. The need for these partnerships is discussed within the context of the growing interest in CE, driven in large part by the anticipated strong, global growth in energy demand, as well as by the need for a spectrum of other long term (e.g. environmental) benefits from CE. The impacts of the rapidly changing investment and the market environment for innovative CE technologies, are also explored. The strong need for multifaceted enabling partnerships and resources are found to go well beyond those corresponding to financing, and includes for example, expertise on markets and market creation, and product development. In addition, deep resource levels are often especially needed in the pursuit of high potential, next generation CE innovative supply technologies that require costly technology development. Such is the case for example, where sophisticated manufacturing approaches are needed to exploit promising, and high performance, material combinations along with novel and complex technology based hardware. Further, access to adequate resources for the needed, high cost, technology development is increasingly less likely to be available from traditional partners such as VCs and their limited partners. Of the key potential partners explored, Strategic Industry Partners (SIPs) are found to be particularly intriguing - they have the most robust range of appropriate resources to potentially benefit from these partnerships while also helping to fill the void in the commercialization food chain for technology development, where VC funding is not available. SIPs also play a broad enabling role for the growth of the entrepreneurial US based, CE industry. Moreover, SIPs also have the required stature and influence to impact global markets as well as to promote global US leadership in CE, while also contributing to the dialogue around public-private partnerships. While SIPs have stringent requirements for partnering, as well as intense competition for their resource investments, successfully pursuing mutually attractive partnerships with SIPs should be well worth the required effort. Keywords: Clean Energy, Strategic Industry Partners, High Cost Technology Development, Commercialization Classification-JEL: Q42, Q49, G24 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.93 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-093.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.93 Title: Quantifying Catastrophic and Climate Impacted Hazards Based on Local Expert Opinions Author-Name: Tim Keighley Author-X-Name-First: Tim Author-X-Name-Last: Keighley Author-WorkPlace-Name: Faculty of Business and Economics, Macquarie University Author-Name: Thomas Longden Author-X-Name-First: Thomas Author-X-Name-Last: Longden Author-WorkPlace-Name: Faculty of Business and Economics, Macquarie University Author-Name: Supriya Mathew Author-X-Name-First: Supriya Author-X-Name-Last: Mathew Author-WorkPlace-Name: Northern Institute, Charles Darwin University Author-Name: Stefan Trück Author-X-Name-First: Stefan Author-X-Name-Last: Trück Author-WorkPlace-Name: Faculty of Business and Economics, Macquarie University Abstract: The analysis of catastrophic and climate impacted hazards is a challenging but important exercise, as the occurrence of such events is usually associated with high damage and uncertainty. Often, at the local level, there is a lack of information on rare extreme events, such that available data is not sufficient to fit a distribution and derive parameter values for the frequency and severity distributions. This paper discusses local assessments of extreme events and examines the potential of using expert opinions in order to obtain values for the distribution parameters. In particular, we illustrate a simple approach, where a local expert is required to only specify two percentiles of the loss distribution in order to provide an estimate for the severity distribution of climate impacted hazards. In our approach, we focus on so-called heavy-tailed distributions for the severity, such as the Lognormal, Weibull and Burr XII distribution. These distributions are widely used to fit data from catastrophic events and can also represent extreme losses or the so-called tail of the distribution. An illustration of the method is provided utilising an example that quantifies the risk of bushfires in a local area in Northern Sydney. Keywords: Catastrophic Risks, Climate Impacted Hazards, Expert Opinions, Local Level Decision Making, Loss Distribution Approach Classification-JEL: Q5, Q54, Q58 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.94 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-094.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.94 Title: Canada – Renewable Energy: Implications for WTO Law on Green and Not-so-Green Subsidies Author-Name: Steve Charnovitz Author-X-Name-First: Steve Author-X-Name-Last: Charnovitz Author-WorkPlace-Name: George Washington University Law School Author-Name: Carolyn Fischer Author-X-Name-First: Carolyn Author-X-Name-Last: Fischer Author-WorkPlace-Name: Resources for the Future (RFF) and Fondazione Eni Enrico Mattei (FEEM) Abstract: In the first dispute on renewable energy to come to WTO dispute settlement, the domestic content requirement of Ontario’s feed-in tariff was challenged as a discriminatory investment-related measure and as a prohibited import substitution subsidy. The panel and Appellate Body agreed that Canada was violating the GATT and the TRIMS Agreement. But the SCM Article 3 claim by Japan and the European Union remains unadjudicated, because neither tribunal made a finding that the price guaranteed for electricity from renewable sources constitutes a ‘benefit’ pursuant to the SCM Agreement. Although the Appellate Body provides useful guidance to future panels on how the existence of a benefit could be calculated, the most noteworthy aspect of the new jurisprudence is the Appellate Body’s reasoning that delineating the proper market for ‘benefit’ analysis entails respect for the policy choices made by a government. Thus, in this dispute, the proper market is electricity produced only from wind and solar energy. Keywords: Feed-in-Tariff, Renewable Energy, Subsidies, International Trade, WTO, Green Growth, Local Content Requirement Classification-JEL: K33, Q48, Q56, Q58 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.95 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-095.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.95 Title: Towards a European Energy Union. The Need to Focus on Security of Energy Supply Author-Name: Simone Tagliapietra Author-X-Name-First: Simone Author-X-Name-Last: Tagliapietra Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) Abstract: Energy has been at the core of the EU integration since its inception. However, following the path of a shooting star, the key role of energy gradually declined over time, to the level of being basically left out from the Treaties, at least up to Lisbon. The EU has struggled to circumnavigate this “energy-gap” of the Treaties by legislating on energy-related issues by making use of its shared competences in the areas of internal market and environment. However, this effort has resulted in a very fragmented EU energy policy, also characterized by the absence of a major element: security of energy supply. After the 2014 Ukraine crisis a new momentum has emerged in the EU about the urgent need of creating a truly European energy policy, with both the new President of the EU Council and the new EU Commission calling for the creation of a EU Energy Union. This paper argues that the EU should seize this historical opportunity to fill the main long-lasting gap of its energy policy: security of energy supply. To this end, the paper proposes a set of new actions that might be undertaken in this field, also outlying that the most feasible option to the development of a new EU Energy Union seems to be the formation -through a scheme of differentiated integration- of a smaller coalition of Member States committed to quickly advance the integration of their energy policies under the principle that only by acting together the EU will be able to meet the growing energy challenges of the future. Keywords: EU Energy Policy, EU Energy Security, EU Energy Union Classification-JEL: Q40, Q42, Q48 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.96 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-096.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.96 Title: Access to Modern Energy: a Review of Impact Evaluations Author-Name: Jacopo Bonan Author-X-Name-First: Jacopo Author-X-Name-Last: Bonan Author-WorkPlace-Name: Università Cattolica del Sacro Cuore and Laboratorio Expo Author-Name: Stefano Pareglio Author-X-Name-First: Stefano Author-X-Name-Last: Pareglio Author-WorkPlace-Name: Università Cattolica del Sacro Cuore and Laboratorio Expo Author-Name: Massimo Tavoni Author-X-Name-First: Massimo Author-X-Name-Last: Tavoni Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM), Centro Euro-Mediterraneo sui Cambiamenti Climatici and Politecnico di Milano Abstract: Universal access to modern energy services, in terms of access to electricity and to modern cooking facilities, has been recognized as fundamental challenge for development and is likely to be included in the post-2015 Sustainable Development Goals. Despite a strong praise for action and several programs at both national and international level, very few impact evaluation studies try to shed light on the causal relationship between access to energy and development, by also allowing decision makers to rigorously assess cost-effectiveness and efficiency of policies and programs. This work attempts to review the literature on existing impact evaluation of access to electricity and modern cooking facilities. For access to electricity we consider as outcomes labour markets, time allocation, household welfare (consumption, income, schooling and health) and business. For access to improved cookstoves, we assess impacts on household welfare. The reviewed literature highlights a significant causal impact of electricity access on important metrics of wellbeing, but more mixed evidence regarding clean cookstove. Finally, we also review the barriers and drivers of access to modern energy services identified by most recent impact evaluation studies. Keywords: Impact Evaluation, Energy Poverty, Energy Access, Rural Electrification, Modern Cookstoves, Literature Review Classification-JEL: O1, O13, Q4, Q48 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.97 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-097.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.97 Title: How Effective Are Energy-Efficiency Incentive Programs? Evidence from Italian Homeowners Author-Name: Anna Alberini Author-X-Name-First: Anna Author-X-Name-Last: Alberini Author-WorkPlace-Name: AREC, University of Maryland, Fondazione Eni Enrico Mattei (FEEM), Center for Economic Research, ETH Zurich, and Queen’s University Belfast Author-Name: Andrea Bigano Author-X-Name-First: Andrea Author-X-Name-Last: Bigano Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Centre on Climate Change (CMCC) Abstract: We evaluate incentives for residential energy upgrades in Italy using data from an original survey of Italian homeowners. In this paper, attention is restricted to heating system replacements, and to the effect of monetary and non-monetary incentives on the propensity to replace the heating equipment with a more efficient one. To get around adverse selection and free riding issues, we ask stated preference questions to those who weren’t planning energy efficiency upgrades any time soon. We argue that these persons are not affected by these behaviors. We use their responses to fit an energy-efficiency renovations curve that predicts the share of the population that will undertake these improvements for any given incentive level. This curve is used to estimate the CO2 emissions saved and their cost-effectiveness. Respondents are more likely to agree to a replacement when the savings on the energy bills are larger and experienced over a longer horizon, and when rebates are offered to them. Reminding about CO2 (our non-monetary incentive) had little effect. Even under optimistic assumptions, the cost-effectiveness of incentives of size comparable to that in the Italian tax credit program is generally not favorable. Keywords: Energy-efficiency Incentives, Free Riding, Adverse Selection, Stated Preferences, CO2 Emissions Reductions; CO2 emissions Reductions Supply Curves, Residential Energy Consumption Classification-JEL: Q41, Q48, Q54, Q51 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.98 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-098.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.98 Title: War Size Distribution: Empirical Regularities Behind the Conflicts Author-Name: Rafael González-Val Author-X-Name-First: Rafael Author-X-Name-Last: González-Val Author-WorkPlace-Name: Universidad de Zaragoza and Instituto de Economía de Barcelona Abstract: This paper analyses the statistical distribution of war size. We find strong support for a Pareto-type distribution (power law) using data from different sources (COW and UCDP) and periods. A power law describesaccurately the size distribution of all wars, but also the distribution of the sample of wars in any given period. The estimated Pareto exponent is always less than 1, indicating that the distribution is heavy-tailed; this means that the war average loss is controlled by the largest conflicts. Furthermore, the study of battle deaths’growth rates reveals a clear decreasing pattern; the growth of deaths declines faster the greater the number of initial deaths. Keywords: War Size Distribution, Battle Feaths, Power Law, Pareto Distribution Classification-JEL: D74, F51, N40 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.99 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-099.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.99 Title: Tradable Renewable Quota vs. Feed-In Tariff vs. Feed-In Premium under Uncertainty Author-Name: Robert Marschinski Author-X-Name-First: Robert Author-X-Name-Last: Marschinski Author-WorkPlace-Name: MCC, PIK, TU-Berlin Author-Name: Philippe Quirion Author-X-Name-First: Philippe Author-X-Name-Last: Quirion Author-WorkPlace-Name: CNRS, CIRED, MCC Abstract: We study the performance under uncertainty of three renewable energy policy instruments: Tradable Renewable Quota (TRQ), Feed-In-Tariff (FIT), and Feed-In-Premium (FIP). We develop a stylized model of the electricity market, where renewables are characterized by a positive learning externality, which the regulator aims to internalize. Assuming shocks on the fossil-based electricity supply, renewables supply, or on total electricity demand, we analytically derive the conditions determining the instruments’ relative welfare ranking. Although we generally confirm the key role of the slopes of marginal benefits and costs associated with the policy, the specific ranking depends on which type of uncertainty is considered, and whether shocks are permanent or transitory. However, a high learning rate generally favours the FIT, while TRQ is mostly dominated by the other two instruments. These results are confirmed in a numerical application to the US electricity market, in which the FIP emerges as the most and TRQ as the least robust overall choice. Keywords: Feed-in Premium, Feed-in Tariff, Renewable Energy Policy, Renewable Portfolio Standard, Tradable Renewable Quota, Uncertainty Classification-JEL: Q4, Q48 Creation-Date: 201411 Template-Type: ReDIF-Paper 1.0 Number: 2014.100 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-100.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.100 Title: From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy Author-Name: Wei Jin Author-X-Name-First: Wei Author-X-Name-Last: Jin Author-WorkPlace-Name: School of Public Policy, Zhejiang University, Hangzhou, China Author-Name: ZhongXiang Zhang Author-X-Name-First: ZhongXiang Author-X-Name-Last: Zhang Author-WorkPlace-Name: School of Economics, Fudan University, Shanghai, China Abstract: Whether China continues its current energy-intensive growth path or adopts a sustainable development prospect has significant implication for energy and climate governance. Building on a Ramsey-Cass-Koopmans growth model incorporating the mechanism of endogenous technological change and its interaction with fossil energy use and economic growth, this paper contributes to an economic exposition of China’s potential transition from an energy-intensive to an innovation-led growth path. We find that in China’s initial growth period the small amount of capital stock creates higher dynamic benefits of capital investment and incentives of capital stock accumulation rather than R&D-related innovation. Accumulation of energy-consuming capital stock along this non-innovation-led growth path thus leads to an intensive use of fossil energy - an energy-intensive growth pattern. To avoid this undesirable outcome, China’s social planner should consider locating a transition point to an innovation-led balanced growth path (BGP). When the growth dynamics reaches that transition point, China’s economy would embark on investment in physical capital and R&D simultaneously, and make a transition into the innovation-led BGP along which consumption, capital investment, and R&D have a balanced share. Also in this innovation-led BGP, consumption, physical capital stock, and knowledge stock all grow, fossil energy uses decline. Keywords: Technological Innovation, Energy Consumption, Economic Growth Model Classification-JEL: Q55, Q58, Q43, Q48, O13, O31, O33, O44, F18 Creation-Date: 201412 Template-Type: ReDIF-Paper 1.0 Number: 2014.101 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2014-101.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.101 Title: Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering when Countries are Asymmetric Author-Name: Vassiliki Manoussi Author-X-Name-First: Vassiliki Author-X-Name-Last: Manoussi Author-WorkPlace-Name: Athens University of Economics and Business, Department of International and European Economic Studies Author-Name: Anastasios Xepapadeas Author-X-Name-First: Anastasios Author-X-Name-Last: Xepapadeas Author-WorkPlace-Name: Athens University of Economics and Business, Department of International and European Economic Studies Abstract: We study a dynamic game of climate policy design in terms of emissions and solar radiation management (SRM) involving two heterogeneous regions or countries. Countries emit greenhouse gasses (GHGs), and can block incoming radiation by unilateral SRM activities, thus reducing global temperature. Heterogeneity is modelled in terms of the social cost of SRM, the environmental damages due to global warming, the productivity of emissions in terms of generating private benefits, the rate of impatience, and the private cost of geoengineering. We determine the impact of asymmetry on mitigation and SRM activities, concentration of GHGs, and global temperature, and we examine whether a trade-off actually emerges between mitigation and SRM. Our results could provide some insights into a currently emerging debate regarding mitigation and SRM methods to control climate change, especially since asymmetries seem to play an important role in affecting incentives for cooperation or unilateral actions. Keywords: Climate Change, Mitigation, Solar Radiation Management, Cooperation, Differential Game, Asymmetry, Feedback Nash Equilibrium Classification-JEL: Q53, Q54 Creation-Date: 201412 Template-Type: ReDIF-Paper 1.0 Number: 2014.102 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2014-102.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.102 Title: Adaptation for Mitigation Author-Name: Masako Ikefuji Author-X-Name-First: Masako Author-X-Name-Last: Ikefuji Author-WorkPlace-Name: Department of Environmental and Business Economics, University of Southern Denmark, Denmark Author-Name: Jan R. Magnus Author-X-Name-First: Jan R. Author-X-Name-Last: Magnus Author-WorkPlace-Name: Department of Econometrics & Operations Research, VU University Amsterdam, The Netherlands Author-Name: Hiroaki Sakamoto Author-X-Name-First: Hiroaki Author-X-Name-Last: Sakamoto Author-WorkPlace-Name: School of Social Sciences, Waseda University, Japan Abstract: This paper develops a dynamic model consisting of two regions (North and South), in which the accumulation of human capital is negatively influenced by the global stock of pollution. By characterizing the equilibrium strategy of each region, we show that the regions’ best responses can be strategic complements through a dynamic complementarity effect. The model is used to analyze the impact of adaptation assistance from North to South. It is shown that North’s unilateral assistance to South (thus enhancing South’s adaptation capacity) can facilitate pollution mitigation in both regions, especially when the assistance is targeted at human capital protection. Keywords: Climate Change, Mitigation, Adaptation, Human Capital Classification-JEL: D91, Q54, Q58 Creation-Date: 201412 Template-Type: ReDIF-Paper 1.0 Number: 2014.103 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2014-103.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.103 Title: Volunteering and Life or Financial Shocks: Does Income and Wealth Matter? Author-Name: Tony Beatton Author-X-Name-First: Tony Author-X-Name-Last: Beatton Author-WorkPlace-Name: Queensland Behavioural Economics Group (QuBE), School of Economics and Finance, Queensland University of Technology, Australia Author-Name: Benno Torgler Author-X-Name-First: Benno Author-X-Name-Last: Torgler Author-WorkPlace-Name: Queensland Behavioural Economics Group (QuBE), School of Economics and Finance, Queensland University of Technology, Australia, EBS Universität für Wirtschaft und Recht, EBS Business School, Germany and CREMA—Center for Research in Economics, Management and the Arts, Switzerland Abstract: Volunteering is a dominant social force that signals a healthy state. However, although the literature on volunteering is extensive, knowledge on how life’s discontinuities (life event shocks) affect volunteering is limited because most studies work with static (cross-sectional) data. To reduce this shortcoming, we use longitudinal data from Australia (HILDA) that tracks the same individuals over time to assess how individuals from different income and wealth groups respond to life and financial shocks with respect to volunteering. Although both income and wealth can act as buffers against life shocks by providing stability and reducing vulnerability—which decreases the need to actually change behaviour patterns—we observe more heterogeneity than expected and also stickiness at the lowest income levels. Response delays in post-shock volunteering also suggest that volunteering habits may be driven and influenced by strong commitment and motivation that are not shattered by life or financial shocks. In fact, the amount of time spent volunteering tends to increase after negative income shocks and decrease after positive income shocks. Keywords: Volunteering, Life Event Shocks, Financial Shocks, Income, Wealth, Habits, Panel, Australia Classification-JEL: D64, J22, D31, Z13, N37 Creation-Date: 201412 Template-Type: ReDIF-Paper 1.0 Number: 2014.104 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2014-104.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.104 Title: On the Timing of Political Regime Changes: Theory and Application to the Arab Spring Author-Name: Raouf Boucekkine Author-X-Name-First: Raouf Author-X-Name-Last: Boucekkine Author-WorkPlace-Name: Aix-Marseille University Author-Name: Fabien Prieur Author-X-Name-First: Fabien Author-X-Name-Last: Prieur Author-WorkPlace-Name: University of Montpellier I and INRA Author-Name: Klarizze Puzon Author-X-Name-First: Klarizze Author-X-Name-Last: Puzon Author-WorkPlace-Name: University of Montpellier I Abstract: We develop a continuous time dynamic game to provide with a benchmark theory of Arab Spring-type events. We consider a resource-dependent economy with two interacting groups, the elite vs. the citizens, and two political regimes, dictatorship vs. a freer regime. Transition to the freer regime can only be achieved if citizens decide to revolt given the concession/repression policy of the elite. Departing from the related literature, the revolution optimal timing is an explicit control variable in the hands of citizens. The elite is the strategic leader: she ultimately chooses her policy knowing the reaction function of citizens. In this framework, we provide with a full equilibrium analysis of the political regime switching game and notably emphasize the role of the direct switching cost of the citizens and of the elite's self-preservation options. In particular, we show how the incorporation of explicit revolution timing may change the conventional wisdom in the related institutional change literature. Finally, we emphasize how the theory may help explaining some key features of the Arab Spring. Keywords: Political Transitions, Revolution, Natural Resources, Optimal Timing, Regime Switching, Dynamic Game Classification-JEL: C61, D74, Q34 Creation-Date: 201412 Template-Type: ReDIF-Paper 1.0 Number: 2014.105 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2014-105.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.105 Title: Should We Ban Unconventional Oil Extraction to Reduce Global Warming? Author-Name: Samuel Carrara Author-X-Name-First: Samuel Author-X-Name-Last: Carrara Author-WorkPlace-Name: FEEM and CMCC Author-Name: Emanuele Massetti Author-X-Name-First: Emanuele Author-X-Name-Last: Massetti Author-WorkPlace-Name: Georgia Institute of Technology, CESIfo and FEEM Abstract: The extraction and processing of unconventional oil is more energy intensive and has larger negative environmental impacts than the extraction of conventional oil. The European Union (EU) estimates that oil sands lead to 22% more emissions than conventional oil. The EU is very concerned by the potential climate and environmental impacts and has considered introducing a tax on imported unconventional oil in order to discourage its production. This study shows that a global ban on the use of unconventional oil substantially reduces global carbon dioxide emissions, but the policy is not efficient. A unilateral ban of the EU on unconventional oil has no climate benefits and it is expensive for Europe. Keywords: Unconventional Oil, Climate Mitigation, Energy Policy, European Union Classification-JEL: Q35, Q37, Q42, Q48, Q56 Creation-Date: 201412 Template-Type: ReDIF-Paper 1.0 Number: 2014.106 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/ndl2014-106.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.106 Title: Attractiveness, Anthropometry or Both? Their Relationship and Role in Economic Research Author-Name: Sonia Oreffice Author-X-Name-First: Sonia Author-X-Name-Last: Oreffice Author-WorkPlace-Name: University of Surrey and IZA Author-Name: Climent Quintana-Domeque Author-X-Name-First: Climent Author-X-Name-Last: Quintana-Domeque Author-WorkPlace-Name: University of Oxford and IZA Abstract: We analyze how attractiveness rated at the start of the interview is related to weight (controlling for height), and BMI, separately by gender and also accounting for interviewer fixed effects, in a nationally representative sample. We are the first to show that height, weight, and BMI all strongly contribute to male and female attractiveness when attractiveness is rated by opposite-sex interviewers, whereas only thinner female respondents are considered attractive by same-sex interviewers; that is, anthropometric characteristics are irrelevant to male interviewers in assessing male attractiveness. In addition, we estimate the interplay of these attractiveness and anthropometric measures in labor and marital outcomes such as hourly wage and spousal education, showing that attractiveness and height matter in the labor market, whereas both male and female BMI are valued in the marriage market instead of attractiveness. Keywords: Beauty, BMI, Height, Weight, Wage, Spousal Education Classification-JEL: D1, J1 Creation-Date: 201412 Template-Type: ReDIF-Paper 1.0 Number: 2014.107 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-107.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.107 Title: The Rebound Effect and Energy Efficiency Policy Author-Name: Kenneth Gillingham Author-X-Name-First: Kenneth Author-X-Name-Last: Gillingham Author-WorkPlace-Name: Yale University Author-Name: David Rapson Author-X-Name-First: David Author-X-Name-Last: Rapson Author-WorkPlace-Name: University of California, Davis Author-Name: Gernot Wagner Author-X-Name-First: Gernot Author-X-Name-Last: Wagner Author-WorkPlace-Name: Environmental Defense Fund Abstract: What do we know about the size of the rebound effect? Should we believe claims that energy efficiency improvements lead to an increase in energy use? This paper clarifies what the rebound effect is, and provides a guide for economists and policymakers interested in its magnitude. We describe how some papers in the literature consider the rebound effect from a costless exogenous increase in energy efficiency, while others examine the effects of a particular energy efficiency policy—a distinction that leads to very different welfare and policy implications. We present the most reliable evidence available quantifying the energy efficiency rebound, and discuss areas where estimation is extraordinarily difficult. Along these lines, we offer a new way of thinking about the macroeconomic rebound effect. Overall, the existing research provides little support for the so-called “backfire” hypothesis. Still, much remains to be understood, particularly relating to induced innovation and productivity growth. Keywords: Energy Efficiency, Rebound Effect, Take-back Effect, Backfire, Jevons Paradox Classification-JEL: H23, Q38, Q41 Creation-Date: 201501 Template-Type: ReDIF-Paper 1.0 Number: 2014.108 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-108.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.108 Title: Catastrophic Risk, Precautionary Abatement, and Adaptation Transfers Author-Name: Francesco Bosello Author-X-Name-First: Francesco Author-X-Name-Last: Bosello Author-WorkPlace-Name: University of Milan, Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC) Author-Name: Enrica De Cian Author-X-Name-First: Enrica Author-X-Name-Last: De Cian Author-WorkPlace-Name: Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC) Author-Name: Licia Ferranna Author-X-Name-First: Licia Author-X-Name-Last: Ferranna Author-WorkPlace-Name: Cà Foscari University of Venice and Fondazione Eni Enrico Mattei (FEEM) Abstract: This paper contributes to the normative literature on mitigation and adaptation by framing the question of their optimal policy balance in the context of catastrophic climate risk. The analysis uses the WITCH integrated assessment model with a module that models the endogenous risk of experiencing an economic catastrophe if temperature increases above a certain threshold. We find that the risk of a catastrophic outcome would encourage countries to reduce emissions even in the absence of a coordinated global agreement on climate change and to realign the policy balance from adaptation toward more mitigation. Our analysis also shows that adaptation transfers from and strategic unilateral commitments to adaptation in developed countries appear to provide weak incentives for reducing emissions in developing countries. Thus our first conclusion is that precautionary considerations, rather than the ability to reduce smooth damage increases, justify mitigation as a fundamental policy option. Accordingly, adaptation is needed to cope with the non-catastrophic damages that countries would fail to address with mitigation Our second conclusion is that supporting adaptation in developing countries should be considered primarily as a mean for ensuring equity or improving development, and very marginally as a mitigation incentive. Keywords: Climate Change, Mitigation, Adaptation, Climate Risk, Integrated Assessment Classification-JEL: C61, D58, Q5 Creation-Date: 201501 Template-Type: ReDIF-Paper 1.0 Number: 2014.109 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-109.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.109 Title: Unconventional Gas and the European Union: Prospects and Challenges for Competitiveness Author-Name: Herman R.J. Vollebergh Author-X-Name-First: Herman R.J. Author-X-Name-Last: Vollebergh Author-WorkPlace-Name: CentER and Tilburg Sustainability Centre, Tilburg University, PBL Netherlands Environmental Assessment Agency and CESifo Author-Name: Eric Drissen Author-X-Name-First: Eric Author-X-Name-Last: Drissen Author-WorkPlace-Name: PBL Netherlands Environmental Assessment Agency Abstract: This article studies the likely impact of unconventional gas developments in the U.S. on EU competitiveness. We find, first of all, little evidence for a prosperous unconventional gas development in Europe. Second, the U.S. boom has already a strong impact on both world and European energy markets. In particular, lower U.S. gas and coal prices have changed relative energy prices both at home and abroad. Finally, competitiveness impacts in some (sub)sectors will be considerable. These impacts are not only related to production based on gas use as a feedstock but also on the ‘byproducts’ from unconventional gas production, such as ethylene, propane and butane. However, several indirect impacts, such as lower coal import prices, may soften the adverse competitiveness impact in the EU. Keywords: Shale Gas, Hydrocarbon Resources, Energy Demand and Supply, Non-renewable Resources, Competitiveness Impacts, European Union Classification-JEL: L71, O52, Q35, Q41, Q43 Creation-Date: 201501 Template-Type: ReDIF-Paper 1.0 Number: 2014.110 File-URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2014-110.pdf File-Format: application/pdf Handle: RePEc:fem:femwpa:2014.110 Title: How Does Stock Market Volatility React to Oil Shocks? Author-Name: Andrea Bastianin Author-X-Name-First: Andrea Author-X-Name-Last: Bastianin Author-WorkPlace-Name: University of Milan and FEEM Author-Name: Matteo Manera Author-X-Name-First: Matteo Author-X-Name-Last: Manera Author-WorkPlace-Name: University of Milan-Bicocca and FEEM Abstract: We study the impact of oil price shocks on U.S. stock market volatility. We derive three different structural oil shock variables (i.e. aggregate demand, oil-supply, and oil-demand shocks) and relate them to stock market volatility, using bivariate structural VAR models, one for each oil price shock. Identification is achieved by assuming that the price of crude oil reacts to stock market volatility only with delay. This implies that innovations to the price of crude oil are not strictly exogenous, but predetermined with respect to the stock market. We show that volatility responds significantly to oil price shocks caused by sudden changes in aggregate and oil-specific demand, while the impact of supply-side shocks is negligible. Keywords: Volatility, Oil Shocks, Oil Price, Stock Prices, Structural VAR Classification-JEL: C32, C58, E44, Q41, Q43 Creation-Date: 201501