Springer Science and Business Media LLC

This paper discusses the implications of climate change for official transfers from rich countries (the North) to poor countries (the South) when the motivation for transfers is ethical rather than strategic. Traditional development transfers to increase income and reduce poverty are complemented by new financial flows to reduce greenhouse gas emissions (mitigation transfers) and become climate-resilient (adaptation transfers). We find that in the absence of barriers to adaptation, mitigation or development, climate change will make isolated transfers less efficient: A large part of their intended effect (to increase income, reduce emissions, or boost climate-resilience) dissipates as the South reallocates its own resources to achieve the mitigation, adaptation and consumption balance it prefers. Only in the case of least-developed countries, which are unable to adapt fully due to income constraints, will adaptation support lead to more climate resilience. In all other cases, if the North wishes to change the balance between mitigation, adaptation and consumption it should structure its transfers as “matching grants”, which are tied to the South’s own level of funding. Alternatively, the North could provide an integrated “climate-compatible development” package that recognizes the combined climate and development requirements of the South. If the aim is to increase both mitigation and adaptation in the South, development assistance that increases the income level, can be an effective measure, but only if there is an international agreement and the recipient country is not income constrained. If the recipient country is very poor, development aid may reduce adaptation effort.

This paper develops a modelling framework that links GEMINI-E3, a multi-regional, multi-sectoral computable general equilibrium model with a cost-benefit analysis approach at local level using geographical information system tools to assess the physical and economic consequences of sea-level rise (SLR) in the twenty first century. A set of future scenarios is developed spanning the uncertainties related to global warming, the parameters of semi-empirical SLR estimates, and coastal developments (cropland, urban areas and population). The importance of incorporating uncertainties regarding coastal development is highlighted. The simulation results suggest that the potential development of future coastal areas is a greater source of uncertainty than the parameters of SLR itself in terms of the economic consequences of SLR. At global level, the economic impact of SLR could be significant when loss of productive land along with loss of capital and forced displacement of populations are considered. Furthermore, highly urbanised and densely populated coastal areas of South East Asia, Australia and New Zealand are likely to suffer significantly if no protective measures are taken. Hence, it is suggested that coastal areas needs to be protected to ameliorate the overall welfare cost across various regions.

This paper provides an empirical assessment of the magnitude of option values relative to expected surplus using a model presented by Larson and Flacco (1992). Option values and option prices are computed for both simulated data sets and actual estimates of recreation demands. Results indicate that option values engendered by price and income uncertainty are generally quite a small percent of expected surplus.

As the international community continues to fall short on reducing emissions to avoid disastrous impacts of climate change, some scientists have called for more research into solar geoengineering (SGE) as a potential temporary fix. Others, however, have adamantly rejected the notion of considering SGE in climate policy discussions. One prominent concern with considering SGE technologies to help manage climate change is the so-called “free driver” conjecture. The prediction is that among countries with different preferences for the level of SGE, the country that prefers the most will deploy levels higher than the global optimum. This paper tests the free-driver hypothesis experimentally under different conditions and institutions. We find that aggregate deployment of SGE is inefficiently high in all settings, but slightly less so when players are heterogeneous in endowments or when aggregate deployment is determined by a best-shot technology. Despite persistent inefficiencies in SGE deployment, free-driver behavior, on average, is less extreme than the theoretical predictions.

Assuming that improvements in environmental quality lead to lower demand for medical care, it has been shown that general-equilibrium interactions with the tax-distorted labor market reduce the benefits from such improvements, and thus lower the second-best optimal environmental tax. This paper provides some insights on how the link between environmental quality, individual’s health capital, and the demand for medical care affects the analysis of pollution taxes. The paper develops structural conditions under which improvements in environmental quality decrease/increase the demand for medical care and discusses their implications for environmental tax interactions.

Existing literature supports that exporting firms have better environmental performance. An interesting question thereby arises: the more exports, the better? To answer this question, we develop a method to decompose firm-level pollution emissions, and empirically investigate the relationship between export intensity and environmental performance using Chinese firm-level data. Our results indicate that the answer to this question is “No”. First, OLS estimation shows that firms with higher export intensity have less pollution emissions, mainly because of smaller output scale and lower energy intensity (energy-to-labor ratio) rather than more advanced technologies. Second, we focus on PSM-DID estimation and find that only the increase in export intensity by a smaller extent is conducive to improving firms’ environmental performance. This effect is driven by decreasing energy intensity and thereby improving energy efficiency. This finding implies that firms should focus on both domestic and foreign markets, when they improve export participation. Third, those relationships are found to be heterogeneous across the firms in terms of different pollutants, ownership types, industrial sectors and provinces. In particular, mainly for private and foreign-funded firms, technology-intensive sectors and coastal provinces, increasing export intensity can improve environmental performance. Our study provides an in-depth empirical evidence on the relationship between export intensity and environmental performance in China, and provides a new insight and a better understanding for exports and environment from a micro perspective.

This paper studies how the strength of intellectual property rights (IPRs) affects investments in biological innovations when the value of an innovation is stochastically reduced to zero because of the evolution of pest resistance. We frame the problem as a research and development (R&D) investment game in a duopoly model of sequential innovation. We characterize the incentives to invest in R&D under two competing IPR regimes, which differ in their treatment of the follow-on innovations that become necessary because of pest adaptation. Depending on the magnitude of the R&D cost, ex ante firms might prefer an intellectual property regime with or without a “research exemption” provision. The study of the welfare function that also accounts for benefit spillovers to consumers—which is possible analytically under some parametric conditions, and numerically otherwise—shows that the ranking of the two IPR regimes depends critically on the extent of the R&D cost.

We present an analysis of quota regulation and discarding in multispecies fisheries, explicitly taking into account the costs of non-compliance with quotas and a possible discard ban, as well as the costs of selective fishing (avoidance effort). We examine the impact of a discard ban on vessels’ profit maximising behaviour, in particular where species quotas are not set in proportion to their availability on the fishing grounds, considering both non-tradeable quotas and ITQs. We show the interdependence between penalty rates for both discards and over-quota landings in determining quota market outcomes. We find that quota prices are sensitive to penalty rates and to the presence of restrictive quotas for “choke” species.