Governance and Deforestation Due to Agricultural Land Expansion

This article examines the effect of governance on forest cover in developing countries. We develop a theoretical model that explains how governance, particularly corruption control and politically stability, affects deforestation due to agricultural land expansion. The theoretical model shows the importance of the complementarity or substitutability of technology and land use in determining the effect of governance on agricultural land expansion and, consequently, forest cover. We complement the theoretical model with a structural empirical analysis to measure the effect of corruption control and political stability on deforestation in developing countries through two direct channels of deforestation: agricultural land expansion and road building. We find that political stability has a positive and significant effect on forest cover but corruption control has a negative and significant effect on forest cover due to increased agricultural land expansion.Deforestation, Governance, Corruption, Political stability

Revenue-Neutral Tax-Subsidy Policy for Carbon Emission Reduction

One of the benefits of biofuel use is a reduction in greenhouse gas emissions relative to fossil fuels, but no policy directly targets carbon emissions across the full spectrum of renewable and nonrenewable fuels. In light of the political unpopularity of carbon taxes in the United States, we develop a model for a revenue neutral price instrument that maximizes social welfare subject to an exogenously determined net tax revenue target. This approach may be more palatable because it has the potential to change the relative price of the low-carbon and highcarbon components of blended fuel while limiting increases in taxes and motor fuel prices. Our model shows that the targeted tax revenue level and share of output to total gross domestic product in all fuel sectors are important factors determining the revenue-neutral tax levels for each fuel type. Interestingly, we also find that the marginal damages of pollution are not the primary determinants of the revenue neutral price instrument, but instead it is the relative marginal damages per unit price of each fuel type. This implies the counterintuitive possibility that with a revenue neutrality constraint, higher net carbon emitting fuels such as gasoline or diesel may implicitly be subsidized using revenues from carbon taxes on lower emitting fuels.Non-renewable resources, carbon tax, carbon dioxide emissions, revenue recycling, revenue neutral

Was It Something I Ate? Implementation of the FDA Seafood HACCP Program

We use FDA’s seafood inspection records to examine: (i) how FDA has targeted its inspections under HACCP regulation; (ii) the effects of FDA inspections on compliance with both HACCP and plant sanitation standards; and (iii) the relationship between HACCP regulations and pre-existing sanitation standards. We use a theoretical model of enforcement to derive hypotheses about FDA’s targeting of inspections and firms’ patterns of compliance. We test those hypotheses using econometric models of inspection and compliance. Contrary to the predictions of the theoretical model and to FDA’s own stated policies, FDA does not seem to have targeted inspections based on product risk or past compliance performance. Firms’ compliance strategies seemed to be broadly in accord with the predictions of the theoretical model. The threat of inspection increased the likelihood of compliance, although the deterrent effect was statistically significant for sanitation standards but not for HACCP. Firms tend to persist in compliance status, especially with respect to sanitation standards. Contrary to FDA’s presupposition, however, HACCP compliance does not improve compliance with sanitation standards, suggesting that the two are not complementary.HACCP, Food safety, Seafood, Enforcement, Regulatory compliance, Regulation

Pollution and the State: The Role of the Structure of Government

Government spending has significant environmental implications. This paper analyzes the effect of the allocation of government spending between public goods broadly defined and private goods or non-social subsidies on air and water pollution. The theoretical model predicts that a reallocation of expenditures from private subsidies to public goods improves environmental quality by reducing production pollution. We estimate an empirical model that shows that such a reallocation causes a significant reduction in air pollutants namely sulfur dioxide and lead and an improvement in water quality measures including dissolved oxygen and biological oxygen demand.

Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two credit instruments: temporary (tCERs) or long-term certified emission reductions (lCERs). This article develops a theoretical model of optimal harvesting strategies that compares private optimal harvest decision under these two instruments. We find that risk neutral landowners are likely to prefer instituting lCERs over tCERs to maximize surplus. A particular type of early harvest penalty implemented under the lCERs is critical in determining the length of rotation intervals and the carbon credit supply. When this penalty is an increasing function of the difference in biomass before and after harvesting across verification periods, the landowner may choose longer or shorter rotation intervals compared to the Faustmann rotation. The resulting supply curve may have a backward bending region over a range of carbon prices.forest rotation, long term certified emission reductions (lCERs), carbon sequestration

Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two credit instruments: temporary (tCERs) or long-term certified emission reductions (lCERs). This article develops a theoretical model of optimal harvesting strategies that compares private optimal harvest decision under these two instruments. We find that risk neutral landowners are likely to prefer instituting lCERs over tCERs to maximize surplus. A particular type of early harvest penalty implemented under the lCERs is critical in determining the length of rotation intervals and the carbon credit supply. When this penalty is an increasing function of the difference in biomass before and after harvesting across verification periods, the landowner may choose longer or shorter rotation intervals compared to the Faustmann rotation. The resulting supply curve may have a backward bending region over a range of carbon prices.forest rotation, long term certified emission reductions (lCERs), carbon sequestration, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy, Q2, Q54, Q23,

The effects of government spending on deforestation due to agricultural land expansion and CO2 related emissions

This paper examines the effect of changes in government spending level and composition on deforestation due to agricultural land expansion and related carbon dioxide emissions. Our theoretical model shows an unintended consequence from increased government spending and widening social safety nets in developing countries where agricultural land expansion significantly affects forest cover: there is an increase in deforestation and carbon dioxide emissions from land use change. Our empirical tests show that an increase in total government spending significantly increases forest land clearing for agricultural production in the short run leading to more carbon dioxide emissions. However, there is no long-run statistically significant effect on the steady-state forest cover and carbon dioxide emissions.•We model the effects of government spending on deforestation and CO2 emissions.•Government spending significantly increases deforestation in the short run.•Government spending significantly increases CO2 emissions in the short run.•Government spending has an insignificant impact on deforestation in the long run.•Government spending has an insignificant impact on CO2 emissions in the long run

The role of federal Renewable Fuel Standards and market structure on the growth of the cellulosic biofuel sector

This article examines the effect of the Renewable Fuel Standards and market power on the growth of the cellulosic biofuel sector. We develop a sectoral model to show how changes in the regulations governing cellulosic fuel production affect the equilibrium quantity of cellulosic ethanol. Based on model calibration for Washington State, we find that existing low-cost waivers purchased by obligated parties in lieu of cellulosic fuel production negate the effectiveness of the Renewable Fuel Standard to induce the production and consumption of cellulosic biofuels. However, raising waiver price slightly relative to the status quo significantly increases the equilibrium quantity of cellulosic ethanol. The high cost of cellulosic ethanol production is often cited as the cause of the lack of cellulosic ethanol production, which is used to justify low waiver prices. Our policy message is the converse: the low current waiver price significantly contributes to the cellulosic ethanol market stagnation in the context of the current biofuel policy. (C) 2016 Elsevier B.V. All rights reserved