The Cowl - v. 70 - n. 3 - Sept 15, 2005

The Cowl - student newspaper of Providence College. Volume 70 - Number 3 - September 15, 2005. 24 pages

Los Angeles, Mexico City, Cubatao, and Ankara - Efficient environmental regulation : case studies of urban air pollution

The authors review the economic principles that should guide the efficient choice of targeted policies for environmental protection. They recommend policy instruments along three dimensions: (1) whether they use economic incentives; (2) whether they target environmental damage directly; and (3) whether they specify prices, quantities, or technologies. This distinction is helpful in guiding policy choices because many discussions in the economics literature on environmental policies mistakenly claim advantages for incentive-based instruments by showing, for instance, that direct policies of this sort are less costly than indirect non-incentive measures. After analyzing efficient responses to the air pollution problem, the authors come up with somewhat surprising results. For three of the cities (Ankara, Los Angeles, and Mexico City), the efficient instruments selected by this (admittedly limited) exercise are similar: indirect incentive-based policies. Only Cubatao differs in that direct non-incentive regulations are the efficient policy choice. But choosing indirect policy instruments is not without its problems. This category is the broadest one. For instance, while there is only a single direct incentive-based price instrument (emissions taxes), several indirect incentive-based price policies exist including taxes on inputs and on complementary and substitute products. Indirect policies also cannot simultaneously target the incentives to reduce waste generation, production efficiency, and reduce output to reduce pollution. A combination of indirect policies will then be required to control pollution. But if the regulatory costs of controlling additional variables are high they may outweigh the cost of monitoring and enforcing a single direct policy. Finally, indirect regulations may be accompanied by perverse incentives, such as new source bias or reduced marginal costs of polluting. Efforts to offset these perverse incentives by regulating additional variables may be subject to second-best problems: two regulations with opposite results can be costlier than no regulation at all. The main lesson the authors draw from the cases examined: Once decisions are made - whether to concentrate industry, to rely on private vehicles for transportation, to subsidize a particular energy source, or to use a certain environmental policy - they acquire a certain performance. Capital is invested and workers are trained under the prevailing laws, and these are costly to change. Los Angeles cannot reverse its emphasis on the automobile; Brazil cannot easily move its industrial center away from Cubatao; Mexico cannot quickly reduce the concentration in its capital city; and Turkey's development would suffer if energy subsidies were removed abruptly. For this reason, it is important to design policy with an eye toward longer-run concerns. It makes sense, for example, for cities such as Ankara to begin to enact policies to prevent mobile source pollution from worsening over the next decades. The authors also point out the dangers of ignoring intermedia substitution of pollutants. In places such as Cubatao, where air quality has been cleaned up, the improvement may have come at the expense of water quality or the accumulation of hazardous wastes.Environmental Economics&Policies,Energy and Environment,Transport and Environment,Economic Theory&Research,Water and Industry

Energy recovery from solid waste. Volume 2: Technical report

A systems analysis of energy recovery from solid waste demonstrates the feasibility of several current processes for converting solid waste to an energy form. The social, legal, environmental, and political factors are considered in depth with recommendations made in regard to new legislation and policy. Biodegradation and thermal decomposition are the two areas of disposal that are considered with emphasis on thermal decomposition. A technical and economic evaluation of a number of available and developing energy-recovery processes is given. Based on present technical capabilities, use of prepared solid waste as a fuel supplemental to coal seems to be the most economic process by which to recover energy from solid waste. Markets are considered in detail with suggestions given for improving market conditions and for developing market stability. A decision procedure is given to aid a community in deciding on its options in dealing with solid waste, and a new pyrolysis process is suggested. An application of the methods of this study are applied to Houston, Texas

A typology of foreign auction markets in sub-Saharan Africa

The authors compare and contrast the design and outcomes of different foreign exchange auctions in four countries in sub-Saharan Africa and present a typology of such auctions. They identify two distinct sets of countries in terms of the auctions'features, policy interventions, and outcomes. In Ghana and Uganda, the exchange rate auctions are judged to have been largely on target in exchange rate unification, exchange rate stabilization,and efficient allocation of foreign exchange. The auctions in Nigeria and Zambia, on the other hand, were subject to frequent policy interventions, resulting in unsustainable auctions, inefficient allocation of foreign exchange (through ad hoc disqualifications), limited unification, and a rather volatile exchange rate. The conclusions reached by the authors are broadly corroborated by a statistical analysis of weekly micro-auction data for all four countries.Economic Theory&Research,Markets and Market Access,Access to Markets,International Terrorism&Counterterrorism,Economic Stabilization

Recent economic and financial developments

This commentary, which was completed at the end of June, provides an account of economic and financial developments in Canada since the publication of the last Monetary Policy Report in mid-May 1998. International developments since May have increased the degree of uncertainty surrounding the outlook for the Canadian economy. While most indicators of domestic demand as well as the growth of the monetary and credit aggregates suggest continued relative buoyancy in the domestic economy, the foreign trade data bear clear evidence of the drag arising from the situation in Southeast Asia and Japan. However, with the various risks to the outlook appearing to be greater than previously thought, the Bank will continue to monitor developments carefully and constantly reassess its judgment of Canada's economic and financial situation. The core rate of inflation is expected to remain in the lower half of the 1 to 3 per cent inflation-control target range for the remainder of the year. Update 12 August 1998: The degree of uncertainty surrounding the international situation and its implications for the Canadian economy remains high. In Southeast Asia, economic activity continues to decline and financial markets remain nervous. In Japan, the latest economic data point to further weakness. In sharp contrast, the U.S. economy continues to outperform expectations, with domestic demand showing robust growth according to the latest information. As well, recent developments in Europe point to moderate economic expansion. Here in Canada, allowing for the effects of temporary factors such as layoffs associated with the strike at General Motors, the underlying momentum in the economy continues to be positive. The many cross-currents affecting the Canadian economy are evident in the data released since the commentary on recent developments was completed. In the resource sector, production and exports have been weak because of reduced demand from Asia. However, exports of other goods, particularly non-automotive manufacturing goods, have been buoyant, reflecting strong demand from the United States. In Canada, retail sales continue to rise and sales of existing homes are also growing, consistent with the pickup in the growth of household credit. At the same time, new home construction has weakened, in part because of strikes in the Greater Metropolitan Toronto area. Business investment and the growth of total business credit have also remained relatively strong. Recent information on overall investment intentions for 1998 show marked growth, consistent with the latest monthly indicators on investment in machinery and structures, but the resource and non-resource sectors are showing divergent near-term trends. The latest labour force data also point to sustained underlying growth in employment and incomes. On the whole, recent data suggest that real GDP increased by about 2 1/2 per cent (annual rate) in the second quarter, somewhat less than anticipated at the time the commentary was completed. Our current estimate is that the various strikes and other production disruptions (the largest being the spillover effects from the GM strike in the United States) lowered second-quarter real GDP growth by about 1/2 of a percentage point. Thus, in the absence of these disruptions, growth would have been closer to 3 per cent. Economic activity in Canada will continue to be affected by the GM strike and associated layoffs into the third quarter, complicating interpretation of the economic data for this period. This and the uncertainties on the external front underscore the need for continued close monitoring of economic developments. On balance, the positive elements of ongoing strength in consumer and investment spending in Canada, together with the high level of U.S. demand for our products, continue to support economic expansion at rates that will reduce unused capacity. On the inflation front, the latest information points to core inflation remaining in the lower half of the 1 to 3 per cent inflation-control target range. While the effects on the price level from exchange rate depreciation will be working to raise inflation, offsetting factors, such as excess supply in the economy and price competition from Asian producers, will keep overall inflation pressures subdued. Since completion of the commentary, monetary conditions have eased further as a result of the depreciation of the Canadian dollar. As noted in the commentary, the extent of the current international uncertainty is causing volatility in financial markets and fluctuations in monetary conditions over a wide range.

Alternative Energy Solutions

Providing a self-sustaining, efficient, and cost-affordable source of energy is perhaps the greatest challenge posed in modern society. With supplies of common fossil fuels and many other non-renewable resources nearing depletion, humanity must soon find safe, dependable, and inexpensive fuel sources capable of adequately fulfilling our heat and electricity generation needs. In this report, unique solutions and regulatory policies are proposed after closely examining the advantages, disadvantages, and sociopolitical concerns of many different fuels in both qualitative and quantitative respects

Eucalyptus oils: a review of production and markets (NRI Bulletin 56)

The bulletin provides information on the technical and economic aspects of the production of steam-volatile oils from eucalyptus leaf, including the collection or harvesting of the leaf and its distillation. It also reviews recent trends in the world market for eucalyptus oils. It is intended for prospective new producers of eucalyptus oil as well as organizations and individuals appraising projects involving its production. It is particularly intended for those in developing countries