Assessing the environmental externalities from biofuels in Australia

In Australia, as in other countries, the environmental costs and benefits of biofuel production and use have been found to vary greatly according to the production method and feedstocks used. In general, the use of biodiesel produced in Australia has been found to provide greater environmental benefits than ethanol, both in terms of reduced greenhouse gas (GHG) emissions and reduced air pollutant emissions. In this paper, estimates of GHG and air pollutant emissions arising from biofuels and petroleum fuels production and use are employed to calculate the change in environmental externalities when substituting biofuels for petroleum fuels in Australia. These estimates of externalities highlight the need to better understand the environmental implications of biofuel production and use.biofuels, environmental policy, greenhouse gas emissions, air pollutants, externalities, Australia, Resource /Energy Economics and Policy, Environmental Economics and Policy,

Voluntary Emission Reductions, Social Rewards, and Environmental Policy

Social norms and intrinsic motivations lead to environmentally friendly behaviour even in the absence of environmental policy. This paper looks at the interactions of social norms and environmental regulation in their impact on individual behaviour. People obtain social rewards for voluntary abatement efforts. These social rewards may be crowded out by environmental regulation taking the shape of standards or taxes. Moreover, the paper shows that environmental externalities and externalities related to social norms interact and that an optimal environmental policy should consider both types of externalities. From a general welfare point of view, emission taxes are superior to emission standards, but people responsive to social rewards prefer standards.

Negative externalities as the engine of growth in an evolutionary context

We present a simple growth model which has two original features: the strategic context considered, which is an evolutionary game, and the growth mechanism described, in which growth is caused by negative externalities. The emphasis in this growth mechanism is evidently different from that placed on positive externalities by current endogenous growth models. In this model welfare depends on three goods: leisure, a free environmental renewable resource, and a non-storable output. The environmental resource is subject to negative externalities, that is, it is deteriorated by the production of the output. Faced with a forced reduction of the resource, agents may react by increasing the labor supply in order to produce and consume substitutes for the diminishing resource, i. e. they can raise their defensive expenditures. The increase in production and consumption that follows, i.e. growth, generates a further deterioration of the environmental resource, thus giving rise to a self-feeding growth process. The conditions under which multiple equlibria and Pareto-worsening growth dynamics arise, are analysed. Beside showing the logical possibility that negative externalities are the engine of growth, we suggest that the case analysed may be of practical relevance, i.e., that negative externalities may play an important role in many episodes of growth. This role is widely recognized by social sciences other than economics. We suggest that the model may be interpreted as a push development model and that it may also contribute to explain some aspects of growth in advanced countries

Environmental Policies and Mergers’ Externalities

A Cournot oligopolistic setting model of trade is characterized by local and foreign firms competing in the presence of pollution quota and tax. Local firms are foreign-owned (FDI) and repatriate their profits. First, we analyze the impact on welfare given by the merger of the local firms, as a response to external firms’ competition and pollution abatement costs. Second, when merger is welfare decreasing, we study the best response of the government in order to compensate this negative externality. Finally, we compare the pollution quota and tax in order to determine their efficiency as a policy instrument.environmental policies, mergers, emission permits

The Optimal Climate Policy Portfolio when Knowledge Spills Across Sectors

This paper studies the implications for climate policy of the interactions between environmental and knowledge externalities. Using a numerical analysis performed with the hybrid integrated assessment model WITCH, extended to include mutual spillovers between the energy and the non-energy sector, we show that the combination between environmental and knowledge externalities provides a strong rationale for implementing a portfolio of policies for both emissions reduction and the internalisation of knowledge externalities. Moreover, we show that implementing technology policy as a substitute for stabilisation policy is likely to increase global emissions.Technical Change, Climate Change, Development, Innovation, Spillovers

Multiple Environmental Externalities and Manure Management Policy

Livestock waste pollutes multiple environmental media along multiple dimensions. This study explores the economic and environmental implications of single-medium and coordinated multi-media policies for reducing manure-related externalities, with particular attention paid to tradeoffs that occur when policies designed to correct an externality in one medium ignore externalities in other media.Environmental Economics and Policy,

Agri-environmental Policy in the European Union: Who's in Charge?

The EU has argued that some agricultural subsidies are needed to provide the optimal amount of externalities (both positive and negative) produced by agriculture. The argument is that agriculture is "multifunctional" and externalities such as rural development and landscape would be underproduced, while some forms of pollution (such as nitrogen runoff) would be overproduced without government intervention. Meanwhile, the United States has raised the concern that multifunctionality is primarily an argument to transfer income to producers. One way to try and determine how much of these non-commodity payments are directed to externalities and how much is intended to distribute income to producers is to analyze the variation of the programs among the different member states of the EU. We estimate the degree to which environmental characteristics, agricultural characteristics and political economy variables determine the objective and amount of funding each member states uses to address environmental externalities (both positive and negative). Results indicate that little of the variance in agri-environmental expenditure can be explained by the difference in negative externalities, neither is there clear evidence that the payments are substituting for traditional agricultural subsidies. However, demand for environmental services and political variables seem to be the driving motivators behind a country's decision to spend money on agri-environmental programs.Environmental Economics and Policy,

Negative externalities as the engine of growth in an evolutionary context

We present a simple growth model which has two original features: the strategic context considered, which is an evolutionary game, and the growth mechanism described, in which growth is caused by negative externalities. The emphasis in this growth mechanism is evidently different from that placed on positive externalities by current endogenous growth models. In this model welfare depends on three goods: leisure, a free environmental renewable resource, and a non-storable output. The environmental resource is subject to negative externalities, that is, it is deteriorated by the production of the output. Faced with a forced reduction of the resource, agents may react by increasing the labor supply in order to produce and consume substitutes for the diminishing resource, i. e. they can raise their defensive expenditures. The increase in production and consumption that follows, i.e. growth, generates a further deterioration of the environmental resource, thus giving rise to a self-feeding growth process. The conditions under which multiple equlibria and Pareto-worsening growth dynamics arise, are analysed. Beside showing the logical possibility that negative externalities are the engine of growth, we suggest that the case analysed may be of practical relevance, i.e., that negative externalities may play an important role in many episodes of growth. This role is widely recognized by social sciences other than economics. We suggest that the model may be interpreted as a push development model and that it may also contribute to explain some aspects of growth in advanced countries.Negative externalities; environmental defensive expenditures; undesirable economic growth; evolutionary games; happiness

The Optimal Climate Policy Portfolio when Knowledge Spills across Sectors

This paper studies the implications for climate policy of the interactions between environmental and knowledge externalities. Using a numerical analysis performed with the hybrid integrated assessment model WITCH, extended to include mutual spillovers between the energy and the non-energy sector, we show that the combination between environmental and knowledge externalities provides a strong rationale for implementing a portfolio of policies for both emissions reduction and the internalisation of knowledge externalities. Moreover, we show that implementing technology policy as a substitute for stabilisation policy is likely to increase global emissions.technical change, climate change, development, innovation, spillovers

SUSTAINABILITY ISSUES: HOW SHOULD GOVERNMENT COORDINATE FARM REGULATIONS AND POLICY?

Agricultural sustainability is an evolving process ever-seeking a balance between society's economic, environmental and social demands. Governmental policy and regulations while attempting to correct adverse externalities, have at times within themselves created adverse externalities. Failures often lie within the policies themselves, but poor coordination among government agencies is also at fault. This paper outlines a number of coordination issues and attempts to show how the empowerment of communities through ecosystem management is a partial solution to environmental degradation.Environmental regulation, Government policy, Regulation, Sustainability, Ecosystem management, Agricultural and Food Policy, Environmental Economics and Policy,