Environmental policy negotiations, transboundary pollution and lobby groups in small open economies

This paper analyzes the consequences of lobby group activity for policy outcomes in economies with transboundary pollution and international environmental policies. In our framework, international environmental policies are characterized as pollution taxes determined in a negotiation between two countries. We find, among other things, that the presence of local lobbying tends to reduce the level of pollution taxes. We also find that an increase in the environmental concern (i.e. stronger preferences for a clean environment) may reduce the pollution tax in both countries. It is also possible that increased environmental concern in one country reduces the pollution tax in the other country.transboundary pollution; lobbying; taxes; pollution; Nash bargain; negotiations; environmental policy

Pollution, mortality and optimal environmental policy

We study an overlapping generations economy in which environmental degradation results from economic activity and affects agents' uncertain lifetimes. Life expectancy depends positively on economic activity and negatively on the stock of pollution. This can make the growth-survival relationship convex over some region and lead to two non-trivial steady states, with one a poverty trap. Uniform abatement taxes can cause the poverty trap to widen while increasing incomes at the high steady state. We also study the properties and dynamics of an optimal second-best abatement tax. It is non-homogeneous and increasing in the capital stock, and leads to a variety of dynamic possibilities, including non-existence and multiplicity of steady states, and cycles around some of the steady states, where there were none under exogenous taxes. Thus, optimal taxes can be an independent source of non-linearities

Mergers, pollution and environmental policy

We examine the impact of abatement taxes on the pollution level in a duopoly framework with endogenous market structure. We demonstrate that an increase in abatement taxes could trigger a regime-switch from Cournot competition to merger, as well as from merger to Cournot competition. The nature of this switch is critically dependent on the nature of merger costs. However, in either case, this may cause the pollution level to increase.Mergers, pollution, abatement tax, endogenous market structure

Pollution-reducing infrastructure and urban environmental policy

Based on a case study on Bombay, we argue that urban infrastructure, like the sewage system and the municipal waste collection, is an important instrument for urban environmental policy. We develop a spatial general equilibrium model of a monocentric city, where infrastructure serves as a public means of abating pollution. Analyzing the optimal supply of pollution-reducing infrastructure, we conclude that it has to be geographically differentiated, even if pollution is homogenous. In a city with a growing population the provision of infrastructure has to be changed throughout the city, not only in newly inhabited areas. Urban environmental policies, based on Pigouvian taxes and pollution-reducing infrastructure, are mutually dependent. In two settings of public or private infrastructure, we show that fiscal environmental policies have to be spatially differentiated, and that income transfers are necessary in order to implement the first best allocation as a residential market equilibrium. --urban environmental policy,pollution-reducing infrastructure,spatial environmental economics,unequal treatment of equal

The relationships between corruption and pollution on corruption regimes

Previous studies have focused mainly on the effect of corruption on pollution. The results of these studies show an inverted U-shaped relationship between economic growth and pollution. In addition, some researchers have suggested that corruption plays an important role in determining pollution. This study proposes the hypothesis of a nonlinear long-run relationship between pollution and corruption. The goal of the study is to investigate the threshold cointegration effect of pollution on corruption using panel data for 62 countries over the period from 1997 to 2004. The results show that the effect of the Corruption Perceptions Index (CPI) on pollution is insignificant in low-corruption regimes. This implies that corruption does not slow down environmental pollution in countries with low corruption. The impact of the CPI on environmental pollution is also insignificant in high-corruption regimes. This result implies that corruption has no adverse impact on environmental pollution in countries with high corruption.Corruption, Pollution, Threshold, Error-Correction Model

What is the Best Environmental Policy? Taxes, Permits and Rules under Economic and Environmental Uncertainty

We study the importance of uncertainty and public finance to the welfare ranking of three environmental policy instruments: pollution taxes, pollution permits and Kyoto-like numerical rules for emissions. The setup is the basic stochastic neoclassical growth model augmented with the assumptions that pollution occurs as a by-product of output produced and environmental quality is treated as a public good. To compare alternative policies, we compute welfare-maximizing values for the second-best policy instruments. We find that, in all cases studied, pollution permits are the worst policy choice, even when their revenues finance public abatement. When the main source of uncertainty is economic, the most efficient recipe is to levy pollution taxes and use the collected tax revenues to finance public abatement. However, when environmental uncertainty is the dominant source of extrinsic uncertainty, numerical rules, being combined with tax-financed public abatement, are better than pollution taxes.general equilibrium, uncertainty, environmental policy

Measuring the health effects of air pollution : to what extent can we really say people are dying from bad air?

Estimation of the effects of environmental impacts is a major focus of current theoretical and policy research in environmental economics. Such estimates are used to set regulatory standards for pollution exposure; design appropriate environmental protection and damage mitigation strategies; guide the assessment of environmental impacts; and measure public willingness to pay for environmental amenities. It is a truism that the effectiveness of such strategies depends crucially on the quality of the estimates used to inform them. However, this paper argues that in respect to at least one area of the empirical literature - the estimation of the health impacts of air pollution using daily time series data - existing estimates are questionable and thus have limited relevance for environmental decision-making. By neglecting the issue of model uncertainty - or which models, among the myriad of possible models researchers should choose from to estimate health effects - most studies overstate confidence in their chosen model and underestimate the evidence from other models, thereby greatly enhancing the risk of obtaining uncertain and inaccurate results. This paper discusses the importance of model uncertainty for accurate estimation of the health effects of air pollution and demonstrates its implications in an exercise that models pollution-mortality impacts using a new and comprehensive data set for Toronto, Canada. The main empirical finding of the paper is that standard deviations for air pollution-mortality impacts become very large when model uncertainty is incorporated into the analysis. Indeed they become so large as to question the plausibility of previously measured links between air pollution and mortality. Although applied to the estimation of the effects of air pollution, the general message of this paper - that proper treatment of model uncertainty critically determines the accuracy of the resulting estimates - applies to many studies that seek to estimate environmental effects

THE POTENTIAL USE OF POLLUTION INSURANCE AS ENVIRONMENTAL POLICY: AN EMPIRICAL ANALYSIS

Market-based environmental policies have been forwarded as alternatives to current pollution control policies. Implementation of the "polluter pays" principle and governmental enforcement of pollution clean-up have led to astronomical environmental liabilities and clean-up costs, which may threaten the survival of many productive ventures, unless producers can spread pollution risk through insurance. An emission constrained target MOTAD LP (TMLP) model showed that pollution insurance for irrigation farmers can be a feasible and efficient solution to agricultural salinization problems in the Loskop Valley, and fairly low salinity standards with pollution insurance will still be reconcilable with profitable farming. Pollution insurance appears to hold promise for applying the "polluter pays" principles also to non-point pollution. Site specific studies are needed for pollution policy, and more research is needed on pollution standards.Environmental Economics and Policy,

TRADE, POLLUTION AND ENVIRONMENTAL PROTECTION

Environmental Economics and Policy, International Relations/Trade,