The Distributional Effects of Environmental Tax Reform

In recent years there has been increased debate about the potential for shifting the incidence of the tax system away from a variety of economic goods (i.e. employment, investment, etc...) and towards environmental bads (i.e. pollution emissions, resource extraction, etc ...). However, in spite of their apparent efficiency, economic instruments have been adopted relatively less frequently than direct regulation to mitigate environmental damages. One reason may be that some of the distributional implications of environmental tax reform have not been adequately recognized and addressed. How the costs and benefits of environmental policies are distributed in society is critical for their application since this will play a significant role in determining whether or not a particular measure is likely to be politically feasible. Moreover, for a given level of aggregate economic wealth, a redistribution of resources from richer households toward poorer households will tend to increase overall social welfare, and vice versa. While environmental measures should not be the instrument through which distributional objectives are realized, their growing importance means that distributional implications can no longer be ignored, particularly in the face of increasing economic inequality in many countries. This report reviews some of the distributional implications of environmental tax reform in the residential energy, road transport and agriculture sectors. While some of the most important distributional issues are related to the direct financial burden of the tax, this study also reviews some of the other distributional implications. In particular, it looks at the indirect effects on goods and services through input-output linkages, the potentially mitigating effects through different forms of revenue recycling, the distribution of indirect economic effects such as employment opportunities, as well as the distribution of social and environmental effects such as personal health and exposure to pollutants. The paper argues that in many cases the distributional consequences of environmental tax reform may be distinctly regressive, at least in terms of relative tax burdens. The distribution of environmental and social consequences are much less readily quantifiable, but in many cases their effects may be progressive. However, this depends very much on the sector affected and the precise form of the reform introduced. In addition, the revenue raised by environmental taxes (unlike most other environmental policy measures) provide the means whereby some of these adverse distributional consequences can be mitigated and even reversed. Finally, by addressing market failures and barriers which impact particularly upon lower-income households some measures which mitigate the adverse distributional effects of environmental tax reform can also improve the economic efficiency of the reform. Thus, if designed appropriately, environmental tax reform can meet both distributional and environmental objectives in an efficient manner. On the basis of the evidence reviewed it is concluded that distributional concerns, while important in many cases, should not prevent or delay the introduction of environmental taxes. Rather, they should serve as guiding principles in the design of environmental tax reform not only for their own sake, but also because efficiency objectives and equity objectives can be complementary in a well-designed package of environmental tax reform.Environmental Economics and Policy,

Economics of Managing Invasive Species in Tropical and Sub-Tropical Areas of the U.S.A.: Case Study Development

Resource /Energy Economics and Policy,

Socio-economic Impacts of Climate Change on Rural United States

Directly or indirectly, positively or negatively, climate change will affect all sectors and regions of the United States. The impacts, however, will not be homogenous across regions, sectors, population groups or time. The literature specifically related to how climate change will affect rural communities, their resilience, and adaptive capacity in the United States (U.S.) is scarce. This article bridges this knowledge gap through an extensive review of the current state of knowledge to make inferences about the rural communities vulnerability to climate change based on Intergovernmental Panel on Climate Change (IPCC) scenarios. Our analysis shows that rural communities tend to be more vulnerable than their urban counterparts due to factors such as demography, occupations, earnings, literacy, poverty incidence, and dependency on government funds. Climate change impacts on rural communities differs across regions and economic sectors; some will likely benefit while others lose. Rural communities engaged in agricultural and forest related activities in the Northeast might benefit, while those in the Southwest and Southeast could face additional water stress and increased energy cost respectively. Developing adaptation and mitigation policy options geared towards reducing climatic vulnerability of rural communities is warranted. A set of regional and local studies is needed to delineate climate change impacts across rural and urban communities, and to develop appropriate policies to mitigate these impacts. Integrating research across disciplines, strengthening research-policy linkages, integrating ecosystem services while undertaking resource valuation, and expanding alternative energy sources, might also enhance coping capacity of rural communities in face of future climate change

Trade-mediated biotechnology transfer and its effective absorption: an application to the U.S. forestry sector

n this paper, we analyze the consequences of biotechnology innovations in the United States forest sector (logging) by modeling technology transfer embodied in trade flows and its absorption. A seven-region, seven-traded-commodity version of a dynamic computable general equilibrium model is used to achieve this task. A 0.63% Hicks-neutral biotechnological progress in the source region (U.S.) has differential impacts on the productivity of the log-using sectors in the domestic as well as in the recipient regions. Since recipient regions' ability to utilize biotechnology innovations depends on their absorptive capacity (AC) and structural similarity (SS), we construct the AC and SS indices based on multiplicity of factors such as human capital endowments, skill content and social appropriateness of the new innovations. The model results show that biotechnological innovations in the U.S. forest sector result in a significant increase in timber production. Following the productivity improvements and its embodied spillover, wood products and pulp and paper sectors in the U.S. register higher productivity growth. The role of AC and SS in capturing technical change is shown to be evident. In the face of growing regulations on timber production from public forests, increasing productivity through biotechnology may be the most effective way to meet the consumer demand for forest products

Trade-mediated biotechnology transfer and its effective absorption: an application to the U.S. forestry sector

n this paper, we analyze the consequences of biotechnology innovations in the United States forest sector (logging) by modeling technology transfer embodied in trade flows and its absorption. A seven-region, seven-traded-commodity version of a dynamic computable general equilibrium model is used to achieve this task. A 0.63% Hicks-neutral biotechnological progress in the source region (U.S.) has differential impacts on the productivity of the log-using sectors in the domestic as well as in the recipient regions. Since recipient regions' ability to utilize biotechnology innovations depends on their absorptive capacity (AC) and structural similarity (SS), we construct the AC and SS indices based on multiplicity of factors such as human capital endowments, skill content and social appropriateness of the new innovations. The model results show that biotechnological innovations in the U.S. forest sector result in a significant increase in timber production. Following the productivity improvements and its embodied spillover, wood products and pulp and paper sectors in the U.S. register higher productivity growth. The role of AC and SS in capturing technical change is shown to be evident. In the face of growing regulations on timber production from public forests, increasing productivity through biotechnology may be the most effective way to meet the consumer demand for forest products

Socio-economic Impacts of Climate Change on Rural United States

Directly or indirectly, positively or negatively, climate change will affect all sectors and regions of the United States. The impacts, however, will not be homogenous across regions, sectors, population groups or time. The literature specifically related to how climate change will affect rural communities, their resilience, and adaptive capacity in the United States (U.S.) is scarce. This article bridges this knowledge gap through an extensive review of the current state of knowledge to make inferences about the rural communities vulnerability to climate change based on Intergovernmental Panel on Climate Change (IPCC) scenarios. Our analysis shows that rural communities tend to be more vulnerable than their urban counterparts due to factors such as demography, occupations, earnings, literacy, poverty incidence, and dependency on government funds. Climate change impacts on rural communities differs across regions and economic sectors; some will likely benefit while others lose. Rural communities engaged in agricultural and forest related activities in the Northeast might benefit, while those in the Southwest and Southeast could face additional water stress and increased energy cost respectively. Developing adaptation and mitigation policy options geared towards reducing climatic vulnerability of rural communities is warranted. A set of regional and local studies is needed to delineate climate change impacts across rural and urban communities, and to develop appropriate policies to mitigate these impacts. Integrating research across disciplines, strengthening research-policy linkages, integrating ecosystem services while undertaking resource valuation, and expanding alternative energy sources, might also enhance coping capacity of rural communities in face of future climate change

VISITOR PREFERENCES AND VALUES FOR WATER-BASED RECREATION: A CASE STUDY OF THE OCALA NATIONAL FOREST

We used the open-ended contingent valuation method to elicit willingnes to pay (WTP) for day visitors and extended visitors on the Ocala National Forest (ONF), Florida. A Tobit model specification was applied to account for the issues involved with censored WTP bids. The results reveal that visitors would pay more for improved recreational facilities at the ONF. In particular, our estimates show that visitors would pay $1 million for basic facilities,$1.9 million for moderate improvements, and $2.5 million for more improvements.contingent valuation, Tobit analysis, water-based recreation, Resource /Energy Economics and Policy, Q23, Q26,

Financing the Sustainable Management of Rwanda’s Protected Areas

Rwanda’s Nyungwe National Park is a biodiversity hotspot with the most endemic species in the ecoregion as well as the highest number of threatened species internationally. In addition to great biological diversity, Nyungwe National Park supplies significant ecosystem services to the Rwandan population including water provisioning and tourism services. Tourism in the Park has strong potential for improving the sustainable management of the Park for continued provision of natural habitat and critical ecosystem services. This paper explores quantitatively the economic impacts of adjustment in Park visitation fees and tourism demand as a source of revenues to improve Park tourism opportunities and ongoing operations and maintenance where budgetary restrictions are particularly acute. The methods developed in this paper are novel in integrating the results of stated preference techniques with regional economy-wide modelling approaches to capture multi-sectoral, direct, indirect and induced impacts. Such methods have strong potential for assessing revenue generation alternatives in other contexts where Park Managers are faced with the need to generate additional revenue for sustainable park management while facing diminishing budget allocations.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS

Potential Economic Impacts of Allocating More Land for Bioenergy Biomass Production in Virginia

The growing attention to renewable energy and rural development has created greater demand for production of biomass feedstock for bioenergy. However, forest growth rates and the amount of land in most existing forests may not be sufficient to sustainably supply the forest biomass required to support existing forest products industries and the expanding bioenergy industry. Additionally, concerns about agricultural land use competition have dampened expansion of biomass production on agricultural land base. One of the ways to meet the growing forest biomass feedstock demand for bioenergy production is by allocating currently marginal non-forested land for growing bioenergy feedstocks. In Virginia, about 80% of forestland is under nonindustrial private forest ownership. The land use allocation decisions of these private owners are critical for the supply of the forest biomass feedstock to support bioenergy production. We apply a computable general equilibrium model to assess the economy-wide impacts of forestland owners’ willingness to plant pine on non-forested land for woody bioenergy in Virginia. We consider three counterfactual scenarios of biomass feedstock supply increase as intermediate demand for bioenergy production based on forestland owners’ willingness to accept biomass bid prices to set aside more non-forested land for biomass production in Virginia under general equilibrium conditions. Overall, the results show an increase in social welfare and household utility but a marginal decline in GDP. However, increased demand of biomass from logging sector depressed the manufacturing sector (the wood manufacturing sub-sector particularly), which also relies on the logging sector for its intermediate inputs. Results from this study provide insights into the bioenergy land use competition debate, and pathways towards sustainable bioenergy feedstock supply

Financing the Sustainable Management of Rwanda’s Protected Areas

Rwanda’s Nyungwe National Park is a biodiversity hotspot with the most endemic species in the ecoregion as well as the highest number of threatened species internationally. In addition to great biological diversity, Nyungwe National Park supplies significant ecosystem services to the Rwandan population including water provisioning and tourism services. Tourism in the Park has strong potential for improving the sustainable management of the Park for continued provision of natural habitat and critical ecosystem services. This paper explores quantitatively the economic impacts of adjustment in Park visitation fees and tourism demand as a source of revenues to improve Park tourism opportunities and ongoing operations and maintenance where budgetary restrictions are particularly acute. The methods developed in this paper are novel in integrating the results of stated preference techniques with regional economy-wide modelling approaches to capture multi-sectoral, direct, indirect and induced impacts. Such methods have strong potential for assessing revenue generation alternatives in other contexts where Park Managers are faced with the need to generate additional revenue for sustainable park management while facing diminishing budget allocations.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS