Optimal acid rain abatement policy in Europe

Acid rain causes greater environmental damage than would occur if countries act cooperatively. Based on new estimates of sulphur abatement cost functions, the potential gains from cooperation are calculated for Europe. Various cooperative abatement rates are compared with the rates implied by recent international agreements. The distinction is made between primary and secondary abatement, and their respective roles are discussed.Environmental Management; abatement; acid rain; cooperation

Optimal acid rain abatement policy in Europe

Acid rain causes greater environmental damage than would occur if countries act cooperatively. Based on new estimates of sulphur abatement cost functions, the potential gains from cooperation are calculated for Europe. Various cooperative abatement rates are compared with the rates implied by recent international agreements. The distinction is made between primary and secondary abatement, and their respective roles are discussed

Optimal acid rain abatement policy in Europe

Acid rain causes greater environmental damage than would occur if countries act cooperatively. Based on new estimates of sulphur abatement cost functions, the potential gains from cooperation are calculated for Europe. Various cooperative abatement rates are compared with the rates implied by recent international agreements. The distinction is made between primary and secondary abatement, and their respective roles are discussed

Effective energy commodity risk management: Econometric modeling of price volatility

The current study emphasizes on the importance of developing an effective price risk management strategy for investment portfolios containing energy assets, given the high volatility of this market. A thorough investigation of energy price volatility is provided through the use of GARCH type model variations and the Markov-Switching GARCH methodology, as these are used in the most representative academic research. First, a large number of GARCH type models are exhibited together with all the econometric procedures and tests that are necessary for developing a robust and precise forecasting model for measuring energy price volatility. Next, follows a comprehensive examination of the probability of potential shifts in the unconditional variance of the models due to the effect of economic crises and several unexpected geopolitical events. Finally, taking into consideration the most relevant and up-to-date of the academic literature, a detailed comparison of the various volatility models and methodologies is presented. This is based on a variety of data samples containing the price returns of the main commercial energy commodities. © 201

Energy commodities: A review of optimal hedging strategies

Energy is considered as a commodity nowadays and continuous access along with price stability is of vital importance for every economic agent worldwide. The aim of the current review paper is to present in detail the two dominant hedging strategies relative to energy portfolios, the Minimum-Variance hedge ratio and the expected utility maximization methodology. The Minimum-Variance hedge ratio approach is by far the most popular in literature as it is less time consuming and computationally demanding; nevertheless by applying the appropriate multivariate model Garch family volatility model, it can provide a very reliable estimation of the optimal hedge ratio. However, this becomes possible at the cost of a rather restrictive assumption for infinite hedger’s risk aversion. Within an uncertain worldwide economic climate and a highly volatile energy market, energy producers, retailers and consumers had to become more adaptive and develop the necessary energy risk management and optimal hedging strategies. The estimation gap of an optimal hedge ratio that would be subject to the investor’s risk preferences through time is filled by the relatively more complex and sophisticated expected utility maximization methodology. Nevertheless, if hedgers share infinite risk aversion or if alternatively the expected futures price is approximately zero the two methodologies become equivalent. The current review shows that when evidence from the energy market during periods of extremely volatile economic climate is considered, both hypotheses can be violated, hence it becomes reasonable that especially for extended hedging horizons it would be wise for potential hedgers to take into consideration both methodologies in order to build a successful and profitable hedging strategy. © 2019 by the authors

Programming Correlation Criteria with free CAS Software

Our contribution in this work is to set the directions for specialized econometric computations in a free computer algebra system, Xcas. We focus on the programming of a routine dedicated to correlation criteria for multiple regression models. We program several operations for detecting and evaluating collinearity by applying the diagnostic techniques of linear regression analysis. In order to illustrate the computational performance of our Xcas codes, we repeat most of the analysis carried out in widely used commercial software, along with some extra statistics. Xcas could constitute a supplemental tool in a collinear data study. Its use is proposed complementary to established econometric software or as substitute software. © 2016, Springer Science+Business Media New York

Computational Aspects of Sustainability

[No abstract available

Pollution, environmental taxes and public debt: A game theory setup

As is well known, public debt accumulation can produce disutility and that its accumulation over time must be economically sustainable. Equally, pollutants generated during the production process also result in disutility. One of the policy weapons available to governments in regard to public debt is the generation of primary surpluses in order to sustain a capacity to repay the debt. Affecting this capacity are the cost/benefits involved in reduction of emissions through taxation. In this paper, we address the above factors in an extremely simple, dynamic game in order to find linkages between the notions of public debt, pollution, and taxation. The starting point of the model is identification of the current account as the basis of the equation of motion of the public debt which is considered as a stock. A regulator's task is to raise the nation's primary surplus to reduce the stock of public debt. Nash and Stackelberg differential game solutions are used to explore the strategic interactions. For the Nash equilibrium, it is found that in establishing the cyclical strategies during the game between the polluters on the one hand and the government on the other, the discount rate of the polluters is required to be greater than the government's discount rate. That is, polluters must be more impatient than the government. In the case of the hierarchical setting, the analytical expressions of the strategic variables and the steady state value of the public debt stock are important outcomes of this study. We find the analytical expressions of the reward functions, making the implementation by policy makers an easier task. Finally, we are able to show the conditions under which conflict is more intensive in the two cases of equilibrium, according to the shadow price of the environmental damages. © 2018 Economic Society of Australia, Queenslan

The impact of economic growth on environmental efficiency of the electricity sector: A hybrid window DEA methodology for the USA

This paper estimates the efficiency of the power generation sector in the USA by using Window Data Envelopment Analysis (W-DEA). We integrate radial and non-radial efficiency measurements in DEA using the hybrid measure while we extend the proposed model by considering good and undesirable outputs as separable and non separable. Then in the second stage, we perform parametric and non-parametric econometric techniques in order to model the relationship between the calculated environmental efficiencies and economic growth in attaining sustainability. Our empirical findings indicate a stable N-shape relationship between environmental efficiency and regional economic growth in the case of global and total pollutants but an inverted N-shape in the case of local pollutants. This implies that attention is required when considering local and global pollutants and the extracted environmental efficiency scores. A clear message to policy makers and government officials is that climate change which calls for economic, environmental and social concern should be analyzed according to its dispersion and regional dimension. © 2018 Elsevier Lt

The channels of the effect of government expenditure on the environment: evidence using dynamic panel data

This paper explores the relationship between government spending and environmental quality using panel data for 94 countries for the period 1970–2008. We identify and estimate three distinct channels that comprise the total direct effect of government expenditure on air pollution, namely a marginal effect, an effect conditional on economic growth and an effect conditional on institutional quality. Since adjustment rate of emissions to their equilibrium level is slow due to technological and institutional reasons, we explicitly take into account dynamics by applying appropriate econometric methods. The results demonstrate that there is a significant alleviating direct effect of government expenditure on SO2 and NOx emissions, which increases with the level of economic growth and democracy. However, there is no evidence of a significant effect on pollutants with more global impact on the environment and human health, like N2O and CO2, implying that the adoption of international environmental treaties is required in this case. © 2016 Newcastle University