Evaluating and regulating the impacts of lobbying in the EU? The case study of green industries

How should we evaluate and regulate the impacts of lobbying in the European Union (EU)? The current lack of transparency around lobbying activities and the absence of formal regulation mean that a hidden lobbying problem may prevail. The tentative case study of green industries in the EU is illustrative. The wind turbine industry, for example, benefits from ambitious environmental target levels for greenhouse gas reductions that will increase the future market for renewable energy. In contrast, for example, no environmental target levels exist that increase the future market shares of organic farming. Rational choice theory suggests that lobbying and group size advantages can explain the observed difference in achieving environmental target levels. The EU may learn from the US legislation as a starting point for a best‐practice solution and future evaluation of impacts of lobbying in the EU

Organic farmers may gain from Green House Gas trade

Farmers may earn money from participating in the ongoing greenhouse gas (GHG) trade system under the Kyoto agreement

The Climate Heroes of the Future?

How farmers may earn money from greenhouse gas emission trading in the EU

How to include farmers in the emission trading system?

The EU has committed itself to an ambitious 20% reduction of greenhouse gases (GHG) by 2020 compared to the 1990 emissions level. Moreover, the EU goal beyond 2012 is to strengthen, expand and improve climate change initiatives. Therefore, there is a strong need to consider more carefully how to integrate as many sectors as possible in these efforts. Farmers, however, do not trade GHG under the Kyoto agreement. The idea of including farmers in a national emission trading system has been launched in Australia but it has not yet been applied to the EU

A project-based system for including farmers in the EU ETS

Farmers in the EU do not trade greenhouse gases under the Kyoto agreement. This is an empirical puzzle because agriculture is a significant contributor of greenhouse gases (GHG) in the EU and may harvest private net gains from trade. Furthermore, the US has strongly advocated land-use practices as ‘the missing link’ in past climate negotiations. We argue that farmers have relatively low marginal reduction costs and that consequences in terms of the effect on permit price and technology are overall positive in the EU Emission Trading System (ETS). Thus, we propose a project-based system for including the farming practices in the EU ETS that reduces the uncertainty from measuring emission reduction in this sector. The system encourages GHG reduction either by introducing a new and less polluting practice or by reducing the polluting activity. When doing so, farmers will receive GHG permits corresponding to the amount of reduction which can be stored for later use or sold in the EU ETS

Why Does the Northern Light Shine So Brightly? Decentralisation, social capital and the economy

Based on institutional economics, the paper develops a new model pointing at two main reasons why Scandinavia is doing so well in economic terms, namely the level of decentralisation and social capital in its broad sense. The idea in the model is that a political system, which decentralises power, means less lobbyism because access to economically harmful rent seeking is more costly. Consequently, social capital and the trust in other people and the political leadership will increase. This model, suggesting one single social capital measure, is applied to countries in both Western and Eastern Europe. The social capital ranking results indeed show that Scandinavia (Denmark, Norway, Sweden and Finland) is among the seven top ranking countries together with Switzerland, the Netherlands and Iceland.Social capital; decentralisation; economy; Scandinavia; Switzerland; Netherlands; rent seeking; transaction costs; economic freedom; corruption

Should farmers participate in the EU ETS? Permit price, measurement and technology

Farmers in the EU do not trade greenhouse gases under the Kyoto agreement. This is an empirical puzzle. Should farmers participate in the EU Emission Trading System (ETS) for greenhouse gases (GHG)? Our overall answer is yes. First, farmers may harvest private net gains because of i) relatively low marginal reduction costs, especially within organic farming; ii) the avoidance of future losses in productivity as a victim of climate change; and iii) the possibility of receiving a favourable allocation system, such as grandfathering or a list of projects that release free allowances. Second, market consequences in terms of the effect on permit price and technology are overall positive, yielding a promising future for the inclusion of agriculture in the EU ETS. Finally, we propose a scheme for including the farming practices in the EU ETS that reduces the uncertainty from measuring emission reduction in this sector

The Long and Winding Road: Social Capital and Commuting

We develop a two-sector model to analyze which kind of social organization generates trust. Social capital is de…ned as trust. We examine two communities: the bedroom community in which people commute long distance to work and the virility community in which people do not commute to work. The hypothesis is that people do not have time to interact spontaneously out- side work in the bedroom community. We show that in the bedroom community social capital cannot accumulate. Hence our results show that time spent in- teracting with your neighbor must be added as an important production factor when considering the formation of social capital in society. Thus, in a commu- nity where agents only interact when producing output, social capital may not accumulate To our knowledge, no such attempt to model social capital has yet been undertaken and this gap or ‘missing link’in economic debates has to be developed to grasp a more holistic understanding of the big di¤erences in the wealth of nations or regionsSocial capital; Two-Sector Model; Indeterminacy

Missing social capital and the transition in Eastern Europe

The transition of the »Old Communist« countries of East and Central Europe has been disappointingly slow given the amount of physical and human capital available at the start of the transition. We argue that this slowness is caused by the lack of social capital, which is an important factor of production. The Communist system replaced it with an official organization of society. Further, the communist system needed a set of grey/black networks of »fixers« to give it the necessary flexibility. These networks were tolerated, but controlled. When the Communist regime ceased the official organizations collapsed and so did most of the control systems. This allowed a flourishing of the grey/black networks, which can be harmful to the operations of a market economy. The available data are still scanty, but they confirm the argument.Social capital; network; communism; Eastern Europe; Trust; Corruption; Political participation

Designing green taxes in a political context: From optimal to feasible environmental regulation

How should green taxation be designed so that it accommodates producer interests? We argue that to design green taxes which are high enough to have the desired incentive effects, tax revenues must be reimbursed, either by earmarking them for environmental subsidies or by reducing other taxes directed at industry. If green tax schemes can be designed this way, industry will have little incentive to mobilise strong opposition to green taxation. However, in practice, the requirement of reimbursement may be difficult to fulfil because, with few exceptions, polluting industries are not homogeneous. This means that reimbursement will redistribute financial resources within industry and thus create winners and losers. Still, green taxes can be used in heterogeneous industries which can be created by operating separate tax schemes for each branch of industry. The Danish case of pesticide taxation demonstrates that relatively high tax levels can be implemented if an equal relationship between the tax object and the object determining the level of refunds exists throughout the sector. This means that revenues can be reimbursed without creating redistribution within producer communities.Green taxation; Policy design; Reimbursement; Lobbyism; Redistribution