SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

While the rest of the world has pursued absolute emissions limits for greenhouse gases, the Bush administration has proposed an alternative policy formulation based, among other things, on reducing emissions intensity-that is, emissions per dollar of real gross domestic product. Critics of this formulation have denounced the general idea of an intensity-based emissions target, along with its voluntary nature and weak targets. This raises the question of whether intensity-based emissions limits, distinct from the other features of the Bush initiative, offer a useful alternative to absolute emissions limits. This paper makes the case that they do, based on how emissions targets are framed. The argument draws on four key observations: greenhouse gas emissions...

Climate Policy in the United States and Japan: Prospects in 2005 and Beyond, Workshop Summary

Palavras-chave: Carbon; Climate; Policy; Intensity; Global warming; Environmental Economics and Policy; Q54; Q58; Q56.

Ano: 2005

URL: http://purl.umn.edu/10917

Pizer, William A.; Tamura, Kentaro.

Resources for the Future and the Institute for Global Environmental Strategies convened a one and one-half day workshop on domestic and international climate policy May 11-12, 2005, in Tokyo, Japan. The first day included 49 participants hearing presentations from 13 speakers and discussing domestic activities, economics, and politics. The second day included a smaller group of participants listening to a panel of four experts and discussing opportunities for future international climate regimes. Participants included government officials from the Japanese Ministry of the Environment; the Japanese Ministry of Economy, Trade and Industry; the U.S. Environmental Protection Agency; the U.S. Department of State; and the Massachusetts Department of Commonwealth...

How Important is Technological Innovation in Protecting the Environment?

Palavras-chave: Climate change; Global warming; United States; Japan; Kyoto; Environmental Economics and Policy.

Ano: 2005

URL: http://purl.umn.edu/10657

Parry, Ian W.H.; Pizer, William A.; Fischer, Carolyn.

Economists have speculated that the welfare gains from technological innovation that reduces the future costs of environmental protection could be a lot more important than the "Pigouvian" welfare gains over time from correcting a pollution externality. If so, then a primary concern in the design of environmental policies should be the impact on induced innovation, and a potentially strong case could be made for additional instruments such as research subsidies. This paper examines the magnitude of the welfare gains from innovation relative to the discounted Pigouvian welfare gains, using a dynamic social planning model in which research and development (R&D) augments a knowledge stock that reduces future pollution abatement costs. We find that the...

Instrument Choice for Environmental Protection When Technological Innovation Is Endogenous

Palavras-chave: Environmental Economics and Policy.

Ano: 2000

URL: http://purl.umn.edu/10883

Fischer, Carolyn; Parry, Ian W.H.; Pizer, William A..

This paper presents an analytical and numerical comparison of the welfare impacts of alternative instruments for environmental protection in the presence of endogenous technological innovation. We analyze emissions taxes and both auctioned and free (grandfathered) emissions permits. We find that under different sets of circumstances each of the three policies may induce a significantly higher welfare gain than the other two policies. In particular, the relative ranking of policy instruments can crucially depend on the ability of adopting firms to imitate the innovation, the costs of innovation, the slope and level of the marginal environmental benefit function, and the number of firms producing emissions. Moreover, although in theory the welfare impacts of...

The Analysis of Randomized Experiments with Missing Data

Palavras-chave: Technological innovation; Externalities; Environmental policies; Welfare impacts; Environmental Economics and Policy; Q28; O38; H23.

Ano: 1998

URL: http://purl.umn.edu/10812

Imbens, Guido W.; Pizer, William A..

The otherwise straightforward analysis of randomized experiments is often complicated by the presence of missing data. In such situations it is necessary to make assumptions about the dependence of the selection mechanism on treatment, response, and covariates. The widely used approach of assuming that the data is missing at random conditional on treatment and other fully observed covariates is shown to be inadequate to describe data from a randomized experiment when partially observed covariates are also present. This paper presents an alternative to the missing at random model (MAR) which is both consistent with the data and preserves the appeal of MAR. In particular, the proposed family of models minimize the discrepancy with MAR while explaining...

Economies of Scale and Technical Efficiency in Community Water Systems

Palavras-chave: Research and Development/Tech Change/Emerging Technologies.

Ano: 2000

URL: http://purl.umn.edu/10596

Shih, Jhih-Shyang; Harrington, Winston; Pizer, William A.; Gillingham, Kenneth.

In this study we use datasets from the 1995 and 2000 Community Water Supply surveys to examine the production costs of water supply systems. We first estimate the economies of scale in water supply by estimating the total unit cost as well as individual component cost elasticities. For total unit cost elasticity, we find that a 1% increase in production reduces unit costs by a statistically significant 0.16%. For individual component cost elasticities, we find that higher economies of scale exist in capital costs, outside costs, other costs, and materials costs; labor costs and energy costs exhibit lower but still positive economies of scale. These economies of scale may reflect production economies or suggest that larger systems are better than smaller...

How Large Are the Welfare Gains from Technological Innovation Induced by Environmental Policies?

Palavras-chave: Small water systems; Water supply; Capacity development; Economies of scale; Community water systems; Resource /Energy Economics and Policy; Q25; Q28.

Ano: 2004

URL: http://purl.umn.edu/10788

Parry, Ian W.H.; Pizer, William A.; Fischer, Carolyn.

This paper examines whether the welfare gains from technological innovation that reduces future abatement costs are larger or smaller than the Pigouvian welfare gains from optimal pollution control. The relative welfare gains from innovation depend on three key factors ¾ the initially optimal level of abatement, the speed at which innovation reduces future abatement costs, and the discount rate. We calculate the welfare gains from innovation under a variety of different scenarios. Mostly they are less than the Pigouvian welfare gains. To be greater, innovation must reduce abatement costs substantially and quickly and the initially optimal abatement level must be fairly modest.

Climate Policy in the United States and Japan: A Workshop Summary

Palavras-chave: Innovation; Welfare; Regulation; Endogenous; Technological; Change; R&D; Environmental Economics and Policy; Q16; Q28; O32; O33.

Ano: 2002

URL: http://purl.umn.edu/10448

Pizer, William A.; Tamura, Kentaro.

Resources for the Future and the Institute for Global Environmental Strategies (Japan) convened a one-and-one-half day workshop on domestic and international climate policy on February 12-13, 2004 in Washington, D.C. On the first day, 55 participants heard presentations from 14 speakers and discussed domestic activities, economics, and politics. The second day featured a smaller group of 27 participants hearing six informal sets of comments and discussing opportunities for international collaboration. Participants included government officials from the Japanese Ministry of the Environment, the U.S. Environmental Protection Agency, and other U.S. administration and congressional staff; representatives from business and environmental groups; and academic...

Technology Adoption and Aggregate Energy Efficiency

Palavras-chave: Climate change; Global warming; United States; Japan; Kyoto; Environmental Economics and Policy.

Ano: 2004

URL: http://purl.umn.edu/10771

Pizer, William A.; Harrington, Winston; Kopp, Raymond J.; Morgenstern, Richard D.; Shih, Jhih-Shyang.

Improved technology is often cited as a means to alter the otherwise difficult trade-off between the economic burden of regulation and environmental damage. Focusing on energy-saving technologies that mitigate the threat of climate change, we find that both energy prices and financial health influence technology adoption among a sample of industrial plants in four heavily polluting sectors. Based on a model linking technology adoption to growth in aggregate efficiency, we estimate that a doubling of energy prices, after raising the growth rate to 2.1%, would require slightly more than 50 years to generate a 50% improvement in aggregate efficiency relative to the baseline forecast.

Regulating Stock Externalities Under Uncertainty

Palavras-chave: Energy efficiency; Endogenous technological change; Technology adoption; Research and Development/Tech Change/Emerging Technologies; O31; O38; Q43; Q48.

Ano: 2002

URL: http://purl.umn.edu/10616

Newell, Richard G.; Pizer, William A..

Using a simple analytical model incorporating benefits of a stock, costs of adjusting the stock, and uncertainty in costs, we uncover several important principles governing the choice of price-based policies (e.g., taxes) relative to quantity-based policies (e.g., tradable permits) for controlling stock externalities. Applied to the problem of greenhouse gases and climate change, we find that a price-based instrument generates several times the expected net benefits of a quantity instrument. As in Weitzman (1974), the relative slopes of the marginal benefits and costs of controlling the externality continue to be critical determinants of the efficiency of prices relative to quantities, with flatter marginal benefits and steeper marginal costs favoring...

How Large Are the Welfare Gains from Technological Innovation Induced by Environmental Policies?

Palavras-chave: Stock; Externality; Regulation; Policy; Uncertainty; Price; Quantity; Tax; Tradable permit; Pollution; Climate change; Greenhouse Gas; Instrument choice; Risk and Uncertainty; Q28; D81; C61.

Ano: 2000

URL: http://purl.umn.edu/10471

Parry, Ian W.H.; Pizer, William A.; Fischer, Carolyn.

This paper examines whether the welfare gains from technological innovation that reduces future abatement costs are larger or smaller than the "Pigouvian" welfare gains from optimal pollution control. The relative welfare gains from innovation depend on three key factors - the initially optimal level of abatement, the speed at which innovation reduces future abatement costs, and the discount rate. We calculate the welfare gains from innovation under a variety of different scenarios. Mostly they are less than the Pigouvian welfare gains. To be greater, innovation must reduce abatement costs substantially and quickly and the initially optimal abatement level must be fairly modest.

Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?

Palavras-chave: Innovation; Welfare; Regulation; Endogenous; Technological; Change; R&D; Environmental Economics and Policy; Q16; Q28; O32; O33.

Ano: 2002

URL: http://purl.umn.edu/10621

Newell, Richard G.; Pizer, William A..

Costs and benefits in the distant future-such as those associated with global warming, long-lived infrastructure, hazardous and radioactive waste, and biodiversity-often have little value today when measured with conventional discount rates. We demonstrate that when the future path of this conventional rate is uncertain and persistent (i.e., highly correlated over time), the distant future should be discounted at lower rates than suggested by the current rate. We then use two centuries of data on U.S. interest rates to quantify this effect. Using both random walk and mean-reverting models, we compute the certainty-equivalent rate that is, the single discount rate that summarizes the effect of uncertainty and measures the appropriate forward rate of...

Workshop Report: Pollution Abatement Costs and Expenditures (PACE) Survey Design for 2000 and Beyond

Palavras-chave: Discounting; Uncertainty; Interest rate forecasting; Climate policy; Intergenerational equity; Risk and Uncertainty; D90; E47; C53; H43; Q28.

Ano: 2001

URL: http://purl.umn.edu/10743

Burtraw, Dallas; Krupnick, Alan J.; Morgenstern, Richard D.; Pizer, William A.; Shih, Jhih-Shyang.

Prices vs. Quantities Revisited: The Case of Climate Change

Palavras-chave: Environmental Economics and Policy.

Ano: 2001

URL: http://purl.umn.edu/10652

Uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently. Price controls - in the form of taxes - fix the marginal cost of compliance and lead to uncertain levels of compliance. Meanwhile quantity controls - in the form of tradable permits or quotas - fix the level of compliance but result in uncertain marginal costs. This fundamental difference in the face of cost uncertainty leads to different welfare outcomes for the two policy instruments. Seminal work by Weitzman (1974) clarified this point and derived theoretical conditions under which one policy is preferred to the other. This paper applies this principal to the issue of worldwide greenhouse gas (GHG) control, using a global integrated climate...

Climate Policy Design under Uncertainty

Palavras-chave: Climate change; Policy under uncertainty; Price and quantity controls; General equilibrium modeling; Demand and Price Analysis; Q28; D81; C68.

Ano: 1997

URL: http://purl.umn.edu/10498

The uncertainty surrounding both costs and benefits associated with global climate change mitigation creates enormous hurdles for scientists, stakeholders, and decision-makers. A key issue is how policy choices balance uncertainty about costs and benefits. This balance arises in terms of the time path of mitigation efforts as well as whether those efforts, by design, focus on effort or outcome. This paper considers two choices-price versus quantity controls and absolute versus relative/intensity emissions limits-demonstrating that price controls and intensity emissions limits favor certainty about cost over climate benefits and future emissions reductions. The paper then argues that in the near term, this favoritism is desired.

Carbon Mitigation Costs for the Commercial Sector: Discrete-Continuous Choice Analysis of Multifuel Energy Demand

Palavras-chave: Carbon; Climate; Policy; Intensity; Global warming; Uncertainty; Price; Quantity; Environmental Economics and Policy; D81; Q54; Q58.

Ano: 2005

URL: http://purl.umn.edu/10584

Newell, Richard G.; Pizer, William A..

We estimate a carbon mitigation cost curve for the U.S. commercial sector based on econometric estimation of the responsiveness of fuel demand and equipment choices to energy price changes. The model econometrically estimates fuel demand conditional on fuel choice, which is characterized by a multinomial logit model. Separate estimation of end uses (e.g., heating, cooking) using the 1995 Commercial Buildings Energy Consumption Survey allows for exceptionally detailed estimation of price responsiveness disaggregated by end use and fuel type. We then construct aggregate long-run elasticities, by fuel type, through a series of simulations; own-price elasticities range from -0.9 for district heat services to -2.9 for fuel oil. The simulations form the basis of...

The EU Emissions Trading Directive: Opportunities and Potential Pitfalls

Palavras-chave: Commercial energy demand; Carbon policy; Climate change; Discrete choice; Resource /Energy Economics and Policy; Q28; Q48; Q41; C35; C15.

Ano: 2005

URL: http://purl.umn.edu/10625

Kruger, Joseph; Pizer, William A..

The European Union is on the verge of establishing an emissions trading program ten times the size of the Acid Rain trading program in the United States. Its design takes advantage of many lessons from existing experience with trading programs, as well as economic theory, and innovates in important ways. While we view this as an impressive development, concerns about equity, enforcement, and efficiency remain. Specifically, a lack of data and weaker environmental institutions in some EU Member States raises questions about both allowance allocations and compliance and enforcement. Although much attention has focused on whether prices will be "too low" in the first phase of the program, a greater risk is that uncertainty about program elements, technology...

Climate Change Catastrophes

Palavras-chave: European Union; Climate change; Emissions trading; Environmental Economics and Policy.

Ano: 2004

URL: http://purl.umn.edu/10679

Most studies that compare price and quantity controls for greenhouse gas emissions under uncertainty find that price mechanisms perform substantially better. In these studies, the benefits from reducing emissions are proportional to the level of reductions, and such linear benefits strongly favor price policies (Weitzman 1974). Catastrophic damages, however, challenge that intuition as consequences become highly nonlinear. Catastrophe avoidance offers huge benefits, and incremental adjustments on either side of the associated threshold are relatively unimportant, suggesting a strong preference for quantity controls. This paper shows that with catastrophic damages, both price and quantity mechanisms offer large gains over the business-as-usual alternative,...

Managing Permit Markets to Stabilize Prices

Palavras-chave: Climate change; Global warming; Prices versus quantities; Stock externalities; Integrated assessment; Uncertainty; Environmental Economics and Policy; Q28; D81; C68.

Ano: 2003

URL: http://purl.umn.edu/10499

Newell, Richard G.; Pizer, William A.; Zhang, Jiangfeng.

The political economy of environmental policy favors the use of quantity-based instruments over price-based instruments (e.g., tradable permits over green taxes), at least in the United States. With cost uncertainty, however, there are clear efficiency advantages to prices in many cases, especially for stock pollutants such as greenhouse gases. The question arises, therefore, of whether one can design flexible quantity policies that mimic the behavior of price policies, namely stable permit prices and abatement costs. We explore a number of "quantity-plus" policies that replicate the behavior of a price policy through rules that adjust the effective permit cap for unexpectedly low or high costs. They do so without necessitating any monetary exchanges...

Optimal Choice of Policy Instrument and Stringency Under Uncertainty: The Case of Climate Change

Palavras-chave: Tradable permit market; Prices; Quantities; Banking; Borrowing; Uncertainty; Demand and Price Analysis; Q28; Q48; D8; L51.

Ano: 2003

URL: http://purl.umn.edu/10524

Considerable uncertainty surrounds both the consequences of climate change and their valuation over horizons of decades or centuries. Yet, there have been few attempts to factor such uncertainty into current policy decisions concerning stringency and instrument choice. This paper presents a framework for determining optimal climate change policy under uncertainty and compares the resulting prescriptions to those derived from a more typical analysis with best-guess parameter values. Uncertainty raises the optimal level of emission reductions and leads to a preference for taxes over rate controls. The first effect is driven primarily by uncertainty about future discount rates while the second arises because of relatively linear damages and a negative...