Taxing air pollutants and carbon individually or jointly: results from a CGE model enriched by an emission abatement sector

We analyse the separate and collective impacts of emissions taxation to understand the internalisation effects of externalities. The analysis is carried out using a static computable general equilibrium model, with unemployment, bottom-up abatement technologies represented by a step function, and detailed emission coefficients. Environmental and health external costs are quantified using the ExternE’s Impact Pathway Approach. Emissions, as a result of environmental taxation, fall through reduced output, production factor substitution, and increased end of pipe abatement activity. The analysis shows that a full internalisation of environmental externalities can result in modest overall economic and environmental welfare gains. There are, however, differences in terms of employment and output, depending on what combination of taxes are applied, which sectors are covered, and how fiscal revenues are redistributed. Air quality benefits range from €35–75 per ton of CO₂ abated. Total environmental benefits always exceed GDP loss and the associated welfare loss.     

Abatement R&D,market imperfections,and environmental policy in an endogenous growth model

We develop an endogenous growth model featuring environmental externalities, abatement R&D, and market imperfections. We compare the economic performances under three distinct regimes that encompass public abatement, private abatement without tax recycling, and private abatement with tax recycling. It is found that the benefit arising from private abatement will be larger if the degree of the firms’ monopoly power is greater. With a reasonably high degree of monopoly power, a mixed abatement policy by which the government recycles environmental tax revenues to subsidize the private abatement R&D is a plausible way of reaching the highest growth rate and welfare.     

The effect of environmental regulation on environmental innovation

Environmental expenditure estimates resulting from US environmental policy are based on current technology which may overstate policy's true costs. Existing evidence shows that ex ante cost estimates are greater than realized costs due to unexpected technological progress. This research programme asks whether innovation is a response to environmental regulation or whether the true regulatory compliance costs are overestimated ex ante when technological advancement is ignored? The author conducts an empirical study of the US manufacturing industry's environmental patent activities and environmental regulation as measured by pollution abatement and control expenditure (PACE) data. She finds a statistically significant positive relationship between environmental regulation and innovation when estimated by ordinary least squares (OLS). However, the OLS coefficient of pollution abatement costs is inconsistent because of a correlation between the explanatory variable and unobservable variables. Two-staged least squares addresses the inconsistency problem, resulting in positive and significant PACE coefficients. Thus, there is evidence that innovation is a response to environmental regulation. © 1998 John Wiley & Sons, Ltd and ERP Environment.     

Effects of international sharing of pollution abatement burdens on income inequality among countries

Improvements in environmental quality will boost output production and hence economic growth. However, although environmental abatement equally benefits all economies in the world, it is shown that, if the private productive resources are not yet accumulated sufficiently in low income economies, income inequality among economies can be widened in the short term not only under equal burden sharing of pollution abatement but even under income-proportional burden sharing. When the marginal productivity is diminishing, the negative effect of the burden is large relative to the positive effect of the improved environment in economies in which resources are not accumulated sufficiently.     

环境的外在性和保护策略

一个简单的环境污染模型发展后,环境污染具有外部性,在这个内生增长模型中,考虑了通过税收提供的资本来保护环境的两条途径。在政府不参与环境控制时,经济增长率最高,但污染也最严重,社会福利要比政府采取补贴情形时底。当环境外部性较少时,环境保护采取政府补贴社会福利要比完全由政府控制时的福利要大,而当外部性较大时,则环境保护应当采取完全由政府控制为妙。     

TRADE LIBERALIZATION, PUBLIC ABATEMENT, AND WELFARE

This paper discusses public abatement financed by pollution tax revenue or tariff revenue and investigates the welfare consequences of a tariff. The main result of this paper is that under certain conditions a tariff reduction results in an improvement in welfare through an increase in public abatement and a decrease in pollution. This result may guide policy for countries that wish to harmonize trade liberalization and the environmental protection demonstrated by both the private and the public sectors.     

What is the potential impact of a taxation system reform on carbon abatement and industrial growth in China?

Economists have long argued that market-based environmental policy such as an environmental tax is beneficial to abate pollution emissions. This study aims at investigating the impact of carbon tax levy on carbon dioxide (CO₂) abatement and industrial growth in China. To this end, the marginal abatement cost (MAC) of industrial CO₂ emissions is estimated as the benchmark of setting the carbon tax rate by using the directional distance function (DDF). This paper employs the polynomial dynamic panel model to forecast the impact of carbon tax levy on target variables such as sectoral value-added and CO₂ intensity. The results reveal that the levy of a CO₂ tax has a negative impact on industrial output only in the short term. In the long term, the impact of CO₂ tax levy on output will become positive. The levy of a CO₂ tax is always beneficial to reduce CO₂ intensity. Corresponding policy suggestions for an environmental taxation system reform are given in the concluding section.     

NO x Emissions and the Use of Advanced Pollution Abatement Techniques in West Germany

This paper concentrates on the integration of pollution abatement techniques for NO x emissions into the environmentally enlarged input-output model PANTA RHEI II for West Germany. The use of available abatement technologies is explained by emission prices, investment and technological factors for different sectors and energy carriers. Simulation runs to the year 2005 show the economic, environmental and technological effects of a tax on NO x emissions, when revenues are recycled via reductions of employers' social security contributions. A cut of emissions by almost one third against the businessas-usual level is reached. In particular, the use of advanced pollution abatement techniques and structural changes prevent negative economic effects on the macro level. Lower real wages even induce higher employment.     

The fundraising efficiency in U.S. non-profit art organizations: an application of a Bayesian estimation approach using the stochastic frontier production model

This article examines how efficient art organizations are in raising funds from private giving. We measure fundraising efficiency using a Bayesian estimation approach using the stochastic frontier production model. We show that fundraising efficiencies are generally quite low for art organizations in the U.S. when private giving is only considered as a fundraising output; however, when the effect of fundraising on ticket sales is considered, fundraising efficiencies improve substantially. We also show that government grants have a negative impact on fundraising efficiency and therefore partially crowd out private giving.     

基于二阶段博弈的碳排放权分配机制研究

建立了政府和两企业之间的一主两从Stackelberg博弈模型和企业之间的差异Bertrand价格博弈模型,将两者结合成一个二阶段博弈模型。对政府和企业之间的博弈行为以及决策变量之间的关系进行分析。研究证明碳排放交易市场可以通过每个企业的边际减排成本均等化实现排放权最终的优化配置,而政府通过确定碳排放权的初始分配比例实现社会的公平性。最后通过数据分析了环境污染程度、企业的减排技术对在均衡条件下的企业效益、政府决策偏好和社会公平性的影响。     

Can industrial agglomeration achieve the emission-reduction effect?

This paper adopted the Meta-constraints efficiency model to measure the environmental efficiency of the industry in China, and then used the spatial panel model to analyze the impact of industrial agglomeration externalities on environmental efficiency. The study found that industrial agglomeration exerted an apparent spatial spillover effect. Different agglomeration degrees and means may be matched with different environmental effects. With the evolution of agglomeration, the balanced effects among negative externality of scale (pollution effect). Marshallian and Jacobs positive externality (self-purification effect) lead to a U-curved tendency between industrial agglomeration and environmental efficiency. Therefore, with the increase of industrial agglomeration degree, the environmental efficiency first decreases and then increases. The effect of industrial agglomeration in the Midwest on the environment is mainly presented as a negative externality of scale, situated in the descending phase of the U curve. However, the effect of eastern industrial agglomeration on the environment mainly manifested as Marshallian and Jacobs positive externalities and was situated close to the ascending phase of the U curve. All regions should fully utilize the “self-purification” effect of the Marshallian externality and the Jacobs externality on emission-reduction according to the different phases of industrial development.     

The government wage bill and private activity

We estimate the macroeconomic effects of public wage expenditures in U.S. data by identifying shocks to public employment and public wages using sign restrictions. We find that public employment shocks are mildly expansionary at the federal level and strongly expansionary at the state and local level by crowding in private consumption and increasing labor force participation and private sector employment. Similarly, state and local government wage shocks lead to increases in consumption and output, while shocks to federal government wages induce significant contractionary effects. In a stylized DSGE model we show that the degree of complementarity between public and private goods in the consumption bundle is key for explaining the observed heterogeneity.     

An iterative approach to the estimation of the abatement costs of harmful emissions

The ability to quantify tradeoffs involved in the process of reducing harmful emissions is essential to successful policy-making in the environmental planning area. The approach by Färe et al. (J Econom 126: 469–492, 2005) to computing point estimates of the marginal abatement costs (MACs) of reducing pollution by estimating the directional output distance function has been gaining popularity in recent years. The contribution of this study is to compute MACs as slopes of the iterated parametric production possibilities frontier (PPF) estimated on the basis of the set of efficient projections of observable output combinations obtained from the parameters of directional output distance function. Policy makers are thus provided with the general shape of the production possibilities set for a polluting technology rather than with a set of point estimates of the MACs. We apply our methodology to a balanced panel of seven Korean manufacturing sectors spanning the period between 1999 and 2009, obtaining theoretically consistent concave PPFs based on a large set of directional output distance vectors. Finally, we estimate the parameters of a directional output distance function corresponding to the iterated PPF.     

The effects of public spending externalities

We conduct a positive analysis on the effects of ‘externalities’ produced by government spending. To this effect, we estimate, using U.S. data, an RBC model with two salient features. First, we allow government consumption to directly affect the marginal utility of consumption. Second, we allow public capital to shift the productivity of private factors. We provide an identification analysis that supports the strategy adopted for estimating the parameters governing these two channels. On one hand, private and government consumption are robustly estimated to be substitute goods. Because of substitutability, labor supply reacts little to a government consumption shock, so the estimated output multiplier is much lower than in models with separabilities. On the other hand, our results point towards public investment being ‘unproductive’.     

Environmental quality standards: A general equilibrium analysis

The increasing importance of pollution controls as a part of government regulatory activities has motivated considerable concern about the economic impact of these activities. This question is of considerable importance, because environmental quality goals are sometimes in conflict with other objectives such as full employment and economic growth. Policy-makers are thus faced with the task of identifying and measuring the trade-offs between these various objectives. But the measurement of these objectives requires information on their economic impacts. This paper develops a general equilibrium model with pollution specifications which can be used to identify the economic impacts of pollution-control policies. The particular pollution-control policy addressed is an environmental standards approach. The model is based on a technique that combines an explicit representation of consumer demand behaviour vis-à-vis linear aggregate demand functions with activity analysis.     

Game-Theoretic Modelling of Transboundary Pollution

Transboundary pollution is pollution which is emitted in one country, and deposited or causing harm in another country. Due to the absence of a supranational institution that could enforce international legislation, transboundary externalities cannot be approached in the same way as domestic pollution problems. In an attempt to find non-traditional solutions to such crossborder problems, recent environmental economics literature incorporates behavioural assumptions with the help of game theory. This paper discusses how different types of transboundary pollution have been approached, and which static and dynamic game theoretic solution concepts have been evaluated. While full cooperation among countries yields the economically optimal outcome it is difficult to reach, because countries are faced with an inequitable sharing of the burden of pollution abatement and with the incentive to free-ride. Side payment schemes to aid burden sharing and strategies to circumvent free riding are reviewed. Issues such as transaction costs, information and motivation are briefly discussed.     

TAX REVENUE-FINANCED PUBLIC ABATEMENT AND WELFARE: A CONSUMPTION TAX CASE

This paper develops a model of public abatement financed either by a pollution tax or by a consumption tax. It shows that consumption tax revenue-financed public abatement raises welfare more than pollution tax revenue-financed public abatement does when the pollution tax rate rises. This result is worthwhile for environmental protection policy makers when they are determining the revenue source of public abatement.     

Land use dynamics and the environment

This paper builds a benchmark framework to study optimal land use, encompassing land use activities and environmental degradation. We focus on the spatial externalities of land use as drivers of spatial patterns: land is immobile by nature, but local actions affect the whole space since pollution flows across locations resulting in both local and global damages. We prove that the decision maker problem has a solution, and characterize the corresponding social optimum trajectories by means of the Pontryagin conditions. We also show that the existence and uniqueness of time-invariant solutions are not in general guaranteed. Finally, a global dynamic algorithm is proposed in order to illustrate the spatial-dynamic richness of the model. We find that our simple set-up already reproduces a great variety of spatial patterns related to the interaction between land use activities and the environment. In particular, abatement technology turns out to play a central role as pollution stabilizer, allowing the economy to reach a time-invariant equilibrium that can be spatially heterogeneous.     

Resource balance, limited information and public policy

The U.S. Federal Government through its expenditure programs is having a major impact on all forms of pollution abatement. Total expenditures on Federal environmental programs amounted to $3.3 billion in 1972. A program of this magnitude can easily lead to waste and expenditures on conflicting goals unless carefully managed.

In a recent article in the Am. Econ. Rev. William Baumol examined the theoretical justification for and attacks on the Pigouvian tax and subsidy approach to controlling externalities. He concluded that while it is theoretically possible to control externalities through Pigou's procedure, the existence of multiple equilibrium and information requirements make it impractical. He proposes an alternate approach which changes the policy goal from maximization of social welfare to generation of acceptable levels of externalities. His goals differ drastically from those of the resource balance model presented by Kneese, Ayres and D'Arge of maximization of social welfare. This paper will combine the concept of resource balance with the goal of obtaining acceptable level of externalities at minimum cost in the presentation of a theoretical model that can be operationalized.

This paper proposes a general equilibrium method, utilizing the decomposition principle of linear programming, that will permit expenditures and regulations only on non-conflicting goals and includes a feedback mechanism for determining if a program is wasteful in relation to other programs. The model has five advantages over earlier proposals: (1) it is a general equilibrium rather than partial equilibrium model; (2) it is dynamic rather than static; (3) limited information rather than complete information is required for its implementation; (4) the model is heuristic rather than optimizing in the sense that policy decisions always increase the efficiency of pollution control, but because of the existence of uncertainty, they cannot be interpreted as maximizing social welfare; (5) the model incorporates multiple rather than a single policy tool.     

Effective pollution control policy for China

China began enforcing a system of pollution levies in 1982. However, senior environmental officials expressed doubt that this system was improving the environment and, in 1996, they began to place greater reliance on mill closure as the penalty for poor environmental performance. Since then, managers have found means of subverting many of the intended mill closures, and this causes us to return to the question of the abatement efficiency and effectiveness of the levies. This paper uses production evidence from 34 papermills in two representative provinces to examine the abatement efficiency and effectiveness of the levies. The paper industry is an important industry for this question because it is the largest polluter of China’s rural environment. We use a distance function to determine individual output-based and revenue-based shadow prices for each mill during the years that the levies were the main environmental incentive. The output-based shadow prices for pollutants display no recognizable trends over time and they are very different for firms in different locations. The revenue-based shadow prices are widely variable between mills and locations as well. These findings indicate that the marginal opportunity costs of abatement were also widely divergent and that there was no trend toward improved abatement efficiency. The way to correct this is to improve the performance of the market—not to reject the market altogether as the more recent reliance on mill closures does. This observation suggests that a system of tradable permits would be an improvement on relatively less successful administrative measures such as forced mill closures.