a dynamic analysis of the marketable permits approach to global warming policy a comparison of spatial and temporal flexibility abstract this paper presents a generalized dynamic model of greenhouse gas emissions trading under constraints on the volume of transactions an empirical version of the model is used to evaluate potentially cost saving flexibility mechanisms joint implementation and clean development mechanism and potentially cost adding restrictions supplementarity of the kyoto protocol the results indicate the greatest gains would stem from extending permit trading spatially among industrialized nations although sizable gains would also emanate from the inclusion of developing countries gains from intertemporal trading banking and borrowing are meager restrictions on the volume of permit purchases have by far the most costly effect when developing countries are incorporated into trading sensitivity tests with respect to differential discount rates across countries and technological change indicate the results are robust

for better or for worse till the human development index do us part abstract this paper describes the results of research intended to explore the volatility inherent in the united nations development programme s undp human development index hdi the hdi is intended to be a simple and transparent device for comparing progress in human development and is an aggregate of life expectancy education and gdp per capita values of the hdi for each country are presented in the human development reports hdrs the first being published in 1990 however while the methodology is consistent for all countries in each year there are notable differences between years that make temporal comparisons of progress difficult the paper presents the results of recalculating the hdi for a simplified sample of 114 countries using various methodologies employed by the undp the results are a set of deviations of recalculated hdi ranks compared to the original ranks given in the hdrs the volatility that can result from such recalculation is shown to be substantial 10 15 ranks yet reports in the popular press are frequently sensitive to movements of only a few ranks such movement can easily be accounted for by changes in the hdi methodology rather than genuine progress in human development while the hdrs often carry warnings about the inadvisability of such year on year comparisons it is argued that the existence of such a high profile index and the overt presentation within league tables do encourage such comparison assuming that the hdi will be retained as a focal point within the hdrs then it is suggested that greater focus be upon more meaningful and robust categories of human development e g low medium and high rather than league tables where shifts of a few places perhaps as a result of nothing more than a methodological or data artefact may be highlighted in the press and by policy makers

sustainability as a fair bequest an evaluation challenge abstract in contrast to conventional approaches the conceptualisation of sustainability as fair bequest makes it possible to consider a finite time horizon valuation is necessary to determine whether the bequest package that is passed on from one generation to the next is fair acknowledging the merits as well as the limitations of economic price theory this paper differentiates between three classes of valuables the essential the useful and the unique it is argued that a fair bequest package should contain items from each of the classes because the three classes are incommensurable fairness of the bequest cannot be expressed by a single figure like a non declining total value of the package we then discuss which methods are appropriate for describing a bequest package with respect to its fairness

troubling tradeoffs in the human development index the 20th human development report has introduced a new version of its famous human development index hdi the hdi aggregates country level attainments in life expectancy schooling and income per capita each year s rankings by the hdi are keenly watched in both rich and poor countries the main change in the 2010 hdi is that it relaxes its past assumption of perfect substitutability between its three components however most users will probably not realize that the new hdi has also greatly reduced its implicit weight on longevity in poor countries relative to rich ones a poor country experiencing falling life expectancy due to say a collapse in its health care system could still see its hdi improve with even a small rate of economic growth by contrast the new hdi s valuations of the gains from extra schooling seem unreasonably high many times greater than the economic returns to schooling these troubling tradeoffs could have been largely avoided using a different aggregation function for the hdi while still allowing imperfect substitution while some difficult value judgments are faced in constructing and assessing the hdi making its assumed tradeoffs more explicit would be a welcome step

intertemporal equilibria and exhaustible resources an overlapping generations approach abstract this paper presents a general equilibrium model of an abstract intertemporal economy with overlapping generations production possibilities and capital investment under the constraint of a nonreproducible natural resource the model provides for institutionally mandated asset transfers between successive generations under the assumption that each generation has perfect foresight concerning future prices and economic conditions competitive exchange supports a multiplicity of pareto efficient equilibria that correspond to particular asset transfer regimes the achievement of a desirable distribution of welfare between present and future generations requires that the asset transfer regime be chosen according to a social welfare function or explicit distributional criterion economic efficiency per se is insufficient to ensure social optimality these results have important implications for resource planning in the real world where policy makers and the public at large are often highly concerned over the potential impacts of current resource utilization on the welfare of future generations

the value and applicability of bargaining in an intergenerational setting abstract this paper considers the effectiveness of a variation of coasian bargaining as a policy instrument for internalizing one or multiple intergenerational externalities the variation involves appointing a contemporary party to represent the interests of the affected parties who are currently unable to represent themselves potential criticisms of such a policy are considered and addressed and precedents to such a policy are put forth to test the value of such a policy a two period model in which two externalities exist in the production consumption decisions and with representative agents is used to compare the welfare effects of four scenarios 1 agents in each period optimize their period specific utility 2 a benevolent social planner chooses allocations in both periods to maximize a social welfare function 3 the externalities are internalized using a bargaining policy and 4 the externalities are internalized using a tax and subsidy policy i find that contrary to general consensus in the literature coasian bargaining can be adapted in such a way as to make it applicable in an intergenerational framework

an overlapping generations model with exhaustible resources and stock pollution this paper analyzes the nexus between resource exhaustion and pollution externality using an overlapping generations framework where each generation lives only for a finite period for a finite horizon model with production where there are many agents per generation the pareto inefficiency arises due to lack of intragenerational coordination and is propagated across generations the tax rates necessary for correcting this externality are characterized we also derive a modified hotelling rule according to which the equilibrium resource price rises slower than the rate of interest in order to account for the damages due to the pollution stock generated by the resource used for the case where the externality induced damage acts on production rather than the utility function pareto inefficiency is shown to persist even when there is intragenerational coordination

intergenerational transfers and the social discount rate this paper investigates the relationship between intergenerational asset transfers and the choice of the discount rate for use in cost benefit analysis in a model of a competitive overlapping generations economy constrained by a socially managed exhaustible resource provided that there are no distortions in capital markets and that all agents hold perfect foresight cost benefit techniques will result in a pareto efficient resource allocation if the discount rate is set equal to the market rate of interest but since the path of the interest rate depends on the level of intergenerational transfers cost benefit techniques do not ensure a socially desirable distribution of welfare between generations a social optimum will result only if intergenerational transfers are properly chosen and enforced decentralized private altruism may result in intergenerational transfers that both present and future individuals would agree are too small if members of the present generation attach positive weight to the general welfare of future generations not simply their personal descendants in a world where intergenerational transfers are non optimal second best policy making may imply a constrained optimum that is inefficient together these findings suggest that cost benefit analysis is at best a partial criterion to policy formulation that should be used only in conjunction with ethical principles that define the proper distribution of welfare between present and future generations

limits to economic growth as shown by a computable general equilibrium model abstract economic growth is distinguished from commercial growth and is defined in this article as the growth of the value a society puts in monetary terms on all commercial and non commercial goods and values it possesses during a certain period a computable general equilibrium model is used to show the impact of changes in the endowments preferences and production possibilities on economic income which in the model comprises all wealth besides land with its natural resources and labor energy is the key endowment to drive an economy the model leads in an intuitive way to the following conclusions 1 societies should start to use appropriate indicators for true economic growth rather than just for commercial growth as measured by gross national product 2 all types of economic growth are limited no matter if based on endowment growth production efficiency growth or changes in preferences 3 economic growth should be oriented more towards increasing production efficiency and less towards using more natural resources 4 human population growth puts at risk the possibilities for average economic growth per person 5 we should get better prepared to use solar energy in the future 6 besides economic growth there exists pure utility growth which is not measurable in monetary terms it includes much of scientific progress in the long run and is of great importance even though it cannot be included in an indicator of economic growth

the political economy of environmental policy with overlapping generations a two sector overlapping generations model illuminates the intergenerational effects of a tax that protects an environmental stock a traded asset capitalizes the economic returns to future tax induced environmental improvements benefiting the current asset owners the old generation absent a transfer the tax harms the young generation by decreasing their real wage future generations benefit from the tax induced improvement in environmental stock the principal intergenerational conflict arising from the tax is between generations alive at the time society imposes the policy not between generations alive at different times a pareto improving tax can be implemented under various political economy settings

dimensions of sustainability geographical temporal institutional and psychological well being depends on produced goods natural amenities and preferences each can be influenced through policies and education production of goods exhibits a hierarchical structure similar to ecosystems subsystems adapt while sustaining system productivity that is higher levels have greater resilience in agriculture the farm has little adaptability the region can shift production among locations and a nation can shift among regions forests exhibit an intertemporal geographical hierarchy in which harvests are replaced by growth elsewhere and later regrowth this structure is useful in responding to change and uncertainty preferences too can and must be informed through education

reducing conflicts between climate policy and energy policy in the us the important role of the states the absence of us national action on global climate change policy has prompted initiatives by the us congress cities states and regions toward what is likely to become a long term collaborative effort to harmonize national energy and climate policies this upward evolution in the face of a reluctant administration is historically consistent with the development of national legislation on other environmental and social issues in the us at the heart of this movement is the need to resolve conflicts between high intensity use of low cost fossil energy supplies and the dominating impact of carbon dioxide emissions on global climate change us states are among the largest carbon dioxide emitters in the world and play a critical role in supplying and transforming energy as well as consuming it for economic advantage state governments are also likely to have to shoulder some of the cost of potentially extensive climate damages and bear the brunt of the cost of implementing future federal mandates as a result many are taking proactive stances on the development of climate mitigation policy to prepare for accelerate and or guide national policy as us states show leadership on addressing greenhouse gas emissions they also play an important role in forging policies and measures that reduce economic conflict between energy and climate goals a number have launched or completed greenhouse gas mitigation plans and other major policies in the past few years that address these conflicts through 1 finding ways to reduce mitigation costs including the use of incentive based policy instruments 2 promoting an open and democratic policy process that includes major stakeholders 3 promoting equity across socioeconomic groups regions and generations and 4 promoting interregional cooperation the results are promising and suggest that the state arena for climate and energy policy is evolving quickly and constructively toward alternatives that reduce conflict regional efforts are also unfolding along with greater congressional attention to the lessons learned and commitments made by sub federal actions in the next few years many national energy and climate conflicts are likely to be tested and addressed by states among these pennsylvania is likely to be an important player due to its high profile of energy production and potential for leadership

do performance measures of donors aid allocation underperform indices of donor performance abound their recent popularity has occurred within the context of pessimism over aid s impact and optimism over the effect of changes in donor behaviour rankings of donor allocative performance aim to change donor behaviour either through direct pressure on governments or indirectly through public engagement the indices themselves rely on descriptive measures and typically claim methodological superiority over positive alternatives due to their simplicity however there are two problems first measures do not seem robust to simple variations in methodology second correlation amongst competing indices is low leading to a host of contradictory judgements this offers neither clear technical guidance nor consistent political pressure the advantages and disadvantages of the approach are discussed building upon the more general critique of aggregate indices i suggest a graphical solution that embraces the advantages of the descriptive approach including ease of public communication while avoiding some of its major weaknesses which typically stem from aggregation

avoiding academic and decorative planning in ghg emissions abatement studies with mcda the peruvian case abstract climate change issues have been considered some of the most complex and messy situations which the decision sciences face in the last decade many countries have carried out studies related to climate change mitigation the relevance of the outcomes of such studies depends on how well technical analysis the priorities of the decision makers and technical political feasibility are integrated this paper focuses on a framework suggested by the united nations environmental programme unep to study the costs and impacts of national policies for abating greenhouse gases ghg emissions it illustrates how the quest for the inclusion of mcda assessment in national greenhouse abatement costing studies can without departing from the established analysis framework be a pretext to provide a process which enhances stakeholder participation validation and ownership of the planning process such a process was used in a national study in peru

intergenerational competitive equilibria under technological uncertainty and an exhaustible resource constraint abstract this paper presents a model of competitive intertemporal equilibrium in a finite horizon overlapping generations economy facing technological uncertainty and an exhaustible resource constraint individuals form rational expectations regarding future prices and economic conditions and income is redistributed from one generation to the next through government mandated lump sum transfers under uncertainty the relationship between resource price appreciation and the interest rate is mediated by consumers risk aversion with respect to consumption in alternative states of nature the intuitively appealing proposition that the expected resource price rises at the expected rate of interest holds only as a special case if future generations are taken to be state contingent in the sense that their composition depends on the states of nature prevailing when they are born then equilibria are generally pareto efficient but if future generations are state independent so that the set of individuals born at a given date is independent of the prevailing state of nature then equilibria may be inefficient because markets do not exist where successive generations may equilibrate their marginal rates of substitution across consumption in alternative contingent states such inefficiencies may be remedied through the implementation of appropriate intergenerational transfers an optimal intergenerational welfare distribution may be supported as a competitive equilibrium if the income transfer regime is properly selected and enforced the social optima that result for a simple version of the model under the maximin welfare criterion indicate that greater sacrifices are required on the part of the present generation when future generations are taken to be state contingent than when they are regarded as state independent this finding provides a possible explanation for the extreme risk aversion of conservationists with respect to the welfare of future generations

the human development index a critical review since 1990 the united nations development programme undp has published a series of annual human development reports hdrs in which the human development index hdi is computed for each country this index has become an important alternative to the traditional unidimensional measure of development i e the gross domestic product although the index still fails to include any ecological considerations it has broadened the discussion surrounding the evaluation of development unfortunately over the years the hdrs seem to have become stagnant repeating the same rhetoric without necessarily increasing the hdi s utility this paper evaluates how well these reports have lived up to their own conceptual mandate and assesses the ability of the hdi to further the development debate we find that the reports have lost touch with their original vision and the index fails to capture the essence of the world it seeks to portray in addition the index focuses almost exclusively on national performance and ranking but does not pay much attention to development from a global perspective we propose the incorporation of three simple modifications for the index as a first step to overcome these shortcomings 1998 elsevier science b v all rights reserved

international equity and differentiation in global warming policy ne of the major obstacles to reaching a comprehensive agreement on global warming is the setting of greenhouse gas emission reduction targets for individual countries long standing tensions between industrialized and developing countries have raised the issue of equity in burden sharing moreover individual industrialized nations have pleaded special circumstances and have sought differentiation in their obligations this paper analyzes alternative rules for distributing tradable carbon dioxide emissions permits a non linear programming model which distinguishes between allocation based and outcome based rules is used to analyze the relative welfare outcomes the model is applied to the world body of nations and yields several important policy implications

comparable assessment of national ghg abatement costs this paper discusses the unep greenhouse gas abatement costing project with particular emphasis on the national assessments of co2 abatement cost for developing countries a methodological framework was developed and country studies were conducted for 10 countries national marginal abatement cost curves for the short term 25 reduction from baseline by 2005 to 2010 and long term 50 reduction from baseline by 2020 to 2030 targets are presented and discussed the cost curves for the selected countries exhibit a number of similarities the paper examines critically how the main scenario assumptions about energy gdp intensity and energy efficiency improvement influence the assessed abatement potential and costs the treatment of no regrets options in the baseline and abatement cases is discussed in relation to a developing country planning context the issue of comparability between assessments from different countries is addressed even with uniform assumptions discount rates oil prices etc for the group of countries as a whole comparability within the unep project is shown to be a complex concept which involves national differences in the projection of economic and energy system development and the use of different modelling approaches

greenhouse gas emissions trading among pacific rim countries an analysis of policies to bring developing countries to the bargaining table this paper examines the aggregate net costs and individual country cost savings of greenhouse gas emissions trading among pacific rim countries we propose emission permit allocation rules designed to entice developing countries to participate absence of developing country involvement has served as an excuse for the lack by participation by the united states in the first compliance period of the kyoto protocol and may serve as a disincentive to even more countries in subsequent periods our analysis specifies permit allocation rules that could result in no net costs and even cost savings to developing countries for their involvement in the emissions trading market while at the same time providing extensive benefits to industrialized countries through access to lower cost mitigation alternatives

entitlements missing markets and environmental uncertainty reply abstract at one level dore and ward seem intent on immunizing received doctrine they say that i did not prove that rights violated nozick s principles of justice and that i did not prove that missing markets were the problem more telling they allege i did not prove that my story was better than the particular story favored by dore and ward that is they argue that there is an alternative approach based on the theory of public economics which is indeed operational 3 they then use the bulk of their comment to explain and defend this alternative model they hope to convince the reader that the model of public economics survives intact in the face of my alternative model to the extent that their model allows one to define the problem away it is not difficult to see why they find it so compelling more seriously dore and ward fail to make a coherent argument about the concept of rights and duties and the logic of a particular rights structure that happens to prevail they seem concerned that my article was tampering with some sacred social construct the status quo rights structure and that my article threatened the received wisdom of both public economics and paretian walrasian bliss indeed theirs seems to be a genuine fear that if economists release their grip on the certitude of received orthodoxy the floodgates will be open to all manner of bumbling regulators seeking to shift rights and wealth positions across generations my article is apparently threatening because it seems to suggest that the received wisdom may at times be misleading

the tradable permits approach to protecting the commons lessons for climate change tradable permit approaches for rationing access to the commons have been applied to many different types of resources in many different countries this essay reviews the experience with three main applications of tradable permit systems air pollution control water supply and fisheries management as well as some unique related programmes the purpose of the review is to draw together what we have learned about tradable permits in practice that might offer some useful insights for the implementation of the three tradable permit mechanisms that are part of the kyoto protocol copyright 2003 oxford university press

review of taiwan s climate policy after copenhagen abstract the copenhagen accord in 2009 initiated new opportunities for international cooperation in reducing greenhouse gas ghg emissions the purpose of this study was to review taiwan s current climate policy and in response to the copenhagen accord to deliberate this policy in the light of new strategic thinking the study proposes a two stage approach with a dividing line in 2020 in the first stage from now until 2020 strategy should be based on cost constraints with a suggested reduction cost below 60 t co 2 and implementation of domestic ghg emissions trading scheme and reduction strategies in the second stage from 2020 and beyond action by taiwan should accord with international cooperative actions to link its domestic emissions trading scheme with the international carbon market

analysis on energy intensive industries under taiwan s climate change policy abstract this study addresses the planning and implementation of energy industry and carbon economy policies concerning the development of the taiwan s energy intensive industries from perspective of climate change as a newly industrialized country taiwan attaches greater importance to the development of green energy and low carbon industries in cooperation with global pressure for carbon reduction due to climate changes through energy and industrial conferences thus in the past year the taiwanese government constructed four laws concerning energy and carbon reduction in order to drive the green energy industry furthermore it plans to reduce current carbon emission benchmarks nevertheless statistical analysis found that in the last decade energy intensive industries have presented structural unbalance regarding energy consumption co 2 emissions energy intensity contributions to the gdp and product value industries in the industrial sector have high energy consumption high carbon emissions and increase total domestic consumption and carbon emissions which have disproportionate contributions to industrial added value nevertheless the government continues to approve investments for such energy intensive industries and results in continuous increases in energy consumption and carbon emissions this contradictory phenomenon indicates that newly industrialized countries rely on a manufacturing economic structure which is difficult to adjust and violates the trends of a global low carbon economy hence the government must examine and adjust such unbalanced industrial structures where such adjustments are executed in a fair and just manner and encourage the development of high value added measures for low carbon manufacturing and service sectors to become equal with competitors in a global economy

the tyranny of international index rankings abstract international index rankings are popular but perhaps too persuasive they emphasize country differences where similarity is the dominant feature rankings based on doing business the human development index and freedom house can be misleading not because of wrong indicators but because the estimation of the scores ignores inherent uncertainty re estimated with a method that captures this uncertainty it becomes clear that ranking every adjacent country is a rather courageous activity

multicriteria methods for resource planning an experimental comparison multicriteria decision making mcdm methods are widely used for comparing alternatives when there are multiple objectives for instance utilities use them for resource bidding externality quantification facility siting and resource planning there are many alternative methods differing in their ease of use validity results and appropriateness to resource planning several mcdm methods are compared in an experiment involving the choice of resource portfolio for seattle city light planners and interest group representatives applied direct weight assessment tradeoff weight assessment additive value functions and goal programming most of the participants concluded that mcdm methods could promote insight and confidence in decision making however the authors also confirmed the existence of method biases previously identified by psychologists no single method emerged as best thus application of two or more methods as consistency checks is recommended to guard against bias and to stimulate insight

intergenerational altruism and the environment we construct an overlapping generations model of pollution externality in which individuals are altruistically linked to their offspring as in barro 1974 it is shown that steady state consumption may be a decreasing function of the intergenerational degree of altruism despite individuals altruism the competitive equilibrium is not optimal we thus study the social optimum and show that it can be decentralized

conservationist government policies and intergenerational equity in an overlapping generations model with renewable resources abstract this paper shows that in overlapping generations models incorporating renewable natural resources competition may lead to perpetually declining living standards in environments in which it is technically feasible to achieve intergenerationally equitable distributions of consumption first and second best conservationist government policies are examined these include forced nationalization of the entire stock of natural capital government open market purchases and sales of natural capital taxation of industrial use of resources and subsidies to private investments in natural capital

an overlapping generations model of growth and the environment this article analyzes the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model short lived individuals make decisions which have long lasting effects on both factor productivity and the environment the model provides a theoretical explanation of observed correlations between environmental quality and income whereby economic growth is associated first with declines then improvements in environmental quality it suggests circumstances in which multiple pareto ranked steady state equilibria may arise and in which sustained growth of both capital and environmental quality may occur overmaintenance of the environment analogous to dynamically inefficient overaccumulation of capital may emerge copyright 1994 by royal economic society

intergenerational resource rights efficiency and social optimality the discipline of economics is generally defined as the science of the allocation of scarce resources between competing social objectives given an initial distribution of resources between economic agents how would they behave so as to improve their welfare according to the pareto criterion the agents would exchange commodities until the opportunities for fruitful exchange were fully exhausted and no agent could be made better off without rendering at least one other agent worse off pareto efficiency is a powerful concept in microeconomic analysis provided that the initial distribution of property rights is equitable allocative efficiency gives rise to the best of all possible worlds acknowledging that the assumptions of perfect competition are often violated firms are monopolistic information is incomplete and externalities exist economists have argued for the modification of institutions so that economic reality will conform more closely to the assumptions of the model that yields such gratifying results but microeconomic theory has always maintained that allocative efficiency is in itself insufficient to maximize social welfare bator 1957 a social welfare function is required to discriminate a social optimum among the array of efficient allocations that correspond to alternative assignments of property rights though economists have posited alternative functional forms for the sake of pursuing conceptual arguments welfare functions have remained elusive constructs for well known theoretical and practical reasons consequently a sharp line of demarcation has been drawn between questions of efficiency the province of economics and equity the principal focus of ethical and political discourse in resource economics however the line demarcating efficiency and equity is often crossed the term optimal depletion appears regularly where only efficient depletion is meant while political debates about resource exploitation over time are laden with questions of the proper distribution of our natural patrimony between generations resource economists have predominantly espoused particular use rules that guarantee efficiency but overlook potential improvements in social welfare achievable through the reassignment of property rights across generations we document the evolution and current status of the misuse of the term optimal depletion in section ii we develop a simple two generation three period general equilibrium model in section iii to illustrate how alternative distributions of resource rights between generations relate to alternative pareto efficient solutions in section iv we demonstrate how different social welfare functions affect the optimal solution and associated assignment of resource rights between generations

measuring energy poverty focusing on what matters abstract the provision of modern energy services is recognised as a critical foundation for sustainable development and is central to the everyday lives of people effective policies to dramatically expand modern energy access need to be grounded in a robust information base metrics that can be used for comparative purposes and to track progress towards targets therefore represent an essential support tool this paper reviews the relevant literature and discusses the adequacy and applicability of existing instruments to measure energy poverty drawing on those insights it proposes a new composite index to measure energy poverty both the associated methodology and initial results for several african countries are discussed whereas most existing indicators and composite indices focus on assessing the access to energy or the degree of development related to energy our new index the multidimensional energy poverty index mepi focuses on the deprivation of access to modern energy services it captures both the incidence and intensity of energy poverty and provides a new tool to support policy making

sustainable forestry timber bequests future generations and optimal tax policy this paper analyzes harvesting and timber bequest behavior in a two period overlapping generations model where the government uses site productivity yield and inheritance taxation the ceteris paribus effects of forest and inheritance taxes are derived first then the paper discusses the optimal design of forest and inheritance taxes by assuming that intergenerational externalities are either absent or operative in the absence of intergenerational externalities it is optimal to use only the site productivity tax and not to introduce yield and inheritance taxes at all in the presence of intergenerational externalities the situation changes the paper demonstrates that the externality can be internalized by introducing either a yield tax or an inheritance subsidy or both if the government is able to use both at the same time it is desirable to use the yield tax to punish excessive harvesting and an inheritance subsidy to bribe to give bequests