frontiers of climate change economics the economics of climate change is an active field of research the contributions to a special issue are put in context of the literature and it is suggested that second best issues such as carbon leakage and the green paradox need to be complemented with a political economy analysis of why certain instruments are politically infeasible and with intra and intergenerational analyses of the impact of climate policy a case is also made for more empirical work on the gradual and catastrophic damages of global warming

an innovation focused roadmap for a sustainable global photovoltaic industry the solar photovoltaic pv industry has undergone a dramatic evolution over the past decade growing at an average rate of 48 percent per year to a global market size of 31 gw in 2012 and with the price of crystalline silicon pv module as low as 0 72 w in september 2013 to examine this evolution we built a comprehensive dataset from 2000 to 2012 for the pv industries in the united states china japan and germany which we used to develop a model to explain the dynamics among innovation manufacturing and market a two factor learning curve model is constructed to make explicit the effect of innovation from economies of scale the past explosive growth has resulted in an oversupply problem which is undermining the effectiveness of demand pull policies that could otherwise spur innovation to strengthen the industry we find that a policy shift is needed to balance the excitement and focus on market forces with a larger commitment to research and development funding we use this work to form a set of recommendations and a roadmap that will enable a next wave of innovation and thus sustainable growth of the pv industry into a mainstay of the global energy economy

using contests to allocate pollution rights in this paper we advocate a new initial allocation mechanism for a tradable pollution permit market we outline a permit allocation contest pac that distributes permits to firms based on their rank relative to other firms this ranking is achieved by ordering firms based on an observable external action where the external action is an activity or characteristic of the firm that is independent of their choice of emissions in the tradable permit market we argue that this mechanism has a number of benefits over auctioning and grandfathering using this mechanism efficiently distributes permits allows for the attainment of a secondary policy objective and has the potential to be more politically appealing than existing alternatives

the social cost of carbon emissions seven propositions determining the social cost of carbon emissions scc is a crucial step in the economic analysis of climate change policy as the us government s recent decision to use a range of estimates of the scc centered at 77 tc or equivalently 21 tco2 in cost benefit analyses of proposed emission control legislation underlines this note reviews the welfare economics theory fundamental to the estimation of the scc in both static and intertemporal contexts examining the effects of assumptions about the typical agent s pure rate of time preference and elasticity of marginal felicity of consumption production and mitigation technology and the magnitude of climate change damage on estimates of the scc we high light three key conclusions i an estimate of the scc is conditional on a specific policy scenario the details of which must be made explicit for the estimate to be meaningful ii the social discount rate relevant to intertemporal allocation decisions also depends on the policy scenario and iii the scc is uniquely defined only for policy scenarios that lead to an efficient growth path because marginal costs and benefits of emission mitigation diverge on inefficient growth paths we illustrate these analytical conclusions with simulations of a growth model calibrated to the world economy authors abstract

energy balance climate models and general equilibrium optimal mitigation policies in a general equilibrium model of the world economy we develop a two dimensional energy balance climate model featuring heat diffusion and anthropogenic forcing driven by global fossil fuel use across the sphere of the earth this introduces an endogenous location dependent temperature function driving spatial characteristics in terms of location dependent damages resulting from local temperature anomalies into the standard climate economy framework we solve the social planner s problem and characterize the competitive equilibrium for two polar cases differentiated by the degree of market integration we define optimal taxes on fossil fuel use and how they may implement the planning solution our results suggest that if the implementation of international transfers across latitudes is not possible then optimal taxes are in general spatially non homogeneous and may be lower at poorer latitudes the degree of spatial differentiation of optimal taxes depends on heat transportation by employing the properties of the spatial model we show by numerical simulations how the impact of thermal transport across latitudes on welfare can be studied

coordinating climate and trade policies pareto efficiency and the role of border tax adjustments abstract this paper explores the role of trade instruments in globally efficient climate policies focusing on whether or not some form of border tax adjustment bta is warranted when carbon prices differ internationally the analysis shows that while there is no case for bta when all instruments can be freely deployed pareto efficiency does require a form of bta when carbon taxes in some countries are constrained its purpose then is to partly counteract the impact on emissions of inappropriate carbon pricing there or equivalently to undo the trade distortions such pricing creates the required form of bta is generally complex but a special case is identified in which it optimally has the simple structure envisaged in practical policy discussions it is also shown that the efficiency case for bta depends critically on whether climate policies are pursued by carbon taxation or by cap and trade

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

a sectoral approach balancing global efficiency and equity this paper explores the idea that a properly designed sectoral approach could be the answer to two sets of constraints that hinder international agreements on climate change namely a genuine concern from developing countries for economic growth and competitiveness issues from industrialized countries our sectoral approach builds on three premises i cap and trade systems are established in industrialized countries and intensity targets in developing countries ii sectors subject to international trade abide by the rules of the countries in which they trade and iii a fraction of the revenues from permits in industrialized countries go towards carbon mitigation in developing countries we design an economic model that features interactions in three carbon intensive sectors two of which are internationally traded and two countries an industrialized country and a developing country two scenarios are constructed an enhanced sectoral approach which refers to our proposal and a global cap which implements a uniform co2 price we compare the two scenarios in terms of total welfare and equity it is shown that for a minor global welfare loss the enhanced sectoral approach ranks high in terms of equity for emerging countries this approach also eliminates competitiveness and leakage issues

who should abate carbon emissions an international viewpoint abstract we review the optimal pattern of carbon emission abatements across countries in a simple multi country world we model explicitly with the model in chichilnisky 1993b the fact that the atmosphere is a public good within this framework we establish conditions for it to be necessary for optimality that the marginal cost of abatement be the same in all countries these conditions are quite restrictive and amount to either ignoring distributional issues between countries or operating within a framework within which lump sum transfers can be made between countries these results have implications for the use of tradeable emission permits which as normally advocated will lead to the equalization of marginal abatement costs across countries the observation that the atmosphere is a public good implies that we may need to look at a lindahl equilibrium rather than a walrasian equilibrium in tradeable permits

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

justifying the lindahl solution as an outcome of fair cooperation the motivation for the lindahl equilibrium is mostly a rather artificial price mechanism even though the analogy to a competitive market was emphasised by lindahl himself his approach does not directly explain the normative ideas behind his concept in the present paper we therefore show how the lindahl equilibrium can be deduced from some simple equity axioms these normative assumptions are the benefit principle on the one hand and the equal sacrifice principle or equivalently a non envy condition as a postulate for distributional equity on the other fairness among agents with different preferences and incomes is taken into account by considering their marginal willingness to pay as shadow prices in this way the reason why the lindahl solution can be perceived as an outcome of fair cooperation might become more understandable

international emissions trading with endogenous allowance choices abstract this paper compares endogenous choices of tradable and non tradable emission allowances by non cooperative countries i find that the cost savings of trading do not necessarily lead to less pollution in particular environmentally more concerned countries usually choose less allowances if these are tradable but this may be offset by the choice of more allowances on the side of environmentally less concerned countries moreover if the establishment of a trading system requires the unanimous approval of all countries there may be no agreement on trading even if it were to lead to less pollution overall conversely a trading system may find unanimous approval even if it induces more pollution

global environmental risks the need to manage climate risks is not a new it has shaped social institutions for many centuries in medieval england a peasant farmer s land was broken into many widely dispersed parcels economic historians interpret this as a way of hedging climate risk see references in bromley 9 land in different locations would be affected differently by droughts floods and frosts by spreading land holdings over different locations as well as by organizing agricultural cooperatives and buying insurance farmers have managed climate risk for many centuries

the impact of government incentive on the two competing supply chains under the perspective of corporation social responsibility a case study of photovoltaic industry abstract strategy corporation social responsibility csr has received a lot of attention lately and is mainly related to environmental protection in a single supply chain under the condition of the constant tax or subsidy imposed by government this paper studies a price competition model of two environmentally friendly and harmful competing supply chains consisting of one manufacturer and one retailer respectively adopting two stage stackelberg game under the condition of incomplete knowledge assume that the manufacturers don t know the retailers knowledge but they are aware of the prior probability of retailers about selling which type of product under the decentralized supply chain and the higher the prior probability is the more likely manufacturers tend to produce the environmentally friendly pv panels this paper first quantifies the impact of products on the environment studies the impact of which on competing supply chains profit and the tariffs this paper finds that only the tariffs set by government and the values of the environmental impact satisfy a three dimensional area can the firms ensure the stable competitive market results of this analysis show that government cannot impose extreme tax or subsidy on firms and the environmental impact in the centralized supply chains is higher than that in the decentralized supply chains this paper validates the results through a case of photovoltaic pv industry from the perspective of csr and the numerical results show that there are significant impacts of different governmental policy of social responsibility and environment protection on the financial revenue and the profits of the competing supply chains and their members

productive efficiency in the middle east and north africa productive efficiency and factors affecting it in 11 countries in the middle east and north africa region were evaluated over the period 1980 to 1999 using fare s nonparametric approach the results indicate that oil producing countries are more efficient in terms of production compared with non oil producing countries tobit analyses indicate that previous levels of efficiency the degree of economic openness consumption of domestically produced goods and the limited availability of credit have a positive impact on production efficiency a sensitivity analysis using the bias corrected bootstrap technique shows that allocative efficiency and economic efficiency are more sensitive to the returns to scale assumption and sample size than pure technical efficiency

multiple competing photovoltaic supply chains modeling analyses and policies abstract many large scale photovoltaic pv energy programs have been launched and developed in the world without a thorough sustainable thinking resulting in an on going misalignment between the demand and supply of the pv systems the global pv industry has encountered a serious oversupply problem causing fierce competitions among the pv supply chains and also led to the dumping accusation and anti dumping trade battles between the pv system importing and exporting countries it is critical to develop better policy and business insights to redirect the current business exchanges and the industry policies for the pv supply chain development this paper attempts to examine theoretically and numerically the business dynamics in a multiple pv supply chain system to acquire better insights and propose appropriate industry policy and business strategy directions for both the governments and businesses this study mimics the contemporary pv supply chains with three supply chain game theoretical models examining the equilibrium conditions of the multiple pv supply chains under cournot competition the numerical and sensitivity analyses of the theoretical supply chain models create several valuable findings on the dynamics regarding the economic decisions of the supply chain members in a pure centralized a pure decentralized and a hybrid multiple supply chain system the quantitative analytical results provide a strong support to the contemporary supply chain theory advocating the world of the business competition has altered to supply chains rather than companies several public and business policy directions are proposed it is suggested that the pv supply chain members should find effective means to form partnership and build up their supply chains which would most likely strengthen their competitiveness in their current markets for governments there are opportunities on both the supply side and the demand side of the pv supply chains to regulate or encourage the pv industry to move toward a healthier industrial structure

the development of china s solar photovoltaic industry why industrial policy failed this article studies china s central local government relations in the formation and implementation of an industry policy in china the central government is responsible for policy formation and the local governments are responsible for policy implementation where local governments are allowed ample flexibility in the ways to achieve the policy mandate this arrangement is conducive to local competition but there is no built in mechanism in the system to regulate such competition the system is defective in the execution of an industrial policy in that it fails to discipline the recipients of policy favours and to make efficient exit selections because local competition involves policy resources as well as economic resources the outcome of competition is not necessarily consistent with the comparative advantage of the region the more that policy is emphasised in industrial development the more that competition tends to favour large and rich cities after a certain period of hands off local competition the timing of which is unpredictable but will come when the industry runs into troubles the central government holds the ultimate power to determine the winners the central government typically picks the large and strong firms as the winners which are crowned as a national team and became eligible for further policy support this institutional set up produces a rapidly growing industry which often results in over capacity but not necessarily a competitive industry i use the case of china s solar photovoltaic industry to illustrate these points

optimal dynamic carbon taxes in a climate economy model with distortionary fiscal policy how should carbon be taxed as a part of fiscal policy the literature on optimal carbon pricing often abstracts from other taxes however when governments raise revenues with distortionary taxes carbon levies have fiscal impacts while they raise revenues directly they may shrink the bases of other taxes e g by decreasing employment this article theoretically characterizes and then quantifies optimal carbon taxes in a dynamic general equilibrium climate economy model with distortionary fiscal policy first this article establishes a novel theoretical relationship between the optimal taxation of carbon and of capital income this link arises because carbon emissions destroy natural capital they accumulate in the atmosphere and decrease future output consequently this article shows how the standard logic against capital income taxes extends to distortions on environmental capital investments second this article characterizes optimal climate policy in sub optimal fiscal settings where income taxes are constrained to remain at their observed levels third this article presents a detailed calibration that builds on the seminal dice approach but adds features essential for a setting with distortionary taxes such as a differentiation between climate change production impacts e g on agriculture and direct utility impacts e g on biodiversity existence value the central quantitative finding is that optimal carbon tax schedules are 8 24 lower when there are distortionary taxes compared to the setting with lump sum taxes considered in the literature

customer economics of residential photovoltaic systems sensitivities to changes in wholesale market design and rate structures abstract the customer economics of u s residential photovoltaics pv often depend on retail electricity rates because most utilities compensate customer sited pv generation via net metering the future bill savings from net metering are uncertain and dependent on retail rate structures wholesale market design and renewable penetration levels among other factors we explore the impact of the following assumptions on the bill savings from residential pv a wholesale electricity market design with a price cap as opposed to an energy only market a retail rate with a fixed customer charge as opposed to a fully volumetric rate and increasing block pricing as opposed to a non varying flat rate a wholesale price cap can dampen the expected bill savings erosion due to moving from a low to a high renewables scenario for customers with time varying rates and net metering moving from a fully volumetric rate to a two part tariff rate with a fixed customer charge could severely erode the bill savings under net metering because pv generation could only displace the reduced volumetric portion of the rate finally increasing block pricing might have an even greater impact on the bill savings from behind the meter pv than the other uncertainties explored in this paper

correcting the climate externality pareto improvements across generations and regions many argue that the present generation must reduce consumption to mitigate future climate change however as significant climate change is due to market failure the correction of market failures by definition gives rise to the possibility of pareto improvements in this paper we examine the implications of pareto improvements both within and across generations we employ the representative consumer model rice 10 a global model including different regions to see how we could potentially distribute any benefits across and within generations such that nobody loses the model shows that different combinations of present and future consumption along the pareto improving frontier yield different combinations of capital investment and emissions we also calculate a conventional social optimum while the social optimum by definition is on the pareto efficiency frontier it is not necessarily on the pareto improving segment of this frontier total emissions and hence temperature change vary significantly across different pareto improving scenarios it obviously matters which generations get the utility gain and one of our results is that for pareto improvements where none of the gain goes to the distant future and allowing transfers total emissions will be higher than in the social optimum even without any welfare gain to the distant future total emissions may be lower in the pareto improving scenarios we have considered than under the social optimum if transfers are not permitted moreover in this case carbon taxes differ substantially across regions for all pareto improvements

productive efficiency and growth policies for the caribbean productive economic efficiency and factors affecting it was evaluated in the caribbean between 1983 to 1992 results from non parametric programming indicated that efficiency i e pure technical allocative and economic measures were lower and more variable in caribbean than in other western hemisphere countries i e north america and latin america tobit regression analysis indicated higher levels of private and foreign investments productive infrastructure credit availability education level and consumption of domestically produced goods had positive impacts on the efficiency measures on the other hand higher levels of public expenditure income tax and export taxes and higher inflation rates had negative effects these results support the current trend towards advocating more open economies i e letting the free market work and encouraging governments to confine their functions to facilitative regulatory type roles and to undertaking tasks that are not generally undertaken by the privat

does distribution matter efficiency equity and flexibility in greenhouse gas abatement this paper analyses banking and borrowing ofcarbon emission rights within the framework ofa simple integrated assessment model breaking the world economy in just two regionsit will be shown 1 increasing intertemporal flexibility in greenhouse gasabatement through banking and borrowing ofcarbon emission permits has a positive effecton welfare for regions with a poor endowment incarbon emission rights but negatively affectsrich endowed regions 2 intergenerationalfairness advocates intertemporal flexibility ingreenhouse gas abatement irrespectively of theinitial allocation of carbon rights 3 optimal carbon accumulation is not independentof the initial allocation of carbon rights different initial sharing rules clearlyinfluence the development of atmospheric carbonconcentration

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

economic analysis of photovoltaic systems for the residential market under china s new regulation abstract china has recently changed its regulation for producing energy from photovoltaic solar panels in order to encourage the use of the solar resource this new regulation started with offering subsidies at a national level and this was later followed by local subsidies in addition to the national one being a large country china has regions with good solar exposure and others with poor exposure each region has a different electricity price and the energy is purchased based on the grid coal power electricity price that also varies throughout the country in this work we analyze the economic profitability of different regions considering the solar radiation levels savings in self consumption cash flows from injecting power into the grid and local prices for installations to show that the best return is obtained in the places with better solar radiation or where the electricity price is higher the regional feed in tariffs help to compensate for lower radiation levels but do not make these regions very attractive from an investment perspective

on the efficiency of a global market for carbon dioxide emission permits type of externality and timing of policymaking we demonstrate that global permit markets are pareto efficient despite the externality type production or consumption when income redistribution occurs after regional environmental policymaking ex ante income redistribution is neutral if emissions affect production only but non neutral if emissions affect consumption 2008 elsevier b v all rights reserved