wheat from chaff meta analysis as quantitative literature review abstract this paper presents and develops a quantitative method of literature reviewing and evaluating empirical research meta regression analysis or mra economics is theory driven yet we must learn empirically if economics is to advance mra offers a more objective statistical method to summarize our empirical knowledge and to explain the wide study to study variation in economic research mra is used to assess the evidence for ricardian equivalence and its findings are contrasted to those of conventional narrative review furthermore mra establishes a platform from which to distinguish genuine empirical effect from the exploitable specification error that infests applied econometrics

low natural gas prices and the financial cost of ramp rate restrictions at hydroelectric dams abstract peaking hydroelectric dams that employ variable stop start reservoir releases can have adverse impacts on downstream river ecosystems efforts to mitigate these impacts have relied predominantly on the use of ramp rate restrictions which limit the magnitude of hour to hour changes in reservoir discharge ramp rate restrictions shift hydropower production towards less valuable off peak hours imposing a financial penalty on dam owners that is a function of the spread difference between peak and off peak electricity prices this study examines how low natural gas prices in the u s have reduced the cost of implementing ramp rate restrictions at dams by narrowing the peak off peak price spread significantly lower costs of ramp rate restrictions could open new opportunities for improving environmental flows at dams including the purchase of more natural streamflow patterns by downstream stakeholders a type of arrangement for which there is growing precedent we also explore the role that uncertainty in the cost of ramp rate restrictions could play in precluding downstream stakeholders from forming these types of agreements with dam owners results suggest that financial collar contracts could mostly eliminate inter annual variability in the net cost of restrictions and provide those purchasing more natural flows with greater certainty

environmental pricing of externalities from different sources of electricity generation in chile abstract the rapid increase in electricity demand in chile means a choice must be made between major investments in renewable or non renewable sources for additional production current projects to develop large dams for hydropower in chilean patagonia impose an environmental price by damaging the natural environment on the other hand the increased use of fossil fuels entails an environmental price in terms of air pollution and greenhouse gas emissions contributing to climate change this paper studies the debate on future electricity supply in chile by investigating the preferences of households for a variety of different sources of electricity generation such as fossil fuels large hydropower in chilean patagonia and other renewable energy sources using double bounded dichotomous choice contingent valuation a novel advanced disclosure method and internal consistency test are used to elicit the willingness to pay for less environmentally damaging sources policy results suggest a strong preference for renewable energy sources with higher environmental prices imposed by consumers on electricity generated from fossil fuels than from large dams in chilean patagonia policy results further suggest the possibility of introducing incentives for renewable energy developments that would be supported by consumers through green tariffs or environmental premiums methodological findings suggest that advanced disclosure learning overcomes the problem of internal inconsistency in sb db estimates

on the economics of ramping rate restrictions at hydro power plants balancing profitability and environmental costs this paper examines the impact of ramping rate restrictions imposed on hydro operations to protect aquatic ecosystems a dynamic optimization model of the profit maximizing decisions of a hydro operator is solved for various restrictions on water flow using data for a representative hydro operation in ontario profits are negatively affected but for a range of restrictions the impact is not large ramping restrictions cause a redistribution of hydro production over a given day which can result in an increase in total hydro power produced this affects the need for power from other sources with consequent environmental impacts

getting the safe minimum standard to work in the real world a case study in moral pragmatism abstract there is growing endorsement of local stake holder conventions to resolve unusual environmental disputes the conventions are separate decision making bodies designed to by pass conventional institutions the hazards of a stake holder convention which is overly detached from conventional decision making leads to a discourse that never successfully confronts the value controversies which the stake holder convention is charged to resolve a case study uncovers obvious and robust strategic manipulations of stake holder conventions that intrude on value dialogue an appeal to the safe minimum standard rules of ciriacy wantrup updated to engage this question successfully corrects some of the more egregious stumbling blocks to good faith dialogue in local discourse the proposed constraints on the stake holder convention can be quite directive authoritative and bureaucratic yet the constraints are necessary to preserve good faith conduct within the dialogue

should we be worried about the green paradox announcement effects of the acid rain program this paper presents the first empirical test of the green paradox hypothesis according to which well intended but imperfectly implemented environmental policies may lead to detrimental outcomes due to supply side responses we use the introduction of the acid rain program in the u s as a case study the theory predicts that owners of coal deposits expecting future sales to decline would supply more of their resource between the announcement of the acid rain program and its implementation moreover the incentive to increase supply would be stronger for owners of high sulfur coal this would all else equal induce an increase in sulfur dioxide emissions using data on prices heat input and sulfur content of coal delivered to u s power plants we find strong evidence of a price decrease and of an increase in the sulfur premium some indication that the amount of coal used might have increased and no evidence of fuel switching towards higher sulfur coal overall our evidence suggests that while the mechanism indicated by the theory might be at work market conditions and concurrent regulation largely prevented a green paradox from arising these results have implications for the design of climate policies

the role of spatial scale in the timing of uncertain environmental policy the spatial scale of an environmental problem is dictated by boundaries physical boundaries limit the extent of impacts while the scale of decision making creates perceived boundaries beyond which impacts are ignored by decision makers while it is well understood that uncertainty and irreversibility will alter policy decisions aimed at alleviating environmental impacts the effect of spatial scales both physical and perceived is less understood when spatial scale is included in a real options model of environmental policy adoption results indicate that the importance and influence of spatial considerations depends on the level of uncertainty stringency of the proposed policy and flexibility of the policy decision recognizing spatial scale may force policy adoption to take place within a window of current damage when spatial scale is small or uncertainty high this window for policy adoption can close precluding policy adoption entirely this undermines well known results demonstrating that changes in uncertainty will only alter the timing of policy adoption in other instances the policy adoption window remains open but the option value increases faster than the benefits of the policy creating a scenario where it is always preferable to delay here the inclusion of an option value can prevent adoption of policies that would be adopted according to traditional cost benefit analysis in general policy decisions will be most affected by spatial considerations when the spatial scale is small damage is spreading fast and the uncertainty in damage spread is high

designing payments for environmental services in theory and practice an overview of the issues abstract payments for environmental services pes have attracted increasing interest as a mechanism to translate external non market values of the environment into real financial incentives for local actors to provide environmental services es in this introductory paper we set the stage for the rest of this special issue of ecological economics by reviewing the main issues arising in pes design and implementation and discussing these in the light of environmental economics we start with a discussion of pes definition and scope we proceed to review some of the principal dimensions and design characteristics of pes programs and then analyze how pes compares to alternative policy instruments finally we examine in detail two important aspects of pes programs their effectiveness and their distributional implications pes is not a silver bullet that can be used to address any environmental problem but a tool tailored to address a specific set of problems those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers pes is based on the beneficiary pays rather than the polluter pays principle and as such is attractive in settings where es providers are poor marginalized landholders or powerful groups of actors an important distinction within pes is between user financed pes in which the buyers are the users of the es and government financed pes in which the buyers are others typically the government acting on behalf of es users in practice pes programs differ in the type and scale of es demand the payment source the type of activity paid for the performance measure used as well as the payment mode and amount the effectiveness and efficiency of pes depends crucially on program design

the supply of non renewable resources there exists no formal treatment of non renewable resource nrr supply systematically deriving quantity as function of price we establish instantaneous restricted fixed reserves and unrestricted nrr supply functions the supply of a nrr at any date and location not only depends on the local contemporary price of the resource but also on prices at all other dates and locations besides the usual law of supply which characterizes the own price effect cross price effects have their own law they can be decomposed into a substitution effect and a stock compensation effect we show that the substitution effect always dominates a price increase at some point in space and time causes nrr supply to decrease at all other points this new but orthodox supply setting extends to nrrs the partial equilibrium analysis of demand and supply policies thereby it provides a generalization of many results about policy induced changes on nrr markets the properties of restricted and unrestricted supply functions are characterized for hotelling homogeneous as well as ricardian non homogeneous reserves for a single deposit as well as for several deposits that endogenously come into production or cease to be active

consumers willingness to pay for green electricity a meta analysis of the literature at present electricity generated from power plants using renewable sources costs more than electricity generated from power plants using conventional fuels consumers bear these expenses directly or indirectly through higher prices for renewable energy or taxes the number of studies published over the last few years focusing on people s preferences for renewables has increased steadily making it more and more difficult to identify key explanatory factors that determine people s willingness to pay wtp for renewables we present results of a meta regression on valuation of consumer preferences for a larger share of renewable energy in their electricity mix our meta regression results reveal a number of important factors that explain the differences in wtp values for renewable energy different valuation methods show widely different values with choice experiments producing the highest estimates our results further indicate that consumers wtp for green electricity differs by source with hydropower being the least valued variables that are often omitted from primary valuation studies are important in explaining differences in values these variables describe individual and household characteristics as well as information on the type of power plant that will be replaced by renewables further the marginal effect of a survey conducted in the us is pronounced we also assess the potential for using the results for out of sample value transfer and find a median error of 21 c 2015 elsevier b v all rights reserved

natural resource economics under the rule of hotelling abstract natural resource stocks held in situ are physical assets equilibrium in the assets market requires that their rates of return be such that their owners are just willing to hold on to them rather than invest elsewhere i discuss a number of factors relating to the evolution of extraction costs to the durability of the resource to market structure and to uncertainty that are important in correctly characterizing the rate of return on holding exhaustible natural resource stocks the emphasis is put on how those factors can potentially help bridge the gap between the basic hotelling s rule of natural resource exploitation and the historical behaviour of the flow price of a number of resources i also highlight some theoretical and empirical issues that need further attention

extraction capacity and the optimal order of extraction the least cost first extraction rule for deposits with different extraction costs previously has been shown to be invalid in general equilibrium this paper demonstrates that this rule also does not hold in partial equilibrium when extraction capacity is limited necessary and sufficient conditions for several surprising extraction orders are presented if extraction from a high cost resource is constrained it may be optimal to begin extraction from a high cost deposit or backstop strictly before extracting from a lower cost deposit if extraction from a low cost resource is limited it may be optimal to exhaust a high cost deposit strictly before the low cost deposit is exhausted or to abandon extraction temporarily from a high cost deposit and then to exhaust it later the analysis demonstrates how extraction constraints affect the order of extraction and shows that certain cost reversals are caused by limited extraction capacity rather than by the general equilibrium definition of extraction costs

optimal provision of hydroelectric power under environmental and regulatory constraints hydroelectric power plants can quickly and inexpensively respond to changes in electricity demand however this operational flexibility can cause negative environmental im pacts and these environmental effects are miti gated through direct restrictions on hydropower operations rather than taxes or other market based mechanisms a dynamic model of hydro electric generation is used to derive hourly hydro electric generation and purchases of replacement power to meet contract demand in the presence of these operational restrictions the pattern of hydropower generation is shown to depend on differences between on peak and off peak spot electricity prices within the operational restric tions set by external regulatory mechanisms

decentralizing hydro power production we analyse the production of electricity from n power stations in a dynamic model each power station s production of electricity is constrained by the quantity of water available to it supply constraint as well as limitations on reservoir capacity storage constraint we show that hydro power production can lead to two sources of welfare loss suboptimal management of water resources and the exercise of market power a monopolist minimizes the first source of inefficiency whereas decentralized production in a competitive environment minimizes the second the decision to introduce competition in hydropower production must account for these two opposite effects jel classification l11 q48 decentralisation de la production d hydroelectricite nous analysons la production d hydroelectricite par n centrales dans un modele dynamique la production de chaque centrale est contrainte par la quantite d eau disponible contrainte d approvisionnement et la capacite du reservoir contrainte de stockage nous demontrons que la production hydroelectrique peut donner lieu a deux types d inefficacite la gestion sous optimale des ressources hydrauliques et l exercice de pouvoir de marche l entreprise monopolistique minimise la premiere inefficacite alors que la production decentralisee dans un marche concurrentiel minimise la deuxieme la decision d introduire la concurrence dans la production d hydroelectricite doit tenir compte de ces deux effets opposes

meta analytic benefit transfer of outdoor recreation economic values testing out of sample convergent validity a benefit transfer approach to recreationeconomic valuation using meta analysis isexamined since the meta regression modeltakes into account some of the study specificeffects on willingness to pay wtp estimates benefit transfer using meta analysis couldyield a valid wtp estimate of unstudiedrecreation resources the convergent validityof the meta analytic benefit transfer is testedusing out of sample original studies from theu s the analyses are performed usingpercentage difference paired t test regression and correlation tests the testsreveal mixed results on convergence betweenestimated wtp using meta analytic benefittransfer function btf and out of sampleoriginal wtp values there is a fairly highpercentage difference between the estimated andoriginal wtp values 80 88 and the meandifferences are statistically significant asshown by paired t tests however correlationand regression results consistently showsignificant positive relationships betweennational btf estimated and original wtp valuesindicating some level of convergence theresults show that the national btf outperformthe regional btf indicating a potential of thenational btf for recreation benefit transferwhen a first best primary valuation study isnot affordable

environmental and resource economics a canadian retrospective the paper reviews research contributions to environmental and resource economics by scholars in canada we focus mainly on work from the past 25 years but also highlight earlier pathbreaking work we begin by looking at broad trends in research both internationally and within canada we then review canadian contributions to various topics in the field canadians have played a leading role in the development of the field especially in resource economics international environmental economics and the valuation of environmental amenities

the alberta dilemma optimal sharing of a water resource by an agricultural and an oil sector we fully characterize the optimal time paths of production and water usage by an agricultural and an oil sector that share a limited water resource we show that for any given water stock if the oil stock is sufficiently large it will become optimal to have a phase during which the agricultural sector is inactive followed by a phase during which both sectors are active again the agricultural sector will always be active in the end as the oil stock is depleted if agriculture is not constrained by the given natural inflow of water then oil extraction will always end with a phase during which oil production follows a pure hotelling path otherwise oil production never follows a pure hotelling path because its full marginal cost must always reflect not only the imputed rent on the finite oil stock but also the positive opportunity cost of water usage the case of oil and agriculture sharing a water resource is but one example our analysis provides a framework to generalize the hotelling rule to other cases where the full marginal opportunity cost of extracting a nonrenewable resource depends on the endogenous activity of some other sector of the economy

an energy centric theory of agglomeration abstract this paper sets out a simple spatial model of energy exploitation to ask how the location and productivity of energy resources affects the distribution of economic activity across geographic space by combining elements from energy economics and economic geography we link the productivity of energy resources to the incentives for economic activity to agglomerate we find a novel scaling law links the productivity of energy resources to population sizes while rivers and roads effectively magnify productivity we show how our theory s predictions concerning a single core aggregate to predictions over regional landscapes and city size distributions at the country level

nature in economics nature has been ill served by 20th century economics when asked economists acknowledge nature s existence but most would appear to deny that she is worth much if ecologists worry about the contemporary nexus between population size and growth the standard of living and the natural environment we economists point to the accumulation of capital and technological progress and say malthus got it wrong in this paper i show by an appeal to theory that economics has been so badly misused that it has deflected attention from deep problems at the nexus that are faced both regionally and globally

ordering the extraction of polluting nonrenewable resources energy markets are often characterized by the use of multiple nonrenewable resources such as coal and natural gas with different pollution characteristics the same resource may have different qualities as when high and low sulfur coal is used to generate electricity multiple resources are used in providing transportation services such as cars running on gasoline or plug in hybrids that may be fueled by electricity produced from coal when these nonrenewable resources contribute differentially to pollution what is the opti mal sequence of extraction over time harold hotelling 1931 developed the classical theory of extraction of a nonrenewable resource orris c herfindahl 1967 extended the hotelling model by considering many resources with different unit costs of extraction and proposed the least cost first principle extraction must be ordered by cost with the cheapest resource used first others have examined whether herfindahl s model remains valid in a variety of situations in a general equilibrium setting see murray kemp and ngo v long 1980 tracy r lewis 1982 in the presence of setup costs g rard gaudet moreaux and stephen w salant 2001 under het erogeneous demands chakravorty and darrell l krulce 1994 and when the extraction rate is constrained jean pierre amigues et al 1998 stephen p holland 2003 in these studies following hotelling and herfindahl resources were differentiated by cost alone in this paper we abstract from cost considerations and focus on how the sequence of extraction may be affected when resources are differentiated only by their pollution character istics we consider two resources one more polluting than the other without loss of generality consider coal to be the dirty resource and natural gas the clean one both may be used to generate electricity environmental regulation is imposed through a cap on the stock of pollution this may be a stylized approximation of an international agreement such as the kyoto protocol which aims to stabilize the concentration of greenhouse gases in the atmosphere 1 with heterogeneity in pollution the results are nonintuitive and do not depend on the emis sion rates of the resources when the economy is already at its allowable stock of pollution the clean natural gas is used first and use of the dirty coal is postponed to the future this is what one would expect armed with insights from the herfindahl model however when the economy starts from below the ceiling and accumulates pollution coal may be used first and use of the clean natural gas is postponed the optimal strategy is to benefit from natural dilution by build ing the stock of pollution as quickly as possible this is done by burning coal rather than natural

the grey paradox how fossil fuel owners can benefit from carbon taxation abstract this paper considers the distributional impact of optimal carbon taxation on fossil fuel owners a carbon emitting exhaustible resource competes with a dirtier abundant resource and a clean backstop a time dependent carbon tax is set to optimally use these resources under a cap constraint over co 2 atmospheric concentration as the cap is tightened the dirtier resource becomes less competitive compared to the exhaustible resource the competition effect but the timing and duration of extraction of the exhaustible resource is modified the timing effect we provide analytical expressions of these effects and determine conditions over size of reserves pollution contents extraction costs and demand elasticity such that the exhaustible resource owners profits increase as the ceiling is tightened calibrations for the transport and power sectors suggest that the profits of conventional oil and natural gas owners increase compared to a baseline without regulation for plausible carbon ceiling values

optimal pricing of depletable replaceable resources the case of landfill tipping fees abstract we develop a general model for pricing a depletable replaceable asset and discuss its application in determining optimal tipping fees for a sanitary landfill we show that the optimal fee includes a component that grows at the real interest rate as space in the landfill is depleted and then drops when a new landfill is built because the scarcity cost of landfill space increases as the landfill is filled it may be optimal to delay a waste reduction program such as recycling composting or incineration until the landfill is partially full

optimal harvesting of stochastic spatial resources abstract we characterize the optimal harvest of a renewable resource in a generalized stochastic spatially explicit model despite the complexity of the model we are able to obtain sharp analytical results we find that the optimal harvest rule in general depends upon dispersal patterns of the resource across space and only in special circumstances do we find a modified golden rule of growth that is independent of dispersal patterns we also find that the optimal harvest rule may include closure of some areas to harvest either on a temporary or permanent basis biological reserves reserves alone cannot correct open access but may under sufficient spatial heterogeneity and connectivity increase profits if appropriate harvest controls are in place outside of reserves

payments for environmental services in costa rica costa rica pioneered the use of the payments for environmental services pes approach in developing countries by establishing a formal country wide program of payments the psa program the psa program has worked hard to develop mechanisms to charge the users of environmental services for the services they receive it has made substantial progress in charging water users and more limited progress in charging biodiversity and carbon sequestration users because of the way it makes payments to service providers using approaches largely inherited from earlier programs however the psa program has considerable room for improvement in the efficiency with which it generates environmental services with experience many of these weaknesses are being gradually corrected as the psa program evolves towards a much more targeted and differentiated program an important lesson is the need to be flexible and to adapt to lessons learned and to changing circumstances

pricing weather derivatives this article presents a general method for pricing weather derivatives specification tests find that a temperature series for fresno ca follows a mean reverting brownian motion process with discrete jumps and autoregressive conditional heteroscedastic errors based on this process we define an equilibrium pricing model for cooling degree day weather options comparing option prices estimated with three methods a traditional burn rate approach a black scholes merton approximation and an equilibrium monte carlo simulation reveals significant differences equilibrium prices are preferred on theoretical grounds so are used to demonstrate the usefulness of weather derivatives as risk management tools for california specialty crop growers

a dynamic ecological economic modeling approach for aquaculture management article i nfo sustainable aquaculture ecosystem approach to aquaculture eaa ecological economic modelling integrated coastal management icm market model this paper presents a modeling approach to resource economics decision making in ecoaquaculture market model the market model was developed as a scenario testing tool to provide insights on the ecological and economic interactions which is a critical issue for sustainable aquaculture management as a case study the model was applied to simulate shellfish production in an embayment located in the east china sea a set of scenarios was used to compare the model outputs with expected trends and to test its capability to simulate relevant management scenarios the comparison of simulated scenarios indicates that the market model outputs followed the expected trends regarding both standard economic theory for consumption and production and ecological economic theory in all the scenarios we tested the area available for aquaculture was found to impose a limitation on production before it became less profitable to expand production as such in this case study the production in the long run does not meet increasing demand reduction of the maximum cultivation area was simulated in one of the scenarios as an example of a conservation measure as expected there was a reduction of the net profit of the farmers compared with the standard simulation on the other hand this scenario combined with an increase in price growth rate simulates a compensatory measure that led to a net profit in the same range as observed in the standard simulation overall the market model provides insights and raises questions useful for the implementation of an ecosystem approach to aquaculture further developments include the simulation of waste generated by cultivated species in order to better support sustainable management objectives

too much coal too little oil abstract our main message is that it is optimal to use less coal and more oil once one takes account of coal being a backstop which emits much more co2 than oil the way of achieving this is to have a steeply rising carbon tax during the initial oil only phase a less steeply rising carbon tax during the intermediate phase where oil and coal are used alongside each other and the following coal only phase and a flat carbon tax during the final renewables only phase the laissez faire outcome uses coal forever or starts with oil until it is no longer cost effective to do so and then switches to coal we also analyze the effects on the optimal transition times and carbon tax of a carbon free albeit expensive backstop solar or wind energy subsidizing renewables to just below the cost of coal does not affect the oil only phase the gain in green welfare dominates the welfare cost of the subsidy if the subsidy gap is small and the global warming challenge is acute without a carbon tax a prohibitive coal tax leads to less oil left in situ and substantially delays introduction of renewables but curbs global warming substantially as coal is never used finally we characterize under general conditions what the optimal sequencing oil and coal looks like

natural gas scenarios in the u s power sector abstract the united states power sector is being transformed by the recent rise in the availability and use of unconventional natural gas specifically shale gas that transformation has already produced some of the most significant changes in the operation of the portfolio of electricity generation since wwii further implications are likely to that end we present results from numerical modeling of different united states u s power sector futures these futures assess questions affecting today s natural gas and electric power markets including the impacts of forthcoming epa rules on power plants decarbonization options such as a clean energy standard ces potential improvements in key generation technologies expanded use of natural gas outside of the power generation sector and higher costs for natural gas production assumed to arise from more robust environmental and safety practices in the field the simulations were done using the reeds model looking out to the year 2050 reeds is a capacity expansion model that determines the least cost combination of generation options that fulfill a variety of user defined constraints such as projected load capacity reserve margins emissions limitations and operating lifetimes the baseline scenario shows strong growth in natural gas generation leading to a roughly 2 5 fold increase in gas demand by 2050 many other scenarios also see strong growth in gas fired generation highlighting questions about portfolio diversity climate change and research and development prioritization

random preferences towards bioenergy environmental externalities a case study of woody biomass based electricity in the southern united states article i nfo this paper contrasts alternate methodological approaches of investigating public preferences the random parameter logit rpl where tastes and preferences of respondents are assumed to be heterogeneous and the conditional logit cl approach where tastes and preferences remain fixed for individuals we conducted a choice experiment to assess preferences for woody biomass based electricity in arkansas florida and virginia reduction of co2 emissions and improvement of forest habitat by decreasing risk of wildfires and pest outbreaks were presented to respondents as attributes of using green electricity the results indicate that heterogeneous preferences might be a better fit for assessing preferences for green electricity all levels of both attributes were positive contributors to welfare but they were no statistically significant respondents expressed a positive mean marginal willingness to pay wtp for each attribute level the total wtp for green electricity per kilowatt hour was 0 049 kwh or 40 5 per capita year 1 when converted into future total annual expenditures

paying for the hydrological services of mexico s forests analysis negotiations and results abstract mexico faces both high deforestation and severe water scarcity the payment for hydrological environmental services psah program was designed to complement other policy responses to the crisis at the interface of these problems through the psah the mexican federal government pays participating forest owners for the benefits of watershed protection and aquifer recharge in areas where commercial forestry is not currently competitive funding comes from fees charged to water users from which nearly us 18 million are earmarked for payments of environmental services applicants are selected according to several criteria that include indicators of the value of water scarcity in the region this paper describes the process of policy design of the psah the main actors involved in the program its operating rules and provides a preliminary evaluation one of the main findings is that many of the program s payments have been in areas with low deforestation risk selection criteria need to be modified to better target the areas where benefits to water users are highest and behavior modification has the least cost otherwise the program main gains will be distributive but without bringing a pareto improvement in overall welfare

modeling nonrenewable resources use with multiple demands and multiple sources the theoretical literature following hotelling j polit econ 39 137 175 1931 assumed that all nonrenewable resource needs are satisfied by one type of resource e g oil extractible at different per unit costs this formulation implicitly assumes that all users are the same distance from each resource pool that all users can switch costlessly from one type of resource to another e g liquid fossil fuels to coal or vice versa and that all users are subject to the same regulations these assumptions imply as herfindahl extractive resources and taxation university of wisconsin press madison pp 63 90 1967 showed that in competitive equilibrium all users will exhaust a lower cost resource completely before beginning to extract a higher cost resource simultaneous extraction of different grades of oil or of oil and coal should never occur in trying to apply the single demand curve model during the last twenty years several teams of authors have independently found a need to generalize it to account for users differing in their 1 location 2 resource needs or 3 regulatory environment each research team found that herfindahl s strong unrealistic conclusion disappears in the generalized model in its place a weaker herfindahl result emerges since each research team focussed on a different application however it has not always been clear that everyone has been describing the same generalized model the goal in this paper is to integrate the findings of these teams and to present an easily accessible generalization of the nonrenewable resource model to multiple demand curves

strike when the force is with you optimal stopping with application to resource equilibria optimal investment in a nonrenewable resource project occurs when the rate of increase of the project s forward value falls to the force of interest this stopping rule yields a financial interpretation of resource quality as being a property of the project rather than of individual units of reserves it also leads to re interpretations of a rent as the present value of the project rather than of units of reserves and b hotelling s insight as not a rule for the path of rents but an equilibrium algorithm for price the analysis is extended to sequential development of pesticides antibiotics and forests

landfill construction and capacity expansion we study the optimal capacity and lifetime of landfills taking into account their sequential nature such an optimal capacity is characterized by the so called optimal capacity condition particular versions of this condition are obtained for two alternative settings first if all the landfills are to have the same capacity and second if each of them is allowed to have a different capacity in the second case we obtain an optimal control problem with mixed elements of both continuous and discrete time the resulting optimization problems involve dividing a time horizon of planning into several subintervals of endogenously decided length the results obtained may be useful to address other economic problems such as private and public investments consumption decisions on durable goods etc

an options pricing approach to ramping rate restrictions at hydro power plants this paper investigates the impact of ramping rate restrictions imposed on hydro operations to protect aquatic ecosystems the optimal ramping decision is specified as an optimal control problem which results in a hamilton jacobi bellman hjb equation electricity prices are modelled as a regime switching stochastic process the optimal control is determined by solving the hjb equation numerically using a fully implicit finite difference approach with semi lagrangian time stepping the paper focuses on the effect of ramping restrictions on a hydro plant s value and optimal operations and provides an analysis of which factors cause ramping restrictions to have a greater or lesser impact on profitability it is shown that hydro plant value is negatively affected by ramping restrictions but the extent of the impact depends on key parameters which determine the desirability of frequent changes in water release rates interestingly for the case considered value is not sensitive to ramping restrictions over a large range of restrictions the results point to the importance of accurately modelling electricity prices in gauging the trade offs involved in imposing restrictions on hydro operators which may hinder their ability to respond to volatile electricity prices and meet peak demands

environmental value transfer state of the art and future prospects abstract the main objectives of the paper are to 1 give an overview of the state of the art of environmental value transfer 2 discuss its prospects and potential role in cba as a decision support tool and 3 provide further guidelines for proper use and application environmental value or benefit transfer is a technique in which the results of studies on monetary environmental valuation are applied to new policy contexts the technique is controversial not least because of academic and political reservations over the usefulness and technical feasibility of economic valuation tools to demonstrate the importance of environmental values in project or programme appraisals testing of environmental value transfer so far has been unable to validate the practice taking into account the conditions set out in the literature for valid and reliable value transfer most transfers appear to result in substantial transfer errors this paper discusses why and addresses the question of which factors may have been overlooked it is argued that the problem is much more fundamental than previously acknowledged strict guidelines in terms of quantitative adjustment mechanisms to valid value transfer are meaningless if the more fundamental issue of differences in the very nature of the values elicited is not addressed at the same time

intertemporal depletion of resource sites by spatially distributed users mineral deposits and other exhaustible resources are scattered around the globe as are their users yet the theory for analyzing depletion of such resources assumes that all resource sites and all users are located in the same place when applying the theory therefore one is forced to disregard what often seems to be an important real world consideration our purpose here is to generalize harold hotelling s 1931 theory of exhaustible resources to accommodate situations in which resource sites and their users are spatially distributed our analysis has many applications it can be applied to a conventional exhaustible resource like oil alternatively it can be applied to an unconventional exhaustible resource like scarce landfill space shipments of solid waste to landfills in other states or countries have become a prominent public policy issue eduardo ley et al 2000 finally our analysis can be applied in situations where the space reflects not geographical location but characteristics of the resource e g the sulfur content hardness and so forth of coal which users find distinctive 2 only two theoretical papers in resource economics have introduced spatial considerations 3 jean jacques laffont and michel moreaux 1986 studied the extraction of resources from sites located along a line segment with all users at one end charles kolstad 1994 was the first to consider spatially distributed users in his formulation consumers are distributed uniformly along a line segment with resource sites at each end kolstad s approach although innovative requires that the set of users be parti

specialization and non renewable resources ricardo meets ricardo abstract the one demand hotelling model fails to explain the observed specialization of non renewable resources we develop a model with multiple demands and resources to show that specialization of resources according to demand is driven by ricardian comparative advantage while the order of resource use over time is determined by ricardian absolute advantage an abundant resource with absolute advantage in all demands must be initially employed in all demands when each resource has an absolute advantage in some demand no resource may be used exclusively the two by two model is characterized resource and demand specific taxes are shown to have significant substitution effects

the efficient use of multiple sources of a nonrenewable resource under supply cost uncertainty whereas in a deterministic world leaving a high cost source of a nonrenewable resource untouched as long as a less costly source is available is always efficient this may not be the case in a stochastic world conditions are derived under which it can be efficient to use a risky supply source in order to conserve a cheaper nonrisky source or to use a costly nonrisky source while a less costly risky source is still available a supply embargo can be interpreted as a limiting case the nonrisky source can be reinterpreted as an artificial stockpile

selective hedging in hydro based electricity companies abstract we analyze risk management trends in electricity commodity markets using the production and transaction data and written hedging policies of 12 norwegian hydropower companies the scope of our analysis is the hedging of physical electricity production using the power derivatives available at nasdaq omx commodities in their hedging policy these companies either use a cashflow at risk c far approach or a hedge ratio approach or follow no explicitly stated approach we find that the derivative cashflows constitute substantial profits for these companies furthermore hedging contributes to reducing the c far for 10 of the companies these findings are surprising considering that we expect hedging to yield zero expected profit and to smooth the earnings overall our findings reveal that a practice of incorporating market views in hedging decisions is widespread in the sample companies as both sanctioned in their written hedging policy and as indicated by the substantial hedging profits

balancing environmental protection and energy production in the federal hydropower licensing process the u s federal energy regulatory commission ferc must balance environmental protection of riverine resources with the nation s growing demand for power production every time it issues a hydroelectric license this paper models the bureaucratic agency s decision making process in issuing these licenses data on nearly 500 hydro power licenses issued from 1983 to 2005 are utilized it is discovered that legislative and institutional constraints are by far the largest influences on ferc s regulatory decisions implying that if the current allocation of surface water in the united states is considered inefficient the most effective way to alter this allocation is by passing new legislation or by implementing institutional reform at ferc

hotelling rents in hotelling space product differentiation in exhaustible resource markets abstract using a hotelling spatial model this paper examines the interrelationship between resource rents in related exhaustible resource markets in a product space context we show that even if two exhaustible resources are not currently in the same market e g coal and oil differential scarcity will link their current scarcity rents this applies analogously in geographic markets another result is that monopoly accelerates depletion of substitutes and may not affect time to depletion of the monopolized resource

restricting the trash trade in early 1999 the mayor of new york city announced a plan for exporting most of his city s waste about 13 000 tons per day to other states the responses escalated an already growing war of words about interstate waste shipments a pennsylvania state legislator bluntly called the mayor s plan irresponsible and the governor of new jersey labeled it a direct assault on her state a spokesperson for new york city s department of sanitation coolly staked out the city s position you can t stop interstate commerce if virginia is the least expensive place to deliver this solid waste then that is where it is going to go the response was swift various legislators joined environmental activists to send 50 pounds of trash to the mayor s office led by the governor s efforts the virginia general assembly subsequently responded with proposed legislation to restrict significantly imports of waste see r h melton 1998 virginia s legislative proposal came on the heels of numerous similar proposals by other states to which large shipments of waste are transported interstate shipments of waste involve almost the entire nation 47 states export waste and 44 states import waste and represent nearly 1 billion annually in disposal and transportation fees since the early 1990 s these shipments have increased by more than 30 percent as officials in importing states have sought to curb these flows the u s supreme court has repeatedly struck down their proposed restrictions as violations of the interstate commerce clause in response the congress has advanced proposals to exempt waste from jurisdiction of that clause to date however very little is known about the positive and normative effects of the various proposals to restrict municipal solid waste transshipments how are the effects of restrictions likely to be distributed among the owners of waste disposal facilities and the users of these services given that the northeast is a net exporter and the midwest is a net importer of waste are the effects likely to differ among regions of the country in this paper we model the interstate market for municipal solid waste and evaluate the potential economic effects of public policies proposed to restrict waste flows these restrictions include local and state requirements stipulating where waste must be landfilled prohibitions on the import or export of waste across state boundaries quantitative limits on these flows and extra fees levied on imported waste to our knowledge this research is the first to evaluate these proposals quantitatively we develop both a conceptual and a computable economic model of the use over time of spatially differentiated resources characteristics which well describe the nation s landfill facilities landfills rather than recycling or other disposal options are the dominant destination of most interstate shipments the model characterizes the efficient intertemporal allocation of spatially distributed waste disposal capacity among users who are also spatially distributed in addition

on nonrenewable resource oligopolies the asymmetric case we give a full characterization of the open loop nash equilibrium of a nonrenewable resource game between two types of firms differing in extraction costs we show that i there almost always exists a phase where both types of firms supply simultaneously ii when the high cost mines are exploited by a number of firms that goes to infinity the equilibrium approaches the cartel versus fringe equilibrium with the fringe firms acting as price takers and iii the cheaper resource may not be exhausted first a violation of the herfindahl rule that may be detrimental to social welfare

integrating ecology and economics in understanding responses in securing land use externalities internalization in water catchments securing sustainable upstream land use externalities internalization in developing countries water catchments continues to be a serious challenge uluguru water catchment in tanzania presents a compelling case for analysis the catchment is currently under downstream upstream conservation subsidy arrangement however lack of information on the long term impacts of the approach on the functioning and distribution of benefits threatens its sustainability based on system dynamics framework this study developed an integrated ecological economic model to evaluate the long term impacts of this arrangement on the functioning and distribution of benefits the model was also used to compare the arrangement with other economic instruments in the same respect simulation results indicate that the scheme has a potential of securing conservation goals without compromising upstream well being taxing crop inputs and outputs also has a potential securing conservation goal but at the expense of upstream well being tax cuts on inputs to tree fruit and basic domestic goods also secure conservation goals without compromising upstream well being these results show that a downstream upstream subsidy scheme is better for achieving upstream land use externalities internalization without compromising distribution of benefits among beneficiaries and well being of upstream land holders than taxing crop inputs and outputs