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The Effects of NAFTA on the Environment

Robert K. Kaufmann, Peter Pauly and Julie Sweitzer

Year: 1993
Volume: Volume14
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No3-10
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Abstract:
This paper reviews the impacts of NAFTA on the environment. Discussion focuses on the degree to which economic conditions in Canada, Mexico, and United States are consistent with the assumptions on which the benefits of free trade are based. Specifically, we discuss how NAFTA may exacerbate or alleviate the environmental impacts of economic activity via environmental externalities, the rate and efficiency of resource extraction, increased income, increased trade and transportation, and harmonizing environmental policy among nations at different levels of economic development. Because of difficulties in comparing different types of environmental impacts, we do not offer a conclusion about the overall effect of NAFTA on the environment, positive or negative. Rather, we argue that NAFTA must preserve the rights of all affected parties to intervene so that the costs and benefits associated with a particular project that arises out of increased trade can be evaluated on a case by case basis in the same imperfect way that such issues are addressed within the confines of a single nation.



Environmentally Responsible Energy Pricing

W. Kip Viscusi, Wesley A. Magat, Alan Carlin, and Mark K. Dreyfus

Year: 1994
Volume: Volume15
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No2-2
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Abstract:
This paper assesses the value of the non-global warming externalities associated with energy use. The estimates of the full social cost energy prices based on this "no regrets" approach imply environmental costs that often greatly exceed current tax amounts. The midpoint estimates suggest that the price of coaI is most out of line with its efficient level. Natural gas is currently overtaxed, and gasoline is appropriately taxed. There is also a substantial range of uncertainty embodied in the no regrets estimates.



Social Costing of Electricity in Maryland: Effects on Pollution, Investment, and Prices

Karen Palmer, Alan Krupnick, Hadi Dowlatabadi and Stuart Siegel

Year: 1995
Volume: Volume16
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No1-1
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Abstract:
Many state public utility commissions (PUCs) have started to require electric utilities to consider environmental and other externalities in their planning processes. To date social costing has been applied exclusively to the evaluation of new sources of electricity. More comprehensive approaches to social costing would include requiring the utility to dispatch both new and existing generating units according to social cost, or requiring electricity consumers to pay a price for electricity that reflects its full social cost. Using estimates of external costs taken from the literature, this study contrasts the implications of these three different approaches for utility decision making, electricity prices, demand for electricity and other fuels and the net emissions of selected pollutants for a Maryland utility. We find that applying social costing at the investment stage only may lead to reduced investment in new resources, increased use of existing generation resources and higher emissions of key pollutants. Applying social costing to dispatch generally leads to increased levels of investment in clean technologies, lower levels of emissions and only moderate price increases. Also, social costing of electricity generally has a small impact on consumer demand for natural gas.



Environmental Externalities, Market Distortions and the Economics of Renewable Energy Technologies

Anthony D. Owen

Year: 2004
Volume: Volume 25
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No3-7
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Abstract:
This paper reviews life cycle analyses of alternative energy technologies in terms of both their private and societal costs (that is, inclusive of externalities and net of taxes and subsidies). The economic viability of renewable energy technologies is shown to be heavily dependent upon the removal of market distortions. In other words, the removal of subsidies to fossil fuel-based technologies and the appropriate pricing of these fuels to reflect the environmental damage (local, regional, and global) created by their combustion are essential policy strategies for stimulating the development of renewable energy technologies in the stationary power sector. Policy options designed to internalize these externalities are briefly addressed.



Why Tax Energy? Towards a More Rational Policy

David M. Newbery

Year: 2005
Volume: Volume 26
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No3-1
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Abstract:
The same fuels are taxed at widely different rates in different countrieswhile different fuels are taxed at widely different rates within and across countries. This paper considers what tax theory has to say about efficient energy tax design. The main factors for energy taxes are the optimal tariff argument, the need to correct externalities such as global warming, and second-best considerations for taxing transport fuels as road charges, but these are inadequate to explain current energy taxes. EU energy tax harmonisation and Kyoto suggest that the time is ripe to reform energy taxation.



Modelling the Health Related Benefits of Environmental Policies and Their Feedback Effects: A CGE Analysis for the EU Countries with GEM-E3

Inge Mayeres and Denise Van Regemorter

Year: 2008
Volume: Volume 29
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No1-6
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Abstract:
A number of recent studies on taxation in the presence of externalities in a second-best framework consider the implications of taking into account the feedback effects of environmental quality. This paper explores by means of GEM-E3, a computable general equilibrium model for the EU countries, the importance of the feedback effects of the health related benefits from an environmental policy. The modelling framework implemented in GEM-E3 allows for three channels through which the feedback can occur: a decrease in medical expenditure, an increase in the consumers� available time and an increase of labour productivity in the production sectors. The results show that the explicit modelling of the health related effect of air pollution on consumers and producers allows for a more precise evaluation of the impact of environmental policies on private consumption and employment. Relative to the included benefits the feedback effects are large. However, in terms of global effect, the impacts of the feedback are small, compared to the standard GEM-E3 model where the health related benefits are evaluated ex-post.



Identifying the Rebound: Evidence from a German Household Panel

Manuel Frondel, Jorg Peters, and Colin Vance

Year: 2008
Volume: Volume 29
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No4-7
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Abstract:
Using a panel of household travel diary data collected in Germany between 1997 and 2005, this study assesses the effectiveness of fuel efficiency improvements by estimating the rebound effect, which measures the extent to which higher efficiency causes additional travel. Following a theoretical discussion outlining three alternative definitions of the rebound effect, the econometric analysis generates corresponding estimates using panel methods to control for the effects of unobservables that could otherwise produce spurious results. Our results, which range between 57% and 67%, indicate a rebound that is substantially larger than obtained in other studies, calling into question the efficacy of policies targeted at reducing energy consumption via technological efficiency.



Asymmetric Information on the Market for Energy Efficiency: Insights from the Credence Goods Literature

Bruno Lanz and Evert Reins

Year: 2021
Volume: Volume 42
Number: Number 4
DOI: 10.5547/01956574.42.4.blan
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Abstract:
Asymmetric information is an important barrier to the adoption of energy efficient technologies. In this paper, we study supply-side implications of the associated incentive structure. We build on existing evidence that, in some settings, energy efficiency owns a credence component, whereby the supply side of the market has more information about what technology is best for consumers. The literature on credence goods markets suggests that an information advantage by expert-sellers leads to market inefficiencies, including low trade volume. We start by developing a simple framework to study supply-side incentives related to the provision of energy efficient technologies. We then document inefficiencies and potential remedies by discussing linkages between an empirical literature on credence goods and that on the market for energy efficiency. Doing so, we identify implications for the design of policies promoting the adoption of energy-efficient technologies.





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