Environmental Economics

Climate-econometric models postulate that increased CO2 levels cause the earth’s average temperature to increase and that the increases in the average temperature will result in huge costs in GDP. However, this causal relation is at odds with datasets that tell a different story: that the causal relationship is inversed and the variable once thought to be the effect may turn out to be the cause and vice versa. Moreover, when the Earth’s temperature is measured, it appears that changes in the (...) measurement set up can lead to changes in the measurement outcomes thereby skewing the relevant estimates. These results reveal two sources of endogeneity in climate-econometrics: simultaneity whereby X causes Y and Y causes X and also measurement error thus making the relevant causal inferences weak from an epistemological viewpoint. Moreover, since climate-econometric models are used to advice decision-making there are further connotations: first, climate policies can hardly be evaluated through common economic methods and, second, different model-based estimates could lead to different policy-prescriptions dependent on whether endogeneity is taken into account or not. And if different policies are tied to different sets of value judgments, then it can be said that different model-based projections carry different normative implications. (shrink)

Should we kill animals to save animals? This question lies at the heart of this case study. Sovereign nations have an interest in protecting and conserving their natural resources, and in particular their distinctive flora and fauna. As they seek to promote these interests, they inevitably face the economic question of how they are going to finance their conservation efforts. One way of answering this question is to engage in the practice of selling big game hunting licenses and using the (...) revenues to fund conservation programs. This strategy is counterintuitive (and to some, morally repellent); but it has a partial track record of success in places such as Namibia, South Africa, and the United States. Despite its successes, there are some who believe that the moral objections to such a strategy outweigh any potential benefits. This case study provides the student with an opportunity to explore the tension between the desire to save endangered animals and the possibility that the best way to do that involves killing some of them. (shrink)

How much should the present generations sacrifice to reduce emissions today, in order to reduce the future harms of climate change? Within climate economics, debate on this question has been focused on so-called “ethical parameters” of social time preference and inequality aversion. We show that optimal climate policy similarly importantly depends on the future of the developing world. In particular, although global poverty is falling and the economic lives of the poor are improving worldwide, leading models of climate economics may (...) be too optimistic about two central predictions: future population growth in poor countries, and future convergence in total factor productivity (TFP). We report results of small modifications to a standard model: under plausible scenarios for high future population growth (especially in sub-Saharan Africa) and for low future TFP convergence, we find that optimal near-term carbon taxes could be substantially larger. (shrink)

The health co-benefits of CO2 mitigation can provide a strong incentive for climate policy through reductions in air pollutant emissions that occur when targeting shared sources. However, reducing air pollutant emissions may also have an important co-harm, as the aerosols they form produce net cooling overall. Nevertheless, aerosol impacts have not been fully incorporated into cost-benefit modeling that estimates how much the world should optimally mitigate. Here we find that when both co-benefits and co-harms are taken fully into account, optimal (...) climate policy results in immediate net benefits globally, overturning previous findings from cost-benefit models that omit these effects. The global health benefits from climate policy could reach trillions of dollars annually, but will importantly depend on the air quality policies that nations adopt independently of climate change. Depending on how society values better health, economically optimal levels of mitigation may be consistent with a target of 2 °C or lower. (shrink)

In Southeast Asian countries (SEA), road transport accounts for the main energy consumption and CO2 emission. Air pollution is a major concern in densely populated cities such as Bangkok, Manila, and Kuala Lumpur. The main objective of this paper is to give insights on trends of transport development, car ownership, and CO2 emissions in Southeast Asia. This study also attempts to review the successful transportation policies around the globe and to introduce the possible instruments that can help reduce air pollution (...) in Southeast Asian countries. Economic instruments to estimate the benefits of a cleaner environment due to new policies are introduced as well. The results of this research could help policy makers consider approaches that could internalize external costs of transportation and maximize the societal welfare. (shrink)

Choice experiment (CE) is a questionnaire based method that the accuracy of research questionnaire determines the validity of the research outcomes. Attribute selection has a prime importance in every CE studies. If respondents do not understand or do not have preference for a certain attribute, the attribute non-attendance problem might happen that biases overall results of the research. Qualitative approaches such as literature review, focus group discussion, and in depth discussion commonly applied in CE researches. However, especially in the developing (...) countries context where ethnical and cultural diversity is a challenge in conducting survey based questionnaires, qualitative methods are not sufficient in selecting attributes. Present study investigates the application of relative importance index (RII) in respondents¡¯ preference for attributes in a modal shift study in Klang Valley, Malaysia. The 5 point Likert scale questions were employed to enhance respondents¡¯ preferences for initial 24 selected attributes. The results of this study showed that from 24 pre-selected attributes, only 18 of them had RII>0.5 and could be included in the final CE design. The results of this study could help researchers to control for unobserved problems in selecting the attributes which could not be discovered through qualitative approaches. -/- . (shrink)

Financial sustainability of protected areas is one of the main challenges of management. Financial self-sufficiency is an important element in improving conservation effort in these areas. This study seeks to review best practices in recreational fee systems in different countries and to find a relevant entry fee for a wildlife sanctuary in Malaysia. The revenue of the National Elephant Conservation Center (NECC) in Kuala Gandah, Malaysia, comes from several sources, including the national government, but all these budgetary sources are strained (...) by tighter public budgets and greater demands. The present study investigates the introduction of visitor entrance fees to supplement an otherwise inadequate budget for supporting the operational costs of the sanctuary. Factor analysis and a double-bounded contingent valuation method were combined to estimate tourists' willingness to pay (WTP) the proposed entrance fee. Factor analysis showed that respondents' motivation to support the NECC with user fees is conditioned by their direct experiences with elephants, their satisfaction with NECC's educational programs and services, and other experiences it gives to users. The WTP model considered respondents' four motivation factors with their sociodemographic characteristics. Since NECC visitors arrive from both within and outside the country, this study suggests to center managers a two-tier fee structure (residents vs. nonresidents of Malaysia), based upon mean WTP estimates. This study further suggests that revenue from such an entrance fee for NECC could support the Center's management and development costs. © 2015 Elsevier B. (shrink)

This dissertation undertakes a philosophical analysis of “natural capital” and argues that this concept has prompted economists to view Nature in a radically novel manner. Formerly, economists referred to Nature and natural products as a collection of inert materials to be drawn upon in isolation and then rearranged by human agents to produce commodities. More recently, nature is depicted as a collection of active, modifiable, and economically valuable processes, often construed as ecosystems that produce marketable goods and services gratis. Nature (...) is depicted as consisting of various unproduced mechanisms or “natural machines” that are first discovered and then channeled so as to serve human ends. In short, nature as an ideal is a kind of garden that is characterized by natural objects purposefully arranged by intentional human agents. This dissertation first lays out working definitions of the key terms, such as capital and Nature, and then traces the historical roots of natural capital in the writings of eminent classical political economists, such as Adam Smith, John Stuart Mill, and Karl Marx. I then examine the question of substitutes for “critical natural capital”, and argue that the preservation paradox is warranted: no one can restore or preserve a part of Nature without turning it into an artifact. Following the recent work of Debra Satz and Michael Sandel, I finish my dissertation by situating the question of natural capital in the broader context of whether some goods should not be for sale, particularly those I define as Basic Ecological Goods. (shrink)