32

Any invention that replaces human labor puts an end to that specific task. Glass recycling eliminates (or decrease) the need for silica-gathering task. Typewriter eliminates the need for printing press typesetter. Etc. Those people whose tasks are eliminated will get reallocated to their most productive use. This might be in the form of job change (silica ...


15

I think it’s mainly politics. For example, when France tried to implement increases in tax on oil (indirect way of taxing carbon) it led to yellow jacket protest. As you pointed out it’s easy to track who produces the carbon in the economy. Especially on industrial level in developed countries. The reason 1 could be problem in some developing countries ...


10

It seems that there are many advantages to carbon taxes, including pricing in the environmental cost and generating revenue (that could offset other taxes). So why are we not seeing them in practice, at least not very much of them? We do, but not in an optimal way. I'm a forest owner. My forest sequesters about 40 tonnes of carbon dioxide every year. If I ...


9

Just to build up on @1muflon1's (+1) answer: I'd also add the "axe the tax" campaign in British Columbia back in 2008. The carbon tax there is (or at least was) considered a model example of how to implement revenue neutral carbon tax. Despite catchy slogans, the ruling party survived the election and so did the carbon tax. However, it brings us to the ...


7

I don't think anyone knows how to "make" an economy grow, but there's a simple channel through which economic growth can occur under fixed non-renewable inputs: innovation. Economic growth does not require increasing use of inputs; if there's profit to be gained through more efficient use of fixed quantities of inputs, or by increasing output of renewable ...


7

Yes, undervaluing environmental impact is a subsidy, within the context of the IMF report that you are referring to. Here's what that report says in its abstract (my emphasis): it focuses on the broad notion of post-tax energy subsidies, which arise when consumer prices are below supply costs plus a tax to reflect environmental damage and an ...


6

The HO model has been generalised. Vanek does a good job of it. Instead of only two countries, there is an index of countries. There are many industries. Identical technology Identical, homothetic tastes. The HOV theorem states that if a country is abundant in a factor, its factor content of trade in that factor should be positive, and negative otherwise....


6

We know one core element of the Guardian article is nonsense - the discussion of Peak Oil. The Peak Oil lament, fashionable a decade ago, was that we didn't have enough oil, and that was going to become a major problem very soon. However, we know from climate science that the reverse is true - we have far too much fossil fuel reserves (disclosure - that's ...


5

It depends on what you like to do in environmental economics. There are lots of people who are working on moral hazard issues on environmental economics by principal-agent models. More specifically, an interesting question arises from non-point source pollution. Let's say farmers are using pesticides which cause pollution. Probably, you don't know ...


5

The combination of the two policies could work and would have some advantages over either alone, and for a given reduction in emissions the overall cost burden on industry and consumers would not be doubled. However, the cap on emissions would weaken the effect of gradual escalation of the tax rate. The model represented in the following diagram is a ...


5

This would fall under the category of endogenous growth models. As dismalscience pointed out innovation is one source of growth, however it is important to distinguish between innovation and technological change. Innovation is sometimes confused with technological change, which is an exogenous process, but is more often associated with endogenous growth. ...


5

The justification goes back to the work of Pigou in the early 20th century. The essence is this: the burning of fossil fuels creates a negative externality: a cost that is incurred, but not by that consumer, but by the general population, and for a century or so. This in essence creates a kind of "social subsidy": the price does not fully reflect the costs. ...


4

An aspect of the matter could be described as follows: We want prompt replacement of (existing) fixed capital because, I guess, it creates currently "unacceptable" levels of negative externalities, and we know better than to think that through the pricing of the externalities we will be able to reverse the damages, and all swell. From this point of ...


4

Top 10% authors in the field of Cognitive & Behavioural Economics https://ideas.repec.org/top/top.cbe.html Ernst Fehr, Institut für Volkswirtschaftslehre, Wirtschaftswissenschaftliche Fakutät, Universität Zürich, Zürich, Switzerland Urs Fischbacher, Fachbereich Wirtschaftswissenschaften, Universität Konstanz, Konstanz, Germany Robert Sugden, School of ...


4

Microeconomic theory is relevant to many topics in environmental economics, eg pollution control, valuation of environmental goods, economics of natural resources. A knowledge of more advanced theory would enable you to go more deeply into such topics and understand more of the literature. However, you can get quite a long way in environmental economics by ...


4

Continuing on the comments exchange, the conclusion that the overall effect is to change the discount factor, is similar to the one reached in the original Overlapping Generations Model of Blanchard, where individuals are faced with a "probability of death" (surely a "catastrophic event" I believe). See the Blanchard & Fischer book "Lectures in ...


3

There are already precedents that show the international capacity is there, technically, and economically to deliver the carbon reduction necessary, in time. And there are indications that the political will to do so is growing to sufficient levels, too. Firstly, with the number of participating nations being 195 (the UNFCCC nation parties), that's about ...


3

My conclusion based on reading his paper is that the utility function of an individual or society can't be of the CRRA form presented in the paper. That would indeed lead to scenarios where you could not get out of the bed in the morning, as minimizing the tiniest probability of an enormous risk would warrant infinite sum of money. I will attempt to explain ...


3

There's this from Polling report showing raw survey data (question, sample data, and responses) back to 2012. Additionally this paper by Lorenzoni and Pidgeon and this paper by Leiserowitz (both 2005) discussing said data in a more academic context. You would need to do some substantial extrapolation to get time-series out of these though.


3

No, there's no assumption that output is constant. Indeed, in most cases, it's expected that output will change, if only a little. For example, there are abatement costs that involve a one-off increase in output which brings about a long-term decrease in output, such as insulating buildings to abate greenhouse-gas emissions from fossil-fuel powered heating....


3

Summary Bill Nordhaus has made several significant contributions to the economics of climate change. That's something of an understatement. His contributions are not just in the pricing of carbon; they but span microeconomics, macroeconomics, (econometric and other) modelling, the philosophy of economics, and the economics of innovation. Modelling He's ...


3

There can be civil or criminal penalties applied for non-compliance. See for example: https://www.gov.uk/government/publications/environment-agency-enforcement-and-sanctions-policy/annex-2-climate-change-schemes-the-environment-agencys-approach-to-applying-civil-penalties https://www.daera-ni.gov.uk/articles/euets-fees-charges-and-civil-penalties ...


3

I have to disagree with the previous answer. There is quite a large literature on international trade and the effect of environmental regulations. To start off there is the whole race to the bottom literature and the environmental Kuznet's curve. A good start of trade versus the environment is given in Esty's 2001 Bridging the Trade-Environment Divide (found ...


3

Airlines typically have a "good" contract for fuel with some supplier for their base airports (they buy a LOT of fuel and hence, they are able to negotiate higher discount). When a plane flies to a small(er) airport (e.g. where the airline goes 2-3 times a week), there they won't have a discount, so they would have to pay more. Therefore, it might be a case ...


3

It is on a correct track but I would not say it is 100% correct as you miss the main source of growth which is technological progress. Consider the following Cobb-Douglas production function with all 4 main factors of production, capital ($K$), human capital ($H$), labor ($L$), land ($M$) then the standard production function would look something like: $$F(...


2

Based on my understanding, Hotelling's Rule is a pretty good first step. Like many first steps, it doesn't perform particularly well empirically. I would expect that when technological change is considered, in the very long run, it isn't too bad. There are a few extensions of this model which are popular. -Exogenise extraction costs The standard idea is ...


2

To offer a theoretical micro-economic perspective, "abatement" can indeed be achieved by reducing the level of output of a company, since in most cases pollution is positively associated with the level of production. But in such an approach, there is no firm-level hard cost, at least not in the mid- to long-term (i.e. abstracting for transitory scale-down ...


2

This should probably be a comment, but it's too long so I am posting it as an answer. I'm not sure I necessarily agree with "[A Pigouvian tax] is a fixed unit price, which cannot be efficient if the damage costs are highly non-linear." But I do definitely agree with the fact that non-linearity causes practical problems for a Pigovian implementation, as I ...


2

Just to complement @Bkay's answer, "measurement error" in the dependent variable is relatively "harmless" -what hurts is error in measurement in the regressors. If we have measurement error in the dependent variable, what we need to assume in addition, in order to preserve unbiasedness, is that this error is independent of the regressors. If we can ...


2

What about assuming a multiplicative error process and then using logs? Say the data generating process were a little different: $Y_i = \beta_0 \cdot X_i^{\beta_1}\cdot E_i$ If $Y_i = Z_i / P_i$ in truth but all we could really observe was: $\hat{P}_i = P_i \cdot \Gamma_i$, where $P_i$ was the true value and $\Gamma_i$ was a strictly positive ...


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