Poland has created a kind of quasi-market focusing on environmental protection and clean-up. New institutions for sustainable development, including the self-financing framework and strong environmental law enforcement mechanisms, have helped draft market forces to serve environmental protection. Poland&s;s self-financing system for the environment is based on a basic precept of environmental economics: the &s;polluter pays principle&s;. This chapter shows that Poland has developed a unique solution to the difficulties facing environmental protection by institutionalizing self-financing and decentralizing the funds. In addition to national, voivodship and local environmental funds, two others — the Forestry Fund and the Farmland Protection Fund — are also regarded as ecological funds. Another institutional innovation providing environmental funds to potential investors in Poland is the Bank for Environmental Protection. One of the most innovative ventures in Poland is the debt-for-environment swap. Poland entered into a separate debt-for-environment swap with Finland, which is managed by a special Polish-Finnish Task Force.
Sustainable Development and Environmental Management
In spite of the apparent lack of success of international emission trading under the Kyoto Protocol, numerous jurisdictions are implementing mitigation mechanisms that put a price on carbon, whether by taxing activities that cause release of carbon to the atmosphere, or by creating markets through which the cost of atmospheric release of carbon is internalised to the relevant activities by way of emission trading schemes. These diverse and heterogeneous mechanisms – in particular the emission trading schemes – might achieve greater efficiency, larger scale, and other benefits, were they to be connected. Against this background, this paper sets out a proposal for a conceptual model for the networking of emission trading schemes, built on the architecture of distributed ledger technology. In this way, it is argued, the interconnection of these emission trading schemes might be achieved flexibly, cost effectively and efficiently, while taking account of the requirements for cooperative approaches, evidenced in the Paris Agreement. The purpose of the paper is to stimulate, and provide a starting point for, more detailed, intensive discussion of what the technical requirements might be of some such scheme.
To discuss the decision making problem of optimal production in supply chain enterprises, by taking a two-stage supply chain with one supplier and one retailer as the research objective and considering emissions trading, the profit models of both centralized and decentralized supply chains were proposed with logical proof. The conclusions show that given finance demand for products, carbon-trading policy enables members of the supply chain to make more money from investing carbon emissions. In addition, in concentration decision, emission reduction effort best that in decentralized supply chain and all members' profit will grow up if the retailer provide the supplier with appropriate subsidies. Furthermore, customs' low-carbon awareness provides a boost for emission reduction efforts and leads to more benefits to the enterprises
Climate change threatens us all; therefore, we must bridge old divides and build new partnerships to meet this great challenge of our time . US President Barack Obama (2009) There are two fundamental political economy facts that must be taken into account in efforts to address climate change through international cooperation: Climate change mitigation through reductions in GHG emissions is a global public good. The benefits of mitigation are thus available to all countries, regardless of whether they participate in the mitigation efforts. Because the international nation-state system is highly decentralized and generally lacking in formalized enforcement mechanisms, it is a challenge to gain participation and compliance in international climate change agreements. It is therefore tempting for countries to be free riders through non-participation and/or non-compliance, and these core conditions pose formidable obstacles to the achievement of environmentally effective, economically efficient, and politically viable international agreements. Yet, progress in the development of an international climate regime has nevertheless been made incrementally over more than two decades. In order to understand the evolution of the system and the constraints on it, it is necessary to consider some key issues and the context in which they are addressed. As we have seen in the previous two chapters, international issues overlap with regulating emissions (Chapter 5) and advancing technologies (Chapter 6); but in addition, there is a wide range of other international issues – including institution-building, financing adaptation and mitigation projects in developing countries, and monitoring, reporting, and verifying emissions and mitigation actions.
Although the UNFCCC sets a direction and defines a number of tools and mechanisms, it does not provide any clear strategy on how to solve the climate crisis. International climate negotiations do not formulate policies. Instead, they leave the international process up to national governments to decide on how to reduce emissions. International goals and pledges may provide policy makers with a direction, but they do not formulate recipes on how to generate energy and feed an increasing world population while protecting the global climate. The challenge is formidable, and time is running out. By the same token, climate finance and the institutional arrangements underpinning it are likely to remain decentralized and diverse. Although fragmentation poses the risk of inefficiencies and duplication of efforts, recent developments under the UNFCCC carry the promise that climate negotiations are able to adapt to changing realities and may provide a framework for country-driven and multistakeholder-driven climate policies.
As the global population heads toward 9 billion by 2050, decisions made today will lock countries into growth patterns that may or may not be sustainable in the future. Care must be taken to ensure that cities and roads, factories and farms are designed, managed, and regulated as efficiently as possible to wisely use natural resources while supporting the robust growth developing countries still need. Economic development during the next two decades cannot mirror the previous two: poverty reduction remains urgent but growth and equity can be pursued without relying on policies and practices that foul the air, water, and land. Inclusive Green Growth: The Pathway to Sustainable Development makes the case that greening growth is necessary, efficient, and affordable. Yet spurring growth without ensuring equity will thwart efforts to reduce poverty and improve access to health, education, and infrastructure services. Countries must make strategic investments and farsighted policy changes that acknowledge natural resource constraints and enable the world's poorest and most vulnerable to benefit from efficient, clean, and resilient growth. Like other forms of capital, natural assets are limited and require accounting, investment, and maintenance in order to be properly harnessed and deployed. By maximizing co-benefits and avoiding lock-in, by promoting smarter decisions in industry and society, and by developing innovative financing tools for green investment, we can afford to do the things we must.| The poor health of today's roads--a subject close to the hearts of motorists, taxpayers, and government treasurers around the world--has resulted from faulty incentives that misdirect government decision-makers, according to the contributors to Street Smart . During the 1990s, bad government decision-making resulted in the U.S. Interstate Highway System growing by only one seventh the rate of traffic growth. The poor maintenance of existing roads is another concern. In cities around the world, highly political and wasteful government decision-making has led to excessive traffic congestion that has created long commutes, reduced safety, and caused loss of leisure time. Street Smart examines the privatization of roads in theory and in practice. The authors see at least four possible roles for private companies, beyond the well-known one of working under contract to design, build, or maintain governmentally provided roads. These include testing and licensing vehicles and drivers; management of government-owned facilities; franchising; and outright private ownership. Two chapters describe the history of private roads in the United Kingdom and the United States. Contemporary examples are provided of pricing, privatizing, and contracting out are evident in environs as diverse as Singapore, Southern California, and Scandinavia, and cities as different as Bergen, Norway, and London, England. Finally, several chapters examine strategies for implementing privatization. The principles governing providing scarce resources in free societies are well known. We apply them to such necessities as energy, food, and water so why not to road space? The main obstacle to private, or semi-private, ownership of roads is likely to remain the reluctance of the political class to give up a lucrative source of power and influence. Those who want decisions about services to be controlled by the interplay of consumers and suppliers in free markets, rather than by politicians, will have to explain the need for change. Street Smart makes a powerful case for the need for change and sheds light on the complex issues involved. Gabriel Roth is a transport and privatization consultant and a research fellow at the Independent Institute in Oakland, California.
We address the issue of emission tax harmonization in a model featuring two representative firms located in two countries. Firms are subject to an international emissions trading system and to domestic emissions taxation; the latter generates public revenue but also implies implementation costs. Decentralized tax setting causes a spillover across countries via the permits price. Nonetheless, harmonization might imply a lower aggregate social welfare. This happens when uniform taxation prevents the exploitation of significant differences across countries in terms of costs and benefits of taxation. Finally, we identify cases where harmonization implies larger aggregate social welfare but lacks unanimous consent . [JEL numbers: Q58, H23].
Offers an overview of the existing and evolving structures of financing climate change mitigation and adaptation, including a brief history of climate finance; a description of existing and future sources of finance; an examination of mechanisms that distribute climate finance; and some of the key climate issues that need to be addressed going forward. Many developing countries have assumed leadership in international climate negotiations and have acknowledged their responsibility by adopting (voluntary and domestic) emissions-reduction targets, such as Brazil’s commitment to reduce deforestation, Mexico’s pledge to stabilize emissions by 2050, and Chinese investments in energy efficiency andrenewable-energy deployment. Climate finance and the institutional arrangements underpinning it are likely to remain decentralized and fragmented. Many different funding sources (private and public), managing institutions (multilateral, bilateral, and national), and financing instruments (domestic or budgetary, international public mechanisms, and private investments and capital markets) will play a part in the near, medium, and long term.
Climate finance has been the dominant instrument and narrative with which the international community has approached the challenge of climate change. In particular, it has become the main way in which developed countries attempt to account and pay for their historic role in contributing to climate change. Climate finance, however, encourages the use of rigid negotiating tactics in international negotiations, and suffers from many of the endemic problems observed in other large-scale, international public resource transfers. It is argued that it would be better to move away from thinking of solutions in terms of ‘least-cost mitigation + adaptation’, to thinking of it in terms of ‘low-carbon economy + development’. Such a move permits the involvement of different political and economic actors (in particular, the private sector) and relevant institutions, and allows for greater cooperation, decentralization and competition. This avoids both the kind of intractable situations observed in the international climate negotiations and the endemic problems that large-scale international institutions inevitably suffer from, and moreover encourages national self-determination. The potential for this approach to climate change is illustrated by the case of the South African Renewables Initiative (SARi).
Performing a valuation exercise of decentralized companies that explore and exploit natural resources (such as Pemex) interpreted from the perspective of a “Special Purpose Vehicle” (SPV), modeled as structured debt, allowing a deeper analysis when the entity does not own the generating assets of its operating cash flow when capital has a negative book value, the generation of free cash flows is negative and it is subject to tax royalty payments that do not allow for deductibility of debt. Moreover, given its high tax burden and that it is forced to issue debt to finance their capital investments, it is unclear whether it can generate resources to meet its labor and/or financial liabilities, particularly if energy prices would fall. These obligations are modeled as options. In summary, this exercise helps to identify key factors in its operations and finances
In climate change, as in other areas, recent years have produced a ‘Cambrian explosion’ of transnational institutions, standards, financing arrangements, and programs. As a result, climate governance has become complex, fragmented, and decentralized, operating without central coordination. Most studies of climate governance focus on inter state institutions. In contrast, I map a different realm of climate change governance: the diverse array of transnational schemes. I analyze this emerging system in terms of two theoretical frameworks developed to describe, explain, and evaluate complex governance arrangements—regime complex theory and polycentric governance theory—revealing fruitful avenues for positive and normative research. I conclude by arguing that the benefits of institutional complexity could be increased, and the costs reduced, through nonhierarchical ‘orchestration’ of climate change governance, in which international organizations or other appropriate authorities support and steer transnational schemes that further global public interests.
Martin Altemeyer-Bartscher, Dirk Rübbelke, Eytan Sheshinski
International environmental protection like the combat of global warming exhibits properties of public goods. In the international arena, no coercive authority exists that can enforce measures to overcome free‐rider incentives. Therefore decentralized negotiations between individual regions serve as an approach to pursue efficient international environmental protection. We propose a scheme which is based on the ideas of Coasean negotiations and Pigouvian taxes. The negotiating entities offer side‐payments to counterparts in order to influence their taxation of polluting consumption. Side‐payments, in turn, are self‐financed by means of externality‐correcting taxes. As we show, a Pareto‐efficient outcome can be attained.
The paper deals with the equivalence between taxation and emission permits according to different viewpoints: the first one sets prices, the second one quantities. But equivalence is more formal than substantial: taxation is the generating fact, the market of permits does not exist spontaneously. Its price is unstable because supply is not independent from demand. It is manipulatable either ex ante when free allowances are allocated or ex post during the period of compliance through Walrasian tatonnement. A real economic determination of prices exists only when there are unit taxes or penalties on emissions exceeding the quotas. In order to avoid these drawbacks, pay-as-bid auctions must be used and free allowances avoided. Taxation or the price of emission permits are the real option value of changing techniques. An assignment rule is proposed : taxes are assigned to reduce average emissions and permits to reduce marginal emissions. In order to transform the cost into a real change of techniques, it is necessary to finance the sector of research and development of an amount greater than the taxes levied on pollution, which serve at paying the rent of innovation. These extra subsidies are used to move factors of production as capital from industry towards the innovation sector. The tax equivalence is ternary and concerns the taxes on pollution, capital and energy, because extracting fossil fuels is similar as innovation. Decentralization through market schemes induces that depollution has a marketable cost.
Synopsis: Concern over emissions and climate change has led over half of the states to enact portfolio (RPS) legislation requiring regulated electric utilities to obtain some fraction of their power requirements from sources defined as Legislation to institute a federal RPS may follow. In reality, RPS is a policy in search of a rationale, at odds with principles of efficient environmental regulation and poorly suited to promote other policies favored by its supporters. The actual record of state implementations has been largely symbolic. Very few states with binding RPS requirements are currently in compliance with their own programs, and a federal RPS will be subject to the same forces that have led to state-level failure. The recent history of renewables leads to a conclusion that existing and proposed mandates are better viewed as special interest legislation than as rational responses to climate change and fossil-fuel power plant emissions. I. INTRODUCTION Electricity from renewable sources is fast becoming a multipurpose remedy that will alleviate energy scarcities, abate air pollution, and mitigate climate change. As of July 2007, over half of the states had enacted portfolio standards (RPS) requiring electric utilities to obtain portions of their power from sources legislatively defined as renewable. ' On August 4, 2007, the U.S. House of Representatives voted in favor of a national RPS, but the Senate failed to pass a comparable provision.2 Supporters of a national RPS have long viewed it as an environmental measure that can also slow the accumulation of greenhouse gases (GHG).3 They have more recently argued that it is, among others, an industrial policy to manufacturing jobs and declining regions, a market intervention that could lower energy prices, a stimulus to development of new technologies, an instrument for risk management, a trade policy initiative, and a weapon in the war on terrorism.4 In reality, a national RPS is singularly ill-suited for any of these tasks. It will be an inefficient and inequitable environmental policy that reduces emissions at higher cost than necessary and is largely incompatible with existing air quality regulations. Some of the non-environmental rationales are elementary economic fallacies and others are at best conjectures. Worse yet, the record of state-level RPS compliance and enforcement strongly suggests that the effects of a federal program will be either minimal or perverse. Psychologically and politically satisfying, a national RPS is likely to obstruct the development of efficient policies. The range of public figures and distinguished commissions favoring a national RPS may indicate no more than an expectation that it will provide a new forum for interest-group politics.5 We begin with data on renewables which suggests that a federal RPS will bring little diversity in generation resources and few environmental benefits. The next sections examine advocates' claims for it, finding them inadequate at best. As environmental policy, an RPS is inefficient by every economic standard. It is a costly measure whose effects on emissions are uncertain, difficult to integrate with existing environmental regulation, and needlessly disruptive of generation investments intended to comply with anticipated emissions rules. Other purported consequences are also questionable. As macroeconomic or industrial policy, a national RPS cannot possibly create net increases in employment and rural areas that it will revitalize seldom need the help. Claims that it is necessary to stimulate reductions in production cost lose their force in a global economy, as do expectations that it will position the U.S. to dominate the world renewables market. Rather than facilitating risk management, standard renewables contracts only transfer it from utilities to captive customers. National security is better advanced through direct policies instead of compulsory investment in renewables. …
According to Byron Kennard , Executive Director of the Center for Small Business and the Environment , the Industrial Age was concerned with large scale, highly centralized production which often damaged the environment (e.g., steel production). 1 On the other hand the Post-Industrial Age is concerned with decentralized technology and distributed production which are cleaner, more efficient, and safer. Here the focus is on flexibility, innovation, and the concept that “less is more”. For example, laptops are smaller and more portable than desktop computers, cell phones are smaller, more powerful, and more transportable than traditional phones, automobile manufacturing currently emphasizes more flexible design and production techniques, greater fuel efficiency and increased safety.
This thesis consists of a summary and four papers. The first two papers address political economy and indus-trial organization aspects of agricultural policy, and the last two international aspects of environmental policy. Paper [I] explains Common Agricultural Policy (CAP) subsidies to farmers by the influence of farmer interest-groups with an EU-wide membership. The analysis is based on panel-data for fifteen commodities over the period 1986-2003. Because the CAP is set as an overall EU policy, effective lobbying presents a collective ac-tion problem to the farmers in the EU as a whole. Indicators of lobbying, which are based on this perception, are found to explain part of the variation in agricultural support. In Paper [II], the Bresnahan-Lau framework is used to analyze whether policy reforms, i.e. the two-price sys-tem (an input quota, 1986-1991) and a general deregulation of dairy policy (1991-1994) had any market power effects on the Swedish butter market. The results show that the null hypothesis of no market power cannot be rejected, for any of the specific policy reforms, at any reasonable significance level. Paper [III] concerns the welfare consequences of environmental policy cooperation. It is assumed that coun-tries finance their public expenditures by using distortionary taxes, and that they differ with respect to compe-tition in the labor market. It is shown how the welfare effect of an increase in the expenditures on abatement depends on changes in the environmental damage, employment and work hours. The welfare effect is also related to the strategic interaction among the countries in the prereform equilibrium. In Paper [IV] environmental policy in an economic federation, where each national government faces a mixed tax problem, is addressed. It is assumed that the federal government sets emission targets, which are imple-mented at the national level. It is also assumed that the economic federation is decentralized. The results high-light a strategic role of income and commodity taxation, i.e. each country uses its policy instruments, at least in part, to influence the emission target.
Johanna Etner, Meglena Jeleva, Pierre‐André Jouvet
This article study the impact of risk perception on environmental policy. The environmental quality is uncertain and can be improved by voluntary contributions. We introduce then an heterogeneity in individuals' risk perceptions. In this context, the social optimum can be decentralized by tax financed government subsidies to private provision. We distinguish the case of a government who represents perfectly agents' preferences from the case of a government with its own risk preferences. In the two cases, we show that neutrality still holds
Wallace Oates is one of the most important scholars in both environmental economics and public finance and this new volume of his essays brings together his recent research in both these areas, covering theory, research and policy. The first half of the book includes papers on the political economy of environmental policy, the analysis of environmental regulation and environmental federalism. The second half deals with fiscal and regulatory competition, state and local government finance and fiscal federalism. This new collection will be essential reading for scholars and students in both environmental economics and public finance.
Wallace Oates is one of the most important scholars in both environmental economics and public finance and this new volume of his essays brings together his recent research in both these areas, covering theory, research and policy. The first half of the book includes papers on the political economy of environmental policy, the analysis of environmental regulation and environmental federalism. The second half deals with fiscal and regulatory competition, state and local government finance and fiscal federalism. This new collection will be essential reading for scholars and students in both environmental economics and public finance.