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.
David S. McCauley, Robert Bruce Anderson, Richard L. Bowen, Ibrahim Elassiouty · 6 authors
Egypt seems to be on the brink of a new era in water management. The country suppose to follow a different operational mode that is “water conservation oriented, decentralized, environmentally sensitive, private sector oriented, equitable and operationally efficient” The focus of this study was on market-based instruments (MBI’s) as complements to traditional command and control measures for managing water quantity and quality. Prior to evaluating potential water MBIs, it was necessary to identify the water management problems and challenges that need to be addressed through policy adjustments. \nThese challenges were threat of water shortages, service delivery in municipal water supply, lake Nasser pollution, Irrigation service delivery challenges, Nile River pollution above Cairo, Insufficient irrigation system upkeep, water pollution in the Nile Delta, Pollution of lakes , low user contribution to irrigation system upkeep, groundwater contamination, and Weak attention to in-stream flows. \nSuch challenges have impacts on: (1) Nonrenewable groundwater management, (2) Adverse effects on human health, (3) Subsidies affecting water use efficiency, (4) Reduced agricultural productivity, (5) Rainfall capture and flash flood protection. The impacts generated some Threats to aquatic ecosystems, particularly, Negative consequences of rising water tables and Negative impacts on aesthetics (incl. tourism) \nA two-step screening process was developed and utilized to evaluate the likely success of alternative market-based policy instruments in response to one or more of water management challenges. The instruments were screened based on economic efficiency and equity and other economic factors relating to the nature of the instrument itself. They also were evaluated based on criteria that considered the specific social, cultural, political, and institutional context in which the instrument will be applied. \nThereon, the study explored the applicability of economic instruments to help address Egypt’s current water management challenges. It resulted in an initial evaluation of twenty instruments that seemed most promising. Screening criteria were developed and applied to assess the merits of each, and direction also was received from nearly 60 participants who attended the study’s concluding Workshop on Economic Incentives for Water. The most promising policy instruments that concluded from the study were: \nWoith respect to the water quantity management deemed of highest priority for follow-up analysis and possible policy action were: Groundwater Extraction Charges, Tariff Reductions for Imported Water Meters and Water Conserving Equipment, Several other measures were identified as warranting careful further analysis. These include area-based irrigation service charges; volumetric water delivery charges for large agricultural enterprises; and increased user fees for the supply of urban and industrial water services. \nLikewise, the most promising policy measures identified to address water quality \nproblems were: Increased User Fees for Wastewater Treatment, Increased Subsidies to Finance Wastewater Treatment Facilities, Subsidized Rural Sanitation, and Subsidized Pollution Control Equipment \nTo achieve such model four approaches to positive change have been identified. These include Creating incentives and disincentives for water management to protect its quality. In addition to Institutionalizing the role private participation; environmental protection and identifying mechanisms to ensure appropriate benefits for participating private sector partners, decentralizing decision making, institutionalizing environmental protection, changing the role of government and improving personnel policies at macro-level decision making regarding uses of the Nile River, and improving awareness of water resources and associated environmental issues.
The international character of today’s most pressing environmental problems has become a key challenge for environmental policy making. As regulation by a supranational authority is not a realistic option at present, policymakers have to rely on decentralized approaches to the management of international environmental resources. This study combines two core dimensions of international environmental policy: the traditional search for cost-effective policy instruments and the creation of incentives for voluntary cooperation among sovereign nations. The analysis offers some clear-cut policy recommendations for the design of environmental treaties and for the further development of existing international institutions to protect the global environment.
Henry D. Jacoby, Ronald G. Prinn, Richard Schmalensee
Taking the Long View on Global WarmingEven well-informed observers disagree about what the Kyoto Protocol on Climate Change will accomplish.Some gaze at its text and see a battle won.They cheer the fact that the generally richer nations participating in the protocol agreed to cut their collective emissions of the greenhouse gases that cause global warming to around five percent less than 1990 levels by early in the next century.These optimists also applaud features of the Kyoto accord designed to hold down the costs of achieving these reductions.In computing their emissions, nations can include changes in the six major greenhouse gases emitted because of human activity, not just carbon dioxide, the most important of the six.In addition, countries can factor in reduced carbon dioxide levels from changes in land use and new forestry techniques that take the gas out of the atmosphere.Groups of participating nations may comply jointly and reallocate commitments among themselves, as the European Union (EU) plans to do within a European "bubble," and there is agreement in principle to some form of emissions trading.Joint implementation, under which agents in one country can get credit for reductions they achieve in another, is to be permitted between participating nations, and a new "Clean Development Mechanism" will provide access to these opportunities in nonparticipating countries, mainly in the developing world.Finally, emissions targets are not rigidly tied to a single year, but to averages over a five-year "commitment period" from 2008 to 2012.Pessimists, on the other hand, see Kyoto as a costly defeat.They note that there is no solid proof that human-induced climate change will occur or that its adverse effects would be serious were it to happen.At the same time, the expense of reducing greenhouse gas emissions to meet the Kyoto targets will be substantial, and pessimists believe that the effort will make participating countries less competitive.In the darkest interpretation, the Kyoto agreement is a pact among rich nations that will cripple their economies for decades to come, made simply because today's political leaders needed to burnish their environmental credentials.Neither of these schools is correct.Still a third group, whose views are much closer to the mark, believes that Kyoto mainly postpones much needed work on what may prove a very serious longterm challenge.To them, Kyoto is a quick political fix to a problem created at the First Conference of Parties to the Climate convention held in Berlin in 1995.The so-called Berlin mandate instructed negotiators to seek short-term, legally binding targets and timetables for emission control for participating countries only.In the run-up to Kyoto, many leaders publicly committed themselves to this idea.Not surprisingly, avoiding embarrassment on this score became the dominant focus of the negotiations.As a result, this group argues, the Kyoto agreement allows political leaders to declare success, but it does not address the larger climate issues at stake.
The purpose of this paper is to compare the performance of some instruments of environmental policy, using data for a coal-fired power plant. Each decentralized scheme coverages towards the social optimum, chosen by a regulator. We look at the performance of a changing tax rate on emission, of an announcement of the tax formula, of an announcement of the tax formula with a tax refund possibility, and of a tax-cum subsidy scheme. Our emphasis is on full information concerning the tax and subsidy formulas and on the opportunity for the firm to optimize intertemporally. We also test two performance schemes which combine social optimal pricing with optimal abatement decisions. Our interest is to compare the speed of convergence of the schemes, the monetary side payments (subsidy, bonus) required, and to look for self-financing schemes.
Many policies use two categories of instruments: a financial incentive (most often a tax) for polluters, and direct undertakings or financing of some restorations or maintenances or improvements of environmental qualities. The financial consequences of such policies, when optimum, are important for considerations of public finance, decentralization (financial autonomy), and equity (must polluters pay?). They turn out essentially to depend upon the mathematical structure of, first, the environment function, i.e., the way in which qualities depend upon both deteriorating and improving activities, and, second, the various constraints of the problem. Constraints which can be expressed by functions homogeneous of any degree are shown to have no direct financial effect. Apart from the constraints' effects, budgetary equilibrium, surplus or deficit are respectively given by functions which present constant, decreasing, or increasing qualitative returns to scale, i.e., weighted homogeneity of degree zero, positive or negative. The opposite polar cases of cleaning and dilution types of improvement technology are presented, with some other mixed simple cases and a few examples of application of the results.