Anastasios Xepapadeas

The Economics Of Shallow Lakes

Ecological systems such as shallow lakes are usually non-linear and display discontinuities and hysteresis in their behaviour. These systems often also provide conflicting services as a resource and a waste sink. This implies that the economic analysis of these systems requires to solve a non-standard optimal control problem or, in case of a common property resource, a non-standard differential game. This paper provides the optimal management solution and the open-loop Nash equilibrium for a dynamic economic analysis of the model for a shallow lake. It also investigates whether it is possible to induce optimal management in case of common use of the lake, by means of a tax. Finally, some remarks are made on the feedback Nash equilibrium.

Environmental policy under imperfect information: Incentives and moral hazard

Abstract When net emissions of individual polluters cannot be efficiently monitored, then emissions charges, controls on emissions levels, or subsidies for emissions reduction are not effective as environmental policy instruments. This paper proposes instruments that can be applied in such limited information situations. These instruments take the form of contracts between a pollution control agency and individual polluters. The contracts include a combination of fines and subsidies that induces dischargers to follow optimal environmental policies in the absence of individual monitoring.

Economic growth and the environment

Environmental pollution is introduced both as a joint product and as a source of disutility in growth models. The purpose is to explore vital questions such as: is environmental protection compatible with economic growth; is it possible to have sustained growth in the long run without accumulation of pollution; what is the impact of environmental concerns on growth, and in particular, how are the levels, the paths or the growth rates of crucial variables such as capital, income, consumption or environmental pollution affected if we take into account the environment; what type of deviations do we observe between market outcomes and the social optimum; what are the policy implications of these deviations; what do data tell us about stylized facts relating environmental quality and economic development (the environmental Kuznets curve); and how can total factor productivity be decomposed into its sources once we account for the fact that an economy produces not only the desired output, but also undesirable output (environmental pollution)?

Environmental Policy Under Oligopoly with Endogenous Market Structure

Emission taxes under both fixed-number oligopoly and endogenous market structure, which are the most relevant market structures for policy issues, are examined. In the latter case, and contrary to what is expected under imperfect competition, the optimal tax could exceed marginal external damages, which implies that externalities generated by oligopolistic firms could be optimally controlled by overinternalizing environmental damages. Under endogenous market structure, a scheme consisting of a license fee and a second-best underinternalizing emission tax can increase social welfare as compared to the use of a single emission tax exceeding marginal damages. Copyright 1995 by The editors of the Scandinavian Journal of Economics.

Environmental policy design and dynamic nonpoint-source pollution

Abstract The inability to monitor individual discharges renders inadequate standard instruments of environmental policy. The instruments proposed in this context have been essentially static because they do not account for the effects of the dynamic processes describing pollutant accumulation. This paper proposes incentive schemes appropriate for a dynamic framework. The schemes take the form of charges per unit deviation between desired and observed pollutant accumulation paths. Under the incentive schemes, these paths converge to the socially desirable ambient pollutant concentration.

Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological, and Genetic Approach

We develop a conceptual framework for valuing biodiversity from an economic perspective. We argue for a dynamic economic welfare measure of biodiversity that complements the literature on benefit-cost approaches and genetic distance/phylogenic tree approaches. Using a unified model of optimal economic management of an ecosystem under ecological and genetic constraints, we identify gains from management policies leading to a more diverse system, using the Bellman state valuation function of the problem. We show that a more diverse system could attain a higher value although the genetic distance of the species in the more diverse system could be almost zero.

Environmental policy and market structure.

Foreword D. Siniscalco. Preface C. Carraro, et al. Part One: Environmental Taxation, Market Structure, International Trade. 1. Emission Taxes and Market Structure Y. Katsoulacos, A. Xepapadeas. 2. Environmental Taxation, Market Share, and Profits in Oligopoly C. Carraro, A. Soubeyan. 3. Naive Use of Environmental Instruments U. Ebert. 4. Optimal Environmental Policy for Oligopolistic Industries under Intra-Industry Trade K. Conrad. 5. Choosing Emission Taxes under International Competition K. Conrad. 6. Strategic Environmental Policy and International Trade - The Role of Market Conduct A. Ulph. Part Two: Environmental Policy, Innovation and Market Structure. 7. Innovation under the Threat of Stricter Environmental Standards O. Cadot, B. Sinclair Desgagne. 8. Environmental Innovation, Spillovers and Optimal Policy Rules Y. Katsoulacos, A. Xepapadeas. 9. Environmental Policy and the Choice of Production Technology C. Carraro, A. Soubeyan. 10. Trade, Strategic Innovation and Strategic Environmental Policy - A General Analysis A. Ulph, D. Ulph.

Building Resilience and Adaptation to Manage Arctic Change

Abstract Unprecedented global changes caused by human actions challenge societys ability to sustain the desirable features of our planet. This requires proactive management of change to foster both resilience (sustaining those attributes that are important to society in the face of change) and adaptation (developing new socioecological configurations that function effectively under new conditions). The Arctic may be one of the last remaining opportunities to plan for change in a spatially extensive region where many of the ancestral ecological and social processes and feedbacks are still intact. If the feasibility of this strategy can be demonstrated in the Arctic, our improved understanding of the dynamics of change can be applied to regions with greater human modification. Conditions may now be ideal to implement policies to manage Arctic change because recent studies provide the essential scientific understanding, appropriate international institutions are in place, and Arctic nations have the wealth to institute necessary changes, if they choose to do so.

Environmental consciousness and moral hazard in international agreements to protect the environment

A group of countries that can potentially commit to cooperation to protect the environment are identified as environmentally-conscious countries. Conditions are examined under which they can provide self-financing side payments, to a second group of less environmentally-conscious countries, so that the two groups form a global or partial stable coalition that agrees to emit at the first-best global welfare optimum. A mechanism is also developed which must be incorporated into the agreement between the two groups, in order to induce all countries to emit at the desired level, even when global pollution has nonpoint source pollution characteristics.

Environmental innovation, spillovers and optimal policy rules

The great majority of the analysis of environmental policy has been undertaken under the assumption that emissions per unit of produced output are constant. Then once environmental policy is introduced, firms either reduce their output or engage in abatement which mainly represents end-of-pipe emissions reduction (e.g., Keeler, Spence and Zeckhauser, 1971; Baumol and Oates, 1988; Barnett, 1980). Recently, however, increasing attention has been directed towards the analysis of environmental policy aimed at reducing unit emissions coefficients through the introduction of environmentally-clean technology. That is, firms are induced by the policy to engage in environmental innovation, or environmental RD Ulph and Ulph, 1994) and by doing so they could reduce emissions without reducing output or undertaking end-of-pipe abatement.