Anni Huhtala

Does International Harmonization of Environmental Policy Instruments Make Economic Sense

Harmonization of the instruments used in environmental policy has beenconsidered necessary to guarantee “fair” competition in internationalmarkets. We examine the economic costs of harmonizing paper recyclingstandards in countries where the urgency of the waste disposal problemsdiffer. Using data of seven European countries we estimate thetechnologically feasible input combinations of pulp and waste paper forpaper production. Short-term effects of two environmental policy measures,minimum content requirement and utilization rate target, are analyzed. Bytranslating the two administrative instruments into taxes and subsidies, weshow that the shadow costs of the harmonization vary considerably betweencountries. The difference in the domestic availability of waste may explainthe variation, and a modification of the policy measures to incorporate thisaspect is suggested.

When the theory is not enough - valuation of forest resources with "efficiency" prices in practice

In resource accounting, simple theoretical models built upon efficiency prices have been developed to capture changes in social welfare generated by natural resources. We examine whether changes in market stumpage prices, as proxies for efficiency prices, have actually reflected changes in the physical timber inventories in Finland and Sweden during the past seventy years. Cointegration and unit root tests show that no long-term equilibrium relationships exist between the timber prices and stocks. After identifying a potential reason for the result, the basic theoretical growth model is slightly elaborated to provide a more appropriate framework for measuring net domestic product for the forest sector.