Katrin Millock

Ex Post Evaluation of an Earmarked Tax on Air Pollution

In this paper we do an ex post evaluation of the French tax on air pollution. The revenues of this tax were redistributed to polluters in the form of subsidies to abatement technologies, and the policy is a typical example of an earmarked tax. We use a two-stage estimation procedure on an unbalanced panel data set of 226 plants from three industrial sectors that are some of the main contributors to nitrogen oxide and sulfur dioxide emissions. The results indicate that the overall environmental effectiveness of this particular tax/ subsidy scheme can be questioned. (JEL Q53, Q58)

Technology transfers in the Clean Development Mechanism: an incentives issue

The Clean Development Mechanism (CDM) offers abatement cost savings under the Kyoto Protocol by allowing credits for emission reductions obtained in signatory developing countries. The paper argues that technology transfers can improve incentives for cost-effective emission reductions under bilateral CDM contracts when there is asymmetric information between the investor and the host party.JEL classification: Q20; D82

Financial incentives and pesticide use

This paper argues that the current pesticide regulatory system is inefficient. An elaborate set of registration requirements has led to high costs of new pesticides. The current system does not provide any incentives for decreasing its pesticide use. The implementation of financial incentives to control pesticide use is difficult since damage from pesticide use depends on locational factors, timing, and manner of application. An efficient pesticide tax scheme requires detailed monitoring and reporting of pesticide use by farmers. Improved monitoring systems will enable differentiated pesticide taxes according to application technology, and such differentiated taxation will encourage the adoption of precision technologies that reduce pesticide use. Proceeds from pesticide taxes may have a role in financing research and education in Integrated Pest Management methods, given the high development costs and advanced management skills demanded by many non-chemical control methods. The transition to efficient financial incentives will be gradual in the near future, and it may be useful to use financial incentives to induce improvement in pesticide use efficiency and reduce pesticides use levels.

Nonpoint Source Pollution When Polluters Might Cooperate

Abstract In a model of nonpoint source pollution, we extend the theory of ambient taxes to the case when polluters might cooperate. We show that regulation through ambient taxes is severely constrained when the degree of cooperation among polluters is unknown to the regulator. On the other hand, if the regulator can invest in costly monitoring of emissions, then the optimal regulation offers a low ambient tax to cooperative groups and an optimal but costly individual emission tax to non-cooperative groups. This mechanism also has attractive properties when risk-aversion is introduced.

The Factors Behind CO2 Emission Reduction in Transition Economies

Les pays en transition ont considerablement reduit leurs emissions de CO2 entre 1995 et 2003. Cette performance est-elle due a l’application d’une politique volontariste de la part des gouvernements, ou bien est-elle un simple effet collateral de la transformation industrielle majeure subie par ces pays ? Nous tentons de repondre a cette question en developpant deux equations structurelles pour la demande (emissions) et l’offre (politique) de pollution. L’equation de l’offre prend en compte la qualite institutionnelle du pays, aussi bien que les preferences des consommateurs pour la qualite de l’environnement. Nos resultats montrent que, toutes choses egales par ailleurs, l’effet d’echelle de la production seul aurait explique une augmentation de 31 % des emissions industrielles de CO2 dans les pays en transition entre 1995 et 2003, et l’effet de structure de la production aurait contribue a une augmentation de 8,4 % de ces emissions. Cependant, l’effet technique, qui decoule de la severite de la politique environnementale, s’est traduit par une reduction de 58 % des emissions industrielles de CO2, et a permis ainsi une reduction nette des emissions industrielles de CO2 de 18 % en 2003 par rapport a 1995. Enfin, notre etude confirme l’importance des facteurs institutionnels dans l’explication des emissions dans les pays en transition.The Central and Eastern European countries significantly reduced their CO2 emissions between 1995 and 2003. Was this emission reduction just the fortuitous result of the major economic transformation undergone by countries in transition? Or is it rather a result of more stringent environmental policy? The objective of the article is to answer this question through a simultaneous equation model of the demand (emissions) and supply (environmental stringency) of pollution. The supply equation takes into account the institutional quality of the country as well as consumer preferences for environmental quality. The results indicate that, all else equal, output growth would have increased CO2 industrial emissions in the Central and Eastern European countries in our sample by 31% between 1995 and 2003, and the composition effect corresponded to an increase of 8.4% of these emissions. Nevertheless, the technique effect, induced by more stringent environmental policy, reduced industrial CO2 emissions by 58%, and allowed for a final beneficial result for the environment, i.e., -18% of industrial CO2 emissions in 2003 compared to 1995. Finally, our study confirms the importance of institutional factors in the explanation and further prediction of pollution reduction in transition economies.

The French Tax on Air Pollution: Some Preliminary Results on its Effectiveness

Empirical evidence evaluating the efficiency of economic instruments is still rare, despite significant theoretical advances over the last decades. The objective of this paper is to evaluate one form of environmental taxation, the French tax on air pollution from 1990-99. While starting out in 1985 as a tax levied only on emissions of sulphur dioxide (SO2 ), the tax base was subsequently extended to encompass also emissions of nitrogen oxides (NOx), hydrochloric acid (HCl), and volatile organic compounds (VOC). The revenues of the French tax on air pollution were earmarked for abatement subsidies and the financing of air quality surveillance systems. Using a plant-level database, we find a negative, significant effect of the tax on emissions of SO2, NOx, and HCl. The abatement elasticity with regard to the tax is quite small, however.

What are Households Willing to Pay for Better Tap Water Quality? A Cross-Country Valuation Study

We estimate willingness to pay (WTP) for better quality of tap water on a unique cross-section sample from 10 OECD countries. On the pooled sample, households are willing to pay 7.5% of the median annual water bill to improve the tap water quality. The highest relative WTP for better tap water quality was found in the countries with the highest percentage of respondents being unsatisfied with tap water quality because of health concerns. The expected WTP increased with income, education, environmental concern, and health and taste concerns with the tap water.

Packaging waste management in Sweden: a product charge

Increased recognition of the limited assimilative capacity of the environment has led to stricter environmental regulation of waste treatment. Recent policy attention has focussed on packaging, mainly because of its high visibility to consumers. This paper studies a Swedish proposal on producer responsability and analyzes economic instruments as an alternative policy instrument. Recent research by Pearce and Turner (1992) and Brisson (1992) has proposed a particular form of a product charge, and here, its application on Swedish packaging waste is analyzed in detail. A packaging charge is calculated for beverage containers and evaluated against the OECD criteria for economic instruments.

Climate change mitigation and adaptation in developing and transition countries: introduction to the special issue

While mitigation efforts in developed and emerging economies are necessary in order to meet ambitious climate targets, the international community strives to explore strategies to help the most vulnerable populations to cope with the short-term and long-term impacts of climate change. In the perspective of the 21st COP of the UNFCCC (Paris, December 2015), this Special Issue on ‘Climate change mitigation and adaptation in developing and transition countries’ addresses two complementary topical issues. On the one hand, migration – international and internal – and remittances are analyzed as adaptation strategies for vulnerable households and individuals. On the other hand, climate policies in emerging economies are examined in light of their distributional impacts for households and of the strategic issues they may raise. This special issue introduces five papers with a diversity of approaches, e.g., game theory, econometric modeling and computable general equilibrium (CGE) modeling.

Contracts for Clean Development - The Role of Technology Transfers

The Clean Development Mechanism (CDM) offers abatement cost savings under the Kyoto Protocol by allowing credits for emission reductions obtained in signatory developing countries. The paper shows that it is necessary to include technology transfers in the CDM to obtain correct incentives for emission reductions when there are monitoring difficulties.