Sebastián J. Miller

The Socioeconomic and environmental effects of free trade agreements: a dynamic CGE analysis for Chile

This paper undertakes a quantitative analysis of the socioeconomic and environmental impacts of different trade agreements for Chile. A dynamic general equilibrium model is used to compare the consequences of unilateral liberalization and trade agreements with the European Union (EU) and the United States (USA). The results show that economic gains under the trade agreements are only significant if foreign investment increases or value added taxes are modified. Winners and losers depend on the agreement; however, unskilled labor-intensive sectors always progress. Consequently, these agreements seem to be good for the poorest groups. Some natural resource intensive sectors significantly increase their production with the EU and the US agreements, also increasing the environmental pressures. CO 2 and PM-10 emissions are not very different under these agreements as compared to business as usual – under which environmental pressures increase significantly. The results show the importance of economy-wide analysis of trade agreements in developing contexts.

Climate cost uncertainty, retrofit cost uncertainty, and infrastructure closedown : a framework for analysis

Large and energy-intensive infrastructure investments with long life times have substantial implications for climate policy. This study focuses on options to scale down energy consumption and carbon emissions now and in the future, and on the costs of doing so. Two ways carbon emissions can be reduced post-investment include retrofitting the infrastructure, or closing it down. Generally, the presence of bulky infrastructure investments makes it more costly to reduce emissions later. Moreover, when expected energy and environmental costs are continually rising, inherent biases in the selection processes for infrastructure investments lead to excessive energy intensity in such investments. Thus great care must be taken when choosing the energy intensity of the infrastructure at the time of investment. Simulations indicate that optimally exercising the retrofit option, when it is available, reduces ex ante expected energy consumption relative to the no-option case. Total energy plus retrofit costs can also be substantially reduced, the more so the larger is ex ante cost uncertainty. However, the availability of the retrofit option also leads to a more energy intensive initial infrastructure choice; this offsets some, but usually not all, of the gains from options for subsequent retrofitting.

Infrastructure investments under uncertainty with the possibility of retrofit: theory and simulations

Investments in large, long-lived, energy-intensive infrastructure investments using fossil fuels increase longer-term energy use and greenhouse gas emissions, unless the plant is shut down early or undergoes costly retrofit later. These investments will depend on expectations of retrofit costs and future energy costs, including energy cost increases from tighter controls on carbon emissions. Simulation analysis shows that the retrofit option can significantly reduce anticipated future energy consumption as of the time of initial investment, and total future energy plus retrofit costs. The more uncertain are the costs, the greater the value of this option. However, the future retrofit option also induces more energy-intensive infrastructure choices, partly offsetting the direct effect of having the option on anticipated energy use. Efficient, forward-looking infrastructure investments have high potential for reducing long-term energy consumption. Particularly if energy prices are expected to rise, however, the potential for reduced energy consumption will be eroded if expectations of energy prices do not include environmental costs or future retrofit possibilities and technologies are not adequately developed.

Are Environmentally Related Taxes Effective

This paper focuses on the question of whether the magnitude of long-established environmentally related taxes (ERT) is related to countries environmental performance. While environmental taxes efficiencies have previously been discussed, those taxes contribution to reducing pollution and improving environmental quality has not been fully explored. This paper therefore analyzes the effectiveness of environmental taxes by examining the environmental performance of 50 countries from all regions in association with the amount of revenues from environmentally related taxes each country collects. Using a cross-section regression and a panel dynamic regression, the paper finds that countries with higher revenues from these types of taxes also exhibit higher reductions in CO2 emission, PM10 emissions, and energy consumption and production from fossil sources.

Parking Taxes as a Second Best Congestion Pricing Mechanism

Growing vehicle use and congestion externalities have led many to consider alternative congestion pricing mechanisms, as road pricing often has high infrastructural costs and faces public opposition. This paper explores the role of parking taxation in reducing congestion by considering a natural experiment created by the progressive January 1, 2012 Chicago parking tax increase. Exploiting differences in vehicle use across income groups, it is estimated that the approximately

Why Do Populist-Outsiders Get Elected? A Model of Strategic Populists

2 a day parking tax increase led to a 4-6 percent reduction in total vehicle trips in high-income areas, with the largest response seen on roads more heavily used by commuters. Also found are corresponding increases in use of public transit and a 3. 1 percent aggregate reduction in vehicle trips. It is concluded that parking taxes can help mitigate congestion externalities, although they are no more than about half as effective as more efficient congestion tolls.

The Cost of Lower Emissions: An Appraisal for Five LAC Economies Using CGE Models

The existence of populist regimes led by outsiders is not new in history. In this paper a simple framework is presented that shows how and why a populist outsider can be elected to office, and under what conditions he is more likely to be elected. The results show that countries with a higher income and wealth concentration are more likely to elect populist outsiders than countries where income and wealth are more equally distributed. It is also shown that elections with a runoff are less likely to bring these populist outsiders into office.

Vulnerability indicators of adaptation to climate change and policy implications for investment projects

Climate change mitigation policies have begun to be discussed in Latin American and Caribbean (LAC) countries in recent years. However, the economic effects of such policies - i. e. , winners and losers - may vary significantly across countries. This paper attempts to shed light on some of these differences for a set of five LAC countries that may in the future adopt or be forced to accept some form of carbon mitigation policy. To this end a single-country CGE model is used to simulate a set of domestic carbon taxes that the countries could adopt or face. The results show that the costs of reducing 1 percent of emissions are in a range of 0. 18 to 0. 32 percent of GDP. Although in all instances the primary objective of reducing emissions is achieved, the sectors that win/lose vary, making this type of analysis relevant for countries to use before adopting a given policy. There is evidence, however, that those costs could become benefits when carbon taxes are compensated with reductions in general taxes.

Quake'n and Shake'n... Forever! Long-Run Effects of Natural Disasters: A Case Study on the 1970 Ancash Earthquake

Relevant and appropriate indicators for vulnerability at both the local levels are significant for effective adaptation to climate change. The paper reviews the literature of these indicators, and explores this issue using a selected sample of development projects from the Inter-American Development Bank (IDB) to assess the measurement of vulnerability. We find the importance of assessing vulnerability based on local indicators reflecting the characteristics of different sectors. The results of analyzing the IDB projects case studies suggest that projects should be designed from project inception to include more relevant indicators of measuring exposure and sensitivity besides adaptive capacity, depending on the attributes of projects. We show that relevant vulnerability indicators can be developed for projects based on existing information.

Adapting to Climate Change: Long-Term Effects of Drought on Local Labor Markets

This study estimates the effects of the 1970 Ancash earthquake on human capital accumulation on the affected and subsequent generation, 37 years after the shock, using the Peruvian censuses of 1993 and 2007. The main finding is that males affected by the earthquake in utero completed on average 0. 5 years less schooling while females affected by the earthquake completed 0. 8 years less schooling. Surprisingly, those whose mothers were affected at birth by the earthquake have 0. 4 less years of education, while those whose fathers were affected by the earthquake at birth have no effects on their education. The evaluation of other outcomes also suggests that the level of welfare of the affected individuals has been negatively impacted in the long run. The present investigation supports previous literature on shocks in early childhood, providing evidence of the existence of intergenerational transmission of shocks.