Competitive Markets for Pollution Permits: Impact on Factor Income and International Equilibrium

We are interested in the impact of pollution permits on wages and profits. We analyze important consequences of introducing a market of pollution permits. A fundamental issue concerns the initial allocation of such permits: should they be allocated freely by grandfathering or be auctioned. The international symmetric case allows us to capture the essence of the problem on income factor. We show that allocating permits to factors in proportion of their contribution to production leads to an efficient (neoclassical) distribution. Considering the international asymmetric case, we show that a permit market does not modify the competitive world equilibrium without permits when the total allocation is large enough. When it is not, if allocation of permits is not proportional to the emissions in the world without permits, there is a reduction factor of emissions that results from the equilibrium allocation of capital.     

Optimal Environmental Policy for a Polluting Monopoly with Abatement Costs: Taxes Versus Standards

In this paper, we characterize the optimal environmental policy for a polluting monopoly that devotes resources to abatement activities when damages are caused by a stock pollutant. With this aim, we calculate the stagewise feedback Stackelberg equilibrium of a (differential) policy game where the regulator is the leader and the monopolist is the follower. Our analysis shows that the first-best policy consists of applying a Pigouvian tax and a subsidy on production equal to the difference between the price and the marginal revenue. However, for a stock pollutant, the Pigouvian tax is not equal to the marginal damages but is given by the difference between the social and private valuation of the pollution stock. On the other hand, if a second-best emission tax is used, the tax is lower than the Pigouvian tax and the difference decreases with the price elasticity of the demand. Finally, we find that taxes and standards are equivalent in a second-best setting. In the second part of the paper, we solve a linear-quadratic differential game and we obtain that the first-best tax increases with the pollution stock whereas the subsidy decreases. Moreover, the tax is negative for low values of the pollution stock, i.e., for low values of the pollution stock, we obtain that the social valuation of the stock is lower than the private valuation. Furthermore, when a second-best policy is applied, the steady-state pollution stock is lower than the steady-state pollution stock associated with the efficient outcome.     

“Emission game”: some applications of the theory of games to the problem of CO2 emission

If there are no doubts that we must reduce the total emission of carbon dioxide, then the problem of how much different countries should be allowed to contribute to this amount remains a serious one. We suggest this problem to be considered as a non-antagonistic game (in Germeier's sense). A game of this kind is called an “emission game”. Suppose that there are n independent actors (countries or regions), each of them releasing a certain amount of CO₂ per year (in carbon units) into the atmosphere, and that the emission would be reduced by each actor. Each actor has his own aim: to minimise the loss in the Gross Domestic Product (GDP) caused by the reduction of emissions. On the other hand, taking into account that it is impossible to estimate more or less precisely the impact of the climate change on GDP for each country today, a common strategy will be to reduce the climate change. Since one of the main leading factors in global warming is the greenhouse effect, then the common aim will be to reduce the sum of emissions. This is a typical conflict situation. How to resolve it? We can weigh the “egoistic” and “altruistic” criteria for each actor introducing the so-called “coefficients of egoism”. This coefficient is very large, if the actor uses a very egoistic strategy, and conversely, if the actor is a “super-altruist”, then the corresponding coefficient is very small. Using these coefficients we get the general solution of the game in a form of some Pareto's equilibrium. The solution is stable and efficient.     

The role of physical and human capital in FDI-pollution-growth nexus in countries with different income groups: A simultaneity modeling analysis

This paper examines the causal links between foreign direct investment (FDI), CO₂ emissions, and economic growth in a global panel of 101 countries and four diverse income groups (low, lower-middle, upper-middle, and high) countries using the simultaneous equations framework, with data from 1990 to 2014. Considering physical capital and human capital, this is the first time these two determinants have been linked to the FDI-pollution-growth simultaneous equation model. The dependent variables in the three simultaneous equations are inflow of foreign direct investment, CO₂ emissions as a proxy for environmental pollution, and real gross domestic product. Three critical inferences can be drawn from the results. First, there is a two-way causal relationship between growth and FDI in the global panel and across all income groups (except for lower-middle-income groups). Likewise, except for high-income countries, there is a two-way causal relationship between FDI and CO₂ emissions in the global panel. Second, the results support a one-way causal relationship between economic growth and CO₂ emissions in the global panel and the income subgroup, but only in the low-middle and high-income groups support the environmental Kuznets curve (EKC) and pollution haven hypothesis (PHH). Third, the heterogeneous impact of human and physical capital on the environment is genuinely striking: human capital improves its quality while physical capital degrades it. The results suggest that physical and human capital contributes to economic growth and attracts foreign direct investment.     

Assessing the effects of noise abatement measures on health risks: A case study in Istanbul

In recent decades, noise pollution caused by industrialization and increased motorization has become a major concern around the world because of its adverse effects on human well-being. Therefore, transportation agencies have been implementing noise abatement measures in order to reduce road traffic noise. However, limited attention is given to noise in environmental assessment of road transportation systems. This paper presents a framework for a health impact assessment model for road transportation noise emissions. The model allows noise impacts to be addressed with the health effects of air pollutant and greenhouse gas emissions from road transportation. The health damages assessed in the model include annoyance, sleep disturbance, and cardiovascular disease in terms of acute myocardial infarction. The model was applied in a case study in Istanbul in order to evaluate the change in health risks from the implementation of noise abatement strategies. The noise abatement strategies evaluated include altering pavement surfaces in order to absorb noise and introducing speed limits. It was shown that significant improvements in health risks can be achieved using open graded pavement surfaces and introducing speed limits on highways.     

Emissions of Particulate and Gaseous Pollutants within the Keelung Harbor Region of Taiwan

The Keelung port, which is located on the northern tip of Taiwan, right next to the Taipei metropolitan area, is an important international harbor. However, any air pollutants generated from the Keelung port region, immediately travel to the neighboring Keelung city, and greatly impact the residents' daily life and the quality of their environment. This study has investigated and quantified pollution emissions, from the Keelung port region, between 1997 and 2002. Emissions from major air pollution sources were estimated. The estimated results indicated that total TSP (total suspended particles) emissions had significantly increased, from 5221 ton/yr in 1997 to 262 687 ton/yr in 2002, due to the greatly increased volume of sand imported into Keelung Harbor. Quantities of other emissions, such as SO₂, NO₂, CO and HC remained stable and were 440, 207, 78 and 25 ton/yr, respectively, on average, with variations within 7% over the previous six-year period. By examining the emissions from pollution sources, it was found that TSP emissions mainly originated from re-suspension of dust, due to both vehicle movement and the sand unloading process; this accounted for over 99% of the total TSP emissions produced in the port region. About 80% of the total SO₂ emissions originated from the main ships' engines within the Keelung port region, due to the use of fuel with a high sulfur content. In addition, loading/unloading machines within the port region were the major sources of NO₂, CO and HC pollution emissions, which comprised 54, 58 and 66% of the total emissions of these pollutants, respectively. TSP emissions from Keelung port were much higher than from the neighboring Keelung city; hence, alleviating TSP emissions should be the first priority for air pollution reduction within both the port of Keelung and Keelung city.     

The Climate Impacts of Sulfate Aerosols

Sulfate aerosols (SO₄) from anthropogenic emissions of sulfur dioxide (SO₂) generally have a cooling effect. However, if SO₂ emissions fall over time, accounting for sulfate aerosols will increase the predicted warming from greenhouse gases. This paper integrates the four marker emission scenarios for CO₂ and SO₄ from the Special Report on Emissions Scenarios (SRES), the UIUC general circulation model (GCM), and a country-specific impact model (GIM) to calculate the impacts of sulfate aerosols. By 2100, lower SO₂ emissions slightly increase warming in the temperate and polar regions causing small damages in the former and small benefits in the latter. If SO₂ emissions are also lower in tropical regions, temperatures will rise causing small damages there as well. However, if SO₂ emissions rise in tropical regions, temperatures will fall leading to small benefits. This revised version was published online in July 2006 with corrections to the Cover Date.     

Assessing the Impact of Carbon Tax Differentiation in the European Union

To what extent do the welfare costs associated with the implementation of the Burden Sharing Agreement in the European Union depend on sectoral allocation of emissions rights? What are the prospects for strategic climate policy to favor domestic production? This paper attempts to answer those questions using a CGE model featuring a detailed representation of the European economies. First, numerical simulations show that equalizing marginal abatement costs across domestic sectors greatly reduces the burden of the emissions constraint but also that other allocations may be preferable for some countries because of pre-existing tax distortions. Second, we show that the effect of a single country's attempt to undertake a strategic policy to limit impacts on its domestic energy-intensive industries has mixed effects. Exempting energy-intensive industries from the reduction program is a costly solution to maintain the international competitiveness of these industries; a tax-cum-subsidy approach is shown to be better than exemption policy to sustain exports. The welfare impact either policy – exemption or subsidy – on other European countries is likely to be small because of general equilibrium effects.     

Behavioural determinants of an individual's intention to adapt to climate change: Both internal and external perspectives

Climate change has had a significant negative impact on socio-economic factors and the earth's ecology. To cope with climate change, many countries have employed various policies and measures to reduce damage due to climate change. For individual residents, adaptation behaviour is vital for reducing individual welfare losses. This research analysed how psychological determinants and other external factors influence residents' intention to adapt to climate change. We proposed an extended protection motivation theory (PMT) model, developed a reliable scale and conducted a nationwide field survey. We interviewed 1402 residents in 29 provinces, and 874 valid questionnaires were collected, providing data that were used in a structural equation model. The results show that our model can serve as a reliable framework for analysing the determinants of residents' intention to adapt to climate change. Policy is the most important factor for stimulating the formation of residents' adaptation intention. Risk appraisals and adaptation appraisals have positive and significant impacts on the intention of residents to adopt climate change adaptation behaviour. Information and climate perception do not directly influence residents' behavioural intentions but indirectly affect their intentions through the process of risk appraisal and adaptation appraisal. Corresponding policy suggestions are made that may be helpful for the formulation of adaptation policies.     

Developing a Decision-Support System for Waste Management in Aluminum Production

Industrial enterprises constitute a major portion of the world’s economy, as well as a large proportion of a country’s businesses and total employment. In Turkey, industrial enterprises are underdeveloped in terms of knowledge, skill, capital, and particularly accessing and benefiting from the advantages provided by modern information and communication technologies. Aluminum manufacturing has been reported to be the largest industry in Turkey with respect to production volumes and application fields. However, aluminum production is known to be an important contributor to environmental pollution, and the relative contribution of other related enterprises to the total industrial environmental impact is unknown. Environmental pollution sources can typically be classified into three categories: gaseous emissions, solid wastes, and wastewaters. The types of wastes produced by aluminum production vary based on the process line used, the variety of target products produced, and the production capacity of a given plant. As the capacities of facilities grow, the type and amount of waste become more variable. Therefore, the primary objective of this study is to determine the priority of each waste type in aluminum manufacturing industries. This study was conducted in the Industrial Zone of Kayseri in Turkey. Three different facilities that range in size from large to small based on their production volume, plant capacity, and variety of production are selected for this study. The priority of waste types was determined by combining the AHP and PROMETHEE II multicriteria decision methods. While wastewater was categorized as having the highest priority in large facilities, solid waste was determined to be the highest priority in medium and small facilities.     

A Stochastic Dynamic Game of Carbon Emissions Trading

This paper proposes a computable stochastic equilibrium model to represent the possible competition between Russia and China on the international market of carbon emissions permits. The model includes a representation of the uncertainty concerning the date of entry of developing countries (e.g., China) on this market in the form of an event tree. Assuming that this date of entry is an uncontrolled event, we model the competition as a dynamic game played on an event tree and we look for a solution called S-adapted equilibrium. We compare the solution obtained from realistic data describing the demand curves for permits and the marginal abatement cost curves in different countries, under different market and information structures: (i) Russia's monopoly, (ii) Russia–China competition in a deterministic framework, (iii) Russia–China competition in a stochastic framework. The results show the possible impact of this competition on the pricing of emissions permits and on the effectiveness of Kyoto and post-Kyoto agreements, without a US participation.     

System Dynamics Modeling and Policy Simulation for Urban Traffic: a Case Study in Beijing

This paper constructs a system dynamics model for simulating the impact of different strategies on urban traffic’s energy consumption and carbon emissions. Based on a case study in Beijing, the model includes three subsystems: (1) urban traffic, (2) population and economy, and (3) energy consumption and carbon emissions. First, the model is used to decompose the impact of different vehicles on energy consumption and carbon emissions. Decomposition results show that private cars have the most significant impact on urban traffic’s energy consumption and carbon emissions; however, total vehicle kilometers traveled by private cars are the smallest among four trip modes. Then, the model is used to simulate different urban traffic policies. Policies are categorized as follows: (a) driving restrictions on vehicle registration numbers, (b) a scheme for vehicle registrations via a lottery system, and (c) development of public transportation infrastructures. Scenario simulation results show that all those measures can reduce energy consumption and carbon emissions. Though the last strategy (c) contains several delays, its effect is more stable and far-reaching. Finally, some recommendations about easing traffic pressure and reducing traffic emissions are given.     

Greenhouse gas emissions from two hydroelectric reservoirs in Mediterranean region

Water reservoirs are used for many purposes, such as water supply, irrigation, flood mitigation, and hydroelectric energy generation. Although hydroelectric energy is considered “green,” many studies show that the construction of a reservoir enhances greenhouse gas (GHG) emissions at the transformed area. These emissions, mainly of CO₂, CH₄, and N₂O gases, depend on the age of the reservoir, landscape and soil composition, fauna and flora remnants of the impounded area, climatic conditions, and basin runoffs. Consequently, GHG emissions significantly vary between reservoirs and depending on local specificities. Several studies have investigated GHG emissions from reservoirs around the world, focusing mainly on reservoirs located in cold regions, temperate regions, and tropical regions. Research is lacking for reservoirs in Mediterranean countries, like Greece, and similar regions. This work initially assesses the net GHG emissions of a newly created reservoir (Ilarion est. 2012) in Western Macedonia, Greece. The methodology for net GHG emission calculation was based on the use of literature data concerning pre-impoundment emission factors and local specificities of the reservoir (terrain type, canopy cover), as well as on the 2-year measurement data that were collected using a “static floating chamber.” Furthermore, in this work, the gross GHG emissions of an older, in-line reservoir (Polyfytos est. 1974) were also calculated, based on 2-year measurement data. The results show that the global warming potential (GWP) of the reservoirs is dictated by methane emissions; it minimizes during winter and spring and maximizes during summer and autumn. Hydroelectric energy production at Ilarion Reservoir results in 32 to 97 times less total CO₂ equivalent emissions in comparison to fossil fuels, while at Polyfytos Reservoir only 8 to 24 times less (based on gross emissions). It appears that the impact of a reservoir’s morphology on GHG emissions is more significant than that of a reservoir’s age.     

Does the high–tech industry consistently reduce CO2 emissions? Results from nonparametric additive regression model

China is currently the world's largest carbon dioxide (CO₂) emitter. Moreover, total energy consumption and CO₂ emissions in China will continue to increase due to the rapid growth of industrialization and urbanization. Therefore, vigorously developing the high–tech industry becomes an inevitable choice to reduce CO₂ emissions at the moment or in the future. However, ignoring the existing nonlinear links between economic variables, most scholars use traditional linear models to explore the impact of the high–tech industry on CO₂ emissions from an aggregate perspective. Few studies have focused on nonlinear relationships and regional differences in China. Based on panel data of 1998–2014, this study uses the nonparametric additive regression model to explore the nonlinear effect of the high–tech industry from a regional perspective. The estimated results show that the residual sum of squares (SSR) of the nonparametric additive regression model in the eastern, central and western regions are 0.693, 0.054 and 0.085 respectively, which are much less those that of the traditional linear regression model (3.158, 4.227 and 7.196). This verifies that the nonparametric additive regression model has a better fitting effect. Specifically, the high–tech industry produces an inverted “U–shaped” nonlinear impact on CO₂ emissions in the eastern region, but a positive “U–shaped” nonlinear effect in the central and western regions. Therefore, the nonlinear impact of the high–tech industry on CO₂ emissions in the three regions should be given adequate attention in developing effective abatement policies.     

基于新空气质量标准的全国大气环境承载力评价

随着中国环境问题特别是大气环境问题的凸显,环境承载能力研究成为国内各界关注的热点。采用大气污染物年均质量浓度与新的空气质量标准比较的方法即超标倍数法,对全国330个地级城市进行大气环境承载力评价。评价结果表明,有70%的城市大气环境超载,大气环境承载形势严峻。超载最严重地区为京津冀及周边区域,长三角地区、中部大部分地区。PM2.5为大多数重点城市超载的首要污染物。通过对比大气环境承载指数与污染物排放总量、污染排放强度、人口、第二产业、地形、气象等因素的相关关系发现,不同地区主要影响因素不同,应该采取分区域、季节等差别化手段控制污染物排放,提高环境承载能力。     

Latitudinal and longitudinal variations in the impact of air pollution on well-being in China

Air pollution has resulted in high costs of living due to additional expenditures to combat the negative health effects, and the relationship between air pollution and well-being is of burgeoning interest. In this paper, the development and life index including 42 indicators is introduced to measure much broader dimensions of well-being in China at the macro level, which helps to compare the well-being of different regions. This paper uses provincial-level panel data from 2004 to 2013 in China, to empirically analyze and compare the impact of air pollution on well-being in latitudinal and longitudinal settings, based on regression methods, such as 2SLS, LIML, GMM and IGMM. The results show that although increased air pollution negatively affects well-being in general, the magnitude of the impact differs by region. Specifically, in China's northern regions, air pollution had a significantly negative impact on well-being, while the negative impact was weaker in southern China; moreover, a strong negative impact was found in western China, while a weak negative impact was found in eastern and central China. The time effect was also found to influence air pollution. Finally, this paper found that the natural birth rate and income level served as functional mechanisms of the effect of air pollution on regional well-being. These findings are useful in guiding government policy for determining the optimal balance between air quality control for economic growth and regional well-being.     

欧盟臭氧污染监测现状及我国开展臭氧污染监测的建议

综述了欧盟臭氧前体物排放及地面臭氧污染监测的现状,分析了欧盟重视地面臭氧污染监测的原因及存在的主要问题.根据欧盟在地面臭氧污染监测方面的经验和做法,提出了加强我国地面臭氧污染监测的必要性和具体建议.     

Examining the Factors Affecting Air Pollution Emission Growth in China

In this study, a structural decomposition method was applied to research the factors affecting the changes in air pollution emissions in China. Based on 1995–2009 data from the World IO Database, we combine China’s (Import) Noncompetitive IO Table and the Environmental Account Table. The results indicate that emission intensities represent the most important factor for reducing air pollution emissions in China. In contrast, economies of scale and the intermediate input product structure constitute the major causes for acceleration in the growth of air pollution emissions in China. From the perspective of final demand, the economic scale effect caused by investment demand is the main reason for this accelerated growth in China’s air pollution emissions in recent years. Consumption-driven economic growth is cleaner, while investment-driven economic growth is dirtier. This study constructed a structure decomposition model based on the input-output tables, which is suitable for studying the driving forces of various economic indicators, such as energy, carbon dioxide, and economic growth. At the same time, this method is helpful for analyzing the factors that influence changes in economic indicators that result from different economic pull modes, such as the final demand mode. However, the model does have limitations; for example, it does not consider the difference between general trade and processing trade in exports.     

Understanding the Price Dynamics in the Jiangsu SO2 Emissions Trading Program in China: A Multiple Periods Analysis

Because emissions permits can be considered to be a pseudo-commodity, the permit price in the emissions trading markets has already attracted great interest from the economic literature. This research took the Jiangsu sulfur dioxide (SO₂) emissions trading program in China as a case study to examine the price dynamics over the next 10 years (2011–2020) based on Jiangsu’s new SO₂ emissions trading policy design. An adaptive agent-based simulation model was developed to estimate the price dynamics as well as the impact of energy price, policy design, and new environmental regulation on the permit price. The results showed that the equilibrium price of the Jiangsu SO₂ emissions trading market is approximately 4.20 CNY/kg, and the permit price will fluctuate around this price if the other conditions are not changed. If the coal price increases during 2011–2016, the permit price will decline to 2.79 CNY/kg by 2020 under China’s current coal–electricity price mechanism. In addition, the banking mechanism will smooth the price fluctuations and the average permit price will be generally higher when banking is not allowed. Finally, the stricter environmental regulation will reduce the market supply of permits and will raise the permit price. According to China’s potential new SO₂ discharge standard, the permit price will jump to 11 CNY/kg. The quantification of the permit price dynamics can help power plants to make decisions on emissions trading.     

Emission-based static traffic assignment models

Tailpipe emissions in the road transportation system are a major source of air pollution and greenhouse gases. One of the possible approaches is to influence drivers’ routing decisions such that the emissions and fuel consumption is minimized. In order to evaluate such condition, we develop environmental traffic assignment (E-TA) models based on user equilibrium (UE) and system optimal (SO) behavioral principles. Extending the traditional travel time-based UE and SO principles to E-TA is not straightforward because, unlike travel time, the rate of emissions increases with the increase in vehicle speed beyond a certain point. The results of various TA models show a network-wide traffic control strategy in which vehicles are routed according to SO-based E-TA, can reduce system-wide emissions. However, a system in which drivers make routing decisions to minimize their own emissions (E-UE system) results in a paradoxical situation of increased individual as well as system-wide emissions.