Household incidence of pollution control policies: A robust welfare analysis using general equilibrium effects

This study assesses the incidence of pollution control policies on households. In contrast to previous studies, we employ an integrated framework combining a multisector general equilibrium model with a stochastic dominance analysis using household-level data. We consider three policy instruments in a domestic emission trading system: (i) an output-based allocation (OBA) of permits; (ii) the use of the proceeds of permit sales to reduce payroll taxes (RPT); (iii) and the use of these proceeds to reduce consumption taxes instead (UCS). The general equilibrium results suggest that the return to capital is more negatively affected than the wage rate in all simulations, since polluting industries are capital intensive. Abstracting from pollution externalities, the dominance analysis suggests that all three policies have a normatively robust negative (positive) impact on welfare (poverty). Formal dominance tests indicate that RPT first-order welfare dominates OBA over all values of household incomes. UCS also first-order poverty dominates RPT for any choice of poverty line below $CAN 18,600, and poverty dominates for any poverty line (and thus welfare dominates) at the second order. Finally, while the three pollution control policies do not have a numerically large impact on inequality (in comparison to the base run), statistical tests indicate that inequality increases significantly more with OBA and RPT than with UCS.     

Economic growth,public welfare and sustainability: an empirical system analysis

SUMMARY

This paper explores the relationships between economic activity and sustainability, growth, and welfare. The issues regarding the nature of the relationships were framed by Ekins in questions which are addressed empirically across countries and the states of the US. The sustainability issue is addressed by comparing nonrenewable energy throughput, a surrogate for impacts, to the renewable energy throughput in the associated ecosystem. The effect of a changing energy intensity, in developing and developed countries, on socioeconomic variables provides clues to social welfare. In developing countries a rising energy throughput (economic growth) and energy intensity is positively related to public welfare while impacts are generally moderate. The reverse appears to be true in developed countries, i.e. as energy throughput and intensity rise in developed countries and the US states, pollution and impacts also rise while socioeconomic variables worsen, so public welfare begins to decline. Economic development appears to pass through three phases which can be characterized by the nature and extent of its energy use. Each phase exhibits characteristic energy, pollution, structural and socioeconomic trends.     

International environmental agreements for local and global pollution

Increasing concerns about climate change have given rise to the formation of International Environmental Agreements (IEAs) as a possible solution to limit global pollution effects. In this paper, we study the stability of IEAs in a repeated game framework where we restrict to strategies which are simple and invariant to renegotiation. Our main contribution is that we characterize necessary and sufficient conditions for stability of an IEA when pollution has both a global and local effect. Local pollution spillovers are represented by a network structure. We find that stable IEAs exist if the network structure is balanced. Too large asymmetries in the degree of local spillovers may, however, lead to non-existence of stable structures. We also discuss the implications of our results for welfare. The generality of our approach allows for several applications, in particular the provision of public goods.     

Pigou meets Mirrlees: On the irrelevance of tax distortions for the second-best Pigouvian tax

This paper extends the Mirrlees (1971) model of optimal income redistribution with optimal corrective taxes to internalize consumption externalities. Using general utility structures and exploring both linear and non-linear taxes, it is demonstrated that the optimal second-best tax on an externality-generating good should not be corrected for the marginal cost of public funds, since it equals one in the optimal tax system. In the optimum, distortions of income taxes are equal to marginal redistributional gains. If the government does not have access to a non-distortionary marginal source of finance, the marginal cost of public funds can be either larger or smaller than one depending on subjective preferences for income redistribution. The optimal second-best corrective tax is then either higher or lower than the Pigouvian level. The findings in this paper generalize and amend prior results based on representative-agent models, shedding new light on the weak double-dividend hypothesis, and on the welfare gains of recycling revenue from environmental taxes.     

Ease vs. noise: Long-run changes in the value of transport (dis)amenities

For a complete cost-benefit analysis of durable infrastructures, it is important to understand how the value of non-market goods such as transit time and environmental quality changes as incomes rise in the long-run. We use difference-in-differences and spatial differencing to estimate the land price capitalization effects of metro rail in Berlin, Germany today and a century ago. Over this period, the negative implicit hedonic price of rail noise tripled. Our results imply income elasticities of the value of noise reduction and transport access of 2.2 and 1.4, substantially exceeding cross-sectional contingent valuation estimates.     

Redistribution and pollution taxes with non-linear Engel curves

This paper analyses optimal corrective taxation and optimal income redistribution. The Pigouvian pollution tax is higher if pollution damages disproportionally hurt the poor due to equity weighting of pollution damages. Moreover, under general utility functions, optimal pollution taxes should be set below the Pigouvian tax if the poor spend a disproportionate fraction of their income on polluting goods. However, if Engel curves are linear, optimal pollution taxes should follow the first-best rule for the Pigouvian corrective tax even if the government wants to redistribute income and the poor spend a disproportional part of their income on polluting goods. The often-used quasi-linear, CES and Stone-Geary utility functions all have linear Engel curves. If Engel curves are linear, and if pollution taxes are not optimised, Pareto-improving green tax reforms exist that move the pollution tax closer to the Pigouvian tax. Simulations demonstrate that optimal corrective taxes should be Pigouvian if the demand for polluting goods is derived from a LES demand system, but deviate from the Pigouvian taxes if demand for polluting goods demand is derived from a PIGLOG demand system.     

The backward incidence of pollution control in a rigid-wage economy

The backward incidence of pollution controls onto the polluting and nonpolluting industries is examined in a two-sector, rigid-wage economy characterized by unemployment in both the short run and the long run. As expected, more restrictive pollution controls result in contraction in the polluting sector and expansion in the nonpolluting sector. Somewhat unexpectedly, national income may rise with stronger pollution controls, if the polluting industry is relatively capital intensive.     

Optimal pollution in the presence of adjustment costs

This paper explores optimal pollution control when pollution is considered a stock and costs of treating pollution are a function both of the level and rate of change of pollution control. It is shown that even if the long run optimum stock of pollution is below the initial level adjustment costs may imply an optimally increasing stock of pollution in the short run. The results obtained are contrasted with those which emerge when adjustment costs are absent and when damages are taken to be a function of the flow of pollution; the appropriate tax rates of polluting discharges are examined.     

Effects of Carbon Taxes in an Economy with Prior Tax Distortions: An Intertemporal General Equilibrium Analysis

This paper analyzes the costs of carbon taxes in a model that recognizes interactions between this tax and pre-existing taxes. First we examine the extent to which costs of a U.S. carbon tax are reduced when its revenues finance cuts in income taxes. Such use of revenues significantly reduces, but does not eliminate, the overall policy costs. The positive overall costs reflect the carbon tax′s focus on intermediate inputs and its relatively narrow base in comparison with income taxes. We also examine the sensitivity of the carbon tax′s costs to the level of pre-existing taxes. For any given use of revenues, welfare costs rise significantly with pre-existing tax rates, indicating that models disregarding pre-existing taxes may substantially understate the costs of new environmental tax initiatives.     

A proposal for improving the measurement of benefits from pollution abatement

Two basic and competing approaches for measuring the benefits of pollution abatement have found support in the recent literature-the property value approach and the health damage function approach. The purpose of this paper is to show that conditions will often exist when the property value approach will not accurately measure all benefits and conditions will always be present that cause the health damage function approach to underestimate benefits. In general, neither approach can stand alone. It is possible, however, that the two approaches can be combined in such a way as to improve the measurement of abatement benefits. We present an approach for combining these two methods and do so by introducing an “information coefficient” that measures the degree of knowledge about pollution effects held by the public. Approaches to estimating the information coefficient are suggested.     

Substitution and the control of pollution : A comparison of effluent charges and quantity standards under uncertainty

Single-valued price and quantity controls of a polluting activity are compared under uncertainty. The ability to substitute other inputs for the pollutant in the production of a positively valued final good, and the usual discrepancy between the amount of pollution actually consumed and the amount emitted are carefully incorporated. The first is found to influence the degree to which cost fluctuation is reflected in the output of the final good. The second concern alters the region of the benefit function into which output is inserted. Both change the welfare losses associated with random fluctuation in the costs of reducing pollution.     

An Economic Analysis of the Fisheries Bycatch Problem

Bycatch is the incidental take of a species that has value to some other group. This paper compares open access and individual transferable quota equilibria to the equilibrium in which the joint value of the fisheries is maximized. The open access induced problems can be corrected by an individual transferable quota system only if both the target species and the bycatch species have tradable quotas, and only if the bycatch species does not have existence value. There exists a range of the bycatch-to-target species harvest levels for which the total harvest of each will be exactly taken by a given technology, even under open access. However, there may not even exist a unique open access equilibrium if bycatch is allocated by “rule of capture.” Prohibitions on the sale of bycatch reduce the bycatch level, but they also reduce social welfare.     

Is there a double-dividend from anti-sprawl policies?

This paper examines the welfare effects of anti-sprawl policies, such as development tax, in a simple spatial explicit urban model with two market failures - urban decline at the city core and underprovision of open space amenities at the urban fringe - and pre-existing distortionary property tax, used to fund public services and improvements to mitigate urban decline. Consistent with prior double-dividend literature, there is a tax interaction effect that occurs between the development tax and the pre-existing property tax. However, there are two fundamental differences between the tax interaction effect identified here and that of prior literature. Ours one has two components: First, there is a cost-side tax interaction effect that is ‘spatially’ concentrated at the urban fringe, as only agents at the urban fringe alter their behavior in response to the development tax. Second, there is also a benefit-side tax interaction effect, as increases in open space at the urban fringe are capitalized into housing prices throughout the city. In contrast to prior literature, we find that the empirical importance of the combined tax interaction effect is of substantially less importance and, as a consequence, the likelihood of a ‘double-dividend’ is higher than in prior studies. Further, we show that the development tax should be part of the local tax system, even in the absence of open space benefits.     

Do plants’ emissions respond to ambient environmental quality? Evidence from the clean water act

In this paper we show that plants respond to downstream ambient water quality after controlling for permitted levels of pollution. We find if past water quality declines by one percent, plants reduce current pollution by 0.35 percent. The magnitude of this coefficient is comparable to the coefficient on permitted discharge levels i.e. regulatory stringency itself. Results are consistent with two mechanisms. First, a decline in water quality may lead to more stringent permits that would raise the cost of abatement of a plant significantly. Second, the plant is likely to be subject to increased public pressure in response to poor water quality. Indeed, as expected, the impact of water quality becomes stronger in locations with higher median household income, higher percent carpooling to work, or lower percent of manufacturing employment but surprisingly with lower median age of residents, lower percent with bachelor׳s degree or higher percent of families with children.     

Cross‐sectional epidemiological study on arsenic excretion in urine of children and workers in Greece

An investigation was undertaken to study the exposure of children in areas with different air pollution and of adults working in three different plants (lead processing, battery plant, oil refinery) using arsenic in urine as a biological parameter. The arsenic excretion of the children are in agreement with the air pollution in the investigated areas. The workers in the lead processing plant are found to have the highest urine excretion values of the three worker collectives. The mean excretion values is nearly ten times higher than that found in the normal population.     

Inefficient environmental instruments and the gains from trade

The primary result from the trade and environment literature is that countries never lose from trade liberalization as long as they implement optimal pollution targets or if they hold emissions constant. These results are derived in models where the regulators use efficient instruments such as tradable permits or emission taxes. Regulators, however, continue to prefer command and control instruments. I show that regulation under these inefficient instruments (such as design standards or concentration standards) can lead to net losses under trade liberalization even if emissions are optimally adjusted for trade. Furthermore, holding the line on emissions need not guarantee welfare improvements either. The problem is that institutional distortions, the excess costs of inefficient instruments, can rise with trade and offset the material gains from trade. Hence the presumption that we can achieve gains from trade by considering only the level of emissions fails to recognize that the mode of regulation also matters.     

Unemployment and the backward incidence of pollution control

This paper reexamines the backward incidence of pollution control using duality theory for a two-sector general equilibrium model in which the economy experiences large-scale unemployment and perfect capital mobility with a sector-specific rigid wage in the polluting sector. In this context it is shown that with stricter pollution controls the wage rate in the nonpolluting sector rises while the common rental rate falls. In addition, stricter pollution controls are shown to have an uncertain impact on national income.     

广州市区大气污染特征与影响因子分析

以2000—2004年广州市国控测点的空气环境质量自动监测结果为基础数据,以我国《大气环境质量标准》的日平均质量浓度二级标准为依据计算广州市2000—2004年的各大气污染物的指数及污染负荷率,阐明广州市区主要大气污染物SO2、NO2、PM10、CO的地域分布特征、季节变化特征、年际变化特征以及由于大气中的酸性物质而形成的酸雨的变化特征并提出研究对策。结果表明:各污染物质量浓度存在明显的季节变化规律,除SO2春夏秋季污染最严重,其余几项污染程度由高到低的顺序均为冬季,春季,秋季,夏季。近5年来空气中的一氧化碳呈显著下降趋势,但二氧化硫、二氧化氮和可吸入颗粒物则呈显著上升趋势,综合污染指数也呈明显上升趋势;酸雨频率呈不显著上升且夏秋季污染大于春冬两季。广州市大气污染分布规律与风向频率以北和东北偏北方向较大,东和东南方向次之的分布基本一致。     

Pollution control and optimal taxation: A static analysis

This article attempts to contribute to the analysis of identifying an optimum tax for the generation of pollutants when both anti-bads and bads are included in the utility function. Bads and anti-bads are introduced via a technological tradeoff relationship with substitution allowed. It is shown that in some instances in order to know the optimum tax on polluters it may not be important to know the marginal damage function. A brief analysis is undertaken of the tradeoffs between private actions to reduce the effect of pollutants and collective provisions for pollution control. The analysis further demonstrates that under certain circumstances the appropriate tax on polluters can be calculated from observed defensive behavior on the part of receptors.     

Dynamic adjustment to land taxation policy: Neutrality and welfare implications

In this paper we use a dynamic three sector model to examine the neutrality and welfare effects of land income taxes. We find that (1) taxes that are neutral in long run equilibrium need not be neutral in the short run; (2) short run neutrality depends upon the tax treatment of development costs and losses; and (3) many of the neutrality results hold under both static and rational expectations assumptions. We also find that, even without externality assumptions, nonneutrality in the short run does not necessarily entail a welfare cost and may be welfare-enhancing when agents have less-than-perfect foresight.