Depletable externalities and pigouvian taxation

In their book Baumol and Oates [“The Theory of Environmental Policy: Externalities, Public Outlays, and the Quality of Life,” Prentice-Hall, Englewood Cliffs, N.J. (1975).] argue that whether an externality is depletable (private) or undepletable (public) is the key characteristic in determining the optimal pricing pattern. They argue that unlike the undepletable case a negative depletable externality requires not only a charge or tax on the generator of the externality but a payment or compensation to the victim in order to achieve Pareto optimality. It is shown that the key characteristic determining whether compensation of victims is required for efficiency is not the depletability of the externality but whether the victim can costlessly control or limit the amount of the damaging substance received.     

Green clubs

This paper treats programs in which firms voluntarily agree to meet environmental standards as “green clubs”: clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods. We compare three common program sponsors—governments, industry, and environmental groups. We find that if monitoring of the club standard is perfect, a government constrained from regulating club size may prefer to leave sponsorship to industry if public-good benefits are sufficiently low, or to environmentalists if public-good benefits are sufficiently high. If monitoring is imperfect, an important question is whether consumers can infer that a club is too large for its standard to be credible. If they can then the government may deliberately choose an imperfect monitoring mechanism as a way of regulating club size indirectly. If they cannot then this reinforces the government's preference for delegating sponsorship.     

Green clubs

This paper treats programs in which firms voluntarily agree to meet environmental standards as “green clubs”: clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods. We compare three common program sponsors—governments, industry, and environmental groups. We find that if monitoring of the club standard is perfect, a government constrained from regulating club size may prefer to leave sponsorship to industry if public-good benefits are sufficiently low, or to environmentalists if public-good benefits are sufficiently high. If monitoring is imperfect, an important question is whether consumers can infer that a club is too large for its standard to be credible. If they can then the government may deliberately choose an imperfect monitoring mechanism as a way of regulating club size indirectly. If they cannot then this reinforces the government's preference for delegating sponsorship.     

The resistibility and shiftability of depletable externalities

In their recently revised book Baumol and Oates (“The Theory of Environmental Policy,” 2nd ed., Cambridge Univ. Press, Cambridge, UK 1988) accept Bird's argument on the optimal taxation policy when externalities are shiftable and depletable. Their conclusion is that the standard Pigouvian tax which is placed upon the generator of a negative externality can be extended to tax the victims who shift the externality to others or extended to compensate recipients in order to achieve Pareto optimality. It is shown in this paper that their conclusion is not free from error, because the possibility of resisting a shifted externality and conjectural variations by recipients is not recognized. Whether an externality is shiftable depends not only on the shifting activity of the original victim but also the resisting activity of his neighbors and their conjectures about each other's action. As such, the shifters should be taxed and the recipients should be compensated at the same rate per unit of externality shifted if the tax base is the output of the shifting and resisting activities. On the other hand, if the tax base is the input which produced the shifting of the externality, then both the shifters and the recipients should be subject to a tax (or subsidy) per unit of input that they have engaged in. Whether it is a tax or a subsidy depends on the direction and magnitude of the conjectural variation. The model and its policy implication can be generalized to cover the omnipresent and wasteful rent seeking activities.     

Externalities, Market Power, and Resource Extraction

This article analyzes the effect of market power in the presence of dynamic and biological externalities. When several countries harvest fish in international waters the evolution of fish population is affected by their joint action, thus generating a biological and a dynamic externality. If there is trade, the market-clearing prices depend on the harvesting and consumption in all countries. Therefore, market-clearing prices also generate an externality. We find a subgame perfect Cournot–Nash equilibrium and study the conditions under which it may be efficient. We also analyze the role of different externalities in generating inefficiency.     

A compensation mechanism for siting noxious facilities: Theory and experimental design

In locating noxious facilities, such as a trash disposal plant or a hazardous waste disposal incinerator, the host community frequently incurs all the costs while other communities in the region receive the benefits. We propose a mechanism for sharing the benefits with the potential loser. Each community submits a sealed bid indicating the minimum amount it would require to host the facility. The site providing the lowest bid obtains the facility and receives its bid as compensation. This compensation is financed by the other communities. If there are N candidate communities, then each of the other communities would pay 1/(N − 1) of their acceptance bid. A series of controlled laboratory experiments show that the outcomes of this low-bid auction come close to predictions from a theoretical model based on maxi-min rules. Equity and efficiency considerations also are discussed in the context of the noxious facility problem.     

The transition from dirty to clean industries: optimal fiscal policy and the environmental Kuznets curve

This paper investigates privately and socially optimal patterns of economic development in a two-sector endogenous growth model with clean and dirty goods. We consider a second-best fiscal policy framework in which distortionary taxes jointly influence economic growth and environmental quality. In this policy setting, three conditions produce an Environmental Kuznets Curve (EKC): (i) dirty output is bounded; (ii) clean output grows endogenously; and (iii) growth in the dirty sector reduces growth in the clean sector. These conditions do not arise with a consumption externality, but can emerge with a production externality. Endogenous labor supply implications are also investigated. Although not necessary for producing an EKC, endogenous labor supply provides additional linkages that produce an EKC under circumstances in which it would otherwise not appear.     

International externalities, strategic interaction, and domestic politics

Domestic politics can sometimes play an influential role when externalities have strategic and international implications. If voters delegate the choice to policymakers and if individual countries independently determine their environmental policy using a consumption tax on the emissions generating good, the result could be an outcome that is inferior to the one preferred by the median voter in the absence of delegation. On the other hand, if the international externality is unilateral in nature, rather than reciprocal, we find that delegation is largely irrelevant, since voters’ choice of policymaker is no longer strategic in character. Similarly, if voters anticipate policymakers successfully coordinating their policies at a later stage, there also will be no difference between the policymakers’ and the median voters’ aggregate weighting of environmental emissions.     

Voluntary Auctions for Noxious Facilities: Incentives to Participate and the Efficiency of Siting Decisions

This paper explores the efficiency properties of a voluntary auction under which the city submitting the low bid hosts the region′s noxious facility and receives the high bid as compensation. In the Nash equilibrium of the auction game, the auction mechanism is individually rational (participation is rational for all values of the local environmental costs of the facility), incentive-compatible (the facility is located in the low-cost city), and revenue-neutral. If the compensation of the host city distorts location choices, participation in the auction is rational for all values of local environmental costs if the scale economies associated with the noxious facility are large relative to the average local environmental cost and the distortionary cost per dollar of compensation.     

Externalities, pigouvian corrections, and risk attitudes

We examine the influence of risk attitudes on the provision of an externality and on the proper size of Pigouvian correction when the externality is a random variable whose distribution is affected by an observable externality-generating activity. An intervening technology relates changes in this observable activity to the probability distribution of the relevant externality. Unlike the now-standard result in the theory of the firm involving the influence of risk attitudes on output levels, we cannot conclude that increases in risk aversion will lead necessarily to a reduction in the level of the externality. Our results are applied to a wide range of market failures.     

Strategic environmental policy; eco-dumping or a green strategy?

The Porter hypothesis claims that a strong environmental policy best serves the interests of a nation's export industry. While this hypothesis seems to be based on some form of bounded rationality, this paper argues that governments may have good reasons for setting an especially strong environmental policy even though firms are fully rational. If the available abatement technology turns the environment into an “inferior input”, competitiveness is spurred by a strong environmental policy. The government should take advantage of this, and set an especially strict emission quota or an especially high emission tax. The findings in the paper also has consequences for the desirability of international cooperation with respect to national environmental policy. If a strict environmental policy spurs competitiveness, the environment is better protected without cooperation.     

Accepting market failure: Cultural worldviews and the opposition to corrective environmental policies

To explore whether and why people sometimes reject environmental policies that improve individual and collective outcomes, we create an experimental market in which transactions generate a negative externality. Market participants endogenously determine whether to implement corrective policies. We consider three policy instruments (Pigouvian taxes and subsidies, and quantity regulation) and two levels of policy efficiency (full and half). We then explore how individual cultural worldviews might contribute to the rejection of policies that correct the market failure. Our results indicate that people often oppose policies that improve their material outcomes, and we find that such opposition is significantly explained by cultural worldviews. Interesting connections emerge between individual worldviews and specific policy instruments.     

绿色食品生产补偿的理论机理与政策设计

制约我国绿色食品发展的重要因素之一是其生态环境成本难以通过市场来兑现。为解决这一问题,文章以生态补偿为突破口,首先从理论上明确绿色食品生产具有正外部性,政府对其生产企业或农户进行补偿具有合理性和必要性,然后进一步探讨其制度构建与政策设计。（1）构建一个包括政府、生产者、消费者三方的博弈模型,着重分析绿色食品供需过程中、政府影响下生产者和消费者的利益动机和博弈行为。模型结果显示,存在能够满足绿色食品供需平衡的1个纯战略纳什均衡解和1个混合战略纳什均衡解,这两个纳什均衡解的实现条件均要求政府对绿色食品生产者提供补偿和对消费者实施优惠政策。（2）利用C-D生产函数建构的利润函数和恢复费用法探讨绿色食品生产补偿标准范围,结果表明最低补偿标准应满足生产者生产绿色食品和生产普通食品利润相等,而最高补偿标准则应对绿色食品生产中创造的环境效益进行支付。（3）文章最后从“建立经济政策支持体系,构筑科技进步支撑体系,完善品牌质量保障体系,培育产业化生产体系”等4方面提出了现阶段我国绿色食品生产补偿的政策建议。     

Nonseparability and the voluntary approach to externality problems

Ronald Coase asserted that voluntary two-party bargaining with zero transaction costs results in an optimal resource allocation, which is invariant with respect to the liability rule. It has been argued that nonseparabilities destroy the validity of Coase's theorem. In this paper it is shown that this criticism is based on implausible assumptions about the externality-receivers adjustment to the externality level.     

完善我国流域生态补偿制度的思考——以东江流域为例

上下游对流域生态资源保护做出的贡献与生态利益享有的不平等导致区域间社会经济差距的扩大,需要通过生态补偿制度的建立和完善来实现区域统筹和谐发展,但我国现行生态补偿制度由于行政区界限制、相关法规建设不完善、补偿方式较单一、补偿标准测算困难等原因面临不少问题和困境。以东江流域现行生态补偿措施为视点,分析了当前生态补偿研究实践中存在的问题;进而以此为基点根据流域生态系统的连贯性与人类政治结构分割性之间的矛盾进行反思,提出打破流域行政区界限制,统筹构建流域“生态共同体”的理念;并在此理念指导下,提出采取“政府主导、市场运作”策略。即在明确界定流域范围后,首先由“政府主导”开展全流域综合规划、建立和完善省内流域统管机制、跨省流域生态共享共建统筹协商机制;其次以水质水量、出售许可交易权方式测算“生态共同体”之间核算补偿资金,并结合“市场运作”实施多样化并进补偿方式;同时建立流域生态补偿奖惩制度并将其纳入“生态共同体”干部绩效考核体系,构建流域补偿的长效机制,完善我国流域生态补偿制度。     

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.     

Error propagation in spatial modeling of public health data: a simulation approach using pediatric blood lead level data for Syracuse,New York

Lead poisoning produces serious health problems, which are worse when a victim is younger. The US government and society have tried to prevent lead poisoning, especially since the 1970s; however, lead exposure remains prevalent. Lead poisoning analyses frequently use georeferenced blood lead level data. Like other types of data, these spatial data may contain uncertainties, such as location and attribute measurement errors, which can propagate to analysis results. For this paper, simulation experiments are employed to investigate how selected uncertainties impact regression analyses of blood lead level data in Syracuse, New York. In these simulations, location error and attribute measurement error, as well as a combination of these two errors, are embedded into the original data, and then these data are aggregated into census block group and census tract polygons. These aggregated data are analyzed with regression techniques, and comparisons are reported between the regression coefficients and their standard errors for the error added simulation results and the original results. To account for spatial autocorrelation, the eigenvector spatial filtering method and spatial autoregressive specifications are utilized with linear and generalized linear models. Our findings confirm that location error has more of an impact on the differences than does attribute measurement error, and show that the combined error leads to the greatest deviations. Location error simulation results show that smaller administrative units experience more of a location error impact, and, interestingly, coefficients and standard errors deviate more from their true values for a variable with a low level of spatial autocorrelation. These results imply that uncertainty, especially location error, has a considerable impact on the reliability of spatial analysis results for public health data, and that the level of spatial autocorrelation in a variable also has an impact on modeling results.     

Interactions between fangblennies (Plagiotremus rhinorhynchus) and their potential victims: fooling the model rather than the client?

Lepidophagous (scale-eating) blue-striped fangblennies (Plagiotremus rhinorhynchus Bleeker 1852) are often found sympatrically with the bluestreak cleaner wrasse (Labroides dimidiatus Valenciennes 1839). They have some resemblance to the juvenile L. dimidiatus and have previously been reported as aggressive cleaner wrasse mimics. We observed 14 P. rhinorhynchus on a small area in the barrier reef near Hoga Island, Indonesia to assess the effects of client size on the behaviour and attack success of fangblennies: our results suggest that fangblennies are selective with regard to victim size; fish avoided by the fangblennies are significantly larger than those not avoided and attack success is significantly higher at intermediate victim size classes. The behaviour of the victims also has a significant direct effect on the foraging success of the fangblennies; where the potential victim posed, 63.6% were ignored by the fangblenny and only 7.4% of attacks were successful on posing fish as opposed to a surprise attack success rate of 71.6%. Overall, victims which exhibited the pose behaviour were significantly smaller in size. It appears likely that the predatory strategy of these fangblennies varies with victim size and that mimicry plays a minor role in attracting potential victims. We suggest that in common with other mimetic fish the resemblance of fangblennies to juvenile bluestreak cleaner wrasse allows them to actively hunt in areas where adult cleaners are common thus, indirectly improving their feeding opportunities.     

生态损害补偿与赔偿的科学及法律基础探析

生态补偿是协调经济发展与环境保护的有效经济手段,在中国得到了广泛重视.由于受到学科范畴的限制,学术界和管理界对生态补偿的内涵、经济性质和法律性质还存在许多争论,关于生态损害的科学含义及与之对应的补偿与赔偿的法理基础尚有待完善.本文旨在梳理生态补偿的相关术语,探讨生态损害及损害补偿与赔偿的科学含义、法理差异及法律制度,从而为我国进一步开展生态补偿的理论研究和实践提供参考.论文首先从环境管理、环境经济学以及法学三层面对生态补偿的内涵进行分析,并在探究生态补偿实践的演变历程的基础上,提出生态补偿至少包含生态保护补偿、生态损害补偿与生态损害赔偿三个方面的内容;其次,文章对生态损害的科学和法律含义进行了辨析,提出：1）生态损害补偿中的生态损害是指人类活动对自由的自然资源的损害,即初级生态损害;2）从法学角度来看,生态损害可分为过错行为导致的生态损害、非过错行为导致的生态损害以及历史累积污染导致的生态损害;3）补偿与赔偿在法理上存在发生的基础、性质、承担责任的时间、承担责任的方式以及程序等方面的差别;4）在以上基础上,论文探讨不同行为造成的生态损害的责任方应当承担补偿/赔偿责任.第三,论文从归责原则、责任主体、补偿/赔偿范围、方式以及补偿/赔偿金额的计算等方面对建立和实施生态损害补偿与赔偿的法律基础和制度进行了论述与分析.最后,论文提出了完善生态损害补偿/赔偿制度的政策建议.     

Ecological compensation based on willingness to accept for conservation of drinking water sources

Ecological compensation is a powerful environmental economic tool for environmental protection in areas where drinking water sources are located. We established an ecological compensation accounting system based on respondents’ willingness to accept (WTA). In this system, stakeholder preferences and the factors that influence them can be gauged effectively using logit and tobit models. We applied this accounting system to ecological compensation for the Miyun Reservoir, Beijing, China. The average WTA value for Miyun Reservoir residents was approximately 1186 CNY per family in 2012, which could be set as a suitable compensation standard, since it is slightly higher than the local protection cost. Thus, the annual total ecological compensation could be 58.73 million CNY. Distance from the reservoir, job types, and attitude to environmental protection were variables with significant effects on WTA. In addition, trends for individual preferences were identified via an analysis of key influential factors. The results suggest some useful information for establishing ecological compensation mechanisms for conservation of drinking water sources. Suggestions include popularizing the concept and meaning of ecological compensation among residents, setting different compensation levels based on distance from the reservoir, considering the requirements of farmers, and taking various in-kind and out-of-kind compensation approaches.