Enforcement and price controls in emissions trading

This paper examines how enforcement affects the structure and performance of emissions trading programs with price controls under uncertainty about firms' abatement costs. The analysis highlights how an enforcement strategy can cause abatement-cost risk to be transmitted to enforcement costs via the price of permits. When this occurs, accommodating the effect of abatement-cost risk with an optimal policy results in higher expected emissions and lower expected permit price than their second-best optimal values. However, it is possible to design an enforcement strategy that shields enforcement costs from abatement-cost risk by tying sanctions directly to permit prices. This enforcement strategy stabilizes enforcement effort, the optimal permit supply and price controls are independent of enforcement costs, and the policy produces the second-best optimal outcome.     

Faunal loss from bushmeat hunting: empirical evidence and policy implications in Bioko Island

Bushmeat market data can be used to detect hunting sustainability by using proxies such as decline in sale volume and price increases over time. Here, we explore these proxies for the Malabo market in Bioko Island, Equatorial Guinea, the main bushmeat sale centre for the island. We gathered data during two sample phases (we call these ‘early’ and ‘later’) between March 1996 and October 1998, to test for evidence of faunal depletion during that period. Mammals (ungulates, rodents and primates) made up most of the bushmeat sold. Our analyses confirmed significant and sudden, rather than continuous, declines between phases, in total and individual animal group carcass volumes. Market species composition differed between phases; diversity indices and evenness increased in the later phase of the study. Price was related to species body mass and carcass condition (whether the carcass was smoked or fresh). Most species prices were higher in the later phase of the study. A total of 33 sites contributed bushmeat to the market, with over half of the recorded volume emerging from five sites in the south of the island. Bushmeat volume supplied from different regions of the island varied significantly between phases, and fewer sites contributed animals to the market during the later phase of the study. Proportionately more primates, ungulates but fewer rodents, appeared in the southern samples, compared with the northern. We suggest that in just over 2 years, hunting incursions, especially into the south of the island, may have resulted in drastic faunal losses. Subsequent data, collected by other authors, also indicate that the hunting spurt in the mid- and late-1990s may have irreversibly imperilled the island's mammalian fauna, since numbers of these animals entering the market have not increased since our study period. Although the Equato-Guinean authorities have recently initiated mechanisms to better protect the country's wildlife, through various legal and funding instruments, we suggest that these initiatives are likely to fail, if the social and environmental linkages are not fully understood to guide immediate restoration of such a unique African faunal assemblage.     

Why are Prices in Wild Catch and Aquaculture Industries so Different?

Through a comparative analysis of prices in capture fisheries and aquaculture sectors, the objectives of this paper are a) to investigate three the trends in prices of forage catches to feed the aquaculture species, b) to analyze the amount of fish species need to feed aquaculture species in order to assess the level of efficiency in resource use, and c) to examine the degree of economic concentration either in wild-catch industry and aquaculture sectors. The results show that prices of cultivated species are higher than prices of the same species when harvested from the sea. We explain this fact by the interplay of three forces. First, the amount of wild fish to feed aquaculture species continues to improve over time. Second, the pressure of fishing activities has not been reduced since catches of most forage fishes are declining, which induce higher prices of capture species that feed aquaculture production. Third, the level of seafood market concentration is significantly higher in aquaculture than in wild catches, which generates higher prices in aquaculture.     

Adjusting the economy to the new energy realities of the second half of the age of oil

Our research indicates that, due to the depletion of conventional, and hence cheap, crude oil supplies (i.e. peak oil), increasing the supply of oil in the future would require exploiting lower quality resources (i.e. expensive), and thus will most likely occur only at high prices. This situation creates a system of feedbacks where economic growth, which requires more oil, would require high oil prices that will undermine that economic growth. We conclude that the economic growth of the past 40 years is unlikely to continue unless there is some remarkable change in how we manage our economy.     

The Weitzman price corner

The standard theoretical approach to comparing price and quantity policies is strictly interior. We extend the comparison to account for the possibility of corner outcomes, where a polluting industry responds to a tax by abating either completely or not at all. We show that, when the uncertainty in marginal costs is high, the inclusion of corner outcomes confers an extra and unnoticed advantage upon an emissions tax. In situations where the standard approach would recommend a quantity policy, the possibility of corners can reverse that recommendation.     

World copper market, 1973–1982, and international stabilization policies

This article critically examines international price stabilization policy in relation to the main features of the world copper market and the structural changes that have affected the industry in the decade up to 1982. The first section summarizes the main features of the world copper market, briefly discussing the principal structural changes; the second part examines the recent pattern of investment in copper and changes in ownership of some copper producing companies resulting from the need for improved cash flows due to the adverse effects of the recession; and the third part analyses the practical and theoretical issues relating to the question of price instability. A number of formidable problems are likely to arise from such price stabilization policies and it is concluded that it is because of these difficulties that the policies have not been implemented. Consequently, international commodity agreements designed to minimize or avoid price instability have proved difficult to conclude. New questions on which consensus is likely should be examined to promote intergovernmental co-operation, and hence market stability. With that end in view, this article lists some new questions that could form the basis of an agenda for exploratory intergovernmental discussions on copper.     

On accounting for sustainable development and accounting for the environment

Economic sustainability or intergenerational equity entails maintaining social well-being by decisions about investments in different types of assets. Under certain conditions, consumption can be sustained by depleting resources, or various kinds of natural capital, while building up other kinds of capital. Theoretically, the choices involve the use of a set of accounting prices. The question becomes one of finding and implementing accounting prices that express the roles of the various capital goods in achieving the objective of the economy.Hartwick's rule holds that an economy can be sustained if the value of the total, net investment in the economy, evaluated at those accounting prices, is zero. The rule applies to a special, abstract economic model which expresses a social objective different from the discounted-utilitarian objective on which national accounting is based. Different objectives give rise to different accounting prices. Because the prices may not be right, the zero net-investment rule using available national-accounting prices cannot generate a condition for sustaining an economy.Still, environmental accounting is a tool which, used prudently, can make an important contribution to social decision-making. This paper expands upon these ideas by discussing the incorporation of natural resource and intangible environmental costs and benefits into green accounting at the firm as well as the economy level. Common techniques of mine valuation and standard corporate accounting are the bases for this extension to the valuation of and accounting for decisions concerning the environment.