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501. The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment

Author:
Robert N. Stavins and Richard Schmalensee
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system's cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away.
Topic:
Climate Change, Environment, Government, Markets, Treaties and Agreements, and Law

502. International Paretianism: A Defense

Author:
Eric A. Posner and David Weisbach
Publication Date:
07-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
A treaty satisfies what we call International Paretianism if it advances the interests of all states that join it, so that no state is made worse off. The principle might seem obvious, but it rules out nearly all the major proposals for a climate treaty, including proposals advanced by academics and by government officials. We defend International Paretianism, and for that reason urge commentators in the debate over climate justice to abandon efforts to right past wrongs, redistribute wealth, and achieve other abstract ideals through a climate treaty.
Topic:
Climate Change, Environment, International Cooperation, and Treaties and Agreements

503. The Geopolitics of Natural Gas

Author:
Amy Myers Jaffe and Meghan L. O'Sullivan
Publication Date:
07-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Some of the most dramatic energy developments of recent years have been in the realm of natural gas. Huge quantities of unconventional US shale gas are now commercially viable, changing the strategic picture for the United States by making it self-sufficient in natural gas for the foreseeable future. This development alone has reverberated around the globe, causing shifts in patterns of trade and leading other countries in Europe and Asia to explore their own shale gas potential. Such developments are putting pressure on longstanding arrangements, such as oil-linked gas contracts and the separate nature of North American, European, and Asian gas markets, and may lead to strategic shifts, such as the weakening of Russia's dominance in the European gas market.
Topic:
Climate Change, Economics, Energy Policy, and Natural Resources
Political Geography:
Europe and Asia

504. Post-Durban Climate Policy Architecture Based on Linkage of Cap-and-Trade Systems

Author:
Robert N. Stavins
Publication Date:
07-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
The outcome of the December 2011 United Nations climate negotiations in Durban, South Africa, provides an important new opportunity to move toward an international climate policy architecture that is capable of delivering broad international participation and significant global CO2 emissions reductions at reasonable cost. We evaluate one important component of potential climate policy architecture for the post-Durban era: links among independent tradable permit systems for greenhouse gases. Because linkage reduces the cost of achieving given targets, there is tremendous pressure to link existing and planned cap-and-trade systems, and in fact, a number of links already or will soon exist. We draw on recent political and economic experience with linkage to evaluate potential roles that linkage may play in post-Durban international climate policy, both in a near-term, de facto architecture of indirect links between regional, national, and sub-national cap-and-trade systems, and in longer-term, more comprehensive bottom-up architecture of direct links. Although linkage will certainly help to reduce long-term abatement costs, it may also serve as an effective mechanism for building institutional and political structure to support a future climate agreement.
Topic:
Climate Change, Economics, Environment, International Cooperation, and Treaties and Agreements
Political Geography:
South Africa and Durban

505. Gasoline Taxes and Consumer Behavior

Author:
Erich Muehlegger, Shanjun Li, and Joshua Linn
Publication Date:
07-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
Gasoline taxes can be employed to correct externalities associated with automobile use, to reduce dependency on foreign oil, and to raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect consumer behavior as distinct from tax-exclusive gasoline prices. Our analysis shows that a 5-cent tax increase reduces gasoline consumption by 1.3 percent in the short-run, much larger than that from a 5-cent increase in the tax-exclusive gasoline price. This difference suggests that traditional analysis could significantly underestimate policy impacts of tax changes. We further investigate the differential effect from gasoline taxes and tax-exclusive gasoline prices on both the intensive and extensive margins of gasoline consumption. We discuss implications of our findings for the estimation of the implicit discount rate for vehicle purchases and for the fiscal benefits of raising taxes.
Topic:
Climate Change, Energy Policy, Oil, and Infrastructure

506. What are the Welfare Costs of Shoreline Loss? Housing Market Evidence from a Discontinuity Matching Design

Author:
Matthew Ranson
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
This paper uses housing market data to estimate the welfare costs of shoreline loss along coastal beaches in Florida. I develop a forward-looking structural model of a housing market in which a time-variant housing characteristic (beach width) follows a Markov process. I use this model to provide an exact welfare interpretation for the coefficients from three empirical research designs: (1) a repeat-sales panel regression of housing prices on beach width; (2) a differences-in-differences approach based on sharp changes in beach width caused by beach nourishment projects; and (3) a new “discontinuity matching” research design that exploits capitalized housing price differentials created by predictable changes in future beach width. Using a unique panel dataset on housing sales, beach width survey measurements, and the timing of 204 beach nourishment projects along 300 miles of Florida's coastline, I then use each of these research designs to estimate homeowners' willingness to pay for an extra foot of sand. In contrast to previous work, I find that changes in beach width have little impact on housing prices, except possibly at very eroded beaches. The results imply that the welfare costs of sea level rise may be low up to a threshold, and then increase sharply.
Topic:
Climate Change, Energy Policy, and Environment
Political Geography:
United States and Florida

507. The Nature and Role of Regional Agreements in International Environmental Politics: Mapping Agreements, Outlining Future Research

Author:
Miriam Prys, Jörg Balsiger, and Niko Steinhoff
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Global agreements to mitigate climate change, conserve biodiversity or combat desertification typically take center stage in scholarly discussions about international environmental politics. Even though the United Nations Environment Programme reported ten years ago that regional agreements make up two‐thirds of all international treaties, regional cooperation has by comparison either received scant attention or been conceptually and empirically lumped together with global treaties. This lack of knowledge about the historical and current scope of regional governance is a serious obstacle to understanding the architecture of global environmental governance and to overcoming current bottlenecks in international environmental cooperation. In response, we report on the outcome of an analysis that complements the most comprehensive database on international environmental agreements (iea.uoregon.edu) with variables for analysis at the regional level. We introduce a multidimensional typology of regional agreements based on contiguous/noncontiguous agreement membership, contiguous/noncontiguous spatial ambit, and whether membership and ambit are adjoining and/or coextensive. We discuss the theoretical and empirical relevance of the different types of agreements and the nature and prevalence of special cases. Given the previous lack of research in this area, our primary purpose is to present a systematic account of regional environmental governance, leaving causal analysis to our own and others' future research. We identify a number of knowledge gaps and analytical directions in the conclusion.
Topic:
Climate Change, Environment, International Cooperation, Treaties and Agreements, and United Nations

508. Migration and Disaster-Induced Displacement: European Policy, Practice, and Perspective

Author:
Michael D. Cooper
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Over the last decade, a series of devastating natural disasters have killed hundreds of thousands of people, displaced millions, and decimated the built environment across wide regions, shocking the public imagination and garnering unprecedented financial support for humanitarian relief efforts. Some suggest that disaster migration must be supported by the international community, first as an adaption strategy in response to climate-change, and second, as a matter of international protection.
Topic:
Climate Change, Development, Environment, Humanitarian Aid, and Natural Disasters
Political Geography:
Europe

509. Assessing EU Leadership on Climate Change. The Limits of Diffusion in EU Relations with China and India

Author:
Diarmuid Torney
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
The EU has for a long time claimed the title of “leader” in the international politics of climate change. However, existing research has generally failed to specify whether the EU's purported leadership has induced the “followership” of other states. This working paper seeks to shed light on this somewhat neglected topic by examining the attempted diffusion of climate change norms, policies, and institutions by the EU to China and India. The paper makes two principal arguments. First, the development of Chinese and Indian climate change policy should be understood as primarily domestic developments. Nonetheless, there was limited evidence of diffusion from the EU, but there was significant variation between the Chinese and Indian responses to the EU's diffusion attempts. The Chinese response was one increasing accommodation; the Indian response was a more straightforward case of resistance. Second, domestic factors help to explain the variation in the Chinese and Indian responses to EU attempts at diffusion and, related, the observed pattern of diffusion from the EU to China and India. Particularly important is the degree to which new external ideas and concepts resonate with pre-existing domestic ideas and concepts. The paper thus paints a picture of limited EU leadership, but also suggests that the EU attempts to secure “followership” could be enhanced by paying greater attention to the domestic politics and preferences of third countries.
Topic:
Climate Change, Environment, and Treaties and Agreements
Political Geography:
China and India

510. Emissions Trading - A Transatlantic Journey for an Idea?

Author:
Katja Biedenkopf
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
The Kolleg-Forschergruppe (KFG)
Abstract:
This paper examines the ways in which the EU greenhouse gas (GHG) emissions trading system (ETS) affected the design of similar programs in North America. It investigates the conditions under which EU pioneering policy can play a role in extra-EU jurisdictions' policy-making. The empirical investigation finds that the EU's promotion of emissions trading was successful to some extent. The EU did not influence or trigger the inception of GHG emissions trading programs in North America. The EU ETS, however, played a role in the design process of the North American programs. Actors learned from elements of the EU system. Domestic North American factors were the triggers and drivers of the agenda-setting stage and dominated the policy adoption stage while the EU ETS significantly contributed to the policy formulation processes. The EU ETS played a role at the technical level rather than at the level of political deliberations and decision- making. The EU's policy promotion efforts depended on the demand in North America. The resonance and receptiveness in North America were decisive factors. The EU was not an importunate persuader. Learning from the ETS was to a significant part demand-driven.
Topic:
Climate Change, Energy Policy, Environment, International Cooperation, and Treaties and Agreements
Political Geography:
North America