Economics, Energy and Environment – serie

The possible introduction of a carbon tax in Europe is an issue which has attracted the attention of numerous economists and policy-makers. The problems under debate concern the effects of the tax at different levels: what costs, in terms of GDP growth, will be paid by each European country? Will the effects on income distribution be larger than those on income level? Should the carbon tax be co-ordinated among the European countries or would it be better to impose a uniform tax rate on carbon emissions? Can Europe introduce the tax unilaterally or should this be done jointly, with the other industrialized countries? This book provides answers to such questions. It analyses the effects of the European carbon tax on both a domestic and an international level.

This text covers some of the most relevant issues in the new environmental economics. Its main emphasis is on the international dimension of environmental phenomena, which implies the necessity of designing properly co-ordinated economic/environmental policies. The issue of policy co-ordination is analyzed both in the case where environmental externalities arise because of cross-country and global pollution flows, and in the case where trade and competitiveness effects induced by environmental regulation affect countries' relative economic performance. The context in which these issues are analyzed relies on recent developments of game theory, industrial economics and international trade where imperfect competition and governments' strategic interactions are accounted for. Recognizing that traditional environmental policy tools are not sufficient to regulate the present environment-economy interactions leads to appraising the effects of more sophisticated policy mixes. In particular, policies to stimulate technological innovation, to regulate industrial markets, to offset negative trade effects are examined. Attention is also given to the issue of economic growth.Under which conditions is endogenous growth consistent with environmental protection? Which policy mix can loosen the traditional trade-off between environment and growth?

The text provides an overview of recent advances in the theoretical analysis of NPS pollution and regulation from an economic perspective. Besides specific policy recommendations, a common theme in the essays is the attempt to suggest regulatory approaches starting from the recognition of the problems of incomplete information encountered when dealing with NPS problems. Such problems, which can be traced back to the difficulty of identifying sources and measuring individual discharges, imply that, rather than monitoring emissions at source, alternative solutions have to be found to set regulatory policy instruments. In this sense, besides problems classified in the technical literature as NPS pollution, many of the considerations are also applicable to phenomena labelled as point-source problems, whenever - despite the availability of technical means for measuring the volume and quality of emissions - widespread and continuous monitoring of individual discharges is economically unfeasible, and alternative ways of establishing cause and effect links between economic activities and observed environmental quality impairments are required.

One of the central tenets of this book is that governmental policies must be designed to take into account market characteristics and environmental phenomena - simultaneously. This volume contains a new research effort of the `Fondazione Eni Enrico Mattei' and explores the theoretical underpinnings of environmental policy in a sub-optimal world. Topics considered link economic issues (oligopolistic market structures, firm heterogeneity, and the strategic behavior of governments) to environmental issues (emission abatements, cleaner technologies, and environmental taxation). The articles in this volume were chosen to achieve a balance between breadth and depth and were written by leading experts in the field. In short, this book is rich in policy implications and raises new issues and questions for future research.

In recent years analysts, researchers and environmental policy makers have been faced with a serious shortage of empirical data on environmental phenomena. In fact, the information gathered by various organizations has not yet been systematically classified into a single system of accounts. This, in turn, threatens to jeopardize the reliability and completeness of the information. This work represents the results of a joint research effort by the Fondazione Eni Enrico Mattei and Italy's Central Statistical Office (ISTAT) to design a system of accounts for natural and environmental resources. The resulting environmental accounts can be integrated with the existing system of national accounting, in order to estimate the so-called "green GDP" or "net national product".

The European Union faces several interlinked challenges: how to protect the environment and foster sustainability; how to reduce unemployment and foster competitiveness in the context of growing globalization; and how to reduce regional disparities among and within member countries. The recent policy debate has revealed that such objectives are not a trade off, provided they are tackled in concert. In particular, win-win policy options are available to the EU, given an appropriate integration of regulation, macro-policy, social policy, fiscal policy and environmental policy. The evidence shows that an optimization of each single policy will not meet the needs of the EU. But an integrated approach would allow the implementation of a genuine sustainable development policy. This study discusses the most recent results available on the green tax reform and the double dividend hypothesis. The first part is devoted to theoretical analysis, and the second provides empirical results.

This study considers the implications of models of economic growth for the debate on sustainability. The interplay between economic and ecological systems is analyzed, also taking into account issues of equity and risk. The main part of the book concentrates on sustainability in the light of an analytical framework. The book will be of particular interest both to researchers in economics and to experts in natural sciences who want to understand the most relevant economic points.

Sustainable development, albeit a fashionable phrase, covers several substantive issues. In essence, as the Bruntlandt Report has it, it is "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". Underlying this concern is the issue of modelling and evaluating alternative long-term dynamic paths open to an economy which, in an essential way, is dependent on environmental inputs. section one of this book presents two non-technical surveys of some of the questions in the areas of dynamics and uncertainty. The papers in section two then go on to model and evaluate alternative development paths of an economic - environmental system, especially with reference to their long-run properties. Of course, many of the processes and relationships underlying such models are uncertain, and the types of uncertainty and how to model them are considered in section three. There are many complex and interesting economic issues that arise when we consider how best to manage the "global commons" as privately produced public goods, and the present book deals with many of the related issues in an informative way.

The analysis of relationships between transport and environmental policy has invited interdisciplinary treatment and a variety of approaches. A subset of the approaches used involves economic analysis. Economic approaches often consider pricing policies and attempt to evaluate their effectiveness in comparison with more traditional measures such as "command and control" regulation and directed technological innovation. Another important subset of approaches involves simulation modelling, in which key relationships are represented mathematically so that their influence can be quantified and their inter-relationships discerned precisely. This book treats the intersection of these two subsets of approaches: simulation models with a strong economic content. This intersection defines a way to study environment and transport. Its breadth is illustrated by the wide range of policies, from carbon taxes to speed limits, treated here.

This volume, which brings together papers from a seminar held in Beijing in 1996, contains contributions written by Chinese participants as well as by visiting experts from the West. The different experience of the several authors is represented in the unique balance of the book: all the Chinese contributions point out the importance of the environment in economic development, expressing a determination to measure effects as a means to the successful management of natural resources. They concentrate on rather specific issues within the constraints of the prevailing economic situation, where identification and asset pricing tend to be specified by administrative norms. Several of these papers contain interesting and useful statistical information. The papers by the visiting experts also stress the importance of taking account of environmental aspects in deriving indicators relating to economic development. All the papers reveal that work in this area is still evolving very quickly, sometimes in unexpected directions.This particular juxtaposition of approaches is a valuable record of the situation at a particular point in time when concern about the environment in China is developing rapidly.

The book first offers a theoretical framework for understanding the features of international agreements on climate, then shows different integrated assessment modelling approaches designed to analyse the impact of possible agreements of emissions abatement and the related costs. Potential implications of the Kyoto agreement, institutional and legal issues and the political economy behind international agreements on climate are not neglected, thus providing a comprehensive, albeit preliminary, exploration of crucial aspects of current negotiations on climate.

In recent years, voluntary approaches to emission reductions have increasingly been adopted by major companies all over the world and have increasingly been supported by regulatory bodies and public administrations. Despite this world-wide effort to achieve a better environmental performance through voluntary approaches, economic analysis has somehow neglected the importance of voluntary approaches as an environmental policy instrument. This book is a first attempt to fill this gap by gathering together all major experts in the fields and by providing a detailed analysis of all main aspects characterising the design and implementation of voluntary approaches in environmental policy. The book, which is the outcome of cooperation between the École des Mines of Paris and the Fondazione ENI E. Mattei, within the EU Concerted Action on Market Based Policy Instruments for Environmental Protection, contains both theoretical analyses and case studies. The chapters of this book therefore provide a useful assessment of the main features and of the potential implementation problems of a new, important and promising environmental policy instrument.

Conventional economic accounts, which measure Gross National Product (GNP)and related indicators of national performance, do not fully allow for the damages caused to the environment in the course of producing and consuming goods and services. Nor do they fully account for the fact that some resources are being depleted in achieving the living standards that we enjoy today. This failure is important, because policy-makers are guided by the changes in macroeconomic indicators such as GNP. Moreover such indicators are not a good guide to the sustainability of present practices of consumption and production. This book provides practical estimates of one key area of neglect in the present national accounts - the measurement of environmental damages. The book sets out the methodology for making such estimates and then applies it to data from four countries: Germany, Italy, The Netherlands and the UK. The results show what can be achieved in the way of consistent damage estimates and what the key problems are.

Efficiency and Equity of Climate Change Policy is a comprehensive assessment of the economic effects of climate change policy, addressing the issues with a quantitative modelling approach. The book thus goes beyond the usual statements on the efficiency of economic instruments to identify the way gains and losses are distributed; who gains and who loses. Both the costs and benefits of climate change policies are analyzed. Most papers also provide useful information on the economic features of the Kyoto Protocol, its possible extensions, and the effect of different implementation strategies (such as the debate on emissions trading ceilings). Readership: Scientists and policy makers, students and specialists in climate related industries, members of NGOs, and policy advisors.

It is universally recognised that Venice and its lagoon are of such value that they constitute an international public good that must be preserved for humanity as a whole. But such an ambitious task requires a diversified, sustainable set of economic activities, mostly focused on the production of services and non-material goods. This complex issue is analyzed using different approaches, with a discussion of the case of Venice as an example of some of the most relevant problems concerning the relation between the environment and development in the contemporary world: the trade-off between preserving an ecosystem and considering it as an economic resource; the evolution of different urban growth scenarios and the preservation of a physical habitat; the role of immaterial production in urban economic development; the nature of tourism as a sustainable activity, considered from both from the environmental and cultural angles; the institutional aspect of governing a process of sustainable urban development. Readership: A unique resource for environmental and urban managers, policy analysts, students of sustainable development, and anyone else interested in the social and economic implications of preserving one of the most loved and celebrated cities in the world.

Groundwater is endangered and polluted in several ways. Conservation and better management of this invisible resource should be a key ingredient of sustainable water policies. This is especially true in areas, such as many Mediterranean regions, which are already exposed to scarcity problems and which are likely to experience increasing competition between freshwater uses and users. Agriculture is an important user of groundwater not only in terms of abstractions, but also in terms of generation and release of pollutants. Agricultural policies, traditionally directed towards other objectives, are beginning to pay more attention to environmental considerations. However more effective initiatives are required to reduce the pressure upon groundwater resources and to achieve a better integration between agricultural and environmental policies. This book has been developed from three workshops held as part of the EU Concerted Action SAGA, "Sustainable Agricultural Use of Aquifers in Southern Europe: Integration between Agricultural and Water Management Policies" (FAIR5-CT97-3673). The Concerted Action and the workshops brought together researchers working in different but complementary fields, in order to get a picture of the state-of-the art about interlinkages between agriculture and groundwater, as well a critical review of alternative regulatory approaches and policy instruments aimed at improving groundwater management.

In April 1992 the Foundation Eni Enrico Mattei organized a workshop on the regulation of nonpoint source pollution. This volume inc1udes the proceedings of that meeting, as well as additional original contributions, in an attempt to provide an overview of recent theoretical developments in the field. Research on the causes, consequences, and control of nonpoint source pol­ lution has been carried out over the last two decades. Interest in this subject has grown as a result of the increasing recognition of the insufficiency of traditional pollution control policies focused on the large scale, confined, and general­ ly predictable pollutant discharges. In fact, many contemporary problems are caused by the combined activities of small polluters, along with natural pro­ cesses, intermittent and unpredictable events, and often involve pollutants with complex environmental outcomes. Despite the progress made in understanding the nature and size of pollution from diffuse sources, the issue of regulation is still far from being system at­ ically and adequately addressed. This policy vacuum is partly attributable to the difficulty of adapting the traditional point source regulatory tool kit to the specific features of nonpoint source problems. Such features inc1ude the tech­ nical difficulty of identifying sources and measuring individual emissions, their variability over time and space, the role played by natural processes in detennin­ ing pollutant discharges at source and their ultimate impacts on the receiving environmental media.

One of the central tenets of this book is that governmental policies must be designed to take into account market characteristics and environmental phenomena - simultaneously. This volume contains a new research effort of the `Fondazione Eni Enrico Mattei' and explores the theoretical underpinnings of environmental policy in a sub-optimal world. Topics considered link economic issues (oligopolistic market structures, firm heterogeneity, and the strategic behavior of governments) to environmental issues (emission abatements, cleaner technologies, and environmental taxation). The articles in this volume were chosen to achieve a balance between breadth and depth and were written by leading experts in the field. In short, this book is rich in policy implications and raises new issues and questions for future research.

The European Union faces several interlinked challenges: how to protect the environment and favour sustainability; how to reduce unemployment and foster competitiveness in a context of growing globalization; how to reduce regional disparities among and within me mb er countries. The recent policy debate has clarified that the above objectives are not a trade off if jointly tackled. In particular, win-win policy options are available to the European Union by an appropriate integration of regulation, macro­ policy, social policy, fiscal policy and environmental policy. Evidence shows that optimising on each single policy will not meet the needs of the European Union. On the contrary, an integrated approach will make it possible to reach the various objectives, as stated in the Treaty on European Union, in the 5th Environmental Action Programme, in the White Paper on Growth, Competitiveness and Employment. This integrated approach would im­ plement a genuine sustainable development policy.

The connection between economic growth and the quality of the environment is a popular subject. Since the second half of the 1980s, there has been an increasingly frequent use of the term "sustainable development", to refer to the preoccupation that the production of goods and services may decrease standards of living. It is natural to analyze this question from the point of view of economic models, which may be helpful in at least identifying the main factors behind such preoccupations and perhaps in suggesting policy measures. Indeed, models are useful to discuss some relevant factors, like the structure of production of the economy, the type of preferences and goals pursued by agents, and the elements of uncertainty. This monograph will consider some of these themes: there will be a study of the analytical framework which can be used for the purpose of defining and analyzing sustainability, and some discussion of how to calibrate a restricted version of the model to empirical data. There will be also some analysis about which type of uncertainty should be incorporated into the model, and which objective functions may be useful for policy purposes. Also, there will be discussions about the key variables which should be included, and some description of a general framework.

The analysis of the relationship between transport and environmental policy invites an interdisciplinary treatment and a variety of approaches, and rightly so. An important subset of the approaches used involves economic analysis. Economic approaches often consider pricing policies, attempting to evaluate their effectiveness in comparison with more traditional measures such as `command and control' regulation and directed technological innovation. Another important subset of approaches involves simulation modelling, where key relationships are presented mathematically so that their influence can be quantified and their interrelationships discerned precisely. This book treats the intersection of these two subsets: simulation models with a strong economic content. This intersection defines a broad but powerful way to study environment and transport. Its breadth is illustrated by the wide range of policies treated here, from carbon taxes to speed limits. Its power derives from the way insights into interrelated actions and the role of markets - the strong points of economic theory - are cast into a form suitable for making quantitative predictions about the results of policies. Case studies are used to show how simulation models can be designed and used to quantify the effectiveness of economic policies in terms of transport systems management and environmental protection, the emphasis being on the role of the markets in tracing the many effects that policies have, both anticipated and otherwise.

Climate change is one of the major environmental concern of many countries in the world. Negotiations to control potential climate changes have been taking place, from Rio to Kyoto, for the last five years. There is a widespread consciousness that the risk of incurring in relevant economic and environmental losses due to climate change is high. Scientific analyses have become more and more precise on the likely impacts of climate change. According to the Second Assessment Report of the Intergovernmental Panel on Climate Change, current trends in greenhouse gases (GHGs) emissions may indeed cause the average global temperature to increase by 1-3. 5 °C over the next 100 years. As a result, sea levels are expected to rise by 15 to 95 em and climate zones to shift towards the poles by 150 to 550 km in mid latitudes. In order to mitigate the adverse effects of climate change, the IPCC report concludes that a stabilization of atmospheric concentration of carbon dioxide - one of the major GHGs - at 550 parts per million by volume (ppmv) is recommended. This would imply a reduction of global emissions of about 50 per cent with respect to current levels. In this context, countries are negotiating to achieve a world-wide agreement on GHGs emissions control in order to stabilize climate changes. Despite the agreement on targets achieved in Kyoto, many issues still remain unresolved.

In recent years, voluntary approaches to emission reductions have increasingly been adopted by major companies all over the world and have increasingly been supported by regulatory bodies and public administrations. Despite this world-wide effort to achieve a better environmental performance through voluntary approaches, economic analysis has somehow neglected the importance of voluntary approaches as an environmental policy instrument. This book is a first attempt to fill this gap by gathering together all major experts in the fields and by providing a detailed analysis of all main aspects characterising the design and implementation of voluntary approaches in environmental policy. The book, which is the outcome of cooperation between the École des Mines of Paris and the Fondazione ENI E. Mattei, within the EU Concerted Action on Market Based Policy Instruments for Environmental Protection, contains both theoretical analyses and case studies. The chapters of this book therefore provide a useful assessment of the main features and of the potential implementation problems of a new, important and promising environmental policy instrument.

Efficiency and Equity of Climate Change Policy is a comprehensive assessment of the economic effects of climate change policy, addressing the issues with a quantitative modelling approach. The book thus goes beyond the usual statements on the efficiency of economic instruments to identify the way gains and losses are distributed; who gains and who loses. Both the costs and benefits of climate change policies are analyzed. Most papers also provide useful information on the economic features of the Kyoto Protocol, its possible extensions, and the effect of different implementation strategies (such as the debate on emissions trading ceilings). Readership: Scientists and policy makers, students and specialists in climate related industries, members of NGOs, and policy advisors.

Groundwater is endangered and polluted in several ways. Conservation and better management of this invisible resource should be a key ingredient of sustainable water policies. This is especially true in areas, such as many Mediterranean regions, which are already exposed to scarcity problems and which are likely to experience increasing competition between freshwater uses and users. Agriculture is an important user of groundwater not only in terms of abstractions, but also in terms of generation and release of pollutants. Agricultural policies, traditionally directed towards other objectives, are beginning to pay more attention to environmental considerations. However more effective initiatives are required to reduce the pressure upon groundwater resources and to achieve a better integration between agricultural and environmental policies. This book has been developed from three workshops held as part of the EU Concerted Action SAGA, "Sustainable Agricultural Use of Aquifers in Southern Europe: Integration between Agricultural and Water Management Policies" (FAIR5-CT97-3673). The Concerted Action and the workshops brought together researchers working in different but complementary fields, in order to get a picture of the state-of-the art about interlinkages between agriculture and groundwater, as well a critical review of alternative regulatory approaches and policy instruments aimed at improving groundwater management.

It is universally recognised that Venice and its lagoon are of such value that they constitute an international public good that must be preserved for humanity as a whole. But such an ambitious task requires a diversified, sustainable set of economic activities, mostly focused on the production of services and non-material goods. This complex issue is analyzed using different approaches, with a discussion of the case of Venice as an example of some of the most relevant problems concerning the relation between the environment and development in the contemporary world: the trade-off between preserving an ecosystem and considering it as an economic resource; the evolution of different urban growth scenarios and the preservation of a physical habitat; the role of immaterial production in urban economic development; the nature of tourism as a sustainable activity, considered from both from the environmental and cultural angles; the institutional aspect of governing a process of sustainable urban development. Readership: A unique resource for environmental and urban managers, policy analysts, students of sustainable development, and anyone else interested in the social and economic implications of preserving one of the most loved and celebrated cities in the world.

The research projects at Fondazione Mattei have for some time now been dealing with the international dimension of environmental policy. Indeed, most environ­ mental phenomena have international implications, which stem from a number of factors: physical ones, such as the transnational or global consequences of pollution and resource conservation; technological factors, such as technological cooperation and diffusion; and economic factors, such as trad~, plant localiza­ tion and migrations. Even in the absence of transnational pollution, therefore, the environmental issues involve substantial interdependence among countries. This volume, edited by Carlo Carraro, presents some of the research which we carried out in international environmental policy, focusing on the relationship between trade, innovation and the environment. The papers in part one discuss the impact of international trade and institu­ tions on environmental resources. Those in part two deal with the importance of innovation when attempting to solve the major environmental problems. The papers in part three, finally, focus on specific policy issues stressing the impor­ tance of institutions and property rights. The whole set of contributions can be seen as progress in environmental economics. The different chapters highlight the close relationship between envi­ ronmental issues and economic development and they merge the literature on the environment with the literature on innovation, economic growth, trade, plant localization, institutions, etc.

CARLO CARRARO* AND DOMENICO SINISCALCO** * University ofUdine, Greta and Fondazione Mattei; ** University of Turin and Fondazione Mattei 1. THE GLOBAL WARMING DEBATE The 1980s have seen an unprecedented growth in awareness ofthe problem of (man-induced) climate change. Scientific studies to assess the extent to which emissions resulting from human activities are increasing the atmos- pheric concentration ofgreenhouse gases (GHGs: carbon dioxide, methane, man-made chloro-fluorocarbons, nitrous oxide), thus contributing to raise the global mean temperature, have been carried out since the beginning of the decade. In 1990, a comprehensive report assessing the nature and the effects of global wanning was presented by the Inter-Governmental Panel on Climate Change (IPCC), jointly established by the World Meteorological Organisa- tion and the United Nations Environmental Programme. According to the Report, emissions resulting from human activities are substantially increas- ing the atmospheric concentration of GHGs. This is true, in particular, for carbon dioxide emissions, which result mainly from the burning of fossil fuels.The IPCC estimates that, in the last thirty years, the increase in the at- mospheric concentration of C02 has been substantially higher than in the last two centuries and the actual level is the highest among those registered in 160,000 years. The increasing atmospheric concentration of GHGs will enhance the greenhouse effect, resulting on average in an additional wann- ing of the earth's surface. The main greenhouse gas, water vapour, will in- crease in response to global wanning, and will further enhance it.

Following the presentation ofChina's Agenda XXIin 1994, the Fondazione Eni Enrico Mattei began a fruitful collaboration with the SSTC (State Science and Technology Commission) on Natural Resource Accounting of the People's Republic of China. Among other initiatives, the Fondazione organised a seminar held in Beijing in March 1996, entitled "Resources Accounting in China". This volume brings together 11 papers as the result ofthat seminar. Our main attempt was to compare approaches and knowledge of specific issues in this area. As far as the approach is concerned there appear to be some interesting comparisons to be drawn considering the authors' different fields of expenence. Seven papers are written by Chinese participants and four by visiting experts from the West. All the Chinese contributions point out the importance of the environment in economic development and a determination to measure the effects as a means to successful management of natural resources. They concentrate on rather specific issues within the constraints of the prevailing economic conditions where identification and pricing of assets tend to be specified by administrative norms. Although the general framework of the Chinese approach tends to be scientific and administrative, all papers contain interesting and useful statistical information. The papers by visiting experts also stress the importance of taking into account environmental aspects in deriving indicators relating to economic development. In contrast to the Chinese contributions, however, they tend to be more abstract and more clearly based on economic theory.