Market,welfare and land-use implications of lignocellulosic bioethanol in Hawai'i

This article examines land-use, market and welfare implications of lignocellulosic bioethanol production in Hawai'i to satisfy 10% and 20% of the State's gasoline demand in line with the State's ethanol blending mandate and Alternative Fuels Standard (AFS). A static computable general equilibrium (CGE) model is used to evaluate four alternative support mechanisms for bioethanol. Namely: i) a federal blending tax credit, ii) a long-term purchase contract, iii) a state production subsidy financed by a lump-sum tax and iv) a state production subsidy financed by an ad valorem gasoline tax. We find that because Hawaii-produced bioethanol is relatively costly, all scenarios are welfare reducing for Hawaii residents: estimated between −0.14% and −0.32%. Unsurprisingly, Hawaii's economy and its residents fair best under the federal blending tax credit scenario, with a positive impact to gross state product of $49 million. Otherwise, impacts to gross state product are negative (up to −$63 million). We additionally find that Hawaii-based bioethanol is not likely to offer substantial greenhouse gas emissions savings in comparison to imported biofuel, and as such the policy cost per tonne of emissions displaced ranges between $130 and $2100/tonne of CO₂e. The policies serve to increase the value of agricultural lands, where we estimate that the value of pasture land could as well.     

Analysis of the economic impact of different Chinese climate policy options based on a CGE model incorporating endogenous technological change

Abatement cost is the main concern for climate change mitigation and the key factor for mitigation cost is technological change. This study established an integrated economic, energy, environmental, dynamic, computable general equilibrium (CGE) model representing endogenous technological change for China's climate change policy analysis. This study analyzed and compared the economic impact of different approaches to mitigation commitments as well as the potential role of technological change in the formulation of mitigation targets and commitments, taking into account China's climate policy-making needs based on the current international climate negotiation process. The results show that, absolute emission limits similar to the Kyoto Protocol will seriously impede the future economic development of China, while the impact of an 80% reduction in carbon intensity, forecast for 2050 based on the 2005 level, is relatively small. Technological change can promote economic growth, improve energy efficiency and reduce carbon intensity per unit of output through the substitution of production factors. Consequently it can reduce marginal abatement cost and related GDP loss by mitigation. At the same time it can increase mitigation potentials and extend the emission reduction amount, showing that consideration of the impact of technological change when deciding the emission reduction targets is necessary.     

Output-based allocations and revenue recycling: Implications for the New Zealand Emissions Trading Scheme

The New Zealand Emissions Trading Scheme (NZ ETS) is more comprehensive in its coverage of emissions than schemes introduced or proposed to date in any other country in that it includes agricultural greenhouse gases, which account for half of New Zealand’s total emissions. But, motivated by concerns for the international competitiveness of emissions-intensive, trade-exposed industrial and agricultural activities, current legislation provides for substantial ongoing free allocations to such activities, linked to their output. Here we use a computable general equilibrium model to analyse the impacts of output-based allocation, given the possibility of recycling net revenues to reduce prior distorting taxes. Unlike previous modelling studies of alternative NZ ETS designs, we allow for a more realistic modelling both of capital and labour supply. We find that, as suggested by theoretical results, interactions between the ETS and existing taxes are important. Given any level of output-based allocation, the negative macroeconomic impacts can be reduced by recycling net revenues as efficiently as possible. Less obviously, we find that there may be an optimal non-zero level of output-based allocation. This optimal level increases as the carbon price and/or factor supply elasticities increase, but decreases if revenues are recycled with greater efficiency.     

The long-run impact of energy prices on world agricultural markets: The role of macro-economic linkages

The world prices of some food and energy products have followed similar large swings in recent years. We investigate the long-run relationship between these prices using a world Computable General Equilibrium model with detailed representations of food and energy markets. Particular attention is paid to specifying macro-economic linkages which have often been overlooked in recent analysis and debate. We find that the omission of these macro-economic linkages has a substantial bearing on this relationship. A positive relationship due to the cost push effect has been identified in most analysis, but we find that the introduction of the real income effect may indeed imply a negative relationship between world food and energy prices.     

Concurrent and legacy economic and environmental impacts from establishing a marine energy sector in Scotland

We examine the economic and environmental impact that the installation of 3 GW of marine energy capacity would have on Scotland. This is not a forecast, but a projection of the likely effects of meeting the Scottish Government's targets for renewable energy through the development of a marine energy sector. Energy, with a particular focus on renewables, is seen by the Scottish Government as a “key sector”, with high growth potential and the capacity to boost productivity (Scottish Government, 2007a. The Government Economic Strategy. The Scottish Government, Edinburgh). The key nature of this sector has been identified through targets being set for renewable energy to achieve environmental and economic benefits. Using a regional computable general equilibrium (CGE) model of Scotland we show that the development of a marine energy sector can have substantial and beneficial impacts on GDP, employment and the environment over the lifetime of the devices, given the encouragement of strong indigenous inter-industry linkages. Furthermore, there are also substantial “legacy” effects that persist well beyond the design life of the devices.     

Directed technical change and the adoption of CO2 abatement technology: The case of CO2 capture and storage

This paper studies the cost-effectiveness of combining traditional environmental policy, such as CO₂-trading schemes, and technology policy that has aims of reducing the cost and speeding the adoption of CO₂ abatement technology. For this purpose, we develop a dynamic general equilibrium model that captures empirical links between CO₂ emissions associated with energy use, directed technical change and the economy. We specify CO₂ capture and storage (CCS) as a discrete CO₂ abatement technology. We find that combining CO₂-trading schemes with an adoption subsidy is the most effective instrument to induce adoption of the CCS technology. Such a subsidy directly improves the competitiveness of the CCS technology by compensating for its markup over the cost of conventional electricity. Yet, introducing R&D subsidies throughout the entire economy leads to faster adoption of the CCS technology as well and in addition can be cost-effective in achieving the abatement target.     

云南有色金属产业关联程度及影响分析

本文基于投入产出分析方法及可计算一般均衡模型,定量分析了云南有色金属产业与其他各个产业的关联程度,并在此基础上模拟了价格波动下该产业对各关联产业的影响程度,确定了云南有色金属产业的关联产业包括电气、机械和器材,电力、热力生产和供应,通用设备等共23个关联产业。有色金属产品价格变动时,受影响最大的分别为电气、机械和器材,电力、热力生产和供应,煤炭采选产品等部门,且影响情况和关联程度的关系较为密切。有色金属产品价格下跌在合理范围内,对经济产生的积极影响随着价格下跌的幅度逐渐增大,但当有色金属产品价格下跌幅度在40%以上时,GDP将受到极大的负面影响;有色金属产品价格上涨对GDP有一定的负面影响,负面影响一定范围内随价格的上涨幅度逐渐增大。     

The economic impact of restricted water supply: a computable general equilibrium analysis

Water problems are typically studied at the level of the river catchment. About 70% of all water is used for agriculture, and agricultural products are traded internationally. A full understanding of water use is impossible without understanding the international market for food and related products, such as textiles. The water embedded in commodities is called virtual water. Based on a general equilibrium model, we offer a method for investigating the role of water resources and water scarcity in the context of international trade. We run five alternative scenarios, analyzing the effects of water scarcity due to reduced availability of groundwater. This can be a consequence of physical constraints, and of policies curbing water demand. Four scenarios are based on a "market solution", where water owners can capitalize their water rent or taxes are recycled. In the fifth "non-market" scenario, this is not the case; supply restrictions imply productivity losses. Restrictions in water supply would shift trade patterns of agriculture and virtual water. These shifts are larger if the restriction is larger, and if the use of water in production is more rigid. Welfare losses are substantially larger in the non-market situation. Water-constrained agricultural producers lose, but unconstrained agricultural produces gain; industry gains as well. As a result, there are regional winners and losers from water supply constraints. Because of the current distortions of agricultural markets, water supply constraints could improve allocative efficiency; this welfare gain may more than offset the welfare losses due to the resource constraint.     

Impacts of carbon motivated border tax adjustments on competitiveness across regions in China

China is a large developing country with high carbon intensity. It is likely that China will have to face the challenge of CBTA (carbon motivated border tax adjustments) in future. Meanwhile, CBTA would create price gap between CBTA users and target countries, and change the competitiveness of different producers. Under such circumstances, this paper seeks to contribute to the debate on CBTA by focusing on the potential impacts of CBTA on different regions of China from a perspective of competitiveness. We adopt two geographical divides in China (eastern-central-western zones, high-trade-openness to low-trade-openness regions), and simulate the potential impacts across regions through a general equilibrium model. Our simulation results show that CBTA would affect competitiveness of different producers, their comparative advantages, relative trade shares, outputs and emissions. CBTA would induce structure change of the economy, and result in a shift of industrial output toward non-industrial output. There are significant differences in the effects of CBTA among different regions in China. CBTA would result in a relocation of outputs across regions in China. Therefore, CBTA would also have impact on China’s regional development policy.