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Zonder onderwerpscode: economie

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This paper discusses possible macroeconomic implications for low-income countries of increased revenue inflows that may follow from implementing certain global greenhouse gas mitigation policies. Such revenue sources include revenue from emissions offset mechanisms, direct investments, and financial transfers that form parts of possible future mitigation treaties. In the short run such revenue will come mainly from offset markets and donor-sponsored programs, with some additional financial inflows due to foreign direct investments. In the longer run, comprehensive global cap-and-trade or carbon tax schemes could provide a potentially much larger revenue flow to many low-income countries. The author argues that the macroeconomic implications of such flows are manageable in the short run, but the larger revenues resulting from global emissions schemes could overwhelm this capacity and lead to a number of potential macroeconomic management problems.

Access to Finance --- Beneficiary --- Debt Markets --- Direct investments --- Disbursement --- Disbursements --- Economic Theory and Research --- Emerging Markets --- Exchange rate --- Exchange rates --- Expenditures --- Finance and Financial Sector Development --- Financial flows --- Foreign direct investment --- Foreign direct investments --- Foreign funds --- Interest rate --- Interest rates --- International bank --- Macroeconomic management --- Macroeconomics and Economic Growth --- Political economy --- Private Sector Development --- Public Sector Economics and Finance --- Tax --- Trading --- Treasury --- Treaties

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Interests in obtaining carbon offsets in host countries for Clean Development Mechanism projects may serve as an obstacle to implementing more stringent general environmental policies in the same countries. A relatively lax environmental policy, whereby carbon emissions remain high, can be advantageous for such countries as it leaves them with a higher than otherwise scope for future emissions reductions through Clean Development Mechanism and other offset projects. In this note, the potential to affect the availability of future Clean Development Mechanism projects is shown to distort environmental and energy policies of Clean Development Mechanism host countries in two ways. Measures to reduce use of fossil energy are weakened. Because this weakens private sector incentives to switch to lower-carbon technology through Clean Development Mechanism projects, host governments then also find it attractive to subsidize this switch, in order to maximize the country's advantage from the Clean Development Mechanism.

Carbon --- Carbon capture --- Carbon content --- Carbon emissions --- Carbon emissions from fossil --- Carbon Offsets --- Climate --- Climate change --- Climate Change Economics --- Climate change mitigation --- Climate Change Mitigation and Green House Gases --- Emissions reductions --- Energy --- Energy Production and Transportation --- Environment --- Environment and Energy Efficiency --- Environmental Economics & Policies --- Fossil fuel --- Fossil fuels --- Fuel consumption --- GHGs --- Global carbon emissions --- Global emissions --- Greenhouse --- Greenhouse gas --- Greenhouse gas emissions --- Macroeconomics and Economic Growth --- Renewable energy

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This paper provides an analytical discussion of several interconnected resource allocation problems from under-pricing of electricity used by farmers for groundwater extraction. In these situations, groundwater extraction is inefficiently high even without electricity under-pricing. Moreover, part of the electric power supply intended for farmers is often diverted to other unauthorized uses (notably illicit consumption). The paper demonstrates that unless non-price electricity rationing imposes severe constraints on demand, the range of resource allocation problems includes insufficient incentives to provide high-level service by the power utility, insufficient incentives for farmers to install and operate efficient equipment, and losses due to political "rent seeking" activities to influence water allocations. It also shows that diversion of electricity to illicit uses can increase overall economic efficiency when this leads to less electricity use by farmers, thus somewhat ameliorating the problem of excessive groundwater extraction as well as the inefficiencies related to under-pricing of electricity. Systemic reforms for overcoming these problems may face severe political obstacles.

Agricultural water use --- Economic Theory & Research --- Electric Power --- Electricity subsidies --- Energy --- Energy Production and Transportation --- Environment --- Groundwater extraction --- Macroeconomics and Economic Growth --- Rent seeking --- Wastewater Treatment --- Water allocation inefficiencies --- Water and Industry

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When a groundwater basin is exploited by a large number of farmers, acting independently, each farmer has little incentive to practice conservation that would primarily benefit other farmers. This can lead to excessive groundwater extraction. When farmers pay less than the full cost of electricity used for groundwater pumping, this problem can be worsened; while the problem can be somewhat relieved by rationing the electricity supply. The research in this paper constructs an analytical framework for describing the characteristics of economically efficient groundwater management plans, identifying how individual water use decisions by farmers collectively depart from efficient resource use, and examining how policies related to both water and electricity can improve on the efficiency of the status quo. It is shown that an optimal scheme for pricing electricity used for pumping groundwater includes two main elements: 1) the full (marginal) economic cost of electricity must be covered; and 2) there must be an extra charge, reflected in the electricity price, corresponding to the externality cost of groundwater pumping. The analysis includes a methodology for calculating the latter externality cost, based on just a few parameters, and a discussion of how electricity pricing could be modified to improve efficiency in both power and water use.

Aquifer --- Basins --- Conservation --- Electricity --- Farmers --- Ground water --- Groundwater Extraction --- Groundwater management --- Recharge --- Wastewater Treatment --- Water and Industry --- Water Conservation --- Water Resources --- Water Supply and Sanitation --- Water Supply and Systems --- Water unit --- Water Use