Environmental conflicts, environmental justice and valuation

In this article some historical and contemporary environmental conflicts are described. The international environmental liability of mining corporations is discussed. Comparisons are made with conflicts in the United States and in South Africa which fall under the rubric of the Environmental Justice movement. Such conflicts are fought out in many languages, and the economic valuation of damages is only one of such languages. Who has the power to impose particular languages of valuation? Who rules over the ways and means of simplifying complexity, deciding that some points of view are out of order? Who has power to determine which is the bottom-line in an environmental discussion?

The making of international environmental agreements

We examine in this paper the formation and the stability of international environmental agreements when cooperation means to commit to a minimum abatement level. Each country decides whether to ratify the agreement and this latter enters into force only if it is ratified by a number of countries at least equal to some ratification threshold. We analyze the role played by ratification threshold rules and provide conditions for international environmental agreements to enter into force. We show that a large typology of agreements can enter into force among the one constituted by the grand coalition.

Stochastic optimal bid to electricity markets with environmental risk constraints

There are many factors that influence the day-ahead market bidding strategies of a generation company (GenCo) in the current energy market framework. Environmental policy issues have become more and more important for fossil-fuelled power plants and they have to be considered in their management, giving rise to emission limitations. This work allows to investigate the influence of both the allowances and emission reduction plan, and the incorporation of the derivatives medium-term commitments in the optimal generation bidding strategy to the day-ahead electricity market. Two different technologies have been considered: the coal thermal units, high-emission technology, and the combined cycle gas turbine units, low-emission technology. The Iberian Electricity Market and the Spanish National Emissions and Allocation Plans are the framework to deal with the environmental issues in the day-ahead market bidding strategies. To address emission limitations, some of the standard risk management methodologies developed for financial markets, such as Value-at-Risk (VaR) and Conditional Value-at-Risk (CVaR), have been extended. This study offers to electricity generation utilities a mathematical model to determinate the individual optimal generation bid to the wholesale electricity market, for each one of their generation units that maximizes the long-run profits of the utility abiding by the Iberian Electricity Market rules, the environmental restrictions set by the EU Emission Trading Scheme, as well as the restrictions set by the Spanish National Emissions Reduction Plan. The economic implications for a GenCo of including the environmental restrictions of these National Plans are analyzed and the most remarkable results will be presented.

Efficiency and environmental regulation: a 'complex situation'

Production of desirable outputs is often accompanied by undesirable by products that have damaging effects on the environment, and whose disposal is frequently regulated by public authorities. In this paper, we compute directional technology distance functions under particular assumptions concerning disposability of bads in order to test for the existence of what we call ‘complex situations’, where the biggest producer is not the greatest polluter. Furthermore, we show that how in such situations, environmental regulation could achieve an effective reduction in the aggregate level of bad outputs without reducing the production of good outputs. Finally, we illustrate our methodology with an empirical application to a sample of Spanish tile ceramic producers.

Ecological and Economic Impacts within the Environmental Input-Output Framework

The environmental input-output approach reveals the channels through which the environmental burdens of production activities are transmitted throughout the economy. This paper uses the input-output framework and analyses the changes in Spanish emission multipliers during the period 1995-2000. By decomposing the global changes in multipliers into different components, it is possible to evaluate separately the economic and ecological impacts captured by the environmental input-output model. Specifically, in this study we distinguish between the effects on multipliers caused by changes in emission coefficients (the ecological impacts) and the effects on multipliers caused by changes in technical coefficients (the economic impacts). Our results show a significant improvement in the ecological impacts of production activities, which contributed negatively to changes in emission multipliers. They also show a deterioration in the economic impacts, which contributed positively to changes in emission multipliers. Together, these two effects lead to a small reduction in global multipliers during the period of analysis. Our results also show significant differences in the individual behaviour of different sectors in terms of their contribution to multiplier changes. Since there are considerable differences in the way individual sectors affect the changes in emission levels, and in the intensity of these effects, this means that the final effects will basically depend on the activity considered. Keywords: emission multipliers, multipliers' changes, ecological impacts, economic impacts.

Scoring rules on dichotomous preferences

In this paper, we study individual incentives to report preferences truthfully for the special case when individuals have dichotomous preferences on the set of alternatives and preferences are aggregated in form of scoring rules. In particular, we show that (a) the Borda Count coincides with Approval Voting on the dichotomous preference domain, (b) the Borda Count is the only strategy-proof scoring rule on the dichotomous preference domain, and (c) if at least three individuals participate in the election, then the dichotomous preference domain is the unique maximal rich domain under which the Borda Count is strategy-proof.

Optimal enforcement policy and firms' emissions and compliance with environmental taxes

In a market where firms with different characteristics decide upon both the level of emissions and their reports, we study the optimal audit policy for an enforcement agency whose objective is to minimize the level of emissions. We show that it is optimal to devote the resources primarily to the easiest-to-monitor firms and to those firms that value pollution the less. Moreover, unless the budget for monitoring is very large, there are always firms that do not comply with the environmental objective and others that do comply; but all of them evade the environmental taxes.

Choosing how to choose: self-stable majority rules and constitutions

Constitutional arrangements affect the decisions made by a society. We study how this effect leads to preferences of citizens over constitutions; and ultimately how this has a feedback that determines which constitutions can survive in a given society. Constitutions are stylized here, to consist of a voting rule for ordinary business and possibly different voting rule for making changes to the constitution. We deffine an equilibrium notion for constitutions, called self-stability, whereby under the rules of a self-stable constitution, the society would not vote to change the constitution. We argue that only self-stable constitutions will endure. We prove that self-stable constitutions always exist, but that most constitutions (even very prominent ones) may not be self-stable for some societies. We show that constitutions where the voting rule used to amend the constitution is the same as the voting rule used for ordinary business are dangerously simplistic, and there are (many) societies for which no such constitution is self-stable rule. We conclude with a characterization of the set of self-stable constitutions that use majority rule for ordinary business.

Bribe-proof rules in the division problem

The division problem consists of allocating an amount of a perfectly divisible good among a group of n agents with single-peaked preferences. A rule maps preference profiles into n shares of the amount to be allocated. A rule is bribe-proof if no group of agents can compensate another agent to misrepresent his preference and, after an appropriate redistribution of their shares, each obtain a strictly preferred share. We characterize all bribe-proof rules as the class of efficient, strategy-proof, and weak replacement monotonic rules. In addition, we identify the functional form of all bribe-proof and tops-only rules.

Efficient priority rules

We study the assignment of indivisible objects with quotas (houses, jobs, or offices) to a set of agents (students, job applicants, or professors). Each agent receives at most one object and monetary compensations are not possible. We characterize efficient priority rules by efficiency, strategy-proofness, and renegotiation-proofness. Such a rule respects an acyclical priority structure and the allocations can be determined using the deferred acceptance algorithm.

Stable condorcet rules

We consider the following allocation problem: A fixed number of public facilities must be located on a line. Society is composed of $N$ agents, who must be allocated to one and only one of these facilities. Agents have single peaked preferences over the possible location of the facilities they are assigned to, and do not care about the location of the rest of facilities. There is no congestion. In this context, we observe that if a public decision is a Condorcet winner, then it satisfies nice properties of internal and external stability. Though in many contexts and for some preference profiles there may be no Condorcet winners, we study the extent to which stability can be made compatible with the requirement of choosing Condorcet winners whenever they exist.

A maximal domain of preferences for tops-only rules in the division problem

The division problem consists of allocating an amount M of a perfectly divisible good among a group of n agents. Sprumont (1991) showed that if agents have single-peaked preferences over their shares, the uniform rule is the unique strategy-proof, efficient, and anonymous rule. Ching and Serizawa (1998) extended this result by showing that the set of single-plateaued preferences is the largest domain, for all possible values of M, admitting a rule (the extended uniform rule) satisfying strategy-proofness, efficiency and symmetry. We identify, for each M and n, a maximal domain of preferences under which the extended uniform rule also satisfies the properties of strategy-proofness, efficiency, continuity, and "tops-onlyness". These domains (called weakly single-plateaued) are strictly larger than the set of single-plateaued preferences. However, their intersection, when M varies from zero to infinity, coincides with the set of single-plateaued preferences.

Pressure groups and experts in environmental regulation

We study a problem of adverse selection in the context of environmental regulation, where the firm may suffer from a certain degree of ignorance about its own type. In a framework like the construction of a certain infrastructure project, the presence of ignorance about its impact on the environment, can play an important role in the determination of the regulatory policy. First, an optimal contract is constructed for any exogenous level of ignorance. Second, the presence of potentially informed third-parties is studied from the perspective of the regulator, which allows us to analyze the impact on the efficiency of the contract, of the presence of environmentalists and of experts. Then, we obtain some insights on how the problem differs when the degree of ignorance is a choice variable for the firm. We finally use our results to derive policy implications concerning the existing envoronmental regulation, and the potential role of interested parties as information providers.