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Non-linear production, abatement, pollution and materials balance reconsidered

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  • Pethig, Rudiger

Abstract

In the environmental economics literature the standard approach of modeling nonlinear production and abatement processes is to treat waste emissions "simply as another factor of production" (Cropper and Oates 1992). That approach doesn't map the materials flow involved completely and hides, moreover, the exact links between production, residuals generation and abatement. This paper shows that production functions with emissions treated as inputs can be reconstructed as a subsystem of a comprehensive production-cum-abatement technology that is in line with the materials-balance principle. In a simple economy with full regard of the materials flow it also explores the consequences for allocative efficiency and efficiency-restoring taxation of multiple and interdependent residuals generated in the transformation processes of production, abatement and consumption. Finally, the paper demonstrates that efficiency may require setting the emissions tax rate above or below conventionally defined marginal abatement cost if the residual subject to abatement is not the only residual causing pollution.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 51 (2006)
Issue (Month): 2 (March)
Pages: 185-204

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Handle: RePEc:eee:jeeman:v:51:y:2006:i:2:p:185-204

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Web page: http://www.elsevier.com/locate/inca/622870

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References

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  1. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
  2. Thomas Eichner & Rüdiger Pethig, 1999. "Recycling, Producer Responsibility and Centralized Waste Management," Volkswirtschaftliche Diskussionsbeiträge 83-99, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  3. Ayres, Robert U & Kneese, Allen V, 1969. "Production , Consumption, and Externalities," American Economic Review, American Economic Association, vol. 59(3), pages 282-97, June.
  4. Krysiak, Frank C. & Krysiak, Daniela, 2003. "Production, consumption, and general equilibrium with physical constraints," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 513-538, November.
  5. Klevorick, Alvin K. & Kramer, Gerald H., 1973. "Social choice on pollution management: the genossenschaften," Journal of Public Economics, Elsevier, vol. 2(2), pages 101-146, April.
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Citations

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Cited by:
  1. Rausser, Gordon C. & Papineau, Maya, 2008. "Managing R&D risk in renewable energy," Transition to a Bio Economy Conferences, Risk, Infrastructure and Industry Evolution Conference, June 24-25, 2008, Berkeley, California 48726, Farm Foundation.
  2. Kuosmanen, Natalia & Kuosmanen, Timo, 2013. "Modeling Cumulative Effects of Nutrient Surpluses in Agriculture: A Dynamic Approach to Material Balance Accounting," Ecological Economics, Elsevier, vol. 90(C), pages 159-167.
  3. Hampf, Benjamin, 2011. "Separating Environmental Efficiency into Production and Abatement Efficiency – A Nonparametric Model with Application to U.S. Power Plants," Darmstadt Discussion Papers in Economics 53901, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
  4. Lauwers, Ludwig, 2009. "Justifying the incorporation of the materials balance principle into frontier-based eco-efficiency models," Ecological Economics, Elsevier, vol. 68(6), pages 1605-1614, April.
  5. Konrad, Kai A. & Skaperdas, Stergios, 2012. "The market for protection and the origin of the state," Munich Reprints in Economics 13961, University of Munich, Department of Economics.
  6. Van Meensel, Jef & Lauwers, Ludwig H. & Van Huylenbroeck, Guido & Van Passel, Steven, 2009. "Exploring production-theoretical insights for analyzing trade-offs between economic performance and environmental pressure at firm level," 2009 Conference, August 16-22, 2009, Beijing, China 51725, International Association of Agricultural Economists.
  7. Førsund, Finn R., 2008. "Good Modelling of Bad Outputs: Pollution and Multiple-Output Production," Memorandum 30/2008, Oslo University, Department of Economics.
  8. Murty, Sushama & Robert Russell, R. & Levkoff, Steven B., 2012. "On modeling pollution-generating technologies," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 117-135.
  9. Jöst, Frank & Quaas, Martin F., 2010. "Environmental and population externalities," Environment and Development Economics, Cambridge University Press, vol. 15(01), pages 1-19, February.
  10. Neophyta Empora & Theofanis Mamuneas, 2011. "The Effect of Emissions on U.S. State Total Factor Productivity Growth," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 3(2), pages 149-172, October.
  11. Rødseth, Kenneth Løvold, 2013. "Capturing the least costly way of reducing pollution: A shadow price approach," Ecological Economics, Elsevier, vol. 92(C), pages 16-24.
  12. Akao, Ken-Ichi & Managi, Shunsuke, 2007. "Feasibility and optimality of sustainable growth under materials balance," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3778-3790, December.
  13. Fagnart, Jean-François & Germain, Marc, 2011. "Quantitative versus qualitative growth with recyclable resource," Ecological Economics, Elsevier, vol. 70(5), pages 929-941, March.
  14. Mikuláš Luptáèik & Bernhard Mahlberg, 2013. "Eco-Efficiency and Eco-Productivity change over time in a multisectoral economic system," Department of Economic Policy Working Paper Series 004, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
  15. Lisann Krautzberger & Heike Wetzel, 2012. "Transport and CO 2: Productivity Growth and Carbon Dioxide Emissions in the European Commercial Transport Industry," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(3), pages 435-454, November.
  16. Guohua Feng & Apostolos Serletis, 2013. "Undesirable Outputs and a Primal Divisia Productivity Index Based on the Directional Output Distance Function," Working Papers 2013-15, Department of Economics, University of Calgary.
  17. Leleu, Hervé, 2013. "Shadow pricing of undesirable outputs in nonparametric analysis," European Journal of Operational Research, Elsevier, vol. 231(2), pages 474-480.

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