IDEAS home Printed from https://ideas.repec.org/a/eee/jeeman/v82y2017icp39-73.html
   My bibliography  Save this article

The social costs of second-best policies: Evidence from agricultural GHG mitigation

Author

Listed:
  • Garnache, Cloé
  • Mérel, Pierre R.
  • Lee, Juhwan
  • Six, Johan

Abstract

This paper investigates the social costs of second-best agricultural greenhouse gas (GHG) mitigation policies. Adjustments along the land use and input intensity margins are represented within a regionalized optimization model of California crop production calibrated to economic and agronomic information. Second-best policies relying on spatially aggregated GHG emission factors lead to small abatement efficiency losses, while policies targeting a single GHG lead to moderate losses. In contrast, policies targeting a single input entail large abatement efficiency losses, which nonetheless can be reduced by combining instruments.

Suggested Citation

  • Garnache, Cloé & Mérel, Pierre R. & Lee, Juhwan & Six, Johan, 2017. "The social costs of second-best policies: Evidence from agricultural GHG mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 39-73.
  • Handle: RePEc:eee:jeeman:v:82:y:2017:i:c:p:39-73
    DOI: 10.1016/j.jeem.2016.10.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0095069616303977
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lucas W. Davis, 2008. "The Effect of Driving Restrictions on Air Quality in Mexico City," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 38-81, February.
    2. Francisco Rosas & Bruce A. Babcock & Dermot J. Hayes, 2011. "A Nonlinear Offset Program to Reduce Nitrous Oxide Emissions Induced by Excessive Nitrogen Application," Center for Agricultural and Rural Development (CARD) Publications 11-wp521, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. GR Pautsch & LA Kurkalova & BA Babcock & CL Kling, 2001. "The Efficiency Of Sequestering Carbon In Agricultural Soils," Contemporary Economic Policy, Western Economic Association International, vol. 19(2), pages 123-134, April.
    4. Lubowski, Ruben N. & Plantinga, Andrew J. & Stavins, Robert N., 2006. "Land-use change and carbon sinks: Econometric estimation of the carbon sequestration supply function," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 135-152, March.
    5. Fullerton, Don & West, Sarah E., 2002. "Can Taxes on Cars and on Gasoline Mimic an Unavailable Tax on Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 135-157, January.
    6. Stéphane Cara & Martin Houzé & Pierre-Alain Jayet, 2005. "Methane and Nitrous Oxide Emissions from Agriculture in the EU: A Spatial Assessment of Sources and Abatement Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(4), pages 551-583, December.
    7. Schneider, Uwe A. & McCarl, Bruce A. & Schmid, Erwin, 2007. "Agricultural sector analysis on greenhouse gas mitigation in US agriculture and forestry," Agricultural Systems, Elsevier, vol. 94(2), pages 128-140, May.
    8. S De Cara & P-A Jayet, 2000. "Emissions of greenhouse gases from agriculture: the heterogeneity of abatement costs in France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(3), pages 281-303, September.
    9. James B. Bushnell & Howard Chong & Erin T. Mansur, 2013. "Profiting from Regulation: Evidence from the European Carbon Market," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 78-106, November.
    10. Heckelei, Thomas & Britz, Wolfgang & Zhang, Yinan, 2012. "Positive Mathematical Programming Approaches – Recent Developments in Literature and Applied Modelling," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 1(1), pages 1-16, April.
    11. Calzadilla, Alvaro & Rehdanz, Katrin & Tol, Richard S.J., 2011. "The GTAP-W model: Accounting for water use in agriculture," Kiel Working Papers 1745, Kiel Institute for the World Economy (IfW).
    12. Arnaud Costinot & Dave Donaldson & Cory Smith, 2016. "Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 205-248.
    13. Douglas J. Miller, 1999. "An Econometric Analysis of the Costs of Sequestering Carbon in Forests," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 812-824.
    14. Innes, Robert, 1996. "Regulating Automobile Pollution under Certainty, Competition, and Imperfect Information," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 219-239, September.
    15. Springborn, Michael & Yeo, Boon-Ling & Lee, Juhwan & Six, Johan, 2013. "Crediting uncertain ecosystem services in a market," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 554-572.
    16. Sophie Durandeau & Benoit Gabrielle & Caroline Godard & Pierre-Alain Jayet & Christine Le Bas, 2010. "Coupling biophysical and micro-economic models to assess the effect of mitigation measures on greenhouse gas emissions from agriculture," Post-Print hal-00410001, HAL.
    17. Cloé Garnache & Pierre R. Mérel, 2015. "What Can Acreage Allocations Say about Crop Supply Elasticities? A Convex Programming Approach to Supply Response Disaggregation," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(1), pages 236-256, February.
    18. Richard E. Howitt, 1995. "Positive Mathematical Programming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 329-342.
    19. Meredith Fowlie & Mar Reguant & Stephen P. Ryan, 2016. "Market-Based Emissions Regulation and Industry Dynamics," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 249-302.
    20. Don Fullerton & Li Gan, 2005. "Cost-Effective Policies to Reduce Vehicle Emissions," American Economic Review, American Economic Association, vol. 95(2), pages 300-304, May.
    21. Newell, Richard G. & Stavins, Robert N., 2000. "Climate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 211-235, November.
    22. Justin Caron, Sebastian Rausch, and Niven Winchester, 2015. "Leakage from sub-national climate policy: The case of Californias capandtrade program," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    23. Uwe Schneider & Bruce McCarl, 2003. "Economic Potential of Biomass Based Fuels for Greenhouse Gas Emission Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(4), pages 291-312, April.
    24. Burtraw, Dallas & McLaughlin, David & Szambelan, Sarah Jo, 2012. "California’s New Gold: A Primer on the Use of Allowance Value Created under the CO2 Cap-and-Trade Program," Discussion Papers dp-12-23, Resources For the Future.
    25. Horowitz, John K. & Gottlieb, Jessica, 2010. "The Role of Agriculture in Reducing Greenhouse Gas Emissions," Economic Brief 138910, United States Department of Agriculture, Economic Research Service.
    26. Feng, Hongli & Kurkalova, Lyubov A. & Kling, Catherine L. & Gassman, Philip W., 2006. "Environmental conservation in agriculture: Land retirement vs. changing practices on working land," Journal of Environmental Economics and Management, Elsevier, vol. 52(2), pages 600-614, September.
    27. Thomas W. Hertel & Kyle Stiegert & Harry Vroomen, 1996. "Nitrogen-Land Substitution in Corn Production: A Reconciliation of Aggregate and Firm-Level Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 30-40.
    28. Maximilian Auffhammer & Ryan Kellogg, 2011. "Clearing the Air? The Effects of Gasoline Content Regulation on Air Quality," American Economic Review, American Economic Association, vol. 101(6), pages 2687-2722, October.
    29. Catherine L. Kling, 2011. "Economic Incentives to Improve Water Quality in Agricultural Landscapes: Some New Variations on Old Ideas," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(2), pages 297-309.
    30. RICHARD M. Adams & DARIUS M. Adams & JOHN M. Callaway & CHING‐CHENG Chang & BRUCE A. Mccarl, 1993. "Sequestering Carbon On Agricultural Land: Social Cost And Impacts On Timber Markets," Contemporary Economic Policy, Western Economic Association International, vol. 11(1), pages 76-87, January.
    31. Antle, John & Capalbo, Susan & Mooney, Sian & Elliott, Edward & Paustian, Keith, 2003. "Spatial heterogeneity, contract design, and the efficiency of carbon sequestration policies for agriculture," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 231-250, September.
    32. Jeffrey M. Peterson & Craig M. Smith & John C. Leatherman & Nathan P. Hendricks & John A. Fox, 2015. "Transaction Costs in Payment for Environmental Service Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 219-238.
    33. Pierre Mérel & Fujin Yi & Juhwan Lee & Johan Six, 2014. "A Regional Bio-economic Model of Nitrogen Use in Cropping," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(1), pages 67-91.
    34. John Antle & Stephen Ogle, 2012. "Influence of soil C, N 2 O and fuel use on GHG mitigation with no-till adoption," Climatic Change, Springer, vol. 111(3), pages 609-625, April.
    35. Godard, C. & Roger-Estrade, J. & Jayet, P.A. & Brisson, N. & Le Bas, C., 2008. "Use of available information at a European level to construct crop nitrogen response curves for the regions of the EU," Agricultural Systems, Elsevier, vol. 97(1-2), pages 68-82, April.
    36. Bushnell, James & Chen, Yihsu & Zaragoza-Watkins, Matthew, 2014. "Downstream regulation of CO2 emissions in California's electricity sector," Energy Policy, Elsevier, vol. 64(C), pages 313-323.
    37. Douglas M. Larson & Gloria E. Helfand & Brett W. House, 1996. "Second-Best Tax Policies to Reduce Nonpoint Source Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 1108-1117.
    38. Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September.
    39. Pierre Mérel & Richard Howitt, 2014. "Theory and Application of Positive Mathematical Programming in Agriculture and the Environment," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 451-470, October.
    40. Pierre Mérel & Leo K. Simon & Fujin Yi, 2011. "A Fully Calibrated Generalized Constant-Elasticity-of-Substitution Programming Model of Agricultural Supply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(4), pages 936-948.
    41. Richard E. Howitt, 1995. "A Calibration Method For Agricultural Economic Production Models," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(2), pages 147-159, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Weng, Weizhe & Cobourn, Kelly M. & Kemanian, Armen R. & Boyle, Kevin J. & Shi, Yuning & Stachelek, Joseph & White, Charles, 2020. "Quantifying Co-Benefits of Water Quality Policies: An Integrated Assessment Model of Nitrogen Management," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304667, Agricultural and Applied Economics Association.
    2. De Cara, Stéphane & Henry, Loïc & Jayet, Pierre-Alain, 2018. "Optimal coverage of an emission tax in the presence of monitoring, reporting, and verification costs," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 71-93.
    3. Lungarska, Anna & Chakir, Raja, 2018. "Climate-induced Land Use Change in France: Impacts of Agricultural Adaptation and Climate Change Mitigation," Ecological Economics, Elsevier, vol. 147(C), pages 134-154.
    4. Manning, Dale T. & Rad, Mani Rouhi & Suter, Jordan F. & Goemans, Christopher & Xiang, Zaichen & Bailey, Ryan, 2020. "Non-market valuation in integrated assessment modeling: The benefits of water right retirement," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).

    More about this item

    Keywords

    Greenhouse gases; Climate policy; Second best; Abatement efficiency;

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:82:y:2017:i:c:p:39-73. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.