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Regulating Environmental Threats

Author

Listed:
  • Tsur, Yacov
  • Zemel, Amos

Abstract

Environmental consequences of natural resource exploitation often entail threats of future occurrences of detrimental abrupt events rather than (or in addition to) inflicting a damage gradually. The possibility of abrupt occurrence of climate-change related calamities is a case in mind. The uncertainty associated with the realization of these threats and their public-bad nature complicate the determination of optimal economic response. We analyze the regulation of such environmental threats by means of a Pigouvian hazard tax, based on the shadow cost of the hazard-generating activities. A numerical example illustrates possible effects of the proposed regulation scheme.

Suggested Citation

  • Tsur, Yacov & Zemel, Amos, 2006. "Regulating Environmental Threats," Discussion Papers 7150, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  • Handle: RePEc:ags:huaedp:7150
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    File URL: http://purl.umn.edu/7150
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    References listed on IDEAS

    as
    1. Tsur, Yacov & Zemel, Amos, 2006. "Welfare measurement under threats of environmental catastrophes," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 421-429, July.
    2. Tsur, Yacov & Zemel, Amos, 1996. "Accounting for global warming risks: Resource management under event uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1289-1305.
    3. Tsur, Yacov & Zemel, Amos, 2005. "Scarcity, growth and R&D," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 484-499, May.
    4. Weitzman, Martin L., 2000. "The linearised Hamiltonian as comprehensive NDP," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 55-68, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Omar O. Chisari, 2010. "Notes on Optimal Growth, Climate Change Calamities, Adaptation and Mitigation," IDB Publications (Working Papers) 1531, Inter-American Development Bank.

    More about this item

    Keywords

    environmental events; emission; climate change; regulation; Pigouvian tax; hazard rate; uncertainty; Environmental Economics and Policy; H23; H41; O13; Q54; Q58;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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