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This dissertation contains three papers that contribute to the theory of international trade, political economy, and trade and environmental protection. The first paper develops a model to examine the costs and benefits of trade in differentiated products. It focuses on how relative ability in exporting variety between two countries determines economic welfare in both countries. The results shed light on the question of why export-promotion programs in many countries aim not only to help their existing exporting firms export more, but also to help domestic firms become new exporting firms or enter new foreign markets. The paper also discusses the possibility of over-provision of export variety and raises some questions regarding the benefits of trade in differentiated products. The second paper suggests some coherent explanations for tariff reductions and substitution of non-tariff barriers for tariffs, taking into account both organized special interests and unorganized consumer interests. It focuses on how the presence of informed consumers affects the political equilibrium choice of trade policy - both the level of protection and the policy instrument. The paper identifies three effects that interact with each other as an incumbent government substitutes a NTB for a tariff and finds, among other things, that an increase in foreign competition will not cause the government to substitute NTBs for tariffs but a rise in the government's valuation of political contributions might. The third paper shows that small or financially constrained environmentalist groups can compete indirectly through changing public preferences over environmental quality, though they may be in a weak position relative to polluting industries in the direct competition for political influence. It is also shown, however, that in a small open economy where the output price is exogenously determined, the value of domestic persuasion falls and government environmental policies will be determined by direct political competition. Moreover, direct competition for political influence in the open economy becomes more intense because positions of different groups on environmental policy become more extreme. The analysis also shows that moving to free trade would increase a country's environmental protection as long as the median voter were not very 'green'.

I consider the influence of foreign environmental policy on domestic manufacturing activity using theory and empirics. A tractable three-country spatial model yields a theory of locational com- parative advantage in the production of pollution-intensive manufactured goods: greater market access to countries with stringent environmental policy encourages output in the polluting sector. Operationalizing the model empirically, I find robust evidence that high market access to countries with stringent environmental policy increases manufacturing value added. Both the theoretical and empirical analyses suggest that estimates of the Pollution Haven Effect that ignore third country environmental policy - yet make the stable unit treatment value assumption - can be misleading. Chapter Two We investigate the impact of short-term weather and long-term climate on self-reported life satisfaction using panel data. We find robust evidence that day-to-day weather variation impacts life satisfaction by a similar magnitude to acquiring a mild disability. Utilizing two sources of variation in the cognitive complexity of satisfaction questions, we present evidence that weather bias arises because of the cognitive challenge of reporting life satisfaction. Consistent with past studies, we detect a relationship between long-term climate and life satisfaction without individual fixed effects. This relationship is not robust to individual fixed effects, suggesting climate does not directly influence life satisfaction. Chapter Three This chapter considers the related policy challenges of deindustrialisation and 'leakage' which can arise when environmental regulation is differentiated across regions. A dynamic two-region 'New Economic Geography' (NEG) model is adopted in which agglomeration forces may make firms tolerant of regulatory disadvantage. Each region ratifies an international environmental agreement (IEA) requiring it to tax transboundary pollution created by local firms. In contrast to previous NEG studies, the model adopted is considerably more tractable, enabling comparative static analysis to be conducted analytically rather than through computer simulation. The model is extended to consider the relationship between the prescribed tax rates and deindustrialisation caused by the relocation of firms. Firm relocation in response to a given tax differential depends crucially on trade costs and the initial location (configuration) of industry. For some industry configurations, agglomeration forces are strong and a set of tax differentials exist which cause no international relocation of polluting firms. For other initial industry configurations in which agglomeration forces are weaker, the same set of tax differentials may cause complete inter-national relocation to the less stringently regulated region. Trade liberalization can actually make industry less likely to relocate in response to a regulatory disadvantage. The model is further extended to consider the issue of carbon leakage, which arises in the regulation of greenhouse gas (GHG) emissions. For relatively low tax differentials, agglomeration forces create rents which tend to anchor industry in the higher taxing region, avoiding carbon leakage. If the tax differential is too great, however, agglomeration forces cause all firms to relocate to the lower taxing region where they optimally emit more GHGs. Environmental outcomes may therefore be improved by reducing the tax rate in the higher taxing region in order to discourage industry relocation. When industry is diversified between regions, firms respond to higher (lower) relative domestic taxes by increasing (decreasing) output and polluting more (less).

In the first chapter, "Does the Stage of Development Matter for Infrastructure Payoffs?”, I consider infrastructure as a channel for economic development. I address the question of whether the impact of infrastructure varies according to the stage of development of a country. I answer this question through an innovative methodology exploiting the information included in papers that provide estimates of infrastructure payoffs. I use a logit model whose dependent variable indicates whether these estimates are positively significant. To account for the variation of this dependent variable, I consider the sample characteristics of estimates. One of these characteristics is the stage of development of the countries included in the samples. Specifically, I use the weight of each of four income categories in the sample as an explanatory variable.<p><p>The second chapter, "Climate Change Mitigation in the Presence of Technology Spillovers", explores the implications of an increase in clean technology spillovers between developed and developing countries. I build a 2-stage 2-country game of abatements in which players are linked with technology spillovers. The two countries are asymmetric in their technology endowment. Country 1 - the developed country - is the only one able to invest in technology that lowers abatement costs. Country 2 - the developing country - captures only part of the technology provided by country 1.<p><p>The third chapter, "Threshold Effects in Self-Enforcing International Environmental Agreements" is co-written with Renaud Foucart. In this chapter, we address the stability of self-enforcing International Environmental Agreements (IEAs) with the presence of a threshold of irreversible climate change. Climate scientists recognize the existence of human-induced abrupt climate changes that are likely to occur when the climate system crosses some threshold. We show that taking into account these threshold effects - when identified with enough accuracy - allows for the existence of more ambitious agreements than those predicted by the traditional literature on IEAs. When considering abrupt irreversible damage, the contribution of any country that helps prevent the world from such a catastrophe is very large. Consequently, a high number of signatories that could potentially prevent the climate system from crossing the threshold could form a self-enforcing agreement. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

This dissertation contains three papers that contribute to the theory of international trade, political economy, and trade and environmental protection. The first paper develops a model to examine the costs and benefits of trade in differentiated products. It focuses on how relative ability in exporting variety between two countries determines economic welfare in both countries. The results shed light on the question of why export-promotion programs in many countries aim not only to help their existing exporting firms export more, but also to help domestic firms become new exporting firms or enter new foreign markets. The paper also discusses the possibility of over-provision of export variety and raises some questions regarding the benefits of trade in differentiated products. The second paper suggests some coherent explanations for tariff reductions and substitution of non-tariff barriers for tariffs, taking into account both organized special interests and unorganized consumer interests. It focuses on how the presence of informed consumers affects the political equilibrium choice of trade policy - both the level of protection and the policy instrument. The paper identifies three effects that interact with each other as an incumbent government substitutes a NTB for a tariff and finds, among other things, that an increase in foreign competition will not cause the government to substitute NTBs for tariffs but a rise in the government's valuation of political contributions might. The third paper shows that small or financially constrained environmentalist groups can compete indirectly through changing public preferences over environmental quality, though they may be in a weak position relative to polluting industries in the direct competition for political influence. It is also shown, however, that in a small open economy where the output price is exogenously determined, the value of domestic persuasion falls and government environmental policies will be determined by direct political competition. Moreover, direct competition for political influence in the open economy becomes more intense because positions of different groups on environmental policy become more extreme. The analysis also shows that moving to free trade would increase a country's environmental protection as long as the median voter were not very 'green'. / Arts, Faculty of / Vancouver School of Economics / Graduate

The purpose of this dissertation is to derive a production possibilities curve illustrating alternative choices of agricultural production and rural environmental quality for the Willow Creek area of the Columbia Plateau in Oregon. The research was done as a supplement to the USDA Oregon Rivers Cooperative River Basin Nonpoint Pollution Study. The dissertation is primarily a methodology which can be expanded to address similar trade-offs between conflicting goals. The study initially presented a methodology for measuring environmental quality. A hierarchical structure was introduced which allowed goals and subgoals to be measured in order of their importance. Linkages among these different goals were also defined. Then a preference function was introduced so that goals could be related to preferences or values. Technical indicators were used to measure how well different practices achieve various goals. Finally a model was developed which maximized the level of environmental quality subject to various profit constraints. The model used mathematical programming to develop a production possibilities frontier giving various choices of economic production and environmental quality.

Rapid, human-forced climate change as a result of greenhouse gases is threatening the fabric of human civilisation itself. It is clear that we need to alter our development and poorer countries will need to develop while limiting their emissions, but it is not clear what sustainable development would entail. Climate change policy solutions have pivoted on carbon trading, under the auspices of the Clean Development Mechanism (CDM), but this too has failed to limit growth in carbon emissions. This report looks at the operations of the CDM in South Africa as a source of climate finance meant to facilitate sustainable development. Though South Africa has emphasised its commitment towards a low-carbon transition, in practice its national planners seek to preserve energy-intensive mineral and industrial sectors. This research draws on both primary and secondary documents as well as interviews with carbon professionals to conclude that CDM projects have played a limited role in South Africa, but has tended to reproduce the existing minerals and energy complex within the country.

Government is constantly attempting to balance the competing interests within society, and is itself active in a variety of different roles. The conflict between these roles becomes particularly clear when an attempt is made to implement a "regulatory market" - that is a market that exists only because of government action- such as an electricity or environmental market - to implement some policy objective, since it is the nature of markets to candidly reveal weaknesses that in a non-market management framework may have remained hidden for some time. This thesis examines the difficulty that government has in setting market rules that implement an efficient market design for such markets. After examining the history and development of the Australian Electricity Industry market reform process, we examine more closely some of the electricity related environmental markets developed specifically to drive a policy outcome in Australia -- in particular the Australian Mandatory Renewable Energy Target Market (MRET) and the New South Wales Greenhouse Gas Abatement Scheme. By comparing these environmental markets with established financial markets, and using the techniques of experimental economics, we show that these environmental markets have significant inefficiencies in their design. We argue that these come about because lessons from the financial markets have not be learned by those implementing environmental markets, that stakeholders are lobbying for market design characteristics that are not in fact in their own best interests, and that governments struggle to manage the divergent pressure upon them. For example, in MRET we show experimentally that one of the market design characteristics most fought for by generators (the ability to create renewable energy certificates from qualifying energy without declaring the certificates to the market until a later time of the creator's choosing) in fact leads to market volatility, and ultimately inefficiently low prices. We also examine the impact on the overall MRET market of simple rule changes upon market performance. Key conclusions of this thesis are that it is more difficult than has been appreciated to successfully use a market to implement public policy and that important lessons have not yet been learned from the existing financial markets.

Concern about environmental injustice has been driving the recent effort to characterize risks from exposures to air toxics at very fine spatial resolutions. However, few studies seek to understand the potential policy implications of regulating risks at increasingly finer spatial resolutions and the impact of resulting policies on distribution of risks. To address this gap, the broad question for this research is how could the choice of spatial resolution for regulation of risks from toxic air pollutants affect emission controls and the consequences thereof? This research develops a formal model of a hypothetical decision maker choosing emission controls within a risk-based regulatory framework. The model suggests that optimal controls on air toxics emissions vary depending on the spatial resolution chosen to regulate risks; net social costs are non-decreasing as one regulates at finer and finer spatial resolutions. An empirical application of the model using air toxic emission data for Escambia and Santa Rosa Counties in Florida demonstrates the sensitivity of optimal emissions to spatial resolution chosen for regulation. The research then investigates the equity implications of regulating at different spatial resolutions with regard to the spatial distribution of cancer risks. The empirical results indicate that regulation at finer spatial resolutions could involve a tradeoff between costs and equitable distribution of risks. For example, at a threshold cancer risk of 100 in a million, regulating at census block level resolution could be twice as costly as regulating at census tract resolution while reducing the maximum individual risk by almost half. Further, regulation at finer spatial resolutions might not address environmental injustice by itself unless such concerns are more explicitly incorporated into emission control decisions. Finally, this research shows that spatial resolution at which air toxics risks are regulated could matter in predictable ways even after taking into account the uncertainties that the decision maker faces.