The environment as a factor of production

Timothy J. Considine and Donald Larson ()

No 3271, Policy Research Working Paper Series from The World Bank

Abstract: The authors develop a model of environmental resource use in production with an empirical analysis of how electric power companies consume and bank sulfur dioxide pollution permits. The model considers emissions, fuels, and labor as variable inputs with quasi-fixed inputs of permits and capital. Incorporating information from permit markets allows the authors to distinguish between user costs and asset shadow values. Their findings indicate that firms are holding stocks of pollution permits for reasons other than short-term cost savings. The results also reveal substantial substitution possibilities between emissions, permits stocks, and other factors of production. The authors speculate that anticipated secondary markets for carbon-offset inventories related to the flexibility mechanisms of the Kyoto Protocol will have similar effects for greenhouse-gas emitting firms.

Keywords: Markets and Market Access; Economic Theory&Research; Payment Systems&Infrastructure; Environmental Economics&Policies; Montreal Protocol; Environmental Economics&Policies; Economic Theory&Research; Energy and Environment; Carbon Policy and Trading; Montreal Protocol (search for similar items in EconPapers)
Date: 2004-04-01
New Economics Papers: this item is included in nep-agr and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The environment as a factor of production (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:3271

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