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Abstract
Increased spatial dependency of economic activities, as well as spatial differentiation of production and consumption, has implications for environmental policy. One of the issues that has gained importance is the responsibility for the emissions from products that cross national boundaries during the environmental policy's lifetime. This paper discusses the different ethical views of environmental responsibility. Furthermore, the policy measures that are associated with the different viewpoints are analyzed in a novel dynamic two-country two-sector dynamic input–output model. A numerical example is modeled to assess taxing schemes that are based on these ethical viewpoints. The results show that a tax on the ‘embodied’ environmental pressure, which is generally viewed as ethically preferable, is less effective that the current policy of taxing consumers of products. Our discussion however shows that these results are very dependent on the model structure and initial parameters that are used. Nevertheless, the model illustrates that policies that are based on ethically superior standpoints may have detrimental distortionary effects in the dynamic setting.
Acknowledgements
The opinions expressed in this paper do not necessarily correspond to the official point of view of Statistics Netherlands. The authors would like to thank Bart Los, Henri de Groot, Jeroen van den Bergh, two anonymous reviewers and Erik Dietzenbacher for their comments and literature suggestions. This research was done in the context of the research programme ‘Materials Use and Spatial Scales in Industrial Metabolism’ (MUSSIM), funded by the Netherlands Organisation for Scientific Research (NWO).
Notes
1. Interesting methodological issues in this field have been raised. For example, Battjes et al. (1998) criticize the assumption that imports use the same production technology as domestic products; Jacobsen (2000) discusses aggregation in embodied emission calculations; and Kainuma et al. (2000) focus on embodied CO2 calculations using a CGE and an IO model.
2. A special case of this volume input–output table is the so-called physical input–output table (PIOT) which has been constructed for, amongst others, the Netherlands, Germany, Denmark and Italy (Konijn et al., 1995, 1997; Stahmer et al., 1997; Pedersen, 1999; Nebbia, 1999). See Hoekstra (2005) or Hoekstra and van den Bergh (2005) for an overview. PIOTs deal with transactions in the economy that have a mass component. Clearly this development is important for environmental analysis because the mass balance principles dictate that all raw material extraction and emissions by the producers are recorded.