The greenbelt in Seoul

What greenbelt is

Land use planning policy, firstly introduced in UK, is explicitly encourages urban densification by restricting land for several purposes such as for environment and natural resources protection and urban sprawl prevention.^[1]

Background and the Policy origin

Seoul is a central city of Seoul Metropolitan Area including Seoul, Incheon and Gyeonggi.^[2][5]From 1950 to 1975, the growth of Seoul was rapid at annual rate of 7.6 percent, on average.^[3] Seoul’s population in 1975 was about 7 times higher than in 1950; a million in 1950 and 6.8 million in 1975.^[3] The Capital Region Urban plan was proposed by the Korean Planners Association in 1963.^[4] The plan included designing the greenbelt within satellite towns along the corridor between Seoul and Incheon in Korea.^[4] Under the Town Planning Act, the greenbelt was created and introduced in Korea in1971; however, the greenbelt was formally defined as “Development Restriction Zone”.^[4] The greenbelt also played an important role in National Comprehensive Physical Plan of 1972-1981.^[4] With an intervention of President Jung Hee Park, Seoul government firstly implemented the greenbelt to Seoul in July 1971.^[4] Since two years after 1971, the greenbelt was built in 13 cities including Busan, Daegu, Kwangju and Daejeon.^[3] Yeocheon became the last city implementing this policy in 1977.^[3] Seoul metropolitan area reformed the greenbelt in 1990^[5]; however, this posting is focused on pre-existing greenbelt before the reform.

Objectives

There are seven objectives of this policy:^[3][4]

1) To ease the rapid growth rate of population and to prevent industrial concentration in Seoul^[4]

2) To restrict expansion of Seoul into neighbour cities such as Incheon, Suwon and Euijeongbu^[4]

3) To restrict expansion to the north near to North Korea for national security^[4]

4) To reserve the land for environmental purpose ^[4]

5) To prevent the formation illegal suburban around Seoul^[3]

6) To protect land for agricultural use^[3]

7) To balance the growth of Seoul and suburban cities like Incheon^[3]

Implementation

The paper, ” KOREA’S GREENBELTS: IMPACTS AND OPTIONS FOR CHANGE”, described the development of the greenbelt in Seoul metropolitan area  in following four phases:

1) The Greenbelt was located 15 kilometres (km) away from City Hall. As the north-west area is near to north Korea, it was also included in greenbelt zone for national defence.  The total area encircled by the belt was 463.8 square kilometres (km²).^[3]

2)  86.8km² were added to the existing greenbelt zone as the greenbelt was extended to include Anyang, suburban surrounding Seoul, to protect its environment.^[3]

3) The width of the belt was extended from 15 to 35 km. The total greenbelt zone increased to 768.6 km² by extending the belt to the land located in eastern side of Han River.^[3]

4) With including Ansan, a new town in the southwest of Seoul metropolitan area, the area encircled by the greenbelt was increased by 247.6 km².^[3]The total area within the belt was 1566.8 km² and its width became 40 km.^[3]Seoul had 153 km² within the greenbelt.^[5]

Coverage

Total area in Seoul Metropolitan Area covered by the greenbelt was 1566.8 km² in 1980s; however, it was decreased to 1424 km² in 2010 data due to the greenbelt reform in 1990.^[3][5]Seoul has had 153 km² area within the greenbelt.^[5] This land area is about 1.3% (=153/11801) of  total land area in Seoul Metropolitan area. The greenbelt, the policy encouraged urban densification was employed in both central city and suburb of the Seoul metropolitan area. But, this blog is focuesed on Seoul, the central city of metropolitan area. Base on 2010 data given in the following table, 18,039 people lived within Seoul greenbelt. The population covered by Seoul greenbelt was about 0.07% (=18039/24857463) of the total population of the Seoul Metropolitan Area.^[5] 0.008% of the metropolitan area population was covered by Incheon greenbelt and 0.23% was covered by  belt in Gyeonggi.

Effectiveness

I found two papers including the content related to the effectiveness of the Seoul greenbelt: KOREA’S GREENBELTS: IMPACTS AND OPTIONS FOR CHANGE and SEOUL’S GREENBELT:AN EXPERIMENT IN URBAN CONTAINMENT. As the authors of these papers noted, there are no actual evaluation done to prove its effectiveness and only few suggestions for its measurement were done by researchers. To measure the effectiveness, calculation of social costs and social benefits of the greenbelt comparison are necessary. If the benefits outweigh the costs, the greenbelt’s effectiveness can be proven.^[3] Bae (1998) described three categories of benefit from the implementation of the greenbelt in Seoul: (1) amenity value of the land within the greenbelt, (2) the government’s savings due to efficiently compacted development of public services such as a public transport, (3) value of ecosystem and environmental quality. The greenbelt’s social costs are incurred from higher prices of land and housing, and an increase in commuting expense and infrastructure spending. According to her estimation, high travel expense was a key component to increase the social cost. Annual travel cost per individual was about 250,000 Won (₩) and the social costs were ₩ 470 billion.^[3]In 1987, the values of greenbelt land were 30 percent lower than non-greenbelt land values.^[4] With an assumption that Seoul completely eliminated the greenbelt in 1987, greenbelt land values would  be increased by 32.1 percent while non-greenbelt values would be declined by 7.5 percent.^[4] High benefits were estimated as the amenity value of the greenbelt land was significant and people were willing to protect land for future generation.^[3] However, these benefits were not enough to outweigh social costs incurred from the skyrocketing non-greenbelt land and housing price due to a rapid population growth in Seoul.^[3]

Distributional Effect

Based on my research, the impact of the greenbelt on people is different depending on people’s income level and where they live:

(1) a negative impact on the poor living in the non-greenbelt

(2) a negative impact on the rich living in the greenbelt

(3) a positive impact on rich people in the non-greenbelt.

As Seoul became one of the cities with high density due to a rapid population growth and the greenbelt, the greenbelt land and housing price was lower than non-greenbelt. The price of non-greenbelt area skyrocketed due to excess demand. Poor people living in non-greenbelt land could not afford a high housing price while the rich having housing ownership could earn benefits. As 80% of the greenbelt land was owned by rich people, they were more negatively affected by low housing price. However, a negative impact on the rich living in the greenbelt can be cancelled by a positive impact on the rich living in the non-greenbelt. Therefore, I can conclude that poor people are more impacted by the greenbelt.

Conclusion

Seoul greenbelt was successful to encourage densification. Due to the greenbelt and population growth, land supply was restricted to satisfy high demand and Seoul became one of the highest density city. However, I don’t think that the policy is efficient at all. Skyrocketing housing price can cause bigger economic gap between people with different income level and greater dissatisfaction of residents in Seoul with the government. I believe that Seoul should eliminate the greenbelt except a few areas for the national defence and environment protection.

Reference 

^[1] http://en.wikipedia.org/wiki/Green_belt

^2] https://en.wikipedia.org/wiki/Seoul_Capital_Area

^[3] http://digital.law.washington.edu/dspace-law/bitstream/handle/1773.1/867

/7PacRimLPolyJ479.pdf?sequence=1

 ^[4] http://www.nrs.fs.fed.us/pubs/gtr/gtr_nc265/gtr_nc265_027.pdf

^[5] http://smartgrowth.umd.edu/assets/documents/acsp/acsp2012pres_jeon.pdf

Background and Political Origin 

In 1980’s, the rapid production and ownership of cars caused traffic congestion in Seoul, capital city of Korea^[1] . About 25% of the total Korean population are living in Seoul and its severe traffic congestion became a major problem. Based on my personal experience (I had lived there for 17 years), Seoul is the most notorious city for the traffic congestion in Korea. For the solution of the congestion problem, the Seoul Metropolitan Government (SMG) had suggested several transport policies mainly focused to increase the supply of the transportation system, such as, constructing and expanding roadways in the early 1990’s^[2]. However, these were not enough to ease the congestion and SMG had a financial problem to build more transportation facilities^[3]. After 1993, SMG changed its focus on the transportation demand management (TDM)^[2]. The government of Seoul chose the congestion pricing scheme among options of TDM due to its high effectiveness to control traffic volume^[2].Namsan #1 and #3 tunnels have the most serious traffic congestion problems as the tunnels are the main roads linked to central business district (CBD). On November 11, 1996, the SMG  began to implement a toll fee of ₩2000 (US $1.7) on private cars having less than two occupants as 90% of the total traffic in Namsan is caused by private cars and 78% of them are single occupied ones^[3].

Goals

Two main goals are^[4]:

1) to reduce high traffic volume in certain areas (Namsan #1 and #3 tunnels) of Seoul

2) to encourage residents to use the public transportation more frequently

Coverage

Covered vehicles by the congestion pricing^[1]:

• Private cars having less than two occupants using two toll gates in Namsan #1 and #3 tunnels

Exempted vehicles^[1]:

• cars with more than three passengers
• emergency vehicles
• vans and trucks
•  handicapped person’s vehicles
•  reporters’ vehicles
• vehicles for welcoming foreign guests
• diplomat’s vehicle
• taxies and buses.

Implementation

Until October 1996, all vehicles passing through Namsan #1 and #3 tunnels were charged ₩100 to recover the construction costs of roadways in Seoul for 20 years^[2]. Since November 11, 1996, private cars with one or two occupants, passing tunnels in both direction, have been charged  a congestion toll of ₩2000^[3]. The toll fees can be paid by cash and credit cards at toll booths located at the two tunnels. The toll is collected from 7am to 9pm during weekdays and 7am to 3pm on Saturdays^[2].  There is no charge on Sundays and national holidays^[2]. ₩10,000 must be paid for violation penalties^[2]. Collected toll fees are mainly used for investment in public transport system^4]

Performance  & the effectiveness of the policy

There are two research papers done to analyze the effectiveness of the congestion pricing scheme in Seoul: (1) “Developments in Road Pricing and Traffic Restraint, Seoul Case” by Eui-Young SHON (2000) and (2) “FOUR-YEAR-OLD NAMSAN TUNNEL CONGESTION PRICING SCHEME IN SEOUL – Success or Failure?” by B. SON and  K.Y. HWANG (2012). According to the papers, the effectiveness of the scheme can be proved by the following four parts:

1. A reduction in the traffic volume on Namsan tunnels
2. Shortened travel time
3. A change in traffic volume in alternative roads
4. An increase in different vehicle usage

1. The following table shows the congestion pricing efficiency of solving the traffic congestion. During the first month, the traffic volume was reduced by 24.9%. After two years, the rate was decreased to 10.6%. However, the travel speed significantly increased from 21.6 to 31.9kph^[2].

2. As the congestion toll is charged during the certain time, from 7am to 9pm, the traffic volume between 6 am and 7am and between 9pm and 11pm increased by 12% and 20%. This way, travel time was able to be shortened during the congestion toll  charged period^[2].

3. The table below shows the change in traffic volume on four alternative roads with no charge. The data is only based on the private cars. Whereas the alternative roads’ traffic volume increased by 11%, the average travel speed was improved after two years of implementation. The speed is increased because the traffic signal delays at intersections between the Namsan tunnels and alternative roads were reduced by improved traffic on the tunnels^[2].

4.  Drivers were more likely to shift from private cars with less than two occupants to vehicles exempted from the congestion toll. The number of  buses, taxis, and private cars with more than 3 occupants were significantly increased; increased car-pool by 144.9%, bus by 62.2%, taxi by 211.6% and truck and other toll-free vehicles by 57% from 1996 to 1998^[2].

The dramatic decrease in traffic volume, travel time and the increase in speed on Namsan tunnels were resulted by the congestion pricing scheme,  applied on the tunnels which are  notorious for the traffic congestion in Seoul. Number of vehicles on alternative roads increased, but the travel speed was not worse off. Furthermore, more people were encouraged to use public transportation. These are all impacts of the pricing scheme pointed out by two papers of analysis I found. The impacts can prove that the pricing scheme effectively achieved  its two main goals.

Distributional effects of the policy

There is no study to prove distributional effects of the policy, however, I think it is clear that poor and rich people are impacted unequally. Although both groups have to pay the same toll fee, 2000 won (US. $1.70), the impact of the policy on the poor and rich are different. In my personal opinion, there are three different cases to prove its unequal impact.

1) People with higher income are impacted less: Withdrawing $1.70 from $10,000 isn’t as big of an impact as withdrawing $1.70 from $100.

2) Poor people are less likely to own a car and more likely to use public transportation. The majority of them would not have to be concerned of paying a toll as well as the rich who are financially capable of paying the fee.

3) Two of the toll gates are located in Namsan and the further away your live from it, the higher the probability of paying a toll. As the area further has lower housing price than Namsan, I can say that the people living there are relatively poorer than the people living in Namsan which is central business district. So, poor people are impacted more.

Therefore, I can conclude that all three cases are relative to the divisions of the rich and poor. The impact of the tax on the people of higher income (a.k.a. the rich) is less than on the poor.

Revenue and its impact on the burden for the rich or poor
According to the website of the Korean government, the revenue from the toll is used for the investment in the development of public transport system^[4]. There was no numerical data of how much revenue has been gathered since 1996 and how much of it has been allocated for the investment purpose^[4]. As the poor are more likely to use the public transport, they can get higher benefit and the impact of revenue use on the burden for the poor would be bigger.

Personal Opinion

Based on the information and data I found, I have no doubt about the effectiveness of the congestion pricing. It has successfully achieved two main goals: a reduction in traffic volume in Namsan and encouraged use of the public transport. No study has been done to test its cost-effectiveness, and social and private welfare benefits. However, as SMG chose the scheme among TMD options, I can tell that it has the most cost effectiveness. I think that this pricing is also quite fair. The poor was more  impacted but they can get more benefits obtained from the congestion pricing. They are more likely to use the public transport and the revenue of the scheme is used for the investment in the improving public transportation system. I believe that congestion pricing on other parts of Seoul can be successfully done if it is the same as the scheme applied in Namsan.

References:

[1] http://enviroscope.iges.or.jp/contents/APEIS/RISPO/inventory/db/pdf/0056.pdf

[2] http://www.iatss.or.jp/pdf/research/26/26-1-03.pdf

[3] http://siteresources.worldbank.org/INTURBANTRANSPORT/Resources/shon1.pdf

[4] http://contents.archives.go.kr/next/content/listSubjectDescription.do?id=006501

FRE525: A blog on Sweden’s NOx Tax Policy

1) The coverage of the policy. Discuss the sector covered and exempted. How does the policy implement over time?
2) Discuss the use of revenue from the tax. Is the tax revenue neutral? That is, it is designed to pay back all its revenue collected back to its population. Is its revenue earmarked towards a particular use? Or is the tax revenue put into general tax receipts?
3) Discuss the appropriateness of the tax rate? Do you believe it is approximately equal to the marginal damage from the pollutant regulated?

Sweden’s NOx Tax policy

What NOx tax is

A NOx tax is a charge on every kilogram of nitrogen oxides (NOx) emitted from large stationary combustion plants.

Background and Policy’s Political Origin 

Sweden is one of the countries that has been very vulnerable to acid rain mainly caused by nitrogen oxides (NOx) and sulphur dioxide (SO2). The acidification damages the ecosystem in forests and lakes and human health, and emission of Nox also causes eutrophication in forest soils and on sea beds. As Sweden’s major environmental problem was acidification in the 1980’s, the Swedish Parliament decided to reduce airborne emissions of NOx by 30 per cent by 1995, compared to 1980 levels. With the Swedish Environmental Charges Commission proposal in 1990, a charge of 40 SEK per kg of NOx emitted by combustion plants producing at least 50GWh was introduced on 1 January 1992.  The tax system was expanded to include plants producing at least 40 and 25GWh in 1996 and 1997.

Aims

1) Accelerate and stimulate investment in advanced combustion and pollution abatement technologies

2) Allow cost-effective implementation to reduce emissions rapidly by the mid 1990s

How it works

In 1992, combustion plants producing at least 50GWh energy per year were charged by 40 SEK per kg of NOx emitted (or $6.4 per kg). The plants producing at least 40GWh and 25 GWh useful energy per year were also included in 1996 and 1997. The tax rate remains constant. At the beginning of every year, all plants must fill in a form regarding their energy production and NOx emitted for the previous year and send it to Swedish Environmental Protection Agency (SEPA). Most plants measure emissions by using the equipment approved by SEPA. The plants that either have no measuring equipment or whose equipment is temporarily out of order use a standard assessment calculated by1.5times the average emission level. SEPA randomly selects a number of plants each year for inspection. For environmental benefits, the tax revenue except the cost of administration is returned to the participating plants, in proportion to their production of useful energy. The administration cost is approximately 0.3% of total tax revenue.

Coverage

Major sectors covered by Sweden’s NOx tax are the food and beverages industry, wood and wood products industry, paper and paper products industry, metal products – machinery and equipment industry, chemical industry, energy industry and waste combustion industry. Cement and lime industry, coke production, mining industry, refineries, blast-furnaces, glass and isolation material industry, wood board production, and processing of biofuel sectors are exempted due to unfeasibly high costs of metering.

Performance

The policy could successfully lead a huge decrease in nitrogen oxides emissions. From 1992 to 1997, total emissions per unit of useful energy were reduced by 35%. Emission levels between 1992 and 1993 fell by 42% from waste incineration,  23% from energy production plants ,17% from the pulp and paper industry , 13% from the metal industry. With the 1996 and 1997 expansions, which brought 200 new combustion plants into the tax system, total emissions increased. However, the average emission coefficient (kg NOx /MWh produced energy)  for the plants actually had been decreasing since 1992.

Tax Revenue

Rather than collecting the tax revenue for the government budget, the tax revenue except the cost of administration is returned to the participating plants, in proportion to their production of useful energy. As the administration cost is approximately 0.2 – 0.3% of total tax revenue,  most of the tax revenue are refundable to the plants. Thereby, the tax revenue is neutral. 96% of tax revenue are earmarked for subsidies to abatement investments or for research and development and 4% are used for metering. Any plant paying the NOx tax were eligible to achieve the subsidy. The plants used this subsidy to install emission measuring equipment, to invest in NOx reducing techniques which are combustion method and flue gas treatments (SNCR and SCR).

Tax Rate

Since 1992, the tax rate has remained constant at 40 SEK per kg of nitrogen oxides emitted by combustion plants, in nominal terms. The decision to set the charge at 40 SEK per kg NOX was based on engineering data on expected effectiveness and costs of abatement investments at electricity power stations and district heating plants. The abatement cost was found to range between 3 and 84 SEK per kg reduced NOX. Midpoint of the range is about 43 SEK per kg. A charge of 40 SEK per kg was therefore considered reasonable and appropriate. Unfortunately, there are no empirical studies that show whether the tax rate corresponds to the marginal damage costs. Norway shows that marginal damages from NOx emissions in Norway is about NOK 25/kg. The NOx tax rate in Sweden is SEK 40/kg, or NOK 33/kg. If the marginal damage in Sweden are the same as in Norway, the Swedish NOx tax rate seems to be a little above the marginal damage cost estimated.

Personal Opinion

Based on the information, I can conclude that Sweden’s NOx tax is effective, efficient and fair. Its effectiveness is shown by the reduction in NOx emissions. The annual average emission level was 35% lower in 1992 than in 1990. Since the emissions have been reduced more rapidly than expected, I can say the tax have reduced the emissions efficiently. As the tax system only included larger plants, tax refund prevented unfairness compared to smaller plants exempted by the tax and competiveness to decrease the size of plants. The average abatement cost is 10SKr per kg of NOx emitted. The NOx charge (40Skr per kg) has provided an economic incentive to the plants. The charge is also cost-effective for society. Net social benefit has estimated to be 252 million Skr. The reduction of NOx is usually less successful than SO2 reduction because of technical difficulties. France and Norway failed to reduce NOx significantly. So, I strongly believe that Sweden’s NOx tax policy can be used as a benchmark.

References:

http://books.google.ca/books?id=_rqDi8MA-kEC&pg=PA164&lpg=PA164&dq=sweden+nox+charge+design&source=bl&ots=E65-WZ3keL&sig=yTyDUhqUqhjaVJorgSrDko9V__0&hl=en&sa=X&ei=K3U6UbXQFMPXyAHHxYHgDQ&ved=0CEUQ6AEwBDge#v=onepage&q=sweden%20nox%20charge%20design&f=false

http://ec.europa.eu/environment/enveco/taxation/pdf/ch5nox.pdf

http://www.naturvardsverket.se/Documents/publikationer/620-8245-0.pdf

http://yosemite1.epa.gov/ee/epa/eed.nsf/2602a2edfc22e38a8525766200639df0/f5f2680e0a67338385257746000aff2d!OpenDocument

FRE525: A blog on Carbon Policy

1) The coverage of the carbon policy. Discuss the sectors/fuels covered. Discuss, what sectors/ carbon equivalent emissions are exempted. How does the policy implement over time? Use the information about the policy’s coverage to inform an evaluation of the cost-effectiveness of the policy

2) Discuss distributional effects of the policy. One of the primary concerns around a carbon policy is that by raising the price of energy it disproportionately impacts the poor. How do these policies address such distributional concerns?

Denmark’s Carbon Tax policy

What carbon tax is

A carbon tax is a price mechanism which requires the fixed payment for every tone of carbon emitted. The fixed financial incentive is guaranteed by the tax for carbon emission.

Policy’s Political Origin 

During the late 1980’s, the Danish Environment Agency had been pursuing environmental taxation. Parliament reached a consensus on using the environmental taxation on household energy consumption as a way to generate revenues to enable a reduction in existing energy tax. Denmark’s carbon tax was passed in 1991. In 1992, carbon tax was added to existing energy tax on coal, oil, gas and electricity. The tax was firstly imposed on carbon emissions by households in May 1992 and the tax system was expanded to include industry in 1993.

Goals

There are 4 main goals:

1) Reduce carbon emissions from 61.1milion tons (1988 levels) to 48.9million tons before 2005 (at least 20% reduction)

2) Avoid the temptation to maximize tax revenue for the government budget by giving it back to industry as a subsidy for environmental innovation

3) As an incentive tax, encourage Danish enterprises to be away from carbon and toward into environmental innovation

4) Encourage all energy users including households and firms to change their behaviours to make a large decrease in carbon emission

How it works

Since 1992, households have been charged $7.50. Firms had been charged $14.30 per ton of CO2 emitted since 1993. However, tax rate was decreased by approximately 50cents in 2005. A carbon tax is imposed on the top of existing energy tax. In order to keep the efficient tax rate, the government decreased energy tax level when carbon tax was established. But, it was increased in 2005 as carbon tax was decreased. Rather than collecting the tax revenue for the government budget, 40% of tax revenue is used for environmental subsidies and 60% is returned to industry. The government also offers 25% reduction of the tax to the company which signs an energy savings agreement with the Ministry of Transportation and Energy.

Coverage

Major sectors covered by Denmark’s carbon tax policy are natural gas, coal, electricity and light and heavy fuel oil.

Performance

The policy could lead a huge decrease in carbon emissions. Per capita emission of carbon was reduced by 25% between 1990 and 2005. Industrial carbon emissions were also dropped by 23% during the 1990s after enterprises were induced to do industrial restructuring by a carbon tax. In addition, a high level of annual revenue was generated. There were $485.7million in 1994, $585.5million in 1995 and $905 million in 2008. Since after the tax was introduced, carbon emissions have been decreasing and revenues have been increasing.

Distribution of revenue

As mentioned earlier, 40% of the tax revenue is used for as environmental subsidy and the other 60% is returned to industry. So, based on total annual revenue of $905 million in 2008, $362 million were offered as environmental subsidy and $548million were returned to industry. However, there are exemptions including fuels for sea-borne carriage, air transport, electricity and gas. They are combined with a tax refund scheme based on reports on enterprises’ energy consumption, VAT payments and VAT reporting. The scheme ensures that electricity production from natural gas and renewable energy sources is not overtaxed.

Distributional effects of the policy

In general, carbon tax impacts business. Denmark allows certain industries to pay reduced tax rates to address concerns about the impact of carbon tax on business. The business that signs an energy savings agreement with the Ministry of Transportation and Energy can pay 25% reduced tax rates. Denmark also reduced existing energy tax since after a carbon tax was established.

Cost-Effectiveness of the policy

Denmark’s carbon policy is very cost-effective. Due to the tax policy, it is easy and incurs low cost for Danish firms to switch to use alternative energy source which can reduce carbon emission. Policy makers provides firms a subsidy for environmental innovation and huge investments in renewable energy by using carbon tax revenue. The government also returns 60% of revenue to industries. With signing saving energy agreement with Ministry of Transportation and Energy, tax rate can be decreased by 25%. As the tax policy covers many sectors of natural gas, coal, electricity and light and heavy fuel oil, the policy successfully reduces carbon emission levels. Personal carbon emission levels were reduced by 25% and industrial carbon emissions were  dropped by 23% between 1990 and 2005. High benefits can be created by relatively low cost carbon tax policy.

Personal Opinion

As climate change has been an issue, many countries already have a carbon policy, which is either tax or cap and trade, and some countries intend to have one to reduce carbon emission. I strongly believe that Denmark’s carbon tax policy can be used as a benchmark. Transparency of tax revenue distribution is high because the revenue is given to industry as a form of subsidy and investment for renewable energy and environmental innovation. The government gives industry an option to pay only 25% reduced tax and reduces energy tax to address concerns about the impact of carbon tax on business. And the most important reason I recommend other countries to follow Denmark’s policy is that its carbon tax efficiently reduces a huge significant level of carbon emissions. I can’t tell that imposition of carbon tax is always more successful than cap and trade or vice versa. It really depends on situations countries face. In Denmark, carbon tax policy is successful. I think that combined price and quantity mechanisms could be also an optimal solution in case that businesses oppose carbon taxes because of the transfer of revenue to the government and environmental groups oppose carbon taxes because of possibility of failure to guarantee a particular emission level unlike a permit system.

References:

http://www.nrel.gov/docs/fy10osti/47312.pdf

http://www.davidsuzuki.org/issues/climate-change/science/climate-solutions/carbon-tax-or-cap-and-trade/

http://www.economicinstruments.com/index.php/climate-change/article/114-

http://londonchronicles.blogspot.ca/2008/03/denmarks-carbon-success.html

http://theconversation.edu.au/start-a-carbon-tax-thats-so-1991-clean-innovation-and-partnerships-is-where-its-at-8009

   The Article Link: http://www.sciencedaily.com/releases/2013/01/130128191230.htm

   As Scientists from the U.S. Forest Service’s Pacific Southwest Research Station and the Pacific Southwest Region had collaborated to monitor the fisher population in the Southern Sierra Nevada for 8 years (2002-2009), they found the stable population. This encouraging finding shows no decreasing trend in the population and proves that the scientists can use simple method to successfully monitor a fisher population over a large area. But, as 8 years is a relatively short period,  the collaborated team of scientists is willing to continue to monitor the fisher and witness an increasing trend in a fisher population.

   This article is relevant to the course material because we learned a fisher’s sustainable (stable) stock in class. Sustainable stock means that the stock is unchanged and remains constant. It can be found where the harvest yield = growth rate of the stock.

As shown in the graph above, S^O is sustainable stock and where Southern Sierra Nevada’s fisher population is at. S¹ is not stable because with the yield given (Y1) the stock size temporarily increases above S¹. Then the natural increment increases and exceeds the yield, and stock would slowly grows to S^O.