“Equity Effects of Alternative Assignments of Global Environmental Rights” (with Paul Niemann) Ecological Economics 56, 2006

Abstract

Through a thought experiment in which members of different generations trade with each other in a virtual market, we examine the effects of alternative assignments of global environmental rights on prices, interest rates, and the global distribution of income. The model is “semi-calibrated” to current and projected levels of the output of produced goods and to present and future quantities of global environmental goods. Income classes in each country are disaggregated to the quintile level. Multiple equilibria are possible for some rights assignments, with implications for intergenerational equity. The model projects bounds on the degree of future economic inequality depending on how the environmental rights are assigned. A policy that assigns the
environmental rights in such a way as to leave the present-day distribution of income unchanged while moving in the direction of equal per capita endowments of environmental rights can result in future inequality comparable to today’s average within-country inequality.

“Economics of ‘essential use exemptions’ for metered-dose inhalers under the Montreal Protocol” (with Catherine S. Norman) Journal of Environmental Management 85, 2007

Abstract

The Montreal Protocol on Substances that Deplete the Ozone Layer has led to rapid reductions in the use of ozone-depleting substances worldwide. However, the Protocol provides for ‘‘essential use exemptions’’ (EUEs) if there are no ‘‘technically and economically feasible’’ alternatives. An application that might qualify as an ‘‘essential use’’ is CFC-powered medical metered-dose inhalers (MDIs) for the treatment of asthma and chronic obstructive pulmonary disease (COPD), and the US and other nations have applied for exemptions in this case. One concern is that exemptions are necessary to ensure access to medications for low-income uninsureds. We examine the consequences of granting or withholding such exemptions, and conclude that government policies and private-sector programs are available that make it economically feasible to phase out chlorofluorocarbons (CFCs) in this application, thereby furthering the global public health objectives of the Montreal Protocol without compromising the treatment of patients who currently receive medication by means of MDIs.

“Distribution of Emissions Allowances as an Opportunity” Climate Policy 7, 2007

Abstract

Much of the debate on climate policy in the USA focuses on the gain or loss to the macroeconomy of alternative policies to reduce greenhouse gas emissions. However, the economy is made up of multiple individuals, not a single representative agent. This article reports the results of alternative ways of distributing emissions allocations across citizens. Macroeconomic effects interact with the policy for distribution, but the distributional weights are more important for the welfare of individual agents than the economy-wide effects of the emissions reductions. Egalitarian distributions of the emissions allowances have the potential to increase the welfare of most people, even if significant emissions reductions are mandated. Focusing on the distribution of emissions allowances (or the revenues generated from an emissions tax) rather than on aggregate GDP may provide guidance in identifying and implementing politically viable solutions to the climate change mitigation problem.

 

“The Montreal Protocol at 20: Ongoing Opportunities for Integration with Climate Protection” (with Catherine S. Norman and Lin Fan) Global Environmental Change 18, 2008

Abstract

The Montreal Protocol, implemented because of the risks posed by stratospheric ozone depletion, has successfully brought about international cooperation to address a serious global environmental hazard. We show how flexibility in destruction offsets could improve efficiency and propose a simple methodology to jointly account for the ozone and climate protection impacts of investment projects. Our approach utilizes data from projects funded by the Montreal Protocol’s Multilateral Fund and from the emerging carbon emissions markets to measure what is currently being spent by governments, firms, and international agencies to reduce emissions of ozone-depleting substances and greenhouse gases. The tradeoffs and/or joint benefits implied by these expenditures can be used to evaluate future investments that reduce one or both kinds of emissions, and as a benchmark for subsequent increases in regulatory stringency. Simultaneously considering the effects of projects or technologies on the ozone layer and climate would improve progress towards achieving global environmental goals. The case of two competing refrigerants for building chillers illustrates the tradeoffs between climate and ozone impacts, and demonstrates that use of an ozone-depleting refrigerant as part of a more energy-efficient technology can be justified, particularly if the ozone-depleting compound’s emissions are offset by destruction of ozone depleters that would otherwise be emitted.

“The political economy of global carbon emissions reductions” Ecological Economics, 68(3) January 2009

Abstract

The discussion about what reductions in greenhouse gas emissions are required and how the emissions rights might be distributed globally has fostered the belief that there is a fundamental conflict between the rich nations of the “North” and the poor but populous nations of the “South.” The argument is that grandfathering the rights will only reinforce existing global inequalities, while per capita distribution of the rights would lead to such huge transfers of wealth to the South as to be unacceptable to the North. However, a very simple general equilibrium model highlighting key elements of the global economy shows that this perception is incorrect under a plausible interpretation of the goal of the United Nations Framework Convention on Climate Change to “avoid dangerous anthropogenic interference with the climate system.” Instead of using an economic damage function to determine the optimal level of emissions reductions, the model’s utility functions are calibrated to reflect scientific understanding of what would be required to stabilize the atmosphere at safe concentrations of greenhouse gases. Among policy options that would accomplish this, the United States has a preference for grandfathering the allocation of emissions rights over a per capita allocation, but this preference is not strong and could be offset by other geopolitical considerations.

“Limitations of integrated assessment models of climate change” (with Frank Ackerman, Richard B. Howarth, and Kristin Sheeran) Climatic Change, 95(3-4); August 2009

Abstract

The integrated assessment models (IAMs) that economists use to analyze the expected costs and benefits of climate policies frequently suggest that the “optimal” policy is to go slowly and to do relatively little in the near term to reduce greenhouse gas emissions. We trace this finding to the contestable assumptions and limitations of IAMs. For example, they typically discount future impacts from climate change at relatively high rates. This practice may be appropriate for short-term financial decisions but its extension to intergenerational environmental issues rests on several empirically and philosophically controversial hypotheses. IAMs also assign monetary values to the benefits of climate mitigation on the basis of incomplete information and sometimes speculative judgments concerning the monetary worth of human lives and ecosystems, while downplaying scientific uncertainty about the extent of expected damages. In addition, IAMs may exaggerate mitigation costs by failing to reflect the socially determined, path-dependent nature of technical change and ignoring the potential savings from reduced energy utilization and other opportunities for innovation. A better approach to climate policy, drawing on recent research on the economics of uncertainty, would reframe the problem as buying insurance against catastrophic, low-probability events. Policy decisions should bebased on a judgment concerning the maximum tolerable increase in temperature and/or carbon dioxide levels given the state of scientific understanding. The appropriate role for economists would then be to determine the least-cost global strategy to achieve that target. While this remains a demanding and complex problem, it is far more tractable and epistemically defensible than the cost-benefit comparisons attempted by most IAMs.

“Two Hidden Sources of Productivity Growth in American Agriculture, 1860-1930” (with William N. Parker) Agricultural History 56, October 1982, pp. 648-62

Initial paragraph

Sustained productivity growth in modern agriculture depends largely upon two complex social processes of learning. In genetic and biochem- ical technology, scientists must learn how to adjust plant varieties and animal breeds to the various and changing conditions of the natural environment. And in agricultural production itself, the producers must learn to anticipate market and factor price changes, to utilize the new genetic and chemical materials afforded them, and to plan to produce what the market (or the state) wants. The two most deeply hidden sources of productivity increase in American agriculture lie in these two learning processes, the one by scientists and the society supporting their work, the other by farmers and those operating the information and marketing institutions. Our work has addressed itself to investigating learning in these two respects during the period 1860-1930 in American agriculture

“Why Do Profitable Energy-Saving Investment Projects Languish?” Journal of General Management 20, 1994