Abstract: Climate change policy analysis has focused almost exclusively on national policy and even on harmonizing climate policies across countries, implicitly assuming that harmonization of climate policies at the subnational level would be mandated or guaranteed. We argue that the design and implementation of climate policy in a federal union will diverge in important ways from policy design in a unitary government. National climate policies built on the assumption of a unitary model of governance are unlikely to achieve the expected outcome because of interactions with policy choices made at the subnational level. In a federal system, the information and incentives generated by a national policy must pass through various levels of subnational fiscal and regulatory policy. Effective policy design must recognize both the constraints and the opportunities presented by a federal structure of government. Furthermore, policies that take advantage of the federal structure of government can improve climate governance outcomes.

Abstract: This study uses survey data from randomly selected rural households in Ethiopia to examine the coping mechanisms employed by rural households to deal with fuelwood scarcity. The determinants of collecting other biomass energy sources were also examined. The results of the empirical analysis show that rural households in forest-degraded areas respond to fuelwood shortages by increasing their labor input for fuelwood collection. However, for households in high forest cover regions, forest stock and forest access may be more important factors than scarcity of fuelwood in determining household‘s labor input to collect it. The study also finds that there is limited evidence of substitution between fuelwood and dung, or fuelwood and crop residue. Therefore, supply-side strategies alone may not be effective in addressing the problem of forest degradation and biodiversity loss. Any policy on natural resource management, especially related to rural energy, should distinguish regions with different levels of forest degradation.

Abstract: Soil fertility depletion is considered the main biophysical limiting factor to increasing per capita food production for most smallholder farmers in Africa. The adoption and diffusion of sustainable agricultural practices (SAPs), as a way to tackle this impediment, has become an important issue in the development policy agenda for sub-Saharan Africa. This paper examines the adoption decisions for SAPs, using multiple crosssectional plot-level observations, collected in 2010 from 681 farm households and 1,539 plots, in 4 districts and 88 villages of rural Tanzania. We employ a multivariate probit technique to model simultaneous adoption decisions by farm households. Our study reveals that rainfall shocks, insects and disease shocks, government effectiveness, tenure status of plot, social capital, plot location and size, and asset ownership, all influence the adoption decision of sustainable practices. Policies that target SAPs and are aimed at organizing farmers into associations, improving land tenure security, and enhancing skills of civil servants can increase the likelihood that smallholder farmers will adopt SAPs.

Abstract: The American Recovery and Reinvestment Act included more than $90 billion in strategic clean energy investments intended to promote job creation and promote deployment of low-carbon technologies. In terms of spending, the clean energy package has been described as the nation’s “biggest energy bill in history.” To provide a preliminary assessment of the Recovery Act’s clean energy package, this paper reviews the rationale, design, and implementation of the act. The paper surveys the policy principles for clean energy stimulus and describes the process of crafting the clean energy package during the 2008–2009 Presidential Transition. Then, the paper reviews the initial employment, economic activity, and energy outcomes associated with these energy investments and provides a more detailed case study on the Recovery Act’s support for renewable power through grants and loan guarantees. The paper concludes with lessons learned.

Abstract: Conservation investments are increasingly evaluated on the basis of their return on investment (ROI). Conservation ROI analysis quantitatively measures the costs, benefits, and risks of investments so conservancies can rank or prioritize them. This paper surveys the existing conservation ROI and related literatures. We organize our synthesis around the way studies treat recurring, core elements of ROI, as a guide for practitioners and consumers of future ROI analyses. ROI analyses involve quantification of a consistent set of elements, including the definition and measurement of the conservation objective as well as identification of the relevant baselines, the type of conservation investments evaluated, and investment costs. We document the state of the art, note some open questions, and provide suggestions for future improvements in data and methods. We also describe ways ROI analysis can be extended to a broader suite of conservation outcomes than biodiversity conservation, which is the typical focus.

Abstract: In the past two decades, rapid population and economic growth on the U.S.–Mexico border has spurred a dramatic increase in electricity demand. In response, American energy multinationals have built power plants just south of the border that export most of their electricity to the United States. This development has stirred considerable controversy because these plants effectively skirt U.S. environmental air pollution regulations in a severely degraded international airshed. Yet to our knowledge, this concern has not been subjected to rigorous scrutiny. This paper uses a suite of air dispersion, health impacts, and valuation models to assess the human health damages in the United States and Mexico caused by air emissions from two power-exporting plants in Mexicali, Baja California. We find that these emissions have limited but nontrivial health impacts, mostly by exacerbating particulate pollution in the United States, and we value these damages at more than half a million dollars per year. These findings demonstrate that power-exporting plants can have cross-border health effects and bolster the case for systematically evaluating their environmental impacts.

Abstract: In the past two decades, rapid population and economic growth on the U.S.–Mexico border has spurred a dramatic increase in electricity demand. In response, American energy multinationals have built power plants just south of the border that export most of their electricity to the United States. This development has stirred considerable controversy because these plants effectively skirt U.S. environmental air pollution regulations in a severely degraded international airshed. Yet to our knowledge, this concern has not been subjected to rigorous scrutiny. This paper uses a suite of air dispersion, health impacts, and valuation models to assess the human health damages in the United States and Mexico caused by air emissions from two power-exporting plants in Mexicali, Baja California. We find that these emissions have limited but nontrivial health impacts, mostly by exacerbating particulate pollution in the United States, and we value these damages at more than half a million dollars per year. These findings demonstrate that power-exporting plants can have cross-border health effects and bolster the case for systematically evaluating their environmental impacts.

Abstract: The Clean Air Act has assumed the central role in U.S. climate policy, directing the Environmental Protection Agency to develop regulations governing the emissions of greenhouse gases from existing coal-fired power plants. The cost and environmental effectiveness of policy options depend on abatement costs, the magnitude of emissions reduction opportunities, and the sensitivity of plant utilization. This paper examines the operation of electricity-generating units over 25 years to estimate the marginal costs and potential magnitude of emissions reductions that could result from improvements in their operating efficiency. We find that a 10 percent increase in coal prices causes a 0.3 to 0.9 percent heat rate reduction, broadly consistent with engineering assessments of abatement costs and opportunities. We also find that coal prices have a significant effect on utilization, but that will vary depending on the policy design. The results are used to compare cost-effectiveness of alternative policies.

Abstract: This paper studies the patterns of farmers’ crop choices for a multiple-crop portfolio, where production risk considerations and rainfall uncertainty are likely to be critical factors. Our analysis employs plot-level panel data from Ethiopia, combined with seasonal and yearly rainfall variability (from 30 years of meteorological data corresponding to the survey villages). Using the single index approach, our results indicate that the combined riskiness of crop portfolios at a household level responds negatively to annual rainfall variability, while seasonal rainfall variability has less consistent impact. Farmers are more likely to select less risky crops with less return, even when intercrop interactions are taken into account. Moreover, development policies designed to enhance accumulation and risk taking should take into account the importance of such exogenous factors as weather in ex-ante risk taking.

Abstract: This study looked into tree-growing behavior of rural households in Ethiopia. With data collected at household and parcel levels from the four major regions of Ethiopia, we analyzed the decision to grow trees and the number of trees grown, using such econometric strategies as a zero-inflated negative binomial model, Heckman’s two-step procedure, and panel data techniques. Our findings show the importance of analysis at the parcel level in addition to the more common household-level. Moreover, the empirical analysis indicates that the determinants of the decision to grow trees are not necessarily the same as those involved in deciding the number of trees grown. Land certification, as an indicator of tenure security, increases the likelihood that households will grow trees, but is not a significant determinant of the number of trees grown. Other variables, such as risk aversion, land size, adult male labor, and education of household head, also influence the number of trees grown. In general, the results suggest the need to use education and/or awareness of the role and importance of trees and point out the importance of household endowments and behavior, such as land, labor, and risk aversion, for tree growing. Finally, we observed that, while tree planting is practiced in all four regions covered, there are variations across regions.

Abstract: Researchers using stated preference (SP) techniques have increasingly come to rely on what we call “hypothetical baselines.” By the term “hypothetical baseline,” we mean that respondents are provided with a description of a current state, or baseline, but that this baseline is intentionally not the actual state of environmental quality, health, or other baseline condition. The SP researcher then poses a valuation question or choice task that is contingent, not on the existing status quo, but rather on the state of the world described in this new hypothetical baseline. In this paper, we argue that SP researchers have often used hypothetical baselines without carefully considering the cognitive challenges this poses for respondents or the difficulties this practice creates for advising policy makers. We present a simple typology of four types of SP studies, two of which rely on hypothetical baselines, and give six examples of conditions that an SP researcher may change to create a hypothetical baseline. We discuss four main reasons why SP analysts use hypothetical baselines in their research designs, plus some of the risks associated with the use of hypothetical baselines. Finally, we offer guidance for the use of hypothetical baselines in future SP surveys.

Abstract: State-owned forest enterprises (SOFEs) in northeast China and Inner Mongolia play important roles both in timber production and in the maintenance of ecological security. However, since the late 1970s, forest resource and economic crises have seriously restricted these functions. Based on a theoretical and an empirical analysis of the harvest and investment behavior of the SOFEs, we examined the effects of forest policies and the socioeconomic conditions on the behavioral choices of the SOFEs. Both the extent to which SOFE supervising authorities emphasized improvement of forest resources in their annual evaluations and the increases in expenses necessary to manage SOFEs had significant impacts on harvest and investment decisions as well as development of forest resources. Promoting the management and utilization of non-timber resources, as well as reforms to increase the efficiency of forest protection and management, have reduced timber harvests as intended, which in turn has increased investment and improved forest resources. The effects have been relatively small, however. In contrast, reforms aimed at timber harvest and afforestation activities actually contributed to increasing the timber harvest, which affected the development of the forest resources negatively.

Abstract: With contingent valuation, both the goods being valued and the payment vehicles used to value them are mostly hypothetical. However, although numerous studies have examined the impact of experience with the good on willingness to pay, less attention has been given to experience with payment vehicles. This paper examines how this influences responses to a contingent valuation scenario of maintenance for irrigation canals. Specifically, the paper uses a split-sample survey to investigate the effects of experience with monetary and labor payment vehicles on the acceptance of a contingent valuation scenario and protest bids. Using convergent validity tests, we found that experience acquired from using both monetary and labor payment vehicles reduces the asymmetries in acceptance rates. These findings suggest that experience with payment vehicles reduces time/money response asymmetries in the contingent valuation method.

Abstract: The U.S. Environmental Protection Agency (EPA) continues to move ahead with regulation of greenhouse gas emissions under the Clean Air Act (CAA). Previous work has indicated that basic forms of compliance flexibility—trading—appear to be legally permissible under the relevant part (Section 111) of the CAA. This paper takes a close look at more expansive and ambitious types of flexibility: trading between different kinds of sources, biomass co-firing, and, above all, offsets. It concludes that most types of such extended flexibility are either legally incompatible with the CAA, or so legally problematic that EPA is unlikely to adopt them. This has important implications for both the costs of CAA climate policy and the level of environmental benefits that are achievable. It also creates tension between CAA climate policy and state-level policies, such as California’s, that aim to include various forms of extended flexibility.

Abstract: A deposit-refund system combines a tax on product consumption with a rebate when the product or its packaging is returned for recycling. Deposit-refunds are used for beverage containers, lead-acid batteries, motor oil, tires, various hazardous materials, electronics, and more. In addition, researchers have shown that the approach can be used to address many other environmental problems beyond waste disposal. By imposing an up-front fee on consumption and subsidizing "green" inputs and mitigation activities, a deposit-refund may be able to efficiently control pollution in much the same way as a Pigovian tax. Theoretical models have shown that alternative waste disposal policies, such as virgin materials taxes, advance disposal fees, recycled content standards, and recycling subsidies are inferior to a deposit-refund. These results have been corroborated in calibrated models of U.S. waste and recycling. And in theoretical models that consider joint environmental problems and product design considerations, the deposit-refund continues to have much to recommend it as a component of an overall socially optimal set of policies. More empirical research into deposit-refund systems is needed, particularly the upstream systems used for many products. In these systems, the processors or collectors of recyclables—rather than consumers—receive the refund. Upstream systems may have lower transaction costs and better environmental outcomes than traditional downstream systems.

Abstract: Using advances in text analysis, we examine the content and timing of 21,493 press releases issued by the U.S. Environmental Protection Agency (EPA) between 1994 and 2009. Press releases announcing enforcement actions or regulatory changes were issued more often on Fridays and before holidays, a time when news has the least impact on media coverage and financial markets. Changing the timing of press releases may increase deterrence through awareness of regulation and market reaction to environmental news. We find no evidence of regulatory capture. We compare text analysis techniques that allow data collection from sources previously too expensive to access.