Discussion Paper

Quasi-Experimental and Experimental Approaches to Environmental Economics

Jul 9, 2007 | Michael Greenstone, Ted Gayer

Abstract

This paper argues that an increased application of quasi-experimental and experimental techniques will improve understanding about core environmental economics questions. This argument is supported by a review of the limitations of associational evidence in assessing causal hypotheses. The paper also discusses the benefits of experiments and quasi-experiments, outlines some quasi-experimental methods, and highlights some threats to their validity. It then illustrates the quasi-experimental method by assessing the validity of a new one in environmental economics that seeks to estimate the impact of the Endangered Species Act on property markets in North Carolina. Ultimately, the greater application of experimental and quasi-experimental techniques has the potential to identify efficient policies that increase social welfare.