Environmental Policy Archives - Page 15 of 73 - An Economic View of the Environment

Water Policy and Environmental Justice

I’m pleased to take a break today from my usual focus on climate change policy to highlight some reflections on water policy and environmental justice from someone with great experience and expertise, Sheila Olmstead, professor of public affairs at the LBJ School of Public Affairs at the University of Texas, Austin. I engage in a conversation with Professor Olmstead on a wide range of topics in the latest episode of our podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” I hope you can find time to listen to our conversation here.

In these podcasts, I converse with leading experts from academia, government, industry, and NGOs. I’m pleased to say that my long-time colleague, friend, and former student, Sheila Olmstead, fits very well in this group with her abundant experience in academia, government, and NGOs.

Sheila earned her PhD in Public Policy from Harvard, and has focused much of her academic and professional work on issues relating to water resources management. In addition to her faculty position at the LBJ School, she is a University Fellow of Resources for the Future, a Member of the Science Advisory Board of the U.S. Environmental Protection Agency, and the Editor of the Journal of the Association of Environmental and Resource Economists.

If that were not enough, she was previously: a Senior Staff Economist for Energy and Environment at the President’s Council of Economic Advisers, a Senior Fellow at Resources for the Future, and an Assistant and Associate Professor of Environmental Economics at the Yale School of the Environment.

Discussing water management issues in the United States, Olmstead begins by noting that the arid western states, in general, have greater challenges than do the more wet east coast states.

“They’re also high growth states, many of them. And so, they struggle more with how to meet especially urban demand, given concerns about the natural supply. And that gets even more interesting as we look to the future, with the climate changing as it is,” she says.

In principle, prices can be an effective tool to affect water demand, but Sheila remarks that water is cheap in many areas of the west, like Phoenix, where the supply is relatively low.

“There’s not a really strong correlation between where the supply is scarce and where the price is high. And that puts those regions in a very difficult situation of having essentially through the low water prices encouraged the kinds of development that are thirsty, without having the tools in the long run to meet that demand.”

Olmstead highlights that the water crisis in Flint, Michigan, which had serious impacts on thousands of residents over the course of several years during the last decade, is just one example of the water management challenges facing millions of people across the United States.

“We’re so much better than we were in the 1970s. The Cuyahoga River doesn’t catch on fire and so on, but our remaining major water quality challenges have mostly to do with agricultural water pollution, urban runoff. And these are not things that were well addressed in the structure of the Clean Water Act. And so, we just continue to struggle with the fact that these are really severe remaining problems, and some of them are essentially unregulated,” she says.

When I ask Professor Olmstead about her recent appointment to the EPA Science Advisory Board, she remarks, “I’m excited about the work. I only have a vague sense so far of what I’m going to be working on, because we’re kind of just getting up and started. They’ve gotten the appointments processed, and I’m very excited about the other folks that are appointed, in particular, my environmental economist colleagues like Dave Kaiser and Lala Ma.”

Finally, I will note that Sheila Olmstead is the co-author of an excellent introductory environmental economics text book (which I use in my own course at Harvard), Markets and the Environment, co-authored with another former student of mine (and recent webinar guest), Nathaniel Keohane. The book is now in its second edition.

My complete conversation with Sheila Olmstead is the 28^th episode in the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

Insights about Climate Change Policy from Europe, New Zealand, and the USA

Suzi Kerr, the chief economist at the Environmental Defense Fund (EDF) and founder of Motu Economic and Public Policy Research, a think tank in her home country of New Zealand, shares her perspectives on climate change policy in the latest episode of our podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” I hope you can find time to listen to our conversation here.

In these podcasts, I converse with leading experts from academia, government, industry, and NGOs. I’m pleased to say that my long-time colleague and friend (and former student), Suzi Kerr, fits well in this group with her abundant experience in academia and NGOs.

Dr. Kerr was involved in the early design of New Zealand’s successful emissions trading system (ETS), which began in 2008, and is similar in some ways to California’s cap-and-trade system, about which I have written many times at this blog and elsewhere.

“It was the second [ETS] in the world and it’s economy wide. It’s what we call upstream, so it covers…basically all fossil fuels and most other emissions in New Zealand. And one of the highlights I think is that it covers the forestry sector, and New Zealand is still probably the one that covers that most comprehensively. A lot of what we were trying to do was experiment and learn so that others could learn from our experience.”

As Europe prepares to begin implementation in 2023 of its Carbon Border Adjustment Mechanism (CBAM), intended to mitigate carbon leakage and protect competitiveness while remaining in compliance with World Trade Organization (WTO) rules, Kerr expresses her belief that while the CBAM is lower cost to taxpayers and provides advantages over output-based allocation measures, there are many challenges standing in its way.

“The logistical issues of bringing in a CBAM are huge. If we all had carbon pricing, it would be pretty easy, but we don’t. We have a whole mix of policies in different countries. Some have carbon pricing, but [other nations have] other policies. That complexity is huge, and the other issue is equity across countries. Does it really make sense for us to be charging countries who have low policy stringency because they’re very poor?,” she says. “I think it’s critically important that the EU couple any introduction of CBAM with really active support for the poorest countries so that they are supported to have a climate transition rather than expected to do that entirely on their own.”

In the U.S., the Biden Administration has announced its new nationally determined contribution (NDC) under terms of the Paris Agreement, with a pledge to cut greenhouse gas emissions by 50 to 52 percent below 2005 levels by 2030. I ask Suzi Kerr whether this target is achievable, given domestic U.S. politics. She responds that she judges the pledge to be credible, but difficult to achieve.

“The research and the modeling all says it can be done. It’s certainly possible and a lot of it can even be done at very low cost. Whether it will be done is a much more challenging question and that’s where it gets really hard – actually implementing the policies that are effective. Even if you have the political will, that’s a difficult thing,” she remarks. “In general, history teaches us that policies are almost always less effective than we think they’re going to be.”

My complete conversation with Suzi Kerr is the 27^th episode in the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

Policy Options for Addressing Climate Change

Economists (including myself) have long recommended carbon-pricing policy instruments – principally carbon taxes or carbon cap-and-trade systems – for achieving meaningful reductions of carbon dioxide (CO₂) emissions in large and complex economies. However, such economy-wide policies are not in favor in the United States within the Biden administration, despite some interest in the Congress. Rather, a set of alternative (second-best) options – such as a Clean Electricity Standard (CES) – are receiving more attention.

Fortunately, economists have developed models with which both economy-wide carbon-pricing systems and sectoral policies, including a CES and increased gasoline taxes, can be consistently analyzed and compared. Stanford University Professor Lawrence Goulder has analyzed a relatively broad set of such climate policy options available to government, and he discusses his analysis and its implications in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” a podcast produced by the Harvard Environmental Economics Program. Listen to our conversation here.

In these podcasts, I converse with leading experts from academia, government, industry, and NGOs. Larry Goulder, the Shuzo Nishihara Professor of Environmental and Resource Economics at Stanford University, is well qualified to talk about the economics of climate change policy. Also, I’m pleased to note that he is my long-time colleague, co-author, and good friend.

Goulder, who graduated from Harvard College with an A.B. in philosophy in 1973 and from Stanford University with a Ph.D. in economics in 1982, served on the faculty of the Department of Economics at Harvard before returning to Stanford’s economics department in 1989. Along the way, he spent a year studying music composition at Ecole Normale de Musique de Paris with the late, great Nadia Boulanger.

Larry Goulder’s research has spanned a range of energy, environmental, and other issues, including green tax reform, the design of environmental tax systems, and climate change policy. He is co-author with Mark Hafstead of Resources for the Future of a book I highly recommend, “Confronting the Climate Challenge: US Policy Options,” published by Columbia University Press in 2018.

In this book, Goulder and Hafstead examine alternative climate change policy options available for lawmakers through the lens of a general equilibrium framework, considering both the aggregate benefits and costs of various policies as well as the distribution of policy impacts across industries, income groups, and generations. Included in the set of policy instruments they examine are carbon taxes, CO₂ cap-and-trade, a clean energy (electricity) standard, and increased gasoline taxes.

In our conversation, Goulder explains that the research shows that price-based approaches such as carbon taxes or cap-and-trade would be the most cost-effective methods to achieve desired changes, but also that a clean energy standard could have significant impacts.

“The reasons it does pretty well … have to do with interactions between this policy and preexisting taxes in the U.S. economy,” Goulder says. “I think this result is quite relevant to current policy discussions, since today there’s a lot of focus on the CES, the Clean Energy Standard, as a way of addressing climate change. And even though our results tend to favor a carbon tax, we find that the CES could do pretty well, as well.”

When I ask Larry to assess the Trump Administration’s environmental policy portfolio, he says that he can find little to be positive about, noting that the administration caused substantial damage, some of which will be long-term.

“The reversal or elimination of some of the Obama efforts was very problematic, in particular a signature effort by the Obama administration, its Clean Power Plan, which would have put limits on the emissions of CO₂ per unit of electricity generated by power plants throughout the U.S. I think dismantling that is a real problem,” Goulder remarks. “I must say also just the general tenor of the Trump Administration to deny the science and to deny, in particular, the idea that there is serious human-caused climate change is very problematic to the extent that it reinforces political opposition to dealing with this immense problem.”

Some of Goulder’s recent research has examined the impacts of China’s new emissions trading system, in which trading was launched just last month (and which was discussed in some detail in a recent webinar by Valerie Karplus, and featured in my previous blog post). I ask Larry to provide a brief assessment.

“This is going to be the largest emissions trading system in the world; it will more than double the amount of carbon dioxide covered by emissions pricing. And it is also using an approach that has some attractions in terms of keeping costs down,” he says. “The tradable performance standard approach used in China is somewhat less cost effective than would be an equivalently scaled cap-and-trade system, but it’s a tremendous step forward that China is taking this national level effort, that it’s employing a tradable system, and that it’s intent on achieving very significant reductions.”

My complete conversation with Larry Goulder is the 26^th episode in the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.