Natural Resource Economics Archives - Page 10 of 17 - An Economic View of the Environment

California’s Crude Oil Production and its Climate Change Policies

California is among the most aggressive jurisdictions in the world in its pursuit of public policies to reduce its emissions of greenhouse gases (GHGs), linked with climate change. At a time when the Trump administration in Washington is working to reverse the Obama administration’s climate policy achievements, California and other sub-national entities are taking the lead in the development and implementation of meaningful domestic policies to mitigate the impact of human activity on the climate.

At the same time, California is a producer of crude oil. Is this inconsistent, or even counter-productive? In a recent report, advocates have criticized Governor Jerry Brown, and proposed a ban on crude oil production within the State, in furtherance of California’s climate policies. The thinking goes, crude oil production leads to environmental impacts, so how can it be allowed?

The logic is flawed, and the prohibition – if adopted – would impose tremendous costs on the State with little or no environmental benefit. As California has developed its climate policies, the need to balance the benefits of these policies with their economic and human consequences has always been a challenging issue. Achieving aggressive climate goals will not be cheap, so designing sensible, effective policies is critical. Simply adopting any and all restrictions that might achieve some emission reductions would unnecessarily raise the human cost of limiting GHG emissions. This is no doubt obvious to some readers of this blog, but for others, let me explain.

At its heart, the climate problem arises because of CO₂ emissions associated with the use of energy and related services. We heat our homes in the winter and cool them in the summer using electricity and natural gas. We use gasoline to get to work and take vacations. As each country or state – including California – tries to reduce its GHG emissions, the policies and regulations adopted to achieve this end nearly always target the activities that lead to GHG emissions – the generation of electricity, the use of transportation, and the heating of living spaces.

The proposed ban on crude oil extraction would flip this on its head, focusing instead on the supply of a fossil fuel. But the simple reality is that the sources of fossil fuel supply are so ubiquitous that crude oil from other regions of the world will replace supplies from California, if California chose not to supply its own on-going needs. Oil and gas used to heat homes and to power vehicles comes not only from California, but from most every region of the globe. Many of these regions have expanding supplies of crude oil due to technological improvements, including the Bakken shale of North Dakota, and vast supplies available with relatively little effort, such as in the Middle East.

Advocates claim that reduction of California crude oil production would reduce global consumption of crude – a claim of questionable validity. But that is not even the right question. There are many things that can be done to reduce GHG emissions, and a sensible, affordable, and sustainable policy will be one that achieves reductions at the lowest cost. Even if restricting California’s oil production might reduce global crude consumption, California would certainly bear all of the economic consequences of this policy, as the state would then rely solely on crude oil imports.

In fact, a restriction on California’s crude production is unlikely to reduce GHG emissions within California. The State’s total GHG emissions are limited by the cap of California’s GHG cap-and-trade system. The most a restriction on California’s crude production can do is to increase costs, while achieving little or no incremental improvement in GHG emissions.

Moreover, supply-side restrictions can limit technological progress that can have very positive economic and environmental consequences. The same advocates oppose shale “fracking,” but the innovative combination of hydraulic fracturing and horizontal drilling has led both to tremendous economic benefits by expanding supplies of low-cost domestic energy and reducing energy imports, and to environmental benefits by allowing lower-carbon natural gas to displace higher-carbon coal in the generation of electricity across the United States.

By focusing on policies aimed at achieving the appropriate policy goal of reducing GHG emissions – rather than trying to choose winners and losers among technologies and energy sources used to achieve those goals – California can achieve its climate policy goals in ways that are environmentally effective, economically sensible, and ultimately sustainable. In my view, Governor Brown merits compliments rather than criticism for California’s progressive environmental and energy policies.

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In the past, I have periodically advised the Western States Petroleum Association (WSPA), although on a very different issue, namely the design of California’s CO2 cap-and-trade system. That was about two years ago, and neither WSPA nor any of its member companies are aware of my writing this essay. As always in this blog, I am expressing my personal views, and not speaking on behalf of any of the institutions, organizations, or firms with which I am or have been associated.

Reflections on Economics and Policy Making in the Environmental Domain

This past week, I was privileged to participate in a workshop, “Climate Science in a Time of Political Disruption,” sponsored by the Harvard Program on Science, Technology and Society. The workshop began with a keynote address by former U.S. Environmental Protection Agency Administrator Gina McCarthy, now Professor of Practice at the Harvard T. H. Chan School of Public Health. Following Gina McCarthy’s down-to-earth but quite inspiring remarks (with her usual Yankee humor adding spice to the proceedings), the others on the panel were asked to comment on the topic at hand. The panelists included Joe Goffman, Executive Director of the Environmental Law Program at Harvard Law School; Peter Huybers, Professor of Earth and Planetary Sciences; Sheila Jasanoff, Pforzheimer Professor of Science and Technology Studies at the Harvard Kennedy School; Lucas Stanczyk, Assistant Professor of Philosophy; and myself.

Given the subject of the workshop, most of the panelists focused their comments on the current political scene and the current U.S. administration’s apparent disdain for climate science. I took a broader, somewhat historical view, and as the only economist on the panel, I commented on the relationship of economic research to policy making. I did this via reflections on experiences I’ve had over the past three decades. I tried to make three points: first, economic research results can be used as a light bulb or a rock, and either can be effective; second, it is important to move quickly when windows of opportunity open in the policy world to implement research ideas; and third, politics matter, and should not be ignored.

Research Results Can be Used as a Light Bulb or a Rock

I cannot speak for the natural sciences, but it is clearly the case that economic evidence can be used either as a “light bulb” – to illuminate an issue and possibly persuade policy makers of the wisdom of a particular course of action – or as a “rock,” that is, as ammunition to support a policy maker’s predisposed position. Is this cynical? I think not, because such economic ammunition can help win a policy battle. I was just reminded by Paul Krugman in his New York Times column of a somewhat less charitable metaphor, where he characterized some politicians as using economists “the way a drunkard uses a lamppost: for support, not illumination.”

Related to this reality was a session I chaired in 2001 at the annual meetings of the American Economic Association – a roundtable of former chairs and members of the U.S. Council of Economic Advisers (CEA), including George Eads (Charles River Associates), the late William Niskanen (then of the Cato Institute), William Nordhaus (Yale University), and Joseph Stiglitz (Columbia University). A repeated theme from this set of economists was the reality that CEA typically had more influence by helping others in the Executive Office of the President in their efforts to stop bad ideas than by itself promoting good ideas.

When Windows of Opportunity Open, Move Quickly

Two examples stand out for me of the importance of moving quickly when windows of opportunity open in the policy world to implement research ideas. One is the work I carried out in the late 1980s under the sponsorship of the late Republican Senator John Heinz of Pennsylvania and former Democratic Senator Timothy Wirth of Colorado in the form of research that led to a report, “Project 88: Harnessing Market Forces to Protect the Environment.” One of the proposals in the report was to address the then politically prominent problem of acid rain with what is now called a cap-and-trade system. This idea resonated with the incoming administration of President George H. W. Bush, particularly with the Counsel to the President, Boyden Gray. In parallel with work being carried out by Joe Goffman and Dan Dudek (both then at the Environmental Defense Fund), I followed up the Project 88 report with numerous White House and other Washington meetings (commuting weekly from my Harvard perch), which eventually contributed to the Bush Administration’s proposal (to an initially resistant Democratic Congress) of the Clean Air Act Amendments of 1990, including its path-breaking sulfur dioxide allowance trading program.

The other example I mentioned to highlight the importance of moving quickly when windows of opportunity open in the policy world is associated with the negotiations carried out annually under the United Nations Framework Convention on Climate Change (UNFCCC). At the seventeenth Conference of the Parties of the UNFCCC in Durban, South Africa, in 2011, the delegates agreed to the “Durban Platform for Enhanced Action,” which broke with nearly twenty years of UNFCCC policy by mandating a new approach in which all countries, not just the richest nations, would participate in addressing the need for greenhouse gas (GHG) emissions reductions. The key challenge for climate negotiators was how to meet this new mandate while still observing the fundamental UNFCCC principle of “common but differentiated responsibilities,” which had previously been interpreted to mean that rich countries alone would shoulder the burden of reducing emissions.

At the Harvard Project on Climate Agreements, we recognized that negotiators around the world were suddenly open to outside-the-box thinking. Indeed, in Science magazine, my colleague, Joe Aldy, and I wrote an article, “Climate Negotiators Create an Opportunity for Scholars.” Over the following months (and years) we worked hard to help key negotiating countries develop a new policy architecture that could meet the challenge before them. The result was a hybrid approach that combined elements of top-down architecture with a healthy dose of bottom-up “pledge-and-review,” which led eventually, of course, to the Paris Agreement of 2015.

Politics Matter

For the Intergovernmental Panel on Climate Change’s (IPCC) Fifth Assessment Report (AR5), I served as Coordinating Lead Author (with Dr. Zou Ji of China) of the chapter on “International Cooperation: Agreements and Instruments.” I was surprised to find that the process was highly politicized – in two distinct ways. First, whereas I had assumed that the Lead Authors (LAs) serving on our writing team were there only to represent their respective scientific expertise (in economics, legal scholarship, international relations, etc.), some of the LAs seemed to represent the interests of their respective countries.

Second, I was very naive about the final step of the process, when the governments of the world are asked to approve the IPCC’s Summary for Policy Makers line by line. The controversy associated with our chapter on international climate agreements resulted in that entire section of the SPM being eviscerated of all meaningful substance at the Government Approval Sessions for Working Group III (WG III) in Berlin in April, 2014. I was disappointed and dismayed by the process and its outcome.

Fortunately, I learned from that experience and my attitude (and behavior) was quite different just six months later, when I found myself in Copenhagen for what was essentially the final stage of the entire five-year enterprise of research, writing, and government approval of the various reports of IPCC AR5, namely the government approval sessions for the Synthesis Report (SYR), which summarizes and synthesizes the key findings from all three Working Group reports. I had learned my lesson. Rather than disdaining the politics of the occasion, I embraced it and spent the week in Copenhagen in careful negotiations with the key national governments, the result of which was that all of the essential text on international cooperation and agreements was preserved in the Synthesis Report.

Ironically, by recognizing, accepting, and indeed participating in the fundamentally political aspects of the IPCC government approval process, I was able to keep the report of research from itself being politicized.

Summing Up

So, the three points I made regarding the relationship between economic research and policy making at last week’s Harvard workshop were these: first, economic research results can be used as a light bulb or a rock, and either or both can be effective; second, it is important to move quickly when windows of opportunity open in the policy world to implement research ideas; and third, politics matter, and should not be ignored.

I left it to others at the workshop – and I leave it to readers of this essay – to judge whether any of this applies more broadly to “Climate Science in a Time of Political Disruption.”

Environmental Economics – A Personal Perspective

Today, I wish to take a brief hiatus from reflecting on the current status of climate change policy, whether in the often traumatic context of policy pronouncements – or rather, Twitter messages – from U.S. President Trump and his administration, or in the broader, longer-term context of global actions. Rather, I want to seize on this mid-summer opportunity to think about the past rather than the present. In particular, I would like to reflect on the four decades in which I have been engaged in the world of environmental policy, most recently – for the past 30 years – as a scholar, from my professorial perch at Harvard.

This reflection is facilitated by the fact that two years ago, I was asked by the editor of the Singapore Economic Review, Professor Euston Quah, to write about the evolution of the field of environmental economics. I was pleased to do so, and I decided to take a quite personal approach to summarizing what otherwise would have required a rather Herculean effort. The result was published earlier this year: “The Evolution of Environmental Economics: A View from the Inside,” Singapore Economic Review, volume 62, number 2, 2017, pages 251-274.

[By coincidence, in just a few days, I am travelling to Singapore to make two presentations – on August 4^th at the 2017 Singapore Economic Review Conference, and on August 6^th at the 7th Congress of the East Asian Association of Environmental and Resource Economics.]

Evolution of the Field of Environmental Economics

Over the past three to four decades, environmental and resource economics has evolved from what was once a relatively obscure application of welfare economics to a prominent field of economics in its own right. The number of articles on the natural environment appearing in mainstream economics periodicals has continued to increase, as has the number of economics journals dedicated exclusively to environmental and resource topics. Likewise, the influence of environmental economics on public policy has increased significantly, particularly as greater use has been made of market-based instruments for environmental protection.

My article this year in the Singapore Economic Review provides one economist’s perspective on this twenty-year evolution, first by tracing it through personal reflections on the professional path that has led to my research and writing, and then by summarizing some highlights of my research. That article was itself rendered feasible because of two previous book projects.

In 1998, my tenth year on the Harvard faculty, I was asked by the British publisher, Edward Elgar Publishing Limited, if I would be willing to assemble my selected papers for a book. I responded with enthusiasm, and selected 23 articles from the 80 (published and unpublished) papers I had produced as of then – frequently with co-authors – from the time I received my Ph.D. in 1988 through 1999. Making the selection was not any easy task, but it was a rewarding one. I categorized my research into seven topic areas: generic issues in environmental economics; benefits and costs of environmental regulation, and the potential use of efficiency and other criteria for evaluating environmental goals; normative analysis of policy instruments; positive analysis of policy instruments; environmental technology innovation and diffusion; land-use change; and global climate change policy. The resulting volume, Environmental Economics and Public Policy: Selected Papers of Robert N. Stavins, 1988-1999, was published in 2000.

In 2011, ten years after the publication of my first set of selected papers (1988-1999), Edward Elgar Publishing Limited suggested a second volume. I selected 26 articles from the many more (published and unpublished) papers I wrote over the decade. The papers again fell into seven (somewhat different) categories: generic issues in environmental economics; methods of environmental policy analysis; economic analysis of alternative environmental policy instruments; the economics of technological change; natural resource economics; domestic (national and sub-national) climate change policy; and international dimensions of climate change policy. This led to the publication in 2013 of Economics of Climate Change and Environmental Policy: Selected Papers of Robert N. Stavins, 2000-2011.

In those two volumes and in the recent article in the Singapore Economic Review, I not only summarized highlights of my research, but I also provided a description of the professional path I have taken. In this blog essay, I am pleased to offer an abridged version below (with the addition of some relevant hyperlinks).

A Professional Path

In retrospect, my professional path may appear somewhat direct, if not altogether linear, but it hardly seemed so as I travelled along it. The path I describe took me back and forth across the United States and to several continents, and it took me from physics to philosophy, to agricultural extension, to international development studies, to agricultural economics, and eventually to environmental economics. During this time, much has changed in the profession.

The early ascendency of the field of environmental economics, during the period from 1970 to 1990, was centered within departments of agricultural and resource economics, mainly at U.S. universities, and at Resources for the Future (RFF), the Washington research institution. Within most economics departments, environmental studies remained a relatively minor area of applied welfare economics. So, when I enrolled in the Ph.D. program in Harvard’s Department of Economics in 1983, and when I received my degree five years later, no field of study was offered in the field of environmental or resource economics.

Fortunately, Harvard permitted its graduate students to develop an optional, self-designed field as one of two fields on which they were to be examined orally before proceeding to dissertation research. Without a resident environmental economist in the Department of Economics (Martin Weitzman had yet to move to Harvard from the Massachusetts Institute of Technology), I developed an outline and reading list of the field through correspondence with leading scholars from other institutions, most prominently Kerry Smith, then at North Carolina State University. My proposal to prepare for and be examined in the field of environmental and resource economics (along with my other field, econometrics) was approved by the Department’s director of graduate study, Dale Jorgenson. So began my entry into the scholarly literature of the field.

But my interest in environmental economics pre-dated by a considerable number of years my matriculation at Harvard. Like many others before and since, I came to the field because of a personal interest in the natural environment (the origin of which I describe below). This personal interest evolved into a professional one while I was studying for an M.S. degree in agricultural economics at Cornell University in Ithaca, New York, in the late 1970’s, where my thesis advisor and mentor was Kenneth Robinson. I had originally gone to Cornell to study for a professional degree in international development, but found agricultural economics more appealing, largely because of the opportunity to examine social questions with quantitative methods within a disciplinary framework.

The faculty at Cornell and the care given to graduate students (including masters students like myself) were outstanding. Kenneth Robinson, my first mentor within the economics profession, became my ongoing role model for intellectual integrity. It was a sad day many years later, in 2010, when Professor Robinson passed away.

A course in linear algebra, brilliantly taught by S. R. Searle, inspired me to pursue quantitative methods of analysis, and I was fortunate to have the opportunity to study econometrics with Timothy Mount. One summer I had the privilege of learning about comparative economic systems in a small workshop setting from George Staller of the Cornell Department of Economics. Working with Bud Stanton, I had my first experience teaching at the university level, and with Olan Forker, I had my first try at serious writing. All of this led to my research and writing of an M.S. thesis, “Forecasting the Size Distribution of Farms: A Methodological Analysis of the Dairy Industry in New York State.” The methodology in question was a variable Markov transition probability matrix, the cells of which were estimated econometrically in a multinomial logit framework. Much to my surprise, this work subsequently received the Outstanding Master’s Thesis Award in the national competition of the American Agricultural Economics Association.

Armed with my M.S. degree, I moved from Ithaca to Berkeley, California, where I eventually met up with Phillip LeVeen, who had until shortly before that time been a faculty member in the Department of Agricultural and Resource Economics at the University of California, Berkeley. Phil was another superb mentor, and from him I learned the power of using simple models — by which I mean a set of supply and demand curves hastily drawn on a piece of scrap paper — to develop insights into real-world policy problems. He introduced me to a topic that was to occupy me for the next few years — California’s perpetual concerns with water allocation. I remember many afternoons spent working with Phil at his dining room table on questions of water supply and demand.

This work with Phil LeVeen led to a consultancy and then a staff position with the Environmental Defense Fund (EDF), the national advocacy group consisting of lawyers, natural scientists, and — then almost unique among environmental advocacy organizations — economists. This marked the beginning of what became an ongoing professional relationship with this rather remarkable organization. At EDF, I was able to experience for the first time the use of economic analysis in pursuit of better environmental policy. With W. R. Zach Willey, EDF’s senior economist in California, as a role model, and Thomas Graff, EDF’s senior attorney, as my mentor, I thrived in EDF’s collegial atmosphere, while thoroughly enjoying life in Berkeley’s “gourmet ghetto,” as my neighborhood was called. Sadly, Tom Graff — without whose passionate and wise mentorship I would not be where I am today — passed away in 2009 after a heroic battle with cancer.

Although I found the work at EDF rewarding, I worried that I would eventually be constrained — either within the organization or outside it — by my limited education. So, like many others in similar situations, I considered a law degree as the next logical step. In fact, I came very close to enrolling at Stanford Law School, but instead, in 1983, I accepted an offer of admission to the Department of Economics at Harvard, moved back east to Cambridge, Massachusetts, and began what has turned out to be a long-term relationship with the University.

But where did my interest in the natural environment begin? Not at Cornell; it was present long before those days. But it had not yet arisen when I was studying earlier at Northwestern University, from which I received a B.A. degree in philosophy, having departed from my first scholarly interest, astronomy and astrophysics.

Rather, the origins of my affinity for the natural environment and my interest in resource issues are to be found in the four years I spent in a small, remote village in Sierra Leone, West Africa, as a Peace Corps Volunteer, working in agricultural extension (in particular, paddy rice development). It was there that I was first exposed both to the qualities of a pristine natural environment and the trade-offs associated with economic development.

So, I had begun in astrophysics, moved to philosophy (both at Northwestern), then to agricultural extension in a developing country (Sierra Leone), then to international development studies and subsequently to agricultural economics (both at Cornell), then to environmental economics and policy (EDF), and eventually to graduate study in economics at Harvard.

My dissertation research at Harvard was directed by a committee of three faculty members: Joseph Kalt, Zvi Griliches, and Adam Jaffe. Joseph Kalt was the first faculty member at the Department of Economics to validate my interest in environmental and resource issues, and he was unfailingly generous to me and many other graduate students in making his office (and personal computer, then a rather scarce resource) available at all hours. Later a colleague at the Kennedy School, Joe provided examples never to be forgotten — that economics could be a meaningful and enjoyable pursuit, and that excellence in teaching was a laudable goal.

Zvi Griliches was not only my advisor and mentor, but my spiritual father as well. Generations of Harvard graduate students would offer similar testimony. My own father had died only a year before I entered Harvard, and Zvi soon filled for me many paternal needs. It is now approaching two decades since Zvi himself passed away. I felt as if I had lost my father a second time.

If Zvi Griliches provided caring and inspiration, Adam Jaffe provided invaluable day-to-day guidance. It was Adam who convinced me not to go on the job market in my fourth year with what would have been a mediocre dissertation, but to put in another year and do it right. That turned out to be some of the best professional advice I have ever received. Our intensive faculty-student relationship from dissertation days subsequently evolved into a very productive professional (and personal) one that continues to this day. The name of Adam Jaffe appears frequently in my curriculum vitae as a co-author; he has been and continues to be much more than that.

Although they were not members of my thesis committee, I should acknowledge two other faculty members at the Harvard Department of Economics who played important roles in my education. I was fortunate to take two courses in economic history (a department requirement) from Jeffrey Williamson, who had recently arrived from the University of Wisconsin. Williamson’s class sessions were as close as anything I have seen to being economic research laboratories. In class after class, we would carefully dissect one or more articles — examining hypothesis, theoretical model, data, estimation method, results, and conclusions. If there was any place where I actually learned how to carry out economic research, it was in those classes.

The other name that is important to highlight is that of Lawrence Goulder, then a faculty member at Harvard, and now a professor at Stanford. I say this not simply because he was willing to be my examiner in my chosen field of environmental and resource economics, nor because he subsequently became such a close friend. Rather, what is striking about my professional relationship with Larry is the degree to which he has been an unnamed collaborator on so many projects of mine. Although he and I have co-authored no more than a few articles, his name probably appears more frequently than anyone else’s in the acknowledgments of papers I have written. There is no one whose overall judgement in matters of economics I trust more, and no one who has been more helpful.

When I began graduate school at Harvard in 1983, it was my intention to return to EDF as soon as I received my degree. But by my third year in the program, I had decided to pursue an academic career, although one that was heavily flavored with involvement in the real world of public policy. Within the context of this professional objective, it was not a difficult decision to accept the offer I received in February, 1988, to become an Assistant Professor at the Kennedy School. Although some of the other offers I received at that time were also very attractive, the choice for me was obvious, and I have never regretted it — not for a moment.

I remain at the Kennedy School today, where I was promoted to Associate Professor in 1992 (an untenured rank at Harvard), and to a tenured position as Professor of Public Policy in 1997. In 1998, I accepted an appointment as the Albert Pratt Professor of Business and Government, and in 2017, I was appointed the A. J. Meyer Professor of Energy and Economic Development.

In the year 2000, I launched the Harvard Environmental Economics Program, which today brings together — from across the University — thirty-two Faculty Fellows and twenty-seven Pre-Doctoral Fellows, who are graduate students studying for the Ph.D. degree in economics, political economy and government, public policy, or health policy. The Program, which I continue to direct, forms links among faculty and graduate students engaged in research, teaching, and outreach in environmental, natural resource, and energy economics and related public policy, by sponsoring research projects, convening workshops, and supporting graduate (and undergraduate) education.

A key reason why the Program — and its various projects, including the Harvard Project on Climate Agreements — have been so successful is the marvelous administrative leadership and staff support it enjoys. Everyone who has been involved in virtually any way has come away impressed by our Executive Director, Robert Stowe, Program Manager, Jason Chapman, and Bryan Galcik, Communications Coordinator.

At the Kennedy School, I have had an excellent mentor, William Hogan, and a superb advisor and friend, Richard Zeckhauser. Over the years, six successive deans have provided leadership, guidance, and support (including abundant time for my research and writing) — Graham Allison, Robert Putnam, Albert Carnesale, Joseph Nye, David Ellwood, and Douglas Elmendorf. At Harvard more broadly, I have benefitted from regular interactions with Daniel Schrag, director of the Harvard University Center for the Environment, and Martin Weitzman of the Department of Economics. For two decades, Marty and I have co-directed a bi-weekly Seminar in Environmental Economics and Policy, which has provided me with frequent opportunities to learn both from seminar speakers and from Marty’s questions and comments.

I will also note that Harvard President Drew Faust has provided superb leadership of Harvard’s increasing research, teaching, and outreach activity on global climate change, and has been exceptionally supportive of my work on climate change policy. I will refrain from naming the many others at Harvard and elsewhere from whom I continue to learn — including my many co-authors — only because the list of such valued colleagues and friends is so long. Included have been a most remarkable set of Ph.D. students, many of whom have gone on to productive — indeed illustrious — careers.

Along the way, I have had my share of administrative responsibilities at Harvard, including serving as Director of Graduate Studies for the Doctoral Program in Public Policy and the Doctoral Program in Political Economy and Government, and Co-Chair of the Harvard Business School-Harvard Kennedy School Joint Degree Programs. Outside of Harvard, I have had the privilege of being a University Fellow of Resources for the Future, a Research Associate of the National Bureau of Economic Research, and the founding Editor of the Review of Environmental Economics and Policy, as well as a member of the Board of Directors of Resources for the Future, the Scientific Advisory Board of the Fondazione Eni Enrico Mattei, and numerous editorial boards. I must also note that I serve as an editor of the Journal of Wine Economics. In 2009, I was elected a Fellow of the Association of Environmental and Resource Economists.

What originally attracted me to the Kennedy School was the possibility of combining an academic career with extensive involvement in the development of public policy. I have not been disappointed. Indeed, a theme that emerges from my professional engagements over the past twenty-five years is the interplay between scholarly economic research and implementation in real-world political contexts. This is a two-way street. In some cases, my policy involvement has come from expertise I developed through research, following a path well worn by academics. But, in many other cases, my participation in policy matters has stimulated for me entirely new lines of research activity.

Finally, what I have characterized as involvement in policy matters is described at the Kennedy School as faculty outreach, recognized to be of great institutional and social value, along with the two other components of our three-legged professional stool — research and teaching. I should note that my outreach efforts have fallen into five broad categories: advisory work with members of Congress and the White House (for example, Project 88, a bipartisan effort co-chaired by former Senator Timothy Wirth and the late Senator John Heinz, to develop innovative approaches to environmental and resource problems); service on federal government panels (for example, my role as Chairman of the Environmental Economics Advisory Committee of the U.S. Environmental Protection Agency Science Advisory Board); on-going consulting — often on an informal basis — with environmental NGOs (most frequently, the Environmental Defense Fund) and private firms; advisory work with state governments; and professional interventions in the international sphere, such as service as a Lead Author for the Second and the Third Assessment Reports and a Coordinating Lead Author for the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, professional roles with the World Bank and other international organizations, and advisory work with foreign governments.

Reflections on Common Themes

Preparing the brief professional autobiography for the 2000 and 2013 books and for the 2017 SER article caused me to review many of the several hundred articles, book chapters, and essays I have written over the years. This allowed me to identify some common themes that emerge from these more than two decades of research and writing.

First, there is the value — or at least, the potential value — of economic analysis of environmental policy. The cause of virtually all environmental problems in a market economy is economic behavior (that is, imperfect markets affected by externalities), and so economics offers a powerful lens through which to view environmental problems, and therefore a potentially effective set of analytical tools for designing and evaluating environmental policies.

A second message, connected with the first, is the specific value of benefit-cost analysis for helping to promote efficient policies. Economic efficiency ought to be one of the key criteria for evaluating proposed and existing environmental policies. Despite its limitations, benefit-cost analysis can be useful for consistently assimilating the disparate information that is pertinent to sound decision making. If properly done, it can be of considerable help to public officials when they seek to establish or assess environmental policies.

Third, the means governments use to achieve environmental objectives matter greatly, because different policy instruments have very different implications along a number of dimensions, including abatement costs in both the short and the long term. Market-based instruments are particularly attractive in this regard.

Fourth, an economic perspective is also of value when reflecting on the use of natural resources, whether land, water, fisheries, or forests. Excessive rates of depletion are frequently due to the nature of the respective property-rights regimes, in particular, common property and open-access. Economic instruments — such as ITQ systems in the case of fisheries — can and have been employed to bring harvesting rates down to socially efficient levels.

Fifth and finally, policies for addressing global climate change — linked with emissions of carbon dioxide and other greenhouse gases — can benefit greatly from the application of economic thinking. On the one hand, the long time-horizon of climate change, the profound uncertainty in links between emissions and actual damages, and the possibility of catastrophic climate change present significant challenges to conventional economic analysis. But, at the same time, the ubiquity of energy generation and use in modern economies means that only market-based policies — essentially carbon pricing regimes — are feasible instruments for achieving truly meaningful emissions reductions. Hence, despite the challenges, an economic perspective on this greatest of environmental threats is essential.

A Personal Message

On a personal level, the professional path I have taken offers confirmation that research can influence public policy, and that involvement in public policy can stimulate new research. The quest — both professional and personal — that took me from Evanston, Illinois, to Sierra Leone, West Africa, to Ithaca, New York, to Berkeley, California, and finally to Cambridge, Massachusetts suggests some consistency of purpose and even function. I find myself doing similar things, but in different contexts. It is fair to say that my professional life has taken me along a path that has brought me home. The words of T. S. Eliot (1943) ring true:

We shall not cease from exploration

And the end of all our exploring

Will be to arrive where we started

And know the place for the first time.

Writing these essays, this year’s article, and today’s blog post have forced me to reflect on the past, and think about the future. The twenty-two articles that comprised the first book of my selected papers and the twenty-six essays that comprised the second volume were the product of twenty-three years on the Harvard faculty (now almost 30 years). I continue to learn about environmental economics and related public policy from colleagues, collaborators, students, friends, and inhabitants of the ”real world” of public policy – individuals from government, private industry, advocacy groups, and the press. I hope my learning will continue.