Conservation Letters 2015 (online 9/28, doi 10.1111/conl.12201)
New infrastructure is needed globally to support economic development and improve human well-being. Investments that do not consider ecosystem services (ES) can eliminate these important societal benefits from nature, undermining the development benefits infrastructure is intended to provide. Such tradeoffs are acknowledged conceptually but in practice have rarely been considered in infrastructure planning. Taking road investments as one important case, here we examine where and what forms of ES information have the potential to meaningfully influence decisions by multilateral development banks (MDBs). Across the stages of a typical road development process, we identify where and how ES information could be integrated, likely barriers to the use of available ES information, and key opportunities to shift incentives and thereby practice. We believe inclusion of ES information is likely to provide the greatest development benefit in early stages of infrastructure decisions. Those strategic planning stages are typically guided by in-country processes, with MDBs playing a supporting role, making it critical to express the ES consequences of infrastructure development using metrics relevant to government decision makers. This approach requires additional evidence of the in-country benefits of cross-sector strategic planning and more tools to lower barriers to quantifying these benefits and facilitating ES inclusion.
Review of Environmental Economics and Policy, volume 7, issue 1, winter 2013, pp. 114–135 doi:10.1093/reep/res023
This article, which is part of a symposium on the economics of REDD, identifies three common settings for forest loss involving different types of decision-making agents that operate under different markets and institutions. That suggests using different theoretical frameworks for these three settings, which in turn generates different predictions concerning policies’ impacts. The first model, “producer profit maximization given market integration,” has been applied to many private decisions about the best locations for profitable land uses, such as agriculture and forest. Its predictions have been widely studied empirically, beginning no later than von Thunen (1826). The second model, “rural household optimization given incomplete markets and household heterogeneity,” has been applied to more isolated settings featuring high transactions costs that yield incomplete integration of households in input and output markets. Its policy impact predictions have been tested with surveys at household and village levels. In the third model, “public optimization given production and corruption responses by private firms,” a public agency determines public forest access by balancing public goods, public revenue needs, and private rents to award concessions. There is potential for corruption, and the decisions may be affected by decentralization. This model’s predictions can be tested using observed policies. We find that past policies rarely addressed the incentives driving forest loss effectively. This helps to explain the limited impact of past policies on deforestation and forest degradation. It also suggests directions for the design of future policies. In sum, the theory and the evidence suggest that REDD success requires an understanding of all the incentives that drive forest loss, so that domestic policy can be tailored to specific settings (i.e., relevant agents and institutions).
Land Economics 2013 89(2):308-329
We examine theoretically the emergence of participatory comanagement agreements that share between state and user the management of resources and the benefits from use. Going beyond user-user interactions, our state-user model addresses a critical question—when will comanagement arise?— in order to consider the right baseline for evaluating comanagement’s forest and welfare impacts. We then compare our model’s hypotheses concerning de facto rights, negotiated agreements, and transfers (all endogenous) with community-level data including observed agreements in a protected Indonesian forest. These unique data could refute the model, despite being limited, but instead offer support.
Amer. J. Agr. Econ. 94(5): 1136–1153; doi: 10.1093/ajae/aas065
Farmers have to make key decisions, such as which crops to plant or whether to prepare the soil, before knowing how much water they will get.They face losses if they make costly decisions but do not receive water, and they may forego profits if they receive water without being prepared.We consider the coordination of farmers’ decisions, such as which crops to plant or whether to prepare the soil when farmers must divide an uncertain water supply. We compare ex-ante queues (pre-decision) to an ex-post spot market (post-decision & post-rain) in experiments in rural Brazil and a university in England. Queues have greater coordination success than does the spot market.
Oxford Review of Economic Policy, Volume 28, Number 1, 2012, pp. 164–179
Policies must balance forest conservation’s local costs with its benefits—local to global—in terms of biodiversity, the mitigation of climate change, and other eco-services such as water quality. The trade-offs with development vary across forest locations. We argue that considering location in three ways helps to predict policy impact and improve policy choice: (i) policy impacts vary by location because baseline deforestation varies with characteristics (market distances, slopes, soils, etc.) of locations in a landscape; (ii) different mixes of political-economic pressures drive the location of different policies; and (iii) policies can trigger ‘second-order’ or ‘spillover’ effects likely to differ by location. We provide empirical evidence that suggests the importance of all three considerations, by reviewing highquality evaluations of the impact of conservation and development on forest. Impacts of well-enforced conservation rise with private clearing pressure, supporting (i). Protection types (e.g. federal/state) differ in locations and thus in impacts, supporting (ii). Differences in development process explain different signs for spillovers, supporting (iii).
Risk Analysis 2011 volume 31 number 1: 12-24 (doi 10.1111/j.1539-6924.2010.01479.x)
Private risk reduction will be socially efficient only when firms are liable for all the damage that they cause. We find that environmental insurance can achieve social efficiency even when two traditional policy instruments—ex post fines and risk management mandates with ex ante fines—do not. Inefficiency occurs with ex post fines, when small firms declare bankruptcy and escape their liabilities, limiting the incentives from this policy tool. Firms ignore mandates to implement efficient risk management because regulatory agencies do not have sufficient resources to monitor every firm. The evolution of the U.S. Environmental Protection Agency’s and states’ underground storage tank programs suggests that mandating environmental insurance can address inefficiency due to small firms declaring bankruptcy. Comparing insurance mandates to risk management mandates, the burden on a regulator is lower if all it has to do is to confirm that the firm has insurance rather than that the firm has actually, and effectively, implemented required management practices. For underground storage tanks, we show that insurance lowered toxic releases.
Report from the Nicholas Institute for Environmental Policy Solutions, Duke University (with the support of the Packard Foundation)
National and international efforts within the last few decades to reduce forest loss, while having some impact, have failed to substantially slow the loss of the world’s forests. Forest loss, i.e., deforestation and forest degradation, is widespread and accounts for 12%–17% of the world’s greenhouse gas (GHG) emissions. Global concern about climate change and the realization that reduced emissions from deforestation and degradation (REDD) can play a role in climate change mitigation make it critical to learn from our past experiences with policies to reduce forest loss. Within the UN Framework Convention on Climate Change (UNFCCC), negotiators are actively considering ways to include incentives for REDD and other forest carbon activities in any post-2012 treaty. In parallel, the U.S. Congress is developing proposals for a long-term climate policy that includes incentives for REDD, and possibly other international forest carbon activities. Such policies may mobilize new funds for forest conservation, including for addressing drivers of deforestation and forest degradation in developing countries. Climate-related incentives for REDD are likely to be performance-based, i.e., to emphasize the measurement, reporting, and verification of all results. The implementation of this emphasis, alongside the introduction of new financial incentives, could increase such policies’ impacts on forest loss relative to the past. Policy effectiveness, efficiency, and equity can increase if we learn lessons from the past about what drives and what inhibits deforestation and degradation. It is in the interest of any REDD program to understand what has worked in reducing deforestation and degradation and what has not, as well as the reasons for observed differences in outcomes. Investments and policies can then more effectively embrace and extend success while reducing risks of further failures. This report aims to provide lessons to inform U.S. and international policymakers by analyzing dominant influences on deforestation and degradation. We study not only forest-focused policies, but also other policies that directly or indirectly influence forest loss, all in light of relevant nonpolicy factors such as trends in commodity prices. We provide examples of previous policies to draw lessons from successes and failures, then link those observations about the past to the decisions current policymakers must soon make within ongoing climate policy deliberations.
Land Use Policy 2010 27:119–129
Using case studies and concepts we suggest that constraints upon aggregate or global forest transition are significantly more severe than those upon local forest reversals. The basic reason is that one region’s reversal can be facilitated by other regions that supply resources and goods, reducing the demands upon the region where forests rise. Many past forest reversals involve such interdependence. For ‘facilitating regions’ also to rise in forest requires other changes, since they will not be receiving such help. We start by discussing forest-transitions analysis within the context of Environmental Kuznets Curves (EKCs), for a useful typology of possible shifts underlying transitions. We then consider the historical Northeast US where a regional reversal was dramatic and impressive. Yet this depended upon agricultural price shocks, due to the Midwest US supplying food, and also upon the availability of timber from other US regions. Next we consider deforestation in Amazônia, whose history (like the Northeast US) suggests a potential local role for urbanization, i.e. spatial concentration of population. Yet inter-regional issues again are crucial. For cattle and soy, expansion of global demands may give to Amazonia a role more like the Midwest than the Northeast US. In addition, across-region interdependencies will help determine where reversal and facilitation occur. Finally we discuss the constraints upon very broad forest transition.
Annual Review of Resource Economics (2009) 1:183–217
We consider health and environmental quality in developing countries, where limited resources constrain behaviors that combat enormously burdensome health challenges. We focus on four huge challenges that are preventable (i.e., are resolved in rich countries). We distinguish them as special cases in a general model of household behavior, which is critical and depends on risk information. Simply informing households may achieve a lot in the simplest challenge (groundwater arsenic); yet, for the three infectious situations discussed (respiratory, diarrhea, and malaria), community coordination and public provision may also be necessary. More generally, social interactions may justify additional policies. For each situation, we discuss the valuation of private spillovers (i.e., externalities) and evaluation of public policies to reduce environmental risks and spillovers. Finally, we reflect on open questions in our model and knowledge gaps in the empirical literature including the challenges of scaling up and climate change.
Climatic Change (2007) 84:217–239
We assess the potential benefits from innovative forecasts of the stream flows that replenish reservoirs in the semi-arid state of Ceará, Brazil. Such forecasts have many potential applications. In Ceará, they matter for both water-allocation and participatory-governance issues that echo global debates. Our qualitative analysis, based upon extensive fieldwork with farmers, agencies, politicians and other key actors in the water sector, stresses that forecast value changes as a society shifts. In the case of Ceará, current constraints on the use of these forecasts are likely to be reduced by shifts in water demand, water allocation in the agricultural Jaguaribe Valley, participatory processes for water allocation between this valley and the capital city of Fortaleza, and risk perception. Such changes in the water sector can also have major distributional impacts.
Resources 2007 volume 165:20-22
Even a perfect measure of the ecosystem services provided by each parcel enrolled in a PES program would be insufficient to measure the overall effectiveness of the program. The simple reason is that if a PES program does not lead to an increase in the provision of ecosystem services compared to what would have happened in the absence of the program—that is, the baseline or “counterfactual”—then it has not accomplished anything. Imagine a PES program focused on forest conservation that makes payments to managers of ecologically rich forest land, who have no incentive to clear the land because it is illsuited for logging, agriculture, or urbanization. Payments to these managers would have little impact on deforestation because the risk of clearing was minimal to begin with. In contrast, payments to managers who have incentives to clear their land would be much more likely to have an impact.
Science volume 314 (December 15, 2006): 1687-1688
Excessive levels of arsenic in drinking water is a vast health problem in Southeast Asia. Several viable approaches to mitigation could drastically reduce arsenic exposure, but they all require periodic testing.
Environmental and Resource Economics 27: 187–200, 2004.
This paper provides a theoretical explanation for the widely debated empirical finding of “Environmental Kuznets Curves”, i.e., U-shaped relationships between per-capita income and indicators of environmental quality. We present a household-production model in which the degradation of environmental quality is a by-product of household activities. Households can not directly purchase environmental quality, but can reduce degradation by substituting more expensive cleaner inputs to production for less costly dirty inputs. If environmental quality is a normal good, one expects substitution towards the less polluting inputs, so that increases in income will increase the quality of the environment. It is shown that this only holds for middle income households. Poorer households spend all income on dirty inputs. When they buy more, as income rises, the pollution also rises. they do not want to substitute, as this would reduce consumption of non-environmental services for environmental amenities that are already abundant. Thus, as income rises from low to middle levels, a U shape can result. Yet an N shape might eventually result, as richer households spend all income on clean inputs. Further substitution possibilities are exhausted. Thus as income rises again pollution rises and environmental quality falls.
Int. J. Global Environmental Issues (2004) volume 4 number 4: 209-228
Will economic growth inevitably degrade the environment, throughout development? We present a household-level framework emphasising the trade-off between consumption that causes pollution and pollution-reducing abatement. Our model provides a simple explanation for upward-turning, non-monotonic paths of environmental quality during economic growth. Its innovation yields sufficient conditions that simultaneously address preferences and technologies. With standard preferences, an asymmetric endowment (i.e., at zero income, consumption is also zero but environmental quality is positive) leads low-income households not to abate, and further this condition is sufficient for an environmental Kuznets curve (EKC) for a wide range of abatement technologies. Without such an endowment, however, even strong economies of scale in abatement are, on their own, insufficient for an EKC
Int. J. Global Environmental Issues (2004) volume 4 numbers 1/2/3: 139-159
Rich-poor interactions complicate the search for a stable Environmental Kuznets Curve (an ‘inverted U’ relationship between income per-capita and environmental degradation). We show that aid from richer to poorer countries to support investments in environment, in either of two forms, alters the income-environment relationships that otherwise exist, lowering levels of degradation in the poorer countries conditional upon their incomes. Yet even with environmental aid, in our model environmental quality eventually falls as economic growth continues, although ongoing innovation could change that conclusion. In light of this result, we show that subsidies to clean goods, one form of technological-transfer aid programme, dominate income transfers as environmental aid policy by the rich. Given that aid matters, we then show that when rich countries degrade the environment, a perverse effect exists: when an aid-giving country becomes richer, it gives less aid to the poor country. This is stronger when that degradation is durable, that is, when consumption and degradation by the rich country in the past has durable effects upon the environment.
Journal of Health Economics 23 (2004) 935–949
Concerns about frequent and harmful medical errors have led policy makers to advocate the creation of a system for medical error reporting. Health providers, fearing that reported information about errors would be used against them under the current medical malpractice system, have been reluctant to participate in such reporting systems.We propose a re-design of the malpractice system – one in which penalties are a function of the health provider’s reporting efforts – to overcome this incentive problem.We also consider some alternatives to this mechanism that address two important ways in which reporting effort may not be observable: hospitals may have interests distinct from individual physicians and may not be able to observe their reporting efforts, and a regulatory agency or a court may not be able to adequately observe reporting efforts by a provider.
Resource and Energy Economics 26 (2004) 237–254
An index of ‘deforestation pressure’ is suggested as useful for reserve planning alongside the currently used information on the species present at candidate sites. For any location, the index value is correlated with threats to habitat and thus also survival probabilities over time for members of species dependent on that habitat. Threats in the absence of reserves are key information for planning new reserves. The index is estimated using a regression approach derived from a dynamic, micro-economic model of land use, with data on observed clearing of forest over space and time as well as biophysical and socioeconomic factors in land returns. Applying an estimated threat (or probability of clearing) function for Costa Rica to locations of interest yields relevant estimates of sites’ deforestation pressure, which are used to evaluate proposed reserves and to suggest other candidate sites.
Climatic Change 54: 415–438, 2002
The development of seasonal-to-interannual climate predictions has spurred widespread claims that the dissemination of such forecasts will yield benefits for society. Based on the use as well as non-use of forecasts in the Peruvian fishery during the 1997–98 El Niño event, we identify: (1) potential constraints on the realization of benefits, such as limited access to and understanding of information, and unintended reactions; (2) the need for an appropriately detailed definition of societal benefit, considering whose welfare counts as a benefit among groups such as labor, industry, consumers, citizens of different regions, and future generations. We argue that consideration of who benefits, and an understanding of potential socioeconomic constraints and how they might be addressed, should be brought to bear on forecast dissemination choices. We conclude with examples of relevant dissemination choices made using this process.
EOS (American Geophysical Union), May 15 2001
Earth-science predictions of natural phenomena are increasingly seen as valuable aids to improved societal decision making. Pielke et al. recently (EOS 7/13/99) argued persuasively that good predictions alone won’t achieve better societal decisions. These authors’ call to change the decision environments in which scientific predictions are used, though, may be more relevant to the daily activities of policy makers than to those of scientists. We see a role also for changing the information that scientists feed into those decision environments. In particular, scientists could better serve societal needs by generating not only possible scenarios, but also improved probabilities that decision makers need, including for decisions to be taken in the near future.
Journal of Law, Economics & Organization (2000) volume 16 number 1: 189-208.
Many firms conduct “environmental audits” to test compliance with a complex array of environmental regulations. Commentators suggest, however, that self-auditing is not as common as it should be, because firms fear that what they find will be used against them. This article analyzes self-auditing as a two-tiered incentive problem involving incentives both to test for and to effect compliance. After demonstrating the inadequacy of conventional remedies, we show that incentives can be properly aligned by conditioning fines on firms’ investigative effort. In practice, however, the regulator may not be able to observe such effort. Accordingly, we propose and evaluate the use of three observable proxies for self-investigation: the manner in which the regulator detected the violation; the firm’s own disclosure of violations; and the firm’s observed corrective actions. Each method has its own efficiency benefits and informational requirements, and each is distinct from EPA’s current audit policy.
NATURE|VOL 397 | 25 FEBRUARY 1999
The effective and equitable dissemination of climate forecasts is as important and challenging as their accuracy. During El Niño 1997–98, Peruvian fisheries showed the need to understand forecast use and all parties’ interests.