Publications
Prices and Quantities to Control Overfishing
July 2011 - by Martin D. Smith and Sathya Gopalakrishnan
Economists have long promoted fishery rationalization programs, but individual transferable quotas (ITQs) may fail to address the ecological consequences of fishing. Of particular concern is that economic incentives to harvest larger fish (due to size-dependent pricing or quota-induced discarding) can destabilize fish populations or lead to evolutionary changes. A substantial theoretical literature in economics has explored incentive problems in ITQ fisheries but has treated highgrading as part of the stock externality. We provide an alternative viewpoint in that the stock externality and the size-based incentives are two distinct externalities and thus require two distinct policy instruments. In this paper, we show that if managers know the price-by-size distribution and the size distribution of the population, total revenues and total catch (in weight) by vessel are sufficient statistics to design a schedule of revenue-neutral individualized landings taxes that eliminate the incentive to highgrade in an ITQ fishery. Landings taxes can be used to address the ecological consequences of fishing while using ITQs to address the open access stock externality.
Incorporating Evaluation into the Regulatory Process
July 2011 - by Lori S. Bennear and Katherine Dickinson
For the last two decades substantial attention and resources have been devoted to increasing evaluation of government programs in an effort to promote evidenced-based and performance-based policies. However, federal efforts to promote evaluation through the Government Performance and Results Act and the Performance Assessment Rating Tool have had limited success. This paper seeks to evaluate the recent efforts at evaluation and provide guidance for how future efforts can be shaped. It provides a stylized model for evaluation in the regulatory process that is consistent with prior federal initiatives. It then examines four categories of barriers to implementation of this stylized model—cognitive, social/cultural, organizational, and incentive—and presents suggestions for how future evaluation efforts can be formulated to better overcome these barriers.
Measuring Improvement in the Energy Performance of the U.S. Cement Industry
May 2011 - by Gale Boyd and Gang Zhang
Recognizing the potential of energy efficiency to reduce CO2 emissions, the U.S. Environmental Protection Agency launched ENERGY STAR for Industry to educate manufacturers on steps to improve their energy efficiency. Energy management strategy is a key component of the ENERGY STAR approach. This paper focuses primarily on development of an updated ENERGY STAR industrial Energy Performance Indicator (EPI) for the Cement industry and the change in the energy performance of the industry observed when the benchmarking system was updated from the original benchmark year of 1997 to the new benchmark of 2008.
Success or Selection? An Economic Perspective on Fisheries Co-Management
April 2011 - by Lori S. Bennear and Martin D. Smith
This paper comments on a recent paper published in the journal Nature that claims that fisheries co-management causes successful outcomes in fisheries. We outline theoretical arguments in favor of and against co-management as an approach to solving fisheries-commons problems. We argue that the principal claims of the authors are not supported by their data and analysis. Spurious inference about effectiveness of co-management runs the risk of undermining rather than advancing the policy process.
Preliminary Analysis of the Distributions of Carbon and Energy Intensity for 27 Energy Intensive Trade Exposed Industrial Sectors
April 2011 - by Gale Boyd, Tatyana Kuzmenko, Béla Személy, and Gang Zhang
It is well documented that different manufacturing sectors require different amounts of energy. Primary materials conversion, e.g., iron ore and scrap into steel, limestone and sand into cement and glass, or wood and other fibers into paper, tend to be the most energy-intensive in the production process, while final consumer products like electronics and clothing require the least energy. This leads to something like the 80-20 rule, where a large portion of energy use is in a small number of industries. For example, the 2006 Manufacturing Energy Consumption Survey (MECS) reported that 75 percent of fuel use arises from only five of the 21 three-digit industries, using the North American Industry Classification System (NAICS). These five sectors are a small share of the total U.S. economy. The energy intensity for different industrial sectors is easily measured using published government statistics, but the plants within these industries are not homogeneous entities. This report measures the differences in energy use and associated CO2 emissions as a first step to understanding the within-sector heterogeneity of energy use.
Efficiency Gains from Pre-Investment Resource Queues: Coordinating Investment under Resource Uncertainty
April 2011 - by Miguel A. Fonseca, Alexander Pfaff, and Daniel Osgood
Farmers make investments before knowing how much water they will receive later in the season. The costs of the inefficiently high or low investment that may result can be significant. A spot market that efficiently allocates water once quantity is realized is unlikely to coordinate simultaneous efficient investments earlier in the season. This paper compares pre-established queues to a post-investment-and-resource-realization market in coordinating investment whose productivity depends on having the uncertain resource.
Hazardous Waste Hits Hollywood: Superfund and Housing Prices in Los Angeles
January 2011 - by Ralph Mastromonaco
This paper contributes to the ongoing debate concerning the effect of various actions taken by the U.S. Environmental Protection Agency (EPA) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as the Superfund Program, on housing prices. This study uses a housing transaction panel dataset encompassing the five major counties of the Los Angeles Combined Statistical Area to estimate the program's influence on the local housing market.
Bright Lines, Risk Beliefs, and Risk Avoidance: Evidence from a Randomized Intervention in Bangladesh
October 2010 - by Lori Bennear, Alessandro Tarozzi, Alexander Pfaff, H.B. Soumya, Kazi Matin Ahmed, and Alexander van Geen
This paper provides evidence on the effects of risk presentation on health behaviors using data from a cluster randomized controlled trial in risk presentation regarding arsenic in drinking water in Araihazar district of Bangladesh. The intervention was designed to test whether highlighting the existence of a gradient in arsenic risk—exposure risk increases with the level of arsenic and lower arsenic exposure is always better—led to better choices relative to “bright line” information provision that focuses on whether the arsenic level is above or below the country standard of 50 parts per billion (ppb).
Management of an Annual Fishery in the Presence of Ecological Stress: The Case of Shrimp and Hypoxia
September 2010 - by Ling Huang and Martin D. Smith
The emergence of ecosystem-based management suggests that traditional fisheries management and protection of environmental quality are increasingly interrelated. But fishery managers have limited control over most sources of marine and estuarine pollution and at best can only adapt to environmental conditions. This paper presents a bioeconomic model of optimal harvest of an annual species that is subject to an environmental disturbance, and parameterizes the model to analyze the effect of hypoxia (low dissolved oxygen) on the optimal harvest path of brown shrimp, a commercially important species that is fished in hypoxic waters in the Gulf of Mexico and in estuaries in the southeastern United States.
The Value of Disappearing Beaches: A Hedonic Pricing Model with Endogenous Beach Width
September 2010 - by Sathya Gopalakrishnan, Martin D. Smith, Jordan M. Slott, and A. Brad Murray
Beach nourishment is used to rebuild eroding beaches with sand dredged from other locations. Previous studies indicate that beach width positively affects coastal property values, but studies ignore the dynamic features of beaches and the feedback that nourishment has on shoreline retreat. This paper corrects for the resulting attenuation and endogeneity bias in a hedonic property value model by instrumenting for beach width using spatially varying coastal geological features.
Designing Cap and Trade to Account for "Imperfect" Offsets
September 2010 - by Brian C. Murray and W. Aaron Jenkins
The use of offsets can potentially improve a cap-and-trade system by lowering the overall cost of compliance, encourage mitigation from outside of the cap, and function as a bridge strategy, giving the regulated sectors time to innovate new low-carbon technologies and business plans. But offset provisions can be imperfect, and decision makers must appreciate the implications of these flaws and design the national offset program accordingly. This paper discusses three policy options for addressing offset integrity issues that can cause effective aggregate abatement to fall below the optimum level set by a compliance cap, and assesses the efficiency and welfare implications—for offset buyers and suppliers—of these policy options.
Participatory Protection in Theory and Application: Paper Tigers, Fences & Fines, or Negotiated Co-Management?
August 2010 - by Stefanie Engel, Charles Palmer, and Alexander Pfaff
Forest protection can involve limits on local communities (“fences and fines”), yet some attempts to form protected areas that block local land use are fruitless (“paper tigers”). Participation, i.e., involving communities in forest management (or “co-management”), is a relatively recent innovation in protection which falls between these two endpoints. This working paper models the emergence of negotiated agreements that can share management of and benefits from forest between actors with different objectives, i.e., state and forest user. This paper has been updated on September 7, 2010.
Assessing Improvement in the Energy Efficiency of U.S. Auto Assembly Plants
June 2010 - by Gale Boyd
This paper describes the EPA's voluntary ENERGY STAR program policy approach selected to engage and motivate the automobile manufacturing industry to improve its energy performance, and the results of the industry’s efforts to advance energy management as measured by the updated ENERGY STAR Energy Performance Indicator.
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