17. climate change abatement

229 Pages·2010·14.2 MB·English

ii Issues of the Day
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Resources for the Future
1616 P Street NW
Washington, DC 20036–1400
USA
www.rff.org
editoRs:
Ian W.H. Parry, series editor
Felicia Day, managing editor
Adrienne Foerster, assistant editor
contRibuting editoRs:
John Anderson
Sally Atwater
coveR and book design:
Ellen A. Davey
The findings, interpretations, and conclusions offered in this publication are those of the authors. They do not necessarily rep-
resent the views of Resources for the Future, its directors, or its officers.
Distributed by RFF Press, an imprint of Earthscan
978-1-933115-89-4 (hardback)
978-1-933115-87-0 (paperback)
Issues of the Day iii
table of Contents
EDItors’ IntroDuctIon...................................................IX 10. Inducing Innovation for climate change
Ian W.H. Parry and Felicia Day Mitigation...............................................................................20
Richard G. Newell
Part 1 11. How should Emissions allowance auctions Be
Global Environmental challenges.......................................1 Designed?................................................................................22
Karen Palmer
1. stabilizing atmospheric co with Incomplete
2
International cooperation.....................................................2 12. competitiveness, Emissions Leakage, and climate
Jae Edmonds, Leon Clarke, and Marshall Wise Policy........................................................................................24
Carolyn Fischer and Richard D. Morgenstern
2. a Pragmatic Global climate Policy architecture.........4
Valentina Bosetti and Jeffrey Frankel 13. addressing Biodiversity and Global Warming by
Preserving tropical Forests.................................................26
3. thinking Beyond Borders Why We Need to Focus on Roger A. Sedjo
Global Public Goods................................................................6
Scott Barrett 14. Forests in a u.s. climate Program Promising, but the
Key Is Implementation.............................................................28
4. the Value of climate-related satellite Data................8 Kenneth R. Richards
William Gail
15. Emissions offsets in a Greenhouse Gas cap-and-
5. the successful International response to trade Policy............................................................................30
stratospheric ozone Depletion...........................................10 Brian C. Murray
James Hammitt
16. Ethics and Discounting Global Warming
6. Evaluating Europe’s Plan for reducing Greenhouse Damages.................................................................................32
Gases........................................................................................12 Cameron Hepburn
Dallas Burtraw
17. climate change abatement Not “Stern” Enough?......34
7. u.s. climate change Policy Previewing the Debate.....14 Dallas Burtraw and Thomas Sterner
Daniel S. Hall
18. Evaluating climate risks in coastal Zones..............36
8. Which Is the Better climate Policy? Emissions Taxes Gary Yohe
versus Emissions Trading.........................................................16
Ian W.H. Parry and William A. Pizer
Part 2
Energy Policies......................................................................39
9. should cap-and-trade systems Be supplemented
with renewable Portfolio standards?.............................18
Christoph Böhringer and Knut Einar Rosendahl 19. Reflections on Three Decades of U.S. Energy
Policy.......................................................................................40
Phil Sharp
iv Issues of the Day
20. the oil security Problem “Déjà Vu All 33. Why International natural Gas Markets Matter in
Over Again”............................................................................42 today’s Energy and Environmental Picture.....................68
Hillard Huntington Steven A. Gabriel
21. reassessing oil security...............................................44 34. assessing Electricity Markets Prospects and
Stephen P.A. Brown Pitfalls.......................................................................................70
Timothy Brennan
22. the 2008 oil Price shock Markets or Mayhem?.........46
James L. Smith
Part 3
national Environmental Policies.......................................73
23. the cost of Protecting oil in the Persian Gulf..........48
Mark Delucchi
35. What are the Biggest Environmental challenges
Facing the united states?.....................................................74
24. What role for “synthetic” Liquid Fuels? A Look at
Paul R. Portney
Canadian Oil Sands...............................................................50
Joel Darmstadter
36. Where things stand with Hazardous Waste
regulation...............................................................................76
25. FutureGen How to Burn Coal—Maybe—Without
Sarah Stafford
Contributing to Climate Change............................................52
John W. Anderson
37. reinstating the superfund taxes Good or Bad
Policy?.......................................................................................78
26. the Economics of new Green technology
Kate Probst
Investment The Case of Satellite Solar Power....................54
Molly K. Macauley and Jhih-Shyang Shih
38. trash talk.........................................................................80
Don Fullerton and Margaret Walls
27. oil and the arctic national Wildlife refuge..............56
Matthew Kotchen and Nicholas Burger
39. the new Economics of Managing the nation’s
Waste.......................................................................................82
28. oil spills The Deterrent Effects of Monitoring,
Molly K. Macauley and Stephen W. Salant
Enforcement, and Public Information.....................................58
Mark A. Cohen
40. Enhancing Productivity while safeguarding
Environmental Quality.........................................................84
29. taking a closer Look at Energy subsidies in the
David Zilberman and Steven Sexton
Federal tax code..................................................................60
Gilbert E. Metcalf
41. Why We need to treat nitrogen as a systems
Problem...................................................................................86
30. Learning by Doing and the california solar
Andrew Manale
Initiative..................................................................................62
Kenneth Gillingham, Arthur van Benthem, and James L. Sweeney
42. the Effectiveness of Voluntary Environmental
Programs.................................................................................88
31. opposing the chicken or opposing the Egg? New
Richard D. Morgenstern and William A. Pizer
Challenges in Siting Networked Energy Facilities................64
Shalini Vajjhala
43. Does Green Corporate Social Responsibility Benefit
society?...................................................................................90
32. the Greening of Buildings............................................66
Thomas P. Lyon and John W. Maxwell
George S. Tolley and Sabina Shaikh
Issues of the Day v
44. the Evolving so allowance Market Title IV, CAIR, 56. restoring Great Lakes Ecosystems Worth the
2
and Beyond..............................................................................92 Cost?........................................................................................118
Karen Palmer and David A. Evans Soren Anderson, Jennifer Read, and Don Scavia
45. the cooling Water Intake structures rule..................94 57. the Gulf of Mexico’s Dead Zone Mess, Problem, or
Winston Harrington Puzzle?....................................................................................120
Don Scavia
46. the Future of regulatory oversight and
analysis...................................................................................96 58. Information Disclosure and Drinking Water
Susan E. Dudley and Art Fraas Quality...................................................................................122
Lori Snyder Bennear and Sheila Olmstead
47. a Plea for Environmental accounts............................98
James Boyd 59. Western Water Law and Efficient Use of Water
resources..............................................................................124
Charles Howe
48. the Political Economy of Environmental Justice...100
Spencer Banzhaf
60. a new approach to reforming the national Flood
Insurance Program..............................................................126
49. overcoming Distributional obstacles to Market-
Leonard Shabman
Based Environmental Policies...........................................102
Roberton Williams
61. Perverse Incentives and the Endangered species
act...........................................................................................128
50. What Do the Damages caused by u.s. air Pollution
Jonathan H. Adler
cost?......................................................................................104
Robert Mendelsohn and Nicholas Z. Muller
62. Improving Investments in Biodiversity
conservation........................................................................130
51. What can Policymakers Learn from Experimental
Juha Siikamäki and Stephen Newbold
Economics?...........................................................................106
John List
63. usDa’s conservation reserve Program Is It Time to
52. Environmental Federalism.........................................108 Ease into Easements?.............................................................132
Wallace E. Oates Ralph Heimlich
64. How should We tackle the Forest Fire
Part 4 Problem?................................................................................134
ManaGInG naturaL rEsourcEs................................111 Arun Malik
53. can catch shares save Fisheries?.............................112 65. options contracts for contingent Takings
Christopher Costello and Steven Gaines Improving Disaster Management.........................................136
Carolyn Kousky, Sam Walsh, and Richard Zeckhauser
54. The Political Economy of Addressing Overfishing in
u.s. Waters............................................................................114
Harrison Fell and James N. Sanchirico Part 5
transportation and urban Policies..................................139
55. Achieving Efficient Coordination and Acceptance in
Fishery reform.....................................................................116 66. triple convergence toward a Higher Gasoline
Robert T. Deacon tax.........................................................................................140
Kenneth Small
vi Issues of the Day
67. the Price of Gas and the Demand for Fuel Economy 80. Declining Traffic Fatalities Lessons for Developing
Are There Any Links?.............................................................142 Countries?...............................................................................168
Thomas H. Klier and Joshua Linn Maureen Cropper and Elizabeth Kopits
68. should Distributional considerations Hold up 81. Preservation and Development Can TDRs Improve
Higher Gasoline taxes?.....................................................144 Land Markets?........................................................................170
Sarah E. West Virginia McConnell and Margaret Walls
69. Does the Federal Government spend too Much for 82. Is there an “Efficient” Way to Address Suburban
Highways, or too Little?.....................................................146 sprawl?..................................................................................172
Winston Harrington Antonio M. Bento
70. The Benefits and Costs of Tighter Fuel Economy
regulations...........................................................................148 Part 6
Ian W.H. Parry Public Health Policies..........................................................175
71. Pay-as-You-Drive auto Insurance.............................150 83. the Value of Health and Longevity...........................176
Jason Bordoff and Pascal Noel Kevin M. Murphy and Robert H. Topel
72. What Motivates People to Buy Hybrids?..................152 84. How u.s. and chinese citizens Feel about reducing
Shanjun Li Mortality risks.....................................................................178
Alan Krupnick
73. the outlook for Hydrogen cars.................................154
Joan Ogden and Edward S. Rubin 85. a new chapter in the History of Malaria
control...................................................................................180
Maciej F. Boni and David L. Smith
74. useful Lessons from california’s Experiment with
congestion Pricing..............................................................156
Robert W. Poole, Jr. 86. the spread of Mrsa Antibiotic Resistance with a
Name......................................................................................182
Hellen Gelband
75. congestion Pricing Lessons from London....................158
Jonathan Leape
87. controlling tuberculosis What Is the Benefit, at What
76. Has the time come for truck-onlytoll Lanes?.......160 Cost?.......................................................................................184
Robin Lindsey Ramanan Laxminarayan, Eili Klein, and Sarah Darley
77. using the Price system to reduce airport 88. Bringing our Food safety sytem into the 21st
congestion............................................................................162 century..................................................................................186
Jan K. Brueckner and Kurt Van Dender Sandra A. Hoffmann
89. tobacco taxation in the European union and
78. Delayed Is Privatizing America’s Airports the
united states........................................................................188
Answer?...................................................................................164
Sijbren Cnossen
Clifford Winston and Ginés de Rus
90. How advertising for smoking-cessation Products
79. telecommuting What Is It Good For?.........................166
can Help Meet Public Health Goals................................190
Elena Safirova
Donald S. Kenkel and Dean R. Lillard
Issues of the Day vii
91. Mercury advisories for commercial Fish................192
Jay Shimshack
92. Measuring the Benefits of Reduced Exposure to
Lead........................................................................................194
Felicia Day
93. Indoor air Pollution and african Death rates........196
Majid Ezzati
Part 7
Environment and Development.......................................199
94. Driving restrictions and air Quality in
Mexico city..........................................................................200
Lucas W. Davis
95. Deciphering the Demand for safe Drinking Water in
Low-Income countries.......................................................202
Michael Kremer, Edward Miguel, Clair Null, and Alix Zwane
96. Environmental Policy Innovations in Developing
countries..............................................................................204
Allen Blackman
97. Green cities and Economic Development...............206
Matthew E. Kahn
98. Building Better Housing Policies for the Developing
World’s Poor.........................................................................208
Robert M. Buckley and Jerry Kalarickal
99. the Future of Famine...................................................210
Cormac Ó Gráda
100. Is Population still an Important Policy Issue?......212
Warren C. Robinson
InDEx.....................................................................................215

ix
eDItors’ IntroDuCtIon
Every week, we post short commentaries on the RFF website, www.rff.org/
weeklycommentary, that provide our readers with an easy means of learning about
how policies work to control, to better and worse extents, some of the most chal-
lenging climate, energy, environmental, transportation, and public health problems
of our time. Written mostly by economists, the commentaries serve to disseminate
important research findings and expert judgment. They are nontechnical and enable
the reader to quickly grasp the key points and background about a particular policy
topic and learn from the insights of a leading expert.
We decided to collect the commentaries in book form not just for the old-fashioned
pleasure of seeing them in print, but also for the most 21st-century reason: to deal with
the information overload we all face and the lack of an easy place to turn to for answers.
We may be well versed or even experts in our given fields, but there are many gaps in
our knowledge about related fields and useful insights can often be gleaned from policy
experience in other contexts.
Professors looking to update their course syllabi, students and reporters looking for
background information, and business and policy professionals just trying to stay ahead
of the curve should find these commentaries valuable. We also hope our readers share
our intellectual curiosity; time and again, we came away edified about a problem or an
idea we’d never considered before.
We cast a global net, looking at how congestion pricing works in London, malaria
control is achieved in Africa, and emissions allowance auctions are designed in the
United States. Some of the commentaries deal with international or transboundary
policy problems, such as stratospheric ozone, and others dwell on national policy issues
that are common to many countries, such as overharvesting of fish stocks.
Some commentaries are specifically focused on the United States, though they still
provide useful insights for other countries. These offer an overview of various federal
regulatory programs and how they might be reformed, including the Endangered Spe-
cies Act, control of hazardous wastes and power plant emissions of sulfur dioxide, man-
agement of flood insurance and forest fires, and food safety regulation.
Rather than evaluating specific programs, some commentaries provide background
on the seriousness of policy problems, broad trends in the form of policy interventions
over time, or technologies that might be developed to help address them.
KEY tHEMEs
A key theme of the commentaries is the potentially critical role of careful economic
analysis in helping to understand complex policy questions and hence aid in policy
reform.
Some essays confirm a case for a particular policy or policy change on cost–benefit
grounds. For example, the economic case for higher fuel taxes is well established. How-
ever, an alternative approach—specifically, policies to encourage automobile insurance
companies to offer premiums that vary in direct proportion to vehicle mileage (in place
of the current system of lump-sum insurance premiums)—would also generate substan-
tial economic benefits, but without a large transfer of revenue to the government.
In other cases, economic analysis is valuable in informing about the extent of unin-
tended policy consequences. For example, restrictions in the number of days vehicles
can be driven in city centers appear to be an ineffective way to improve urban air qual-
ity, at least in Mexico City, because any gains in pollution are offset by increased use of
x Issues of the Day
secondary vehicles, as people attempt to circumvent driving
restrictions. And advisories warning about mercury levels in
fish have public health benefits from reduced consumption
of contaminated fish, but these benefits appear to be offset
because alerts lead to reduced consumption of all fish (rather
than just high-mercury fish alone), thereby forgoing some of
the health benefits from moderate fish consumption.
Understanding about the wide-ranging issues covered in
this book is not just interesting for its own sake. Increasingly,
issues in different fields are becoming related in one way or
another. For example, it is useful for the climate economist
to understand policy issues affecting the transport sector, like
congestion pricing, fuel taxes, and fuel economy standards, as
these policies have implications for the effects and costs of
national-level greenhouse gas control programs. In the same
light, biologists grappling with natural resource management
issues can gain insights from innovative land management
programs, voluntary pollution control efforts, and the use of
satellite data.
acKnoWLEDGMEnts
We owe a huge debt of gratitude to a number of our RFF
colleagues for assistance with the web series and production
of the book. In particular, we thank Adrienne Foerster for
helping to manage the series on a week-by-week basis and
for carefully editing many of the commentaries. Sally Atwater
and John Anderson helped prepare many of them, and their
contributions are very much appreciated. We also thank Peter
Nelson and Don Reisman for their guidance during the book
development process. Ellen Davey designed and produced the
book. Tiffany Clements and Scott Salyer, of our web team,
and David McLaughlin and Michael Eber also provided valu-
able support. Finally, we thank all of the 134 authors for their
willingness to contribute to our series. We hope this book,
and the commentary website, will help to provide them with
access to a broader audience for their valuable work.
Ian W.H. Parry is an RFF senior fellow and holds the Allen
Kneese chair. He dedicates this book to his late grandfather, William
H. Skelton, in appreciation of support for his education.
Felicia Day is RFF’s managing editor. She dedicates it to her “of-
fice” grandfathers, John Anderson and Joel Darmstadter, for their wise
counsel and friendship over the years.