UCSB Econ 260B

I. The Environment and Economics [Week 1]

A. Scope of the Problem

*Robert Deacon et al, "Research Trends and Opportunities in Environmental and Natural Resource Economics," ERE, 11:383-97 (1998).

*Geoffrey Heal, “A Celebration of Environmental and Resource Economics,” REEP, 1:7-25 (2007).

P&S, chapters 1 & 2.

B. Positive vs. Normative Analysis

1. Normative Analyses

*Geoffrey Heal, “Climate Economics: A Meta-Review and Some Suggestions for Future Research,” REEP, 3:4-21 (2009).

2. Positive Analyses

*Richard S. J. Tol, “The Economic Effects of Climate Change,” JEP, 23:29-51 (2009).

M. Cropper et al, “The Determinants of Pesticide Regulation,” JPE, 100:175-97 (1992).

C. Social Choice

*Sagoff, Mark, "Should Preferences Count?," LE, 70:127-144 (1994).

Arrow, Kenneth, et al, “Are We Consuming Too Much?”, JEP, 18:147-72 (2004).

II Public Goods and Externalities [Week 1]

A. Nature of Public Bads and Externalities

*B&O, Chapters 2, 3

*Kolstad, Chapter 5

William Nordhaus, “The Problem of Global Public Goods,” working paper (2005).

B. Voluntary Provision of Public Goods

*Bergstrom, T, L. Blume and H. Varian, “On the Private Provision of Public Goods,” JPubE, 29:25-49 (1986)

John A. List, Erwin Bulte and Jason Shogren, “’Beggar Thy Neighbor’: Testing for Free-Riding in State-Level Endangered Species Expenditures,” Public Choice, 111:303-315 (2002).

Marc Isaac and James Walker, “Group Size Effects in Public Goods Provision,” QJE, 103:179-99 (1988).

III. Environmental Regulation [Weeks 2-3]

A. Political Economy of Environmental Regulation

*Kolstad, Ch 11

*Robert W. Hahn, “The Political Economy of Environmental Regulation: Towards a Unifying Framework,” Public Choice, 65:21-47 (1990).

*Marcel Boyer and Jean-Jacques Laffont, “Towards a Political Theory of the Emergence of Environmental Incentive Regulation,” RJE, 30:137-57 (1999).

*Larry Goulder and Ian Parry, "Instrument Choice in Environmental Policy," REEP, vol 2 (2008).

Paul L. Joskow, Richard Schmalensee, "The Political Economy of Market-Based Environmental Policy: The US Acid Rain Program," JLE, vol 41, pp37-83 (1998).

B. Price and Quantity Instruments

*W. David Montgomery, "Markets in Licenses and Efficient Pollution Control Programs," JET, 5, 395-418 (1972).

*Larry Goulder, Ian Parry and Dallas Burtraw, "Revenue-Raising versus Other Approaches to Environmental Protection: The Critical Significance of Preexisting Tax Distortions," RJE, 28:708-31 (1997).

*Michael Greenstone, “The Impacts of Environmental Regulations on Industrial Activity,” JPE (2002).

AL Bovenberg and LH Goulder, “Environmental Taxation and Regulation,” NBER Working Paper 8458, subsequently published in Handbook of Public Economics (2001).

Agnar Sandmo, "Optimal Taxation in the Presence of Externalities," SJE, 77:86-98 (1975).

C. Voluntary Measures

*Kolstad, Chapter 17

*Kathleen Segerson and Thomas J. Miceli, "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?" JEEM, 36:109-30 (1998).

*David P. Baron, "Morally Motivated Self-Regulation," AER, 100:1299-1329 (2010).

*Matt Kotchen, “Green Markets and Private Provision of Public Goods,” JPE, 114:816-34 (2006).

John W. Maxwell, Thomas P. Lyon and Steven C. Hackett, “Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism,” JLE, 43:583-617 (2000).

Thomas P. Lyon and John W. Maxwell, “Self-Regulation, Taxation and Public Voluntary Environmental Agreements”, J. Pub. E., 87:1453-89 (2003).

Arora, S., and T. Cason, “An Experiment in Voluntary Environmental Regulation: Participation in EPA’s 33/50 Program,” JEEM 28 (1995) 271-86.

Montero , Juan-Pablo, "Voluntary Compliance with Market-Based Environmental Policy: Evidence from the US Acid Rain Program," JPE, 107:998-1033 (1999).

M.F. Teisl, B. Roe, and R.L. Hicks, “Can Eco-Labels Tune a Market?: Evidence from Dolphin-Safe Labeling,” JEEM, 43:339-59 (2002).

D. Risk, insurance and liability

*Martin Katzman, "Pollution Liability Insurance and Catastrophic Environmental Risk," Journal of Risk and Insurance, 55:75-100 (1988).

*C.D. Kolstad, T. Ulen and G. Johnson, "Ex Ante Regulation vs. Ex Post Liability for Harm: Substitutes or Complements?," AER (Sept. 1990).

T.H. Tietenberg, "Indivisible Toxic Torts: The Economics of Joint and Several Liability," LE, 65: 305-319 (1989).

Kathleen Segerson, "Risk and Incentives in the Financing of Hazardous Waste Cleanup," JEEM, 16: 1-8 (1989).

Phillip J. Cook and Daniel A. Graham, "The Demand for Insurance and Protection: The Case of Irreplaceable Commodities," QJE, 91: 143-56 (1977).

E. Innovation

*S Milliman and Ray Prince, "Firm Incentives To Promote Technological-Change In Pollution-Control," JEEM, 17:247-265 (1989).

*Charles D. Kolstad, “Regulatory Choice with Pollution and Innovation,” NBER Working Paper 16303 (2010).

IV. Demand for Environmental Goods [Weeks 4-7]

A. Hedonic Methods

*Kolstad, Chapters 7 and 8

*Ekeland, Heckman and Nesheim, "Identification and Estimation of Hedonic Models", JPE, 112:S60-S109 (2004)

*Chay, Kenneth Y. and Michael Greenstone, "Does Air Quality Matter? Evidence From the Housing Market," JPE, 90: 1257-1278 (2005).

*Roback, Jennifer, "Wages, Rents, and the Quality of Life," JPE, 90:1257-78 (1982).

Smith VK, Sieg H, Banzhaf HS, et al, “General equilibrium benefits for environmental improvements: projected ozone reductions under EPA's Prospective Analysis for the Los Angeles air basin ,” JEEM, 47: 559-584 (2004).

Epple, Dennis and Holger Sieg, "Estimating Equilibrium Models of Local Jurisdictions," JPE, 107:645-81 (1999).

Harrison, David Jr. and Daniel L. Rubinfeld, "Hedonic Housing Prices and the Demand for Clean Air," JEEM, 5(1)81-102 (1978).

B. Hedonic Methods and Climate Change

*Mendelsohn, Robert, William Nordhaus and Daigee Shaw, "The impact of Global Warming on Agriculture: A Ricardian Analysis", AER, 84:753-771 (1994)

*Olivier Deschenes and Michael Greenstone, "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather", AER, 97:354-385 (2007)

Mendelsohn, Robert, Emanuele Massetti, "Estimating Ricardian Models With Panel Data", NBER Summer Institute (2010).

C. Travel Costs and Household production

*Kolstad, Chapter 9

*Jerry A. Hausman, Gregory K. Leonard, and Daniel McFadden, "A Utility-Consistent, Combined Discrete Choice and Count Data Model Assessing Recreational Use Loses Due to Natural Resource Damage", JPubE, 56:1-30 (1995)

*Timothy Bartik, "Evaluating the benefits of non-marginal reductions in pollution using information on defensive expenditures," JEEM, 15:111-127

*Mark Dickie and Shelby Gerking, "Willingness to Pay for Ozone Control: Inferences from the Demand for Medical Care," JEEM, 21:1-16 (1991).

D. Constructed Markets

*Michael Hanemann, "Valuing the Environment Through Contingent Valuation," JEP, 8(4):19-43 (1994).

*Peter Diamond and Jerry Hausman, "Contingent Valuation: Is Some Number Better than No Number?,"JEP, 8(4):45-64 (1994).

Daniel Kahneman and Jack L. Knetsch, "Valuing Public Goods: The Purchase of Moral Satisfaction," JEEM, 22:57-70 (1992).

Vossler, C. A., and J. Kerkvliet, “A criterion validity test of the contingent valuation method: comparing hypothetical and actual voting behavior for a public referendum.” JEEM 45 (2003) 631-649.

E. Experimental and Quasi experimental Methods

*Kolstad, Chapter 10

*Greenstone, Michael and Ted Gayer, "Quasi-experimental and experimental approaches to environmental economics", JEEM, 57:21-44

*Edward Miguel, "Spring Cleaning: Rural Water Impacts, Valuation, and Property Rights Institutions", forthcoming QJE 2010

*Greenstone, Michael and Kenneth Chay, "The Impact of Air Pollution on Infant Mortality: Evidence from Geographic Variation in Pollution Shocks Induced by a Recession", QJE 118:1121-1167

*Andrew Foster and N Kumar, "Have CNG Regulations in Delhi Done Their Job", Economic and Political Weekly, 42:48-58 (2007)

Greenstone, Michael and Kenneth Chay, "Air Quality, Infant Mortality and the Clean Air Act of 1970", NBER 2003

Clancy, Luke et al., "Effect of Air-Pollution Control on Death Rates in Dublin, Ireland: An Intervention Study", The Lancet, 360:1210-1214

F. External Validity

* Costa, DL and ME Kahn, "The Rising Price of Non-Market Goods", AER, 93:227-232 (2003)

* Jayachandran, Seema, "Air Quality and Early-Life Mortality: Evidence from Indonesia's Wildfires", Journal of Human Resources, 44:916-954 (2009)

W. Kip Viscusi and Joe Aldy, “The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World,” J. Risk and Uncertainty, 77:5-76 (2003).

V. Uncertainty, dynamics and discounting [Week 7-8]

A. Discounting

*Martin L. Weitzman, “Risk-Adjusted Gamma Discounting,” JEEM, 60:1-13 (2010).

Martin L. Weitzman, "Why the Far-Distant Future Should be Discounted at Its Lowest Possible Rate," JEEM, 36:201-8 (1998).

C. Harris and D. Laibson, “Dynamic Choices of Hyperbolic Consumers,” Ecta, 69:935-57 (2001).

Larry Karp, “Global Warming and Hyperbolic Discounting,” JPubE, 89:262-82 (2005).

B. Uncertainty, Preservation, Irreversibilities and Option Value.

*Anthony C. Fisher, "Investment under uncertainty and option value in environmental economics," REE, 22:197-204 (2000).

*Daniel A. Graham, "Cost-Benefit Analysis Under Uncertainty," AER, 71: 715-725 (1981).

Charles D. Kolstad, "Fundamental Irreversibilities in Stock Externalities," JPubE, 60:221-33 (1996).

C. Valuing Biodiversity

*Simpson, R. D., R. A. Sedjo, and J. W. Reid, "Valuing Biodiversity for use in Pharmaceutical Research", JPE, 104(1) 1996, 163-185.

Costello, Chris, "Search, bioprospecting and biodiversity conservation" JEEM, 52:615-26 (2006)

Weitzman, Martin "The Noahs Ark Problem," Econometrica, 66:1279-98 (1998).

VI Asymmetric information (moral hazard and adverse selection) [Weeks 8-9]

A. Theory -- Adverse Selection and Moral Hazard

*Martin L. Weitzman, "Prices vs. Quantities," REStud, 41(4)477-491 (1974).

*K. Segerson, "Uncertainty and Incentives for Nonpoint Pollution Control," JEEM, 15: 87-98 (1988).

Harrington, Winston, "Enforcement Leverage when Penalties are Restricted," JPuE, 37:29-53 (1988).

Evan Kwerel, "To Tell the Truth: Imperfect Information and Optimal Pollution Control," REStud, 44,595-601 (1977).

Richard Newell and William Pizer, "Regulating Stock Externalities Under Uncertainty," RfF Discussion Paper 99-10 (2000).

Marc J. Roberts and Michael Spence, "Effluent Charges and Licenses Under Uncertainty," JPuE, 5, 193-208 (1976).

B. Empirics -- Moral Hazard

*Maximilian Auffhammer and Ryan Kellogg, "Cleaning the Air? The effects of gasoline content regulation on air quality", forthcoming AER, 2010

*Paulina Oliva, "Environmental Regulations and Corruption: Automobile Emissions in Mexico City", working paper 2010.

Greenstone, Michael. 2003. "Estimating Regulation-Induced Substitution: The Effect of the Clean Air Act on Water and Ground Pollution ." American Economic Review, 93(2): 442–448.

Lucas Davis, "The Effect of Driving Restrictions on Air Quality in Mexico City", JPE, 116:38-81 (2008)

C. Empirics -- Adverse Selection

*Juan Pablo Montero, "Environmental Policy: Evidence from the U.S. Acid Rain Program", JPE, 107:998-1033 (1999)

*Meredith Fowlie, "Allocating emissions permits in cap-and-trade programs: Theory and evidence", NBER (2010)

Juan Pablo Montero, "Optimal design of a phase-in emissions trading program", JPubE 75:273-291 (2000)

Kelsey Jack, "Allocation in environmental markets: A field experiment with tree planting contracts", working paper, (2010)

Carolyn Fischer, "Project-based mechanisms for emissions reductions: balancing trade-offs with baselines" Energy Policy, 33:1807-1823 (2005)

Arturo Sánchez, Alexander Pfaff, et al. "Costa Rica's Payment for Environmental Services Program: Intention, Implementation, and Impact", Conservation Biology, 21:1165-1173 (2007)

Alban Thomas, "Regulating Pollution Under Asymmetric Information: The Case of Industrial Wastewater Treatment," JEEM, 28:357-73 (1995).

VII Cooperation and Transboundary Pollution [Week 10]

*Kolstad, Chapter 19

A. Interjurisdictional competition

*WE Oates and RM Schwab, "Economic Competition among Jurisdictions: Efficiency Enhancing or Distortion Inducing?," JPuE, 35:333-54 (1988).

Scott Barrett, "Strategic Environmental Policy and International Trade," JPuE, 54:325-38 (1994).

Xing, Y and C. Kolstad, "Do Lax Environmental Regulations Attract Foreign Investment?" ERE (2002).

B. Transboundary Pollution

*Scott Barrett, "Self-Enforcing International Environmental Agreements," OEP, 46:878-94 (1994).

Scott Barrett, "Montreal vs. Kyoto: International Cooperation and the Global Environment," in Inge Kaul, Isabelle Grunberg and Marc Stern (Eds), Global Public Goods (Oxford, New York, 1999).

Charles Kolstad and Alistair Ulph, “Learning and International Environmental Agreements,” working paper.

VIII Topics [Week 10]

[10/10/10]

UNIVERSITY OF CALIFORNIA