economic valuation of the threat posed by the establishment of the asian tiger mosquito in australia invasive species policy could be better informed if we understood how much people value reductions in the risks posed by these organisms this study investigates the public s willingness to pay wtp for additional measures to reduce the risk of invasion of the australian mainland by the asian tiger mosquito atm the study contributes to the literature by applying a stated preference method to estimate the public s wtp to reduce the risk of an atm invasion expressed as a change in probability it is the first ex ante invasive species analysis to test over two discrete invasion reduction probabilities based on management effort further to overcome the challenges in valuing changes in probabilities the study presented respondents with a well defined discrete difference in the final probability with one scenario reducing risk from 50 to 25 and the other from 50 to 5 we find a significant difference in the mean wtp values between these two scenarios a 67 vs a 90 the overall conclusion is that estimated benefits of reducing the probability of an atm incursion outweigh the costs

environmental regulations under simple negligence or strict liability we use negligence and strict liability as the basis for environmentalregulations and show that when jurisdictions compete for firms that engagein environmentally risky behaviour strict liability implements the sociallyoptimal outcome while simple negligence does not even if the jurisdictionsfully cooperate in setting standards of care consequently we argue that even if jurisdictions delegate standard setting to a central authority likein the european union this would not implement the socially optimaloutcome we also demonstrate that harmonization of environmental regulationsmakes more sense if strict liability is used rather than simple negligence

environmental federalism and environmental liability abstract environmental federalism considers what level of government should optimally regulate pollution this paper addresses this question for accidental pollution which government regulates through the ex post liability regimes of either negligence or strict liability we find that decentralizing the choice between these regimes does not in general induce the socially optimal outcome when firms can pay all damages all regions may choose negligence and impose an overly strict standard of due care when firms may be bankrupted by damages all regions may choose strict liability which induces too little care in addition asymmetric equilibria are possible in which some regions choose negligence others strict liability combining negligence with a pigovian tax or strict liability with a bonding requirement can align regional authorities incentives with those of a central government

designing economic instruments for the environment in a decentralized fiscal system designing economic instruments for the environment when external effects are important markets will be inefficient and economists have considered several broad classes of economic instruments to correct these inefficiencies however the standard economic analysis has tended to neglect important distinctions and interactions between the geographic scope of pollutants the enforcement authority of various levels of government and the fiscal responsibilities of the levels of government for example externalities generated in a particular local area may be confined to the local area or may spill over to other jurisdictions also local governments may be well informed about how best to regulate or enforce pollution control within their jurisdiction but they may not consider the effects of their actions on other jurisdictions finally the existence of locally generated waste emissions affects the appropriate assignment of both expenditure and tax responsibilities among levels of government the standard analysis therefore focuses mainly upon an aggregate or national perspective it typically ignores the possibility that the externality may be created and addressed by local governments and it does not consider the implications of decentralization for the design of economic instruments targeted at environmental problems this paper examines the implications of decentralization for the design of corrective policies that is how does one design economic instruments in a decentralized fiscal system in which externalities exist at the local level and in which subnational governments have the power to provide local public services as well as to choose tax instruments that can both finance these expenditures and correct the market failures of externalities

environmental policy with endogenous plant locations in a game between the governments of two countries each chooses its own environmental policy the nash equilibria of the game are generally not pareto optimal on the one hand each country may want to attract industry giving it an incentive to choose low environmental taxes or standards on the other hand if disutility from pollution is sufficiently high each country might prefer that a firm locates only in other countries this effect tends to make the environmental policy under non cooperation stricter than it would be with cooperation

comment on m hoel emission taxes versus other environmental policies the choice of the appropriate instrument in environmental policy is not only a question of theoretical importance it is also of considerable political relevance while environmental taxes are sometimes used to control pollution quotas and direct controls dominate in practice if this observed bias is only due to the nature of policymaking and not supported by economic reasoning politicians are not well advised to use quotas and direct controls instead of environmental taxes hoel discusses popular arguments that are often used by politicians in favour of direct controls and concludes that the results are typically not clear cut in this comment i would like to focus on the employment effects of revenue raising and nonrevenue raising instruments politicians as well as special interest groups often claim that emission taxes increase the cost of production thereby harming employment clearly in the face of high rates of unemployment in many industrialized countries potentially negative employment effects of environmental regulation raise political resistance to green policy the ongoing debate has put

the value of nonindigenous species risk assessment in international trade abstract managing the introduction of nonindigenous species is becoming a major goal of policy makers at regional national and international scales here we investigate at the national level the ideal design and expected net benefits of a risk assessment program for evaluating the desirability of nonindigenous species imports we show how to enhance the statistical rigor of such a system by correcting a common non random sampling problem encountered in the data this correction enables model output to be interpreted in an economically relevant way and facilitates a theoretically rigorous characterization of the balance between trade and nonindigenous species establishment risk using reptiles and amphibians imported to the u s as a case study we characterize economic outcomes over a range of cases and demonstrate substantial expected returns to such a screening program relative to the current effectively open door policy our results are informative for the current debate in the u s about whether to require federal agencies to apply risk assessment before allowing a species for import the framework presented decomposes a complex argument about risk management into component economic and statistical parts allowing for debate and improved understanding over each element to inform the overall program in a transparent fashion

think locally act locally spillovers spillbacks and efficient decentralized policymaking we analyze models with interjurisdictional spillovers among heterogeneous jurisdictions such as co 2 emissions that affect the global environment each jurisdiction s emissions depend upon the local stock of capital which is interjurisdictionally mobile and subject to local taxation in important cases decentralized policymaking leads to efficient resource allocation even in the complete absence of corrective interventions by higher level governments or coordination of policy through coasian bargaining in particular even when the preferences and production technologies differ among the agents the decentralized system can result in globally efficient allocation

competition in regional environmental policies when plant locations are endogenous abstract a two region model is presented in which an imperfectly competitive firm produces a good with increasing returns at the plant level production of the good causes local pollution the firm decides whether to maintain plants in both regions serve both regions from a single plant or shut down if the disutility of pollution is high enough the two regions will compete by increasing their environmental taxes standards until the polluting firm is driven from the market alternatively if the disutility from pollution is not as great the regions will usually compete by undercutting each other s pollution tax rates

the econometrics of damage control why specification matters the contribution of damage control agents to production differs fundamentally from that of standard inputs lands labor capital this paper develops an econometric model based on the key characteristics of damage control agents and examines its properties it demonstrates that standard production function specifications overestimate damage control agent productivity and have erroneous implications for the evolution of damage control agent productivity and use in response to changing environments e g the spread of pest resistance it also proposes several alternative specifications and discusses methods for estimating them

how liable should a lender be the case of judgment proof firms and environmental risk comment recently u s environmental law has shown a tendency toward increased lender liability a model of a potentially judgment proof owner of a firm a lender and a potential victim is developed in which this policy can increase accident frequency and reduce efficiency full partial and zero lender liability rules and a minimum equity requirement are analyzed partial lender liability and an equivalent minimum equity requirement deliver the highest level of efficiency although the former can deliver a higher contribution by the lender to the victim than the latter policy and empirical implications are also discussed copyright 1995 by american economic association

growing state federal conflicts in environmental policy the role of market based regulation abstract in recent years cases in which state governments chose to override federal environmental regulation with tighter regulations of their own have become increasingly common even for pollutants that have substantial spillovers across states this paper argues that this change arose at least in part because of a shift in the type of regulation used at the federal level from command and control regulation toward more incentive based regulation under an incentive based federal regulation a state imposing a tighter regulation will bear only part of the additional cost and thus has more incentive to tighten regulation than it does under federal command and control this difference helps to explain observed patterns of regulation in addition it has implications for the choice of regulatory instruments for a pollutant that causes both local and spillover damage a federal pollution tax is likely to yield a more efficient outcome than federal command and control policy or a federal system of tradable permits

bankruptcy and care choice this article considers the care choice of a potentially bankrupt injurer when care is pecuniary and the legal system is characterized by strict liability i show contrary to previous results that such an injurer may take too little or too much care and that neither injurer care nor victim welfare is necessarily increasing in injurer wealth when injurers behave optimally analysis of an expected cost function demonstrates that injurer expected costs are a concave and increasing function of injurer assets a result suggesting applications to the study of vertical relationships and markets for agents

environmental policy in a federation with special interest politics and inter governmental grants the paper explores the potential effect of intergovernmental grants igg on sub national local environmental policy in a federal structure in the model a politically inclined local government receives campaign contributions from the polluters lobby in return for lower pollution taxes a benevolent federal government uses igg as an incentive to reduce the resulting distortion in the local pollution tax igg are formulaic transfers that are conditional on pollution levels lower pollution in a sub national jurisdiction relative to others translates into a higher share of the grant and vice versa in equilibrium the grant effect reduces the distortion created in the pollution tax by the lobby effect and may even lead to a higher than pigouvian tax when the local government assigns a large enough weight on social welfare and or when the grant is large enough further igg result in the tax levels of jurisdictions becoming interdependent in an interesting way environmental policies in two jurisdictions may become strategic complements or substitutes depending on their relative pollution levels the possibility of strategic substitution implies that federal welfare may not increase even when environmental policy becomes stricter in one state

the control of invasive species on private property with neighbor to neighbor spillovers invasive pests cross property boundaries property managers may have private incentives to control invasive species despite not having sufficient incentive to fully internalize the external costs of their role in spreading the invasion each property manager has a right to future use of his own property but his property may abut others properties enabling spread of an invasive species the incentives for a foresighted property manager to control invasive species have received little attention we consider the efforts of a foresighted property manager who has rights to future use of a property and has the ability to engage in repeated discrete control activities we find that higher rates of dispersal associated with proximity to neighboring properties reduce the private incentives for control controlling species at one location provides incentives to control at a neighboring location control at neighboring locations are strategic complements and coupled with spatial heterogeneity lead to a weaker link public good problem in which each property owner is unable to fully appropriate the benefits of his own control activity future use rights and private costs suggest that there is scope for a series of coase like exchanges to internalize much of the costs associated with species invasion pigouvian taxes on invasive species potentially have qualitatively perverse behavioral effects a tax with a strong income effect e g failure of effective revenue recycling can reduce the value of property assets and diminish the incentive to manage insects on one s own property

on environmental federalism and direct emission control abstract a theoretical exception to the race to the bottom contends that if decentralized environmental policy is comprised of direct controls on each firm emissions standards are set too high when compared to a centralized optimum herein we examine potential distortions in decentralized decision making by reconciling two recent views of direct environmental controls we show that differences in direct control policy can arise from differences in the number of symmetric jurisdictions in an economy our results suggest the race is on once the number of jurisdictions competing for a fixed number of firms increase we see the race is off when few jurisdictions can exploit their form of environmental market power

fiscal federalism and interjurisdictional externalities new results and an application to us air pollution abstract the economics of fiscal federalism has identified two book end departures from first best provision of a public good local governments may respond to local conditions but ignore inter jurisdictional spillovers alternatively central governments may internalize spillovers but impose uniform incentives ignoring local heterogeneity we provide a simple model that demonstrates that the choice of pricing policy also depends crucially on a third factor the shape of marginal costs of providing the public good if marginal costs are convex then marginal abatement cost elasticities will be higher around the local policies this increases the deadweight loss of those policies relative to the centralized policy ceteris paribus if they are concave then the opposite is true using a detailed simulation model of the us electricity sector we then empirically explore these tradeoffs for us air pollution we find that us states acting in their own interest lose about 31 5 of the potential first best benefits whereas the second best uniform policy loses only 0 2 of benefits the centralized policy outperforms the state policy for two reasons first inter state spillovers are simply more important that inter state heterogeneity in this application second because of the convexity of the marginal cost functions elasticities are much lower over the range relevant to the centralized policy dampening the distortions

harmonization and optimal environmental policy in a federal system with asymmetric information abstract should environmental policy be set at the federal level to counter incentives for environmental dumping when states act non cooperatively assuming that environmental damage costs are known only by state governments i ask whether this asymmetry of information could rationalize a federal government harmonizing environmental policies across states i show that asymmetric information narrows the difference in environmental policies across states relative to full information but does not justify harmonization the welfare loss from harmonization rises sharply with the variance in damage costs across states and can erode the benefit of setting policy at the federal level to counter environmental dumping

state corroding federalism competition among local governments in a decentralized political system is often thought to discipline lazy or corrupt officials improving public good provision and increasing welfare some scholars note possible distortions due to spillovers or a race to the bottom but suggest that central transfers or regulations can remedy these both arguments take for granted a framework of constitutional order in which the central government can collect taxes allocate transfers and enforce regulations autonomously but what if it can t we show that if central enforcement capacity is endogenous interjurisdictional competition may itself erode the center s ability to channel competition in welfare enhancing directions regional governments may compete for capital by shielding firms from central tax collectors bankruptcy courts or regulators the equilibrium result is weaker central law enforcement and usually lower welfare interjurisdictional competition corrodes the state we illustrate with three examples from russia china and the us of cases in which such competition apparently encouraged subnational politicians to help firms evade central taxes or regulations

eco dumping capital mobility and international trade a small open economy s optimal environmental policy is studied in a model with international capital mobility and local pollution the country produces traded as well as non traded goods is it in the country s interest to engage in ecological dumping by choosing generous pollution allowances for the traded good sector the answer depends decisively on the policy regime in use dumping is not optimal if the country ensures that the implicit rent on pollution is completely appropriated within the country however if the implicit factor reward on pollution leaves the country because it accrues to foreign owners of mobile capital the local welfare maximizing government tends to discriminate against the traded good sector the opposite of ecological dumping

the choice of a liability regime when there is a regulatory gatekeeper consider a firm planning a project that poses a risk of environmental spillovers such a firm might be deterred by the threat of legal liability or restrained by gatekeeper regulation if regulators would be perfect gatekeepers then negligence based liability combined with regulation is more efficient that strict liability with or without regulation however if the regulator has incomplete information then any of a variety of regimes could be the most efficient harsher regimes regulation rather than laissez faire and strict liability rather than negligence are more appropriate for larger risks the choice of a liability regime is more complicated however if regulators are biased if they are biased against projects then negligence plus regulation is less likely to be the most efficient regime if regulators are biased toward projects then it is possible that apparently soft liability regimes are more desirable when risk is high

population mobility and transboundary environmental problems abstract a standard result in the literature on environmental economics is that efficient environmental policies regulating transboundary pollution will be adopted only if there is interjurisdictional coordination efficient policies can be adopted as a result of interregional treaties or mandated by a central authority the present paper demonstrates that if there is perfect population mobility between the regions affected by the transboundary pollution the efficient outcome is a nash equilibrium of the policy game between regional authorities this is true independently of what policies are available to the regional authorities however there may be more than one nash equilibrium so that policy coordination may be necessary in order to achieve the best equilibrium

is environmental dumping greater when plants are footloose concerns have been expressed that in a global market place with mobile capital national governments will have incentives to set weak environmental policies environmental dumping to protect the international competitiveness of their domestic firms and that these incentives are particularly strong in industries where plants may be relatively footloose so that governments are concerned to prevent capital flight in this paper we investigate whether the mobility of firms does indeed increase incentives for environmental dumping we do this by taking a simple model of imperfect competition and comparing the environmental policies that would be set by non cooperative governments for two different move structures where governments set environmental policies after firms decide where to locate the exogenous location case or market share game and where governments set environmental policies before firms decide where to locate the endogenous location case or location game this raises an important modelling issue for it is natural in the market share game that governments would set different environmental policies depending on the number of firms that locate in their countries and if we are to compare just the effect of different move structures then in the location game we should also allow governments to condition their environmental policies on the number of firms that locate in them contrary to previous models of the location game where governments set a single instrument independent of the number of firms that locate in their countries we show that the extent of environmental dumping in the market share game may be greater or less than in the location game depending in particular on the degree of substitution between products of the firms and hence the intensity of market competition we also show that there is more environmental dumping in the location game when governments use a single instrument than when they condition their instruments on the number of firms that locate in their countries

hedonic valuation of the perceived risks of nuclear power plants we use the 2011 fukushima accident to evaluate the impact of the perceived risks of nuclear power plants on apartment rents in switzerland using online advertisements over 12 years and a difference in differences approach we find a 2 3 price discount after the accident for apartments near nuclear power plants

inter regional competition comparative advantage and environmental federalism in this paper we compare endogenous environmental policy setting with centralized and decentralized governments when regions have comparative advantages in different polluting goods we develop a two region two good model with inter regional environmental damages and perfect competition in product markets where both regions produce both goods despite positive spillovers of pollution across regions the model predicts that decentralization may lead to weaker or stricter environmental standards or taxes depending on the degree of regional comparative advantage and the extent of transboundary pollution this suggests that federalism can lead to either a race to the bottom or a race to the top without relying on inefficient lobbying efforts or capital competition resume concurrence inter regionale avantage comparatif et federalisme environnemental dans ce texte les auteurs comparent l appareil de definition de politique environnementale endogene pour des gouvernements centralises et decentralises quand les regions ont des avantages comparatifs dans la production de divers biens polluants on developpe un modele a deux regions et a deux biens operant dans un cadre ou existent 1 des effets de retombees inter regionales toxiques pour l environnement 2 concurrence parfaite dans les marches des produits et 3 ou les deux regions produisent les deux biens malgre les effets de pollution entre regions le modele predit que la decentralisation peut entrainer des standards et des taxes portant sur l environnement qui sont soit plus faibles ou plus forts selon le degre d avantage comparatif regional et la nature de la pollution transfrontiere on suggere que le federalisme peut conduire a une emulation soit vers le bas soit vers le haut sans avoir a avoir recours a des efforts de lobbying inefficaces ou a la concurrence pour le capital pour expliquer le resultat

destructive interjurisdictional competition firm capital and labor mobility in a model of direct emission control abstract a theoretical exception to a regional race to the bottom contends that if decentralized environmental policy is comprised of direct controls on each firm emissions standards are set too high relative to a centralized optimum provided populations are immobile herein we relax population immobility within a purely competitive interjurisdictional model of direct environmental controls by generalizing previous models we show that the race is likely to be on when local land incomes are important and firms respond grudgingly to changes in direct emission controls

efficient decentralized fiscal and environmental policy a dual purpose henry george tax abstract one consequence of decentralized responsibility to set tax policy and environmental standards is that local governments might try to attract industry and jobs by underproviding local public goods with lower taxes or lax environmental standards or both but if local authorities exploit fixed property site i e land taxation to fund local public goods affect firm migration and internalize potential local emission rents herein we find decentralized efficiency is supported this result reflects a dual form of the classic henry george theorem previously overlooked

a model of competing jurisdictions with locally polluting environments and mobile populations in this model we consider a federation consisting oftwo geographically separated regional states withlocal taxing authority the residents of thefederation are identical in preferences and haveexplicit tolerance to pollution pollution is local innature and is a by product of production implying amore highly populated region would generate morepollution local authorities in the regions can andwill in the interest of local residents engage ingame theoretical taxation strategies the model isused to illustrate that nash equilibrium can resultwherein the two regions have different levels ofenvironmental quality the resulting nash conditionsimply for instance that residents of the cleanregion will subsidize those in the other region tostay in the more polluted environment in order foreach to accomplish their preferred consumption andenvironmental quality pair

environmental taxation and the double dividend in decentralized jurisdictions this research explores the implications for jurisdictional welfare of sharing environmental rents between private and public consumption an integrated model is developed from research literatures on jurisdictional competition the double dividend and on the design of tax refund instruments this model shows that jurisdictional welfare increases as environmental rents are initially allocated towards public consumption yielding a double dividend but that this dividend may or may not continue as all rents are shifted to public finance when the double dividend occurs the rent allocation both improves the efficiency of the tax system and reduces the private public consumption distortion that decentralized jurisdictional decision making creates in some parameter configurations there is an optimal rental allocation between the private sector and the local government at this optimum environmental and fiscal policies are set at their first best levels and decentralized jurisdictional decision making is globally efficient if less rents are allocated to public finance than this optimum fiscal and environmental policies will be suboptimal whereas if too much rent is allocated for public consumption fiscal and environmental policies will be set at levels above the global efficiency standard these results illustrate the crucial importance of environmental rent sharing for the efficiency of jurisdictional decision making

a note on environmental federalism interpreting some contradictory results abstract this paper reconciles some conflicting interpretations of recent literature on interjurisdictional environmental regulatory competition 6 7 present a model in which competition to attract investment by lowering environmental standards leads to a pareto optimal equilibrium 3 and 4 describe a model in which such competition can result in a suboptimal nash equilibrium while it would be possible to draw opposite policy implications from the two models regarding the appropriate degree of environmental federalism such a conclusion would be incorrect this paper reconciles the different results by showing that they depend in large part on monopoly profits and tax exporting not the nature of the pollution externality or environmental federalism

choosing between adaptation and prevention with an increasing probability of a pandemic abstract the risk of pandemics is increasing driven by changes in human behavior and climate both of which are difficult for policymakers to control there are two main strategies available for reacting to these changes this paper considers the decision to invest in either adaptation domestic capital or prevention foreign capital before a pandemic in an interval of time when pandemic risk is increasing this paper demonstrates how relatively small investments in the two strategies can provide large savings through smaller expected future damages the technical relationships between adaptation prevention and risk also determine the optimal mixture of investment over time as risk increases the technical relationships between these three stocks causes the optimal mixture of strategies to change over time

designing economic instruments for the environment in a decentralized fiscal system when external effects are important markets will be inefficient and economists have considered several broad classes of economic instruments to correct these inefficiencies however the standard economic analysis has tended to neglect important distinctions and interactions between the geographic scope of pollutants the enforcement authority of various levels of government and the fiscal responsibilities of the levels of government for example externalities generated in a particular local area may be confined to the local area or may spill over to other jurisdictions also local governments may be well informed about how best to regulate or enforce pollution control within their jurisdiction but they may not consider the effects of their actions on other jurisdictions finally the existence of locally generated waste emissions affects the appropriate assignment of both expenditure and tax responsibilities among levels of government the standard analysis therefore focuses mainly upon an aggregate or national perspective it typically ignores the possibility that the externality may be created and addressed by local governments and it does not consider the implications of decentralization for the design of economic instruments targeted at environmental problems this paper examines the implications of decentralization for the design of corrective policies that is how does one design economic instruments in a decentralized fiscal system in which externalities exist at the local level and in which subnational governments have the power to provide local public services as well as to choose tax instruments that can both finance these expenditures and correct the market failures of externalities

strict liability as a deterrent in toxic waste management empirical evidence from accident and spill data abstract this paper examines whether strict liability imposed on polluters has reduced uncontrolled releases of toxics into the environment we fit regressions relating spills of selected chemicals to the type of liability in force in a state and to state manufacturing activity for some chemicals spills are more numerous in states imposing strict liability this could be due to unobserved state characteristics with small firms being responsible for a disproportionate number of spills regardless of the liability structure alternatively separate regressions for the two liability regimes suggest that only under strict liability are small firms responsible for a disproportionate number of spills

the risks of nuclear disaster and its impact on housing prices abstract using a data set on housing sales transactions we explore the potential effect of the fukushima disaster on housing prices in sweden in contrast to most earlier findings in other countries we do not find any disproportionate effect from the fukushima disaster on housing prices in vicinity of nuclear power plants in sweden

direct regulation of a mobile polluting firm abstract we compare noncooperative regional environmental policy to cooperative national policy for direct regulation of a mobile firm the national government can always reach its first best with commitment but not with time consistent policy with commitment regional policy results in a game of chicken with too little output or in not in my backyard without commitment regional policy may improve upon national policy this happens when regional policy discourages the investment whereas the welfare reducing investment does take place with national policy

take a risk preferring prevention over control of biological invaders abstract scientists have argued that invasive species can be managed most cost effectively with greater investments in prevention further under ideas like the precautionary principle it is reasonable to expect that a cautious manager would use more prevention relative to control because it keeps more invaders out yet this is not typically done in many cases private and public resources are invested primarily to control existing invaders rather than to prevent new invasions managers frequently wait until after invaders have arrived and then scramble to limit the damages we believe these paradoxical decisions can be understood by recognizing the link between typical human preferences for risk bearing and the technology of risk reduction we demonstrate quantitatively how managers perceived to be cautious or averse to risk tend to shy away from prevention relative to control this counterintuitive result arises because control is a safer choice than prevention because its productivity is relatively less risky it works to remove existing invaders from the system in contrast the productivity of prevention is more uncertain because prevention only reduces the chance of invasion it does not eliminate it and invasion may not occur even in the absence of prevention managers averse to risk will inherently avoid as much uncertainty as possible whether the source of uncertainty regards ecological outcomes or economic productivity implications for environmental decision making are clear in invasive species management if managers act as though they are risk averse their caution can backfire when it leads to more control rather than prevention the social consequences of this choice are a greater probability of future invasions and lower social welfare our results suggest that social welfare is highest when managers were willing to take a risk with prevention

locational choices of firms and decentralized environmental policy with various instruments abstract suppose there exists a federation with a given number of mobile firms generating waste emissions in the jurisdiction in which they locate this paper demonstrates that if jurisdictions use emission taxes or marketable emission rights to control pollution within their boundaries and distribute the revenues captured by these instruments in a socially efficient way firms locate efficiently taking their pollution externalities into account decentralized environmental policy relying on direct controls however prevents locational efficiency of mobile firms furthermore if jurisdictions are small decentralized environmental policy with emission taxes and marketable pollution rights also support an efficient environmental quality while a policy using direct controls sets too high emission standards

a portfolio balancing approach to natural capital and liabilities managing livestock and wildlife diseases with cross species transmission researchers often refer to stocks of desirable natural resources as natural capital and stocks of undesirable species as natural liabilities the logical extension is that when these natural resources interact then the ecosystem is a collection or portfolio of natural capital and liabilities however natural capital and liabilities held in an ecosystem portfolio are more complex to manage than financial asset portfolios the key problem in a financial asset portfolio is adjusting the rates of return on assets for risk and correlation of risk in contrast the returns on natural assets and liabilities require many other adjustments arising from stock related returns and depreciation that endogenously depend on both stocks and controls including interactions among these variables this means ecosystem portfolio analysis extends beyond the consideration of uncertainty and involves understanding complex economic ecological tradeoffs even in a deterministic setting we use capital theory in the context of a deterministic bioeconomic model of valuable wildlife livestock and a pathogen that can be passed between them to develop a portfolio balancing approach to understanding the tradeoffs associated with ecosystem management this specific ecosystem is highly relevant to conservation health and livestock agriculture within the context of this example we also explore issues of mitigation and adaptation to disease risks and the management implications of cross species transmission a final contribution is to examine how exports and infection risks influence the ecological thresholds that epidemiologists often focus on to guide disease management

liability and large scale long term hazards this paper analyzes the application of liability to large scale long term hazards the key features distinguishing such hazards are the long temporal separation between exposure to a hazard and disease and the large damages when injuries finally emerge the large scale of damages creates a strong incentive to avoid liability payments and the long temporal separation creates numerous avenues through which parties can avoid paying possible damage awards the analysis focuses on the incentive to avoid paying damages by vertically divesting production tasks associated with serious occupational risks such divestiture can lower liability costs if the small firm operating the risky stage goes out of business before latent injuries emerge or has insufficient assets to pay damages and declares bankruptcy when suits are filed the paper then presents an empirical regression analysis of small firm entry into the u s economy between 1967 and 1980 the period in which liability laws were changing the point estima

on the efficiency of environmental instruments in a spatial economy this paper develops an efficiency criterion to evaluate environmental policy instruments in a spatial economy we call an environmental policy regime at the regional level efficient if it guarantees not only an efficient distribution of emission permits within a region but also an efficient locational pattern of mobile firms across the regions of a federation using marketable pollution rights or emission taxes efficiency in this broad sense can only be achieved if revenues of regional environmental agencies are not transferred to regional firms direct controls neither support an efficient allocation of emission rights within a region nor locational efficiency of firms

choice under uncertainty problems solved and unsolved ffifteen years ago the theory of choice under uncertainty could be considered one of the success stories of economic analysis it rested on solid axiomatic foundations it had seen important breakthroughs in the analytics of risk risk aversion and their applications to economic issues and it stood ready to provide the theoretical underpinnings for the newly emerging information revolution in economics 1 today choice under uncertainty is a field in flux the standard theory is being challenged on several grounds from both within and outside economics the nature of these challenges and of our profession s responses to them is the topic of this paper

the provision of local public goods and factors in the presence of firm and household mobility abstract this paper studies the efficiency properties of allocations when firms and households are mobile and when local governments provide local public goods and local public factors the analysis differentiates between immobile land owners and perfectly mobile workers and concludes that an efficient allocation is obtained if there is no outflow of land rents to absentee owners if rents flow out only local public goods are supplied in accordance with the samuelson rule the provision of local public factors is inefficiently low however and jurisdictions tax mobile firms and mobile households inefficiently high in order to restrict the outflow of rents an optimal intervention scheme is derived in this case we also analyze the distortions that result when the non availability of local head taxes makes it impossible to internalize crowding costs

limits to environmental bonds abstract bonds have recently been promoted as an alternative tool to control environmental damages particularly in those instances when the innovative activities of a firm have uncertain future impacts under this mechanism a firm would post a bond ex ante forfeiting all or a portion of the bond if its activities harmed environmental resources while the benefits of bonds have been developed there has been little systematic effort to explore their limitations in contrast the labor literature has extensively studied the limits of bonds as a mechanism to prevent worker shirking using insights from this parallel problem this paper explores the limits to environmental bonds focusing on the problems of moral hazard liquidity constraints and legal restrictions each limit offers a challenge to the success of environmental bonds we explore the use of bonds in surface mining and agricultural nonpoint pollution as motivating examples we also consider how other incentive schemes suggested by the labor literature might prove useful in the context of environmental management we consider the labor mechanisms of efficiency wages increasing wage profiles trust funds and rank order tournaments

on interjurisdictional competition and environmental federalism herein we construct a competitive interjurisdictional model that reconciles two recent exceptions to the race to the bottom j publ econ 35 1988 333 354 j urban econ 37 1995 290 310 our results suggest that since environmental rents from local production are likely not captured 100 percent by local residents devolved command and control environmental regulation is inefficient moreover faced with the reality of fiscal constraints local governments adopt property tax structures that serve to compound inefficiencies within such a second best setting if a jurisdiction underprovides non environmental public goods and jurisdictional capital productivity and emissions are strong complements a race to the bottom equilibrium is supported

u s housing prices and the fukushima nuclear accident abstract did the nuclear catastrophe at fukushima in march 2011 cause individuals to reappraise the risks they attach to nuclear power plants we investigate the change in home prices in the u s after the fukushima event to test the hypothesis that home prices in the proximity of power plants fell due to an updated nuclear risk perception using a difference in differences approach we do not find evidence in support of the hypothesis that individuals reappraised the risks associated with nuclear power plants according to our results home prices close to nuclear reactor sites did not fall relative to home prices at other locations in the u s

transboundary environmental problems with mobile but heterogeneous populations most of the literature on transboundaryenvironmental problems treats population ineach country or region as constant ignoringpopulation mobility we showed previously thatif there is perfect population mobility betweenregions and populations are homogeneous asocially efficient outcome can be supported asa nash equilibrium of the game of uncoordinatedpolicy setting even without any internationalenvironmental agreement in the present paperwe introduce heterogeneous population and showthat when people differ a non cooperativeoutcome is generally inefficient we alsodemonstrate that for a particular set ofobjective functions for the regionalgovernments there is an equilibrium of thegame of uncoordinated policy setting that isefficient finally we give an example wherethe decentralized outcome is efficient whenthere is no population mobility butinefficient when there is population mobility

economic incentives for managing filterable biological pollution risks from trade infectious livestock disease problems are biological pollution problems prior work on biological pollution problems generally examines the efficient allocation of prevention and control efforts but does not identify the specific externalities underpinning the design of efficiency enhancing policy instruments prior analyses also focus on problems where those being damaged do not contribute to externalities we examine a problem where the initial biological introduction harms the importer and then others are harmed by spread from this importer here the externality is the spread of infection beyond the initial importer this externality is influenced by the importer s private risk management choices which provide impure public goods that reduce disease spillovers to others making disease spread a filterable externality we derive efficient policy incentives to internalize filterable disease externalities given uncertainties about introduction and spread we find efficiency requires incentivizing an importer s trade choices along with self protection and abatement efforts in contrast to prior work that targets trade alone perhaps surprisingly we find these incentives increase with importers private risk management incentives and with their ability to directly protect others in cases where importers can spread infection to each other we find filterable externalities may lead to multiple nash equilibria