Abstract: Biomass energy is expected to play a major role in the substitution of renewable energy sources for fossil fuels over the next several decades. The US Energy Information Administration (EIA 2012) forecasts increases in the share of biomass in US energy production from 8 percent in 2009 to 15 percent by 2035. The general view has been that carbon emitted into the atmosphere from biological materials is carbon neutral—part of a closed loop whereby plant regrowth simply recaptures the carbon emissions associated with the energy produced. Recently this view has been challenged, and the US Environmental Protection Agency (EPA) is considering regulations to be applied to biomass energy carbon emissions. A basic approach for analyses of environmental impacts has been the use of life cycle assessment (LCA), a methodology for assessing and measuring the environmental impact of a product over its lifetime—from raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling. However, LCA approaches vary, and the results of alternative methodologies often differ (Helin et al. 2012). This study investigates and compares the implications of these alternative approaches for emissions from wood biomass energy, the carbon footprint, and also highlights the differences in LCA environmental impacts.

Abstract: The U.S. Environmental Protection Agency (EPA) continues to move ahead with regulation of greenhouse gas emissions under the Clean Air Act (CAA). Previous work has indicated that basic forms of compliance flexibility—trading—appear to be legally permissible under the relevant part (Section 111) of the CAA. This paper takes a close look at more expansive and ambitious types of flexibility: trading between different kinds of sources, biomass co-firing, and, above all, offsets. It concludes that most types of such extended flexibility are either legally incompatible with the CAA, or so legally problematic that EPA is unlikely to adopt them. This has important implications for both the costs of CAA climate policy and the level of environmental benefits that are achievable. It also creates tension between CAA climate policy and state-level policies, such as California’s, that aim to include various forms of extended flexibility.

Abstract: Concerns about nutrient pollution in the Chesapeake Bay have led to the establishment of pollution limits—total maximum daily loads (TMDLs)—which, by 2025, are expected to reduce nitrogen loadings to the Bay by 25 percent and phosphorous loadings by 24 percent from current levels. This paper outlines how the benefits associated with achieving the Chesapeake Bay TMDLs could be measured and monetized. We summarize studies that measure the benefits of improved water quality in the Bay and evaluate whether these studies could be used to value the water quality benefits associated with the TMDLs.In cases where studies conducted in the Bay watershed either do not exist or are out of date, we discuss whether results from studies conducted elsewhere could be transferred to the Chesapeake Bay. We also discuss original studies that would be useful to conduct in the future.

Abstract: Economic analysis to aid in the implementation of public policy made major strides in the 1960s when organizations such as the Rand Corporation and Resources for the Future began systematically applying benefit–cost analysis (BCA) to regulatory choices. A further burst of enthusiasm for economic analysis swept the policy world in the 1970s and 1980s. This surge gained momentum from the nearly revolutionary impact of economist Alfred Kahn and his merry band of academic warriors who disrupted long-standing political equilibria, brandishing economic analysis as their primary offensive weapon. The movement garnered support from the White House in both the Carter and Reagan administrations. During the latter an Executive Order issued in 1981 mandated that executive branch regulatory agencies formally include benefit–cost analysis in their evaluation of rules. The BCA approach was likewise endorsed by the George H.W. Bush, Clinton, George W. Bush, and Obama administrations to follow.

Abstract: Despite the recent popularity of conditional cash transfers (CCT) and payments for environmental services (PES) programs, what determines their success is not well understood. We developed a conceptual framework to give insight into some of the main determinants of CCT and PES program efficiency that hope to increase investments in human and environmental capital. We used a simple agent-based model and validated the results with empirical data from existing programs. We show that 1) the share of participants who meet the program’s conditions at baseline is a powerful predictor of program efficiency, (2) and selection bias erodes program efficiency to a large extent. (Selection bias stems from agents who already meet program criteria and who self-select into programs at higher rates than those who do not meet the conditions.) Based on these results, we discuss possibilities for improving efficiency—mainly by targeting applicants or increasing payments—and criteria for evaluating and choosing CCT, PES, or other policy instruments.

Abstract: This paper describes specific ways in which the analysis of ecosystem goods and services can be included in terrestrial carbon sequestration assessments and planning. It specifically reviews the U.S. Geological Survey’s LandCarbon assessment methodology for ecosystem services. The report assumes that the biophysical analysis of co-effects should be designed to facilitate social evaluation. Accordingly, emphasis is placed on natural science strategies and outputs that complement subsequent economic and distributional analysis.

Abstract: Fiscal instruments are potentially among the most effective, and cost-effective, options for addressing externalities related to poor air quality, urban road congestion, and greenhouse gases. This paper takes a case study, focused on Mauritius (a pioneer in the use of green taxes) to illustrate how existing taxes, especially on fuels and vehicles, could be reformed to better address these externalities. We discuss, in particular, an explicit carbon tax; a variety of options for reforming vehicle taxes to meet environmental, equity, and revenue objectives; and a progressive transition to usage-based vehicle taxes to address congestion.

Abstract: Choice experiments, a stated preference valuation method, are proposed as a tool to assign monetary values to environmental externalities during the ex-ante stages of environmental impactassessment. This case study looks at the impacts of the Costa Rican Institute of Electricity’s Toro 3 hydroelectric project and its affects on the Recreo Verde tourism center in San Carlos, Costa Rica.Compared to other valuation methods (e.g., travel cost and contingent valuation), choice experiments can create hypothetical but realistic scenarios for consumers and generate restoration alternatives for the affected good. Although they have limitations that must be taken into account in environmental impact assessments, incorporating economic parameters—especially resource constraints and tradeoffs—can substantially enrich the assessment process.

Abstract: The study describes existing federal policies that permit or promote ecosystem services analysis, management, investments, and markets. Our survey discusses: 1) current programs that stimulate or support the measurement of ecosystem services; 2) existing federal drivers of ecosystem services analysis; and 3) programs that stimulate investment in ecosystem services. Understanding existing capacity is important to federal and other leaders who see opportunities for environmental policy innovations—such as payments, markets, and management practices—based on ecological wealth and services.

Abstract: The value of mortality risk reduction is an important component of the benefits of environmental policies. In recent years, the number, scope, and quality of valuation studies have increased dramatically. Revealed preference studies of wage compensation for occupational risks, on which analysts have primarily relied, have benefited from improved data and statistical methods. Stated preference research has improved methodologically and expanded dramatically. Studies are now available for several health conditions associated with environmental causes, and researchers have explored many issues concerning the validity of the estimates. With the growing numbers of both types of studies, several meta-analyses have become available that provide insight into the results of both methods. Challenges remain, including better understanding of the persistently smaller estimates from stated preference than from wage differential studies and of how valuation depends on the individual’s age, health status, and characteristics of the illnesses most frequently associated with environmental causes.

Abstract: Twenty years ago, Harvard Business School economist and strategy professor Michael Porter stood conventional wisdom about the impact of environmental regulation on business on its head by declaring that well-designed regulation could actually enhance competitiveness. The traditional view of environmental regulation held by virtually all economists until that time was that requiring firms to reduce an externality like pollution necessarily restricted their options and thus by definition reduced their profits. After all, if profitable opportunities existed to reduce pollution, profit-maximizing firms wouldalready be taking advantage of those opportunities. Over the past 20 years, much has been written about what has since become known simply as the Porter Hypothesis (PH). Yet even today, we find conflicting evidence and alternative theories that might explain the PH, and oftentimes a misunderstanding of what the PH does and does not say. This paper provides an overview of the key theoretical and empirical insights into the PH to date, draws policy implications from these insights, and sketches out major research themes going forward.

Abstract: Economic analyses of nature must somehow define the “environmental commodities” to which values are attached. This paper articulates a set of principles to guide the choice and interpretation of nonmarket commodities. We describe how complex natural systems can be decomposed consistent with what can be called “ecological production theory.” Ecological production theory—like conventional production theory—distinguishes between biophysical inputs, process, and outputs. We argue that a systems approach to the decomposition and presentation of natural commodities can inform and possibly improve the validity of nonmarket environmental valuation studies. We raise concerns about the interpretation, usefulness, and accuracy of benefit estimates derived without reference to ecological production theory.

Abstract: Credits for sequestered carbon augment forests’ already considerable value as natural habitat and as producers of timber and biomass, making their accurate inventory more critical than ever before. Thisarticle examines discrepancies in inventories of forest attributes and their sources in four variables: area, timber volume per area, biomass per timber volume, and carbon concentration. Documented discrepancies range up to a multibillion-ton difference in the global stock of carbon in trees. Because the variables are multiplied together to estimate an attribute like carbon stock, more precise measurement of the most certain variable improves accuracy little, and a 10 percent error in biomass per timber levers a discrepancy as much as a mistake in millions of hectares. More precise measurements of, say, accessible stands cannot remedy inaccuracies from biased sampling of regional forests. The discrepancies and uncertainties documented here underscore the obligation to improve monitoring of global forests.

Abstract: This paper investigates the potential for systematic errors in the Energy Information Administration’s (EIA) widely used Annual Energy Outlook, focusing on the near- to midterm projections of energy demand as measured in physical quantities. Overall, based on an analysis of the EIA’s 22-year projection record, we find a fairly modest but persistent tendency to underestimate total energy demand by an average of 2 percent per year over the one- to five-year projection horizon after controlling for projection errors in gross domestic product, oil prices, and heating/cooling degree days.For the 14 individual fuels/consuming sectors routinely reported by the EIA, we observe a great deal of directional consistency in the error patterns over time, ranging up to 7 percent per year. Electric utility renewables, electric utility natural gas, transportation distillate, and residential electricity all show significant biases, on average, across the full five year projection horizon examined. Projections for certain other fuels/consuming sectors have significant unexplained errors for selected time horizons.Independent evaluation of this type can be useful for validating ongoing analytic efforts and for prioritizing future model revisions.

Abstract: In this study, I analyze the role of environmental policies and energy cost savings in the switch to natural gas by stationary sources in Chile. According to the data, most of the switching was induced by the lower cost of natural gas, although environmental policies played a small role and showed that sources were more sensitive to the cost of energy than to environmental regulation.

Abstract: Following Executive Order 12898 in 1994, federal agencies have taken a variety of steps to incorporate environmental justice (EJ) into their programs and practices. Two scales at which these efforts are critical are regulatory design and enforcement. This study evaluates Regulatory Impact Analyses (RIAs) and Environmental Impact Statements (EISs) across three federal agencies (theDepartment of Energy, the Department of Transportation, and the Environmental Protection Agency) to compare the extent to which EJ is addressed at these two scales, across agencies, and over time. Bysearching agency documents for key EJ variables, such as site, population, and impact characteristics, we develop a framework to determine if RIAs and EISs include sufficient information to identifydisproportionate impacts of proposed regulations or projects on minority and low-income communities. Results of this analysis reveal that EJ issues are noted more frequently in all three agencies’ EISs over time, but few RIAs or EISs contain enough data to assess whether EJ impacts are significant.

Abstract: In this paper, I address a difficult, important, and long-standing problem in national income accounting: How to capture the welfare contributions of nonmarket, public environmental goods? The strategy I advocate here is to use principles from economic accounting, welfare economics, and environmental valuation to define the nonmarket units that should be used in a quantity index of ecological goods and services. A goal is to mimic the household-level foundations of conventional national income or product accounts, but extend them to the nonmarket natural economy. I describe the underlying theory and show how it can be used to define a practical, empirical strategy for constructing a welfare-significant ecological quantity index.