Essays on Environmental Regulation

Abstract

I focus on three challenges that often confront regulators in designing environmental regulations around the world: equity-efficiency tradeoffs, incomplete information, and significant ecologic and economic uncertainty across time and space. First, I analyze the efficiency and distributional consequences of trade restrictions in environmental permit markets, I study common trade restrictions—segmentation and production requirements—in Iceland’s fisheries permit market, showing how they increase employment and compress the income distribution at an efficiency cost. Second, in the U.S. Conservation Reserve Program, Anna Russo and I find that auction mechanisms designed to incentivize land conservation suffer from widespread non-additionality due to adverse selection in land use. A redesigned scoring system that accounts for counterfactual land outcomes improves welfare. Third, using a stylized model calibrated to the Atlantic scallop fishery, Aaron Berman and I evaluate the use of output, input, and quantity-based regulations over time when a resource exhibits ecological and economic uncertainty across large areas of space. We show that, for a given ultimate sustainability goal, output taxes maximize value but exacerbate inequality and ecological risk, while input limits can strike a balance between flexibility, equity, and robustness. JEL Classification: L51, Q22, Q28