Climate risks are not fully priced in US housing markets. This mispricing can distort household decision-making and may create perverse incentives for development in high-risk areas. Unpriced climate risk could also cause sudden adjustments in home values when consumers' perceptions of climate risks change, creating market instability. To improve the economic efficiency of housing markets, state and federal policies are needed to correct the market failures underlying this mispricing. However, depending on how they are implemented, certain policy interventions could introduce destabilizing effects and may worsen socioeconomic inequality. To support policy makers navigating these trade-offs, we review how policies that contribute toward more efficient pricing of climate risk can either support or hinder market stability and progressive distributional outcomes. We specifically focus on how three sets of state and federal policy levers-improving climate risk information, removing subsidies for development in high-risk areas, and increasing public investment in disaster risk reduction-can be implemented to reprice climate risk in housing markets following a gradual and transparent pathway, while protecting low-income households from adverse financial impacts.
Despite ongoing national and international policy efforts, carbon emissions from the aviation sector continue to rise. Among the policies implemented, instruments that place a price on emissions-such as carbon markets, airport charges, and ticket taxes-are often considered cost-effective tools because of the flexibility they offer. Drawing on empirical studies that employ causal identification strategies, this article reviews the evidence on the effectiveness of these instruments in curbing aviation emissions. The literature finds that pricing policies reduce emissions primarily by reducing the number of flights, though not necessarily reducing load factors, and by accelerating fleet renewal. Although concerns persist that carbon pricing will shift emissions to activities not subject to these instruments, the evidence suggests that such carbon leakage has been limited so far, aside from potential route shifting via hub changes or delayed aircraft upgrades on routes not facing carbon pricing. Importantly, most of the evidence to date comes from periods of relatively low carbon prices. This review synthesizes the main findings and reflects on their policy relevance for the aviation sector.
Addressing climate change requires policies that are ethically defensible, politically acceptable, and implementable. The concept of a "just transition"-a decarbonization process that avoids leaving workers and communities behind and mitigates burdens on vulnerable and historically marginalized groups-has gained prominence in academic and policy debates. This article bridges these debates with insights from environmental economics. We identify and examine four key dimensions of a just transition-distributional, restorative, procedural, and recognition justice-and use them to map existing economic research. We highlight the contributions and limitations of environmental economics in addressing justice concerns and discuss gaps that future research should address to better inform the design of equitable climate policies.
This article examines possibilities for reducing greenhouse gas emissions from aviation through alternative aviation fuels with lower life cycle emissions. After discussing various technological options for such fuels, the article considers how various policies in the United States and other countries affect their production and usage. The article also outlines a possible policy mechanism for reducing the carbon intensity of aviation fuel and highlights important questions that must be addressed to increase the use of low-carbon fuels.
Global population is projected to continue increasing until 2100. With or without increasing incomes, feeding a growing population will require more land, more machinery, more agricultural inputs, and continued innovation in agricultural technology. The relationship between increased agricultural production and environmental degradation is a central challenge to human well-being. This article compiles available evidence on the relationship between agriculture and the environment, focusing on the tropics, where potential trade-offs between food production and environmental quality are particularly acute because much larger shares of the population depend upon agriculture for work and subsistence. Although our main focus is on land use, we also touch on associated environmental services, such as soil and air quality, and attempt to catalog policies that highlight synergies and trade-offs between agricultural livelihoods and environmental quality.
This article introduces the Gridded Environmental Impacts Frame (Gridded EIF), a novel public-use data set derived from the US Census Bureau's confidential Environmental Impacts Frame (EIF) microdata infrastructure. The EIF combines comprehensive administrative records and survey data on the US population with high-resolution geospatial information on environmental conditions. Although access to the EIF is restricted due to the confidential nature of the underlying data, the Gridded EIF offers a broader research community the opportunity to glean insights from the data and preserve confidentiality. We describe the data and privacy-protection methods and offer guidance on appropriate usage, presenting practical applications.
Research in environmental economics often relies on aggregated place-based data, limiting our understanding of the interplay between economic activity and environmental conditions. To mitigate this, we introduce the Census Environmental Impacts Frame (EIF), a new microdata infrastructure linking individual-level socioeconomic data and residential histories with high-resolution estimates of environmental conditions for nearly all US residents over the past 2 decades. The EIF enables researchers to analyze the distribution of environmental conditions using individual-level rather than place-based data, track exposures over time, and assess their economic consequences in unprecedented detail. This article describes the EIF and summarizes opportunities for researchers.
Experiments are sometimes viewed as being too limited to provide input into policy. Contrary to this perspective, we document diverse ways in which experimental findings have influenced environmental and natural resource policy decisions. We show how experiments have informed or changed the designs of emissions trading programs, conservation auctions, pro-environmental initiatives directed at households, and regulatory enforcement and compliance schemes. Experiments have also produced nonmarket demand estimates that have informed government regulatory analyses. We highlight the context and conditions that produced these experiment-policy links and offer insights into how researchers can better engage with the policy-making process and increase the impact of experimental research on policy.
Increasingly, governments around the world have been interested in evaluating the environmental justice (EJ) implications of new regulations and policies. However, there have been few systematic reviews that gauge the extent and quality of these analytical efforts. We inventory and evaluate EJ analyses for all economically significant final rules issued by the US EPA between 2012 and 2024. We find that three-quarters of these rules include an EJ analysis, two-thirds of which are at least partially quantitative. The proportion of rules that include an EJ analysis increased from about 60 percent in 2012 to more than 90 percent in 2021-2024. Although many of the quantitative EJ analyses only examined baseline issues, some recent assessments used more nuanced methods to assess differences in vulnerability, cumulative impacts, and climate risk. Three EJ analyses also considered the incidence of costs (i.e., who bears the burden of costs). While recognizing differences in budget, data, and modeling constraints across regulatory contexts, we emphasize the need to consider EJ at the early stages of the analytical process. We also discuss important gaps in data and methods that are key to examining the underlying heterogeneity in pollutant concentrations and health risks, EJ impacts of regulatory options, regulatory costs, and net benefits across demographic groups. Although these conclusions derive from past US experience, they are likely applicable in other country contexts as well.
In this paper, we review recent advances in the field of economic incentives for biodiversity conservation, focusing on incentives offered to private landowners to change how they manage land. Due to market failures, profit-maximizing land-use decisions are rarely consistent with optimal provision of biodiversity. As a result, it has been argued that additional financial incentives are needed to slow global biodiversity decline and aid biodiversity recovery. The paper organizes recent literature along four thematic lines: paying for results rather than actions, incentives for spatial coordination, collective participation schemes, and biodiversity offset markets.
Human threats to biodiversity are the impetus for establishing protected areas (PAs) to conserve biodiversity. Current international goals aim to cover 30 percent of terrestrial and marine areas with PAs by 2030. Yet, despite the importance of human behavior in driving threats to biodiversity, relatively little economic analysis informs the design of PA networks. We describe the PA network design decision as a constrained optimization problem, which can include human responses to PAs that threaten biodiversity both within PAs and across broader seascapes and landscapes. This approach differs from most of the conservation planning literature by putting human actions at the center of PA network design decisions. We argue that PA network efficiency can be improved through design frameworks that incorporate predictions of how human behavior will respond to PAs. The variety of threats to biodiversity posed by people's actions in marine and terrestrial settings, and across country income levels, suggests the need to include the range of human responses to a fuller set of PA network design choices, beyond decisions about the siting of PAs. We discuss possible steps to link the PA network design models discussed here to empirical analysis and implementation.
Climate change is a key threat to biodiversity and may become the largest threat by 2070. Climate change will alter ecological impacts and costs of conservation sites and measures, and introduce additional uncertainties to be considered in decision-making. As a consequence, we need to rethink the design of policy instruments, with four key challenges ahead: (1) Cost-effectiveness analysis needs to consider the heterogeneous impacts of climate change on biodiversity and on conservation costs. (2) Designing conservation strategies under climate change requires a consideration of economic approaches in dealing with climate change-induced uncertainties. (3) Changes in cost-effectiveness and increasing uncertainties imply that policy instruments for biodiversity conservation should allow for spatial flexibility (to adapt the location of conservation sites) and management flexibility (to adapt conservation measures on those sites). (4) Climate change poses new questions regarding citizens' preferences, including the difference in the value people attach to species migrating to a region due to climate change, relative to native species, and the increasing importance of considering risk and time preferences as climate change increases risks and causes changes in the ecological system over time. In this article, we summarize the existing research and derive recommendations for policies to conserve biodiversity in a changing climate.
Despite the well-documented dangers of lead exposure, millions of homes still rely on lead service lines (LSLs), contributing to elevated lead levels in drinking water. This article discusses the Lead and Copper Rule Improvements (LCRI), which aim to accelerate the removal of LSLs and to strengthen public health protections. The article highlights the LCRI's key provisions, including mandatory LSL replacement throughout the country within 10 years, stricter lead action levels, improved tap sampling methods, required testing in schools, and expanded public communication and transparency. Although the LCRI represents significant progress, challenges related to funding, legal barriers, and equitable implementation remain. Addressing these obstacles is crucial for achieving the goal of eliminating lead exposure through drinking water and protecting vulnerable populations, especially children.
Rigorous evidence detailing the myriad interconnections between humans and ecosystems will be critical to slow the loss of biodiversity. Effective conservation interventions will depend upon a detailed understanding of the benefits that biodiversity provides to people, the ways that human activities drive biodiversity decline, and the potential for conservation policies to stem this decline. Although hundreds of papers explore these relationships, a careful review of this literature shows that the overwhelming majority of studies fall short of documenting causal relationships with biodiversity per se. However, a combination of data and methodological advances has led to rapid growth of quasi-experimental analyses that are advancing our understanding of human interactions with biodiversity in three domains. First, economists have provided valuable insights into the causes of biodiversity loss, which complement traditional ecological experiments by better reflecting real-world conditions. Second, quasi-experimental studies have begun to identify which policy interventions, in what contexts, have slowed biodiversity loss. Finally, recent quasi-experimental studies have shown that the loss of species can impose extremely large costs on humanity but that these costs vary widely depending upon the species and opportunities for human adaptation.
This paper examines the role of environmental identity in environmental policy and economics, the extent to which environmental policies affect environmental identity, and the welfare implications. We begin by reviewing the identity economics literature and environmental identity literature, and then present a novel conceptual framework of identity and pro-environmental behavior. We discuss how policy interacts with environmental identity, particularly through shifting and priming. We conclude with suggestions for future policy-making, as well as the role of economics in environmental identity research.
We survey various ethical issues related to the use of pollution pricing. Although pollution pricing-for example, in the form of Pigouvian taxes or cap-and-trade systems-is widely used in environmental economics modeling, many moral and ethical assumptions underlie those models, and many ethical objections to pollution pricing are disregarded. We hope this review will be helpful to environmental economists who are regularly engaged in the use of such models, and in economic reasoning more generally, but who are less familiar with their ethical underpinnings and possible implications.
Benefit-cost analysis plays a key role in regulatory activity in most countries around the world. In the United States, the Office of Management and Budget's Circular A-4 provides crucial guidance to US federal agencies on how to undertake a regulatory analysis, and Circular A-94 provides similar guidance on federal spending. These key documents have profound impacts on agency decisions on environmental rulemaking and spending on environment-related programs. In November 2023, these crucial documents were very substantially revised, bringing to the forefront important conceptual questions about the discount rate, how distributional effects are incorporated, the valuation of mortality risk, and how ecosystem and environmental services are included in benefit-cost analysis. While the revisions have subsequently been rescinded, this symposium contributes to longstanding debates by delving deeply into the economic issues inherent in the guidance, presenting reflections on the intellectual foundations of several of the most important topics.
Nature-based solutions (NbS) are actions to protect, sustainably manage, or restore natural ecosystems in ways that enhance their ability to reduce or remove carbon emissions. They are important to achieving net-zero climate goals, especially by reducing emissions from land-use change. NbS credits feature prominently in carbon-offset markets. Economics has an important role in assessing the unique benefits, costs, and distributional impacts of NbS; addressing the concerns raised over additionality, leakage, and permanence for the effectiveness of scaling up NbS; and evaluating the integrity of NbS offset credits. In addition, the long-term potential of NbS for climate mitigation will depend on their cost-effectiveness compared with conventional energy and technology-based solutions. More analysis is needed of how NbS could be supported by economy-wide policies and financing sources other than carbon markets.
