Abstract: Hypothetical referenda have been proposed as an incentive-compatible mechanism that can be used to obtain social valuations of environmental resources. The authors employ experimental methods to test the hypothesis that such referenda are indeed incentive compatible. Their results lead them to reject that hypothesis. Coauthors are Steven Elliott, Glenn W. Harrison, and James Murphy.

Abstract: A model of global warming with endogenous substitution of energy resources and multiple energy demands is developed. It suggests that, if historical rates of cost reduction in the production of solar energy are maintained, most of the world's coal will never be used. The world will move from oil and natural gas use to solar energy. Temperatures will rise by only about 1.5-2.0 degrees centigrade by the middle of the twenty-first century and then decline to preindustrial levels. These results are significantly lower than those predicted by the Intergovernmental Panel on Climate Change and suggest that the case for global warming may be seriously overstated.

Abstract: In a 1991 essay in Scientific American, Michael Porter suggested that environmental regulation may have a positive effect on the performance of domestic firms relative to their foreign competitors by stimulating domestic innovation. The authors examine the stylized facts regarding environmental expenditures and innovation in a panel of manufacturing industries. They find that lagged environmental compliance expenditures have a significant positive effect on R&D expenditures when they control for unobserved industry-specific effects. The authors find little evidence, however, that industries' inventive output (as measured by successful patent applications) is related to compliance costs.

Abstract: Allegations of bidder collusion at Forest Service timber sales in the Pacific Northwest were common in the 1970s. Of course, prices may be low for reasons other than collusion. The authors formulate an empirical model that allows for both bidder collusion and supply effects and in which they control for demand conditions. Noncooperative behavior in which a single unit is sold (the standard auction model) is a special case: it is found to be definitively outperformed by a model of collusion. The authors also find that supply effects are dominated by collusion in determining the winning bids in the market.

Abstract: With asymmetric information about local costs relative to international benefits of direct environmental policy, countries will rely too heavily on trade policy in controlling cross-border externalities in negotiated agreements. The unilateral externality policy chosen before negotiations by an exporter provides a signal about its local cost, modifying the information used in negotiations. The greater the exporter's incentive to use an externality tax as a second-best trade instrument, the better the signal. Consequently, exogenous limits on the unilateral use of trade policy in the absence of environmental cooperation can diminish the informational problem and improve the performance of prospective environmental agreements.

Abstract: This paper examines the effects of ground-level ozone regulation on economic activity. Regulatory effort varies by county attainment status and state attitudes. A switch from attainment to nonattainment status induces greater local regulatory effort, leading to air quality improvement, ceteris paribus, and an exit of polluting industries. Polluting industries spread out, moving from nonattainment (polluted) to attainment (initially less polluted) areas. Localities can improve hourly extreme-value readings, which trigger regulatory activity, without improving measures of typical conditions(for example, daily medians) by spreading economic activity over the day to dampen daily ozone peaks.

Abstract: The problem of extracting commonly owned renewable resources is examined within an evolutionary-game-theoretic framework. It is shown that cooperative behavior guided by norms of restraint and punishment may be stable in a well-defined sense against invasion by narrowly self-interested behavior. The resource-stock dynamics are integrated with the evolutionary-game dynamics. Effects of changes in prices, technology, and social cohesion on extraction behavior and the long-run stock are analyzed. When threshold values of the parameters are crossed, social norms can break down leading generally to the lowering of the long-run stock and possibly to its extinction.

Abstract: Local authorities and industries seeking to reduce emissions and improve air quality have shown interest in programs that offer to purchase and retire old, high-polluting vehicles. We analyze the results from an experimental vehicle retirement program in Delaware, during which selected pre-1980 vehicle owners were offered &0 for their vehicles and surveyed about vehicle characteristics, value and use. With this unique data set we estimate the relationship between the owner's reservation price and the expected remaining life of the vehicle to derive a supply curve for emissions reductions, which predicts the emissions reductions as a function of the offer made to eligible vehicles in a scrappage program.

Abstract: This paper estimates the costs of a government mandate to use natural gas vehicles, focusing on the less desirable attributes that these vehicles 9 possess. A model of producer and consumer behavior in a market for a differentiated product is constructed; a hedonic price function is estimated; and consumer surplus losses from the substitution of natural gas cars for gasoline cars are calculated. These losses are found to be significant: the average per car consumer surplus loss ranges from $1100 to $3200, with 20% to nearly 50% of the loss due to changes in vehicle characteristics. The costs of such a policy appear to be greater than the environmental benefits but may not be too far out of line with the costs of alternative approaches for reducing vehicular pollution.

Abstract: 'Biodiversity prospecting' has been touted as a mechanism for both discovering new pharmaceutical products and saving endangered ecosystems. It is unclear what values may arise from such activities, however. Evidence from transactions is incomplete and existing theoretical models are flawed. The authors calculate an upper bound on the value of the 'marginal species.' Even under favorable assumptions this bound is modest. Slightly modified assumptions lead to drastically lower estimates. The authors extend their findings to the value of the marginal hectare of habitat and find that the incentives for habitat conservation generated by private pharmaceutical research are also, at best, very modest.

Abstract: Most analyses treat global warning as a single-agent problem. The present study presents the Regional Integrated model of Climate and the Economy (RICE) model. By disaggregating into countries, the model analyzes different national strategies in climate-change policy: pure market solutions, efficient cooperative outcomes, and noncooperative equilibria. This study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies; that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries; and that high-income countries may be the major losers from cooperation.

Abstract: When formal regulation is weak or absent, communities often use other channels to induce pollution abatement by local factories in a process of 'informal regulation.' The resulting 'pollution equilibrium' reflects the relative bargaining power of the community and the plant. This note uses Indonesian data from 1989-90 on plant-level organic water pollution to test the informal regulation hypothesis.

Abstract: To explore the link between a tighter environmental policy and economic growth, the authors employ an endogenous growth model with endogenous technological progress in abatement technologies. The environment, which is modelled as a renewable resource, acts both as a public consumption good and as a public input into production. The entire transition towards a new balanced-growth path after a tightening of environmental policy is computed analytically. The authors find sharp contrasts between short-run and long-run effects. Whereas the level and the growth rate of output may decline in the short run, income growth may improve in the long run.

Abstract: Two-country single-good real business cycle models predict that the cross-country correlation of output is smaller than the cross-country correlations of consumption and productivity, in contrast to the evidence in historical samples. The objective of this paper is to reproduce the observed empirical evidence in a two-country real business cycle model with endogenous growth. Central features of the model include a nonmarket sector and international externalities in production. The model generates realistic cross-country correlations for output, consumption, and productivity with standard parameter values.

Abstract: This paper examines, first, the conditions under which sustained economic growth and the preservation of environmental quality are compatible and optimal, and, second, in what way economic growth is affected by environmental policy. A general equilibrium one-sector model is developed in which the environment is essential for production and welfare. The growth rate is endogenously determined. Pollution occurs as an inevitable by-product of economic activity but can be reduced by spending a fraction of total output on abatement activities. Feasibility of long-term growth requires a critical level of substitution in production and productivity in abatement technology. Low-development traps may arise due to environmental constraints. Whether the optimal growth path implies sustainability depends on the rate of discount, and the rates of intratemporal and intertemporal substitution. Because producers fail to take into account the positive effect of private abatement activities on aggregate environmental quality and productivity, growth in the market economy may be either too low or too high. In the former case, environmental taxation boosts growth.

Abstract: This paper reports the results of a statistical summary of estimates of the marginal willingness to pay for reducing particulate matter from hedonic property value models developed between 1967 and 1988. Results from ordinary least squares and minimum absolute deviation estimators consider the effects of market conditions and the implementation procedures for hedonic models. The interquartile range for these estimated marginal values (measured as a change in asset prices) lies between zero and $98.52 (in 1982-84 dollars) for a one-unit reduction in total suspended particulates (in micrograms per cubic meter).

Abstract: Over the past decade, the world community has focused on the deleterious effects of hazardous waste on humans, wildlife, and the environment. The U.S. Congress established a 'Superfund' aimed at cleaning up these wastes. This legislation and the impending regulations have given little explicit recognition to either the opportunity cost of using resources to clean up waste or the possibility of intertemporal trade-offs. The authors formulate a dynamic model of waste cleanup that examines the environmental damage and resource cost of cleaning up hazardous wastes in order to determine the pace and extent of optimal cleanup.

Abstract: The authors examine the reduced-form relationship between per capita income and various environmental indicators. Their study covers four types of indicators: urban air pollution, the state of the oxygen regime in river basins, fecal contamination of river basins, and contamination of river basins by heavy metals. The authors find no evidence that environmental quality deteriorates steadily with economic growth. Rather, for most indicators, economic growth brings an initial phase of deterioration followed by a subsequent phase of improvement. The turning points for the different pollutants vary but in most cases they come before a country reaches a per capita income of $8,000.

Abstract: 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.

Abstract: The Clean Air Act requires the EPA to conduct annual auctions of emission allowances. Under the discriminative auction rules, sellers with the lowest asking prices receive the highest bids. This paper studies an inverted version of this auction in which buyers face the same incentives as sellers in the EPA auction. Consistent with theoretical predictions, buyers bid above their valuation, auction outcomes are inefficient, and increasing the number of buyers increases bids. Buyers facing human opponents compete more aggressively than the risk-neutral prediction but bids do not differ systematically from this prediction when buyers face computerized Nash 'robots.'

Abstract: This paper examines how national income and trading opportunities interact to determine the level and incidence of world pollution. The authors find that free trade raises world pollution if incomes differ substantially across countries; if trade equalizes factor prices, human-capital-abundant countries lose from trade, while human-capital-scarce countries gain; international trade in pollution permits can lower world pollution even when governments' supply of permits is unrestricted; international income transfers may not affect world pollution or welfare; and attempts to manipulate the terms of trade with pollution policy leave world pollution unaffected.

Abstract: The tree-farm model of T. Mitra and H. Wan (1985) contains novelties: a continuum of optimal cycles appear for small discounting and the cyclicality survives perturbations. To isolate the source of novelties, the author studies the simplest case: trees live naturally for two periods. This model specializes the general theory of multisector development under four conditions. It becomes a Ramsey type model, augmented by a cross-vintage constraint: the present acreage under trees, age n, must not be less than the acreage under trees age n + 1, one period hence. Novelties emerge when this constraint bounds the graph of the state-to-control correspondence.

Abstract: This paper tests the conjecture that the divergence of willingness to pay and willingness to accept for identical goods is driven by the degree of substitution between goods. In contrast to well-known results for market goods with close substitutes (i.e., candy bars and coffee mugs), the authors' results indicate a convergence of willingness-to-pay and willingness-to-accept measures of value. However, for a nonmarket good with imperfect substitutes (i.e., reduced health risk), the divergence of willingness-to-pay and willingness-to-accept value measures is persistent, even with repeated market participation and full information on the nature of the good. Coauthors are Seung Y. Shin, Dermot J. Hayes, and James B. Kliebenstein.

Abstract: The authors analyze a common property resource model with a single incumbent firm that faces future potential entry of a rival. The cost of harvest from the resource is a function of the stock size. By drawing down current stock sufficiently, which lowers future stock, the incumbent can make entry unprofitable. The authors analyze the conditions under which the incumbent firm would deter entry and when entry would be allowed. Further, they analyze the effect that potential entry has on the harvest rate both before and after the date of potential entry and whether or not potential entry is welfare improving.

Abstract: Contingent valuation surveys have become an important tool in placing monetary values on non-market goods and amenities. Many policy issues involve evaluation of several alternatives such as different environmental quality levels, different levels of risk, etc. Contingent valuation then involves asking the respondent a sequence of nested questions. Asking and analyzing a nested sequence of questions is an efficient approach to data gathering and preference revelation. The resultant sequentially censored data set cannot be efficiently analyzed with the standard regression models like the Tobit or nested logit models. The nested Tobit model is proposed as an efficient and consistent method of estimating regressions using sequentially censored data. An empirical application suggests greater efficiency in comparison to the Heckman two-stage procedure.

Abstract: In this article, a seemingly unrelated Poisson regression model is presented as an alternative to using Zellner's seemingly unrelated regression model for estimating a system of recreation demand functions. The seemingly unrelated Poisson regression model provides estimates that are asymptotically more efficient than equation-by-equation Poisson estimates and circumvents the bias and inconsistency problems that result when using A. Zellner's seemingly unrelated regression model. Additionally, the seemingly unrelated Poisson regression model is applied to an empirical problem dealing with the value of recreational boating and the findings indicate that the seemingly unrelated regression model consumer surplus estimates are substantially different from those of the seemingly unrelated Poisson regression model.

Abstract: A simple static model of North-South trade is developed to examine linkages between national income, pollution, and international trade. Two countries produce a continuum of goods, each differing in pollution intensity. The authors show that the higher income country chooses stronger environmental protection and specializes in relatively clean goods. By isolating the scale, composition, and technique effects of international trade on pollution, they show that free trade increases world pollution; an increase in the rich North's production possibilities increases pollution, while similar growth in the poor South lowers pollution; and unilateral transfers from North to South reduce worldwide pollution.

Abstract: Self-reporting--the reporting by parties of their own behavior to an enforcement authority--is a commonly observed aspect of law enforcement, such as in the context of environmental and safety regulation. The authors add self-reporting to the model of the control of harmful externalities through probabilistic law enforcement and they characterize the optimal scheme. Self-reporting offers two advantages over schemes without self-reporting: enforcement resources are saved because individuals who report their harmful acts need not be detected and risk is reduced because individuals who report their behavior bear certain rather than uncertain sanctions.

Abstract: Differences in property rights create a motive for trade among otherwise identical regions. Two regions with identical technologies, endowments, and preferences will trade if one, the South, has ill-defined property rights on environmental resources. Trade with a region with well-defined property rights transmits and enlarges the problem of the commons: the North overconsumes underpriced resource-intensive products imported from the South. This occurs even though trade equalizes all prices, of goods and factors, worldwide. Taxing the use of resources in the South is unreliable as it can lead to more overextraction. Property-rights policies may be more effective.

Abstract: The authors measure the economic impact of climate on land prices. Using cross-sectional data on climate, farmland prices, and other economic and geophysical data for almost 3,000 counties in the United States, they find that higher temperatures in all seasons except autumn reduce average farm values, while more precipitation outside of autumn increases farm values. Applying the model to a global-warming scenario shows a significantly lower estimated impact of global warming on U.S. agriculture than the traditional production-function approach and, in one case, suggests that, even without carbon dioxide fertilization, global warming may have economic benefits for agriculture.

Abstract: This paper attempts to demonstrate how "diversity theory" can be applied to the analysis of real-world conservation policies. The specific example chosen to serve as a paradigm concern s preservation priorities among the fifteen species of cranes living w ild throughout the world. The example is sufficiently actual to show how diversity theory can be used operationally to frame certain critical conservation questions and to guide us toward answers by providing informative quantitative indicators of what to protect. At the same time, the cranes example is rich enough that it illustrates nicely some broad general principles about the economics of diversity preservation.

Abstract: This paper tests the hypothesis that differential regulations reduced the rate of capital turnover in the electric utility industry, resulting in increased emissions of sulfur dioxide. Based on a sample of forty-four privately owned electric utilities operating over the period 1969-83, the authors' results indicate that (1) regulation increased the age of capital by an average of 3.29 years (24.6 percent); (2) increases in the age of capital have no statistically significant impact on emissions; and (3) in the absence of regulation, emissions would have increased by 3.79 tons per million kWhs (34.6 percent).

Abstract: It is typically thought that conservation of natural resources is encouraged by low interest rates. However, when capital goods are used to extract the resource, low interest rates may discourage rather than encourage conservation. Using a model of a capacity-constrained extractive industry in competitive equilibrium, I find the relationship between the initial rate of exploitation and the interest rate. If capital is so "important" that for sufficiently high interest rates the industry is nonviable, the graph of initial quantity versus the interest rate is U-shaped; the traditional result holds at small interest rates but not at large ones.

Abstract: This paper examines the EPA's decision to cancel or continue the registration of cancer-causing pesticides that went through the special review process between 1975 and 1989. Despite claims to the contrary, the authors' analysis indicates that the EPA indeed balanced risks to health and the environment against benefits in regulating pesticides. Intervention by special interest groups was also important in the regulatory process. The authors' analysis suggests that the EPA is capable of weighing benefits and costs when regulating environmental hazards; however, the implicit value placed on health risks--$35 million per applicator cancer case avoided--may be considered high by some persons. Coauthors are William N. Evans, Stephen J. Berard, Maria M. Ducla-Soares, and Paul R. Portney.

Abstract: Optimal designs for estimating model parameters and other characteristics such as mean and median willingness-to-pay are discussed.when a logistic or a probit regression model is used for analyzing a contingent valuation study with discrete questions. A numerical example, related to a study of the value of preserving some virgin forests in Sweden, illustrates the efficiencies of different designs and how a sequential procedure can be applied.

Abstract: This paper models the selection of environmental policies under authoritarian and democratic regimes, and tests the hypothesis that political institutions systematically affect the enactment of environmental regulations. The results support the contention that political institutional arrangements, rather than resource endowments, largely determine policies concerning environmental regulation.

Abstract: Lack of explicit markets and associated data have impeded measurement of nonpecuniary rewards in the workplace. Most of the published literature employs hedonic models that permit estimation of market-clearing prices, but do not allow for identification of demand schedules. In an alternative approach, used successfully by environmental economists, the author develops quasi-market data and uses it to estimate demand for the nonpecuniary rewards associated with leadership. In addition to price responsiveness, individuals exhibit tastes for the amenities of leadership that differ substantially, and in expected directions, with their personal and professional characteristics.

Abstract: The authors study natural selection of preferences using a golden-age model with endogenous population. In equilibrium, all agents have preferences with maximum biological fitness, given resource constraints, and total population is the maximum the environment can sustain. Naturally selected agents follow the golden rule, acting as if they maximize the undiscounted sum of per-capita felicities of current and future generations. Selected preferences and, hence, work, saving, consumption, and population density vary predictably with environmental differences.

Abstract: The use of cost-benefit analysis by federal regulatory agencies has expanded greatly in scope and sophistication. Unfortunately, agencies continue to employ private cost, rather than social cost, to evaluate environmental quality regulations. Furthermore, general equilibrium impacts and intertemporal effects of regulations are typically not included in the evaluation. In this paper, the authors estimate the social cost of environmental quality regulations mandated by the Clean Air Act and the Clean Water Act. They construct an econometric general equilibrium model of the United States to demonstrate that social costs estimates diverge sharply from private costs estimates. The authors also demonstrate that general equilibrium impacts are significant and pervasive.

Abstract: Economists have studied the environmental consequences and competitiveness of alternative sales techniques for publicly-owned na tural resources. Little attention has been paid, however, to fluctuat ions in revenues resulting from the "option" nature of public resourc e sales. This paper analyzes how the contract structure of public res ource sales leads to defaults and thereby revenue instability. Data on U.S. Forest Service timber sales contracts (which were modified i n the early 1980s in response to default problems) suggest that reduc ed contract lengths and more stringent requirements for extensions in crease harvest rates, but that price adjustment clauses are unlikely to have similar effects.

Abstract: This paper introduces a decision framework for regulating environmental health risks which incorporates the characteristic uncertainty about the dissemination and toxicological impacts of environmental contaminants and the behavioral restrictions commonly encountered. Analysis indicates that increases in uncontrollable uncertainty will increase emphasis on average performance, that more potent or less controllable risks will be regulated more stringently and that increasing aversion to uncertainty may result in poorer average performance. The paper also developes an alternative measure for valuing risk of loss of life taking into account uncertainty about health risk generation processes.

Abstract: Implicit markets capture compensation for intraurban and interregional differe nces in amenities and yield differences in housing prices and wages. These pecuniary differences become preference-based weights in a qual ity-of-life index. Hedonic equations are estimated using microdata fr om the 1980 Census and assembled county-based amenity data on climati c, environmental, and urban conditions. Ranking of 253 urban counties reveals substantial variation within, as well as among, the 185 urba n areas. The quality-of-life differences across counties within one S MSA is almost one-half of the difference between the top- and bottom- ranked counties in the nation.

Abstract: "Closed-ended contingent valuation" surveys can be very useful in the evaluation of nonmarket resources. Respondents merely state whether they would accept or reject a hypothetical threshold amount, either as payment for giving up access to the resource or as a fee for its use. The authors develop a maximum likelihood procedure which exploits the variation in the threshold values to allow direct and separate point estimates of regression-like slope coefficients and error standard deviations (without truncation bias). Their illustration uses data from a survey of recreational fisherman to examine factors which influence individuals' willingness-to-pay.