Selected Monographs and Reports

2018
Richard, Schmalensee, and Robert Stavins. “Policy Evolution Under the Clean Air Act.” Harvard Environmental Economics Program, 2018.Abstract
The U.S. Clean Air Act, passed in 1970 with strong bipartisan support, was the first environmental law to give the Federal government a serious regulatory role, established the architecture of the U.S. air pollution control system, and became a model for subsequent environmental laws in the United States and globally. We outline the Act’s key provisions, as well as the main changes Congress has made to it over time. We assess the evolution of air pollution control policy under the Clean Air Act, with particular attention to the types of policy instruments used. We provide a generic assessment of the major types of policy instruments, and we trace and assess the historical evolution of EPA’s policy instrument use, with particular focus on the increased use of market-based policy instruments, beginning in the 1970s and culminating in the 1990s. Over the past fifty years, air pollution regulation has gradually become much more complex, and over the past twenty years, policy debates have become increasingly partisan and polarized, to the point that it has become impossible to amend the Act or pass other legislation to address the new threat of climate change.
dp_79_schmalensee-stavins_clean_air_act.pdf
2015
Gerarden, Todd D, Richard G Newell, and Robert N Stavins. “Assessing the Energy-Efficiency Gap.” Cambridge, Massachusetts, USA: Harvard Environmental Economics Program, 2015. Publisher's VersionAbstract

Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but these technologies appear not to be adopted by consumers and businesses to the degree that would apparently be justified, even on a purely financial basis. We present two complementary frameworks for understanding this so-called “energy paradox” or “energy-efficiency gap.” First, we build on the previous literature by dividing potential explanations for the energy-efficiency gap into three categories: market failures, behavioral anomalies, and model and measurement errors. Second, we posit that it is useful to think in terms of the fundamental elements of cost-minimizing energy-efficiency decisions. This provides a decomposition that organizes thinking around four questions. First, are product offerings and pricing economically efficient? Second, are energy operating costs inefficiently priced and/or understood? Third, are product choices cost-minimizing in present value terms? Fourth, do other costs inhibit more energy-efficient decisions? We review empirical evidence on these questions, with an emphasis on recent advances, and offer suggestions for future research.

sloan_energy_efficiency_monograph.pdf

F-36

2014
Gerarden, Todd D, Richard G Newell, Robert N Stavins, and Robert C Stowe. “An Assessment of the Energy-Efficiency Gap and its Implications for Climate-Change Policy.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2014. Publisher's VersionAbstract

Improving end-use energy efficiency—that is, the energy-efficiency of individuals, households, and firms as they consume energy—is often cited as an important element in efforts to reduce greenhouse-gas (GHG) emissions. Arguments for improving energy efficiency usually rely on the idea that energy-efficient technologies will save end users money over time and thereby provide low-cost or no-cost options for reducing GHG emissions. However, some research suggests that energy-efficient technologies appear not to be adopted by consumers and businesses to the degree that would seem justified, even on a purely financial basis. We review in this paper the evidence for a range of explanations for this apparent "energy-efficiency gap." We find most explanations are grounded in sound economic theory, but the strength of empirical support for these explanations varies widely. Retrospective program evaluations suggest the cost of GHG abatement varies considerably across different energy-efficiency investments and can diverge substantially from the predictions of prospective models. Findings from research on the energy-efficiency gap could help policy makers generate social and private benefits from accelerating the diffusion of energy-efficient technologies—including reduction of GHG emissions.

energy_efficiency_and_climate.pdf

F-34

Bodansky, Daniel M, Seth Hoedl, Gilbert E Metcalf, and Robert N Stavins. “Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies Through a Future International Agreement: Executive Summary.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2014. Publisher's VersionAbstract

Negotiations pursuant to the Durban Platform for Enhanced Action appear likely to lead to a 2015 Paris agreement that embodies a hybrid climate policy architecture, combining top-down elements, such as for monitoring, reporting, and verification, with bottom-up elements, including “nationally determined contributions” from each participating country, detailing what it intends to do to reduce emissions, based on its national circumstances. For such a system to be cost-effective—and thus more likely to achieve significant global emissions reductions—a key feature will be linkages among regional, national, and sub-national climate policies. By linkage, we mean a formal recognition by a greenhouse gas mitigation program in one jurisdiction (a regional, national, or sub-national government) of emission reductions undertaken in another jurisdiction for purposes of complying with the first jurisdiction’s mitigation program. We examine how a future international policy architecture could help facilitate the growth and operation of a robust system of international linkages of regional, national, and sub-national policies. Several design elements merit serious consideration for inclusion in the Paris agreement, either directly or by establishing a process for subsequent international elaboration. At the same time, including detailed linkage rules in the core agreement is not desirable because this could make it difficult for rules to evolve in light of experience.

ieta-hpca-es-sept2014.pdf

F-33

Bodansky, Daniel M, Seth Hoedl, Gilbert E Metcalf, and Robert N Stavins. “Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies Through a Future International Agreement.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2014. Publisher's VersionAbstract

Negotiations pursuant to the Durban Platform for Enhanced Action appear likely to lead to a 2015 Paris agreement that embodies a hybrid climate policy architecture, combining top-down elements, such as for monitoring, reporting, and verification, with bottom-up elements, including “nationally determined contributions” from each participating country, detailing what it intends to do to reduce emissions, based on its national circumstances. For such a system to be cost-effective—and thus more likely to achieve significant global emissions reductions—a key feature will be linkages among regional, national, and sub-national climate policies. By linkage, we mean a formal recognition by a greenhouse gas mitigation program in one jurisdiction (a regional, national, or sub-national government) of emission reductions undertaken in another jurisdiction for purposes of complying with the first jurisdiction’s mitigation program. We examine how a future international policy architecture could help facilitate the growth and operation of a robust system of international linkages of regional, national, and sub-national policies. Several design elements merit serious consideration for inclusion in the Paris agreement, either directly or by establishing a process for subsequent international elaboration. At the same time, including detailed linkage rules in the core agreement is not desirable because this could make it difficult for rules to evolve in light of experience.

harvard-ieta_linkage_paper.pdf

F-35

2013
Ranson, Matthew, and Robert N Stavins. “Linkage of Greenhouse Gas Emissions Trading Systems: Learning from Experience.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2013. Publisher's VersionAbstract

The last ten years have seen the growth of linkages between many of the world’s cap-and-trade systems for greenhouse gases (GHGs), both directly between systems, and indirectly via connections to credit systems such as the Clean Development Mechanism. If nations have tried to act in their own self-interest, this proliferation of linkages implies that for many nations, the expected benefits of linkage outweighed expected costs. In this paper, we draw on the past decade of experience with carbon markets to test a series of hypotheses about why systems have demonstrated this revealed preference for linking. Linkage is a multi-faceted policy decision that can be used by political jurisdictions to achieve a variety of objectives, and we find evidence that many economic, political, and strategic factors — ranging from geographic proximity to integrity of emissions reductions — influence the decision to link. We also identify some potentially important effects of linkage, such as loss of control over domestic carbon policies, which do not appear to have deterred real-world decisions to link. These findings have implications for the future role that decentralized linkages may play in international climate policy architecture. The Kyoto Protocol has entered what is probably its final commitment period, covering only a small fraction of global GHG emissions. Under the Durban Platform for Enhanced Action, negotiators may now gravitate toward a hybrid system, combining top-down elements for establishing targets with bottom-up elements of pledge-and-review tied to national policies and actions. The incentives for linking these national policies are likely to continue to produce direct connections among regional, national, and sub-national cap-and-trade systems. The growing network of decentralized, direct linkages among these systems may turn out to be a key part of a future hybrid climate policy architecture.

ransonstavinslinkagecop-19.pdf

F-32

2012
Aldy, Joseph E, and Robert N Stavins. “Climate Negotiations Open a Window: Key Implications of the Durban Platform for Enhanced Action.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2012. Publisher's VersionAbstract

A key outcome of the Seventeenth Conference of the Parties (COP-17) of the United Nations Framework Convention on Climate Change (UNFCCC), held in Durban, South Africa, late in 2011 — the Durban Platform for Enhanced Action — represents an important milestone in the history of climate negotiations. This is because it departs from the long-standing and problematic dichotomous division of the world's countries into those with serious emissions-reduction responsibilities and the others — with no such responsibilities whatsoever. That distinction, now apparently abandoned, has prevented meaningful progress for decades. The Durban Platform — by replacing the Berlin Mandate's (1995) division of the world into a set of countries with ambitious responsibilities and another set of countries with no responsibilities — has opened an important window. National delegations from around the world now have a challenging task before them: to identify a new international climate policy architecture that is consistent with the process, pathway, and principles laid out in the Durban Platform, while still being consistent with the UNFCCC. The challenge is to find a way to include all key countries in a structure that brings about meaningful emission reduction on an appropriate timetable at acceptable cost, while recognizing the different circumstances of countries in a way that is more subtle, more sophisticated, and — most important — more effective than the dichotomous distinction of years past.

aldy_stavins_durban-brief_hpca.pdf

F-30

Green, J, Dale Jorgenson, and Robert N Stavins. “Memorial Minute on the Life and Service of Robert Dorfman,” 2012. dorfman_memorial_minute.pdf

F-31

Chan, Gabriel, Robert N Stavins, Robert C Stowe, and Richard Sweeney. “The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation.” Cambridge, Massachusetts, USA: Harvard Environmental Economics Program, 2012. Publisher's VersionAbstract

The introduction of the U.S. SO2 allowance-trading program to address the threat of acid rain as part of the Clean Air Act Amendments of 1990 is a landmark event in the history of environmental regulation. The program was a great success by almost all measures. This paper, which draws upon a research workshop and a policy roundtable held at Harvard in May 2011, investigates critically the design, enactment, implementation, performance, and implications of this path-breaking application of economic thinking to environmental regulation. Ironically, cap and trade seems especially well suited to addressing the problem of climate change, in that emitted greenhouse gases are evenly distributed throughout the world’s atmosphere. Recent hostility toward cap and trade in debates about U.S. climate legislation may reflect the broader political environment of the climate debate more than the substantive merits of market-based regulation.

so2-brief.pdf

F-29

2010
Peace, Janet, and Robert N Stavins. “Meaningful and Cost Effective Climate Policy: The Case for Cap and Trade.” Arlington, VA: Pew Center on Global Climate Change, 2010. Publisher's Version case-for-cap-and-trade-paper.pdf

F-28

Stavins, Robert N. “Options for the Institutional Venue for International Climate Negotiations.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2010. Publisher's VersionAbstract

It is exceptionally challenging to conclude a comprehensive and effective multilateral agreement to address global climate change among nations with divergent interests. This is true for many international issues. However, largely because any domestic policy or set of policies to mitigate greenhouse gas (GHG) emissions (whether intended to implement an international agreement or not) extend so deeply into the economic fabric of a nation, climate change negotiations have proven to be exceptionally difficult. The Fifteenth Conference of the Parties (COP-15) of the United Nations Framework Convention on Climate Change (UNFCCC) reinforced doubts about whether the UNFCCC should continue to be the primary institutional venue for global climate change negotiations. This issue brief assesses some other institutions that might serve to supplement or partially replace the UNFCCC.

stavins-issue-brief-3.pdf

F-26

Olmstead, Sheila M, and Robert N Stavins. “Three Key Elements of Post-2012 International Climate Policy Architecture.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2010. Publisher's VersionAbstract

We describe three essential elements of an effective post-2012 international global climate policy architecture: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change.

stavins_olmsteadmontrealfinal-2.pdf

F-27

2009
Stavins, Robert N. “A Portfolio of Domestic Commitments: Implementing Common but Differentiated Responsibilities.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2009. Publisher's VersionAbstract

International negotiations are focused on developing a climate policy framework for the post-2012 period, when the Kyoto Protocol's first commitment period will have ended. In addition to negotiations under the United Nations Framework Convention on Climate Change (UNFCCC), other intergovernmental outlets, including the G20 and the Major Economies Forum, are trying to reach common ground among the world's major emitters of greenhouse gases. To date, these efforts have not produced a politically, economically, and environmentally viable structure for a future climate agreement. An effective, but more flexible and politically palatable approach could be an international agreement on a "portfolio of domestic commitments." Under such an agreement, nations would agree to honor commitments to greenhouse gas emission reductions laid out in their own domestic laws and regulations. A portfolio of commitments may emerge from a global meeting such as the UNFCCC Conference of the Parties, or a smaller number of major economies could negotiate an agreement among themselves, and then invite other countries to join. Despite the obvious differences between such a system and the conventional "targets and timetables" in the Kyoto Protocol, negotiators should not dismiss this new approach out of hand. There are several ways to construct a portfolio of domestic commitments, and negotiators have numerous levers available to tailor an agreement to meet their political, economic, and environmental goals. This Viewpoint outlines some basic features of a portfolio approach, highlights a few major issues and concerns, and discusses the potential feasibility of this approach.

domesticcommitments_final.pdf

F-25

2008
Jaffe, Judson, and Robert N Stavins. “Linkage of Tradable Permit Systems in International Climate Policy Architecture.” Cambridge, Massachusetts, USA: Harvard Project on Climate Agreements, 2008. Publisher's VersionAbstract

Cap-and-trade systems have emerged as the preferred national and regional instrument for reducing emissions of greenhouse gases throughout the industrialized world, and the Clean Development Mechanism — an international emission-reduction-credit system — has developed a substantial constituency, despite some concerns about its performance. Because linkage between tradable permit systems can reduce compliance costs and improve market liquidity, there is great interest in linking cap-and-trade systems to each other, as well as to the CDM and other credit systems. We examine the benefits and concerns associated with various types of linkages, and analyze the near-term and long-term role that linkage may play in a future international climate policy architecture. In particular, we evaluate linkage in three potential roles: as an independent bottom-up architecture, as a step in the evolution of a top-down architecture, and as an ongoing element of a larger climate policy agreement. We also assess how the policy elements of climate negotiations can facilitate or impede linkages. Our analysis throughout is both positive and normative.

linkage_paper_hpica.pdf

F-24

Jaffe, Judson, and Robert N Stavins. “Linking a U.S. Cap-and-Trade System for Greenhouse Gas Emissions: Opportunities, Implications, and Challenges.” Washington, D.C. AEI-Brookings Joint Center for Regulatory Studies, 2008. aei-brookings_epri_paper.pdf

F-23

2007
Jaffe, Judson, and Robert N Stavins. “Linking Tradable Permit Systems for Greenhouse Gas Emissions: Opportunities, Implications, and Challenges.” Geneva, Switzerland: International Emissions Trading Association, 2007. ieta_linking_report.pdf

F-22

Stavins, Robert N. “Managing Water Demand – Price vs. Non-Price Conservation Programs.” Boston, Massachusetts: Pioneer Institute for Public Policy Research, 2007. pioneer_olmstead_stavins_water.pdf

F-20

Stavins, Robert, Judson Jaffe, and Todd Schatzki. “Too good to be true? An examination of three economic assessments of California climate change policy.” National Bureau of Economic Research, 2007. Publisher's Version too_good_to_be_true.pdf

F-19

Stavins, Robert N. “A U.S. Cap-and-Trade System to Address Global Climate Change.” Washington, D.C. The Hamilton Project, 2007. stavins_hp_discussion_paper_2007-13.pdf

F-21

Pages