Working papers

Clear Skies: Multi-Pollutant Climate Policy in the Presence of Global Dimming

Joint with Matthew McGinty        | pdf

Multi-pollutant interactions can have crucial implications for the design and performance of environmental policy targeting single pollutants. This paper presents a two-region model where a global  pollutant (CO2) and local pollutant (SO2) are produced jointly. The interaction between SO2 and CO2 gives rise to the global dimming effect, which relates SO2 emissions to the environmental damage caused by CO2 emissions. We analyze climate policy by comparing abatement of these pollutants in the presence and absence of the dimming effect. We then draw implications for the design of international climate agreements, which should reflect the interactive nature between pollutants. The paper also illustrates how a market-based policy in the form of emissions taxes can be embedded into climate agreements to facilitate an efficient coordination of multi-pollutant abatement across regions. Our model predicts that this involves a uniform tax on the global pollutant but differentiated (region-specific) taxes on the local pollutant.

Innovation and Environmental Stringency: The Case of Sulfur Dioxide Abatement

Joint with Cees Withagen        | link to paper on SSRN

A weak version of the Porter hypothesis claims that strict environmental policy provides positive innovation incentives, hence triggering improved competitiveness and securing environmental quality. In a comparative way, this paper empirically tests this hypothesis across countries by linking environmental stringency to innovation proxied by patents in the field of SO2 abatement over the period 1970-2000. Three different models of environmental stringency are examined. Two of these models do not reveal a positive significant effect on innovation as a result of increased stringency. In the theoretically preferred model, however, a positive relationship between environmental stringency and innovation is obtained.