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We use the 2003 Consumer Expenditure Survey and emissions estimates from an input-output model based on the 1997 US economy to estimate the incidence of a price on carbon induced by a cap-and-trade program or carbon tax in the context of the US. We present results on how much different income deciles pay for a carbon tax as well as which industries see the largest increase in costs due to a carbon tax. We illustrate the main determinant of the regressivity: consumption patterns for energy-intensive goods. Furthermore, on a per-capita basis a carbon price is much more regressive than calculations at the household level. We discuss policy options to offset the adverse distributional effects of a carbon emissions policy.

The Bush Administration followed its withdrawal from the Kyoto Protocol in March, 2001, by a February, 2002 proposal for unilateral action to reduce US greenhouse gas emissions. The February proposal has been widely criticized for having little content and no teeth. The lack of teeth is clearly a valid criticism. The proposal is unlikely to result in much in the way of changed behavior within the U.S. economy. However, a side benefit is that other actors, particularly states, are attempting to fill the void left by the Federal Government. Those actions are reviewed in this paper. Furthermore, there is an interesting idea within the Bush Proposal, an idea that may warrant further examination at the international level. Although the idea is probably not original, its emphasis by the Bush Administration gives it more prominence that it has had in the past. The idea is to focus on the rate of decline of the emissions intensity of the economy, rather than the total amount of emissions (though the two are obviously related). This has a number of advantages, including dynamic consistency, reduced uncertainty, and potential attractiveness to non-Annex I countries. These characteristics are reviewed in this paper.

A standard assumption in integrated assessment models of climate change is that population and productivity are growing, but at a decreasing rate. We explore the signifcance of the assumption of population and productivity growth for greenhouse gas abatement. After all, there has been no long run slow down in the growth of productivity over the past few centuries, and the rate of population growth has actually been increasing for the past 19 centuries. Even if either of these growth rates were expected to slow, by how much is subject to great uncertainty. We show computationally that such continued growth greatly increases the severity of climate change. Indeed we nd that climate change is a problem in large part caused by exogenous population and productivity growth. Rapid reductions in growth make climate change a small problem; smaller reductions in growth imply climate change is a very serious problem indeed. Analogously, reductions in the growth rate of population can be effective in controlling climate change.

This paper concerns computational models in environmental economics and policy, particularly so-called integrated assessment models. For the most part, such models are simply extensions of standard neoclassical growth models, extended by including the environment and pollution generation. We review the structure of integrated assessment models, distinguishing between finite horizon and infinite horizon models, both deterministic and stochastic. We present a new solution algorithm for infinite horizon integrated assessment models, relying on a neural net approximation of the value function within an iterative version of the Bellman equation.

The paper begins with the problem of a firm subject to random productivity shocks drawn from a particular distribution. We are concerned with the case whereby the distribution of the shocks changes without the knowledge of the firm. Over time the firm learns about the nature and extent of the change in the distribution of the shock and adjusts, incurring adjustment costs in the process. The long run loss in profits (Ž) due to the shift in the distribution we term the adaptation costs. The transitory profit loss, incurred while the firm is learning about the distribution shift, is termed the adjustment cost. The theory is developed and then applied to the problem of measuring adaptation and adjustment costs in the face of unanticipated and imperfectly observed climate change in agriculture. The empirical part of the paper involves estimating a supply function for corn that depends on actual weather realizations and expected weather, using county level data for the US. We then simulate the effect of an unobserved climate shock, where learning about the climate shock is by observing the weather and updating prior knowledge using Bayes Rule.

There has been considerable controversy over the empirical significance of the theoretically predicted pollution haven hypothesis. Generally, empirical papers have failed to find an effect on industrial location of weaker or stricter environmental regulations. In this paper we find strong confirmation of theoretical predictions. We present a statistical test of the impact of environmental regulations on the capital movement of polluting industries. The empirical study is conducted by examining foreign direct investment (FDI) of several US industries, representing industries with high pollution control costs (chemicals and primary metals) as well as industries with more modest pollution control costs (electrical and non-electrical machinery, transportation equipment, and food products). At issue is the effect of the laxity of environmental regulation on FDI. As laxity is not directly observed, we posit two equations, one for FDI determination and one for pollutant emissions, a variable positively correlated with the unobserved variable. We use aggregate national sulfur emissions as the pollutant. Using instruments for the unobserved variable, the statistical results show that the laxity of environmental regulations in a host country is a significant determinant of FDI from the US for heavily polluting industries and is insignificant for less polluting industries.

This paper reviews the impact of the literature in depletable resources and energy economics over the period 1973-98, particularly the period of publication of the Journal of Environmental Economics and Management, 1974-98. A discussion of prominent policy issues in this arena is provided, along with an indication of what academic economics papers have contributed to that debate. This is followed by a citation analysis of contributions in the fields of energy and exhaustible resource economics. For each of these two fields, a list of the top papers in each five year period from 1974 to 1998 is presented, along with a list of the top journals in each decade, based on average citations per article. The top ten cited articles in the fields in the Journal of Environmental Economics and Management are also presented.

This paper presents a simple model of auction equilibrium. The distinctive feature of the model is that each bidder may discover the value that the item represents for herself, provided she spends some amount in order to be well informed. For each agent, the decision of whether or not to acquire information depends on a private cost of information acquisition and on her conjectures regarding the behavior of other bidders. A rational expectations equilibrium is characterized.

This paper presents a simple model of auction equilibrium. The distinctive feature of the model is that each bidder may discover the value that the item represents for herself, provided she spends some amount in order to be well informed. For each agent, the decision of whether or not to acquire information depends on a private cost of information acquisition and on her conjectures regarding the behavior of other bidders. A rational expectations equilibrium is characterized.

This paper presents the results of an experiment on the economics of endogenous information acquisition. The experiment consists of a series of auctions where subjects compete for an object with private but unknown value. The information regarding the value of the object is costly. The experiment tests a theoretical model of bidding equilibrium and analyzes the effects of variations in the parameters (such as information costs and level of uncertainty) on the endogenous variables (such as the proportion of bidders who buy information and the winning bid). Bidders' decisions concerning the purchase of information are closely consistent with a Risk Neutral Rational Expectations model. The winning bids, however, are persistently above the equilibrium predictions suggesting the presence of risk aversion.