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This article presents an interview with environmental economist Maureen L. Cropper. Maureen completed her Ph.D. at Cornell University and subsequently held positions at the University of California, Riverside, and the University of Southern California. At Riverside, she moved from monetary economics to environmental economics. She then landed at the University of Maryland, where she is a still a professor. She has taken on leadership roles in numerous institutional settings, including the US National Academy of Sciences and the US Environmental Protection Agency (EPA) Science Advisory Board. Her contributions to environmental economics have been groundbreaking and extensive. Together with many collaborators—including former students and colleagues at the University of Maryland, World Bank, EPA, and Resources for the Future—Maureen has produced a body of work that spans theory, methods, and empirical applied economics. Her work covers the environment, energy, climate change, and transportation in both the United States and developing countries.

AbstractOver the past half-century or more, economists have developed a robust literature on the theory and practice of benefit-cost analysis (BCA) as applied to diverse projects and policies. Recent years have seen a growing demand for practical applications of BCA to climate change policy questions. As economists seek to meet this demand, they face challenges that arise from the nature of climate change impacts, such as the long time frame and the potential for non-marginal changes, the importance of intangible effects, and the need to grapple with Knightian uncertainty. As a result of these and other characteristics of climate change, many of the fundamental tenets of BCA are coming under scrutiny and the limits of BCA’s methodological and practical boundaries are being tested. This special issue assembles a set of papers that review the growing body of literature on the economics of climate change. The papers describe the state of the literature valuing climate change impacts, both globally and at more disaggregated levels. The papers also discuss the challenges economists face in applying BCA to support climate change decision making and adaptation planning. This introduction provides background and context on the current use of BCA in climate change analysis, and sets each paper firmly in that context, identifying also areas for future research. While the challenges in conducting BCA and interpreting its results are significant, across the papers it becomes clear that economic analysis in general, and the tools and methods of BCA in particular, have a central role to play in supporting decision-making about how to respond to climate change.

AbstractThis paper discusses the challenges inherent in developing benefit-cost analysis (BCAs) of climate change. Challenges are explored from three perspectives: meeting the foundational premises for conducting BCA within the framework of welfare economics, methodological considerations that affect the application of the tools and techniques of BCA, and practical limitations that arise out of resource constraints and the nature of the question, project, or policy being evaluated. Although economic analysts frequently face – and overcome – conceptual and practical complications in developing BCAs, climate change presents difficulties beyond those posed by more conventional environmental problems. Five characteristics of the climate system and associated impacts on human and natural systems are identified that pose particular challenges to BCA of climate change, including ubiquity of impacts, intangibility, non-marginal changes, long timeframes, and uncertainty. These characteristics interact with traditional economic challenges, such as valuing non-market impact, addressing non-marginal changes, accounting for low-probability but high-impact events, and the eternal issue of appropriately discounting the future. A mapping between the characteristics of climate change and traditional economic challenges highlights the difficulties analysts are likely to encounter in conducting BCA. Despite these challenges, the paper argues that the fundamental ability of economic analysis to evaluate alternatives and tradeoffs is vital to decision making. Climate-related decisions span a wide range in terms of their scope, complexity, and depth, and for many applications of economic analyses the issues associated with climate change are tractable. In other cases it may require improved economic techniques or taking steps to ensure uncertainty is more fully addressed. Augmenting economic analysis with distribution analysis or an account of physical effects, and exploring how economic benefit and cost estimates can be incorporated into broader decision making frameworks have also been suggested. The paper concludes that there are opportunities for BCA to play a key role in informing climate change decision-making.