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The Supreme Court’s ruling in Kelo v. New London (2005) justified the use of eminent domain for redevelopment takings based on the anticipated spillover benefits to the community in the form of increased taxes and new jobs. This paper asks whether this is a coherent economic rationale for allowing expropriation of residential land for private development. We show that, in the absence of a market distortion, the answer is generally no. However, when there is a pre-existing imperfection in the land and/or labor market, it is possible, though not guaranteed, that allowing eminent domain will increase social welfare. The reason, however, is not because of the increased tax revenue or employment per se, but rather because eminent domain increases industrial/commercial land use above the inefficiently low level that arises in the presence of the distortions. Thus, setting aside questions about fairness or holdouts, we show that whether using eminent domain for private takings can be justified on the basis of economic efficiency hinges on the existence of market distortions and the relative values of residential vs. industrial/commercial land in that particular market.

A better understanding of the link between a firm’s financial status and its regulated performance can help to improve the design of regulatory regimes and lead to more efficient regulatory structures. To date, however, the literature investigating this link has not considered the role that regulatory enforcement plays in determining how financial status affects performance. This paper analyzes how regulatory enforcement affects the relationship between financial status and the safety performance of regulated firms. It examines a particular form of safety performance, namely, the environmental performance of companies regulated under environmental protection laws. In particular, our study explores this effect in the context of the regulation of water pollution using data on wastewater discharges from U.S. chemical manufacturing facilities for the years 1995 to 2001. The results suggest that enforcement in general can play an important role in shaping the effects of financial status on safety performance.

Land use/cover change (LUCC) is a major threat to ecosystems. It may affect the abundance and distribution of species. Despite the importance of LUCC to ecological patterns and processes, few quant...

Marine hypoxia adversely affects parts of numerous waterbodies around the world. The effects extend to marine organisms. The objective of this paper is twofold. First, we present a theoretical model that can be used to analyze the spatial effects of hypoxia on harvest for any fishing industry. Second, we use temporally and spatially differentiated harvest data for Connecticut Long Island Sound lobster industry to estimate the contemporaneous and lagged effects of hypoxia on harvest across three adjacent fishing zones, only one of which faces moderate to severe hypoxic conditions each summer. The key insight from the theoretical model shows that hypoxia can affect the optimal harvest of both the hypoxic and non-hypoxic fishing zones, and that the impact outside the hypoxic zone will vary across species, depending on how the species responds. Results from the empirical model are consistent with the theoretical findings, i.e., the presence of hypoxic water conditions reduced harvest from both the hypoxic and non-hypoxic water zones during the period between 1995 and 2011.

The development of mineral resources in the deep sea can potentially generate significant economic returns, but also raises governance challenges. The International Seabed Authority (isa) wrestles with a wide range of issues and complex interactions that may affect not only how the industry develops over time, but also how development will benefit mankind. Two key issues they face are the means for sharing the payments from deep sea mining (dsm), and protecting environmental resources in the deep sea from harmful effects. This article provides an overview of issues for deciding among alternative means of distributing the isa’s share of monetary returns that will be realized as deep sea mineral resources, how they are converted from natural assets into financial assets, and alternative approaches to ensure that exploitation of these resources does not come at the expense of mankind also benefiting from the environmental resources provided by the deep sea.

In July 2015, the Council of the International Seabed Authority (ISA) adopted seven priority deliverables for the development of the exploitation code. The first priority was the development of a zero draft of the exploitation regulations. This article focusses on the second priority deliverable, namely the development of a payment mechanism for exploitation activities, following detailed financial and economic models based on proposed business plans. Between 2015 and 2017, five workshops have been organised with 196 active participants from 34 countries. The results so far are synthesised, drawing upon the outcome of these workshops, ISA technical papers, and the scholarly literature. Van Nijen, K (reprint author), Univ Antwerp, Fac Business & Econ, Dept Engn Management, B-2000 Antwerp, Belgium, Global Sea Mineral Resources NV, B-8400 Oostende, Belgium. kris.vannijen@uantwerpen.be

A central challenge in the Mississippi River Basin is how to continue to support profitable agricultural production, provide water supply, flood control, transportation, and other benefits, while reducing the current burden of environmental degradation. Several practices have been shown to reduce nutrient runoff and water pollution, and improve soil fertility, while often yielding profits for farmers. Yet many of these beneficial practices remain underutilized. Participants at an expert workshop identified five candidate financial mechanisms that could increase adoption of these beneficial farming practices in four focal Midwest states in the next five years: crop insurance premium subsidies, transformation of the private service provider business model, expansion and targeting of 2019 U.S. Farm Bill funding, development of new state funds, and direction of post-disaster federal funds towards habitat restoration, particularly in floodplains. This study provides rough approximations of the change in nutrient runoff and greenhouse gas (GHG) emissions, the annualized costs, and the nutrient and GHG reductions per dollar likely to result from deployment of each financial mechanism. Based upon these approximations, the adoption of these programs could reduce annual nitrate flows at the outlet of the Ohio and Upper Mississippi River Basins by 25%, surpassing the intermediate 2025 target (20% reduction) and achieving more than half of the long-term target (45% reduction) set by the Mississippi River/Gulf of Mexico Hypoxia Task Force. These approximations also illustrate that these five mechanisms could provide the same GHG reductions (∼43 Tg CO2e yr−1) as taking 12 coal-fired energy plants offline. The total cost of these five financial mechanisms is estimated at ∼$2.6 billion, or 64 g of nitrates and ∼17 kg of CO2e per dollar spent. These proposed solutions all face political, financial, cultural or institutional challenges, but with industry support, creative political action, and continued communication of both private and public benefits, they can create meaningful nutrient reductions and rebuild soils by 2022.

Voluntary approaches have been used in a variety of contexts and for a variety of purposes in agriculture, including voluntary conservation programs and product labeling. This paper provides an overview of some of the general principles that emerge from the literature on voluntary approaches and their application in agriculture. The literature suggests that, to be effective, voluntary approaches must provide sufficiently strong participation incentives to a targeted population, clearly identify standards for behavior or performance that ensure additionality and avoid slippage, and monitor outcomes. Thus, reliance on voluntary approaches in agriculture is likely to be effective only if there is sufficient market demand for certain product characteristics, significant public funds are committed to pay for voluntary actions, or the political will exists to impose regulations if voluntary approaches fail. Copyright 2013, Oxford University Press.

This paper analyzes the influence of financial status on the effectiveness of environmental enforcement. It considers multiple dimensions of both enforcement and financial status. Regarding enforcement, the paper considers both the likelihood of enforcement, as captured by the likelihood of inspections conducted at regulated facilities, and the severity of enforcement, as captured by the size of sanctions imposed on polluting facilities found violating their effluent limits. As indicators of corporate financial status, the paper considers measures of liquidity, solvency, and profitability [a proxy for corporate managerial skill], all of which can influence the likelihood that a firm faces liquidity and/or bankruptcy constraints. The paper first develops a theoretical model of optimal abatement in the presence of liquidity and bankruptcy constraints and uses the model to investigate the impact of financial status on optimal abatement and the effectiveness of enforcement. Then the paper empirically examines the interactions between enforcement and financial status using data on wastewater discharges from US chemical manufacturing facilities for the years 1995 to 2001. Empirical results suggest that the financial status dimensions considered here in general play an important role in determining the incentives created by enforcement. As the most striking result, we show theoretically and empirically that, when financial dimensions are included in the analysis, the conventional wisdom regarding the effect of enforcement likelihood on abatement no longer holds, i.e., increased enforcement can actually lead to worse environmental performance.

Because it can uniquely furnish insights into nonuse values for ecosystem services, survey-based Stated Preference (SP) valuation is widely used to estimate the benefits of ecological restoration. SP surveys ask respondents to select among restoration options yielding different ecological outcomes. This review examines the representation of ecological outcomes in SP studies seeking to quantify values for restoration of aquatic ecosystems. To promote the validity of ecological indicators used in SP valuation, we identified four standards: indicators should be measurable, interpretable, applicable, and comprehensive. We reviewed recent SP studies estimating the value of aquatic ecosystem services to assess whether ecological indicators in current use had these desirable properties. More than half of the 54 indicators reviewed were measurable, meaning referable to potentially precise quantification. About one-third were interpretable, that is, presented in a way that facilitates understanding the effects of restoration. About three quarters of the indicators were applicable; SP valuation practitioners typically consult with natural scientists to ensure that indicators represent the effect of stressors on ecological systems and with focus groups to ensure that indicators have a connection with ecosystem services that contribute to public well-being. While most of the SP studies employed diverse and potentially comprehensive indicators that could capture direct and indirect effects of restoration, and 6 of 20 studies used indicators that met all standards, shortcomings in the indicators were common. These problems can be rectified with attention to how natural scientists measure change and to relationships between restoration outcomes and characteristics of fully restored reference ecosystems.

In this study, we present an indexing scheme to screen large numbers of brownfield sites in wide areas (municipalities, counties, states or other types of districts) in order to develop initial planning strategies for fund allocation and redevelopment. The scheme entails three dimensions, socioeconomic, smart growth and environmental, for each of which an index is constructed on the basis of location-specific variables irrespective of the target end use. Socioeconomic variables include population density, property values and unemployment which collectively represent the potential contribution of brownfield redevelopment to economic growth. The smart growth or livability index was developed on the basis of the LEED ND evaluation scheme of the U.S. Green Building Council, isolating location-specific features. Finally, the environmental index incorporates variables that represent the potential source of contamination (past use), pathway of exposure (soil permeability) and receptors (zoning, proximity to water bodies, parks, critical habitats, open spaces, wetlands and floodplains). The application of the indices to the City of New Haven, Connecticut as a case study yielded four priority sites out of 47 in the city inventory. Even though the indices were sensitive to the chosen weights, prioritization of sites in clusters reduced the effect; the top four sites were identical in the case study and 31 out of 47 sites were present in the same cluster regardless of the weighting scheme.

Stated preference surveys often give minimal attention to distinctions between intermediate and final ecosystem services, leading to the potential for welfare estimates that overlook, misrepresent or double count associated values. This paper illustrates potential mechanisms through which multimetric indexes of the type developed in the ecological literature, here an index of biotic integrity, can be used within stated preference survey scenarios to both improve the validity of survey responses and provide otherwise unavailable information on willingness to pay for intermediate and final ecosystem services. We illustrate the approach using a choice experiment application to the restoration of migratory fish in a Rhode Island watershed. Where assumptions of the model hold, results can allow transparent disentanglement and estimation of marginal values for both intermediate and final ecosystem services.

In this essay we examine the coevolution and cross-fertilization of environmental and agricultural economics over the past century. We discuss the key role that agricultural economists have played in the intellectual development of environmental economics. We focus on three primary contributions: incentive design, nonmarket valuation, and joint determination. The nature of these contributions is illustrated using specific examples from the literature. Agricultural economists' tendency to focus on applied problems has enriched and broadened both the academic debates and the policy advice provided by economists. Copyright 2010, Oxford University Press.

The US Global Change Research Program (USGCRP) is a collection of 13 Federal entities charged by law to assist the United States and the world to understand, assess, predict, and respond to human-induced and natural processes of global change. As the understanding of global change has evolved over the past decades and as demand for scientific information on global change has increased, the USGCRP has increasingly focused on research that can inform decisions to cope with current climate variability and change, to reduce the magnitude of future changes, and to prepare for changes projected over coming decades. Overall, the current breadth and depth of research in these agencies is insufficient to meet the country's needs, particularly to support decision makers. This report provides a rationale for evaluating current program membership and capabilities and identifying potential new agencies and departments in the hopes that these changes will enable the program to more effectively inform the public and prepare for the future. It also offers actionable recommendations for adjustments to the methods and procedures that will allow the program to better meet its stated goals.

Although the phenomenon of nutrient pollution can be studied using models from the environmental sciences, understanding both the human causes and the human effects of nutrient pollution requires a study of economics. The economic dimensions of the problem of nutrient over-enrichment and the role that economics can and should play in the evaluation and design of policies to reduce nutrient pollution relate, to understanding the causes of nutrient pollution, setting targets for reduction or improvement, and designing policies to meet those targets. We summarize the incentives created by alternative policy approaches, including both voluntary approaches (based on education, subsidies, and implicit threats of more stringent policies) and mandatory approaches (such as regulations, taxes, and marketable permits).

The last decade has seen a dramatic increase in the use of voluntaryapproaches (VAs) to environmental protection, which has spurned agrowing literature on the relative merits of voluntary vs. mandatoryapproaches. This paper draws on that literature to discuss both thetheoretical and empirical issues that arise in the evaluation orassessment of a particular VA. We consider both the environmentaleffectiveness and the efficiency of this policy approach. Our aim is toaid policymakers in evaluating a specific program or in thinking aboutthe use and design of a VA. We identify some key features that arelikely to increase both the effectiveness and the efficiency of VAs.

This article examines statutes that limit the liability of landowners who open their property for recreational use. We ask whether landowner immunity promotes efficient provision by owners and efficient entry by recreational users. We examine these questions in several contexts, depending on whether the land is developed or undeveloped, privately or publicly owned, and whether or not the owner charges an entry fee. Our main finding is that, for both privately and publicly owned land, owner immunity is more efficient than owner liability when the land is undeveloped, but this is not true when the land is developed.

Approximate profit functions are estimated using time-series, cross-sectional, county level data for 12 midwest states. Measures of climate variability are included in the profit functions. Simulated impacts of climate changes on profits are derived. Results show that inclusion of measures of climate variation are important for measuring the impact of changes in mean temperature and precipitation levels. Failure to account for the impact of differences in variability leads to an overestimate of damages. If global warming increases diurnal variation, such increases would have negative impacts on the profitability of midwest agriculture.

Food safety policy is currently based on a combination of voluntary measures undertaken by producers and regulatory measures imposed, for example, by the US Department of Agriculture and the Food and Drug Administration (e.g., mandatory HACCP systems). This article addresses the question of whether reliance on voluntary approaches is likely to lead to adequate consumer protection. Drawing on recent literature on the choice between voluntary and mandatory approach to environmental protection and standard models of product liability, the article develops an analytical framework to determine the conditions under which firms are likely to invest in food safety voluntarily. The results suggest that for goods for which consumers can readily detect safety characteristics, market forces can create incentives for voluntary provision of safety. However, for goods for which consumers cannot readily detect food risks, market forces are not likely to be sufficient to afford adequate protection. Even in such a context, however, direct government regulation is not always necessary. The threat of the imposition of mandatory controls (possibly coupled with financial inducements for undertaking voluntary approaches) may provide firms with sufficient incentives to invest in food safety in an effort to avoid those controls. However, if firms do not respond, regulators must be prepared to follow through on their threats and impose a regulatory system of protection. © 1999 John Wiley & Sons, Inc.

This article considers the use of legal liability as a tool for internalizing environmental externalities, considering specifically the implications for land markets. The discussion focuses on liability under CERCLA. A simple model of land markets is used to evaluate alternative assignments of liability in terms of their impacts on decisions to buy and sell property and to invest in pollution abatement. The results suggest that the existence of a land market can alter the effect of the liability rule. In some cases the land market can eliminate an inefficiency that would otherwise exist, while in other cases it can create one.

This paper presents a conceptual framework for identifying the bias that results when aggregate (county-level) data are used to analyze the impact of agricultural activities on groundwater contamination. The use of aggregate data is often necessary due to dimensionality problems or data limitations in national or even regional analysis. With aggregate data, detailed site characteristics are not considered. It is shown that ignoring detailed site characteristics leads to five potential sources of bias. The factors that determine the signs and magnitudes of these biases are examined. Through an application to the state of Wisconsin, three of the five sources of the bias are quantified. The implications of the results regarding the use of aggregate analyses in the design of groundwater protection policies are also discussed.

This article examines whether the wealth levels of injurers and victims in accident cases are relevant for the determination of efficient tort rules. When the standard of efficiency is wealth maximization, it is well known that the answer is no. In this article, we consider whether this is also true when utility is not linear in wealth. We show that when actuarially fair insurance is available and income can be redistributed by mechanisms other than tort liability, efficient care levels and damage awards are independent of wealth in this case as well. When independent redistribution mechanisms do not exist, however, then whether wealth matters depends on the assumed distribution of accident costs in the definition of efficient care. These conclusions have important implications regarding the admissibility of evidence regarding a defendant's wealth in tort cases. Copyright 1995 by the University of Chicago.

This comment argues that the model specification used by Wetzstein and Centner in a recent paper is not an appropriate representation of the problem of groundwater contamination from agricultural chemicals and that their conclusions regarding the efficiency of alternative liability rules are incorrect. In particular, the modified strict liability rule proposed by the authors will not lead to efficiency for what we argue is the correct model specification. Likewise, a pure negligence rule, which they argue is inefficient, is in fact efficient.

This volume includes a series of previously published papers that both illustrate basic principles in the economics of pollution control and represent recent advances in the field over the last fifteen years. This authoritative collection includes seminal papers, written by leading scholars in the field, which relate to the overarching issue of designing pollution control policies to reduce environmental threats. The editor successfully covers a wide range of contemporary contexts and issues and includes both theoretical papers and empirical analyses of the impacts of pollution control policies. This volume will serve as an excellent source of reference for researchers, advanced students and practicing economists interested in a contemporary overview of the field.

This paper considers capacity utilization measures for the multi-product firm. The single–product dual measure of capacity utilization easily extends to the multi-product case. Three possible extensions of the single-product primal measure are considered. Although each has its limitations because of the restrictions embodied in it, each provides different, yet potentially useful information about capacity utilization in a multi-product industry. The dual and primal measures of multi-product capacity utilization are applied to the multi-species New England fishing industry to evaluate the potential for capacity expansion under a regulatory program of licence limitation.

Traditional tort law does not allow a victim of exposure to a toxic substance to seek damages without evidence of actual loss. Given the difficulty of collecting damages after a long latency period, however, we examine the desirability of granting exposure victims an independent cause of action for medical monitoring at the time of exposure. We show that such a cause of action is not necessary to induce victims to invest in efficient monitoring. It can, however, increase incentives for injurer care, but only at the cost of greater litigation costs. The general reluctance of courts to adopt a cause of action reflects their recognition of this trade-off.

Virtually every human activity involves a certain amount of risk, from walking downstairs and crossing the street to eating and breathing. Thus, the goal of a risk-free environment is meaningless, unless individuals are willing to cease all activity. We can, however, learn to manage risks more effectively. While some risk management is best conducted by individuals without the involvement of governments, other types of risks require a clear public-policy response.

The relationship between agriculture and the environment has been a topic of recent concern among both policymakers and academic researchers. This recent surge in interest stems from a growing recognition that agriculture, once thought to be a “wholesome” activity, is in some cases a primary source of environmental pollution. The recognition has been particularly acute in the area of water pollution (Batie 1988). As a result, considerable attention has been focused on the impact that the agricultural sector has on both surface water and groundwater quality.

Control of nonpoint sources of pollution has traditionally been within the domain of local decision makers in recognition of the critical importance of site-specific issues. More recently attention has turned to the issue of what can and should be done at the regional or national level, while recognizing the importance of site-specific attributes. This paper describes and illustrates an approach for analysis of nonpoint pollution problems that focuses jointly at the aggregate and disaggregate levels of the problem. The approach is based on linking two tools of analysis, the microparameter distribution model and the Geographical Information Systems (GIS). Although there are significant challenges to be overcome in implementing such an approach, linkage of these two policy tools has considerable promise in dealing with site-specific issues within an aggregate framework. Furthermore, GIS is potentially an important source of data for economists to exploit, given the momentum of GIS systems throughout the nation and given the relatively disaggregate nature of the data.

This paper evaluates alternative approaches to financing hazardous waste cleanup, recognizing that future cleanup costs are not known with certainty and that the choice of a financing approach implies a specific allocation of risk. Both retroactive and prospective use of different forms of strict liability are considered. In the prospective case, the standard principal-agent paradigm is extended to capture the risk-sharing and incentive effects relating to the choice of waste-generating inputs. The results indicate when a fund used for cleanup should or should not be subrogated.

In dispersed or nonpoint pollution problems, monitoring of individual polluting actions is difficult and those actions cannot generally be inferred from observed ambient pollution because (i) ambient pollutant levels have a random distribution that is contingent on the level of abatement undertaken and/or (ii) the actions of several polluters contribute to the ambient levels and only combined effects are observable. This paper describes a general incentive scheme for controlling nonpoint pollution. Rewards for environmental quality above a given standard are combined with penalties for substandard quality. The mechanism is discussed in the context of both a single suspected polluter and multiple suspected polluters where free riding must be avoided.

Uncertainty about physical and biological effects undermines the value of some economic analyses of the relative merits of air pollution abatement policies. It does not necessarily follow, though, that researchers should focus their efforts on the areas of greatest uncertainty without first determining which areas are most important for policy purposes. The author reviews concerns raised over the use of ex post rather than ex ante measures as decision criteria in cost benefit analysis. She argues that acid rain should be considered apart from general air pollution because of the political and regional problems associated with long-range transport. 9 references.

In many cases, as in this session, it is convenient to lump acid rain and ozone together when discussing the effects of air pollution on agricultural, forest, and aquatic resources. As noted by Forster and Phillips, both are secondary pollutants with effects that extend beyond the immediate emission source area. However, there are also some important differences between the two that make it difficult to synthesize research on their economic effects. Some of these differences are apparent in the papers presented here, while others have not been explicitly recognized. Before discussing the specific content of either paper, I would like to highlight some of these differences. First, although acid rain can result in production losses such as decreased forestry growth and losses to commercial fisheries, many of its effects relate to nonmarket goods. These include reductions in the recreational value of aquatic resources and in genetic diversity among fish populations. Forster and Phillips discuss a number of studies of nonmarket valuation that have addressed acid rain control. The research on ozone, on the other hand, has