2008 Awards


Allocation of incentive contracts for environmental service provision in agricultural landscapes

Christopher Avery, Roy E. Larsen Professor of Public Policy and Management, Kennedy School of Government

2008-09 award of $40,000

In settings where private and social benefits to landuse are misaligned, policy interventions that compensate private landholders for undertaking privately costly investments can improve social outcomes. However, information asymmetries between the landholders and the policy-maker make it difficult to determine which landholders should receive payments and how much they should be paid. Program efficiency may be improved through policy mechanisms that cause low-cost landholders to self-select into the program or to reveal private information that allows efficient enrollment. The research proposed here uses an experimental design to directly compare outcomes at the selection and the compliance stage for two of the most commonly used selection mechanisms: a reverse auction and a posted-price scheme. While these mechanisms are theoretically equivalent, laboratory evidence has suggested divergence in the valuations they elicit, and no field evidence has tested their performance in context. The research will be carried out in cooperation with The World Agroforestry Centre (ICRAF) in the Malawi between May 2008 and August 2009.

Publications:

Ajayi, O.C., B.K. Jack and B. Leimona. 2012. Auction Design for the Private Provision of Public Goods in Developing Countries: Lessons from Payments for Environmental Services in Malawi and Indonesia. World Development40(6): 1213-1223.

Jack, B. Kelsey. 2010. Allocation in Environmental Markets: A Field Experiment with Tree Planting Contracts. HEEP Discussion Paper 2010-14, Cambridge, MA: Harvard Environmental Economics Program.

Jack, B. Kelsey. 2013. Private information and the allocation of land use subsidies in Malawi. American Economic Journal: Applied Economics 5(3): 113-35, DOI: 10.1257/app.5.3.113.

Updated 2015.01.09


Climate Change Policy as Sustainable Development: Designing A Successor to Kyoto that Brings Developing Countries Inside Without Derailing Growth

Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth, Kennedy School of Government

2008-09 award of $38,035

The research deals with global climate change policy as it relates to developing countries. Sustainable development in this context means achieving the twin goals of protecting the global environment and allowing poor countries to achieve economic development. The absence of serious commitments by developing countries is one of the most intractable shortcomings of the Kyoto Protocol on Global Climate Change. Developing countries must participate, for three reasons.

They will be the source of the big increases in emissions in coming years according to the Business-as-Usual path (BAU), that is, the path along which countries’ emissions would increase in the absence of an agreement.

  1. If a quantitative international regime is implemented without the developing countries, their emissions are likely to rise even faster than the BAU path, due to the problem of leakage.
  2. The opportunity for industrialized countries to buy relatively low-cost emissions abatement from developing countries is crucial to keep the economic cost low.
  3. The developing countries point out that it was the industrialized countries, not they, who created the problem, and they should not be asked to limit their economic development to pay for it.

Developing countries argue that equity requires setting quantitative targets at equal amounts per capita. But the rich countries will not accept this.

Grant-supported research falls under three topics: Project 1 sought to formalize a proposal for successors to the Kyoto Protocol that set quantitative emission targets in such a way as to bring developing countries inside the system. Project 2 explored the increasingly-likely prospect that rich countries would apply border taxes against energy-intensive imports from developing countries that do not participate. Project 3 investigates the implications of uncertainty for developing countries, and seeks to make the long-term regime robust with respect to economic fluctuations by sequentially indexing their targets.

Final progress report - submitted 091105

Publications:

Bosetti, Valentina and Jeffrey Frankel. 2011. Politically Feasible Emission Target Formulas to Attain 460 ppm CO2 ConcentrationsReview of Environmental Economics and Policy (Oxford University Press) Winter 2011-12, doi: 10.1093/reep/rer022; Harvard Kennedy School Faculty Working Paper Research Working Paper11-016, Feb. 2011. Revised from Global Climate Policy Architecture and Political Feasibility: Specific Formulas and Emission Targets to Attain 460PPM CO2 ConcentrationsNational Bureau of Economic Research Working Paper 15516, Nov. 2009 and Harvard Project on International Climate Agreements Working Paper 09-30, Sept. 2009.

Bosetti, Valentina and Jeffrey Frankel. 2011. Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets to Build on Copenhagen and Cancun, National Bureau of Economic Research Working Paper 17669, Dec. 2011, Cambridge, MA; Harvard Program on Climate Agreements Discussion Paper No. 46, Sept. 2011; and Fondazione Eni Enrico Mattei Working Paper 66, Sept. 2011.

Updated 2012.01.13


Sustainable Growth: Evidence from Two Field Studies in India

Sustainable Growth: Evidence from Two Field Studies in India, and the extension of this work, Improving Gujarat’s Industrial Pollution Inspection Standards

Rohini Pande, Mohammed Kamal Professor of Public Policy, Kennedy School of Government

2008-09 award of $40,000

India is one of the fastest growing economies in the world, and while its rapid industrial growth has improved the living standards of its average citizen, this has also been accompanied by increasing environmental costs and inequality as a result of urbanization. SSP has been supporting two projects in Gujarat, India’s fastest growing state, to evaluate two public policies relevant to these issues.

The first project examines how regulations can be designed and enforced to ensure industry compliance with air and water pollution standards. The research team first reviewed the performance of existing regulations and submitted these findings in a report to the Sustainability Science Group. The researchers also worked closely with the Gujarat Pollution Control Board (GPCB) to identify a feasible set of field experiments (including increased inspections and third party pollution audits) to examine the impact of current and strengthened regulatory practices. After establishing a partnership with GPCB, it was possible to develop a pilot to test these field experiments, which was funded by SSP. These pilots have now been conducted and the interventions expanded into a large-scale evaluation.

The second project is looking at how public housing should be designed in response to rapid migration by the poor into the urban areas of Gujarat. This research is studying a public housing project in Ahmedabad to provide micro-level evidence on how relocating from urban slums to better quality public housing, and the change in neighborhood composition, affects the economic mobility of household members. The research team completed a household survey of beneficiaries, and our preliminary analysis shows clusters of houses with greater social diversity experience reduced social engagement and provision of certain public goods. To follow up on this result, we collected additional data on the usage and upkeep of public spaces in the housing project and are planning a public goods experiment.

Final progress report - submitted 091120