Using Economy-Wide Modeling of Climate Change Policies

In my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,”  I’ve had the pleasure of chatting with a number of former Harvard PhD students who have gone on to wonderful careers; and my most recent podcast was no exception, because I was joined by Karen Fisher-Vanden, Distinguished Professor of Environmental and Resource Economics and Public Policy at Pennsylvania State University, and President of the Association of Environmental and Resource Economists.  You can listen to our complete conversation here.

Fisher-Vanden earned a B.S. in Mathematics and a B.A. in Economics at the University of California, Davis, a M.S. in Management Science at UCLA Anderson School of Management, and a Ph.D. in Public Policy at Harvard. She spent time working at the South Coast Air Quality Management District in Los Angeles, California and the Pacific Northwest National Laboratory in Washington D.C. before settling into her academic career, initially at Dartmouth College and now at Penn State.

When I ask Karen why she moved to Penn State (having previously received tenure at Dartmouth), she responds, “Penn State is known for its work on climate.  I was really excited about the opportunity to come here and build a large research program in integrated assessment modeling and economy-wide modeling for climate, not only climate policy, but climate impacts and adaptation, and I was able to do that here.”

Much of her research has involved economy-wide models designed to decipher the economic feedbacks that drive climate impacts and climate policy, including a 2018 paper she co-authored with Qin Fan and Allen Klaiber, published in the Journal of the Association of Environmental Research Economists.

“What I really like about this paper is it shows how econometrics and structural econometrics can be combined with economy-wide modeling to capture some important general equilibrium feedbacks that are crucial for getting the story [right]… There had been [several] papers that were using these residential sorting models, which is a structural econometric model, to analyze the effects of climate change on household location choice. And they basically were finding that climate change would create this large shift in population from southern states in the U.S. to the northern states,” she explains.  “However, if you take into account equilibrium effects, you know that if everybody moves, north wages fall, housing prices increase. And these models were not taking that into account.”

‘[We] found that even though you do get some movement north, it significantly is dampened. And that seems to make sense if you start to look at what’s happening in areas that you see these people moving to high climate risk states like Arizona, Texas, Florida, because the cost of living is a lot cheaper. We’re starting to already see that type of thing [happening].”

Karen has regularly served on National Academies panels, EPA review panels, the EPA Science Advisory Board, and the Intergovernmental Panel on Climate Change.  I ask her whether those stints have been a diversion – albeit perhaps a worthwhile diversion – from her research and teaching, or has such service actually contributed to her research and/or teaching?

She responds that serving as a Lead Author of the Intergovernmental Panel on Climate Change’s (IPCC) Fifth Assessment Report, Working Group III, in 2014, assessing literature on the scientific, technological, environmental, economic, and social aspects of mitigation of climate change since 2007, helped guide her current work as director of Penn State’s Program on Coupled Human and Earth Systems.

“Just to know how the IPCC works…has been very valuable not only in teaching… A lot of times being involved in these things allows you to identify new areas of research, and that’s helped me with some recent direction of my research program,” she remarks. She notes that her students glean a deeper understanding of how to develop public policies that will have a positive impact.

“Why you’re taking my course is you have to understand the economic incentives to change behavior, and you need some sort of training in economics to be able to do this. You need to be able to talk like an economist in terms of talking to policymakers,” she states. “You want to harness [their passion], but you want to give them the tools to be able to be more effective in trying to argue their case and make a difference.”

For this and much more, please listen to my podcast conversation with Karen Fisher-Vanden, the 63rd episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunesPocket CastsSpotify, and Stitcher.

Share

A Leading Expert Reflects on Climate Change and Agriculture

In my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” I’ve had the opportunity of engaging in interesting conversations over the past five years with many outstanding academic economists who have carried out work that is relevant for climate change policy.  But an important topic that has not gotten much attention in the podcast – with the exception of my recent conversation with Charles Taylor – is the impact of climate change on agriculture.

That topic is, in fact, the focus of path-breaking research by my most recent guest – Wolfram Schlenker, the Ray Goldberg Professor of the Global Food System at the Harvard Kennedy School.  You can listen to our complete conversation here.

In our conversation, Schlenker, who very recently joined the Harvard Kennedy School faculty after 19 years at Columbia, told me he that he has long been interested in empirically identifying the impact of weather and climate on agricultural yields and prices.

“When I was a grad student, there was actually a very active debate whether U.S. agriculture would benefit or be harmed from climate change. That’s how I got really interested in it, because it seemed like an unresolved issue,” he remarks. “I think one of the common things that I think I was among the first to identify, at least statistically, is this crucial role of extreme heat.”

Weather extremes, Schlenker explains, are extremely important.

“If you look at the EPA’s latest proposal for the revised social cost of carbon, and you look at all the sectoral impacts and mortality, energy consumption, labor productivity, agriculture, the common theme across all of them is that it’s pretty much all driven by how much of the temperature distribution we push into the really upper tail where the outcomes are just very negative,” he says. “I think that’s something that’s been coming back repeatedly in many contexts.”

Schlenker says that he’s excited to co-teach a new Harvard PhD-level course on environmental and climate economics with James Stock, professor in the Harvard Department of Economics, who has also been a guest in my podcast series.

“It’s based partly on the class I taught at Columbia. It’s also based on Jim Stock’s experience that he had from being on the Council of Economic Advisors in Washington, DC, where he worked a lot on biofuel standards and energy transition, and so forth,” Schlenker explains. “We’re trying to merge both the classics, the fundamentals of environmental economics, with recent policy-relevant topics.”

Wolfram also shares his thoughts on the relatively recent youth movements of climate activism, prominent both in Europe and the United States.  He says that while individual actions may not have significant impacts on specific policy initiatives, they have drawn international attention to the issue, which has been beneficial.

“They’ve been really good at setting the agenda and [putting] pressure on policymakers to take this seriously. [These actions can] lead to regulation that could help us potentially make sure we don’t use all those finite resources, and then, really have an effect on climate change,” he says.

For this and much more, please listen to my podcast conversation with Wolfram Schlenker, the 62nd episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunesPocket CastsSpotify, and Stitcher.

Share

A Rising Star Shares His Thoughts on Land Use & Climate Policy

In my podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” I’ve had the pleasure of engaging in conversations with a significant number of outstanding economists, who have carried out important work relevant for environmental, energy, and resource policy, including by serving in important government positions.  That inevitably brings with it the reality that many of the people I’ve spoken with have been senior leaders in the profession, with the emphasis on the word “senior.”  I’m very pleased to say that in my most recent podcast, I’ve broken that mold with someone who is a young, rising star in the world of environmental economics, particularly in the realm of analyzing the causes and consequences of changes in land use.  I’m referring to my colleague, Charles Taylor, a relatively new Assistant Professor of Public Policy at the Harvard Kennedy School.  You can listen to our complete conversation here.

Taylor’s research often uses satellite data to address policy questions associated with land use, and at the beginning of our conversation, he explains that he first got interested in land use issues during his time spent as a consultant at McKinsey & Company, following his undergraduate years at the University of Virginia.

“I got to go work abroad in Qatar, Brazil, and Europe, and get a lot of exposure to these big climate change and land-based initiatives that governments and the private sector were doing. And I got really excited by that, and also very quickly learned I didn’t want to be a consultant,” he says. “I felt that I wanted to get more either skin in the game at that time or more in depth into the issues, and that prompted my journey into more of the entrepreneurial world.”

Charles soon connected with David Tepper, a former banker who shared his passion for land use issues, and together they co-founded Earth Partners, a private company that provides land restoration and bio-energy services intended to help rebuild soils, habitats, and other critical ecosystems.

“How do we restore ecosystems to meet all the challenges we’re facing, from water to food security to pollution to climate change, and how do we do that at scale?  [The idea was to] start a company [dedicated to] next generation land management,” he remarks. “A lot of the challenges we’re facing as a society directly or relate to land management, and looking around, I didn’t really see any companies or organizations taking that head on.”

Charles notes that he decided to pivot from his entrepreneurial venture into academia once he realized the limits of what can be accomplished with capital alone.

“We had great small-scale investors who wanted to do good things, but you still had to get their money back in a few years and that limits the scope of what you can do if you really want transformational change,” he explains. “So, that made me say, okay, what if I went back to the research side and found some way I could contribute to these problems on the other side while keeping one foot or at least half my brain in this world of how this … on the ground world works?”

Much of Charles Taylor’s current academic research relates directly to environmental economics associated with land use decisions, and is intended to inform lawmakers and other stakeholders of the benefits of specific policy choices.

“Humans have touched nearly every acre of non-barren land on earth. We’ve transformed it. We farm it for our food. We take its water. We shape its rivers for reservoirs, for irrigation. We use the wood for forests. We build on it for housing… We get our energy out of it, increasingly for renewable energy. We need a lot of it for siting wind and solar. And then climate change interacts with all this,” he says. “So, there’s all these questions I am really curious about [and am interested in] quantifying and using some of the empirical tools we have [to do that].”

Taylor references a recent paper he co-authored with Caltech Assistant Professor Hannah Druckenmiller that examines land use regulation under the Clean Water Act.

“You might see this spurious relationship between where wetlands are lost and more flood damages, for example, to think of one of the benefits of wetlands. And that paper was just trying to find an empirical way to uncover that and give an estimate of the value of wetlands that then could be used by the EPA in measuring the cost and benefits of these types of regulations, which are super important and cover almost all land use decisions and where you’re going to build in the U.S.,” he explains.

For this and much more, please listen to my podcast conversation with Charles Taylor, the 62nd episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunesPocket CastsSpotify, and Stitcher.

Share