This blog post is quite a departure from my typical ones about climate change economics and policy and/or my latest podcast. It’s actually stimulated by comments that were offered by my colleague, Jim Stock, at the conclusion of this past Wednesday’s Harvard Seminar in Environmental Economics and Policy.
At the beginning of the seminar, before introducing the day’s excellent presenter, Anna Russo, I announced two changes/improvements in the Seminar starting in the spring semester. One is that after 35 years of hosting the seminar series – first solo for 2 years, then 28 years with Marty Weitzman, and most recently 5 years with Jim Stock (that’s 70 semesters and a total of more than 500 seminars) – I was delighted to state that my Harvard Kennedy School colleague, Wolfram Schlenker, had agreed to take over for me in the spring, and co-host the Seminar with Jim. That’s one of two upgrades. (No, I’m not retiring, and I will be teaching my environmental economics and policy course as usual in the spring semester).
The other upgrade is that it will become the Harvard-MIT Joint Seminar in Environmental Economics and Policy, meeting every week on Thursdays, 4:30-5:45 pm, but alternating locations between Harvard and MIT. The first seminar in the spring semester will be on Thursday, February 5th.
At the end of Wednesday’s seminar, after Anna’s presentation, I made my usual closing comment that the spring semester schedule will be sent out soon. But before I could stand up to leave, Jim Stock surprised me (and presumably others in the room) by standing up, moving to the front of the room, and expressing his thanks for my having founded and led the Seminar for the past 35 years (as well as making some broader, very generous comments about my contributions to environmental economics and policy at Harvard and beyond). Jim knows that I am resistant to being acknowledged publicly, let alone celebrated, so I’m not going to compound matters by repeating any of it here.
So, then, what’s the reason for this blog post today? It’s quite simple. When Jim spoke at the end of the seminar, he read a list of the authors and papers from the very first semester that I had co-hosted with Marty Weitzman in the fall of 1992, and it turned out that the list included to future Nobel laureates, Bill Nordhaus and Bob Solow (plus one who should have been – in my view – Marty himself).
I’ve inserted the schedule below for your reading pleasure. Topics in environmental economics at that time were clearly much broader than today, when the profession is focused (albeit not exclusively) on climate change. For some of you, reviewing the schedule below will bring back memories, but I hope for everyone, it will be of interest.
I’m pleased to say that my most recent podcast is a distinct exception, because I converse with someone who is very young (and whom I predict will become a leader in the world of environmental economics), my Harvard colleague, Anna Russo, a Junior Fellow with the Harvard Society of Fellows, who will be an Assistant Professor of Economics and Social Studies at Harvard, beginning in July, 2026. You can listen to our complete conversation here.
Anna characterizes her research fields as environmental economics, public finance, industrial organization, and market design, and so I ask her how she came to focus on such a diverse set of fields.
“It came about from taking field courses and figuring out the classes of questions that got me excited, which are typically settings in which we think there’s some kind of market that could provide a lot of value to society or to participants, but for some kind of nebulous, probably pointing to some sort of market or policy failure reason, is not functioning well,” she remarks. “That is exciting to me because I want to try to think about how I can fix it.”
Russo’s recent paper, co-authored with Karl Aspelund, who is now completing his PhD in economics at MIT, focuses on the USDA’s Conservation Reserve Program’s auction mechanism for ecosystem services, using satellite-derived land use data to determine the impact of environmental incentive policies. I ask her what leverage they are able to achieve by combining auction data with satellite observations.
She responds that “when we’re trying to incentivize someone to do something good, for example, conserve their land, we care deeply whether they would have conserved that land anyways, in which case the finances spent on that are potentially wasted or could have been used elsewhere. That’s where linking the bids to the satellite data really come in handy because it allows me to learn about both individual participants’ costs and behavior in this auction mechanism because bids reveal a lot about the amount that an individual participant would be willing to accept to participate in the conservation reserve program. The satellite data… measures their behaviors on their land, both inside the program and outside the program.”
Looking forward, Anna Russo explains that she intends to continue studying vexing market design questions.
“Following the stream of the USDA paper, [I’m] thinking about conservation markets more globally and I also am generally very excited by questions related to climate change adaptation. And I think it’s a sad truth, but the truth is that climate change is already really affecting how we live our lives and imposing lots of risks, particularly related to natural disasters, and I’m interested in studying those further,” she remarks. “Most of my research relates to these high-level questions or themes about information economics, imperfect information, and how participants engage in these environments with imperfect or asymmetric information.”
Russo says that when she joins the Harvard faculty, she hopes to influence the next generation of environmental economics scholars by helping them understand how they can have an impact on climate policy and other urgent global challenges.
“What other field offers the combination of a hugely pressing societal problem that is fundamentally linked to economic incentives that we have a decent understanding of how to potentially solve, but much is still left unresolved both from a theoretical and an implementation standpoint?” she asks. “The data that’s available for studying environmental economics questions is expanding dramatically due to satellite data and improvements in remote sensing. And so, the combination just presents an incredibly exciting avenue to ask questions at the intersection of policy and economics.”
For this and much more, please listen to my complete podcast conversation with Anna Russo, the 69th 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:
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.
Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.
Billy Pizer, Vice President for Research & Policy Engagement, Resources for the Future.
Daniel Bodansky, Regents’ Professor, Sandra Day O’Connor College of Law, Arizona State University.
Catherine Wolfram, Cora Jane Flood Professor of Business Administration, Haas School of Business, University of California, Berkeley, currently on leave at the Harvard Kennedy School.
James Stock, Harold Hitchings Burbank Professor of Political Economy, Harvard University.
Mary Nichols, long-time leader in California, U.S., and international climate change policy.
Geoffrey Heal, Donald Waite III Professor of Social Enterprise, Columbia Business School.
Kathleen Segerson, Board of Trustees Distinguished Professor of Economics, University of Connecticut.
Meredith Fowlie, Professor of Agricultural and Resource Economics, U.C. Berkeley.
Karen Palmer, Senior Fellow, Resources for the Future.
Severin Borenstein, Professor of the Graduate School, Haas School of Business, University of California, Berkeley.
Michael Toffel, Senator John Heinz Professor of Environmental Management and Professor of Business Administration, Harvard Business School.
Emma Rothschild, Jeremy and Jane Knowles Professor of History, Harvard University.
This is a blog essay I have been dreading having to write, because I knew that writing it would be painful, if not downright depressing. However, I also felt that it is a blog essay that I am obliged to write.
Why Am I Obliged to Write This Essay?
Three reasons. First, back in October 2016, as that year’s Election Day approached, I came out of my political closet (as a long-time bipartisan and moderate independent), and revealed my great concerns, indeed fears, of what a Trump presidency would mean – not just for environmental and climate change policy, but for a much larger set of issues with profound consequences domestically and internationally (This is Not a Time for Political Neutrality). I wrote about “what a Trump presidency would mean for my country and for the world in realms ranging from economic progress to national security to personal liberty,” based on Trump’s “own words in a [2016] campaign in which he substituted impulse and pandering for thoughtful politics” … and “built his populist campaign on false allegations about others, personal insults of anyone who disagreed with him, and displays of breathtaking xenophobia, veiled racism, and unapologetic sexism.”
Second, just a week after Trump’s surprising win over Hilary Clinton, I turned my focus in this blog to considering carefully the implications of the (first) Trump administration for environmental, energy, and climate change policy and action (What Does the Trump Victory Mean for Climate Change Policy?). I’m pleased to say that much (but not all) of what I feared that first Trump administration would bring did not occur, for four reasons, among others: (a) the incompetence of the administration, particularly in regard to producing regulatory changes that would withstand legal challenges (Reflecting on Trump’s Record); (b) some Trump appointees provided guardrails protecting the country from the President’s worse instincts; (c) the (Democratic) Congress provided significant checks; and (d) dedicated, expert staff in the various departments and agencies (and even in the Executive Office of the President) were determined to resist the undoing of decades of sound public policy.
Third, in January 2021, just days before the inauguration of President Biden, I wrote in some detail about what I expected the consequences to be for domestic and international climate change policy of the then forthcoming Biden administration. For better or for worse, much of what I anticipated, did indeed subsequently come to pass (Climate Change Policy & Action in the Biden Administration).
So, now with Trump 2.0 two months away, I feel obliged to offer my thoughts about the forthcoming administration’s implications for climate change policy and action. I need not point out that none of the four reasons I listed above to explain why much of what I feared from the first Trump administration did not occur, apply for the second Trump administration.
A Very Important Caveat Before Turning to Climate Change Policy
I want to acknowledge that my major reactions to the Trump victory and my major concerns about the forthcoming Trump administration are not about climate change policy or even environmental policy more broadly, but about: the future of American democracy; global security (the future of NATO and the stability of the European Union); the real economic consequences of across-the-board tariffs (consumer costs, inflation); tax cuts for the rich; mass deportations; and leadership by uninformed demagogues – Matt Gaetz as Attorney General, RFK Jr as Secretary of Health and Human Services, Peter Hegseth as Secretary of Defense, Elon Musk on economic policy and business regulation, and so many others. The four I name are not just bad appointments, but absolutely appalling ones, who share the one characteristic that apparently matters – blind loyalty to the authoritarian who has been elected President.
But my expertise is not in the study of democratic institutions, international affairs, macroeconomics, or immigration policy, but in the study of environmental and climate change economics and policy. So, I will turn to this now, and I will be brief, partly because we will learn much over the coming two months, as more cabinet-level and then lower-level nominations are announced. My other reason for being brief is that, as I suggested at the outset, it is painful to write this essay, and so I want to finish writing as quickly as I can. I apologize for that.
International Climate Change Policy
In terms of the international dimensions of climate change policy, that is, cooperation with other countries in addressing a fundamentally global commons problem of massive magnitude, the focus needs to be on the United Nations Framework Convention on Climate Change (UNFCCC), the Paris Agreement, and the annual Conferences of the Parties. Having just returned from COP29 in Baku, Azerbaijan, my next blog essay will focus on that and will appear in a week or so, after COP29 has adjourned and the outcome has become clear. So, for now, I will stick to some broad observations about the consequences of Trump 2.0 for the international domain.
In short, it is 2016 all over again, when Trump stated during the campaign that he would withdraw the United States from the Paris Agreement, and then announced the “withdrawal” on June 1, 2017. As I wrote at the time (Trump’s Paris Withdrawal: The Nail in the Coffin of U.S. Global Leadership?), the Paris Agreement itself specifies that the soonest any Party to the Agreement can initiate withdrawal is three years after the Agreement comes into force, followed by a one-year delay before withdrawal takes effect. Hence, Trump’s announcement did not take effect until November of 2020! For almost the entirety of Trump 1.0, the United States remained a Party to the Paris Agreement, and dedicated staff from the U.S. State Department continued to participate in the ongoing negotiations in meaningful ways.
Hence, the United States was out of the Paris Agreement for just a few months – from November 2020 until a month after Inauguration Day, January 20, 2021, when President Biden filed the paperwork for the U.S. to rejoin 30 days later.
Now, however, the statutory three-year delay period has long since passed, and so assuming that Trump files the withdrawal papers on January 20, 2025 (which is likely, given the much more careful preparations his supporters have been making for the past year), one year later the U.S. will be alone among the community of nations as a non-Party of this fundamental and path-breaking Agreement (after some delay, Iran and Algeria ratified the Agreement). Furthermore, it is much less likely that Civil Service staffers at the State Department, EPA, or the Department of Energy will be able to continue their work, as Trump 2.0 seems determined to purge the upper ranks of the Civil Service of anyone other than Trump loyalists (by making these positions require political appointment).
A more drastic action would be to withdraw the United States not just from the Paris Agreement of 2015, but from the umbrella agreement, the United Nations Framework Convention on Climate Change (UNFCCC, 1992). Ironically, this requires only a one-year delay to become effective after filing paperwork. During Trump 1.0, serious consideration was never given to this more significant move, perhaps because the UNFCCC was ratified (by voice vote with apparent unanimity) by the U.S. Senate in 1992 and signed by Republican President George H.W. Bush.
Now, some of the most passionate climate skeptics in Trump’s orbit want the U.S. to pull out of the UNFCCC as well. A key question, which legal scholars will debate, is whether withdrawal requires Senate action, including a super-majority vote, which Democrats in the chamber could easily defeat. There seems to be some uncertainty. While Senate action is required to ratify treaties, Senate involvement in withdrawal is not mandated nor even mentioned in the U.S. Constitution. But Presidents have previously withdrawn from treaties unilaterally. That said, this apparently remains a debated issue in U.S. constitutional law.
In the meantime, a key question is what will the effect of U.S. withdrawal from the Paris Agreement – or more broadly, the election results and the promise of Trump 2.0 – have on other countries’ climate stances and policies. As of now, it seems that Trump’s election need not derail global climate action, but it is too soon to make firm predictions. It does appear that Trump’s victory may have emboldened Saudi Arabia to be much more strident in its defense of fossil fuels at COP29 (more about this in my next blog essay).
It also seems clear that the new administration will try to roll back many provisions of the Inflation Reduction Act (IRA), and perhaps some provisions of the Bipartisan Infrastructure Act. Actual repeal of the statutes is unlikely, due to Senate filibuster rules (i.e., the necessity of 60 votes, more than Republicans will control). In the face of this, the Biden administration is rushing to finalize regulations, and to get IRA money (explicit subsidies) out the door. Beyond this, the White House has considerable latitude to defund elements of the IRA, since nearly all are explicit or implicit subsidies. The methane fee will be a particular target.
On the other hand, the protectionist elements of the IRA, including domestic content standards, will be harder to roll back, because of bipartisan support. Furthermore, fully 80% of investments in the first two years of IRA implementation went to Republican Congressional districts, whether locations for electric vehicle plants in Georgia, battery factories in South Carolina, or others.
It is also important to recognize that the tremendous reductions that have been experienced over recent years in U.S. carbon dioxide (CO2) emissions were not due to government policies, but largely a result of exogenous technological change and market forces, namely the development of horizontal drilling and hydraulic fracturing (fracking), which resulted in opening up new, low-cost, unconventional sources of both natural gas and oil. This is what led to the massive substitution in U.S. electricity generation from major reliance on coal to major reliance on gas. Added to this are the very significant decreases experienced over the past few years in the costs of renewable sources – both solar and wind. None of this will go away.
Finally, the November election brought a small, but meaningful bit of positive climate policy news when Washington State voters decided not to repeal the state’s Cap-and-Invest (cap-and-trade) program. Linkage discussions with California and Quebec will soon commence, if they have not already. Overall, this is a reminder of the fact that the next four years (at least) will again be a period when sub-national climate policy is increasingly important in the USA. For the time being, this is the best I can do at trying to offer a somewhat positive end to this essay. I wish I could do better.
