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Effective Environmental Policy in the Presence of Distorting Taxes

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This research will investigate the economic cost of policy instruments for environmental protection in the presence of preexisting distortionary taxes. Recent literature has identified the potentially significant indirect economic cost that an environmental tax has when there are preexisting distortionary taxes in factor markets such as capital and labor. This cost counteracts the anticipated benefits that might follow from recycling revenue raised by an environmental tax to reduce preexisting taxes.

The insight that motivates this proposal is that environmental policies that do not raise revenues nonetheless are likely to impose a cost through their interactions with preexisting taxes just as would an environmental tax. However, they forgo the potential benefit from recycling environmental tax revenues. In this research the investigators will focus primarily on the comparison of revenue-raising and nonrevenue-raising instruments in various settings in evaluating their economic cost in achieving a stated environmental goal.

This proposal has two parts; each part will involve all three investigators. The part to be funded by NSF will focus on the regulation of a single pollutant in the presence of preexisting taxes in factor markets. The investigators will use an analytical model to advance the understanding of the interactions between environmental policy and the tax system. The researchers will complement the theoretical model with numerical models to deal with some more complex interconnections that cannot be examined analytically. The numerical models will consider the costs of existing and potential policies for reducing air emissions of particular pollutants such as CO2 and SO2 in the U.S. economy.

The second part will be funded by EPA and will extend the analysis of preexisting distortions in factor markets to consider preexisting distortions in an industry that is immediately subject to environmental regulation. The investigators will model the institutional setting of the U.S. electric utility industry to consider the regulation of multiple pollutants, other environmental policies special to the industry, and various forms imperfect competition and market structure that may characterize ongoing changes in the industry.

Our initial research on this topic suggests there are striking and important differences between the economic performance of alternative instruments when they are evaluated in the context of preexisting distortionary taxes. The results of this research project should advance the understanding of the economic cost of environmental regulation, and especially the design of policies to minimize that cost.

Metadata

EPA/NSF ID:
R825313-010
Principal Investigators:
Burtraw, Dallas
Parry, Ian
Goulder, Lawrence
Technical Liaison:
Research Organization:
Resources for the Future
Stanford University
Funding Agency/Program:
EPA/ORD-NSF/Valuation
Grant Year:
1996
Project Period:
October 1, 1996 - September 30, 1998
Cost to Funding Agency:
$300,000
Project Status Reports:
From Proceedings of April 1998 NSF/EPA Conference:

Traditional analysis of environmental problems is cast in a so-called “first best” setting absent distortions away from economic efficiency other than environ- mental externalities. This project is investigating the cost of environmental policies in a more realistic “second-best” setting in which the economy is distorted away from economic efficiency prior to the adoption of environmental policy. The economic cost of policy instruments is being investigated in the presence of preexisting distortionary taxes, and guidance for policy-makers for the choice of instruments to reduce the cost of environmental policies is being developed.

Environmental policies offer benefits through environmental improvement and by imposing costs on firms that raise product prices to better reflect the social opportunity costs of resources used in production. However, set in a context with preexisting distortionary taxes, an offsetting detrimental effect is identified. The increase in product prices serves to lower the real wage of workers, which can be viewed as a “virtual tax” layered on top of preexisting taxes that amplifies the distortions of the tax system. Some environmental policies have a third effect stemming from their ability to raise revenues that in principle could be used to reduce preexisting taxes, offsetting the tax-interaction effect to an important but only partial degree.

This project focuses on the comparison of revenue-raising and nonrevenue-raising instruments and evaluates their economic cost in achieving a stated environmental goal. Analytical and numerical general equilibrium models are used to examine the costs of pollution reduction under a range of environmental poli- cy instruments in a second-best setting with preexisting factor taxes and to provide guidance for the choice of policy instruments under various circumstances. The presence of distortionary taxes raises the costs of pollution abatement under each instrument that is exam- ined (i.e., taxes, nonauctioned permits, performance standards, fuel [output] taxes and technology standards) relative to its costs in a first-best world. For plausible values of preexisting tax rates and other parameters, the cost increase for all policies is substantial (35 percent or more). This extra cost is an increasing function of the magnitude of preexisting tax rates.

Policies that raise revenues promise to signifi- cantly out-perform policies that fail to do so. For instance, nonauctioned permits can be several times more expensive than environmental taxes or auctioned permits. A detailed analysis of the SO2 emission allowance trading program indicates that preexisting taxes raise the cost to the economy of this regulation by $907 million per year, adding an additional 70 percent to the compliance cost for the program. If the program were to raise revenue, this could reduce the cost by $533 million according to our model. Earlier work on instrument choice has emphasized the potential re- duction in compliance cost achievable by converting fixed emissions quotas into tradeable emissions permits. This project’s results indicate that the regulator’s decision of whether to auction or grandfather emissions rights can have equally important cost impacts.

The cost differences among instruments depend importantly on the extent of pollution abatement under consideration. For small emission reductions, the investigators found that nonauctioned permits perform relatively worse. For instance, the costs of reducing carbon emissions by 10 percent are more than 300 percent higher using nonauctioned permits than under a tax. Strikingly, for all instruments, except the fuel tax, these costs converge to the same value as abatement levels approach 100 percent. Figure 1 indicates the net efficiency gain of taxes and nonauctioned permits in achieving climate change goals, when emissions are set at the so-called “Pigouvian level,” calibrated to an efficient level in a first-best world absent preexisting taxes. The horizontal axis indicates a range of potential marginal damages from carbon that in turn determine the Pigouvian level of emission reductions (not shown), and the vertical axis indicates benefits less costs (net benefits). The top curve shows the efficient carbon tax if there are no preexisting taxes in the economy. The middle curve shows the efficient carbon tax given preexisting taxes. Though it is uniformly lower, both yield positive net levels for any level of marginal damages and an associated goal for emission reductions. The bottom curve indicates the net benefits if a nonauctioned permit (carbon quota) scheme is used to achieve the Pigouvian level of emission reductions. Over a large range of plausible marginal damage estimates, the net benefits of this type of policy are negative.

The investigators are modeling the institutional setting of the U.S. electric utility industry to consider the regulation of multiple pollutants, other environ- mental policies special to the industry, and various forms of imperfect competition and market structure. Other important extensions have to do with the role of heterogeneity among firms and the relationship between environmental quality, economic productivity, and labor supply.

Figure 1. Net efficiency gain under the Pigouvian rule (not available).


From earlier status report:

Project Summary:

This purpose of this research is to investigate the economic cost of policy instruments for environmental protection in the presence of preexisting distortionary taxes. Environmental taxes or other means of raising revenue as a component of environmental policy potentially yield an economic dividend by providing revenue that could be used to reduce preexisting taxes in factor markets such as labor and capital markets. Since all taxes create inefficiency, the reduction of taxes in factor markets would be expected to improve economic efficiency. However, there is another potentially significant indirect economic cost that an environmental tax has when there are preexisting distortionary taxes in factor markets. This cost counteracts the anticipated benefits that might follow from recycling revenue raised by an environmental tax to reduce preexisting taxes.

The insight that motivates this proposal is that environmental policies that do not raise revenues nonetheless are likely to impose a cost through their interactions with preexisting taxes just as would an environmental tax. However, they forgo the potential benefit from recycling environmental tax revenues. In this research we focus primarily on the comparison of revenue-raising and nonrevenue-raising instruments in various settings in evaluating their economic cost in achieving a stated environmental goal.

Accomplishments and Research Results:

The first year of the project has resulted in two completed manuscripts that have been submitted to scholarly journals. One has been accepted for publication. In addition two other manuscripts are nearly complete.

Earlier work on instrument choice has emphasized the efficiency significance of the decision whether to allow trades in emissions rights by converting fixed emissions quotas into tradable emissions permits, by distributing abatement efforts to firms with the lowest cost of reducing emissions. A key result of our work is the finding that the regulatory decision about whether to allocate these permits without charge (for example, so-called "grand fathering" of quotas to emitters based on historic emissions) versus auctioning permits in order to raise revenue can be equally as important in terms of economic efficiency. The cost of grand fathering may well offset the efficiency gains achieved by improving cost effectiveness in compliance activities.

We examine this issue in the context of the SO2 trading program instituted under the 1990 Clean Air Act Amendments. Using a computable general equilibrium model we estimate preexisting taxes raise the cost to the economy of this regulation by $907 million per year. We estimate this to be an additional 70% to the out-of-pocket compliance cost for the program. More than half of the additional cost reflects the failure of the program to raise revenue that could be used to reduce preexisting(labor) taxes. Were the program to raise revenue, this could reduce this cost by $533 according to our model.

Another paper examines the economic efficiency of two policies to reduce carbon emissions in the U.S. a carbon tax and a tradable quota (permit) system with quotas allocated at zero charge. The tax interactions significantly raise the costs of both policies relative to what they would be in the absence of preexisting taxes, sometimes called the "first-best" setting. In the more realistic "second-best" setting that includes preexisting taxes, the cost of both policies are much higher. However, we show that the tax interactions put the quota system at a significant efficiency disadvantage relative to the carbon tax. The costs of reducing emissions by 10 percent are more than 300 percent higher under the quota system than under the tax. This disadvantage reflects the inability of the quota policy to generate revenue that can be used to reduce preexisting distortionary taxes.

Publications and Presentations:

"Revenue-Raising vs. Other Approaches to Environmental Protection: The Critical Significance of Preexisting Tax Distortions," by Goulder, Parry and Burtraw. Status: Forthcoming, Winter 1997, RAND Journal of Economics.

Other manuscripts include:

"When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," by Parry, Williams and Goulder. Status: Completed and submitted to journal.

"The Cost-Effectiveness of Alternative Instruments For Environmental Protection in a Second-Best Setting," by Goulder, Parry, Williams and Burtraw. Status: October 1997 manuscript near completion and submission to a journal.

"A Second-Best Comparison of Eight Policy Instruments to Reduce Carbon Emissions," by Parry and Williams. Status: Paper near completion and submission as invited contribution to a special issue of Resource and Energy Economics.

Articles for general audiences include:
  • "Reducing Carbon Emissions: Interactions with the Tax System Raise the Cost" by Ian Parry, Resources, published by Resources for the Future, Summer 1997.
  • "Revenue Recycling and the Costs of Reducing Carbon Emissions" by Ian Parry, published at the Resources for the Future Weathervane web site: www.rff.org.
Presentations include:
  • Public Lecture, Resources for the Future, October 1996, by Dallas Burtraw and Ian Parry.
  • Seminar, Department of Economics, University of Maryland, October 1996, by Ian Parry.
  • Paper presentation, Southern Economics Association, November 1996, by Dallas Burtraw.
  • Seminar, White House Council of Economic Advisors, December 1996, by Dallas Burtraw and Ian Parry.
  • Paper presentation, American Economic Association, January 1997, by Lawrence Goulder and Ian Parry.
  • Seminar, Economics Department, University of California at Santa Barbara, February 1997, by Lawrence Goulder.
  • Seminar, Economics Department, Duke University, May 1997, by Lawrence Goulder.
  • Seminar, Industrial Energy Consumers Public Policy Workshop, June 1997, by Ian Parry.
  • Paper presentation, National Bureau of Economic Research Summer Workshop, July 1997, by Ian Parry and Roberton Williams.
  • Seminar, Economic Policy Institute, July 1997, by Dallas Burtraw.
Project Reports:
Final

1. Introduction

This statement is a final report on the EPA Grant titled “Effective Environmental Policy in the Presence of Distorting Taxes.” The original grant was for two years, but at the end of the second year we requested and received a one year no-cost extension. The third year is now complete and the project has continued to meet with considerable success. Almost all of the goals of the original proposal have been met, and several unanticipated extensions have been pursued, resulting in several completed manuscripts and published articles.

In addition, the project has benefited from the substantial contribution of a fourth collaborator, Roberton Williams, formerly a graduate student at Stanford University and now an Assistant Professor at the University of Texas. Mr. Williams has worked closely with Professor Goulder in his graduate career, and has co-authored or sole-authored manuscripts prepared under this project. A fifth collaborator was Matt Cannon, a Research Associate at Resources for the Future, who worked closely with Dallas Burtraw.

Description/Objective of Research:

The purpose of this research is to investigate the economic cost of policy instruments for environmental protection in the presence of preexisting distortionary taxes. Many observers have suggested that environmental taxes or other means of raising revenue as a component of environmental policy could yield an economic dividend by providing revenue that could be used to reduce preexisting taxes in factor markets such as labor and capital markets. Since all taxes create inefficiency, the reduction of taxes in factor markets would be expected to improve economic efficiency. However, more recent literature has identified the potentially significant indirect economic cost that an environmental tax has when there are preexisting distortionary taxes in factor markets. This cost counteracts the anticipated benefits that might follow from recycling revenue raised by an environmental tax to reduce preexisting taxes.

The insight that motivates this project is that environmental policies that do not raise revenues nonetheless are likely to impose a cost through their interactions with preexisting taxes just as would an environmental tax. However, they forgo the potential benefit from recycling environmental tax revenues. In this research we focus primarily on the comparison of revenue-raising and nonrevenue-raising instruments in various settings in evaluating their economic cost in achieving a stated environmental goal.

Methods:

This research has two parts. The first part focuses on the regulation of a single pollutant in the presence of preexisting taxes in factor markets. We use analytical models to advance the understanding of the interactions between environmental policy and the tax system. We complement the theoretical models with numerical models to deal with some more complex interconnections that cannot be examined analytically. The numerical models consider the costs of existing and potential policies for reducing air emissions of particular pollutants such as CO2, SO2 and NOX in the U.S. economy. The first part of the research is funded through grants form EPA and NSF.

The second part of the research extends the analysis of preexisting distortions in factor markets to consider in fuller detail the preexisting regulations that govern regulations of pollutants in the U.S., especially within the electricity industry. These extensions consider the combination of policies that simultaneously affect emissions, targeted policies such as mandates for abatement technologies affecting specific industries, and the role of heterogeneity in abatement costs and production costs. The second part of the research involves funding from EPA only.

In addition to these two anticipated areas of focus, a third focus has emerged over the course of the project. This focus includes several extensions to the project not anticipated in the original proposal. These extensions include the consideration of health benefits within a general equilibrium setting for comparison with costs, an exploration of the role of tax-interaction effects in setting agricultural policy, the interaction of environmental policy with tax-deductible spending, and the role of preexisting environmental policies.


Accomplishments and Research Results:

The first year of the project yielded three manuscripts that were published in scholarly journals. The second year of the project has added to this list with four additional scholarly manuscripts. Two of these are already accepted for publication and forthcoming in scholarly journals. In addition, we have completed six manuscripts that are review articles or syntheses of the literature. Several of these are written in a format accessible to a general policy audience in order to address the public outreach component of this grant. A couple of these are technical summaries written for a general audience of economists. In the third year additional work continued that modified some previous manuscripts, leading to final publication of several of these manuscripts. One new effort was conducted in the third year, resulting in an additional manuscript that will be submitted for publication.

Earlier work on the choice of instruments for environmental policy emphasized the efficiency significance of the decision whether to allow trades in emissions rights by converting fixed emissions quotas into tradable emissions permits in order to assign abatement efforts to firms with the lowest cost of reducing emissions. A key result of our work is the finding that the regulatory decision about whether to allocate these permits without charge (for example, so-called “grandfathering” of permits to emitters based on historic emissions) versus auctioning permits in order to raise revenue can be equally as important in terms of economic efficiency. The cost of grandfathering may well offset the efficiency gains achieved by improving cost effectiveness in compliance activities.

In the first year of this project we examined this issue in the context of the SO2 trading program instituted under the 1990 Clean Air Act Amendments. Using a computable general equilibrium model we estimate preexisting taxes raise the cost to the economy by an additional 70% relative to the out-of-pocket compliance cost of the program. More than half of the additional cost reflects the failure of the program to raise revenue that could be used to reduce preexisting (labor) taxes.

Another paper in the first year examined policies to reduce carbon emissions in the U.S. The tax interactions significantly raise the costs of taxes and tradable permits relative to what they would be in the absence of preexisting taxes. However, the tax interactions put the permit system at a significant efficiency disadvantage relative to the carbon tax. A third paper in the first year examined a large set of instruments and found comparable results.

In the second year of this project we have extended previous work by considering the costs and overall efficiency impacts of emissions taxes, emissions permits, fuels taxes, performance standards, and mandated technologies, and explore how costs change with the magnitude of pre-existing taxes and the extent of pollution abatement. We examine these policies within the context of costs to reduce emissions of NOX in the U.S. We find that the presence of distortionary taxes raises the costs of pollution abatement under each instrument relative to its costs in a first-best world. This extra cost is an increasing function of the magnitude of pre-existing tax rates. For plausible values of pre-existing tax rates and other parameters, the cost increase for all policies is substantial (35 percent or more). The impact of pre-existing taxes is particularly large for non-auctioned emissions permits. Here the cost increase can be several hundred percent. Earlier work on instrument choice has emphasized the potential reduction in compliance cost achievable by converting fixed emissions quotas into tradable emissions permits. Our results indicate that the regulator’s decision whether to auction or grandfather emissions rights can have equally important cost impacts. Similarly, the choice as to how to recycle revenues from environmentally motivated taxes can be as important to cost as the decision whether the tax takes the form of an emissions tax or fuel tax. This choice involves whether to return the revenues in lump-sum fashion or via cuts in marginal tax rates. This is particularly important when only modest emissions reductions are involved.

In both first- and second-best settings, the cost differences across instruments depend importantly on the extent of pollution abatement under consideration. Total abatement costs differ markedly at low levels of abatement. Strikingly, for all instruments except the fuel tax these costs converge to the same value as abatement levels approach 100 percent.

Most recent studies ignore the benefits of regulation on labor supply and focus only on the cost side of the policy choice. In another paper, we develop an analytically tractable general equilibrium model that allows regulation to provide benefits through several different channels, including improved health or productivity. The model shows that when the benefits of regulation come in the form of improved health or productivity, the benefits do affect labor supply, and therefore create a benefit-side tax-interaction effect in addition to the familiar cost-side interaction. This effect can magnify or diminish such benefits. When the benefits of regulation boost labor productivity, the effect substantially magnifies such benefits. When regulation affects consumer health, this effect will tend to have the opposite effect, diminishing the benefits of regulation. This benefit-side interaction is potentially as large as the cost-side interactions, and thus can fundamentally affect the optimal level of regulation.

In yet another paper, we extend the prior literature on shifting tax burden toward environmental issues by allowing for consumption goods that are deductible from labor taxes. These “goods” represent medical insurance, other less tangible fringe benefits, mortgage interest, and so on. We find that incorporating tax-favored consumption may overturn key results from earlier studies. In particular, a revenue-neutral pollution tax (or auctioned pollution permits) can produce a “double dividend” by reducing both pollution and the costs of the tax system.

Another paper analyzes how distortionary factor taxes affect the welfare impacts of production subsidies, production quotas, acreage controls, subsidies for acreage reductions and cash transfers to farmers. Pre-existing taxes substantially raise the costs of all these policies.

In the third year of the project, we completed another paper that investigates heterogeneity in the cost of pollution abatement using a simple computable general equilibrium framework. When underlying costs are heterogeneous, aggregation to a sector-level abatement cost function yields qualitatively different findings from a disaggregated representation of costs. Tradable permits that do not raise revenue (grandfathered permits) out-perform command and control approaches over a wide range of emission reductions, reversing a finding in the recent literature. We find the results to be sensitive in a predictable way to the characterization of heterogeneity in the underlying data, providing guidance about the requisite level of detail for similar modeling efforts.


Conclusions:

The conclusions from this body of research are extensive, and relate in special ways to the various contexts that were investigated. In brief, the main points of conclusion include:

Preexisting distortions away from economic efficiency raise the cost of environmental regulations to the economy in almost all contexts that were studied. Preexisting taxes are an important example of a distortion that raises the cost of environmental regulations.
The extra cost that is identified in the context of preexisting taxes is an increasing function of the magnitude of preexisting tax rates.
The extra cost that is identified in the context of preexisting taxes varies significantly according to the type of policy instrument used to impose environmental regulations. The key characteristic is the ability of the instrument to raise revenues that can be used to reduce other preexisting taxes.
Regulatory design and the decision whether to raise revenue with environmental regulations can be equally as important in terms of economic efficiency as the decision to convert fixed emissions quotas into tradable emissions permits. Tax interactions put the permit system that fails to raise revenue at a significant efficiency disadvantage relative to a revenue-raising environmental tax.
Tradable permits may be more expensive that traditional command-and-control approaches to environmental regulation over a large range of emission reduction targets.
For all instruments, except the fuel tax, the difference between regulatory costs in the presence and in the absence of preexisting taxes converge to the same value as abatement levels approach 100 percent.
Other regulations in addition to conventional environmental regulation, such as production subsidies, production quotas, acreage controls, subsidies for acreage reductions and cash transfers to farmers, also are found to interact with preexisting taxes. Pre-existing taxes substantially raise the costs of all these policies.
When underlying costs are heterogeneous, aggregation to a sector-level abatement cost function yields qualitatively different findings from a disaggregated representation of costs. Tradable permits that do not raise revenue (grandfathered permits) out-perform command and control approaches over a wide range of emission reductions, reversing a finding in the recent literature.
The choice as to how to recycle revenues from environmentally motivated taxes can be as important to cost as the decision whether the tax takes the form of an emissions tax or fuel tax.
There also exists a tax-interaction effect on the benefit side of environmental regulations. This effect can magnify or diminish such benefits.
The benefit-side interaction is potentially as large as the cost-side interactions, and thus can fundamentally affect the optimal level of regulation.
Incorporating tax-favored consumption into economic models may yield a “double-dividend” with negative costs associated with environmental regulation.


Papers and Manuscripts:

The papers and manuscripts completed under this project are listed according to the year in which most of the work was completed.

Year One Papers and Manuscripts:

1. Goulder, Lawrence H., Ian Parry and Dallas Burtraw. 1997. “Revenue-Raising vs. Other Approaches to Environmental Protection: The Critical Significance of Pre-Existing Tax Distortions.” RAND Journal of Economics, 28: 708-31.
2. Goulder, Lawrence H., Ian Parry and Roberton C. Williams. 1999. “When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets.” Journal of Environmental Economics and Management, 37: 52-84.
3. Parry, Ian, and Roberton C. Williams. 1999. “A Second-Best Evaluation of Eight Policy Instruments to Reduce Carbon Emissions.” Resource and Energy Economics, 21: 347-373.


Year Two Papers and Manuscripts -Primary Research:

4. Goulder, Lawrence H., Ian Parry, Roberton C. Williams and Dallas Burtraw. 1999. “The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting.” Journal of Public Economics, 72: 329-360.
5. Parry, Ian. 1999. “Agricultural Policies in the Presence of Distorting Taxes.” American Journal of Agricultural Economics, 81: 212-230.
6. Williams, Roberton. 1998. “The Impact of Pre-Existing Taxes on the Benefits of Regulations Affecting Health or Productivity,” Unpublished manuscript, Stanford University Economics Department. Status: In review at Journal of Public Economics.
7. Bento, Antonio Miguel, and Ian Parry. 1999. “Tax Deductible Spending, Environmental Policies, and the ‘Double Dividend’ Hypothesis.” Journal of Environmental Economics and Management, forthcoming.


Year Two Papers and Manuscripts-Review Articles and Public Outreach:

The following manuscripts are additional products that have resulted from this project and reflect an explicit effort to synthesize the research and make the results available to general audiences. Each of these are sizable contributions on their own, but they do not offer original research. They are intended to address the public outreach component of this research project. Not listed are numerous seminars and conference presentations that also contribute to the public outreach component.

8. Bovenberg, A. Lans and Lawrence H. Goulder. “Environmental Taxation,” in A. Auerbach and M. Feldstein, eds., Handbook of Public Economics (second edition). Amsterdam: North-Holland, (forthcoming).
9. Goulder, Lawrence H. “Tax Interactions, Revenue Recycling, and the Efficiency Impacts of Pollution-Abatement Policies,” in P. Portney and R. Schwab, eds., Essays in Honor of Wallace E. Oates, Edward Elgar Publishing, (forthcoming).
10. Parry, Ian. 1997. “Reducing Carbon Emissions: Interactions with the Tax System Raise the Cost.” Resources, 128, 9 – 12.
11. Parry, Ian. 1997. “Revenue Recycling and the Costs of Reducing Carbon Emissions.” Climate Issues Brief No.2, Resources for the Future, Washington, DC.
12. Parry, Ian and Wallace E. Oates. 1998. “Policy Analysis in the Presence of Distorting Taxes.” Journal of Policy Analysis and Management, forthcoming.


Year Three Papers and Manuscripts:

Activities in the third year included revision to several of the manuscripts now listed above as published or forthcoming. In addition the following project was completed. A draft manuscript was completed for a conference proceeding in July. It is under revision and will be submitted to a journal.

13. Burtraw, Dallas and Matt Cannon. 1999. “Heterogeneity in Costs and Second-Best Policies for Environmental Protection,” Prepared for presentation at the Association of Agricultural and Resource Economists Workshop on Market-Based Instruments for Environmental Protection, Kennedy School of Government, July 18-20. Revision under preparation for submission to a scholarly journal.

Presentations:

This project has yielded many presentations, ranging from departmental workshops to agency briefings to formal conference proceedings. A summary of the presentations made during the course of this project is listed below.


1996
Southern Economics Association meetings, Washington, November (Burtraw).
Council of Economic Advisors, December (Burtraw and Parry).
1997
Economic Policy Institute, Washington, June (Burtraw).
NBER Summer Institute on Public Policy and the Environment, Boston, August (Goulder, Parry, Williams).
Stanford University Center for Economic Policy Research Presentation on Environmental Regulation and Economic Growth, September (Goulder).
IAEE Presentation on Costs of Environmental Regulation, San Francisco, September (Goulder).
Industrial Energy Consumers Workshop, Washington, DC, September (Parry).
American Petroleum Institute, October (Parry).
Resources for the Future, October (Burtraw and Parry).

1998
American Economic Association Session, Chicago, January (Goulder and Parry).
University of California at Davis, Dept of Agriculture & Resource Economics, February (Goulder).
George Washington University, March (Parry).
Center for Sustainable Economy, Washington, April (Burtraw).
UCLA Department of Economics, April (Goulder).
World Bank Conference on Trade, Global Policy and the Environment, Washington DC, April (Parry).
Harvard Kennedy School of Government, April (Goulder).
RFF Wednesday seminar, May (Parry).
World Bank, seminar for staff members, June (Parry).
AERE-FEEM World Congress of Environmental and Resource Economists, June (Goulder).
NBER Workshop on Public Policy and the Environment, August (Goulder).
EPA STAR Fellowship Conference, Washington (Williams).
NBER Summer Institute on Public Policy and the Environment, August (Williams).
Air and Waste Management Meetings, Washington, DC, October (Parry).
National Tax Association Meetings, Austin, Texas, November (Parry).
CEMA University 20th Anniversary Conference, Buenos Aires, Argentina, November (Goulder).
Stanford University Environment & Natural Resource Economics Workshop (Williams).

1999
Resources for the Future, February (Willams).
Energy Modeling Forum, Stanford University, February (Goulder).
University of Wisconsin Department of Economics, March (Goulder).
University of Wyoming Department of Economics, March (Goulder).
NBER Public Economics Program Meeting, April (Goulder).
Stanford University Institute for International Studies, May (Goulder).
Kennedy School of Government, Workshop on Market-Based Instruments for Environmental Protection, July (Burtraw).

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