This chapter applies recent research on environmental enforcement to a potential U.S. program to control greenhouse gases, especially through emission trading. Climate policies present the novel problem of integrating emissions reductions that are relatively easy to monitor (such as carbon...

Most regulations designed to reduce environmental externalities impose costs on individuals and firms. An active body of research has explored how these costs are disproportionately born by different sectors of the economy and/or across different groups of individuals. However, much less is...

I show that commonly proposed emission taxes are not optimal for controlling climate change: they can achieve zero emissions but cannot induce negative emissions. The first-best policy charges firms period by period for leaving a stock of carbon in the atmosphere, not just for injecting carbon...

U.S. adoption of a cap-and-trade program for greenhouse gases could place some domestic producers at a disadvantage relative to international competitors who do not face similar regulation. To address this issue, proposed federal climate change legislation includes a provision that would freely...

Although international programs for carbon offsets play an important role in current and prospective climate-change policy, they continue to be very controversial. Asymmetric information creates several incentive problems, include adverse selection and moral hazard, in offset markets. The...

Climate policy spillovers can be either positive or negative since firms change their production processes in response to climate policies, which may either increase or decrease emissions of other pollutants. Understanding these ancillary benefits or costs has important implications for climate...

A critical issue in climate-change economics is the specification of the so-called "damages function" and its interaction with the unknown uncertainty of catastrophic outcomes. This paper asks how much we might be misled by our economic assessment of climate change when we employ a conventional...

Can simple government programs effectively promote voluntary initiatives to reduce greenhouse-gas emissions? This paper provides an evaluation of how the Connecticut Clean Energy Communities program affects household decisions to voluntarily purchase "green" electricity, which is electricity...

This chapter examines the tradeoffs of regulating upstream (e.g., coal, natural gas, and refined petroleum product producers) versus regulating downstream (e.g., direct sources of greenhouse gases (GHG)). In general, regulating at the source provides polluters with incentives to choose among...