This essay revisits the question of instrument choice for the regulation of externalities in the context of climate change. The central point is that the Pigouvian prescription to equate marginal control costs with the expected marginal benefits of damage reduction should guide the design of...

A substantial literature examines second-best environmental policy, focusing particularly on how the Pigouvian directive that marginal taxes should equal marginal external harms needs to be modified in light of the preexisting distortion due to labor income taxation. Additional literature is...

Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article reconsiders many central results for the case in which preferences for commodities, public goods, and...

The view that intergenerational distributive justice and efficiency should be treated separately is familiar, yet controversial. This article elaborates the often-implicit justifications for separate treatment and provides a more express statement of how and when such treatment is appropriate....

Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful...

This paper focuses on the interaction between uncertainty and insurability in the context of some of the risks associated with climate change. It discusses the evolution of insured losses due to weather-related disasters over the past decade, and the key drivers of the sharp increases in both...

This paper examines whether risk-based pricing promotes risk-reducing effort. Such mechanisms are common in private insurance markets, but are rarely incorporated in government assurance programs. We analyze accidental underground fuel tank leaks--a source of environmental damage to water...

From 1864 to 1972, the real price of oil fell by, on average, over one percent per year. This trend dramatically broke when prices for crude increased by over 650 percent from 1972 to 1980. Policy makers adopted several policies designed to keep oil prices in check and reduce consumption....

Understanding and minimizing the transaction costs of policy implementation are critical for reducing tropical forest losses. As the international community prepares to launch REDD+, a global initiative to reduce greenhouse gas emissions from tropical deforestation, policymakers need to pay...

This paper examines the choice between revenue-raising and non-revenue-raising instruments for environmental protection in a second-best setting with pre- existing factor taxes. We find that interactions with pre-existing taxes influence the costs of regulation and seriously militate against...