The Economics and Politics of Conservation
European Research Council (ERC) Consolidator Grant 683031
2016 - 2021
Photo: Neil Palmer/CIAT
- While traditional environmental policies focus on the demand side by regulating emitting firms or consumers, this project aims at exploring how a supply-side policy would work, for instance by an environmental policy regulating the extraction of natural resources.
- Since traditional climate and environmental policy so far have had limited success, a new approach is crucial.
- The case for a supply-side climate treaty, by Asheim, Fæhn, Nyborg, Greaker, Hagem, Harstad, Hoel, Lund, Rosendahl, Science Policy Forum 365(6451): 325-27, 2019.
- Does the Salience of Risk Affect Large, Risky Asset Purchases?, by Garnache.
- The Role of Research in Common-pool Problems, by Kuusela and Laiho.
- Conservation contracts for exhaustible resources, in progress, by Harstad and Framstad.
- Coalitions under vertical contracts: A theory for mergers, collusion, and conservation, to be substantially revised, Harstad and Mideksa. (Old title: "Contracts and Induced Institutional Change")
- Conservation Contracts and Political Regimes, by Harstad and Mideksa, Review of Economic Studies 84(4), 2017: 1708-34.
- The Market for Conservation and Other Hostages, by Harstad. Journal of Economic Theory 166(November), 2016: 124-151.
- The Conservation Contradiction and Political Remedies, by Harstad. To be substantially revised.
- Buy Coal! A Case for Supply-Side Environmental Policy, by Harstad. Journal of Political Economy 120(1), 2012: 77-115.
More on the objectives
The project develops and applies game theory and political economy methods to address a number of important questions:
- Strategic conservation. How can the time profile of oil extraction, for example, influence the time profile of more harmful fossil fuels, such as coal, but also the development of renewable energy sources and other types of green technology?
- International agreements. Climate treaties have so far focused on the demand side. How will emission quotas determine the various countries’ choice of resource extraction, when they take into account that the resource stock they have left at the next bargaining round will influence their bargaining power and the bargaining outcome? One hypothesis is that since resource extraction will be strategic when such concerns are taken into account, it may be more efficient to (also) negotiate extraction rates.
- Deforestation contracts. For some types of resources, such as tropical forests, it is necessary with explicit compensations to succeed with conservation. While some such agreements are being established, we do not yet know much about how conservation contracts ought to be designed in order to be effective, neither from an economic, nor from a political point of view.
- Political concerns. To address the questions above in a realistic manner, the analysis will also take into account political economy forces: the resource stock that is conserved will be inherited by the political challenger when the opposition wins the election; political decisions are not made by isolated politicians, but typically through legislative bargaining and coalition formation; international treaties will tie the hands of the next policy maker, and may thus also influence the election. These concerns will influence the answer to the questions raised above, such as how deforestation contracts ought to be designed when political economy forces are taken into account.
Funding is provided by the European Research Council (ERC) Consolidator Grant.
The project has a budget of 1,57 million Euro (15 million NOK) and lasts five years, August 1st 2016 – July 31st 2021.
This is the second ERC project led by principal investigator Bård Harstad. The first project, a European Research Council (ERC) Starting Grant called "General Institutional Equilibrium: Theory and Policy Implications", was operational from 2012 to 2016.