Policymakers shaping environmental policy currently face significant challenges. These include limiting greenhouse gas emissions and curbing local pollution. Efforts to mitigate these can lead to an unequal distribution of benefits and burdens.
The workshop “Effectiveness and Distributional Impacts of Environmental Policy” discussed current research on environmental policy. It had a focus on improving our understanding of the tradeoffs between their effectiveness and their distributional impacts. Given the urgency of these challenges, the workshop was highly policy relevant.
The program of the workshop consisted of presentations by researchers from a wide selection of institutions in and outside of Berlin. The workshop also featured three keynote lectures by influential researchers in the field:
Janet Currie from Princeton University spoke on environmental justice, illustrating that pollution can be an important source of inequality because poorer people often live in highly polluted areas. Under the U.S: Clean Air Act, policies targeting the dirtiest areas of the country improved racial justice without taking explicit account of race.
Catherine Hausman from the University of Michigan held a keynote lecture on the distributional effects of environmental policy. She spoke on how when customer bases of utilities shrink they can come under pressure to recover their fixed costs. Spreading fixed costs over a smaller customer base can lead to higher burdens for remaining customers.
Ulrich Wagner from the University of Mannheim spoke on CO2 permit trading in Europe. His keynote focused on how climate policies like the EU Emissions Trading System can have important co-benefits or co-damages with respect to local pollution. Both dimensions of environmental externalities should be considered together when designing these policies.
Insights
An important insight of the workshop was that the distributional impacts of environmental policy can decrease policy acceptance. Given that widespread policy acceptance among the population is key to achieving environmentally sustainable outcomes, especially in the area of climate policy, policymakers should strongly consider the distributional impacts of policy options they implement.
Policymakers must also keep in mind that environmental policy instruments usually have heterogeneous impacts on the targeted outcomes. This heterogeneity must be well-understood if policy choices are to be both effective and accepted by the population. Furthermore, climate policy and local environmental policy should be conceptualized together due to their interactions.
The workshop also illustrated that research on the distributional impacts of environmental policy is a rapidly expanding area of the literature with strong potential for important contributions.
