Trust and efficiency

Agency problems within the firm are a significant hindrance to efficiency. We propose trust between coworkers as a superior alternative to the standard tools used to mitigate agency problems: increased monitoring and incentive-based pay. We model trust as mutual, reciprocal altruism between pairs of coworkers and show how it induces employees to work harder, relative to those at firms that use the standard tools. In addition, we show that employees at trusting firms have higher job satisfaction, and that these firms enjoy lower labor cost and higher profits. We conclude by discussing how trust may also be easier to use within the firm than the standard agency-mitigation tools. © 2002 Elsevier Science B.V. All rights reserved.

Environmental and technology policies for climate mitigation

We assess different policies for reducing carbon dioxide emissions and promoting innovation and diffusion of renewable energy. We evaluate the relative performance of policies according to incentives provided for emissions reduction, efficiency, and other outcomes. We also assess how the nature of technological progress through learning and research and development (R&D), and the degree of knowledge spillovers, affects the desirability of different policies. Due to knowledge spillovers, optimal policy involves a portfolio of different instruments targeted at emissions, learning, and R&D. Although the relative cost of individual policies in achieving reductions depends on parameter values and the emissions target, in a numerical application to the U.S. electricity sector, the ranking is roughly as follows: (1) emissions price, (2) emissions performance standard, (3) fossil power tax, (4) renewables share requirement, (5) renewables subsidy, and (6) R&D subsidy. Nonetheless, an optimal portfolio of policies achieves emissions reductions at a significantly lower cost than any single policy. © 2007 Elsevier Inc. All rights reserved.

Designing Climate Mitigation Policy

This paper provides an exhaustive review of critical issues in the design of climate mitigation policy by pulling together key findings and controversies from diverse literatures on mitigation costs, damage valuation, policy instrument choice, technological innovation, and international climate policy. We begin with the broadest issue of how high assessments suggest the near and medium term price on greenhouse gases would need to be, both under cost-effective stabilization of global climate and under net benefit maximization or Pigouvian emissions pricing. The remainder of the paper focuses on the appropriate scope of regulation, issues in policy instrument choice, complementary technology policy, and international policy architectures.

Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand

We estimate a carbon mitigation cost curve for the U.S. commercial sector based on econometric estimation of the responsiveness of fuel demand and equipment choices to energy price changes. The model econometrically estimates fuel demand conditional on fuel choice, which is characterized by a multinomial logit model. Separate estimation of end uses (e.g., heating, cooking) using the U.S. Commercial Buildings Energy Consumption Survey allows for exceptionally detailed estimation of price responsiveness disaggregated by end use and fuel type. We then construct aggregate long-run elasticities, by fuel type, through a series of simulations; own-price elasticities range from -0.9 for district heat services to -2.9 for fuel oil. The simulations form the basis of a marginal cost curve for carbon mitigation, which suggests that a price of $20 per ton of carbon would result in an 8% reduction in commercial carbon emissions, and a price of $100 per ton would result in a 28% reduction. © 2008 Elsevier B.V. All rights reserved.

The Effects of Organic Matter Amendments and Migratory Waterfowl on Greenhouse Gas and Nutrient Dynamics in Managed Coastal Plain Wetlands

Wetland ecosystems provide many valuable ecosystem services, including carbon (C) storage and improvement of water quality. Yet, restored and managed wetlands are not frequently evaluated for their capacity to function in order to deliver on these values. Specific restoration or management practices designed to meet one set of criteria may yield unrecognized biogeochemical costs or co-benefits. The goal of this dissertation is to improve scientific understanding of how wetland restoration practices and waterfowl habitat management affect critical wetland biogeochemical processes related to greenhouse gas emissions and nutrient cycling. I met this goal through field and laboratory research experiments in which I tested for relationships between management factors and the biogeochemical responses of wetland soil, water, plants and trace gas emissions. Specifically, I quantified: (1) the effect of organic matter amendments on the carbon balance of a restored wetland; (2) the effectiveness of two static chamber designs in measuring methane (CH4) emissions from wetlands; (3) the impact of waterfowl herbivory on the oxygen-sensitive processes of methane emission and coupled nitrification-denitrification; and (4) nitrogen (N) exports caused by prescribed draw down of a waterfowl impoundment.

The potency of CH4 emissions from wetlands raises the concern that widespread restoration and/or creation of freshwater wetlands may present a radiative forcing hazard. Yet data on greenhouse gas emissions from restored wetlands are sparse and there has been little investigation into the greenhouse gas effects of amending wetland soils with organic matter, a recent practice used to improve function of mitigation wetlands in the Eastern United States. I measured trace gas emissions across an organic matter gradient at a restored wetland in the coastal plain of Virginia to test the hypothesis that added C substrate would increase the emission of CH4. I found soils heavily loaded with organic matter emitted significantly more carbon dioxide than those that have received little or no organic matter. CH4 emissions from the wetland were low compared to reference wetlands and contrary to my hypothesis, showed no relationship with the loading rate of added organic matter or total soil C. The addition of moderate amounts of organic matter (< 11.2 kg m-2) to the wetland did not greatly increase greenhouse gas emissions, while the addition of high amounts produced additional carbon dioxide, but not CH4.

I found that the static chambers I used for sampling CH4 in wetlands were highly sensitive to soil disturbance. Temporary compression around chambers during sampling inflated the initial chamber CH4 headspace concentration and/or lead to generation of nonlinear, unreliable flux estimates that had to be discarded. I tested an often-used rubber-gasket sealed static chamber against a water-filled-gutter seal chamber I designed that could be set up and sampled from a distance of 2 m with a remote rod sampling system to reduce soil disturbance. Compared to the conventional design, the remotely-sampled static chambers reduced the chance of detecting inflated initial CH4 concentrations from 66 to 6%, and nearly doubled the proportion of robust linear regressions from 45 to 86%. The new system I developed allows for more accurate and reliable CH4 sampling without costly boardwalk construction.

I explored the relationship between CH4 emissions and aquatic herbivores, which are recognized for imposing top-down control on the structure of wetland ecosystems. The biogeochemical consequences of herbivore-driven disruption of plant growth, and in turn, mediated oxygen transport into wetland sediments, were not previously known. Two growing seasons of herbivore exclusion experiments in a major waterfowl overwintering wetland in the Southeastern U.S. demonstrate that waterfowl herbivory had a strong impact on the oxygen-sensitive processes of CH4 emission and nitrification. Denudation by herbivorous birds increased cumulative CH4 flux by 233% (a mean of 63 g CH4 m-2 y-1) and inhibited coupled nitrification-denitrification, as indicated by nitrate availability and emissions of nitrous oxide. The recognition that large populations of aquatic herbivores may influence the capacity for wetlands to emit greenhouse gases and cycle nitrogen is particularly salient in the context of climate change and nutrient pollution mitigation goals. For example, our results suggest that annual emissions of 23 Gg of CH4 y-1 from ~55,000 ha of publicly owned waterfowl impoundments in the Southeastern U.S. could be tripled by overgrazing.

Hydrologically controlled moist-soil impoundment wetlands provide critical habitat for high densities of migratory bird populations, thus their potential to export nitrogen (N) to downstream waters may contribute to the eutrophication of aquatic ecosystems. To investigate the relative importance of N export from these built and managed habitats, I conducted a field study at an impoundment wetland that drains into hypereutrophic Lake Mattamuskeet. I found that prescribed hydrologic drawdowns of the impoundment exported roughly the same amount of N (14 to 22 kg ha-1) as adjacent fertilized agricultural fields (16 to 31 kg ha-1), and contributed approximately one-fifth of total N load (~45 Mg N y-1) to Lake Mattamuskeet. Ironically, the prescribed drawdown regime, designed to maximize waterfowl production in impoundments, may be exacerbating the degradation of habitat quality in the downstream lake. Few studies of wetland N dynamics have targeted impoundments managed to provide wildlife habitat, but a similar phenomenon may occur in some of the 36,000 ha of similarly-managed moist-soil impoundments on National Wildlife Refuges in the southeastern U.S. I suggest early drawdown as a potential method to mitigate impoundment N pollution and estimate it could reduce N export from our study impoundment by more than 70%.

In this dissertation research I found direct relationships between wetland restoration and impoundment management practices, and biogeochemical responses of greenhouse gas emission and nutrient cycling. Elevated soil C at a restored wetland increased CO2 losses even ten years after the organic matter was originally added and intensive herbivory impact on emergent aquatic vegetation resulted in a ~230% increase in CH4 emissions and impaired N cycling and removal. These findings have important implications for the basic understanding of the biogeochemical functioning of wetlands and practical importance for wetland restoration and impoundment management in the face of pressure to mitigate the environmental challenges of global warming and aquatic eutrophication.