Bård Harstad receives the Erik Kempe Award for his novel and insightful contribution to the study of international environmental policy. At a theoretical level, he has presented mechanisms of relevance for a successful climate policy by exploring the role of a market for extraction rights. In light of the difficulties in forming climate coalitions in practice, and the problems that such coalitions typically face, the paper is also of clear practical policy relevance by pointing at a new approach for solving a very challenging social problem. As such, Harstad has contributed both to the academic literature and to policymaking by providing insights of clear practical relevance for the design of policies to combat the climate change problem.
Read more about the nomination committee's motivation for the Erik Kempe Award 2013
The paper “Buy Coal! A Case for Supply-Side Environmental Policy" was published in the Journal of Political Economy 120, 77-115, in 2012.
Abstract:
Free-riding is at the core of environmental problems. If a climate coalition reduces its emissions, world prices change and nonparticipants typically emit more; they may also extract the dirtiest type of fossil fuel and invest too little in green technology. The coalition’s second-best policy distorts trade and is not time consistent. However, suppose that the countries can trade the rights to exploit fossil-fuel deposits: As soon as the market clears, the above-mentioned problems vanish and the first-best is implemented. In short, the coalition’s best policy is to simply buy foreign deposits and conserve them.
ESOP congratulates!