Green Governance
Where’s Coase? Transaction costs reduction or rent-seeking in determining US environmental policies
Gary Libecap
International Review of Law and Economics, December 2025
Abstract:
In 1960, Ronald Coase offered a decentralized bargaining framework for reducing transaction costs in externality mitigation. Subsequent US environmental policies have not made it primary. Policies are centralized and prescriptive. To explore why, I examine the Clean Air Act Amendments of 1970, 1977, 1990, the most wide-ranging US environmental law; the Magnuson-Stevens Fishery Act of 1976, the primary US fishing regulation; and the Endangered Species Act of 1973, suggested to be the most powerful conservation law in the world. It is commonly asserted that the transaction costs of Coase are high relative to command and control. I find no empirical support for this claim; it is not tested; nor does it appear in legislative histories as justification for observed regulation. Prescriptive controls may involve higher transaction costs than Coase. Relevant externalities often are local where information about abatement costs and benefits would be available and costs of defining and trading decentralized property rights potentially lower than in the political arena with larger numbers of heterogeneous parties and objectives. Rent-seeking by political agents rather than transaction cost reduction dominates policy selection. Coase’s efficient collaborative problem solving has not been realized. Although the three laws provide public goods, they appear costly on the margin, inequitable, and mired in political controversy. High costs in all three laws is a key empirical finding. Predictions for policy formation motivated by transaction cost reduction or rent-seeking guide the analysis.
Can Collective Action Institutions Outperform the State?
Max Harleman & Jeremy Weber
Policy Studies Journal, forthcoming
Abstract:
A core literature in the field of public policy seeks to understand whether decentralized collective action institutions will emerge to provide public goods. While some studies examine how they perform relative to public institutions, they fail to account for the possibility of public institutions self-selecting into the most challenging contexts. If they do, finding that public institutions perform worse could reflect the greater challenge rather than differences in knowledge, skill, or motivation. We examine measures of performance in remediating polluted water discharges from abandoned mines, a task sometimes done by the state government and sometimes by nonprofit watershed associations. Accounting for self-selection, we find that watershed associations are at least as effective as the state across a variety of outcomes measuring effectiveness and cost-effectiveness. Moreover, associations better maintain their effectiveness over time. The findings suggest a role for sustained public investment in collective action institutions when providing public goods and services in complex and dynamic policy settings.
Clean Rides, Healthy Lives: The Impact of Electric Vehicle Adoption on Air Quality and Infant Health
Cavit Baran et al.
NBER Working Paper, September 2025
Abstract:
This paper provides the first nationwide evidence on how electric vehicle (EV) adoption has improved both air quality and child health. We assemble a rich dataset from 2010–2021 that links county-level EV registrations to measures of air pollution, birth outcomes, and emergency department visits. The endogeneity of EV adoption is addressed using two complementary strategies: Two-way fixed effects and instrumental variables (IV). The IV exploits the staggered rollout of Alternative Fuel Corridors as a source of exogenous variation in charging infrastructure that affected EV adoption. The estimates show that greater EV penetration significantly reduces nitrogen dioxide (NO2), a key pollutant linked to vehicular emissions. These improvements in air quality yield significant health benefits, including reductions in very low birth weight and very premature births, as well as fewer asthma-related emergency department visits among children ages 0 to 5. This is true even when potentially offsetting increases in pollution from the electricity generation needed to power EVs are accounted for. The benefits are higher in the high-pollution counties with Alternative Fuel Corridors, where baseline exposures are greatest. The resulting reductions in very low birth weight births alone could generate annual benefits of $1.2 to $4.0 billion. These findings underscore the dual environmental and public health benefits of EV adoption.
When risk does not discount: Flood history and rising property valuations
William Doerner, Michael Seiler & Matthew Suandi
Real Estate Economics, forthcoming
Abstract:
We study how expanded flood disclosure requirements affect real estate markets and appraisals in South Carolina. Counterintuitively, more comprehensive flood disclosures cause home prices to increase in tracts with a history of significant flooding. To support these higher postdisclosure valuations, appraisers reduce negative language, select more comparable properties outside flood zones, and apply smaller adjustments to comparable sales. Experienced appraisers are more likely to underappraise properties, yet appraisal values still match or exceed contract prices 89.2% of the time. These findings highlight the unintended consequences of real estate regulation for market behavior and appraisal practices.
Rising temperatures increase added sugar intake disproportionately in disadvantaged groups in the USA
Pan He et al.
Nature Climate Change, September 2025, Pages 963-970
Abstract:
Extreme heat may affect added sugar consumption through the increased intake of drinks and frozen desserts, but such an impact is rarely quantified. Here, using individual transaction-level data for US households in 2004–2019, we find that added sugar consumption is positively related to temperature, notably within 12–30 °C at a rate of 0.70 g °C−1. This is primarily driven by the higher consumption of sugar-sweetened beverages and frozen desserts. The magnitude of such impact is larger among households with lower income or educational levels. Our projections indicate a substantial nationwide increase in added sugar consumption of 2.99 g per day by 2095 (or equivalently 5 °C warming level), with vulnerable groups at an even higher risk. Our results highlight the critical need to mitigate health risks from the over-intake of added sugar and to explore dietary adaptation to climate change.
Vote and trade: An efficient mechanism for common-pool resource management with stock externalities
Hao Zhao & David Porter
Journal of Public Economics, September 2025
Abstract:
The efficiency of inter-temporal resource allocation in a rights-based common-pool resource management system can be compromised by a stock externality. This occurs when one user’s extraction depletes the resource stock and then raises future harvesting costs for all users. This paper introduces a vote-and-trade (VAT) mechanism, an enhancement to standard cap-and-trade (CAT), to correct this inefficiency. VAT operates in two stages: first, resource users vote to set a binding, period-specific extraction cap; second, they trade the resulting rights in a within-period market. Our theoretical model demonstrates that while standard CAT is dynamically inefficient, VAT can achieve the social optimum under mild conditions by using voting to aggregate agents’ private information and collectively choose the optimal inter-temporal extraction path. Laboratory experiments confirm this prediction, showing that VAT substantially outperforms CAT in aggregate economic efficiency.
Lewy body dementia promotion by air pollutants
Xiaodi Zhang et al.
Science, 4 September 2025
Abstract:
Evidence links air pollution to dementia, yet its role in Lewy body dementia (LBD) remains unclear. In this work, we showed in a cohort of 56.5 million individuals across the United States that fine particulate matter (PM2.5) exposure raises LBD risk. Mechanistically, we found that PM2.5 exposure led to brain atrophy in wild-type mice, an effect not seen in α-synuclein (αSyn)–deficient mice. PM2.5 exposure generated a highly pathogenic αSyn strain, PM2.5–induced preformed fibril (PM-PFF), with enhanced proteinase K resistance and neurotoxicity, resembling αSyn LBD strains. PM2.5 samples from China, the United States, and Europe consistently induced proteinase-resistant αSyn strains and in vivo pathology. Transcriptomic analyses revealed shared responses between PM2.5-exposed mice and LBD patients, underscoring PM2.5’s role in LBD and stressing the need for interventions to reduce air pollution and its associated neurological disease burden.
Sustainable gold extraction from ore and electronic waste
Maximilian Mann et al.
Nature Sustainability, August 2025, Pages 947-956
Abstract:
Gold plays an essential role in the global economy and has wide applications in various industrial technologies. Currently, the gold supply relies heavily on mining processes that employ toxic substances such as cyanide salts and mercury metal, leading to substantial environmental pollution. Gold extraction approaches that do not rely on cyanide and mercury are needed to improve the overall sustainability of gold production. Here we develop an approach for gold leaching and recovery from ore and electronic waste. This approach first uses trichloroisocyanuric acid, activated by a halide catalyst, to oxidatively dissolve gold metal from ore and electronic waste, and then applies a polysulfide polymer sorbent to selectively bind gold from the leachate. The gold can be recovered in high purity by pyrolysing or depolymerizing the sorbent. The efficacy of this approach in gold extraction was validated using ore, electronic waste and other gold-containing waste. Overall, this work provides a viable approach to achieve greener gold production from both primary and secondary resources, improving the sustainability of the gold supply.
Measuring flood underinsurance in the USA
Natee Amornsiripanitch et al.
Nature Climate Change, September 2025, Pages 971-977
Abstract:
Flood insurance could mitigate the negative shock from climate-induced disasters, yet many households are still not covered. Here, using data on expected flood damage and National Flood Insurance Program policies, we provide estimates of annual flood risk protection gaps and underinsurance among single-family residences in the contiguous USA. Annually, 70% (US$17.1 billion) of total flood losses would be uninsured. Underinsurance, defined as protection gaps among properties whose current coverage is under the optimal level, totals US$15.7 billion annually. Among at-risk households, 88% are underinsured and average underinsurance is US$7,208 per year. Underinsurance persists both inside and outside the Federal Emergency Management Agency’s special flood hazard areas, suggesting frictions in the provision of risk information and regulatory compliance. Underinsurance falls disproportionately on low-income communities. At least 70% of at-risk households would benefit from purchasing flood insurance, even as prevailing prices rise.
Political Ideology in Patent Examination: Examiner Partisanship and Green Innovation
Tao Shu et al.
University of Delaware Working Paper, August 2025
Abstract:
We investigate whether U.S. patent examiners’ political ideology affects the outcomes of green patent applications and the subsequent innovation incentives of inventors and firms. We find that Republican examiners are significantly more likely than non-Republican examiners to reject green patent applications–particularly those targeting climate change, and especially during Republican administrations and periods of heightened partisan polarization over climate issues. We estimate that the higher rejection rate associated with Republican examiners translates into over 10,000 additional rejected green patents and results in an economic value loss of at least $20.15 billion (in 2025 dollars) during our sample period. An analysis of approved green patents’ quality indicates that the partisan gap in rejection rates cannot be explained by Republican examiners applying stricter quality standards in evaluating green patents. Rather, the results suggest that examiners of differing political ideologies weigh the societal and economic values of green patents differently. Moreover, rejections by Republican examiners disproportionately deter inventors and firms from pursuing future green innovation. Overall, our findings indicate that examiners’ ideological beliefs can influence the patent review process, altering innovation incentives and shaping the trajectory of green technology development.
Regulating Biological Resources: Lessons From Marine Fisheries in the United States
Eyal Frank & Kimberly Oremus
NBER Working Paper, September 2025
Abstract:
In 1996, with United States fish populations in decline, Congress overhauled fishing laws with scientific thresholds for rebuilding overfished stocks. The law's impact is contested, and lawmakers have spent over a decade debating its reauthorization while countries around the world consider similar policies. We develop the first causally interpretable evaluation of this law, exploiting the fact that the European Union has comparable fisheries but only recently developed similar laws. Compiling comprehensive data on US and EU fishery status and management, we examine fish populations that decline to unhealthy levels and measure the effect of a policy that aims to rebuild them to health. We find treated populations increase by 52 percent relative to these counterfactuals, with both catch and revenue rebounding to baseline levels or greater. Analyzing fisheries' revenue, we find net present values are higher for at least 69 percent of rebuilt stocks compared to simulated counterfactuals.