Table of Contents

Utah's Fine Particulate Air Pollution Problem

Arnold W. Reitze, University of Utah - S.J. Quinney College of Law

Firm Preferences for Environmental Regulation

Felix Munoz-Garcia, Washington State University - School of Economic Sciences
Sherzod B. Akundjanov, Washington State University - School of Economic Sciences

Mirrored Externalities

Lisa Grow Sun, Brigham Young University - J. Reuben Clark Law School
Brigham Daniels, Brigham Young University - J. Reuben Clark Law School

Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches

Sheila M. Olmstead, Yale University - School of Forestry and Environmental Studies
Nathan D. Richardson, Resources for the Future


"Utah's Fine Particulate Air Pollution Problem" Free Download
Utah Law Review, No. 2, 2014

ARNOLD W. REITZE, University of Utah - S.J. Quinney College of Law

The air pollution problem in Utah's Wasatch Front has resulted in several counties being classified as nonattainment for fine particulate matter. This article examines the reasons for the area's air pollution problem and the efforts being made to achieve compliance with the national ambient air quality standard.

"Firm Preferences for Environmental Regulation" Free Download
Review of Environment, Energy and Economics (Re3), Forthcoming

FELIX MUNOZ-GARCIA, Washington State University - School of Economic Sciences
SHERZOD B. AKUNDJANOV, Washington State University - School of Economic Sciences

This paper summarizes the findings of two papers that examine the effect of environmental regulation on the production decisions and profits of polluting and green firms. Using a game-theoretic framework, we find conditions under which the green firm favors regulation (a standard finding), but also derive conditions for the opposite – and more surprising – scenario, whereby the green firm opposes environmental regulation, while the brown firm favors it. We also show that similar preference reversals can occur towards uniform and fine-tuned regulation. Our study highlights the role that firm heterogeneity plays in determining firm preferences towards environmental regulation.

"Mirrored Externalities" Free Download
Notre Dame Law Review, Vol. 90, No. 1, p. 135, 2014

LISA GROW SUN, Brigham Young University - J. Reuben Clark Law School
BRIGHAM DANIELS, Brigham Young University - J. Reuben Clark Law School

A fundamental but underappreciated truth is that positive and negative externalities are actually mirror reflections of each other. What we call “mirrored externalities? exist because any action with externalities associated with it can be described as a choice to do or to refrain from doing that particular action. For example, if a person smokes and thereby creates a negative externality of more secondhand smoke, then her choice not to smoke creates a positive externality of less secondhand smoke. Conversely, if a person’s choice to get an immunization confers a positive externality of reducing vectors for disease transmission, then a choice not to get an immunization necessarily imposes negative externalities on third parties in the form of more vectors for disease. In each set, the negative externalities are the inverse — the mirror image — of the positive externalities. Thus, we have two possible characterizations or framings of any decision, one of which focuses on negative externalities and the other of which focuses on positive externalities. Which framing tends to predominate may be influenced by a number of factors, including society’s baseline sense of the actor’s legal or moral entitlement to engage in (or refrain from engaging in) particular behavior, the availability of a villain to whom to ascribe negative externalities, and the relative invisibility of certain externalities until disaster strikes, when the negative framing becomes the face of the crisis.

Ultimately, the framing of externalities has profound effects on both the way we think about and process externalities and on our politics and policy development. We see profound potential impacts of framing on human perception of risk and opportunities, particularly due to the implications of the Nobel Prize-winning work of behavioral economists Amos Tversky and Daniel Kahneman. Their work on human perception suggests that due to loss aversion, the availability heuristic, and our bimodal response to catastrophic risk, we will give much greater weight and attention to negative externalities and consistently undervalue positive externalities. While positive externality frames are more effective in inspiring voluntary action, negative frames have serious implications for policy decision-making. The choice to emphasize either the positive or negative externality in the mirrored set shapes the array of policy prescriptions we are likely to consider. The same choice may affect whether we think there is a real problem to be solved in the first instance. We find loss aversion at work in policymaking as well: negative externalities, we suggest, are often viewed as a call to action, while positive externalities are viewed merely as an occasion for celebration. Lastly, the negative-externality “call to action? is often a concerted campaign to redefine the legal and social meaning of particular activities.

Given the critical role externalities play in justifying both development of property rights and intervention in markets and individual liberties, understanding mirrored externalities and the consequences of our framing of them is vital.

"Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches" Free Download
RFF Discussion Paper 14-15

SHEILA M. OLMSTEAD, Yale University - School of Forestry and Environmental Studies
NATHAN D. RICHARDSON, Resources for the Future

Booming production of oil and gas from shale, enabled by hydraulic fracturing technology, has led to tension between hoped-for economic benefits and feared environmental and other costs, with great associated controversy. Study of how policy can best react to these challenges and how it can balance risk and reward has focused on prescriptive regulatory responses and, to a somewhat lesser extent, voluntary industry best practices. While there is undoubtedly room for improved regulation, innovative tools are relatively understudied. The liability system predates environmental regulation yet still plays an important — and in some senses predominant — role. Changes to that system, including burden-shifting rules and increased bond requirements, might improve outcomes. Similarly, new regulation can and should incorporate modern understanding of the benefits of market-based approaches. Information disclosure requirements can benefit the liability system and have independent benefits of their own. Policymakers faced with a need for policy change in reaction to shale development should carefully consider alternatives to regulation and, when regulation is deemed necessary, consider which tool is best suited.


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