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This dissertation investigates the causes and effects of the decentralization of environmental regulation. In Chapter 1, I provide an historical overview of air pollution regulation in the U.S., which serves as the context for this dissertation. Chapter 2 develops a model of interjurisdictional environmental regulation where economic and pollution spillovers may arise. I show that these spillovers may cause local jurisdictions to seek decentralized regulatory control, which in turn generates inefficient outcomes. Chapter 3 investigates empirically whether the decentralization of air pollution regulation in the U.S. during 1971-1990 caused an increase in transboundary air pollution. I find that the transfer of regulatory authority from the federal government to an individual state generated a significant increase in air pollution observed at monitors in downwind states. These findings vary with distance to those states creating transboundary spillovers and across pollutants with different atmospheric lifetimes. This is consistent with the notion that local governments do not account for externalities that their policies generate. The final chapter estimates a model of interjurisdictional environmental regulation that allows for transboundary pollution and competition for firms. The interdependence in jurisdictions’ regulatory choices from the spillovers creates a challenging identification problem, which I address using exclusion restrictions derived from the atmospheric physics of pollution propagation. For total suspended particulates, transboundary pollution will typically occur only between contiguous neighbours in the direction of the wind. This implies that exogenous factors affecting pollution dispersion (such as wind velocity) in distant jurisdictions can serve as instruments for neighbours' endogenous policy choices: they do not affect a given jurisdiction's regulatory choice directly, but directly affect the choices of that jurisdiction's neighbours. I find that a shift from centralized to state regulatory control causes significant increases in the number of polluting firms that locate in that state and decreases elsewhere; the same shift increases ambient air pollution at home and in other states. I also find that state regulatory choices respond much more to changes in the number of firms than to pollution. Further, I show that the degree of decentralization and the observed pollution outcomes are far from the counterfactual efficient levels.

This dissertation investigates the causes and effects of the decentralization of environmental regulation. In Chapter 1, I provide an historical overview of air pollution regulation in the U.S., which serves as the context for this dissertation. Chapter 2 develops a model of interjurisdictional environmental regulation where economic and pollution spillovers may arise. I show that these spillovers may cause local jurisdictions to seek decentralized regulatory control, which in turn generates inefficient outcomes. Chapter 3 investigates empirically whether the decentralization of air pollution regulation in the U.S. during 1971-1990 caused an increase in transboundary air pollution. I find that the transfer of regulatory authority from the federal government to an individual state generated a significant increase in air pollution observed at monitors in downwind states. These findings vary with distance to those states creating transboundary spillovers and across pollutants with different atmospheric lifetimes. This is consistent with the notion that local governments do not account for externalities that their policies generate. The final chapter estimates a model of interjurisdictional environmental regulation that allows for transboundary pollution and competition for firms. The interdependence in jurisdictions’ regulatory choices from the spillovers creates a challenging identification problem, which I address using exclusion restrictions derived from the atmospheric physics of pollution propagation. For total suspended particulates, transboundary pollution will typically occur only between contiguous neighbours in the direction of the wind. This implies that exogenous factors affecting pollution dispersion (such as wind velocity) in distant jurisdictions can serve as instruments for neighbours' endogenous policy choices: they do not affect a given jurisdiction's regulatory choice directly, but directly affect the choices of that jurisdiction's neighbours. I find that a shift from centralized to state regulatory control causes significant increases in the number of polluting firms that locate in that state and decreases elsewhere; the same shift increases ambient air pollution at home and in other states. I also find that state regulatory choices respond much more to changes in the number of firms than to pollution. Further, I show that the degree of decentralization and the observed pollution outcomes are far from the counterfactual efficient levels.

Campylobacter jejuni is one of the leading bacterial causes of human gastroenteritis world wide and has been linked to several severe complications including autoimmune syndromes which can result in paralysis. Despite being the subject of much study, C. jejuni remains a major public health burden in both developing and developed nations. There is currently no vaccine available for protection against this pathogen and the mechanisms important for C. jejuni pathogenesis are not fully defined. This study has employed a range of experimental approaches to investigate the molecular mechanisms involved in C. jejuni pathogenesis. Lipooligosaccharides (LOSs) are surface structures and known virulence factors of C. jejuni which are involved in serum resistance, resistance to phagocytic killing, endotoxicity and adhesion. Mutagenesis studies targeting the putative LOS biosynthesis genes wlaRF, wlaTA, wlaTB, wlaTC and waaV were performed in order to characterise the proteins encoded by each of these six genes and assess their potential role in C. jejuni pathogenesis in vitro. The gene product of wlaTA was found to be essential for C. jejuni survival and therefore a knock out mutant could not be generated. Phenotypic characterisation of four knock-out mutants confirmed that each gene contributed to the construction of the LOS molecule as all four mutants produced a truncated LOS moiety and altered their immunoreactivity. Further analysis determined that the production of complete LOSs was important for C. jejuni to invade and adhere to both human and chicken cells in vitro. This study identified a link between the inactivation of two LOS biosynthesis genes and the loss of motility, another important virulence factor. A major source of human C. jejuni infection is contact with contaminated poultry. However, C. jejuni exists as a commensal in chickens. It is currently not known why C. jejuni is pathogenic to humans and not to chickens and the differences between these two hosts represent pathogenic and non-pathogenic environments respectively. These environmental differences were exploited in this study. The four conditions investigated were temperature, blood, bile and host cells in vitro. Five different C. jejuni strains (NCTC11168, 81116, HB93-13, a recent human enteritis isolate and a recent chicken isolate) were subjected to modelled

This dissertation consists of three essays which examine environmental policy, employer mandates and energy consumption. The essays explore how firms respond to government policies such as environmental regulation and employer mandates. Understanding how firms adjust to government policies is crucial to law makers attempting to design optimal policies that maximize net benefits to society. The first essay, titled Who Loses under Power Plant Cap-and-Trade Programs tests how a major cap-and-trade program, known as the NOx Budget Trading Program (NBP), affected labor markets in the region where it was implemented. The cap-and-trade program dramatically decreased levels of NOx emissions and added substantial costs to energy producers. Using a triple-differences approach that takes advantage of the geographic and time variation of the program as well as variation in industry energy-intensity levels, I examine how employment dynamics changed in manufacturing industries whose production process requires high levels of energy. After accounting for a variety of flexible state, county and industry trends, I find that employment in the manufacturing sector dropped by 1.7% as a result of the NBP. Young workers experienced the largest employment declines and earnings of newly hired workers fell after the regulation began. Employment declines are shown to have occurred primarily through decreased hiring rates rather than increased separation rates, thus mitigating the impact on incumbent workers. The second essay, titled Evaluating Workplace Mandates with Flows versus Stocks: An Application to California Paid Family Leave uses an underexploited data set to examine the impact of the California Paid Family Leave program on employment outcomes for young women. Most papers on mandated benefits examine labor outcomes by looking at earnings and employment levels of all workers. Examining these levels will be imprecise if the impacts of the program develop over time and firms are wary to immediately adjust employment and wages for existing workers. Using Quarterly Workforce Indicator data, we are able to measure the impact on hires, new hire earnings, separations and extended leaves among young women. Earnings for young female new hires fell in California relative to other workers, but changed little relative to country-wide comparison groups. We find strong evidence that separations (of at least three months) among young women and the number and shares of young female new hires increased. Many young women that separate (leave the payroll) eventually return to the same firm. Increased separation and hiring rates among young women in the labor market (“churning”) may reflect both increased time spent with children and greater job mobility (i.e., reduced job lock) as the result of mandated paid family leave across the labor market. The third essay, Evidence of an Energy Management Gap in U.S. Manufacturing: Spillovers from Firm Management Practices to Energy Efficiency, merge a well-cited survey of firm management practices into confidential plant level U.S. Census manufacturing data to examine whether generic, i.e. non-energy specific, firm management practices, ”spillover” to enhance energy efficiency in the United States. For U.S. manufacturing plants we find this relationship to be more nuanced than prior research on UK plants. Most management techniques are shown to have beneficial spillovers to energy efficiency, but an emphasis on generic targets, conditional on other management practices, results in spillovers that increase energy intensity. Our specification controls for industry specific effects at a detailed 6-digit NAICS level and finds the relationship between management and energy use to be strongest for firms in energy intensive industries. We interpret the empirical result that generic management practices do not necessarily spillover to improved energy performance as evidence of an “energy management gap.”

Environmental degradation limits the prospects of sustainable economic development and the pursuit of a life of better quality. An informational approach to environmental regulation, a policy innovation implemented after direct regulation and economic incentive mechanism, has exhibited its positive results on pollution reduction. Since 1995, this approach has been exported from the developed world to more than ten developing countries by international policy advisors. China experimented with environmental performance information disclosure (EPID) pilot programs in Zhenjiang, Jiangsu province and Hohhot, Inner Mongolia between 1999 and 2000. Mixed results have been found. The disclosure program was sustained in Zhenjiang but was stopped in Hohhot only after the pilot phase. Furthermore, there has been no extensive research on how an informational approach to environmental regulation worked in a developing country context such as China, where private environmental enforcement by civil society and markets are lacking. This comparative case study advances our knowledge of the informational approach to environmental regulation by examining its implementation and impact. The following factors are found to be critical for policy implementation: perceptions of the policy innovation by local leadership and implementers, capacity of local environmental protection agencies, and the contexts in which the policy was carried out. Disclosed environmental information was able to induce better industrial environmental performance and incorporated the environment into development decision making by local government officials. However, environmental performance information disclosure alone was not sufficient to involve the public in environmental protection in China. For administrative, legal, market, and public forces to converge in environmental compliance and enforcement in China, building better institutional infrastructure is in order. / Ph. D.

Thesis advisor: Hideo Konishi / This paper will review prior research to support the notion that innovation does in fact lead to a competitive advantage for business, and that this competitive advantage is translated into increased profitability and productivity. Though the body of work reviewed here will by no means unequivocally prove that this relationship always holds true in real-world markets, it will provide a convincing argument that fostering innovation will likely have positive economic affects. Building off this assumption, this paper will then focus specifically on examining the relationship between environmental regulation and innovation in more detail. This paper looks to answer the question: Under what conditions will environmental regulation cause firms to begin choosing to innovate technologically rather than simply to meet regulation with compliance? Using a simple model of price competition between two firms it will be shown that environmental regulation can effectively induce innovation through spending on R&D projects to develop more efficient technology. / Thesis (BS) — Boston College, 2010. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics Honors Program. / Discipline: Economics.

Le 1er Juin 2007 l’union européenne met en place REACH (Registration, Evaluation, Authorisation of Chemicals), un des règlements les plus ambitieux jamais mis en place au niveau européen. Cette réglementation introduit une nouvelle philosophie dans la manière de concevoir la protection environnementale et sanitaire. Selon le préambule du règlement, l’objectif de REACH consiste « à assurer un niveau élevé de protection de la santé humaine et de l’environnement, tout en améliorant la compétitivité et l’innovation ». Aussi, le règlement vise à concilier des enjeux à priori antagonistes, grâce aux innovations environnementales qu’il induirait. En ce sens, REACH apparaît comme un objet d’étude privilégié pour analyser les effets d’une réglementation environnementale sur les stratégies d’innovations des entreprises. Dans cette perspective, nous étudierons les mécanismes du règlement REACH qui sont susceptibles de favoriser le développement des innovations environnementales. A travers une étude empirique originale réalisée auprès des entreprises en région PACA, nous déterminerons, d’une part, les mécanismes qui favorisent de nouvelles opportunités technologiques et commerciales dans le domaine de l’environnement et de la santé, et, d’autre part, ceux qui stimulent une demande de qualité environnementale. Enfin nous analyserons l’influence des attributs de la réglementation REACH sur la dynamique technologique et industrielle à partir d’un modèle multi-Agent. Ce cadre de modélisation s’avère particulièrement pertinent pour tenir compte du caractère stochastique et complexe des processus qui gouvernent les stratégies d’innovations des agents soumis à la pression de la réglementation REACH. / On 1 June 2007 the European Union set up REACH (Registration, Evaluation, Authorisation of Chemicals), one of the most ambitious regulations. This regulation establishes a new philosophy of how to design environmental protection and health. According to the preamble to the Regulation, the objective of REACH is "to ensure a high level of protection of human health and the environment while enhancing competitiveness and innovation." REACH has been designed to balance environmental objectives with competitiveness aims, and has the scope to induce the adoption of eco-Innovation as a side effect of the regulation itself. For this reasons, REACH appears as a privileged object of study to analyse the effects of environmental regulation on the innovation. In this regard, we analyse the innovation-Friendly mechanisms of REACH to promote the development of environmental innovations. From an unique original survey on REACH regulation, we study, one the hand, mechanisms to promote new opportunities in the field of environment and health, and, the other hand, those that stimulate demand for environmental quality. Finally, we analyse the impact of the attributes of the REACH regulation on technological and industrial dynamics from an agent-Based model (ABM). The ABM provide a powerful tool for exploring such complex and stochastic systems as innovation, and allow modelling the behaviour of heterogeneous agents, technological diversity and the change in selection environment that result from policy measures.

Abstract The impact of environmental regulation on competitiveness is a major issue of concern to policy makers. It has also been the subject of considerable academic debate in the past few years on environment-competitiveness. The relationship between environmental goals and industrial competitiveness has conventionally been thought of as involving a tradeoff between social benefits and private costs. In the recent decade, the environment-competitiveness debate has been shifted to a new dynamic international competitiveness paradigm. Michael Porter suggested that the traditional trade-off between environmental regulation and competitiveness may have overestimated environmental compliance costs, neglected innovation offsets, and disregarded the affected industry's initial competitiveness. In this thesis, we aim to examine firm-level evidence to assess the Porter hypothesis as well as the basic correlation between environmental goals and industrial competitiveness. Our approach mainly concentrates on the possibility of Porter hypothesis. Porter hypothesis suggests that more severe environmental regulation may have a positive effect on firm¡¦s performance by stimulating innovation. To capture the dynamic impacts and the incurred adjustments for enterprises in complying with the environmental standard requires a model with dynamic adjustment features. Our investigation shows that the impact of environmental regulation on TFP growth rate could become less detrimental and even positive, confirming the Porter hypothesis. This dynamic pattern is seen clearly in our results in many samples.

As more renewable resources are added into the grid and environmental regulations are imposed to reduce emissions, there will be dramatic changes in the generation portfolio. Assessing the impact of these changes is important for policy makers, market participants, and general public to understand trends in the electricity market. This paper addresses this issue by analyzing how the ERCOT market is affected by CO2 penalty and wind penetration. In order to assess the future power system, the study model should represent the long term dynamics of various factors to find out how investment decisions are made economically in a competitive market with appropriate assumptions. Another important aspect is the short term market dynamics from real operation of power system. For this study, AURORAxmp, a commercially available market simulator, is utilized to capture both long term and short term dynamics. This study runs 5 different scenarios: two base cases with and without CO2 price, 20%, 27%, and 33% wind penetration level. The result shows that, increasing wind penetration reduces production and capacity of both coal and gas units, electricity market prices, and amount of emissions. However, increasing wind penetration has greater impacts on a decrease in generation from thermal units than reduction in thermal capacity, resulting in 11.4% capacity value of wind power. The study also confirms that CO2 price impacts capacity and generation of coal (negatively) and gas (positively) units in opposite ways, and reduces emission, but increases power prices and generation cost. Especially, the impact on retirement of coal units is noticeable. Almost half of the current coal capacity (19 GW), 9,390 MW, is retired by 2040 in this study. / text