Issue 161: Economic Incentives to Control Water Pollution in Developing Countries

The value of building an econometric model to analyze a social phenomenon— like sprawl or poverty—probably doesn’t seem obvious to non-economists. But, as a former politician, I can attest that robust data matter a great deal. Policy based primarily on anecdote and opinion is destined for the scrap heap.

In this issue of Resources, you will find evidence-based counterarguments to the assumptions and conventional wisdom that cloud public discourse. Example: Virginia McConnell, Margaret Walls, and Elizabeth Kopits analyzed more than 20 years of land-use data for rapidly growing Calvert County, Maryland, to address a vexing question: What forces drive sprawling housing developments—zoning requirements that encourage siting homes on large lots, or simply consumer demands for more room?

At first glance, many of the things we study might seem obvious to a casual observer, but much lies beneath the surface. Example: Urvashi Narain and her colleagues surveyed residents in 60 Indian villages to determine whether the widely held belief that people in developing countries turn more to the marketplace as their incomes rise is true. (It’s not.)

We don’t shy away from policy debates, such as the one among policymakers and academics about using economic incentives instead of command-and-control policies to control pollution in developing countries. Example: Allen Blackman takes a close look at how well Colombia’s wastewater discharge fee program worked and why. Early supporters praised the program’s efficiency. However, evidence from his fieldwork suggests that the fees also created incentives for regulators to improve permitting, monitoring, and enforcement.

We ask tough questions about annoying subjects, the ones that many folks neglect. In his State of the Union speech, the president said that Americans are addicted to oil and, I might add, to big cars and trucks. So what is it going to take to get us out of our SUVs? Example: Kate Probst believes that when we’re standing in a showroom choosing a new car, what might help is insight into how much carbon dioxide a given vehicle emits. A simple window sticker rating a car’s carbon dioxide output per year could do the trick, she says.

Finally, we provide perspective on current developments, such as a global survey that ranks 133 nations on their environmental performance. In a lively back-and-forth, Jim Boyd and Yale Professor and RFF Board Member Dan Esty exchanged views on what it takes to get policymakers to pay attention to environmental problems in their countries.

These examples are the kind of rigorous, independent analyses that we believe drives lasting change.

- Phil Sharp