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on Resource Economics |
| By: | Raphaël Chiappini (University of Bordeaux); Enea Gerard (University of Bordeaux) |
| Abstract: | This paper investigates the impact of environmental regulations on inward foreign direct investment (FDI) using a novel index that distinguishes between the implementation and enforcement of environmental policy across 111 countries from 2001 to 2018. Leveraging bilateral FDI data and a structural gravity model, we find robust evidence of a Pollution Haven Effect: stricter environmental regulations in host countries are associated with lower inward FDI. The effect is more pronounced in emerging markets and in environments with higher corruption. Importantly, we show that FDI responds more strongly to policy implementation, capturing formal regulatory commitment, than to enforcement, measured as deviations between predicted and actual emissions. In addition, bilateral FDI patterns are shaped by the environmental stringency gap between source and host countries, consistent with regulatory arbitrage behavior. |
| Keywords: | Environmental regulation, foreign direct investment, Pollution Haven Hypothesis |
| JEL: | F Q |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:inf:wpaper:2025.09 |
| By: | Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (Department of Economics, School of Business, Economics and Law, Göteborg University); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We investigate how politicization and the financial cost of climate policies influence public trust in scientific information about climate change. We find that citizens' trust in science-based information on climate is influenced by its political context. When climate policy is associated with a political affiliation, trust in the scientific information decreases, independent of the political party supporting the policy. However, there is no effect on policy support on political endorsement. Varying the financial cost of the policy to induce cognitive dissonance had no significant effect on trust in the scientific information; instead, as expected, higher cost substantially reduced policy support. |
| Keywords: | Experiment; climate change; scientific information; political parties; motivated beliefs |
| JEL: | D91 Q54 Q58 |
| Date: | 2025–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:gunwpe:0856 |
| By: | Boyd, James (Resources for the Future); Krupnick, Alan (Resources for the Future); Joiner, Emily (Resources for the Future); Toman, Michael A. (Resources for the Future) |
| Abstract: | Carbon dioxide removal (CDR) involves the application of chemical or biological processes by which carbon dioxide (CO2) can be removed from the atmosphere and stored in different reservoirs. Those reservoirs include soils, oceans, underground (geologic) storage sites, long-lived wood products, and living biomass like forests.The 2015 Paris Agreement under the auspices of the 1992 United Nations Framework Convention on Climate Change established the aim of limiting the global average temperature increase from global emissions of greenhouse gases (GHGs) to less than 2.0°C, and as close to 1.5°C as possible, to limit dangerous impacts from climate change. Achieving that aim requires a concerted international effort to reduce GHGs to zero by mid-century. Many analysts have concluded that achieving the Paris temperature limits is infeasible without major increases in CDR, even with aggressive measures to limit GHGs (which have not yet been achieved). Smith et al. (2023); Coalition for Negative Emissions (2021); Environmental Defense Fund (2021); Committee on Developing a Research Agenda for Carbon Dioxide Removal and Reliable Sequestration et al. (2019); IPCC (2018). These sources also provide background on the temperature goals; in addition, see IPCC (2018). Furthermore, net negative emissions removal (above and beyond what is achieved by a net-zero economy) will be necessary to reduce the stock of atmospheric CO2 if, as is currently feared, emissions “overshoot” the trajectory for achieving the temperature limits.Smith et al. (2023) describe the lack of national goals for CDR around the world, and the lack of adequate policies to engender rapid and significant advances in CDR capability followed by large-scale installation of CDR. In what follows we summarize what we believe are needed innovations in US CDR policy to achieve these goals. These findings are based on research contained in a recent RFF report (Boyd et al. 2024). A few basic principles underlie the policy suggestions. Public sector support for CDR research, development, and demonstration is needed. However, as technologies mature, public sector support should be scaled back in favor of policies relying on private sector incentives to finance the major buildup in CDR capacity needed. Policy should be based on technology performance and cost of CO2 removal across a portfolio of approaches. However, negative side effects also must be identified and addressed in a timely way. Finally, CDR policy should be designed to take advantage of benefits from coordination with GHG mitigation measures. |
| Date: | 2024–04–25 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-24-01 |
| By: | Elkerbout, Milan (Resources for the Future); Kopp, Raymond J. (Resources for the Future); Rennert, Kevin (Resources for the Future); Nehrkorn, Katarina (Resources for the Future) |
| Abstract: | In our 2023 report, Carbon Border Adjustments: Design Elements, Options, and Policy Decisions, we provided an overview of critical design elements in carbon border adjustment policies. We compared these design elements, such as how fees are set and the product scope, across several border adjustment mechanisms (BAMs) including the European Union’s Carbon Border Adjustment Mechanism (EU CBAM); the Clean Competition Act (CCA) proposal and the Foreign Pollution Fee Act (FPFA) proposal. In April 2025, a revised version of the FPFA was reintroduced in the Senate by Bill Cassidy (R-LA) and Lindsey Graham (R-SC). This issue brief uses the design elements introduced in our original BAM report to describe the policy reflected in the updated bill.The FPFA recognizes in its design and structure that the United States has reduced its greenhouse gas (GHG) emissions substantially over time, and that US manufacturers face costs to comply with environmental regulations that are not faced uniformly by many countries US manufacturers compete with. Though US emissions have decreased, the United States is also a significant importer of GHGs embodied in primary commodities and manufactured products from countries that have not taken comparable actions to reduce their emissions.A primary purpose of the FPFA is to level the playing field for US manufacturers vis-à-vis manufacturers in jurisdictions with higher average carbon intensities in selected sectors and thereby reduce the importation of embodied GHGs. The FPFA seeks to accomplish this goal by imposing a fee on embodied imported GHGs for a set of product categories that are highly traded and also have high GHG intensities. The proposed fees are intended to disincentivize US importation of such products from countries with poor environmental performance, incentivize increased importation from countries with high environmental performance and greater US manufacturing overall, and address concerns about international industrial competitiveness. The primary focus on leveling the playing field for US manufacturers means that the FPFA does not include provisions to require further reductions in greenhouse gases by domestic manufacturers, in contrast to other proposals such as the CCA.BAMs are complicated and technical policy instruments, and the FPFA is no exception. To describe the FPFA in this brief, we discuss it in terms of the seven design elements of BAMs we laid out in our earlier report. We have made every effort to be concise with respect to our descriptions of the policy approach taken in the legislation, but that has required us to abstract from a great deal of detail that exists within the legislative text. This issue brief is intended to provide a roadmap to understanding the approach taken by the FPFA but should not be considered a complete and comprehensive description and review. |
| Date: | 2023–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-23-09 |