3 goings on€¦ · and demonstrate methods for analyzing similar development projects through-out...

Goings OnRFF evaluating impact of proposed Thai dam Valuing space technologies EPA’s clean airstandards Advanced technology and climate change Productivity study advances GDP: Does it matter?

F E AT U R E

Energy Trading—The Market’s Response to DeregulationVito Stagliano and Sarah EmersonWhat can deregulated oil markets tell us about coming competitionfor natural gas and electric utilities?

F E AT U R E

A Framework for Climate Change PolicyMichael A. TomanSeveral maxims seem worth applying in negotiating goals andactions about climate change.

F E AT U R E

Preparing America’s Food Safety System for the Twenty-First CenturyMichael R. TaylorBuilding on recent progress is necessary to assure a safer Americanfood supply.

Putting a Price on Solid Waste ReductionRFF researchers identify significant cost differences among programsto reduce disposal of municipal solid waste.

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Given our organizational name, one should not be surprised to find a futureorientation to much of the work conducted here at RFF. It’s not really that

we attempt to stargaze, but our scholars typically will scrutinize environmentalissues with an eye to developing necessary new methodologies or to heading offpolicy problems before they emerge or worsen. The current issue of Resources isespecially rich in reporting this type of activity.

In the feature article “Energy Trading—The Market’s Response toDeregulation,” Vito Stagliano and Sarah Emerson look at developments in thepetroleum industry during the past sixteen years—particularly the emergence offutures markets—to forecast the prospects in store for Americans under muchmore competitive markets for natural gas and electric utilities.

If talk of change is everywhere with respect to electricity policy, it’s positivelythematic on the subject of climate. As discussion gradually begins to moveaway from natural scientific questions about climate change to possible respons-es, Mike Toman’s “A Framework for Climate Change Policy” provides a key touse in evaluating climate risks and formulating necessary policies.

Recent regulatory changes offer the promise of a safer American food supply,according to Mike Taylor—especially if steps he identifies in “PreparingAmerica’s Food Safety System for the Twenty-First Century” are taken to helpimplement the new approach.

The shorter entries in the “Goings On” section also advance this forward-looking theme. A two-year RFF study of the comprehensive impacts of a pro-posed new dam in northern Thailand on local forest communities will developand demonstrate methods for analyzing similar development projects through-out the world. A project measuring the economic returns from space technolo-gies foreshadows a possibly disconcerting future world in which sophisticated“remote sensing” raises serious questions about privacy and national sovereign-ty. What the future holds for national air quality standards, public health, andeconomic vitality was the subject of a recent RFF symposium, part of our con-tinuing involvement with this hot topic. And an RFF workshop explored waysto anticipate and account for the effects of advanced technology in reducingglobal greenhouse gas emissions. Finally, through our study of the contributionsof technological innovation to productivity growth in U.S. natural resourceindustries, RFF is taking a fresh look at the adequacy of America’s resources forthe future.

In developing our agenda, we at RFF routinely look down the road foropportunities to focus our work on pressing social problems. Sometimes wefind these roads do not yet exist. We then willingly embrace the pioneeringspirit that constitutes so much of RFF’s institutional heritage to cut pathways tothe future. And we count on your input as regular readers of Resources to helpus set our sights.

RESOURCES FOR THE FUTURE 1616 P Street, NWWashington, DC 20036–1400202–328–5000

FAX: 202–939–3460E-MAIL: [email protected] WIDE WEB:http://www.rff.org

OFFICERSPresident, Paul R. PortneyVice President–Finance andAdministration, Edward F. Hand

BOARD OF DIRECTORSDarius W. Gaskins Jr., ChairCatherine G. Abbott, Richard A. Abdoo,Jodie T. Allen, John C. Borum, James H. S. Cooper, Anthony S. Earl,Robert E. Grady, F. Henry Habicht II,Robert H. Haveman, Thomas C. Jorling,Donald M. Kerr, Thomas E. Lovejoy,Frank E. Loy, Lawrence U. Luchini, James D. Maddy, Karl-Göran Mäler,Frank L. Matthews, Mark A. Pisano, Paul R. Portney, Robert M. Solow,Edward L. Strohbehn Jr., Linda C. Taliaferro, Victoria J. Tschinkel,Mason Willrich

RESOURCES STAFFManaging editor, Richard GetrichSenior editor, Marie FranceAssociate editor, Chris KelaherContributing editor, Mike TeboProduction editor, Eric WurzbacherGraphic support, Brian Kropp

Published quarterly since 1959,Resources (ISSN 0048-7376) containsnews of research and policy analysisregarding natural resources and theenvironment. The views offered are thoseof the contributors and should not beattributed to Resources for the Future, itsdirectors, or its officers. Articles may bereproduced, providing credit is givenand a copy of the reproduced text issent to Resources.

Resources is sent to individuals and insti-tutions without fee. Write or e-mailResources at RFF; or call 202–328–5025. The publication is also availablethrough University MicrofilmsInternational, 300 North Zeeb Road,Dept. P.R., Ann Arbor, MI 48106.

Printed on recycled paper.

Looking to the Future

Paul R. Portney

F R O M T H E P R E S I D E N T

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Ford funds impactstudy of Thai dam The Ford Foundation is pro-viding a two-year, $100,000grant for RFF researchers R.David Simpson and Roger A.Sedjo to study the impact of aproposed dam in northernThailand on local forest com-munities. Such an impact is notoften accounted for in currentdevelopment planning in theregion as rising populationsand growing economies inSoutheast Asia create demandfor more water.

The researchers will focuson determining the value ofbiodiversity that would be lostin the Mae Yom River valley

from flooding behind the pro-posed dam; the value of carbonsequestration provided byforests cut in preparation forflooding; and the value ofrecreation and tourism oppor-tunities lost by destroying anold-growth forest.

Working with the researchproject’s director, SuthawanSathirathai of ChulalongkornUniversity in Bangkok, Sedjoand Simpson are assessing thetotal ecological, social, andcultural implications of theproposed Kaeng Sua Ten dam.They also plan to use the grantto enhance local expertise inenvironmental economics.

In assessing the dam’simpact, the research team will

try to account for all of therelated benefits and costs. Theiranalysis will include often-ignored, less apparent values,such as the plants, animals,and other natural featuresimportant to local communities.

Goods derived from foreststhat might be lost in a waterdevelopment project includewood for fuel and construc-tion; fruits, nuts, and foodderived from forest plants andanimals; grazing and foraginglands for domestic animals;rattan and other useful materi-als; and forest medicines.Crucial functions of the foreststhat would be lost includeprovision of clean water, pro-tection from erosion, cycling ofnutrients, and local climatemoderation.

The RFF researchers willcollaborate with localresearchers. Pooling theirexpertise, they hope to demon-strate methods applicable toanalyzing similar developmentprojects in Thailand and otherdeveloping nations around theworld.

Valuing space technologiesRFF Senior Fellow MollyMacauley and some of hercolleagues are digging intowhat she calls the “valuationtool kit” that RFF has devel-oped over many years to arriveat some good ways to measurethe economic return to spacetechnologies. Funding com-mercial spinoffs for technolo-gies emanating out of federalmissions like military surveil-

lance is a relatively new butgrowing trend. Since about1980, Congress has writtenlegislation supporting govern-ment agencies that aim tocapitalize on research anddevelopment once meant onlyto serve themselves.

These so-called “technologytransfers” from the public tothe private sector (and some-times back again) enableAmericans to keep up withindustrial rivals abroad. Athome, they can revitalizeindustries struggling to copewith the post–cold war declinein demand for their output.And they offer taxpayers somesatisfaction for the dollarsthey’ve invested in science andtechnology.

A spectacular example ofsuccess in technology transferis the commercial use of satel-lite remote sensing. Untilrecently, remote sensing was atool wielded by a handful ofnations to spy from outer spaceon the military activities ofother nations. Now as many asa dozen commercial satellites,licensed to private Americancompanies by the U.S. Depart-ment of Commerce, may gointo orbit over the next decade.

For the first time, Americancommercial spacecraft will havethe right to zero in on objectsas small as an automobile andsell the resulting images toanyone who cares to purchasethem. The images are estimatedto cost as little as a few hun-dred dollars and are foreseen tohave many purposes, includingcartography, disaster relief,environmental compliance

GOINGS ON

Inspecting a teak forest plantation, near Chiang Mai, northern Thailand. Picturedfrom left to right: RFF fellows Roger A. Sedjo and R. David Simpson and ProjectDirector Suthawan Sathirathai of Chulalongkorn University, Bangkok.

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monitoring, oil exploration,and urban planning. The fewrestrictions include the U.S.government’s right to requirecompanies to turn off commer-cial cameras during war orinternational tension and itsright to deny access to someforeign customers.

By permitting commercialenterprises to engage in remotesensing the government hasopened the way to an industrythat some predict will netbillions of dollars annually andfollow the communicationssatellite industry as the nextspace-based commercial suc-cess. At the same time, thedecision raises legal and politi-cal questions involving suchissues as privacy and nationalsovereignty that may take yearsto resolve. To study these ques-tions as well as the ongoingeconomic implications—andadditional commercial possibil-ities—of remote sensing, theNational Aeronautics and SpaceAdministration has renewed itscooperative agreement withMacauley.

Measuring the returnsgovernment can expect torecoup from investments inresearch and development ischallenging, she says—andcertainly no less so in the caseof technology transfers. Inshort, workable approaches toquantifying in economic termsthe effects of technology trans-fer activities do not exist. Butthe demand for them does. Thecall for greater accountability ingovernment—including “met-rics” to demonstrate effectiveperformance—applies as much

to NASA as it does to otherfederal agencies.

In addition to her researchon remote sensing, Macauley isworking with RFF researchersMike Toman, David Austin, andDavid Simpson to assess waysthat NASA’s Jet PropulsionLaboratory can measure thebenefits and costs of interna-tional participation in U.S.government-funded R&D. In aseparate project for JPL,Macauley and Austin co-chaireda workshop this past winter onmeasuring the economic returnto government-funded spaceactivities. The two researchersalso have a grant from theCalifornia Institute ofTechnology for broader researchinto the economics of spacetechnologies.

EPA and the air:“future-talk”No fortune-tellers made predic-tions at the symposium RFFheld in February on EPA’sproposals to tighten air qualitystandards for ozone and partic-ulate matter. But that’s not tosay those who attended theday-long event wouldn’t haveliked to see into the future—atleast as far as July 19. That’swhen the agency will make afinal decision on the proposalsit issued last November, basedon its conclusion that currentair standards for the two pollu-tants do not adequately protectpublic health—especially thehealth of the elderly and peoplewith respiratory problems.

Whether the agency actual-ly will go ahead and tighten

national standards for ground-level ozone and set first-timelimits on fine particles in theair is still anybody’s guess. Butthe prospect has members ofCongress fighting over thelarger question of how EPAshould set standards andadminister the Clean Air Act.

More to the point, but alsoopen to question—and consid-erable difference of opinion—ishow serious the health hazardis and just how much relief wecould expect to get from morestringent standards. In sponsor-ing an opportunity to considerthose questions—as well asrelated ones involving costsand benefits, implementationissues, and the role of Con-gress—RFF hosted an array ofofficials and experts from EPA,universities, industry, the states,Congress, and environmentaladvocacy organizations, whooffered their assessments of theproposed standards as well astheir opinions as to what EPAought to do.

Among those who dis-cussed the level at which thestandards should be set wereMorton Lippmann from NewYork University’s NortonInstitute of Medicine; MaryNichols, assistant administratorfor air and radiation at EPA;and Roger McClellan of theChemical Industry Institute ofToxicology. Weighing in on thecosts and benefits of the pro-posed new standards wereEPA’s Robert Brenner,Chevron’s Steven Ziman, theAmerican AutomobileManufacturers Association’sRichard Klimisch, and RFF’sAlan Krupnick.

How to implement newstandards was taken up byEPA’s John Seitz and byDonald Theiler, who directs theState of Wisconsin’s Bureau ofAir Management. RobertWyman of the law firm Latham& Watkins and David Hawkinsof the Natural ResourcesDefense Council also addressedimplementation issues.

GOINGS ON

Panelists at RFF symposium discuss the costs and benefits of EPA’s proposed new airquality standards.

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Jimmie Powell, a staff mem-ber for the U.S. SenateCommittee on Environmentand Public Works, discussedthe role of Congress in settingair quality standards, as did C.Boyden Gray of the law firmWilmer, Cutler and Pickeringand NRDC’s Hawkins.

RFF briefing paperAt the time of the symposium,RFF released a briefing paperon the subject of revising airquality standards written byJ.W. Anderson, formerly amember of the Washington Post’seditorial page staff and current-ly RFF’s journalist in residence.

Anderson provides back-ground on what led EPA topropose the revisions, includinghow the Clean Air Act entersinto the picture. He provides aQ&A approach to discussingthe proposed standards, theirstringency, attainment, andassociated costs and benefits.

He believes that EPA makesa much stronger case for reduc-ing particulate matter (PM)than ozone. Reducing eitherpollutant would be expensive,he says. But in terms of healthbenefits, Americans would geta much higher return on theirmoney spent to reduce PMthan ozone. Anderson alsoquestions whether some citiesthat are out of compliance canever clean up their air enoughto meet EPA’s current ozonestandard, let alone the tighterone proposed.

Advanced technologyand climate changeAs part of RFF’s ClimateEconomics and Policy Program,RFF and Carnegie MellonUniversity co-hosted a work-shop in March for economictheorists and empirical model-ers to consider how technicalchange might reduce the costof cutting emissions of green-house gases. As the UnitedStates considers the conse-quences of “binding targets” forsuch emissions reductions,interest appears to be growingin the contribution of newadvanced technology to do thejob. The hope is that techno-logical advances can reducecarbon dioxide and othergreenhouse gases at a muchlower cost than policies thatsimply achieve reductionsthrough a process of economiccontraction.

The attractiveness of theapproach does not make it easy,RFF’s Director of the Quality ofthe Environment DivisionRaymond Kopp told those whoattended the workshop. Howto prompt development of suchtechnologies is not clear, Koppsaid—nor are the potential costsavings.

Thinking about the prob-lem raises a number of ques-tions about what governmentsshould do. Should they, forexample, subsidize researchand development projects tostimulate low-emission tech-nologies? What kinds of inno-vations might result frompolicies that induce green-house gas reductions by rais-

ing energy costs? Should theyadopt early abatement strate-gies so that a process of “learn-ing by doing” leads to costreductions from accumulatedknowledge? What costs to theeconomy as a whole might beincurred by redirecting inno-vation efforts from other areasto energy efficiency andrenewable resources? Andwhat kinds of empirical andpolicy research can help answerthese questions?

The RFF-CMU workshop,which Kopp coordinated,included panel discussions oncurrent modeling practice,government policies to inducetechnical change, and theneed to link theoretical andempirical knowledge to mod-els for the analysis of policyoptions. Panel participantsincluded faculty from a rangeof universities across thecountry and staff from theU.S. DOE, the EPA, nationallaboratories, consulting firms,and several European institu-tions.

Productivity studyreaches midpointFunded by the Alfred P. SloanFoundation, RFF researchersare investigating the causes ofproductivity change in fournatural resource industries thatare major contributors to theU.S. economy (see “WhatDrives Productivity in NaturalResource Industries?” inResources, Spring 1996,no. 123). In March theresearchers reached the mid-way point in their two-year

project. They marked the occa-sion by convening a meeting ofoutside experts to help themevaluate their findings to dateand advise them on futurework. Eventually, RFF plans topublish a book on the findingsof this research program, andwill seek other forums fordissemination and discussionas well.

The study is being carriedout to better understand theeffects of technological innova-tion on the costs of productionand to identify ways in whichnew technologies are diffusedthroughout a particular indus-try as well as the world.Although productivity growthhas had obvious impacts onindustrial performance, econo-mists have not yet convincinglyexplained how productivitygains are generated.

The RFF researchers hopeto use their findings to specu-late about future production ofpetroleum, coal, forest prod-ucts, and copper in the UnitedStates. They also seek to betterunderstand the long-termcompetitiveness of U.S. firmsin these resource industries. Inanalyzing productivity growth,the researchers are attemptingto distinguish betweenchanges in productivity thatincrease a resource base andthose that make extractionfrom the existing base lessexpensive. Later on they mayconsider a broader cross-section of natural resourceindustries and comparedomestic and foreign produc-tivity performance withinthem.



Access a synopsis of thesymposium and the briefing

paper at http://www.rff.org or callRFF for copies.

http://www.rff.org/


GDP: Does It Matter?As developing nations experience improvements in materialwell-being, sooner or later they must focus on preserving andbuilding on their progress, despite social dislocation, environ-mental degradation, and overall global economic change. Richcountries worry, too, over this struggle for “sustainable develop-ment,” an elusive concept subject to much debate. Among themany things open to question is which indicators to use forevaluation. One such indicator is Gross Domestic Product(GDP), the market value of total output of goods and services ina country’s economy.

Some analysts say we should drop GDP as an indicatorentirely, claiming the measure is too deeply flawed to track thefactors that make or break a country’s capacity to take care of itspeople.

Those (primarily economists) who defend continued use ofGDP, as one among numerous measures, counter: Do you throwout the baby with the bathwater? Do you abandon GDP for itswell-known inability to fully reflect and track various indicatorsof human welfare?

Well-known because economists have long noted, for exam-ple, GDP’s inadequate treatment of natural resource depletionand its almost entire neglect of environmental degradation. Mosteconomists nonetheless do not dismiss GDP’s considerable valuefor policy analysis and strategies.

Our conclusion: GDP, though imperfect, has value. It is ameasure which, over a sizable range of the international incomeladder, is likely to correlate well with some key contributors tostandards of living. Even where a society chooses to use theproceeds of its GDP “misguidedly,” the measure still captures thecapacity and potential of that society to improve the lot of itspeople. While we should not rely exclusively on GDP as a mea-sure of progress, neither should we jettison it quite as casually assome people seem prepared to do.

—Joel Darmstadter and Ron Lile

The charts on this page: In cross-sectional representationscovering 114 countries in 1995, three important social anddevelopmental indicators assembled by the World Bank areplotted against GDP (as adjusted for variations in purchasingpower of different currencies). Literacy parallels GDP quiteconsistently, until a level of income equal to approximatelyUS$5700 (22 percent of the U.S. level) is reached. This correla-tion does not necessarily mean that a growing GDP is responsi-ble for improved literacy or vice versa. But the relationship isthere for the record—and further study.

Life expectancy and access to sanitation behave similarly,although in both cases the correlations plateau long before theincome levels of the wealthiest nations are reached. Some signifi-cant measures of progress show little relationship to per capitaGDP. For example, infant survival rate (not plotted here) doesn’tseem to be associated with GDP at all—possibly because ofinexpensive and simple practices like rehydration.

Adult literacy rate versus GDP per capita

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Energy TradingThe Market’s Response to Deregulation By Vito Stagliano and Sarah Emerson

Remarkable changes have resulted from the decision to deregulate oil marketssixteen years ago. What lessons can be applied to increased competition inthe markets for electricity and natural gas? Will expectations be realized?

The energy sector of the U.S. economy has changedin extraordinary ways. Today the prices we pay to

heat and light our homes and offices, cook our food,and drive our cars are, when adjusted for inflation,about what they were in 1949. Widespread concernsabout the security of energy supplies have diminished,also. Sooner or later Americans will buy all of theirenergy on the open market—probably from nationallyknownenergycompaniesrather thanlocal utili-ties—andget betterservice intothe bargain.These bene-fits derivefrom anepochalshift inresponsibili-ty for set-ting energyprices—from thepurview ofgovern-ments and

cartels acting in secrecy to free agents trading publiclyin the marketplace.

Oil markets have been free of regulation for sixteenyears. More recently, policymakers have been focusingon increasing competition in the natural gas sectorand on liberating electric utilities from government’slong-established control. The shift away from govern-ment regulation of energy has led to something per-

haps evenmoreimportantthanimplacabledownwardpressure onthe price ofa barrel ofoil. It hasinstigateddevelop-ment ofmultipletradingcenters—inNew York,Rotterdam,Singapore,and else-where—that are


Composite Fossil Fuel Production Prices: 1949–19971987 Real Dollars

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E N E R G Y T R A D I N G — T H E M A R K E T ’ S R E S P O N S E T O D E R E G U L AT I O N

dedicated to competition in free trade for crude oiland related products.

Free trade has unearthed more knowledge about thevalue of fuels—and of the technology that transformsthem into useful energy—than was ever the case in aregulated market. The New York Mercantile Exchange(NYMEX) has been especially active in developingtrading structures and trading instruments for oil, gas,and power. In the United States alone, which accountsfor only a fraction of world trade in petroleum, theNYMEX oil futures market trades anywhere between 80million and 150 million barrels of oil daily. This volumeof trade, which is almost ten times greater than U.S. dailyconsumption of about 17 million barrels, exerts greaterinfluence on the price that consumers pay for gasoline,fuel oil, and other products than does any other force atplay in the international oil market, including theOrganization of Petroleum Exporting Countries (OPEC).

Energy and the Price of Toilet PaperDoes any of this trading activity really matter to ordi-nary people? Yes, but not obviously. Once goods andservices enter the world of commodity markets, theybecome part of a trading system so vast, and now soglobal, as to make it difficult for any individual orgroup to manipulate supply and price as OPEC didduring the notorious decade of energy crises.Identifying causes and effects of price changes alsobecomes difficult when markets take over. Considersomething so common as toilet paper.

Paper mills, a great many of which burn residualfuel oil to power their plants, make products whoseprices must necessarily reflect the energy cost of pro-duction. In the eastern half of the United States, theprice that paper mills pay for fuel oil is set in the so-called New York Harbor (NYH) for fuel oil. The priceof NYH oil is, in turn, shaped by the interplaybetween supply and demand on the U.S. East Coast,and by political and market developments in otherregions of the world—as distant as Siberia.

Siberia? In recent years, one of the most influen-tial factors shaping NYH prices has been Russian fueloil export policy. During the last three winters, theRussian government has either banned fuel oilexports altogether, or has so heavily taxed the exportbarrels as to make them uneconomic on the worldmarket. Russia has done so to guarantee availabilityof this same fuel to electric power plants in its ownremote regions. Interestingly, barely a drop ofRussian fuel oil ever actually makes it to the EastCoast of the United States under any circumstances.But the imposition of Russian export controls dra-matically elevates prices in NYH because it reducesthe volume of fuel oil available to the highly integrat-ed “Atlantic basin” market. Thus, because mostpaper mills buy fuel oil through long-term contractstied to the spot price in New York, they are quitevulnerable to any price fluctuations anywhere in thesystem. Any increase in energy input costs ends upreflected in the price of toilet paper. (The spot pricereflects a market where transactions take placeimmediately. Unlike futures markets, the commoditybeing traded is on hand and delivered to buyers “onthe spot.”)

The impact of Russian oil export policy can also befelt by electricity consumers in New England. In thatregion of the United States, plant capacity to generate

Deregulating Natural GasMuch remains to be done before American consumers realize the fullbenefits of what will certainly become a highly competitive market forgas. Congress intervened heavy-handedly in the natural gas sector from1973 to 1989. It sought to control most aspects of the production anduse of this energy, which it considered limited in supply and too pre-cious to use widely. For a decade, Congress actually banned its use inindustry and for power generation. The consequence of this restrictivepolicy was that the price of a thousand cubic feet of gas rose from itstypical wholesale price of about $1.50 to over $3.00 by 1980, despiteclear evidence that the United States—and North America—had sup-plies of it that would last centuries, and would be cheap to produce. Theevidence did finally convince a Democratic Congress and a RepublicanPresident to deregulate gas production prices in 1989. But even then theresulting Natural Gas Wellhead Decontrol Act did not fully let go offederal price fixing until 1992.

Meanwhile, most state regulators still do not allow residential andcommercial gas consumers to choose their suppliers in an open market.Rather, such customers must continue to purchase gas from so-calledlocal distribution companies (LDCs) that remain regulated monopolies.Does this make a difference in the price that these consumers pay forgas? The evidence suggests that it does.

But change is coming. Some states have accepted the idea of a fullycompetitive natural gas market and are beginning to allow some retailconsumers to choose suppliers. These states are proceeding along thispath at the very same time that they are coming to terms with consumerchoice and market competition in the electric power industry.



electricity by using oil happens to be significant. Thefuel oil that New England utilities purchase is typicallypriced off the same NYH market used by paper mills.To the degree that the electric utilities have supplycontracts tied to spot prices, they are as vulnerable tochanges in Russian export policy as are the papermills.

As deregulation of electric utilities moves forward,events in places as remote as the frozen tundra ofnorthern Russia will affect energy buyers in NewEngland. And so if an increase in the price of toiletpaper does not grab the attention of U.S. consumers,the rise and fall of electricity prices surely will.

The news about deregulation is of course notinvariably positive. Along with vigorous competition,free markets also bring uncertainty and unpredictabili-ty—a kind of trading frenzy that results in pricevolatility. From time to time, and for reasons that arenot entirely obvious to the average consumer, prices ofcommodities such as oil go up, sometimes sharply,recurrently and repeatedly, and always inconveniently.This was the case, for example, in the winter of1996–97, when American consumers experiencedunexpectedly high prices for the oil they use to heathomes and buildings. During the same winter, con-sumers were also subjected, albeit briefly, to extremelyhigh prices for natural gas. Politicians reacted to theseevents by calling for government to intervene by, forexample, releasing stocks held in the StrategicPetroleum Reserve.

That politicians feel pressure to step in and “fix”sudden price spikes is not surprising. Reliance on themarket is hardly a policy carved in stone. And evenwhen the commitment to competition is made, eco-nomic deregulation in a sense never really ends.Crude oil and markets for related products, for exam-ple, continue to require tinkering. The U.S. gasolinemarket was so fragmented by implementation ofregulations related to the Clean Air Act amendmentsof 1990 that trading in gasoline futures remains unvi-able—an unintentional but nonetheless significantconsequence. Similarly, the natural gas market, someaspects of which are still heavily regulated at bothfederal and state levels, has proven difficult to organizein a manner that protects the interests of allconsumers (see “Deregulating Natural Gas”). Theelectric power market, meanwhile, is just gettingorganized. In terms of value and volume of trade, it

will be larger than all other energy markets combined(see “Trading in Electrons”).

The Hedging SolutionFor every problem created by deregulation, however,markets are proving capable of devising solutions.Some paper mills and electric companies, for example,have turned to investment banks and trading housesto find protection from the price volatility of marketslike those for fuel oil. So-called hedging instrumentsfor managing price risks, developed first in the oilmarkets, then in the natural gas markets, and now inthe electric power markets, provide financial vehiclesfor large consumers to “lock in” energy prices over aspecified period of time. These instruments free themfrom the price volatility that characterizes trade in spotmarkets. Moreover, they can use other financial tools,like price options, to capture a windfall if a price fallswell below the guaranteed price they locked in previ-ously. So, in the imminent market for competitiveelectricity—and for other energy traded as commodi-ties—the happiest consumer will be the one thatchooses a clever hedger for a supplier.

The average home owner is, of course, unlikely to

Crude Oil Refiner Acquisition Costs, 1981–1993(Nominal Dollars/Barrel)(Domestic/Imported Composite Cost)

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Deregulation of the energy marketplace can be said to have began as a result of an ExecutiveOrder that President Reagan issued two weeks after taking office in January 1981. The orderhad an immediate effect on crude oil prices—an effect so powerful that it drove OPEC into astrategic tailspin. Deregulation of the U.S. oil sector fostered a profound revaluation of themarket value of a commodity, which barely two years earlier had been thought to be worth$50 to $100 per barrel.

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have the means or the opportunity to check on thefinancial management skills of the energy companiesthat offer service. Here the responsibility falls back onthe regulators. They who previously devoted theirgreatest efforts to setting rates will, in the deregulatedworld, devote time and vigilance to ensuring thatmarkets are competitive. A monopolist has no motiva-tion to reduce price risk exposure because it can passthat risk (and the higher cost) on to the consumer. In a

competitive market, however, where consumers canshop around for the energy they need, the vendor withthe lowest price is likely to prevail. Other factors beingequal, the vendor that sells at the lowest price is alsothe most likely to have protected itself against volatility.

Freedom Is Worth the RiskThe value of energy has preoccupied governments onall continents since economies first became dependenton commercial fuels. Energy has been priced too highor too low relative to its market value because govern-ments have insisted on saddling its trade with myriadsocial and security burdens. Despite the fact thatderegulation remains an unfinished business, what hasoccurred thus far presents fairly clear evidence thatfree energy markets result in lower costs toconsumers. If it remains for the political establishmentto take this evidence and make it enduring policy, atleast a precedent exists for doing so. The impetustoward greater energy sector deregulation can betraced to the hotly debated Energy Policy Act of 1992(EPAct). It took Congress nearly two years to forge aconsensus in support of this legislation. But perhapsmore than any other energy legislation in recent mem-ory, this law sent a strong signal that the federal gov-ernment was finally fully committed to free trade inenergy.

Markets are risky, and their organization and man-agement are sometimes flawed. But as WinstonChurchill used to say of democracy, they are betterthan all the other alternatives.

The authors are directors of Energy Security Analysis Inc. (ESAI), a firm that special-izes in analysis of physical and paper energy markets. Vito Stagliano was a visitingscholar at RFF in 1995–96 and was one of the authors of A Shock to the System,RFF’s primer on electricity restructuring.

E N E R G Y T R A D I N G — T H E M A R K E T ’ S R E S P O N S E T O D E R E G U L AT I O N

Trading in ElectronsLess than four years after Congress enacted the Energy Policy Act of1992 (EPAct), the New York Mercantile Exchange (NYMEX) made histo-ry by opening trade in electrons at two West Coast market hubs:California-Oregon Border and Palo Verde, a switchyard in Arizona. SinceMay 1996, NYMEX traders have taken on the difficult task of determin-ing what electricity is truly worth in the marketplace. For the previoussixty-two years, regulators had established the value of electrons, andassigned rates that local utilities would have to charge their captivecustomers. But the cumulative consequences of regulating electricityproved to be uneconomic; a competitive market could deliver power atlower cost. This was—and is—the impetus for restructuring America’slargest energy industry.

The market for trade in electric power is likely to be difficult toorganize and manage. Unlike oil and gas, electrons cannot be producedand stored for later use, and the path they are made to travel frompower station to home and business is subject to unforgiving laws ofphysics. Even with these complexities, markets for electric power arenonetheless emerging and being organized. “Spot markets” exist in everyregion of the country, where power is on hand and delivered to buyersimmediately. The futures market, where the electrons usually are notphysically present but are bought and sold via contracts that specify adelivery date and fix a price, will continue to evolve as new contracts aretested in new market centers. Within five years, free trade in the $200billion electricity market will likely be routine.

S P R I N G 1 9 9 7 / I S S U E 1 2 7 R E S O U R C E S 1 1

A great deal of controversy surrounds the issue ofclimate change. Some say that climate change is

one of the greatest threats facing humankind, one thatcalls for immediate and strong controls on greenhousegases from fossil fuel burning. Others say that therisks are weakly documented scientifically, that adap-tation to a changing climate will substantially reducehuman vulnerability, and that little action is warrantedother than study and development of future techno-logical options. The same kinds of divides arise indiscussing policy options to reduce greenhouse gasemissions, with some predicting net benefits to theeconomy and others fearing the loss of several per-centage points of national income.

These disagreements surface in the efforts of theinternational community to negotiate goals andactions under the 1992 Framework Convention onClimate Change. They reflect different interpretationsof the evidence and different interests. To help sortthrough the tangle, I have summarized some ways tothink about climate change risks and policies that maybe useful in considering both international agreementsand actions by the United States.

Decision FrameworkWhile no easy recipe indicates what should go into aclimate change decision framework, several maximsseem worth applying.

Think comprehensively about risks and costs. Efforts to gaugethe benefits of reducing climate change risks shouldbe as broad as possible. Elements to consider includethe impacts on market goods like agriculture; effectson human health; effects on nonmarket resources likewilderness areas and wetlands that provide both recre-ational values and ecological functions; and the ancil-lary benefits of greenhouse gas reduction such asimproved air quality. It is just as important to thinkbroadly about control and adaptation costs, includingindirect effects on the economy as well as direct com-pliance expenditures.

Given the current state of knowledge, it will bedifficult to attach monetary values to a number of riskreductions and costs. This uncertainty is likely topersist for many risk categories (especially those relat-ed to ecological impacts) even if uncertainty about thephysical manifestations of climate change declines.However, lack of information should not be confusedwith negligible risk. To be useful to decisionmakers,moreover, an assessment of climate change risksshould go beyond a sequence of “best guess” or “worstcase” estimates of atmospheric changes, biophysicalimpacts, and socioeconomic impacts to consider thevariability of possible consequences.

Think long-term. The risks posed by climate changedepend on the path of changes in the atmosphericconcentration of greenhouse gases over many decades

A Framework for ClimateChange Policyby Michael A. Toman

Differing interpretations of the evidence—and differing interests—complicateefforts to negotiate goals and actions regarding climate change. While noeasy cookbook-style recipe can indicate what should guide thinking about risksand policies, several maxims seem worth applying.

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and centuries, not just on the emissions of these gasesover a relatively short period of time. We are dealingwith the cumulative effect of many smaller influenceson the biosphere—an effect with a great deal of natur-al inertia.

Having to confront the distant future greatly com-plicates risk assessment and the development of con-sensus for policy actions. To be effective, at least someactions must anticipate long-term impacts, before allof the scientific evidence is clear. Our political system

arguably is less effective at taking such actions thanresponding to a single large and immediate concern.On the other hand, the long-term nature of climatechange risks means we can hone our scientific under-standing and policy responses over time; we need notdo everything right away.

Address adaptation. In areas such as agriculture, man-aged forestry, and human settlements, intuition andexperience in other contexts suggest a medium-to-high degree of potential adaptability to naturalchanges, given enough lead time and investment.Adaptation possibilities include development of newplant varieties and crop patterns, changes in irrigationtechnology, relocation of coastal infrastructure, andexpanded protection of wetlands to compensate fortheir potential future damage.

Adaptation may be difficult in some cases, forexample, where damage occurs to natural ecosystemswhose functions are not well understood. But evenwhen adaptation capacity seems very limited, itshould not automatically be treated as negligible.Improving the capacity to adapt where it is weak—asin many poor, developing countries—may be one ofthe most effective ways to respond to some climatechange risks, at least until the cost of stabilizingatmospheric concentrations of greenhouse gases falls.

Think internationally. Rich and poor countries argueover how the burden of greenhouse gas emissionsreductions should be allocated. The ongoing tensioncan only be resolved by negotiation among the partiesthemselves. However, long-term global climate changerisks will not diminish to any significant degree untiltotal global emissions are reduced, and this will requireglobal cooperation, not just action by today’s richcountries. This point deserves to be underscored inlight of the likely future decline in the share of totalemissions from advanced industrial countries (current-ly about 50 percent) as economic growth proceeds inother areas. The efficacy of any policies the UnitedStates pursues to reduce climate change risks thus willdepend on the actions taken by others.

Keep distributional issues in mind. Climate change risksand response capacities vary with income level. Thereis also a fundamental asymmetry between the timingof response costs—which will largely be borne by thecurrent generation—and the benefits of reduced cli-mate change—which will largely accrue to futuregenerations. This asymmetry means we cannot simply

RFF Climate Change ResearchRFF launched its Climate Economics and PolicyProgram last fall to conduct basic and appliedresearch and policy analysis related to global cli-mate change. An initial set of research projectsunder way includes:

• Bringing Uncertainty into the EquationWhen Calculating Climate Change Risks

• Carbon Consequences of Tax System Reform • Carbon Policy and Endogenous Technical

Change • Discounting in Intergenerational

Decisionmaking • Economic Analysis of Greenhouse Gas

Emissions Trading • Effective Environmental Policy in the

Presence of a Distorted Tax System • Electricity Restructuring and the Costs of

Controlling CO2

• Impacts of Climate Change Mitigation onOther Environmental Problems

• International Cooperation for Effective andEconomic Greenhouse Gas Limitation

• Vulnerability of Low-Income Households tothe Hydrologic Effects of Climate Change

To broaden understanding of climate changeconcerns, RFF is also organizing workshops andproducing a series of Issue Briefs. The first of these,“Climate Change Risks and Policies: An Overview,”is the source of Michael Toman’s article.

For more information:http://www.rff.org/research/programs/climprog.htm

http://www.rff.org/research/programs/climprog.html



compare the costs of reducing the risk with the valueof enjoying the ultimate benefits. Instead, we mustassess both the costs members of the current genera-tion would bear and the strength of our concerns forthose who would be vulnerable in the future. Theseare economically and ethically complex questionsabout which we know little, and they require maturepolitical debate.

Estimate control costs realistically. Some people argue thatmarket inefficiencies are so rife, and opportunities forinnovation so plentiful, that emissions abatement is alow-cost proposition or one that might even benefitthe economy. This point of view is in sharp contrast tothe outputs of economic models indicating that stabi-lizing emissions may cost as much as several percentof a country’s gross domestic product (implying thatdeeper cuts in emissions to reduce greenhouse gasconcentrations in the atmosphere would be even moreexpensive).

Most people who have looked at the debate seemto agree that some low-cost improvements in energyefficiency exist, for example, by reducing subsidiesand other market distortions. However, it is open toquestion whether these opportunities are substantialcompared with, say, the amount of abatement neededto stabilize greenhouse gas emissions. Against thebackdrop of future increases in global energy demand,the cost of longer-term reductions in greenhouse gasemissions cannot help but rise unless further progressoccurs in the development of nonfossil energy alterna-tives. In assessing medium- to long-term costs, it is amistake to assume technical progress as a panacea forreducing abatement costs, or no technical progress atall.

Another argument is that our tax system is sodistorted that we can levy energy taxes to reducegreenhouse gas emissions and use the proceeds tolower other taxes that hamper economic growth.However, recent analysis calls into question this “dou-ble dividend.” The basic conclusion of this analysis isthat broader-based taxes like those on income general-ly create less overall economic distortion than narrow-er-based taxes like those on energy. Thus, adjustingother taxes might dull the economic pain of an addedenergy tax, but not to negligible levels. Moreover, anytinkering with the tax system is possible only if politi-cians take the difficult step of imposing higher energytaxes in the first place.

Most studies of greenhouse gas abatement costsassume the application of idealized least-cost policymeasures like a comprehensive “emissions trading”program or a comprehensive “carbon tax” based onthe carbon content of different fossil fuels. Abatementcosts will be higher (perhaps considerably so) if lessthan ideal policies are used in practice. The debateabout which greenhouse gas reduction targets areappropriate cannot be conducted independent ofdiscussions about what concrete measures can andshould be used to actually restrict emissions.

Implications for PolicymakingThe decision framework I have described has severalimplications for formulating policy.

Allow flexibility in the timing of cumulative emissions reductions toreduce overall costs. The potential cost savings fromintertemporal flexibility in meeting a particular long-term emissions-reduction goal depend on the assump-tions made, but it appears that savings of at least 20percent or more are possible. Taking this approach

RFF Council Takes Up Climate TopicThe RFF Council took up the topic of “ClimateChange: Policy Issues and Options” at its seventhannual meeting in April. Council members heardfrom scientists as well as experts in government,academia, and the business and environmentalcommunities on this critical and controversial issue.

In a plenary session on how to think aboutclimate change policy, RFF Senior Fellow MichaelToman was joined by American Petroleum InstituteExecutive Vice President William O’Keefe andDaniel Lashof, a senior scientist at the NaturalResources Defense Council. Toman and RFF SeniorFellow Raymond Kopp later led respective discus-sions on technical responses to climate change andimplementation of policies.

Rafe Pomerance, the U.S. Department of State’sdeputy assistant secretary for environment anddevelopment, spoke of the challenges of negotiatinginternational climate agreements. Everett Ehrlich,the U.S. Department of Commerce’s under secretaryof commerce for economic affairs, discussed theimplications of climate change policies as theymight affect the United States in particular.

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does not mean that all or even most policy actions aredeferred to the future. It simply means that theemphasis is placed on sequential decisions—some ofwhich are better taken sooner and others later. Unlesswe start with a longer-term perspective, it is impossi-ble to consider such tradeoffs.

Incorporate economic incentives into emissions-reduction policy.These incentives include carbon taxes on energysources and various forms of tradable permit systemsthat would effectively establish quotas on emissionsbut allow their trade. Sources with higher controlcosts could (in effect) pay emitters with lower controlcosts to assume more of the reduction burden.

Provide opportunities for emissions reductions wherever possible.One example of an abatement incentive program thattakes place outside industrialized countries is the so-called “joint implementation” approach, wherebyemitters in, say, the United States, can satisfy anyemissions reductions requirements they face throughactions that reduce emissions in other countries.Formal emissions trading programs among sources incountries with quantified emissions reduction targetsalso are possible. Significant practical questions needto be answered to structure flexible yet verifiableprograms for international (and intertemporal) emis-sions trading. However, the magnitude of the potentialcost savings underscores the value of seeking to over-come these challenges. Depending on the assumptionsmade, savings of 50 percent or more seem possible.

Build knowledge and improve technology. Even if we do allthe best things possible to reduce emissions, given thecurrent state of knowledge, economic growth—espe-cially in developing countries—will continue to pushup greenhouse gas emissions and atmospheric con-centrations. Unlike limiting pollutant gases such assulfur dioxide, for which a variety of technical controloptions is available, limiting carbon-dioxide emissionsrequires reduced energy use, greater energy efficiency,or substitution of energy sources with lower carboncontent.

To avoid unacceptable climate change risks ulti-mately will require a fundamental change in our ener-gy systems toward much greater reliance on otherenergy sources—solar, biomass, and possibly nuclear.To make the transition economically manageable willrequire continued or enhanced investments in basicand applied knowledge.

The government has an inescapable role to playnot just in creating the incentives for private parties toseek better technologies but also in funding the devel-opment of basic knowledge about technology as wellas climate change impacts. At the same time, we mustrecognize that our understanding of what policy canactually do to induce climate-friendly innovation isweak at best. We must also recognize that divertingresources from other areas to research on low-carbonenergy systems may well reduce innovation elsewherein the economy—technical progress is not a free good.

Increase emphasis on adaptation. Adaptation is part of anoptimal response strategy in any event. Indeed, it isthe means of transcending the narrower concernabout our vulnerability to climate change to a broaderconcern with global-scale changes that place stress onnatural systems and pose threats to human well-being.Furthering human capacity to adapt to climate changeentails investment in improved understanding of theoptions and their international application. It alsoentails adjusting economic and other distortions thatlimit adaptation potential (such as assistance programsthat subsidize coastal development or water use). Inmany cases, the best climate policy may have little todo with greenhouse gases or climate per se, and muchmore to do with developing better basic social infra-structures for natural resource conservation and useand for public health protection.

Michael A. Toman directs RFF’s Energy and Natural Resources Division and coordi-nates its Climate Economics and Policy Program.

In announcing a new round of food safety initiativesin connection with his FY98 budget proposal,

President Clinton called for a national discussionabout the future of the nation’s food safety system.Recently, federal agencies have gone a long waytoward improving that system by adopting a regulato-ry framework that focuses attention on prevention andmore clearly defines the roles the food industry andthe government must play. But as the President’s newinitiatives indicate, more work needs to be done—andnew working relationships forged—in preparing ourfood safety system for the next century.

The organizational and statutory fragmentation ofthe current system makes it difficult for the federalfood safety agencies to take full advantage of thenewly adopted regulatory framework. Efforts to assignclear responsibility and accountability for food safetywithin the government are frustrated by the fact thatseveral different federal agencies are involved in regu-latory matters concerning food safety. They operateunder thirty-five distinct statutes. Further, althoughthe federal government spends more than $200 mil-lion annually on food safety research, no formalmechanism or strategy exists to coordinate the twenty-one distinct federal agencies conducting such research

(see “A Fragmented Food Safety System”). To say theleast, the current “system” is not the one anyonewould design if starting from scratch.

The new federal framework for food safety regula-tion is cause for optimism nonetheless. To understandwhy requires some familiarity with the current U.S.food safety system, which actually consists of twosystems: one for meat and poultry, administered bythe U.S. Department of Agriculture (USDA), and onefor seafood and all other foods, administered primarilyby the Food and Drug Administration (FDA). It isthese two agencies that have decided to adopt a newregulatory framework based on what is known as aHazard Analysis and Critical Control Points (HACCP)approach.

America’s Two Food Safety SystemsIn the USDA system, inspectors carry out “continuousinspections” of meat and poultry plants by physicallyexamining every carcass passing through slaughter-houses and making daily inspections of plants thatprocess products ranging from fresh, cut-up chickenparts to pepperoni pizza and chicken noodle soup.USDA employs nearly 7,500 full-time inspectors whocontinuously inspect more than 6,000 plants. In

Preparing America’s FoodSafety System for the Twenty-First Centuryby Michael R. Taylor

Recent regulatory changes will help the food safety system focus on preventionand should clearly define the respective roles of government and industry. Butmore work is needed to assure the system’s future success.


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1994, inspectors individually examined approximately130 million head of livestock, and 7.5 billion chick-ens, turkeys, and other poultry. Carcasses andprocessed products cannot be shipped into commercewithout the USDA mark of inspection.

The USDA system reflects its historical origins inthe early 1900s, when the public’s primary concernswere extremely unsanitary conditions in meatpackinghouses and the use of diseased animals or visibly cont-aminated carcasses for human food. The system hasworked well to address these problems, but it has doneso by playing a prominent role in the operation of theplants it inspects and for the quality and safety ofproducts leaving those plants. For example, USDAinspectors bear the primary responsibility for sortingdiseased carcasses from wholesome ones; USDAapproves facility blueprints, processing equipment, andproduct labels prior to their use; and inspectors, ratherthan plant managers, have traditionally made the dailydecisions on whether or not a slaughter plant has beenadequately cleaned and is ready to begin operations.

The strength of the traditional USDA system is thatit puts government inspectors in a position to prompt-ly detect and correct obvious food safety and sanita-tion problems. It also provides the assurance thatmany consumers evidently want—external oversightof production. The system’s primary weakness is thatslaughterhouses have no clearly defined responsibili-ties for preventing or minimizing contamination ofcarcasses with the most significant forms of contami-nation—microbial pathogens, such as Salmonella,Campylobacter, or E. coli 0157:H7—which are notvisually observable by inspectors.

Moreover, before 1994, the USDA did not considerany microbial pathogens on raw meat and poultryproducts to be adulterants under law, partly becauseproper cooking was thought to kill the bacteria. Thispolicy insulated slaughterhouses from responsibilityfor reducing bacterial contamination and meant that,when the presence of E. coli in hamburgers in thePacific Northwest caused an outbreak of illness in1993, USDA investigators determined that the inspec-tion system had worked as it was designed to work.Unfortunately, the system’s failure to assign responsi-bility for reducing microbial contamination under-mines not only its effectiveness in minimizing the riskof illness but also the public’s confidence in the safetyof the food supply.

A Fragmented Food Safety SystemResponsibility for America’s food safety is widely dispersed among gov-ernment agencies at federal, state, and local levels. The roles of theseagencies vary widely depending on their statutory authority andresources. The resulting fragmentation undercuts the government’sability to marshal the most effective food safety program possible and itmuddles accountability. A few examples illustrate this point:

• FDA is responsible for the safety of eggs in shells and USDA for thesafety of processed egg products, but it is USDA—not FDA—inspectors that visit shell egg packing houses on a daily basis tograde eggs for quality.

• Plants producing pepperoni pizza are subject to daily inspectionswhereas those producing cheese pizza are rarely inspected. Meataccounts for the difference in oversight. USDA oversees the formertype of plant and FDA the latter. USDA also inspects the animalfrom which the pepperoni was made at the time of slaughter aswell as the processing of the meat into pepperoni.

• To implement the pesticide reform law that Congress passed lastyear, the Environmental Protection Agency will make hundreds ofimportant food safety decisions about chemicals in foods—manymore than FDA will make—even though FDA is considered thefederal government’s leading food safety agency.

• The Centers for Disease Control and Prevention (CDC) are respon-sible for monitoring foodborne illnesses at the federal level andthey conduct investigations of outbreaks of illnesses at the invita-tion of state health officials. FDA and USDA also investigate out-breaks of illness, albeit for different purposes. While the CDC focusis on determining the causes of illnesses, the agencies look to see ifregulatory action is needed, such as seizure or product recall.

• State and local agencies have their own food safety programs thatplay a critical role in the nation’s food safety system. In addition toinvestigating outbreaks of illness within their boundaries, theyconduct food safety inspections at the retail level—grocery storesand restaurants—and they have primary oversight for certain prod-uct categories such as milk products and shellfish.

Because fundamental structural reform in the federal government ispolitically difficult to achieve, the agencies are working among them-selves to improve the existing structure, using HACCP as their concep-tual framework.



More broadly, the USDA system has also, in somerespects, stood in the way of progress on food safety.For some companies, the extensive system of com-mand-and-control regulation associated with continu-ous USDA inspection has discouraged or delayedadoption of new food safety technologies. For others,the USDA mark of inspection has been a crutch thatplant operators have depended on in lieu of takingresponsibility themselves for food safety and sanitation.

In contrast, the FDA relies much less heavily oninspection than the USDA does. The FDA insteadensures food safety by establishing quantitative limitson various chemical contaminants, specifying in somecases which microbial pathogens adulterate variousfoods, issuing regulations on the use of additives, andproviding general guidance concerning the “goodmanufacturing practices” that FDA considers neces-sary to prevent insanitary conditions. FDA enforcesthese provisions when violations are encountered as aresult of outbreaks of illness, consumer or industrycomplaints, or observations made during periodicFDA inspections.

FDA has jurisdiction over 53,000 establishmentsthat produce, process, or store food, ranging fromseafood plants to warehouses to high-tech food pro-cessing facilities. The agency’s 250 food inspectorsconduct about 5,000 annual inspections. A typicalFDA enforcement action involves removal of an adul-terated food from commerce, either through voluntaryrecall by the responsible company or through an FDA-initiated court action. Because FDA inspection isinfrequent for any one firm—a year or more can passbetween inspections, even in plants with relativelyhigh-risk operations—the system relies heavily on thecommitment and competence of food companies toproduce safe products. Most companies take theirfood safety responsibility seriously.

The strength of the FDA system is that is hasspelled out what it considers to be an appropriatestandard of safety and, through its enforcementactivity, has created added incentive for companiesto meet those standards. The system’s primary weak-nesses are the infrequency of its inspections and itslargely reactive stance: the system has lacked strate-gies and mechanisms to systematically anticipateand prevent the most significant food safety prob-lems, such as ones associated with microbialpathogens.

A New Approach: HACCP

In the 1960s, food industry experts developed theHazard Analysis and Critical Control Points system tomonitor foodstuffs at several important junctures inthe preparation process, rather than waiting untilproducts were ready to go to market before inspectingthem for safety. The approach is a proactive and pre-ventive one. The operator of a food productionprocess develops a HACCP plan for producing safefood, one that identifies the potential hazards in theprocess—such as the possibility of harmful contami-nation with bacteria or chemicals. Such a plan alsospecifies process controls—for example, proper cool-ing of perishable raw materials or adequate cookingtemperatures—that are validated as effective in pre-venting or minimizing health risks. Recordkeepingand monitoring procedures enable an operator toverify on a continuing basis that the controls areworking and to detect and promptly correct foodprocessing errors.

USDA adopted the HACCP system in 1996 follow-ing the recommendation of the National Academy ofSciences. In the early 1990s, FDA began developingits own HACCP-based food safety strategy for seafood,culminating in its 1995 regulations that mandateHACCP for seafood processors.

While food safety laws in the past have implicitlymade food companies responsible for preventingsafety hazards and producing safe food, HACCPmakes their responsibility explicit and establishes ageneral standard of process control that companiesmust achieve. Under HACCP as adopted by USDA,for example, a slaughter plant’s responsibility to targetand reduce contamination with harmful bacteria isnow crystal clear.

HACCP also clarifies the government’s role. Forexample, USDA inspectors will continue to inspecteach carcass in every slaughter plant and make dailyinspections in processing plants, but they will nolonger attempt to control—and, in effect, take respon-sibility for—so many details in a given plant’s day-to-day operations. Instead USDA will focus on verifyingthrough its inspection activity that every company-designed HACCP plan is appropriate and workingproperly and that each company is meeting foodsafety performance standards. For USDA, taking anHACCP approach will permit more efficient deploy-

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ment of its inspectors, allowing them to focus on themost important food safety concerns in the plants theymonitor.

For FDA, the HACCP system can compensate tosome extent for the infrequency of its inspections. AllHACCP plans include recordkeeping procedures toprovide an ongoing indication of plant conditions andwhether food safety controls remain effective betweeninspections. Documentation includes how plantemployees have detected and corrected processingproblems.

Strategies for the Next CenturyThe HACCP approach is at the heart of the Clintonadministration’s farm-to-table food safety strategy.HACCP’s core concepts—prevention, clearer assign-ment of responsibilities, and better use of resources—establish a solid foundation for the food safety systemof the future, but it is only a first step. To satisfy thepublic’s food safety expectations and realize the foodindustry’s full potential in the global food economywill require a new kind of effort and collaboration. Itwon’t simply be a matter of more regulation. What isneeded besides are investments—and new mecha-nisms for management and coordination—to bolsterthe scientific capabilities of our food safety system andits readiness to address a changing set of food safetychallenges, including those posed by foodborne ill-nesses and the globalization of the food economy.

Looking into the next century, reducing the risk offoodborne illness will remain a central priority andchallenge. Food safety problems are persistent andnew problems emerge, such as the recent appearanceof E. coli 0157:H7 in apple juice. Most experts agreethat more efforts are needed to improve epidemiologi-cal surveillance, better focus and prioritize food safetyresearch, and expand education of food service employ-ees and consumers in safe food handling practices.

Fostering new technology is another challenge butalso an opportunity. New technologies have long beencentral to building the safety, economy, and conve-nience of the American food supply, and the new

HACCP framework encourages industry adoption ofnew technologies and procedures to control harmfulbacteria. Continued success requires investment intechnology development, rigorous but prompt govern-ment approval processes, and public understandingand acceptance of technology and its benefits.

Trade-related issues will also loom large in theyears ahead. Food imports and exports are expanding,and the growth prospects of American agriculture andthe food industry rest heavily on meeting the risingdemand overseas for high-quality, value-added foodproducts. Traditional economic barriers are comingdown, but food safety concerns are increasingly thebasis for disruptions in trade. The United Kingdom,for example, is struggling to resume exports of beef inthe wake of the “mad cow” disease scare, and theUnited States is contesting Europe’s refusal to allowimports of U.S. beef from cattle treated with FDA-approved growth hormones. As the world movestoward greater harmonization of food regulatory stan-dards, the U.S. challenge is to ensure that importedfood continues to meet America’s high safety standardsand that U.S. exports are not blocked by unfoundedconcerns.

An Opportunity for CollaborationWith all of these concerns in mind, the food industry,the government, and consumers should take PresidentClinton’s food safety initiative as a cue and join in acollaborative process to resolve what we want ourfood safety system to do for us in the next century,who will be responsible for what, and how we aregoing to pay for it.

Michael R. Taylor is a visiting scholar at RFF’s Center for Risk Management and is apartner in the law firm King & Spalding. Previously he was deputy commissioner forpolicy at FDA and the administrator of USDA’s Food Safety and Inspection Service,where he played leadership roles in developing the HACCP reforms described in thearticle.


Putting a Price on Solid Waste Reduction

Not all methods designed to reduce solidwaste are paragons of economic virtue.

In fact the differences in costs across pro-grams can be quite substantial. So when agovernment selects an inefficient approachto discouraging garbage, it can be anexpensive proposition. RFF Fellows KarenL. Palmer and Margaret A. Walls, alongwith Gilbert F. White Postdoctoral FellowHilary Sigman, suggest as much in theirlatest look at the costs of reducing munici-pal solid waste.

Like other economists who have stud-ied this issue, Palmer, Walls, and Sigmanoperated on the assumption that mostmunicipalities want to confront householdswith the full costs of handling and dispos-ing of what they throw away. Illegal dump-ing, however, is the feared consequence ofupfront approaches, such as charginghouseholds by the pound or restricting thequantity of garbage picked up.

With that in mind, the researcherslooked at three indirect ways to makeconsumers sensitive to the costs of trans-porting and disposing of waste at landfillsand incinerators: deposit/refund programs,which place a fee or deposit on a productwhen it is purchased and then refund itwhen the used product is returned forrecycling; recycling subsidies, which offermonetary support to manufacturing firmsthat use recyclable materials; and advancedisposal fees, which are charged to manu-facturers to cover the ultimate disposal orrecycling costs of their products.

To find out how much it costs to useeach method, the researchers calculatedwhat a municipality would have to chargein each instance to get a modest, 10-per-cent reduction in waste. To make theircalculations, Palmer, Walls, and Sigmanbuilt a model of waste generation andrecycling using price and quantity data

from 1990 for each of five materials—aluminum, glass, paper, plastic, andsteel—that make up 56 percent of a typicalAmerican municipality’s solid waste.

The RFF researchers found that thedifferences in cost across methods weresignificant. To get the 10 percent wastereduction through a deposit/refund pro-gram cost $45 per ton; to get the samereduction through advance disposal feesand recycling subsidies cost $85 and $98per ton, respectively. The deposit/refundcost was significantly lower because themethod offers incentives to recycle andreduce consumption, whereas the othertwo methods encourage only one or theother.

Palmer and her colleagues thus con-firmed what earlier studies have indicated:deposit/refund schemes are the leastexpensive way to make consumers bear thecosts of waste transport and disposal,assuming that illegal disposal is an option.Having said that, the researchers note thatadvance disposal fees could be preferred ifthe administrative costs involved in run-ning a deposit/refund program are high.

How policy is set makes a difference inwaste reduction costs, also. Setting a singledisposal price for all waste items is moreefficient than setting reduction goals forindividual materials, since some of themare cheaper to reduce (paper and glass)than others (metal). Using a deposit/refundsystem, for example, a 10 percent reduc-tion in each of the five materials studiedwould cost almost twice as much as a 10percent reduction across the board, theresearchers found.

A Modest ProposalRight now RFF Fellow Karen Palmerand her colleagues think the true socialcost of disposing of solid waste (includ-ing cans) is much lower than whatconsumers pay in states with so-called“bottle bill” deposit/refund programs.These programs are expensive to imple-ment and administer.

If “Joe” is in the habit of tossing hisempty six-packs into the garbage ratherthan recycling them in a state with adeposit/refund program, he’ll end uppaying much more for the privilegethan it actually costs to cart the cans offto the dump or incinerator. (Costsinclude environmental damage likegroundwater contamination and dis-amenities like the congestion and noisethat garbage trucks create.)

The incentive for Joe to stop tossingout beer cans and start recycling them ismore severe than it should be, the RFFresearchers maintain. They say the depositfee charged on the cans should be in linewith what it costs to dispose of them.

That state bottle bills may be exces-sive is not to say consumers are off thehook, however. The RFF researchersconfirm that we stand to gain economi-cally if we can cut down on waste by amodest amount.

See page 22 to order the researchers’related discussion paper, “The Cost of

Reducing Municipal Solid Waste” (96-35).

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Toman is new ENRdirectorMichael A. Toman is the newdirector of RFF’s Energy andNatural Resources Division,where he has been a researchersince 1981. Toman replacesDouglas R. Bohi, who led thedivision for eight years beforeleaving RFF in mid-February tojoin the Washington office ofCharles River Associates.

In addition to directingENR, Toman will continue tocoordinate RFF’s ClimateEconomics and Policy Program.He helped launch the programafter serving as a senior staffeconomist on the President’sCouncil of Economic Advisersfrom September 1994 toFebruary 1996.

RFF President Paul R.Portney had this to say aboutthe change in tenure: “Mikewill do an excellent job work-ing with his colleagues inENR—and throughout RFF—to identify an intellectuallyexciting research agenda, theresults of which will help clari-fy policy decisions that theUnited States and the rest ofthe world face.” At the sametime, Portney expressed regretat Bohi’s departure, praisinghim as “one of RFF’s bestresearchers and policy analystssince he walked in the door.”

Toman joined RFF afterearning his Ph.D. in economicsfrom the University ofRochester. He became a seniorfellow in 1989 and hasauthored four books and overforty scholarly articles on avariety of topics.

Visiting scholar leadsnew programRuth Greenspan Bell, a lawyerwho has carved a niche in legalinstitution building, has joinedRFF’s Center for RiskManagement as a visiting schol-ar. Working with CRM DirectorTerry Davies, Bell is here to putin place a new program forinternational institutionaldevelopment and environmen-tal assistance (IIDEA). IIDEAwill combine RFF’s analyticalresearch capabilities with Bell’slegal advisory experience tohelp governments—as well asnongovernmental organiza-tions, development banks, andother institutions—becomemore effective in implementingnatural resource managementand environmental protectionlaws.

Today most countries haveenvironmental laws, and some900 international agreementsexist to solve difficult interrelat-ed environmental issues aroundthe world, Bell says. But gettingresults is another matter. Manyof these laws and agreements

have not yet achieved theirgoals of controlling pollutionand conserving naturalresources. In fact, according toBell, considerable work needsto be done to ensure that theseagreements amount to morethan symbols.

“The gap between commit-ment and actual pollutionreduction must be closed ifenvironmental risk is to bereduced,” Bell says. To helpcountries close that gap isIIDEA’s reason for being.

Although science, technicalissues, and the formal processof drafting laws and negotiatingagreements have receivedmuch attention, the crucial stepin the entire process is imple-mentation, Bell maintains. Inhelping to develop implemen-tation plans that are realistic,IIDEA will give high priority tocontext—that is, to the condi-tion of a country’s legal systemand economy, the maturity ofits governmental bodies, thesoundness of its institutionalframework, and the capacityand willingness of its citizensand business enterprises tocomply with a given law.Process is important, too, Bellsays. Consensus-building, forexample, can boost compli-ance. To reach it usuallyrequires knowing how to setup a dialogue among the vari-ous parties affected by the lawsin question.

Bell gained her expertise inbuilding the institutions thatundergird environmental policyand law during seventeen yearsat EPA. She spent most of herlast six years at the agency

advising former Soviet Bloccountries on how to “activate”law to solve environmentalproblems arising from thepolitical and economic changesin that region. For a time Bellwas the resident advisor of theRegional Environmental Centerfor Central and Eastern Europein Warsaw, Poland.

Discounting scholar isuniversity fellowPartha Dasgupta, a professor ofeconomics and philosophy atthe University of Cambridge, isRFF’s newest university fellow.He is also one of the mostinfluential thinkers and writerson the often controversial toolcalled “discounting,” whicheconomists use to comparepresent with future benefits

and costs. Dasgupta acceptedthe invitation to become auniversity fellow from RFFPresident Paul R. Portney whileparticipating in a workshop ondiscounting and intergenera-tional decisionmaking that RFFand the Energy ModelingForum co-sponsored last fall.

INSIDE RFF

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RFF created its universityfellowship program in 1988 tofoster cooperative researchbetween staff and leading acad-emics around the world.

Three join RFF boardThe RFF Board of Directorsswore in three new members atits annual meeting in April.They are Catherine G. Abbott,a natural gas and power execu-tive; James H.S. Cooper, aninvestment banker and formermember of Congress; andFrank E. Loy, a business exec-utive, lawyer, and former seniorgovernment official.

Abbott is the CEO of twointerstate pipeline subsidiariesof the Columbia Gas System,Inc., in Charleston, WV. Withmore than eighteen years ofexperience in the natural gasand power industries, she haslong been a consultant to nat-ural gas, electricity, and otherenergy firms, advising them onmarketing, government rela-tions, and merchant banking.

As a vice president from 1985to 1995 at Enron Corporation,she managed that company’snational marketing of unregu-lated natural gas and estab-lished its first approach totrading and valuing natural gaslocational price differentials.Before entering the privatesector, Abbott directed a num-ber of offices at the U.S.Department of Energy, makingpolicy recommendations onderegulation of natural gas andelectricity. She also served atthe White House Office ofEnergy Policy and Planningand the EnvironmentalProtection Agency. Abbottholds an M.A. in public policyfrom the John F. KennedySchool of Government atHarvard University and a B.Awith High Honors fromSwarthmore College.

Cooper is the managingdirector of investment bankingat Equitable SecuritiesCorporation in Nashville, TN.Cooper served as a member ofthe U.S. House of Repre-sentatives (D-Tenn.) from1982 to 1994, where he advo-cated such market-basedenvironmental reforms asemissions trading programs. In1994, he was Tennessee’sDemocratic nominee to theU.S. Senate. As a congress-man, he was a member of theso-called “Group of Nine,”instrumental in passing the1990 Clean Air Act. Today heserves on the board of theCenter for Clean Air Policy,among other organizations.

Before representing thefourth district of Tennessee,

Cooper practiced corporateand securities law with thefirm of Waller, Lansden,Dortch & Davis. He receiveda J.D. from Harvard LawSchool and an M.A. in philos-ophy, politics, and economicsfrom Oxford University,where he was a RhodesScholar. He also holds a B.A.in history and economicsfrom the University of NorthCarolina, where he was aMorehead Scholar.

Loy chairs the board oftrustees of the League ofConservation Voters and is vicechair of the EnvironmentalDefense Fund’s board. Hiscurrent scope of activitiesincludes addressing economicand environmental issues bothin this country and in Centraland Eastern Europe andGermany. With the MonsantoCorporation’s CEO RobertShapiro, he co-chairs a com-mittee advising the Presidentand the U.S. trade representa-tive on environmental policyand trade. He serves on the

board of the RegionalEnvironmental Center forCentral and Eastern Europe,Budapest, of which he is afounding member.

These activities follow along career in business, gov-ernment, and law, includingmuch international engage-ment. From 1981–95, Loywas the president of theGerman Marshall Fund of theUnited States. He directed theU.S. Department of State’sBureau of Refugee Programsand was a deputy assistantsecretary of state for economicaffairs.

In the private sector, Loysuccessfully piloted the PennCentral TransportationCompany out of bankruptcy. AtPan American World Airwayshe focused on internationalregulatory affairs as a seniorvice president. He began hiscareer as a corporate lawyerwith O’Melveny & Myers, afterreceiving a B.A. from theUniversity of California at LosAngeles and an L.L.B. fromHarvard Law School.

Catherine G. Abbott

James H. S. Cooper

Frank E. Loy



RFF names 1997award winnersJoseph L. Fisher DissertationAwards are presented annuallyto support graduate students ineconomics and policy studiesduring the final year of theirdissertation research on issuesrelated to the environment,natural resources, or energy.These awards honor the lateJoseph L. Fisher, who waspresident of RFF from 1959 to1974.

This year RFF received 120applications for the Fisherawards—more than twice asmany as in previous years—suggesting that more youngpeople in all types of fields arechoosing to study issues relatedto natural resources and the

environment. The quality of theapplications was excellent.Those selected represent a widerange of disciplines from engi-neering economics to zoology,and research interests fromgroundwater in India toSuperfund issues in the UnitedStates. Each of the followingindividuals received a $12,000fellowship to support comple-tion of the dissertation indicated:• Navroz Dubash, Energy and

Resources Group, Universityof California at Berkeley:“Pumping for Power andProfit: A Study ofGroundwater Markets inGujarat, India.”

• Mark Stephan, Departmentof Politics, PrincetonUniversity: “CommunityInvolvement in Superfund.”

• Amy Craft, Department ofEngineering-EconomicSystems and OperationsResearch, StanfordUniversity: “The SociallyOptimal Level of Trans-mission Capacity in aDeregulated Electricity Mar-ket: A Technical Summary.”

• Cristina Bellido, Departmentof Economics, University ofChicago: “Contributions toEnvironmental InterestGroups: How MuchInformation Do TheyConvey on the Valuation ofEnvironmental Amenities?”

• Sandra Diamond-Tissue,Department of Zoology,North Carolina StateUniversity: “The Effects ofShrimp Trawl Bycatch onAtlantic Croaker.”

Ordering books andreportsTo purchase books andreports, add $3.00 to theprice of the first bookordered; add 50 cents foreach additional book. Senda check payable toResources for the Future to:Resources for the Future,Customer Services, P. O. Box4852, Hampden Station,Baltimore, MD 21211–2190.

Books and reports maybe ordered by telephoning410–516–6955. MasterCardand VISA charges may bemade on telephone orders.

Ordering discussionpapersDiscussion papers may beordered through RFF. Theprice per paper covers pro-duction and postage costsand is based on deliverypreference: domestic, $6 forbook rate and $10 for firstclass; international, US$8 forsurface and US$15 for airmail. Canadian and overseaspayments must be in U.S.dollars payable through aU.S. bank.

Please send a writtenrequest and a check payableto Resources for the Futureto: Discussion Papers,External Affairs, Resourcesfor the Future, 1616 PStreet, NW, Washington, DC20036–1400. Recent discus-sion papers are accessibleelectronically athttp://www.rff.org.

ANNOUNCEMENTS

Regulating Pollution: Does the U.S. System Work?

By J. Clarence Davies and Jan Mazurek

What laws, processes, and institutions exist to protect the American envi-ronment? To what degree do they succeed? This important new book con-cisely describes and evaluates America’s pollution control system. It con-cludes that “For all its accomplishments…the pollution control regulatorysystem is deeply and fundamentally flawed.”

The authors, analysts with RFF’s Center for Risk Management, examinethe fragmented tangle of statutes, regulatory bodies, and programsdesigned to control environmental degradation in the United States.Davies and Mazurek employ carefully chosen criteria such as pollutionreduction, economic efficiency, and responsiveness to social values in

order to judge the effectiveness of the various instruments—and the system as a whole—in protecting theenvironment. The authors’ goal is a critical understanding of pollution regulation in the United States, thuslaying the groundwork for improving it.

Regulating Pollution emerges from a major research project undertaken by RFF’s Center for RiskManagement, with support from the Andrew W. Mellon and Smith Richardson foundations. The three-yearproject constitutes the first in-depth, systematic evaluation of U.S. pollution control efforts. This book sum-marizes the project’s findings and makes them immediately available; RFF will publish the full report at alater date.

ISBN 0-915707-85-3 • approx. 56 pages • $9.95 paperback

Regulating Pollution Does the U.S. System Work?

by J. Clarence Davies

and Jan Mazurek

http://www.rff.org/



RFF’s China ProgramContinuesWith the death of Walter O.Spofford, Jr. last fall, RFF lost adear friend and colleague. Tomany people, Walter was syn-onymous with RFF’s work inChina. He established theChina Program at RFF in 1989and oversaw the translationinto Chinese of fifteen booksoutlining RFF economic analy-sis of environmental issues. Inthe field, Walter worked closelywith Chinese officials at alllevels to establish environmen-tal standards compatible withsustainable economic growthgoals. He was instrumental indeveloping environmentalmaster plans for Beijing,Chungjing, and Shandong. In1995, he helped establish theBeijing Environment andDevelopment Institute (BEDI).Thanks to his tireless efforts,scholars at both RFF and BEDIhave a solid platform for futureendeavors.

As many readers ofResources know, BEDI was thefirst independent, nonadvocacyenvironmental research organi-zation in the People’s Republicof China. Today BEDI is agrowing institution, dedicatedto balancing China’s economicneeds with responsible envi-ronmental practices. BEDIscholars conduct research on avariety of issues, includingenvironmental and naturalresource economics; naturalresources management andpolicy; and the application ofeconomic, conservation, andsustainable development theo-ries in China. In addition tothis ambitious research agenda,BEDI’s mission is to providereliable and objective informa-tion to decisionmakers; fosterawareness of sustainabilityissues in China; and promotecooperation between govern-ment, industry, and otherorganizations.

Climate change policy isan important part of BEDI’s

current research agenda.BEDI’s experts have joinedforces with their counterpartsat RFF and at several institu-tions in Japan. In each coun-try a research team isinvestigating options forreducing greenhouse gasemissions in cooperative waysthat are mutually beneficial.

To help identify how multi-national cooperative effortsmight be structured, the threeresearch teams are analyzingopportunities and obstacles totransferring and diffusinglower-emissions technologies indeveloping countries. They arealso evaluating the potential forincreasing the use of economicincentives to encourage indus-trialized countries to invest inthose technologies.

Michael Toman, director ofRFF’s Energy and NaturalResources Division, is leadingthe collaborative research pro-ject. Milton Russell, formerdirector of RFF’s Center forEnergy Policy Research, is

joining the effort as an adviserto the BEDI team. Over the lastdecade, Russell’s work in Chinahas concentrated on suchsustainable development issuesas environmental policy, preser-vation of ecosystems, environ-mental and energymanagement, and promotionand implementation of energyconservation and renewableenergy projects.

Perhaps the project’s majorstrength is the participationthrough BEDI of experts whoare contributing to a betterunderstanding of the issues andopportunities for internationalcooperation from a Chineseperspective. The project isexpected to be completed bythe fall of 1997 whenresearchers from the threecountries will present theirfindings at a meeting in Beijing,China.

RFF would like to offer special thanks tothe Ford Motor Company for its strongand early support of BEDI.

A Memorial Internship

A key goal of the RFF China Program is in-country capacitybuilding, and Chinese scholars have been intimately involvedin all of the program’s work including spending time at RFFhoning their analytical skills. To continue this important work,RFF is establishing The Walter O. Spofford, Jr. MemorialInternship for Chinese students to pursue the study of environ-mental economics. The first of these internships is scheduledfor summer 1997.

If you would like to help establish the internship—andcelebrate Walter’s legacy in a meaningful way—please contactRFF’s development office. Or you may respond directly bysending a check payable to RFF, referencing your desire tosupport this memorial fund, to Resources for the Future, 1616P St. NW, Washington, DC 20036.

DEVELOPMENT

Walter O. Spofford Jr. and Professor Ma Zhong, president of BEDI and director ofChina’s Institute of Environmental Economics, Renmin University, Beijing.


ON THE WEB http://www.rff.org

RESOURCES FOR THE FUTURE1616 P Street, NWWashington, DC 20036-1400

Nonprofit Org.US PostagePAIDWashington, DCPermit No. 5005

ADDRESS CORRECTION REQUESTED

RFF discussion papers convey tointerested members of theresearch and policy communitiesthe preliminary findings ofresearch projects for the purposeof critical comment and evalua-tion. Unedited and unreviewed,they may be ordered from RFF(see page 22).

The following papers haverecently been released:

• “Control of Dioxins from thePulp and Paper Industry underthe Clean Water Act and Leadin Soil at Superfund MiningSites: Two Case Studies in EPA’sUse of Science” by Mark R.Powell (97-08)

• “The 1987 Revision of theNAAQS for Particulate Matterand the 1993 Decision Not toRevise the NAAQS for Ozone:Two Case Studies in EPA’s Use

of Science” by Mark R. Powell(97-07)

• “The 1983-84 Suspensions ofEDB under FIFRA and the 1989Asbestos Ban and PhaseoutRule under TSCA: Two CaseStudies in EPA’s Use of Science”by Mark R. Powell (97-06)

• “The 1991 Lead/CopperDrinking Water Rule and the1995 Decision Not to Revisethe Arsenic Drinking WaterRule: Two Case Studies in EPA’sUse of Science” by Mark R.Powell (97-05)

• “Environmental Priorities for theDistrict of Columbia: A Report tothe Summit Fund” by Terry Daviesand Nicole Darnall (97-04)

• “Economic Values of Freshwaterin the United States” byKenneth D. Frederick, Tim

VandenBerg, and Jean Hanson(97-03)

• “Stranded Costs, Takings, andthe Law of Economics of ImplicitContracts” by Tim Brennan andJames Boyd (97-02)

• “The ‘Regulatory Compact’ andImplicit Contracts: ShouldStranded Costs BeRecoverable?” by James Boyd(97-01)

• “Environmental Amenities asSources for ProductDifferentiation and MarketPower” by Laura L. Osborneand V. Kerry Smith (96-37)

• “The Role of Health-RiskAssessment and Cost-BenefitAnalysis in EnvironmentalDecision Making in SelectedCountries: An Initial Survey” byJanice V. Mazurek (96-36)

Find the complete text of discussion papers as close as your computer. Search the RFF home page for books and reviews, seminar information, testimony, and more.

http://www.rff.org/

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