Molly K. Macauley

Private Markets, Contracts, and Government Provision What Explains the Organization of Local Waste and Recycling Markets?

The authors study determinants of market organization of local public services by an examination of one of the most visible services, residentialwaste management. Using a multinomial logit model and data for 1,000 U.S. communities, the authors explore the effects of political influence, voter ideology, environmental constraints, production costs, and contracting transaction costs on a community’s choice of service delivery options. They find that costs are significant in explaining communities’ choices. In contrast, few of the political variables are statistically significant. These results hold for both waste and recycling, providing further evidence that local governments emphasize costs when choosing between private and public provision.

The Effects of Environmental Liability on Industrial Real Estate Development

The paper explores the effects of current liability law on real estate transactions involving properties with potential environmental contamination. Sources of uncertainty and their likely impact on transactions are identified. Liability-driven market distortions are likely to be due less to legal uncertainty than to problems arising from asymmetric information and imperfect detection.

An Economic Assessment of Space Solar Power as a Source of Electricity for Space-Based Activities

We develop a conceptual model of the economic value of space solar power (SSP) as a source of power to in-space activities, such as spacecraft and space stations. We offer several estimates of the value based on interviews and published data, discuss technological innovations that may compete with or be complementary to SSP, and consider alternative institutional arrangements for government and the private sector to provide SSP.

Strategically Placing Green Infrastructure: Cost-Effective Land Conservation in the Floodplain

Green infrastructure approaches have attracted increased attention from local governments as a way to lower flood risk and provide an array of other environmental services. The peer-reviewed literature, however, offers few estimates of the economic impacts of such approaches at the watershed scale. We estimate the avoided flood damages and the costs of preventing development of floodplain parcels in the East River Watershed of Wisconsins Lower Fox River Basin. Results suggest that the costs of preventing conversion of all projected floodplain development would exceed the flood damage mitigation benefits by a substantial margin. However, targeting of investments to high-benefit, low-cost parcels can reverse this equation, generating net benefits. The analysis demonstrates how any flood-prone community can use a geographic-information-based model to estimate the flood damage reduction benefits of green infrastructure, compare them to the costs, and target investments to design cost-effective nonstructural flood damage mitigation policies.

Assessing the Role of Renewable Energy Policies in Landfill Gas to Energy Projects

Methane (CH4) is the second most prevalent greenhouse gas and has a global warming potential at least 28 times as high as carbon dioxide (CO2). In the United States, Municipal Solid Waste (MSW) landfills are reported to be the third-largest source of human-made methane emissions, responsible for 18% of methane emissions in 2011. Capturing landfill gas (LFG) for use as an energy source for electricity or heat produces alternative energy as well as environmental benefits. A host of federal and state policies encourage the development of landfill gas to energy (LFGE) projects. This research provides the first systematic economic assessment of the role of these policies on adoption decisions. Results suggest that Renewable Portfolio Standards and investment tax credits have contributed to the development of these projects, accounting for 13 of 277 projects during our data period from 1991 to 2010. These policy-induced projects lead to 10.4 MMTCO2e reductions in greenhouse gas emissions and a net benefit of

Spatially and Intertemporally Efficient Waste Management: The Costs of Interstate Flow Control

41.8 million.

Heredity or Environment: Why Is Automobile Longevity Increasing?

We examine the intertemporal allocation of the solid waste of cities within the United States to spatially distributed landfills and incinerators, taking into account that capacity at existing and potential landfills is scarce. Amendments have been proposed to restrict waste flows between states by means of quotas and surcharges. We assess the aggregate surplus loss (and its regional distribution) resulting from proposed policies. In addition, we find that limitations on the size of shipments to any one state can have the perverse effect of substantially increasing interstate waste shipments as states export smaller volumes to more destinations.

Prizes, Patents, and Technology Procurement: A Proposed Analytical Framework

Over the past 25 years the longevity of automobiles has increased dramatically. We disentangle the rise in longevity into an embodied or inherent-durability effect and a disembodied effect (driven by the external environment, such as reduced accident rates or reductions in the prices of auto repair parts) and estimate these effects by year from 1950 through 1991. We find that the entire rise in auto longevity is due to some force disembodied from the cars themselves and offer some speculation about the nature of this external environment. Copyright 1999 by Blackwell Publishing Ltd

Managing Risk through Liability, Regulation, and Innovation: Organizational Design for Spill Containment in Deepwater Drilling Operations

Policy and entrepreneurial communities are increasingly promoting innovation by using prizes but their distinguishing features remain inadequately understood. Models of patents treat winning a patent as winning a prize; other models distinguish prizes primarily as public lump-sum (re)purchase of a patent. We examine advantages of prizes based on the ability to customize rewards, manage competition, generate publicity, and cover achievements otherwise not patentable. We compare prizes to patents using a model based first on whether the procuring party knows its needs and technology, its needs but not its technology, or neither. The second factor is the risk that the investment in research will prove profitable, where the greater the risk, the more the procuring party should share in it through ex ante cost coverage or payment commitment. The model suggests a framework that may be extended to cover other means of technology inducement, including grants, customized procurement, and off-the-shelf purchase.

Assessing Investment in Future Landsat Instruments: The Example of Forest Carbon Offsets

The Deepwater Horizon oil spill in the Gulf of Mexico in April 2010 led to the deaths of 11 workers, a six-month moratorium on deepwater drilling in the Gulf, and nearly three months of massive engineering and logistics efforts to stop the spill. The series of failures before the well was finally capped and the spill contained revealed an inability of both government and industry to deal effectively with a well in deepwater. Because drilling at this depth and even deeper depths is expected to provide a sizeable share of global oil and gas supply in the future, ensuring that deepwater and ultradeepwater containment capabilities adequately protect the public is a salient challenge for policymakers. In this article we consider long-term readiness for deepwater spill containment. We assess organizational design, including the Marine Well Containment Company (MWCC), an industry consortium developed in the aftermath of the accident to contain future deepwater spills in the Gulf. We focus on two separate but related determinants of readiness: the roles of liability and regulation, and the adequacy of incentives for technological innovation in oil spill containment technology (to keep pace with advances in deepwater drilling capability). We find that without additional provisions in place to ensure innovation in containment technology and readiness, industry might meet near-term minimum regulatory standards but still fail to meet the larger social need for innovation.