Revenue-Recycling and the Efficiency and Spatial Distributional Impacts of Development Taxes

Recent studies that compare the efficiency and distributional impacts of alternative instruments to curb sprawl typically ignore what to do with the revenues from anti-sprawl policies, such as development taxes. This paper extends first-best analysis of development taxes aimed at preserving land at the urban fringe to account for interactions with other distortions within the urban system. By incorporating urban decline at the city core, which in turn, generates negative neighborhood spillover effects and extra pressure for development at the urban fringe, we provide a more complete framework to evaluate the efficiency and distributional impacts of development taxes. We consider three potential alternative schemes to recycle the revenues: lump sum recycling, earmarked revenues to purchase conservation easements that permanently save open space and earmarked revenues to subsidize a revitalization program at the city core. In this setting, when revenues from the development tax are earmarked to fund a conservation easement there is an additional welfare gain (relative to the lump sum case) because the threat of future conversation of open space is fully eliminated. Similarly, when revenues are earmarked to fund a revitalization program at the city core, there are additional sources of welfare that make this policy preferred relative to the lump-sum recycling scheme. Finally, we also explore the spatial distributional impacts of these three alternative recycling schemes.Urban Sprawl, Revenue-Recycling, Regional Coordination, Spatial Modeling, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy, Q31, R14, R38,

Welfare Effects of Anti-Sprawl Policies in the Presence of Urban Decline

This paper extends first-best analysis of anti-sprawl policies, such as development taxes, and examines the welfare effects of development taxes in the presence of urban decline at the city core. We find that anti-sprawl policies generate several important feedbacks within the urban system, generating additional welfare gains and affecting the level of urban decline and suburban sprawl. Further, the optimal development tax exceeds the (first-best) Pigouvian level, irrespective of whether or not revenues are returned lump-sum to all landowners or earmarked for urban decline mitigation.urban sprawl, development taxes, second-best policies, spatial modeling, Land Economics/Use,

Unitization of spatially connected renewable resources

Spatial connectivity of renewable resources induces a spatial externality in extraction. We explore the consequences of decentralized spatial property rights in the presence of spatial externalities. We generalize the notion of unitization - developed to enhance cooperative extraction of oil and gas fields - and apply it to renewable resources which face a similar spatial commons problem. We find that unitizing a common pool renewable resource can yield first-best outcomes even when participation is voluntary, provided profit sharing rules can vary by participant.

Optimal environmental border adjustments under the General Agreement on Tariffs and Trade

A country choosing to adopt border carbon adjustments based on embodied emissions is motivated by both environmental and strategic incentives. We argue that the strategic component is inconsistent with commitments under the General Agreement on Tariffs and Trade (GATT). We extend the theory of border adjustments to neutralize the strategic incentive, and consider the remaining environmental incentive in a simplified structure. The theory supports border adjustments on carbon content that are below the domestic carbon price, because price signals sent through border adjustments inadvertently encourage consumption of emissions intensive goods in unregulated regions. The theoretic intuition is supported in our applied numeric simulations. Countries imposing border adjustments at the domestic carbon price will be extracting rents from unregulated regions at the expense of efficient environmental policy and consistency with international trade law

Orbital-use fees could more than quadruple the value of the space industry

The space industry’s rapid recent growth represents the latest tragedy of the commons. Satellites launched into orbit contribute to—and risk damage from—a growing buildup of space debris and other satellites. Collision risk from this orbital congestion is costly to satellite operators. Technological and managerial solutions—such as active debris removal or end-of-life satellite deorbit guidelines—are currently being explored by regulatory authorities. However, none of these approaches address the underlying incentive problem: satellite operators do not account for costs they impose on each other via collision risk. Here, we show that an internationally harmonized orbital-use fee can correct these incentives and substantially increase the value of the space industry. We construct and analyze a coupled physical–economic model of commercial launches and debris accumulation in low-Earth orbit. Similar to carbon taxes, our model projects an optimal fee that rises at a rate of 14% per year, equal to roughly $235,000 per satellite-year in 2040. The long-run value of the satellite industry would more than quadruple by 2040—increasing from around$600 billion under business as usual to around $3 trillion. In contrast, we project that purely technological solutions are unlikely to fully address the problem of orbital congestion. Indeed, we find debris removal sometimes worsens economic damages from congestion by increasing launch incentives. In other sectors, addressing the tragedy of the commons has often been a game of catch-up with substantial social costs. The infant space industry can avert these costs before they escalate