Environmental Economics Policy Briefing Note
A briefing note (is a short document written for the purposes of providing information to a decision-maker concerning a particular issue). Here are two policy problems can be chosen. More details in attached files. Please notice that you should write the 1000-world brief note requested not the formative 1 or 2 document. Attach formative 1 and 2 just may help you to understand your work requested.
ENV-3A46: Summative Assessment
Environmental Economics Policy Briefing Note
Your summative assessment will require you to bring together the skills that you have learnt in the two formative coursework exercises and the knowledge you have gained through studying the economics of environmental regulation in lectures and classes. In this exercise, you will be presented with two different policy problems. You will have to choose one of the two problems as the focus of your Policy Briefing Note.
For each problem, you will be presented with a description of a proposed policy option intended to address an issue of environmental pollution. You will also be provided with a selection of readings. Your task will be to critique the proposed policy and then use your understanding of environmental economics to propose an alternative policy (or improvements to the current policy). You will be asked to provide a focused and accessible note summarising your findings in the form of a Policy Briefing Note.
In writing your Briefing Note, maintain the same motivation that we have used through your formative coursework. In particular, imagine that you are an advisor to a government minister. This time things have got really dangerous and your minister has come up with a policy idea of their own, an idea that they are planning to announce in an important up-coming speech. As the minister’s advisor you are concerned that they haven’t fully considered the economics of their proposed policy. As a result, you have taken it upon yourself to prepare a Briefing Note that will critique your minister’s policy proposal and suggest an alternative that has improved economic properties.
The skills you will have to demonstrate in undertaking this task will be to show that you understand the economics of instrument choice for environmental regulation, that you can apply that understanding in critiquing a suggested policy and in proposing and defending a preferred form of Regulation, and that you can convey your understanding to a non-expert in a focussed and accessible manner.
B. Choice of Policy Problem
In preparing your Briefing Note, you have the choice of addressing one of two possible policy problems. Only choose ONE policy problem.
Either: Reduce Household Carbon Emissions through Personal Carbon Trading
Policy Proposal: The environmental problem is emissions of greenhouse gases (henceforth, Carbon) by households in the UK. Households create emissions in various ways; for example, from their use of fuel in transportation and through the energy used for heating and lighting their homes, for cooking or for powering household appliances. To meet its Carbon-reduction commitments the government would like to see household Carbon emissions reduced.
The policy your minister has proposed is one of Personal Carbon Trading (PCT). There are many variants of this form of regulation, but the variant under consideration is one in which a fixed number of Carbon Credits are issued by the government each year setting a cap on total household emissions in the UK. Around half of those credits are allocated to households with each household entitled to an equal number of credits. The remaining credits are auctioned by the government with the expectation that
many of those will be purchased by brokers who will create a market in which households can buy and sell credits. A household will have to surrender credits in order to cover the carbon content of electricity and gas that they use in their home and for fuel purchased for personal transport or for their contribution to the fuel used when they travel on an aeroplane.
Reading: The following two readings will provide you with the essential insights you require in order to produce your Briefing Note:
? DEFRA. (2008). Synthesis Report on the Findings from Defra’s Pre-feasibility Study into Personal Carbon Trading. (available at http://www.teqs.net/Synthesis.pdf)
? Sorrell, S., (2010). “An upstream alternative to personal carbon trading”, Climate Policy, 10(4), pp. 481-486.
I am definitely not limiting you to only reading these two documents. Indeed, you may wish to go further and do your own search of the literature in order to find other academic articles that discuss PCT schemes and alternative policies for dealing with household Carbon emissions. Of course, I would greatly encourage that endeavour but please make sure you reflect your extra research by properly referencing sources in your Briefing Note.
Or: Reduce Carbon Emissions through Fuel Efficient Standards in Car Manufature
Policy Proposal: The environmental problem is emissions of greenhouse gases (henceforth, Carbon) from private cars in the UK. In order to meet its Carbon-reduction commitments the UK is exploring policies that would limit emissions from this source.
The policy your minister has proposed is one of mandating increased levels of fuel-efficiency in new cars sold in the UK. Fuel efficiency in this case is measured in terms of grams of Carbon emitted by a car per kilometre travelled (so the units are g/km). According to this policy each car manufacturer is set a fixed target for the average fuel efficiency of the set of new vehicles that they sell in the UK in a year. In order to meet that target, therefore, a manufacturer can sell some vehicles that are less fuel efficient than the target provided those sales are offset by sales of other vehicles that are more fuel efficient than the target. If the average fuel efficiency of cars sold by a manufacturer exceeds the limit in any year then they are liable for a fine which increases substantially for each extra g/km by which they are in exceedance.
In reality, this is a policy that has already been instituted by the European Union. In effect, therefore, in critiquing the minister’s proposal you will be critiquing a real policy that has been put into place across Europe.
Reading: The following report will provide you with a good overview of the issues surrounding the imposition of fuel efficiency standards:
? Herring, H., (2006). “Energy efficiency—a critical view”. Energy, 31(1), pp. 10-20.
? Flachsland, C., Brunner, S., Edenhofer, O., and Creutzig, F. (2011). “Climate policies for road transport revisited (II): Closing the policy gap with cap-and-trade”. Energy policy, 39(4), pp. 2100-2110.
I am definitely not limiting you to only reading these two documents. Indeed, you may wish to go further and do your own search of the literature in order to find other academic articles that discuss efficiency standards and alternative policies for dealing with Carbon emissions from cars. Of course, I would greatly encourage that endeavour but please make sure you reflect your extra research by properly referencing sources in your Briefing Note.
C. Writing a Briefing Note
What is a Briefing Note?
A briefing note is a short document written for the purposes of providing information to a decision-maker concerning a particular issue. A good briefing note succinctly summarises complex information, distilling it into a form whereby it can be easily and quickly digested.
Why a Briefing Note?
When you leave UEA, it is very likely that your job will involve you in providing input to decision processes. That is true whether you are working for a business, an NGO or in government. Your boss will be the one making the final decision, but the quantity of information required to make those decisions will be far too demanding for one person to assimilate. As a result, you will often be called upon to provide input and advice on the aspect of the decision for which you have expertise (in the case of this exercise, economics). What your boss will be looking for is for you to provide a concise and clear briefing, presenting well-researched evidence and reliable advice. Being able to provide such input is an invaluable skill and one that you will use repeatedly throughout your working life.
How to write your Briefing Note?
The key characteristics of a good briefing note are that it is;
? short: briefing notes are usually no longer than four pages long. In this case, you have no more than 1,000 words in which to deliver your key messages.
? concise: don’t waste precious words waffling, make sure every word counts and adds something valuable to your briefing.
? well-structured: your briefing note should have a clear structure that provides a thread of evidence and argument leading to your advice. Ask yourself whether a busy decision-maker could read your briefing note just once and be convinced by your arguments.
? focussed: your briefing note must stay “on message”, so make sure you only include information that is core to the case you are making in your note. Sometimes that will mean making hard choices as to what to include and what to leave out. My advice is to decide which are the key issues and describe those in a clear and accessible manner. Those key issues should be sufficient to support the case you are building in your Briefing Note. There may be other issues that you would have liked to have included but must leave out. That is fine … though a good trick is to briefly list those other issues and explain that they do not change the conclusion of your argument.
? reliable: the information in your briefing note must be accurate and dependable; so make sure you clearly reference your sources.
? readable: your note should be written in prose and not presented as a bulleted list of key points. Make sure you use plain language and design your briefing note for maximum readability. For example, you can use white space, subheadings, lists, font, and other means of making reading easier.
Examples to have a look at:
Search the web and you will find 1,000s of examples of Briefing Notes. For example, take a look at the Briefing Notes provided by the UK Parliamentary Office of Science and Technology:
D. Format of your Briefing Note
Your Briefing Note does not have a page limit but does has a word limit of 910 words. Given UEA’s flexibility rules, that gives you no more than 1,000 words to present your analysis and policy recommendation.
I am not going to give you direction as to how you should organise your Briefing Note since part of the challenge in this exercise is organising the material in your note in a way which provides a clear thread of argument. Having said that, I would expect you note to give roughly equal weighting to critiquing the proposed policy as to presenting arguments for your alternative policy.
One thing you do not have to do is to explain the proposed policy … take as given the fact that the reader knows what that policy is. In the first problem you can simply talk about the proposal for a “PCT scheme”, in the second problem you can refer to the imposition of “fuel efficiency standards”. Obviously, you will have to explain your alternative policy.
As per the formative assessment, please present your note using a standard 12 point font, at least single line-spacing and margins of no less than 2.5cm. Likewise, references (which are required) and diagrams (which are encouraged) should follow the full text of your note.
I don’t mind how you reference, but to keep within the word limits you might find it easier to use a style that presents your sources at a numbered list at the end of the document and, in the text, refers to those sources using just their number in the list. For example;
Perhaps the most beautifully written and insightful contribution to this debate was provided by Day , though other arguments can be found in the literature which provide a contrary viewpoint [2,3].
… Lots of other stuff until the end of your note.
 Day, B., (2015). Lecture Note 2: Individual Decision-Making, University of East Anglia Teaching Materials, Norwich.
 Day, B., (2015). Lecture Note 14: The Regulation of Pollution: Market-Based Instruments, University of East Anglia Teaching Materials, Norwich.
 Day, B., (2015). Lecture Note 15: Regulation of Pollution in the Real World, University of East Anglia Teaching Materials, Norwich.
E. Submission of your Briefing Note
Your note must be handed in electronically through the Hub by:
Wednesday Week 12.
This is summative coursework so late submission will be penalised unless you have been formally granted an extersion.
Formative 2: Formulating Economic Arguments
In your first formative assessment you were asked to read a number of papers and prepare a note that summarised the economic arguments conceived by the authors of those papers. The challenge presented by your second formative assessment will be to do the economic thinking on your own.
In week 7 we will begin considering different forms of regulation that might be used to deal with problems of environmental pollution or degradation. Of course there are many different policies that a regulator might adopt in order to deal with such a problem, and some of those might be considered ‘better’ than others. In this formative assessment you will first need to familiarise yourself with the key criteria by which we might judge how successfully a regulation achieves its goal. Subsequently you will be asked to apply that knowledge in evaluating three different ways in which an environmental problem might be regulated. Your task will be to provide a brief note that provides a clear argument as to which of the three options you believe to be the best.
Again for motivation, imagine that you are advising a government minister. This time that minister has to stand up in the House of Commons and declare which of the instruments will be adopted as government policy. The minister can expect some tough questioning from the opposition as to why they have chosen that option over the other possibilities. Your job will be to prepare a Briefing Note that clearly and succinctly summarises the arguments they can use to defend the choice you have made.
The skills you will have to demonstrate in undertaking this task will be to show that you understand the economics of instrument choice for environmental regulation, that you can apply that understanding in appraising different possible regulations and that you can convey that understanding in a focussed and accessible manner.
A. Task 1: Reading on Environmental Regulation (Week 7)
In Week 7 your main task will be to read the following lecture notes (which, of course, you would want to be doing irrespective of this assignment!):
? Topic 13: Coase and Command & Control Instruments
? Topic 14: Market-Based Instruments
? Topic 15: Regulation in the Real World
In addition, to support your understanding, you can read the following short articles:
? Portney, P., (2003). “Market based approaches to environmental policy”, Resources, 151, Resources for the Future
? Barde, J-P, and S. Smith (1997). “Do economic instruments help the environment?”, The OECD Observer, No. 204, OECD
The next step up takes you to the longer but more thorough:
? Goulder, L. H., & Parry, I. W. (2008). “Instrument choice in environmental policy” Review of Environmental Economics and Policy, 2(2), pp. 152-174.
This reading will provide you with an understanding of the key issues that economists consider when designing environmental policy.
B. Task 2: Choosing a Topic (Beginning of Week 8)
By the beginning of Week 8 you should be ready to take on the challenge of this second piece of assessment. You will have to choose between two possible policy areas as follows:
Either: Voluntary Agreement in the Regulation of a Polluting Industry?
Policy Issue: The environmental problem that you are addressing is the pollution created by firms in a particular industry. Assume that the pollutant is perfectly-mixing. The industry comprises a relatively small number of individual firms … for the sake of concreteness let us say 30 firms. The firms are represented by an influential and well-organised Trade Association which is funded by the firms in the industry.
Clearly, the government (as regulator of the industry) has the means to impose a mandatory pollution regulation instrument on the industry (for example, limiting allowable emissions from each firm or forcing firms to pay a tax for each unit of pollution created). Your minister, however, is concerned that imposing mandatory regulation will result in a lengthy and costly legal dispute with the industry which will delay the pollution reduction measures and may be politically damaging.
Policy Options: Drawing on your profound knowledge of environmental economics (developed while studying ENV-3A46 at the UEA) you have identified three policy options. Each of these policy options involves the firms in the industry agreeing to voluntarily reduce their levels of pollution. Of course, no firm would willingly incur the expense of cutting pollution so the types of voluntary agreement you are proposing are each backed by a threat: if the firms fail to reduce their pollution to the agreed levels within 2 years then a mandatory regulation will be imposed which will certainly be more costly for the firms than reducing pollution voluntarily. The three options you are considering are:
(1) Voluntary Agreement with each Firm: In this option, the government negotiates a separate voluntary agreement with each and every firm in the industry. Each agreement would see a firm voluntarily committing to cut back their pollution by a certain amount. After 2 years any firm not honouring their agreement would be subject to mandatory regulation.
(2) Voluntary Agreement with Trade Association: In this option, the firms in the industry confer negotiating duties on the Trade Association. The Trade Association then reaches a voluntary agreement with the government that determines how much the industry as a whole will cut back its aggregate emissions (for simplicity, assume that the amount agreed to is the same as that which would result from the combination of all the firm-level agreements in Option (1)). The government then leaves the firms and the Trade Association to work out between them how they will reach that target. Importantly, in this case the firms do not confer any powers of punishment on the Trade Association. In other words, the Trade Association cannot penalise (perhaps by imposing a fine) firms that fail to contribute sufficiently to meeting the industry’s pollution commitments.
(3) Voluntary Agreement with Trade Association coercive Enforcement: In this option, as in Option (2), the government agrees to negotiate an industry-wide voluntary agreement with the Trade Association. In contrast, however, the government insists that the firms must confer powers of punishment on the Trade Association allowing them to penalise firms that fail to contribute sufficiently in reducing pollution. Again, for simplicity assume that the amount of pollution abatement agreed to is the same for this Option as for Options (1) and (2).
Hints: In deciding upon which of the three options to recommend, amongst other things, I would like you to think about the costs to the government in negotiating voluntary agreements under the different options. You should also probably consider the issue of ‘regulatory capture’ and ‘free-riding’ … terms that you might have to do a little bit of research to understand.
Or: Pollution Taxes or Pollution Subsidies?
Policy Issue: The problem that you are addressing is the pollution created by firms in an industry made up of a large number of relatively small firms. Assume that the pollutant is perfectly mixing. The government have identified the optimal level of pollution and are considering various market-based (or incentive-based) options for delivering the necessary cuts in pollution across the industry.
Policy Options: The government have been discussing various options with industry representatives and have settled on a short list of three … I’ll leave you to figure out which were suggested by the industry and which by government. The options are as follows:
(1) Abatement Subsidies: The government pays firms a fixed subsidy for each unit of pollution that they abate. In setting the subsidy, the government chooses a level of subsidy that they believe will encourage abatement measures that reduce pollution from those firms currently in the industry to the optimal level.
(2) Pollution Tax: In this option, firms have to pay the government a fixed tax for each unit of pollution that they emit. Once again, in setting the tax, the government chooses a level that they believe will encourage firms in the industry to reduce pollution to the optimal level.
(3) Pollution Tax with Revenue Recycling: This Option is similar to Option (2) in so much as a pollution tax is levied by the government on each unit of pollution emitted by a firm. In contrast to Option (2), however, the revenues raised from the tax are returned to each firm as payments that are proportional to the level of output of their products (which is not necessarily related to the level of pollution they emit or the quantity of pollution that they abate because of the tax).
Hints: In deciding upon which of the three options to recommend, amongst other things, I would like you to think about the revenues made available to the government and the various uses to which they could be put. You should also think about the impact of the different options on the profitability of the firms and what impacts those differences in profitability may have on the long term development of the industry.
C. Task 3: Writing a Briefing Note (Week 8)
For the question you have chosen (either voluntary agreements or taxes/subsidies), you will have to write a short and accessible Briefing Note that identifies which of the three possible options you are recommending should become policy. Your note will have to justify that choice by comparing and contrasting the outcomes that you expect will arise from each of the different policies. To do that you will have to think like an economist (I know that’s a dreadful prospect, but give it a go!). A good place to start will be to consider what incentives the different options place in front of firms in the industry (or even outside the industry); that is, what would a profit maximising firm think was the best thing to do when faced by the policy in that option? In your reading you will have been introduced to a number dimensions regarding how to evaluate environmental regulation (e.g. does it achieve pollution reductions? does it reduce pollution at least direct cost? does it create the correct dynamic incentives etc.). You should consider all of those dimensions, though you may have to be selective in discussing only the fundamental points of contrast between the policies to keep to the length restrictions.
Your note should be approximately 500 words in length and must be presented on one side of A4, using a standard 12 point font, at least single line-spacing and margins of no less than 2.5cm. You should definitely use references where they are appropriate and these should be placed on the page following your single page of text. Likewise, if you use diagrams or figures to illustrate your work, which is greatly encouraged, then those should be placed on the pages that follow the text of your one page note.
Your note must be handed in electronically through the Hub by Monday of Week 9.