Essays at the Intersection of Public
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© COPYRIGHT by James A. Gordon 2019 ALL RIGHTS RESERVED THE JOURNEY TO GREEN ECONOMIES: ESSAYS AT THE INTERSECTION OF PUBLIC POLICY, THE MARKET, AND ENVIRONMENTAL SUSTAINABILITY BY JAMES A. GORDON ABSTRACT As problems like rising temperatures, declines in global biodiversity, and the great pacific garbage patch can attest, environmental sustainability is arguably emerging as the issue of the 21st century. It is also an issue that holds the ignominy of being highly complex, and likely to influence every aspect of government and modern society. For many of the most difficult problems in environmental sustainability, like climate change or sustainable development, the pursuit of long-term sustainability is as much about the journey as it is the outcome. Across three essays connected by public policy, markets, and the environment, I detail some of the ways demand for greater environmental sustainability will change governments, firms, and society. I also offer a pathway for future research in environmental governance, environmental policy, and education. In chapter one, I explore the potential impact of unseasonably warm and cold temperatures, as expressed as variations from monthly averages, and particulate matter pollution (PM2.5), on three measures of input productivity for firms engaged in manufacturing: labor, capital, and total factor productivity (TFP). Results suggest that value-added labor, capital, and TFP are negatively affected by large variations in daily average temperatures. Both value-added labor and TFP are adversely affected by unseasonable warmth, while value-added capital is affected by unseasonable cold. Labor productivity is also negatively affected by increases in PM2.5. If climate change produces a warmer climate and less stable daily temperatures, this ii will have important implications for how firms allocate resources between labor, capital, and technology, and have ramifications for both labor markets and climate change adaptation policy. In chapter two, I exploit the unique longitudinal characteristics of the Thomson Reuters ESG database to investigate whether investors support efforts by firms to become more environmentally sustainable. Across three regions and three categories of environmental corporate social responsibility, I find evidence that investors often penalize firms for their environmental efforts. In North America, investors penalize firms for emissions efficiency and overall environmentalism; in Asia Pacific, they penalize resource efficiency; and in Europe, investors penalize environmental innovation and overall environmentalism. Globally, results show that a one unit increase in firm-level environmentalism on a 0-100 scale reduces market capitalization by about 75 cents per $100 of total capitalization. Likewise, building a passive portfolio of the top 10 percent of environmentally friendly firms underperforms the broader market. On average globally, investing $10,000 in the top 10 percent of firms for average environmentalism reduces the hypothetical investor’s annual returns by about $129. In chapter three, I investigate environmental sustainability within the context of Public Administration (PA). While greater preemptive research in environmental sustainability is needed, I show that PA research generally lags political and social changes to administrative organizations. I review the philosophical and practical difficulties of environmental sustainability as it relates to public administration, and I develop a framework for future research. Finally, I review MPA programs to see how environmental sustainability is treated by the field, and how PA is engaging with future researchers. Of the top 18 PA departments with MPA programs, four offer a specialized masters with a focus on sustainability, with nine offering at iii least one course using sustainability as the primary pedagogical tool. Teaching is primarily conducted by non-PA scholars, suggesting PA lacks proprietary knowledge of environmental sustainability. iv ACKNOWLEDGMENTS First and foremost I would like to thank both my advisor, Erdal Tekin, and Daniel Fiorino, for their advice and feedback throughout the entire PhD process. Without them the process would have been a far less enjoyable and more muddled experience. I would also like to thank my committee members, Claire Brunel for her amazing feedback, David Marcotte for challenging me to produce great research, and Todd Eisenstadt for his insightful commentary. I would also like to recognize Neil and Ann Kerwin for their generous financial support during the dissertation stage of my PhD. I am also indebted to the many people at American University who have suffered through discussions of my research. This includes Karen Baehler, Al Hyde, Jocelyn Johnston, Robert Briggs, and Lilli Shaffer. Finally, I would like to express my sincere thanks to Grace Baker for all her editorial guidance and support throughout the PhD process, my daughter Emma for her legendary patience, and Gus the cat for staying up late while we worked on the dissertation together. v TABLE OF CONTENTS ABSTRACT................................................................... ii ACKNOWLEDGMENTS............................................................. v LIST OF TABLES............................................................ vii LIST OF ILLUSTRATIONS...................................................... ix LIST OF ABBREVIATIONS....................................................... x CHAPTER ONE PRODUCTIVITY AND THE ENVIRONMENT – A FIRM LEVEL APPROACH.......................................................... 11 Introduction................................................... 12 Background..................................................... 14 Data........................................................... 19 Data Matching Principles....................................... 24 Conceptual Framework and Empirical Methodology................. 25 Results........................................................ 29 Conclusion..................................................... 35 Tables and Figures............................................. 37 CHAPTER TWO GREEN CAPITAL AND PROSOCIAL INVESTING – EVIDENCE FROM INVESTOR RETURNS IN THE STOCK MARKET......................... 64 Introduction................................................... 65 Literature and Conceptual Framing.............................. 68 Data........................................................... 81 Empirical Methodology.......................................... 86 Results........................................................ 90 Policy Discussion.............................................. 95 Conclusion.................................................... 103 Tables and Figures............................................ 105 CHAPTER THREE ENVIRONMENTAL SUSTAINABILITY AND PUBLIC ADMINISTRATION................................................... 122 Introduction.................................................. 123 Literature Review and Conceptual Framing...................... 124 Environmental Sustainability as a Growing Concept............. 128 What is “Good” Environment and “Good” Sustainability.......... 133 Designing Policy for Environmental Sustainability............. 140 The Risks and Opportunities of Environmental Sustainability for Public Administration..................................... 148 Towards a Sustainable Public Administration................... 152 Teaching for Sustainability and the Environment............... 169 Conclusion.................................................... 176 Tables and Figures............................................ 179 REFERENCES................................................................ 182 vi LIST OF TABLES Table 1 Summary of Key Results............................................. 29 Table 2 World Bank Productivity Descriptive Statistics..................... 37 Table 3 Berkeley Earth Descriptive Statistics.............................. 38 Table 4 Annual Average PM2.5 Concentrations by Region and Year............. 39 Table 5 Temperature variation from monthly mean on Value-added Labor productivity......................................................... 40 Table 6 Temperature variation from monthly mean on Value-added Capital Productivity......................................................... 41 Table 7 Temperature variation from the monthly mean on Value-added TFP..... 42 Table 8 Temperature variation from the monthly mean on sales-based Labor productivity......................................................... 44 Table 9 Temperature variation from the monthly mean on sales-based Capital productivity................................................. 45 Table 10 Temperature variation from the monthly mean on sales-based TFP.... 46 Table 11 Extreme temperature variation from monthly mean on value-added Labor................................................................ 48 Table 12 Extreme temperature variation from monthly mean on value-added Capital.............................................................. 49 Table 13 Extreme temperature variation from monthly mean on value-added TFP.................................................................. 50 Table 14 Hi/Low Extremes on Labor Sales Productivity....................... 51 Table 15 Hi/Low Extremes on Capital Sales Productivity..................... 52 Table 16 Hi/Low Extremes on TFP Sales...................................... 53 Table 17 Extreme Daily Maximum Temperatures on value-added Labor Productivity........................................................