2013 Annual Report Resources for the Future (RFF) is an independent, nonpartisan organization that conducts economic research and analysis to help leaders make better decisions and craft smarter policies about natural resources and the environment. RFF researchers collaborate on issues that shape the world we live in—from policies that impact local communities to negotiations that create global agreements—with the goal of developing practical solutions that make a lasting difference.

II Contents

A Letter from the President 2

RFF by the Numbers: 2013 3

Leading Research Excellence 4

Convening Our Community 8

Shaping Policy Dialogues 12

Toward the Next Decade 14

Board of Directors 16

Supporters 18

Financial Statements 20

Experts and Staff 22

How You Can Help 24

1 A Letter from the President

For more than 60 years, researchers at Resources for the “RFF’s approach is uniquely Future have leveraged the tools of economic analysis to shape objective, rigorous, and smarter policies for natural resources, energy, and the independent—a rarity in our environment. RFF’s approach is uniquely objective, rigorous, increasingly partisan world.” and independent—a rarity in our increasingly partisan world. We strive to bridge this divide through the power of ideas and Support from donors also allows RFF researchers to explore original research—and to connect and counsel leaders from “over the horizon” issues. For example, RFF’s Jim Boyd across sectors to build a stronger, more sustainable future. and Allen Blackman are identifying methods for prioritizing investments in conservation—working with colleagues This combined role of researcher, advisor, and convener is to create approaches that emphasize specific, tangible underpinned by the investments of those who understand biophysical and societal outcomes. The result is a new the need for authentically objective analysis to inform better framework for assessing “conservation return on investment” policy. With this in mind, I offer our most sincere thanks as a means of reaching environmental goals. to the people, agencies, foundations, and companies who support work at RFF each year. In the pages of this year’s RFF, above all else, is a place of ideas. Throughout 2014, Annual Report, you’ll find a consequential and highly I hope you’ll take a deeper dive into research at RFF relevant portfolio of activity that demonstrates a wise use by attending our workshops and seminars to share your of this support, in tandem with an unfaltering commitment questions, ideas, and expertise. Our scholars are keenly to developing policy solutions and innovations that better interested in deconstructing and harnessing the trends prepare us for the future. and issues shaping our world, and your participation will help ensure that our work is truly relevant to today’s policy RFF supporters make it possible for our experts to pursue new community. Let’s keep the conversation going. lines of research, engage with policymakers, and identify and analyze emerging trends. Long before the mainstream climate discourse acknowledged the Clean Air Act as the “law of the land,” for example, RFF researchers such as Dallas Burtraw were assessing the potential to regulate carbon emissions under this law. As a result of this pioneering work, the US Phil Sharp Environmental Protection Agency and state governments are President now calling on RFF for guidance on the anticipated regulation of greenhouse gas emissions from existing power plants.

22 130 12,000 2,000 research projects were people received people watched undertaken by RFF the RFF Connection, RFF’s seminars researchers and staff RFF’s monthly newsletter via live webcast

11,000 RFF by the 15,000 people visited subscribers received Common Resources, Resources, RFF’s RFF’s blog on current Numbers: agship magazine research and policy debates 2013

3,000 64 600 Facebook and Twitter publications were people attended users followed RFF produced by RFF RFF’s First researchers—all of Wednesday Seminars which are available at www.rff.org/publications

3 Leading Research Excellence

In the 1950s, RFF pioneered the field of environmental and natural resource economics, leading pathbreaking investigations to better understand the concerns of resource scarcity that faced the nation. Today, RFF researchers are proud to uphold that legacy. They remain dedicated to bringing the best possible analysis to bear on the world’s critical natural resource and environmental challenges—those that will determine the kind of world future generations will inherit. The following pages feature a sample of the increasingly critical research and analysis conducted by RFF experts in 2013.

4 Transportation Natural Gas Analyzing Fuel Economy Standards Managing the Risks and Expanding With new fuel economy standards in the Benefits of Shale Gas effect to reduce both the amounts of In 2013, the United States led gasoline used and greenhouse gases the world in producing natural gas emitted, RFF scholars are beginning from the hydraulic fracturing of to examine the impact and success shale formations (shale gas). The of the policy. This year, RFF Senior boom has also raised awareness Fellow Virginia McConnell released of the environmental impacts “The New CAFE Standards: Are of this technique. A team of They Enough on Their Own?” She researchers, working within RFF’s finds that the corporate average fuel Center for Energy Economics and economy (CAFE) standards do not Policy, completed an 18-month guarantee that the new dual goals will initiative to identify the associated be met and suggests implementing a complementary policy, environmental risks and assess the existing regulatory such as a carbon or fuel tax or a better information program frameworks at the state level. Numerous papers were released to convey the fuel savings. and are available at www.rff.org/shalegasrisks.

RFF Fellow Joshua Linn also released research that examines At the same time, China holds the world’s largest potentially another issue with tighter fuel economy standards: the recoverable reserves of shale gas, but the country is lacking rebound effect. In “The Rebound Effect for Passenger in the necessary technology and experience to exploit Vehicles,” he explains that when cars get better fuel economy, those reserves. Researchers in the Consortium for Energy people will drive more, resulting in more gasoline use, Economics and Policy in China (CEEPIC), which was launched greenhouse gas emissions, traffic congestion, road damage, by RFF and Chinese partners in 2012, have been working to and other social costs. bring shale gas development best practices from the United States to China. RFF’s Zhongmin Wang and Alan Krupnick released a series of papers designed to bridge the knowledge gap, including “US Shale Gas Development: What Led to the Boom?” and “Sector Effects of the Shale Gas Revolution in the United States.”

RFF Center Researchers working in CEEP help to develop smart approaches for the efficient use and for Energy sustainable development of energy resources. In addition to the research above, they also explore the economics of natural gas, the market for alternative vehicles, and the intersection Economics and of energy and water, among other issues. Policy (CEEP) www.rff.org/ceep

5 Economy and Environment Energy Efficiency Considering a US Carbon Tax Providing Information to Close the In response to the national and Energy Efficiency Gap international debate surrounding the Improvements in energy efficiency costs, benefits, and effectiveness often appear to pay for themselves of carbon taxes, RFF researchers in energy cost savings. Yet people set out to help inform discussions frequently fail to make such with real data based on innovative investments—a phenomenon known modeling and analyses. RFF’s as the “energy efficiency gap.” New Richard Morgenstern, Roberton research by RFF’s Juha Siikamäki Williams, and Dallas Burtraw, and RFF board member Richard working with RFF University Fellow Newell of Duke University, “Nudging Jared Carbone of the University of Energy Efficiency Behavior: The Calgary, released “Deficit Reduction Role of Information Labels,” finds and Carbon Taxes: Budgetary, Economic, and Distributional that one tool to help close the gap is better labeling of energy Impacts.” They found that a carbon tax (in the range of $20 efficient appliances. Specifically, they note that simple to $50 per ton of carbon dioxide) represents a potentially information on how much energy (and money) will be saved is substantial revenue source for the United States—from $160 the most important element to encourage such purchases. billion to $360 billion in gross revenues per year, or $1.6 trillion to $3.6 trillion over a decade. Another way to provide information about energy efficiency is through “green” home certifications, such as the federal RFF’s Dallas Burtraw and Karen Palmer examined other government’s Energy Star program. In “Is Energy Efficiency aspects of a carbon tax—how it would interact with other Capitalized into Home Prices? Evidence from Three US policies designed to reduce emissions, encourage cleaner Cities,” RFF’s Margaret Walls, Karen Palmer, and Todd energy, and improve energy efficiency. In the RFF discussion Gerarden find that local certifications have a larger effect on paper “Mixing It Up: Power Sector Energy and Regional and sales prices than national certifications. Regulatory Climate Policies in the Presence of a Carbon Tax,” they explored interactions with state or regional greenhouse gas programs, renewable subsidies, state renewable portfolio standards programs, and other subnational policies.

RFF Center In addition to conducting research on carbon taxes and energy efficiency, CCEP researchers for Climate also examine, among other issues, greenhouse gas regulation under the Clean Air Act, state and regional policies to reduce emissions, and the impact of abundant natural gas on the and Electricity electricity sector. Policy (CCEP) www.rff.org/ccep

6 Flooding and Resilience Forests Reducing Vulnerability to Climate Examining the Carbon Footprint of Change and Weather Extremes Wood Biomass Following Hurricane Sandy, RFF’s As the United States explores new methods for expanding its Carolyn Kousky and coauthor Erwann renewable energy portfolio, debate continues regarding the Michel-Kerjan of the Wharton sustainability of burning wood for energy. Part of the debate is Risk Management Center released the existing “food versus fuel” problem related to land use. In “Hurricane Sandy, Storm Surge, new research, “Wood Bioenergy and Land Use: A Challenge and the National Flood Insurance to the Searchinger Hypothesis,” RFF’s Roger Sedjo, with Program: A Primer on New York coauthors Brent Sohngen of Ohio State University and RFF’s and New Jersey.” They find that Anne Riddle, argues that land that is not productive enough a significant number of flooded to produce traditional crops could be used to produce wood homes and businesses did not have biomass. This would not drive up food prices or encourage a flood insurance policy. Recently, changes in land use abroad to grow more food. the authors released “Addressing Affordability in the National Flood Insurance Program,” in Equally important in the biomass which they propose an innovative voucher program to ensure debate is the question about carbon insurance remains affordable for low- and middle-income emissions: Is biomass carbon neutral? residents. To help answer this question, RFF’s Roger Sedjo released “Regulating Also in 2013, the Mississippi River flooded St. Louis. RFF’s Emissions from Bioenergy: What Life- Carolyn Kousky and Margaret Walls released “Floodplain Cycle Assessments Tell Us,” finding Conservation as a Flood Mitigation Strategy: Examining Costs that the environmental impact of and Benefits.” The paper highlights the effects of protecting biomass must be measured over its lands from development to utilize the floodplain’s natural lifetime—from raw material extraction “green” infrastructure for reducing flood damages. For one through materials processing, greenway along the Meramec River in St. Louis County, distribution, use, and disposal. If Missouri, the benefits—of flood reduction and increases in this is done correctly, biomass will nearby housing values—greatly exceeded the opportunity cost generate no net emissions. of not developing the land.

RFF Center At CMEW, researchers examine a variety of topics—in addition to flooding and forest issues— for the related to the efficient and effective management of natural resources. They also explore eco-certification programs, opportunities for investing in public lands, and how to measure Management returns on conservation investments, among other issues. of Ecological www.rff.org/cmew Wealth (CMEW)

7 Convening Our Community

The development of truly consequential research does not begin and end with the researcher. It requires cultivating trusted relationships with people whose experiences and future will be shaped by the research findings. RFF’s reputation for independence and rigor allows its researchers to do just that.

RFF is a convener of thought leaders and a place of new ideas. Throughout the year, interdisciplinary groups of experts from the business, academic, government, and NGO sectors meet at RFF to identify key issues and ensure that the right questions are being asked. Some of RFF’s most thought-provoking events of 2013 are featured here.

88 Findings from RFF’s Initiative, “Managing the Risks of Shale Gas Development”

“Case-by-case permitting you see a lot [in shale gas development]. It has important advantages. It’s more flexible than any other form of regulation . . . but it has important disadvantages that I think are underappreciated in terms of how transparent it is. It’s very difficult for outsiders to understand what is required and what’s not required in these case-by-case permit applications.”

Nathan Richardson of RFF on the use of permits for regulating shale gas development.

Ice Sheets on the Move Species Conservation under the

“Sea level rise has been accelerating. . . . For the twentieth Endangered Species Act: Science, century, the mean global sea level rise was somewhere Partnerships, and Effectiveness between 15 and 18 centimeters. And for the last 20 years, it has been going up at a rate nearly double that. . . . If you “What does it take? What extrapolated to 2100 with does recovery look like? no acceleration, you’re Let’s figure that out now. looking at 32 centimeters. Let’s figure out what, if That’s over a foot of sea anything, can be done to level rise by 2100.” begin conservation on the ground and avoid the need Jonathan Bamber of the for [species] listing.” University of Bristol on tracking the melt of ice sheets. Paul Souza of the US Fish and Wildlife Service on “setting the conservation bar.”

The Role of a Carbon Tax in Tax Reform and Deficit Reduction

“A carbon tax can be quite a substantial source of revenue. . . . Over a 10-year budget window, the lowest carbon tax we’re looking at raises more than $1.5 trillion. The highest carbon tax is bringing in more than $3 trillion. . . . It’s not enough to solve the deficit problem on its own, but it’s enough to take a big bite out of it.”

Rob Williams of RFF (center) on possible revenues from a $20 and $50 tax per ton of carbon dioxide. 9 The Media, Science, and Cognition: How We Shape Our Understanding of Environmental Issues

“Hot cognition can lead people to work habitually in their thinking, so their thinking goes in a pattern . . . for example, when I’m faced with X, I do Y. . . . And sometimes those habits can bias our search for information and bias what kind of information we will take in. So we have to be thinking about ways we can move people from just doing what their habit is . . . so that they may think about things in a new way and let new information in.”

Barbara Allen of Carleton College on how people think about new information, with Julia Kumari Drapkin of iSeeChange.

10 Cheaper Fuels for the Agricultural Biotechnology and the Light-Duty Fleet Environment: Perspectives on the “This is basically a ‘chicken and egg’ problem. You not only Next 10 Years need the fuel but you need the vehicles. There’s investment “Ninety-nine percent or more of current crops are herbicide that’s required on both sides, so who is going to go first?” tolerant or insect resistant. . . . A recent survey suggests Richard Morgenstern of RFF on flexible fuel vehicles that can use because these crops are used natural gas–based ethanol fuel. and encouraged in industrial agriculture—and the heavy use of herbicides that these crops were designed for—resistant weeds now infest 50 to 60 million acres [nationwide].”

Doug Gurian-Sherman from the Union of Concerned Scientists on the risks of genetically modified agriculture.

The Future of US Water Supplies

“Climate change is a lot more about water than it is about temperatures. . . . It’s about liquid water, it’s about frozen water, it’s about freshwater, and it’s about seawater. . . . The Earth’s system uses the water cycle to mix heat from areas where there’s too much heat to areas where there’s too little.”

Brad Udall of the University of Colorado’s Getches-Wilkinson Center for Natural Resources, Energy, and Environment on water risks.

11 Shaping Policy Dialogues

Every year RFF researchers develop and advance smart solutions for solving complex issues that impact the environment and the economy. They pride themselves on anticipating and asking the right questions—and RFF’s reputation for objectivity allows its researchers to be heard where they can make a difference. In 2013, RFF researchers worked to enrich policy dialogues at local, state, and national levels, and around the world.

12 RFF Ideas That Made an Impact This year, RFF researchers examined a variety of policy issues, pioneering new approaches and developing creative options for improving their efficiency and effectiveness, including the following:

The benefit of using flexible performance The limits of using innovation to respond to standards to regulate greenhouse gas environmental problems emissions from existing power plants under the Clean Air Act

The use of natural gas to generate lower Options for supplementing the Corporate fuel prices for cars and trucks Average Fuel Economy (CAFE) standards with policies to reduce greenhouse gas emissions and oil dependence

A proposal for improving flood insurance The impact of a carbon tax on economic affordability by using a voucher system growth and greenhouse gas emissions coupled to a low-interest loan program for investments in hazard mitigation

Approaches for producing large levels The effect of shale gas development on of biomass without compromising crop surface water and property values production

New funding strategies for financially Implementation of and cost containment in struggling state parks California’s cap-and-trade system

RFF researchers, working in an advisory capacity, actively contribute to the work of numerous organizations, including those listed here:

• California Air Resources Board • National Research Council • Inter-American Development Bank • US Department of Energy • Intergovernmental Panel on Climate Change • US Environmental Protection Agency • National Academy of Sciences • The World Bank • National Oceanic and Atmospheric Administration

13 Toward the Next Decade

As RFF concluded the celebration of its 60th anniversary, researchers and staff began to look toward shaping the next decade at RFF. Led by RFF Vice President for Research Molly Macauley, they explored the consequential issues ahead that could represent a new phase in RFF’s evolution, while remaining true to RFF’s commitment to public service.

14 A note from RFF Vice President for Research Molly K. Macauley

This Annual Report turns a page With these priorities, RFF has initiated new research on in RFF’s history as we begin our the economics of natural gas and the potential creation of seventh decade. We remain keenly an energy market that could span North America. We are aware of our social responsibility sharpening our focus on the measurement and mitigation of as a think tank dedicated to risk and uncertainty about the effects of extreme weather exceptional research and policy on our coasts and the related problem of improving the analysis. effectiveness of flood insurance. And, we are building an innovative model to understand the effects of environmental In fact, we were critically reminded policies on economic growth and employment. of this public service role when several of our university fellows (exceptionally distinguished academicians working in RFF’s “Looking toward the next decade, fields) met with the RFF Board of Directors to celebrate RFF’s 60th anniversary and help launch us into the next decade. RFF’s reputation and credibility They noted that RFF has been and remains “the most continue to allow it to be a place influential institution working on environmental economics.” They also said that the organization had shaped the direction of people and ideas, generating a of their professional lives; for example, one commented, “for my career, I have been standing on the shoulders of one giant dynamic dialogue that ensures we and that giant is RFF.” make a difference.” The excellence of RFF has been and always will be its people and ideas. In the 1980s, RFF researchers and collaborators produced seminal books on the economics of the energy and electricity sectors; today, major changes lie ahead in these What distinguishes RFF as we pursue these ideas is not sectors and our creativity is being tapped to address emerging only state-of-the-art research. In addition to our core staff, issues in these markets. The need also remains for deeper our academic fellowships support a large network of junior application of concepts such as ecosystem services and scholars—an investment in the next generation. Furthermore, their valuation to inform conservation return on investment this Annual Report provides a glimpse of the almost daily flow analysis—another area in which RFF has produced pioneering of visitors from around the world for collaborations critical to research. And the years ahead may bring fundamental our work. Looking toward the next decade, RFF’s reputation changes in the macroeconomy (rates of unemployment and and credibility continue to allow it to be a place of people and economic growth, in particular), with new implications for ideas, generating a dynamic dialogue that ensures we make a environmental management. Developing new tools to quantify difference. risk and communicate uncertainty about the future will become more critical than ever.

15 Board of Directors

As of October 2013

Leadership C. Boyden Gray Robert N. Stavins* Founder/Partner, Albert Pratt Professor of Business and W. Bowman Cutter Boyden Gray & Associates Government, Chair John F. Kennedy School of Senior Fellow and Director, David Hawkins Government, Harvard University Economic Policy Initiative, Director, Climate Center, The Roosevelt Institute Natural Resources Defense Council Lisa A. Stewart President and CEO, John M. Deutch Rick R. Holley Sheridan Production Company, LLC Vice Chair President and CEO, Institute Professor, Department Plum Creek Joseph Stiglitz of Chemistry, Professor of Economics, Business, Peter R. Kagan Massachusetts Institute of Technology and International Affairs, Managing Director, Columbia University School of Philip R. Sharp Warburg Pincus, LLC Business President, Sally Katzen Resources for the Future Mark R. Tercek Senior Advisor, President and CEO, Podesta Group The Nature Conservancy Members Rubén Kraiem Anthony Bernhardt Partner, Chair Emeriti Northern California Director, Covington & Burling LLP Environmental Entrepreneurs Darius W. Gaskins, Jr. Robert B. Litterman Partner, Trudy Ann Cameron Chairman, Risk Committee, Norbridge, Inc. Raymond F. Mikesell Professor Kepos Capital of Environmental and Resource Robert E. Grady Richard G. Newell Economics, Managing Director, Director, Duke University Energy University of Oregon Cheyenne Capital Fund Initiative; Professor, Nicholas School Red Cavaney of the Environment, Lawrence H. Linden Alexandria, VA Duke University Founder and Trustee, Linden Trust for Conservation Elaine Dorward-King Henry Schacht Executive Vice President of Managing Director and Senior Advisor, Frank E. Loy Sustainability and External Relations, Warburg Pincus Washington, DC Newmont Mining Corporation Richard Schmalensee Linda J. Fisher Howard W. Johnson Professor and Vice President and Chief Dean Emeritus, Sloan School of Sustainability Officer, Management, DuPont Environment and Sustainable Massachusetts Institute of Technology Growth Center

*Board member-elect

16 In Appreciation of RFF’s Retiring Board Members In October, four RFF board members retired from their positions after nearly a decade of service. RFF thanks them greatly for their leadership and dedication to the institution and its role in the policy process.

Vicky A. Bailey Mohamed T. El-Ashry Lawrence H. Linden Frank E. Loy

Vicky A. Bailey Lawrence H. Linden Principal/Partner, Founder and Trustee, BHMM Energy Services LLC Linden Trust for Conservation

Vicky Bailey was elected as a member of the RFF Board of Larry Linden was elected to the RFF Board of Directors in Directors in 2004. During her tenure, she demonstrated 2001, and also served as its chair for several years. His a keen understanding of complex policy matters related tenure was characterized by a strong personal commitment to to energy and electricity and significantly advanced RFF’s creating a more sustainable world shaped by smarter policy. fundraising success as chair of the Development Committee He also worked closely with the Board and the RFF leadership of the Board. team through a strategic review that significantly enhanced RFF’s ability to deliver on its mission. Mohamed T. El-Ashry Senior Fellow, Frank E. Loy UN Foundation Washington, DC

Mohamed El-Ashry joined the RFF Board in 2004, bringing Frank Loy joined the RFF Board in 2001. He served as the his deep knowledge of global environmental policy. He board chair during a crucial time in RFF’s history, leading the also served as the founding chair of the Research Program search that appointed current RFF President Phil Sharp. To Committee, creating a forum through which the RFF Board this role, he brought considerable experience in the public, and staff can explore emerging areas of research together. private, and nonprofit sectors, and encouraged RFF to be more attuned to the needs of policymakers.

17 Supporters

RFF is sincerely grateful to the following supporters for their generous contributions during 2013.

Individuals and David Blood Harold and Colene Brown Edward L. Phillips Family Foundation Family John M. Deutch Bernard J. Picchi Linda J. Fisher Dallas Burtraw Mark Pisano Foundations Robert W. Fri Barbara Bush William Pizer Chairman’s Circle Edward F. Hand John M. Campbell Paul and Chris Portney $50,000 and above James Harmon Red Cavaney Milton Russell Gregory Alexander Stephen D. Kahn Emery Castle Thomas C. Schelling S.D. Bechtel, Jr. Raymond J. Kopp John C. Colman Richard Schmalensee Foundation Rubén Kraiem Joel Darmstadter Schmitz-Fromherz Family Anthony Bernhardt Richard E. Kroon Lee H. Endress Fund W. Bowman Cutter Jan W. Mares Richard L. Epstein Deborah J. Schumann Christopher J. Elliman Wilhelm Merck Robert S. Epstein Jesse A. Schwartz Joseph Gleberman Steve Percy Dod Fraser Hilary A. Sigman Grantham Foundation William Fulkerson Joseph Stiglitz for the Protection of the Helen Raffel Environment John W. and Jeanne M. Kathryn Gabler John E. Tilton Mark Heising and Rowe Manuel Godinho de Matos Tesar Timon Liz Simons Robert P. Rotella Debbie Groberg Victoria Tschinkel Peter Kagan Foundation Ridgway M. Hall Chris Whipple Lawrence H. Linden Roger and Vicki Sant Nicole Hardy R. James Woolsey Litterman Family Henry B. Schacht Lea Harvey Foundation Philip R. Sharp William Hildreth The G. Unger Vetlesen Legacy Society Jeffrey A. Smith R. Glenn Hubbard Foundation Catherine G. Abbott Lisa Stewart Leonard S. Hyman Edward L. Strohbehn, Jr. John F. Ahearne President’s Circle Julia and Howard Klee Paul F. Balser $25,000 and above Don Kerr Associates Emery N. Castle Knobloch Family $250 and above The Jennifer and Tim Foundation Kingston Charitable Fund Thomas D. Crocker Anonymous (4) Thomas E. Lovejoy J. Clarence Davies Council Catherine Abbott Ernest J. Moniz Margaret W. Fisher $5,000 and above Garrett Albright George G. Montgomery Maybelle Frashure Christopher C. Aitken James K. Asselstine Richard G. Newell Kenneth D. Frederick Merribel Ayres Carter Bales Daniel H. Newlon Robert W. Fri Vicky A. Bailey H. Spencer Banzhaf Abby Newton Darius W. Gaskins Paul F. Balser Glenn C. Blomquist Robert R. Nordhaus Robert E. Grady

18 Debbie Groberg Green Diamond Resource Mitsubishi Corporation Inter-American Winston Harrington Company Raytheon Company* Development Bank Donald M. Kerr Southern Company Stout and Teague IVL, Swedish Environmental Research Thomas J. Klutznick Toyota Two Sigma Investments Institute, Ltd. Richard Morgenstern Warburg Pincus* LLC Next 10 Steven W. Percy Vinson & Elkins LLP Council Statistics Norway Paul R. Portney Westport Innovations, Inc. $25,000 and above US National Academy of William D. Ruckelshaus American Gas Association Sciences Clifford S. Russell American Honda Motor Foundations Wageningen University Helen Marie Streich Company The Energy Foundation The World Bank Edward L. Strohbehn CF Industries Fuel Freedom Foundation World Health Organization Victoria J. Tschinkel ConocoPhillips Generation Foundation World Wildlife Fund—US The Dow Chemical The Gordon and Betty Company Corporations Moore Foundation Government EQT* The Curtis & Edith and Hess Corporation Munson Foundation Agencies Associations Pacific Gas and Electric Alfred P. Sloan National Science Company Chairman’s Circle Foundation Foundation $100,000 and above The Salt River Project Tinker Foundation US Army Corps of Duke Energy* Schlumberger Ltd. US Endowment for Engineers Exelon Shell Oil Company Forestry and Communities US Centers for Disease Control and Prevention ExxonMobil Corporation Southern California The Walton Family Edison Foundation US Department of General Electric Agriculture/Forest Service Goldman, Sachs & Co. Associates US Department of Plum Creek Timber Less than $25,000 Other Defense Company, Inc. American Forest and Institutions US Department of Energy United Technologies Paper Association Asian Development Bank US Department of Health Corporation Bracewell & Giuliani LLP and Human Services Bipartisan Policy Center Weyerhaeuser BASF Corporation US Department of Biotechnology Industry Consolidated Edison Transportation (FTA) President’s Circle Organization Company of New York US Environmental $50,000 and above Cornell University Edison Electric Institute Protection Agency Anadarko Petroleum Deurstche Gesellschaft US Geological Survey Corporation Hunton & Williams LLP Für Internationale US National Aeronautics American Chemistry MeadWestvaco Zusammenarbeit Space Administration Council Corporation Electric Power Research US National Oceanic BP America Merrill Lynch & Co., Inc.* Institute and Atmospheric University of Gothenburg Chevron Corporation Microsoft Corporation* Administration

*Matched their employees’ contributions to RFF. 19 Financial Statements

YearASS EETndingS September 30th 2013 2012 CURRENTASSET ASS SETS 2013 2012 Cash and cash equivalents $50,000 $310,029 CURRENT ASSETS GCaransht sand and c aconsh tequracitv raelenvenuts e receivable 1,348,984$50,000 $310,029543,997 Contributions receivable 1,664,517 1,259,301 Grants and contract revenue receivable 1,348,984 543,997 COonthetri burectieonsivab rleesceivable 1,664,517 788 1,259,301 77,149 Other arescseitvsables 217,473 788 43,30477,149 ToOtatlhe curr arsensett sassets 3,281,762217,473 2,233,780 43,304 CToonttalr icurbutrienonst asresceetisvable, net of current portion 3,281,762587,490 2,233,780457,490 INContVESriTbMEutiNonsTS receivable, net of current portion 587,490 457,490 INVInEvSeTsMEtmNenTSts at fair value 48,040,529 20,473,766 Investments i na tLand, fair v aLlLueC 48,040,5298,900,000 20,473,7668,900,000 Investment in RCLand,C LLC 8,900,000 - 4,689,8948,900,000 ToItnavl eisnvestmentmt enin tRCs C 56,940,529 - 34,063,6604,689,894 TFoixtedal iasnvessettsm -en netst of accumulated depreciation 56,940,5296,844,141 34,063,6606,019,189 AFisxsedets as heseldts u -n nedetr ocharf acictablumue ltarustedt depreagreemcienatitons 6,844,141373,046 6,019,189334,003 Total Assets $68,026,968 $43,108,122 Assets held under charitable trust agreements 373,046 334,003 Total Assets $68,026,968 $43,108,122

LIABILITIES AND NET ASSETS CURRENTLIABILI LTIAIEBISLI TANDIES NET ASSETS 2013 2012 Tax-exempt bond nancing, current portion $260,000 $250,000 CURRENT LIABILITIES 2013 2012 TLinaxe-ex ofe mcrpedt ibondt nancing, current portion $260,000 - $250,000908,776 Grants and awards payable 67,750 32,500 Line of credit - 908,776 AGcrancounts atsnd p aawardyables a pandy abacclerued liabilities 1,612,34367,750 1,712,976 32,500 PosAcctounretitrse mpaenyabt benle ae ndt s,ac ccuruedrrent liabilities 1,612,34353,045 1,712,976 53,045 PosDefetrreredtire rmevenenuet bene ts, current 598,563 53,045 379,81653,045 ToDtaelf ecurrredren rte vlienueabilities 2,591,701598,563 3,337,113 379,816 Tax-exempt bond nancing, net of current portion 5,160,000 5,420,000 Total current liabilities 2,591,701 3,337,113 TPosax-texreteimrepmt enbondt ben e nants,ci nge,t neof tcu ofr rcuentrrent portion 5,160,000463,763 5,420,000 469,645 PosLiabtrilitietireesm undeent benr spe lit-tis,n tnereets ot fa cugrerreentments 463,763237,323 469,645221,052 LiFundsabiliti heesl dunde for or tsphelrits-interest agreements 237,323146,231 221,05283,603 TFundsotal li heabildli tfioesr others $8,599,018146,231 $9,531,413 83,603 NToETta Al SliSETabilSities $8,599,018 $9,531,413 NETU nArSeSETstricSted 49,532,008 24,798,050 UTenmrepostriacriltedy restricted 49,532,0083,583,035 24,798,0502,855,752 PeTemrmpoanraerilntlyy r reessttrricictteded 3,583,0356,312,907 5,922,9072,855,752 ToPetalr mneant asenstleyt srestricted 59,427,9506,312,907 33,576,7095,922,907 Total liabilities and net assets $68,026,968 $43,108,122 Total net assets 59,427,950 33,576,709 Total liabilities and net assets $68,026,968 $43,108,122 20 CHANGES IN UNRESTRICTED NET ASSETS REVENUE 2013 2012 Individual contributions $2,494,226 $2,348 , 55 4 Foundation grants 1,488,922 1,525 , 87 2 Corporate contributions 2,300,150 1,353 , 55 0 Government grants and contracts 2,036,023 2,512 , 29 4 Other institution grants 972,491 1 , 255 , 16 6 Rental income 2,023,711 3,168 , 34 3 Investment income net of fees 1,567,343 187 , 31 7 Other revenue 13,017 35 , 17 7 Total operating revenue $12,895,884 $12,386 , 27 3 EXPENSES Programs Research 8,600,249 8,488 , 54 4 Academic relations 185,195 188 , 59 4 Communications 1,255,065 1,140 , 24 9 Other direct 221,535 102 , 40 5 Total program expenses $10,262,044 $9,919 , 79 2 Fundraising 1,114,947 959 , 77 5 Management and administration 1,795,025 1,622 , 39 6 Building operations and maintenance 1,261,596 1,008 , 12 7 Total functional expenses $14,433,612 $13,510 , 09 0 Change in unrestricted net assets from operations ($1,537,728) ($1,123 , 817 ) NON-OPERATING REVENUES (EXPENSES) Realized and unrealized gains (losses) on investment transactions 2,807,881 2,497 , 06 8 Realized gain on sale of investment in RCC 24,581,087 - Increase (decrease) in unrestricted net assets $25,851,241 $1,373 , 25 1 Net assets at beginning of year $33,576,709 $32,203 , 45 8 Net assets at end of year $59,427,950 $33,576 , 70 9

Development 7.7% Investment and Research rental income 27.8% REVENUE Building Other revenue .1% programs 71.2% operations 8.7% In fiscal year 2013, RFF’s operating revenue was $12.9 million, 72.1 percent of which came from individual contributions, foundation grants, corporate contributions, and government grants. RFF augments its income by an annual Management and disbursement from its reserve fund to support operations.administra tionAt 12.4%the end of fiscal year Gifts and grants 72.1% 2013 the reserve fund was valued at $48 million.

EXPENSES Development 7.7% Investment and Research rental income 27.8% Building Other revenue .1% programs 71.2% RFF research and educational programs continued to be vital in 2013, operations 8.7% representing 71.2 percent of total expenses. Management and administration combined with fundraising expenses were only 20.1 percent. The balance is related to facilities rented to other nonprofit organizations Management and administration 12.4% Gifts and 21 grants 72.1%

Experts and Staff

As of October 2013

Executive Leadership Roger M. Cooke Raymond J. Kopp Karen L. Palmer Chauncey Starr Senior Senior Fellow and Director, Research Director, Senior Phil Sharp Fellow CCEP Fellow, and Associate President Maureen L. Cropper Carolyn Kousky Director, CCEP Edward F. Hand Senior Fellow Fellow Sophie Pan Vice President, Finance Research Assistant and Administration Joel Darmstadter Alan J. Krupnick Senior Fellow Senior Fellow and Director, Anthony Paul Lea Harvey CEEP Center Fellow, CCEP Vice President, J. Clarence Davies Development, and Senior Fellow Yusuke Kuwayama Nigel Purvis Corporate Secretary Alexander Egorenkov Fellow Visiting Scholar Molly K. Macauley Research Assistant Corinne Land Nathan Richardson Vice President for Rebecca Epanchin-Niell Research Assistant Resident Scholar Research and Senior Fellow Joshua Linn Skyler Roeshot Fellow Carolyn Fischer Fellow and Associate Research Assistant Peter Nelson Senior Fellow and Director, CCEP Heather L. Ross Director of Associate Director, CCEP Antung Anthony Liu Visiting Scholar Communications Brian Flannery Fellow Stephen W. Salant Center Fellow, CCEP Xu Liu Nonresident Fellow Research Arthur G. Fraas Research Assistant Francisco Santiago-Avila Visiting Scholar Randall Lutter Research Assistant Joseph E. Aldy Visiting Scholar Nonresident Fellow Robert Fri Roger A. Sedjo Visiting Scholar Jan Mares Senior Fellow and Director, Allen Blackman Senior Policy Advisor FEPP Thomas Klutznick Senior Leonard Goff Fellow Research Assistant Virginia D. McConnell Samantha Sekar Senior Fellow Research Assistant James W. Boyd Hal Gordon Senior Fellow and Director, Research Assistant Richard D. Morgenstern Leonard A. Shabman CMEW Marc Hafstead Senior Fellow Resident Scholar Timothy J. Brennan Fellow Daniel F. Morris Daniel Shawhan Senior Fellow Winston Harrington Center Fellow, CCEP Gilbert F. White Postdoctoral Fellow Anna Brittain Senior Fellow Lucija Anna Muehlenbachs Manager, CMEW Kristin Hayes Fellow Jhih-Shyang Shih Fellow Stephen P.A. Brown Assistant Director, CCEP Clayton Munnings Nonresident Fellow and CEEP Research Assistant Hilary Sigman Nonresident Fellow Dallas Burtraw Mun Ho Sheila M. Olmstead Darius Gaskins Senior Visiting Scholar Nonresident Fellow Juha Siikamäki Fellow and Associate Shefali Khanna Ariel Ortiz-Bobea Associate Research Director, CCEP Research Assistant Fellow Director and Fellow Ziyan Chu Kenneth A. Small Senior Research Assistant Nonresident Fellow

2222

Daniel Velez-Lopez Jon A. Krosnick Scott Hase Karen Furman Research Assistant Stanford University Manager, Institutional Staff Assistant Peter Vail Simon Levin Outreach and Events Shilo Lillis Research Assistant Princeton University Christine Tolentino Accounting Staff Assistant Margaret A. Walls John A. List Events Coordinator Mara Parrish Research Director and University of Chicago Ellen A. Walter Human Resources Senior Fellow Anup Malani Graphic Designer and Manager Yushuang Wang University of Chicago Production Associate Charlotte Pineda Research Assistant Wallace E. Oates Shannon Wulf Tregar Senior Staff Assistant Zhongmin Wang University of Maryland Deputy Director for Public Claudia Rios and Government Affairs Fellow William A. Pizer Accounting Manager Roberton C. Williams, III Duke University Adrienne Young Tiffany Smith Managing Editor Senior Fellow and Director, Stephen Polasky Human Resources Academic Programs University of Minnesota Assistant Michael Wolosin Paul R. Portney Development Marilyn M. Voigt Visiting Scholar Executive Assistant to the University of Arizona Angela Blake President James N. Sanchirico Development Assistant Lester Wilkerson University Fellows University of California, Barbara Bush Payroll-Project Accounting Davis Director of Donor Relations John F. Ahearne Clerk Sigma Xi V. Kerry Smith Key Hill Arizona State University John M. Antle Director of Foundation and Oregon State University Brent L. Sohngen Corporate Relations Information Ohio State University Jesse H. Ausubel Khadija Hill Technology Robert N. Stavins Development Officer, The Rockefeller University Aris Awang Harvard University Individual Giving Gardner M. Brown, Jr. Database Programmer/ University of Washington Thomas Sterner Mike Viola Analyst University of Gothenburg Development Associate Mark A. Cohen Danish Baig Vanderbilt University John E. Tilton Dana Yanocha Desktop Support Analyst Colorado School of Mines Development Officer, Partha Dasgupta Nauman Memon Foundation and Corporate University of Cambridge Jonathan B. Wiener IT Manager Duke University Relations Robert T. Deacon Jhon Valdez University of California, JunJie Wu Desktop Support Analyst Santa Barbara Oregon State University Finance and Hadi Dowlatabadi Administration University of British Communications Julie Alleyne Columbia Jeannine Ajello Research Division Manager Lawrence H. Goulder Digital Strategy Manager Jane Bergwin-Rand Stanford University Sarah Aldy Grants and Contracts W. Michael Hanemann Editor, Resources Administrator University of California, Nicole Hardy Michael Brewer Berkeley Online Communications Mailroom and Purchasing Charles D. Kolstad Associate Assistant University of California, Chris Clotworthy Santa Barbara Librarian

23 How You Can Help

RFF’s capacity to make an impact is due in large part to the individuals and organizations that believe that objective, research-based insights lead to smarter policy. Every gift helps RFF develop rigorous, independent research on issues that will shape the environment, economy, and world for years to come.

• Send a gift directly to RFF’s office in Washington, DC. • Donate online through the secure Network for Good website, www.networkforgood.org. • Participate in the Combined Federal Campaign using RFF’s CFC code 19241. • Provide matching gifts through your employer’s matching gift program. • Give gifts of stocks, bonds, or mutual funds. • Consider planned gifts through bequests or deferred giving.

www.rff.org/support

2424 Improving Efficiency and Collaboration

RFF completed the renovation of its headquarters in 2013. With a desire to maximize efficiency while still planning for growth, RFF moved from three floors to two— still adding more offices for researchers and visitors, doubling its collaborative work areas, and improving the technology in its conference suites. 1616 P Street NW, Suite 600 Washington, DC 20036 www.rff.org