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Publication Date - 12/3/1999

65. EPA - Market Mechanisms and Incentives for Environmental Management

The Environmental Protection Agency (EPA) Office of Research and Development, National Center for Environmental Research and Quality Assurance (NCERQA), in cooperation with the EPA Office of Policy and Innovation, announces an extramural grants competition supporting research in the area of market-based mechanisms and other incentives for environmental management (MM&I). This is the first year of this particular competition.

The MM&I competition encourages research that will contribute to the development of practical, credible approaches for designing environmental programs that will meet the Nation's environmental goals cost-effectively. The terms "market mechanisms" and "incentives" refer to approaches that are alternatives, complements, or supplements to traditional environmental regulation, and that rely on market forces, financial mechanisms, or other instruments to encourage regulated entities to reduce emissions, discharges and waste generation, or generally improve environmental performance. Existing and suggested MM&I approaches have included: pollution fees, charges and taxes; deposit-refund systems; pollution allowance trading; subsidies; performance bonds; extension of property rights to environmental resources; liability approaches; information approaches, environmental management systems and voluntary programs, among others.

The competition encourages proposals from researchers from all behavioral, social, and economic sciences. It encourages collaborations with non-social science disciplines when needed to answer social science-based questions. It supports both research conducted within a single disciplinary tradition, as well as novel, collaborative, and interdisciplinary scientific efforts.

This competition is soliciting proposals for theoretical and empirical research that will accomplish several logically related objectives:

(1) identify potential applications of MM&I approaches to environmental issues that federal, state and local agencies must address;

(2) estimate the impacts of MM&I programs on the environment, innovation, technological change, trade and competitiveness, and consumer behavior;

(3) estimate (ex ante) or verify (ex post) the costs, including transaction costs, and cost-savings (relative to existing command and control programs alone) of MM&I applications in the U.S. and abroad;

(4) identify who will bear the costs or realize the savings of MM&I programs;

(5) investigate the underlying theoretical issues that will determine the relative effectiveness of MM&I programs in protecting the environment; and

(6) develop realistic models that will demonstrate the relative effectiveness of MM&I programs in novel situations.

Applicants are encouraged to submit proposals that achieve several of these objectives and involve experts from economics and other disciplines. The results of this research are expected to inform federal and state policy-makers in both executive and legislative capacities, as well as members of regulated communities, the academic community, and public interest groups, all of whom will be stakeholders and participants in the debate on uses of MM&I approaches.

EPA anticipates making approximately 10 awards for MM&I research, totaling about $2 million. The projected range is from $50,000 to $200,000 per award per year, with durations from 1 to 3 years. Field experiments, survey research, and multi-investigator projects may justify the higher funding level.

The deadline for receipt of applications by EPA is FEBRUARY 2, 2000.