#MeetTopEnvEcon – Anil Markandya

1. Could you please give me a brief background of yourself and your main research interests.

I have been someone who is struggling to be in the worlds of academic economics and policy making all my life. I have been almost always working in the areas of energy and the environment. I started out as an economist in the economics department at the University College London, there I was a lecturer and then I was promoted senior lecturer, reader and then I was seven years with the Harvard Institute for International Development in the US. From there I came to Bath University as a professor. After that I was at the World Bank for a few years, and from the World Bank I came back to Europe where I became the director of the Basque Centre for Climate Change in Spain. While I have been there I have also been doing various advisory work for the UK and French governments, for international organizations, the European Commission. So my work has been trying to use academic knowledge for policy.

2. What article/book of yours would you call your best?

The one that probably had the biggest influence was the `Blueprint for a Green Economy’ which was published in 1989 with David Pearce and Ed Barbier. That was very influential because we managed to convince many people that if you are interested in the environment then you can get good insights into how to manage the environment through the use of economic ways of thinking. And I suppose there we coined the phrase which is now very popular called `green economy and green growth’. So we were the first people to produce this idea of economic growth which is green.

Now this was, in a way, not very popular with the environment community who wanted zero growth, so they were against growth. And on the other hand we were not very popular with the very traditional economists who said: what is all this green stuff, it is not important. So it was like a niche that we created which tried to combine the ideas of environment as being important, but being consistent with a vision for the future which entails some form of growth.
In your book `Blueprint for a Green Economy’, the Guardian described it as “a text for the next election”. Do you feel it had that impact?

No I don’t think so. I don’t think it had that much impact in this sense but in the British context it raised awareness. It also made it possible for us to address environmental problems in a more effective way without always trying to put restrictions and physical controls on everything. We realized that in a modern economy it doesn’t work. If we are going to take care of the environment then we need to try to make as much use as we can of the instruments of a modern flexible economy and that’s what we promoted. And I think that idea has caught on, not only in Great Britain but also in Europe and many other countries. So if you look at the number of economic instruments for environmental management then you see that they have grown a lot in the last 20 to 30 years.

3. Would you mind giving a list of essential articles that a young researcher in your line of research should read?

In 1992 I published a set of Readings in Environmental Economics, which is still good! I would include from that:  (a) the Economics of the Coming Spaceship Earth by Boulding, the Tragedy of the Commons by Hardin, (c) Conservation Reconsidered by Krutilla and Economic Instruments for Environmental Regulation by Tietenberg.

4. And could you be so kind and give a reference for a policy-oriented article or book that sums the research in your field for an interested policy maker?

Perhaps a good book would be the new version of `Blueprint for a Green Economy‘, a book that Ed Barbier and I wrote (sadly David Pearce died several years before this new version) and that we called `A new Blueprint for a Green Economy’, which is also a good guide to where we stand now. I would recommend this book to a politician to suggest how we can use the ideas of economics to try and address some of the big challenges, which, among others, include now climate change and living within our planetary boundary.
In the thirty years that have passed between the old `Blueprint for a Green Economy’ and the `new Blueprint for a Green Economy’, what did you learn, what did you feel made it important for you update your book?

I think we have become more aware of empirical relevance, we have become much better now on the impacts of mismanaging the environment. Also, thirty years ago climate change was not seen as such a big issue as it is now. This is also another thing that has to take centre stage in trying to address the big challenges of our time.
And then the other thing that we perhaps didn’t stress enough previously is the importance of civil society in trying to resolve the problems of insuring a green economy. We previously felt that by giving the right incentives through flexible instruments we could do a lot. And we felt that governmental policies need to be based on better information rather than just GDP like Sarkozy and other people tried to do, meaning to correct GDP for the environment. But all of this missed one thing, which is that in many cases societies that managed the environment were also societies in which the public is well informed and is able to channel information that is provided. This makes a big difference. And I think this plays a bigger role than we had initially anticipated.

5. In what direction would you like to see environmental economics develop? What would be the obstacles?

Clearly, the importance of understanding psychological aspects, understanding behavior in determining how to change it. If people do certain things that are not in the public interest, how can we alter that behavior. We can of course use taxes, we can use charges, we can do all that, but we also need to understand some of these other psychological instruments, and especially how this package fits together.

Why do feel that taxes or prices are not enough to drive behavior?

Well they are certainly very important. To me they are still the central instruments. But they are not always enough. For example, if we are interested in increasing energy efficiency we can do a lot through prices. But if we are also interested in topics like human diet, which has a big effect on health and in some extend also on our emissions of greenhouse gases, we cannot change this only through taxes. We have to find ways to make people understand that e.g. obesity is not good for their own sake. And these are areas where we need new instruments.

I don’t really believe that there are obstacles really. One of the key ingredients in making progress is to do good empirical work. The phrase which is very popular in that regard is evidence-based. So we want to make good decisions but the evidence-base for many decisions that we want to make is not so good. Thus we often have to implement a multitude of policies, some of them work and others don’t. We need to understand better why some things work and others don’t.

6. If you had to give young researchers in environmental economics some advice, what would it be?

Firstly I would say that you must have a good background in economics. So you must especially understand microeconomics, the theory of value, concepts determining demand and supply. You have to understand them really well. Then, within the new literature, you should get a good grounding in behavioral economics, which is the economics where people do not seemingly respond in a rational way. A lot of this is influencing our approaches to managing our economy including our natural resources. For example, if you want to understand how to make better use of energy, to be more energy efficient, it is generally not enough to just change the price. It is also important to give the kind of incentives which are on the peripheries of that system and which are not always rational choices. And this again is related to civil society and related to the idea that our original framework needs some new thinking on what determines individual behavior.

But to be a good economist is generally not enough to be an environmental economist. You also have to have good knowledge of the area you are working. For example if you are working on energy, you need to have good understanding of the engineering aspects of energy. If you work on health, you need to understand the key health linkages which will be very important. If you work on climate change, you need to understand quite a lot about the climate modelling, the uncertainties involved in that area and so on. And, of course, you need to get a better evidence-base for these policies which are critical for the management of a green economy.

So I would say to a young environmental economist: First be well-grounded in your basic discipline, but then be open to understanding the interface between economics and the areas that will be very important for your work – either it can be psychology, or engineering, or meteorology or climate change.

Young researchers always feel that they have problems to get their voices heard not only within the profession but also from policy makers. Given your experience on the policy side, how do you feel young researchers should approach politicians with their thoughts?

Approaching politicians is not easy. But there are nowadays many pathways by which you can influence policy. One is clearly to do good research, present it and then people pick it up. But then there are also now these social media networks, which is also a method by which you can create awareness and transfer knowledge in an effective way. In this regard, I am a bit old-fashioned now, I don’t use them so much. But there are clearly some networks which are a good way to influence policy and I would say you should use them.

7. How do you mostly get your ideas?

 

8. Are you more interested in fundamental research or do you try to shape actual policy through your research? Which impact would you say does your research have on policy making? And how do you think environmental economists could increase their say in the policy agendas?

I keep trying. One can never say that there is one big step. For example, in the Horizon 2020 program, which is a big program with lots of money being spent, I have been involved in the expert group which tries to advise them on the research that needs to be supported. And I always try to indicate where environmental economics can fit in to make a good contribution. A politician’s thinking is often not very strong on economics. Some of them are very good on the areas of science, some especially good on public awareness, but I try to make sure that the important ideas of environmental economics are included in that program of work. And in the work with the other policy bodies I try to do the same.

Since you work regularly with policy makers – what do you think we environmental economists can learn from policy makers?

We need to learn to understand much better their problems and difficulties. For example, I am working now on a program called `Smart cities’. In that regard, I am starting to work with politicians from India and China. Both countries have very different traditions. India is traditionally much more democratic, but also much more chaotic and things do not always work very well. If they don’t work very well, at least people complain and something subsequently gets changed. In China everything is much more directed from the centre, it is not chaotic but if something goes wrong then it goes wrong in a very big way. So one needs to understand the different roles of the politicians within those different traditions and offer some support and advice on the strengths and weaknesses of policies that are framed within these traditions.

In which way do you feel politicians think differently from environmental economists?

Yes, since they have to cater for their constituency, which depends on which country you are in but they all want to make sure that they don’t make big mistakes. For example, some years ago in the Netherlands economists suggested to introduce environmental taxes, the politicians listened but these turned out to be big failures. The politicians were blamed and got into a lot of difficulty. So politicians are much more aware of the risks that they are taking. We environmental economists are less aware of those risks but we are more aware of what our knowledge indicates is the best way forward. But I suppose the common ground is that we should try to be more evidence-based. We should look at experiences and advise them best on the impacts of what we propose to the groups of people who they are most interested in.
So you feel that our approach in economics is not always holistic enough?

Sometimes I think not. Sometimes we are not very clear about some of the risks of our recommendations.

You once said: “The United States is the society which is probably the most difficult to convince on environmental issues.” Why do feel this is the case?

Look at what is happening on climate change. They are really the most difficult of all the developed countries. The people there who are often unconvinced are those that believe to see disadvantages from handling climate change. There more climate sceptics in the US than in most other places and it is hard to see what is the basis of that. Sometimes I wonder whether it is religious, but then it cannot be as simple as that. For example, if you look at climate change, then the Pope produced the Laudato Si, which is very supportive of the action to limit climate change.
Maybe the Americans don’t believe scientists, but I really cannot say why their attitude is like it this.

9. And now for a bit of fun. Do you know the concept of holidays or do you take your papers to the beach?

I combine with my holidays with a little bit of work almost all the time. The only time I really don’t do anything is perhaps one week in February when I go skiing with my grandchildren. But in the summer now I will spend most of my time in my house in Italy, I will also worry about my trees which are having a lot of diseases now, but the rest of the time I will work.

10. What is your favourite economics joke or anecdote from a conference?

There are quite a few to choose from. What is the good definition of an environmentalist? He is the man who built his log cabin last year. (He is the man who destroyed in the environment in the past and now ferociously tries to protect his land.)
Another one is based on a cartoon in the New Yorker. There is a man looking at some bugs on the ground, in the background there is a construction side. He shouts at these bugs saying: Come on, breed you two so that there are more of you so that I can say you are not endangered anymore and I can continue building.

11. Please feel free to suggest someone else whose answers you would like to see.

My colleague Ed Barbier for sure, and Thomas Sterner is someone I rather like. Also, Hans Obschoor, and Jean-Philippe Barde from the OECD.