Examining the Economics of Climate Change

Visiting professor Don Fullerton will spend the semester working with Duke and UNC faculty and students on climate change issues.

Don Fullerton head shot.jpeg
Don Fullerton, the Nannerl Keohane Distinguished Visiting Professor for Spring 2015

In the early 1990s, while a University of Virginia economics professor, Don Fullerton sent out a team of grad students to study a change in the way a local government was charging residents for trash collection.

Their research tools: A station wagon and a scale. They tracked the garbage trucks’ routes, anticipating each pickup and – with each homeowner’s permission – measuring and weighing trash and recycling containers.

It wasn’t glamorous work, but the team’s findings put a scientific sheen to a tax many Americans can relate to. Fullerton’s findings – that charging homeowners per bag of trash increased recycling and reduced waste -- were published in the American Economic Review and have played a role in municipal tax discussions since.

“It was a fun thing to do because people could really wrap their minds around the issue,” said Fullerton, now an economist in the finance department at the University of Illinois. “This is something people do every day, every week.”

Fullerton has subsequently focused his research on another matter of public interest: climate change. He will spend the spring semester at Duke and UNC Chapel Hill analyzing the economics of climate change as the Nannerl Keohane Distinguished Visiting Professor, an appointment spanning both schools. In that role, he will work with students and faculty from both universities, give a Feb. 3 public lecture and help officials on both campuses plan a national conference on the issue.

“Climate change effects are pervasive; nothing is untouched,” Fullerton said. “It affects everything -- from agriculture to land use, shipping, building codes, even office jobs because you will have to use more air conditioning. It impacts everything you can think of.”

The Keohane professorship is funded by UNC-Chapel Hill graduate Julian Robertson and his late wife, Josie, and by the William R. Kenan, Jr. Charitable Trust. It was created in 2004 by then-UNC-Chapel Hill Chancellor James Moeser to honor Keohane, who was stepping down as Duke's president. It seeks to spark collaboration between the two campuses.

Last year, Fullerton presented a paper at a joint Duke/UNC environmental economics seminar. It was the largest audience for a research seminar he’s ever been a part of, and he said he was invigorated by the questions, comments and suggestions parried about during the proceedings. He hopes for more of the same during his semester in the Triangle.

“The Research Triangle area includes an amazing collection of researchers in environmental economics and policy, including those at UNC, N.C. State, Research Triangle Institute and several units at Duke,” Fullerton said. “Researchers at each of those universities and units have their own Ph.D. students doing research, and so the whole area is a hotbed of interesting activity in my field.”

Officials at Duke and UNC hope to convene a national climate change conference in the spring or summer. While the details are yet to be hammered out, Fullerton will play a valuable role, said Andrew Yates, a UNC-Chapel Hill environmental economist.

“Don brings instant credibility to any economic conference,” Yates said. “He is a master of analyzing policy, not just the obvious effects, but the not-so-obvious effects as well. Sometimes those indirect effects can be just as important.”

Climate change is a massive issue to tackle, one that doesn’t have any single, easy fix, said Billy Pizer, a Duke public policy professor who helped recruit Fullerton for the professorship. But economics sits at the center of it, said Pizer, also a faculty fellow with the Nicholas Institute for Environmental Policy Solutions.

“To solve climate change, we have to fundamentally change the way we use energy,” Pizer said. “That won’t happen without incentives to develop new, cleaner forms of energy. It’s much more complicated than just filtering water and getting smoke out of smokestacks.”