Using economics to solve eco-challenges

We create and shape markets to reward cleaning up instead of polluting

EDF economist Daniel Dudek, Ph.D., is honored in China

EDF economist Daniel Dudek, Ph.D., was awarded China's National Friendship Award for designing market methods to reduce air pollution.

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Markets are a powerful force — for good or ill. They can enable great prosperity for millions and huge advances in technology.

But, when markets do not account for the true costs of pollution or overuse, they can fuel environmental degradation. Because of these failures, the world’s climate and fisheries are far worse off today than when EDF was founded.

Many were skeptical when we first proposed using well-designed markets to protect the environment. But our results show that markets and the incentives they create can attract brainpower and capital to solve environmental problems.

Acid rain pollution cut in half

In the midst of a divisive debate in the late 1980s, we proposed an innovative solution to cut acid rain pollution.

Under our plan, which became part of the Clean Air Act, government sets a cap on pollution. Companies decide how to meet that cap. This allows companies to use different methods to cut pollution, and choose the cheapest, most effective ones. As a result of the system, emissions were cut faster than expected, and at a fraction of the projected cost.

Giving fisherman a stake in the market

In 2006, regulators approved our proposed management method, catch shares, to end commercial overfishing of red snapper in the Gulf of Mexico. The new approach gives each fisherman a share of the catch, and a stake in the growth of the fishery. Catch shares have helped fish populations recover while increasing per-boat revenues by 80%.

Now, we’re helping to get more catch share programs up and running, such as the catch share for Pacific groundfish. And in 2010, our oceans experts literally wrote the manual on designing an effective catch share program, to guide fishing communities on how to achieve healthy fish populations and healthy economies.

Sharing our experience with others

We've developed the expertise in markets to engage the right participants, set ambitious targets and get the rules right. We know how to assemble the building blocks that support successful markets: good data, strong enforcement and the backstop of litigation.

You can follow our experts' commentary through the Market Forces blog and through our economics materials and seminars.