The Journey to Green Economies: Essays at the Intersection of Public Policy, the Market, and Environmental Sustainability

As problems like rising temperatures, declines in global biodiversity, and the great pacific garbage patch can attest, environmental sustainability is arguably emerging as the issue of the 21st century. It is also an issue that holds the ignominy of being highly complex, and likely to influence every aspect of government and modern society. For many of the most difficult problems in environmental sustainability, like climate change or sustainable development, the pursuit of long-term sustainability is as much about the journey as it is the outcome. Across three essays connected by public policy, markets, and the environment, I detail some of the ways demand for greater environmental sustainability will change governments, firms, and society. I also offer a pathway for future research in environmental governance, environmental policy, and education. In chapter one, I explore the potential impact of unseasonably warm and cold temperatures, as expressed as variations from monthly averages, and particulate matter pollution (PM2.5), on three measures of input productivity for firms engaged in manufacturing: labor, capital, and total factor productivity (TFP). Results suggest that value-added labor, capital, and TFP are negatively affected by large variations in daily average temperatures. Both value-added labor and TFP are adversely affected by unseasonable warmth, while value-added capital is affected by unseasonable cold. Labor productivity is also negatively affected by increases in PM2.5. If climate change produces a warmer climate and less stable daily temperatures, this will have important implications for how firms allocate resources between labor, capital, and technology, and have ramifications for both labor markets and climate change adaptation policy.In chapter two, I exploit the unique longitudinal characteristics of the Thomson Reuters ESG database to investigate whether investors support efforts by firms to become more environmentally sustainable. Across three regions and three categories of environmental corporate social responsibility, I find evidence that investors often penalize firms for their environmental efforts. In North America, investors penalize firms for emissions efficiency and overall environmentalism; in Asia Pacific, they penalize resource efficiency; and in Europe, investors penalize environmental innovation and overall environmentalism. Globally, results show that a one unit increase in firm-level environmentalism on a 0-100 scale reduces market capitalization by about 75 cents per $100 of total capitalization. Likewise, building a passive portfolio of the top 10 percent of environmentally friendly firms underperforms the broader market. On average globally, investing $10,000 in the top 10 percent of firms for average environmentalism reduces the hypothetical investor’s annual returns by about $129.In chapter three, I investigate environmental sustainability within the context of Public Administration (PA). While greater preemptive research in environmental sustainability is needed, I show that PA research generally lags political and social changes to administrative organizations. I review the philosophical and practical difficulties of environmental sustainability as it relates to public administration, and I develop a framework for future research. Finally, I review MPA programs to see how environmental sustainability is treated by the field, and how PA is engaging with future researchers. Of the top 18 PA departments with MPA programs, four offer a specialized masters with a focus on sustainability, with nine offering at least one course using sustainability as the primary pedagogical tool. Teaching is primarily conducted by non-PA scholars, suggesting PA lacks proprietary knowledge of environmental sustainability.