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The "Clean Development Mechanism" (CDM) contained in the December 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change provides, for the first time, the capacity for industrialized countries to claim credits for greenhouse gas (GHG) emissions reductions or offsets undertaken in cooperation with host developing countries. However, the Protocol provides no guidance on how these cooperative activities for GHG reduction and sustainable development would be undertaken in practice, including the particularly important issue of the relationship of the private sector vis-à-vis government institutions in designing, financing, and securing approval for jointly implemented GHG abatement projects. The pilot program for "Activities Implemented Jointly" under the Framework Convention provides an opportunity to better understand the practical constraints and opportunities for successful private sector participation in the CDM. This paper highlights some of the lessons for establishing a successful CDM by examining a small number of cases from the United States Initiative on Joint Implementation (USIJI). We first review the objectives, proposal review and evaluation criteria of this program, and provide some overall information on project proposals by project type and stage of development. We then develop case studies of two energy-related USIJI projects from the earlier phase of the program. These cases illustrate several potential problems that can arise in establishing CDM transactions. Further investigation of more recent cases sheds some light on the extent to which these problems change over time. To be successful, the CDM must be based on a solid institutional footing, with clear incentives for all parties involved. The cases we examine illustrate how transactions can become entangled in the same kinds of problems that bedevil other transactions in developing and transitional economies. In both early cases, "transaction costs" were substantial. The latter projects indicated that while the nature of transactions costs changed over time, they still remained somewhat substantial. Project proponents regarded gaining USIJI acceptance as one of the principal impediments to JI project development. The cases also illustrate the need for clear and widely understood goals and procedures for investor country approval. In addition, the analysis underscores how attitudes of different project proponents regarding the value of GHG credits can affect their perspective on the transaction. Finally, the study underscores that financing remains the ultimate hurdle to project implementation, and that the expectation of a clear financial return on investment is a prerequisite to a successful project.

The World Trade Organization Sanitary and Phytosanitary Agreement (SPS Agreement) relies heavily on science and expert organizations to avoid and resolve trade disputes over measures enacted under the rationale of food safety or plant and animal health protection. However, the state of science for sanitary and phytosanitary risk analysis is highly uncertain, and the SPS Agreement leaves many science policy issues unsettled. The international agencies charged under the SPS Agreement with harmonizing standards and forging international scientific consensus face a daunting and politically-charged task. Two case studies are briefly developed. In the first case, the international scientific consensus strongly supports the U.S. challenge of the European Union's ban on cattle growth hormones, but the root causes of the dispute go much deeper. The case suggests that establishing a precedent for SPS measures based solely on "sound science" may be a slippery objective. In the second case, domestic avocado producers challenged a U.S. Department of Agriculture assessment which concluded that a partial lifting of the ban on Mexican avocado imports posed a negligible plant pest risk. Although the Department's phytosanitary risk assessment gained endorsement by independent scientists, a contributing factor to resolving this dispute was the threat of retaliation against U.S. agricultural exports to Mexico. A recent survey of current and proposed technical barriers to U.S. agricultural exports suggests that the trade impacts could approach $5 billion a year and that the most common SPS disputes in the future will be over biological hazards--particularly plant pests and foodborne microbial pathogens. This poses a tremendous challenge, however, because the practice of risk assessment for biological stressors is much less developed than that for chemical substances. The paper concludes with some proposed criteria for evaluating the weight of scientific evidence in SPS risk assessment.

This paper reviews the risk assessments prepared by the U.S. Department of Agriculture (USDA) in support of regulations implementing the Conservation Reserve Program (CRP) and Environmental Quality Incentives Program (EQIP). These two natural resource conservation programs were authorized as part of the 1996 Farm Bill. The risk assessments were required under the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994. The framework used for the assessments was appropriate, but the assessments could be improved in the areas of assessments endpoint selection, definition, and estimation. Many of the assessment endpoints were too diffuse or ill-defined to provide an adequate characterization of the program benefits. Two reasons for this lack of clarity were apparent: 1) the large, unprioritized set of natural resource conservation objectives for the two programs and 2) there is little agreement about what changes in environmental attributes caused by agriculture should be considered adverse and which may be considered negligible. There is also some "double counting" of program benefits. Although the CRP and EQIP are, in part, intended to assist agricultural producers with regulatory compliance, the resultant environmental benefits would occur absent the programs. The paper concludes with a set of recommendations for continuing efforts to conduct regulatory analyses of these major conservation programs. The central recommendation is that future risk assessments go beyond efforts to identify the natural resources at greatest risk due to agricultural production activities and instead provide scientific input for analyses of the cost-effectiveness of the conservation programs.

This study analyzes the local regulatory and non-regulatory determinants of ambient air quality in Allegheny, Baltimore, and Cuyahoga Counties over the period 1972-1992. Mandated pollution control investments appear to have often had a statistically significant effect in reducing maximum concentrations of suspended particulates and tropospheric ozone in these areas. The effects of regulatory air quality controls, however, generally have been overshadowed by the impacts of non-regulatory factors. In general, local regulatory and nonregulatory factors failed to account for a majority of the variation in local air quality. This underscores the importance of regional or national factors in determining local air quality.

This paper assesses the constraints and opportunities for private-sector participation in Activities Implemented Jointly under the United Nations Framework Convention on Climate Change. After some initial background, the discussion turns to the United States Initiative on Joint Implementation (USIJI) - its objectives, proposal review and evaluation criteria, and a classification of project proposals by project type and stage of development. Two USIJI projects are developed as case studies. One case is an energy end use project that has gained formal acceptance and financing. The other case is an energy production project proposal that has not secured acceptance or financing. In both cases, transaction costs were substantial, and project proponents regarded gaining formal host country acceptance as the principal impediment to project development. The cases illustrate how the host country JI project approval process can become entangled in broader struggles over economic reforms. The cases also suggest that JI project proponents may have divergent perspectives on the speculative value of greenhouse gas (GHG) credits. An enforceable cap on GHG emissions in the project funders' countries, which is a prerequisite to establishing any market for the credits, is contrary to the position of energy and power suppliers who promote voluntary emissions reductions. For emissions reduction technology firms, however, establishing a value for GHG credits would help generate demand for the firms' stock in trade. Finally, the study underscores that not withstanding transaction costs associated with JI proposal development and acceptance, financing remains the ultimate hurdle to project implementation.

This paper discusses EPA's acquisition and use of science in a decision under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA): the 1983-84 suspensions of ethylene dibromide (EDB); and in a decision under the Toxic Substances Control Act (TSCA): the 1989 Asbestos Ban and Phaseout Rule. By requiring EPA to balance the risks and benefits of the commercial use of toxic substances, both statutes place considerable analytical burdens on the agency, though TSCA places a more substantial burden on EPA for acquiring science and demonstrating unreasonable risks. In the case of EDB, data produced outside EPA over which the agency had no control incited a public alarm. Because a senior EPA official had contaminated the agency's reservoir of public trust by cooking the scientific data to provide regulatory relief, EPA had no credibility to portray the health risks of EDB in an objective manner. In the case of asbestos, the reviewing court, despite its limited scientific capability and lack of political accountability, substituted its own science policy judgment for that of politically accountable decision-makers of the more expert administrative agency. The court was arguably invited to do so, however, by the substantial evidentiary judicial review standard specified for TSCA by the legislature. Both cases illustrate the need for and difficulty of generating and considering scientific information regarding tradeoffs among risks in environmental regulatory decision-making.

This paper discusses EPA's acquisition and use of science in addressing dioxins (and other organochlorines) from the pulp and paper industry under the Clean Water Act and lead in soil at large Superfund mining sites. The common thread between both cases is the challenge posed by administering national pollution control programs while considering site-by-site variability in factors that influence environmental risks. In the first case study, high levels of dioxin in fish downstream of pulp and paper mills were inadvertently detected in 1983 as part of an EPA effort to determine background levels of dioxin in areas presumed to be relatively uncontaminated. These findings quickly got the release of dioxins from pulp and paper mills on EPA's research agenda. News reports beginning in 1987 elevated the issue onto the regulatory agenda, but more than a decade has passed without EPA taking final regulatory action. Meanwhile, the pulp and paper industry has dramatically reduced, but not eliminated, dioxin discharges from mills. The key scientific issue now confronting EPA decision-makers is how much weight to give to a water quality indicator called AOX. AOX is not statistically related to dioxin at the levels under consideration. Environmentalists justify using AOX because it serves as a surrogate measure for the entire toxicologically uncharacterized "soup" of organocholorines discharged from bleaching mills. Additionally, EPA estimates that discharges of dioxin from plants at levels below the analytical detection limits will continue to result in exceedances of stringent federal ambient water quality criteria under some local conditions. Industry counters that reductions in AOX do not achieve any measurable or monetizable environmental benefits. This case illustrates EPA's use of science to evaluate the cost-effectiveness of nominally technology-based water pollution controls. In the second case study, the Superfund program does not have the option of following its standard operating procedures for evaluating risks and determining Preliminary Remediation Goals for lead-contaminated sites because EPA has no numerical health-based standard for ingested lead (the agency's goal for lead is based on the level of lead in children's bloodstream). The study, therefore, illuminates the challenges and opportunities posed by developing and using rigorous site-specific scientific information. Potentially Responsible Parties (PRPs) generated rodent bioassay data which suggested that the bioavailability of lead in soil at mining sites would be much lower than EPA's default assumption. However, the agency disputed the validity of using mature rodents as animals models for the population of concern, children. In response, EPA conducted experiments with juvenile swine. The results indicated considerable variability in the bioavailability of lead in soil among the sites tested, with some higher, some lower, and some about the same as the agency's default assumption. Consequently, EPA cannot generalize across sites where similar mining activities occurred or draw any general distinctions between different types of mining sites, as had been presumed. This case illustrates that selection of the most appropriate animal model for toxicological studies involves tradeoffs between cost, experimental power and control, fidelity to human physiology, and the value of information for decision-making. Determination of the "optimal" animal model depends on the evaluative criterion being used. Although the new scientific data generated by EPA suggests higher bioavailability of lead in soil at some sites than the agency's default assumption, in terms of the final remedy selection, it appears that all of the results will be either beneficial or essentially neutral to Large Area Lead Site PRPs because EPA deems the cost of removing the contaminated soil to be excessive.

This paper discusses EPA's acquisition and use of science in two decisions under the Safe Drinking Water Act: the 1991 revision of the lead drinking water regulations and the 1995 decision to pursue additional research instead of revising the arsenic in drinking water standard. In the first case, a committed band of policy entrepreneurs within EPA mobilized and supplemented scientific information which had accumulated in the agency's air program to force lead in drinking water up the agency's regulatory agenda. In the minds of senior EPA decision-makers, there was adequate science to justify making the lead in drinking water regulation more stringent; the critical question was "how far to go" in terms of regulatory compliance expenditures. To the extent that the agency's use of science increased the regulatory benefits estimate, it could rationalize more stringent and costly regulations. In the case of arsenic in drinking water, not only the scientific uncertainties in estimating the health risks but also the regulatory compliance costs, the distribution of those costs, and the presumed public health impacts of delay were important in the decision to pursue additional research on the health risks of arsenic. However, because EPA decision-makers have failed to articulate what they consider to be compelling scientific evidence to justify departing from default risk assessment procedures in this case, it seems less likely that future research will facilitate future decision-making. Both cases illustrate impediments to the generation of scientific data needed for regulatory decision-making, the potential for scientific information to be distorted in or omitted from the regulatory decision-making process, and the key roles played by intermediaries between scientists and decision-makers within EPA.

This paper discusses EPA's acquisition and use of science in two decisions regarding National Ambient Air Quality Standards: the 1987 Revision of the NAAQS for Particulate Matter and the 1993 Decision Not to Revise the NAAQS for Ozone. In the first case, more than ten years before EPA proposed to revise the NAAQS for particulates, narrowly-scoped results of academic experiments suggesting that the agency should focus its regulatory efforts on smaller diameter suspended particulates penetrated deep into the agency, far removed from decision-makers in Washington. The particulates review was elaborate and protracted and was promoted and inhibited by multiple factors. Due to the lengthy review period, however, researchers involved in complex epidemiological studies were able to produce information which bore directly on regulator's questions prior to the final decision. Such is a rarity given the normal mismatch between the pace of regulatory decision-making and the time required to produce, analyze, and verify original scientific data. These studies observed an increase in respiratory ailments in children at particulate concentrations experienced in U.S. urban areas and suggested the lack of a discernible threshold in the relationship between particulate levels and mortality. Furthermore, as the decision was being finalized, the agency leadership was warned that forthcoming studies would probably suggest health concerns at even lower levels than the lowest end of the proposed range. In the case of ozone, political factors and a divided Clean Air Science Advisory Committee (CASAC) led to a 1992 proposal by EPA Administrator Reilly not to revise the NAAQS for ozone. Administrator Browner essentially inherited this decision during the transition period between the Bush and Clinton administrations, and although the role of science in the final decision-making was not substantive, the scientific review process was considered. The ozone case study illustrates that an elaborate and lengthy NAAQS review process is required to make science available for consideration by EPA decision-makers and that policy disagreements within CASAC provide the Administrator with a justification to not revise the NAAQS on the basis of "scientific uncertainty." Both cases provide examples of non-agency scientists operating in multiple, overlapping roles inside and outside the regulatory decision-making process. The NAAQS case studies also underscore that the Clean Air Act is based on the false scientific premise that a threshold level exists below which health effects from ubiquitous air pollutants will not be observed. As a consequence of this mistaken legislative presumption, new scientific developments inevitably point toward ever more stringent ambient standards and preordain--in principle--the outcome of periodic reviews of the scientific basis of air quality regulation. In practice, EPA's response has been to delay the inevitable.