Workshop: "Integrating Economic and Financial Principles into Environmental Engineering Research and Education, January 2011, Washington DC Metropolitan Area

University Of North Carolina At Chapel Hill, Chapel Hill NC

Investigators

Abstract

Abstract PI: Gregory W. Characklis Proposal Number: 1041730 Institution: Univ. of North Carolina ? Chapel Hill Title: Integrating Economic and Financial Principles into Environmental Engineering Research and Education Decisions regarding society?s most challenging environmental problems are made with attention to both scientific and economic arguments, with economic criteria playing an ever-larger role. Economic terms and concepts are now ubiquitous in environmental policy debates, with discussions over climate change mitigation often revolving around ?discount rates?, while concerns over ?equity? frequently play a prominent role when considering activities designed to promote sustainability. Even when discussing more traditional regulatory themes (e.g., drinking water standards), cost-benefit analysis has become a common and, in some cases, federally mandated part of regulatory decisions. Economic principles also play an increasing role in the development of new regulatory schemes, with market- or incentive-based approaches receiving more attention. Similarly, financial theory is being increasingly employed in the development and deployment of innovative solutions to environmental challenges in both the developed (e.g., project finance) and developing world (e.g., microfinance). The ability of the environmental engineering community to more fully engage in this expanding range of environmental activities will be greatly enhanced by the capacity to incorporate economic and financial principles into its research, as well as the ability to describe research outcomes in economic terms. There is a growing societal need for researchers that can simultaneously consider the engineering, economic and financial implications of a given course of action, yet few research and educational programs are set up to meet this demand. Many opportunities for such interdisciplinary research exist, with communication between the fields greatly facilitated by each discipline?s dependence on a logical framework and mathematical underpinnings. These fields also complement each other well in that engineering knowledge is often critical in determining the costs of mitigating environmental impacts, while economics provides methods of valuing the benefits of environmental quality improvements. Financial theory, meanwhile, can often be effectively applied to improve understanding of the best implementation paths by which a particular environmental objective might be realized. A better understanding of economic and financial principles will provide environmental engineers with the tools to address an expanding range of research opportunities, as well as the means to more effectively describe the value of their contributions to policymakers and society at large. The proposed workshop represents an important first step toward expanding the environmental engineering field into new areas. It will involve a broad and diverse set of researchers, professionals and other stakeholders (e.g., regulatory agencies), and will be designed to provide a forum for discussing interdisciplinary research involving environmental engineering, economics and finance. The specific objectives of the workshop will be to: 1. Explore and evaluate the range of opportunities that could be more effectively addressed by the environmental engineering community with an improved understanding of economic and financial principles; 2. Identify the principles and tools that would be most useful in allowing the environmental engineering community to take advantage of these opportunities; 3. Develop suggestions regarding how environmental engineering and science curricula might be adapted to introduce students to economic and financial principles and tools; and, 4. Consider how economic and financial concepts can be used to highlight the intellectual and economic value created by the environmental engineering community, while increasing its influence on society?s environmental choices. A final project report will be developed around these four objectives, with additional sections identifying recommendations for follow-up to promote new research opportunities, as well as the tools and skills necessary to move into these areas. The final report will be disseminated on-line through the Association of Environmental Engineering and Science Professors (AEESP) website, and promoted during the AEESP?s 2011 meeting.