Environmental economist Dr. Laura Taylor makes the collaborative connections to ensure public policy aligns with smart economics.
NC State University environmental economist Dr. Laura Taylor has always loved the ocean and even grew up planning to become a marine biologist. That plan took a detour when she got to college and fell in love with the social science of economics. Yet the ocean is still part of her professional purview, as she works to help shape policy on issues that impact the environment.
Taylor, a professor in the College of Agriculture and Life Sciences’ Department of Agricultural and Resource Economics (ARE), is director of the university’s Center for Environmental and Resource Economic Policy (CEnREP). Established in 2001 under the leadership of Dr. Kerry Smith, ARE professor emeritus, the center provides expertise in economic research and outreach programs to promote forward-thinking environmental policy for the state and the nation. Its faculty members are actively engaged in economic research that addresses natural resource and environmental management problems.
Taylor pulls together the interdisciplinary teams to tackle challenges and to guide the forward motion of policy makers, assisting their understanding of the economic effects of national or local environmental policies. And she’s doing this at home and around the world. Most recently, Taylor advised the government of Chile on ways to update their economic assessment of policies designed to reduce air pollution in Santiago and other cities.
The reason a center such as CEnREP was needed, says Taylor, “and the reason that it exists today is to help solve the big hairy challenges: feeding an expanding population under increased water stress, climatic variations, storms and droughts; urban and rural water pressures and conflicts; and creating energy solutions that are sensitive to the water-energy-food nexus.”
Whether the solutions to the challenges are technical or engineering solutions, she says, “None of them succeeds unless we understand the human dimension.”
A key aspect of understanding that human dimension is the economics – and in this context, economics means understanding how people will respond to the incentives of various policies and understanding what kinds of impacts policies will have on communities and constituents.
“The tools we use in economics to understand how people interact with the environment, with each other and with policy are critical to develop solutions that work in the real world,” Taylor says. “If the economics aren’t aligned, it’s going to be very difficult to get solutions that the community can support. Smart public policy typically is aligned with smart economics.”
That’s where CEnREP comes in.
The center was established as a means to elevate and integrate the work of NC State economists into the interdisciplinary research and outreach and engagement and extension across the university, Taylor says. As center director, she identifies opportunities for research partnerships among her colleagues at NC State, across disciplines and across colleges.
A key goal of the center is “to provide the economic basis for management solutions to environmental challenges we face and to add an economic dimension to the policy process focused on the environment,” Taylor says.
“The environment is at the heart of what we do, whether it’s agriculture, energy or water resources, wildlife conservation or thinking about how land-use change impacts all of these things. One of the nice things we do as economists is we cut across many environmental domains – including energy, air quality, water quality, water quantity, land use, urbanization, loss of farmland, wildlife management – and the public policies that address all of these. We work in all those dimensions, because economics is the fundamental component of the decision-making process, for addressing any of these problems.”
Current CEnREP research projects and study areas include the impact of voluntary and mandatory water restrictions on residential water consumption; estimating how water reuse systems impact household outdoor irrigation choices; estimating the monetary benefits of improving water quality in North Carolina’s fresh and saltwater bodies; designing optimal management strategies for endangered and invasive species; improving management of wildlife habitat for migratory birds along the Outer Banks; improving regulations for harvesting game animals; estimating the impacts of offshore wind development on the state’s tourism economy; and estimating the cost to local fishermen of potential off-road vehicle restrictions on Cape Hatteras beaches, where the National Park Service seeks to rehabilitate piping plover and sea turtle populations.
“So often when people think of economics, they think of it in a context almost like they think of accounting: Is it profitable or not? Will this make a business money? But that’s not how we harness economics. Economics is a social science, where we try to understand how people respond to all sorts of incentives, not just the profit motive,” Taylor explains. “We try to make tangible some of the intangibles about the environment, like the value of our ecosystem in sustaining our communities and our quality of life. This is a really important component of what we do at the center.”
Taylor thinks of the center’s work as “the stewardship of our natural capital: Our natural resources and our environment sustain us in so many ways, and it isn’t just in production of goods we directly consume. It’s in our recreation opportunities, our health and frankly our well-being and quality of life.”
In addition to undertaking high-quality research, center scholars advise and train policy makers and practitioners in educational workshops. They also serve on advisory boards for organizations such as the U.S. Environmental Protection Agency and North Carolina Sea Grant, as well as the North Carolina Legislative Commission on Global Climate Change and the Offshore Energy Exploration Study Committee of the North Carolina General Assembly.
This past July, Taylor was a featured speaker at the North Carolina Coastal Federation’s forum, “Shaping Our Economic Future: Offshore Drilling in North Carolina.” There she addressed the economic implications of oil and gas exploration and development, specifically the economic considerations for North Carolina.
“My particular role was to talk about the broad-based economic impacts in terms of energy prices for North Carolinians and energy security as a national policy. My message was to make sure folks understood that the amount of oil and natural gas that is believed to be directly off the N.C. coast is so small relative to the overall production of natural gas and crude oil in the United States, and indeed globally, that it is assuredly not going to have any impact on general energy prices and indeed no impact on energy security as we typically refer to it,” she says.
It will not change energy prices to drill off North Carolina’s coast, she says, because “it’s such a small part of a very large global market in the case of oil and a very large market in the case of natural gas. I liken it to opening one more McDonald’s restaurant in Durham. It’s not going to change the price of fast-food meals for residents of Durham or citizens of the state.”
Taylor says that “based on estimates of the resource size I have seen, I would expect no effect in gasoline prices if resources in North Carolina are developed.” And, she adds, if energy security is defined as reduced purchasing from international partners, then the drilling will not be the answer: “The amount of oil off our state’s coast is not enough to stop our dependence on a foreign oil source.”
She also notes that “the No. 1 entity that we import oil from is Canada. In 2014, we imported more oil from Canada than from OPEC as a whole. Folks don’t realize what a relatively small share is currently coming from OPEC countries. It’s not what it was back in the ’70s.”
As for natural gas, she says, “We are already energy independent. We are a net exporter of natural gas. So adding more doesn’t make you any more independent.”
In making such analyses for decision makers, environmental economists think about the benefits and the costs – the benefits of environmental protections and what trade-offs have to be made to attain those protections, she says.
“You may very well want to drill for oil, but you should understand what the trade-offs are. It is not without risk,” she says. “And my point at that conference was to clarify the rhetoric about some of the benefits there may or may not be for North Carolina.”
Water quality issues – and the CEnREP’s community-of-scholars approach – are center stage in a relatively new and important program: the Research Network on Water Solutions (ReNeWS). Taylor and colleagues from NC State received a NC State Research and Innovation Seed Funding grant to help build a campuswide community-of-practice that works to create a systems-level understanding of water issues and their innovative solutions.
“ReNeWS is an example of the center trying to elevate interdisciplinary work around particular themes, in this case water,” she says. “We’ve had a terrific year building connections among water resource scholars across campus, engaging faculty from seven colleges and over 20 departments, centers and institutes located at NC State.”
She also notes that, as a result of new connections made through ReNeWS, a team from NC State’s CALS, College of Natural Resources, College of Sciences and College of Design got together and submitted a multi-university proposal to the National Science Foundation. The proposal is focused on understanding how upstream land-use decisions in the Neuse and Tar-Pamlico watersheds affect estuarine health in the Pamlico Sound.
“The proposal merges natural sciences with social sciences and explores how to manage upstream land-uses when people who bear the costs of regulations (landowners upstream) are not necessarily the same people that directly benefit from the regulations (coastal residents and businesses),” Taylor says.
Another center project she highlights is a recent $800,000 award from the U.S. EPA to estimate the economic benefits of stream water quality improvements in urbanizing watersheds – such as the Upper-Neuse watershed that includes the rapidly growing Raleigh-Durham metropolitan area.
“We are teaming up with faculty in the departments of Civil, Construction and Environmental Engineering to use an ‘ecological production function’ approach for valuing in-stream water quality,” she says. “A lot of researchers are very interested in our ability as environmental economists to value ecosystem services in a dollar-context.”
Dr. Roger von Haefen, the associate director of CEnREP, is the lead investigator of this project, where, she says, “we go beyond predicting changes in ecosystem services that people care about to actually placing a dollar value on improvements in those ecosystems. Only by understanding how people value water quality in the streams near their homes can we do a complete benefits-assessment for any policy designed to improve lake water quality, since ancillary benefits always come from cleaning up the streams that feed the lakes.”
The center is also committed to preparing the next generation of leaders in environmental economics. CEnREP faculty members teach a variety of natural resource and environmental policy courses at the undergraduate and graduate levels both in CALS and the university’s College of Management. “We offer five sections each year of environmental economics and policy at the undergraduate level, a master’s class, and we have a Ph.D. field with very successful students,” Taylor says. “Our students are doing state-of-the-art economic analysis that matters and has real-world impact.”
And, with a focus on mentoring graduate students, CEnREP’s Camp Resources is an internationally known summer intensive workshop where graduate students present their work to each other and to senior faculty members and mentors from universities, government agencies and think-tanks from around the country. While the first one was held in Beaufort, typically the camp is held in Wilmington or Asheville.
Camp Resources was founded by Kerry Smith, Taylor says, “and he purposely set it up to essentially sequester people away for a couple of days with faculty from around the Triangle.
“We have in the Triangle probably one of the largest concentrations of environmental economists in the United States. We’re nationally known as having a tremendous amount of activity in economics research focused on the environment and natural resources. So we invite graduate students from around the country, and they come and they present their work much like in a conference format. But they are able to present their work at earlier stages and get feedback from the faculty who work in the Triangle. It’s designed to be high quality and high contact.”
Taylor calls the workshop a wonderful way for students to begin to network – and not just with faculty members: “They form lifelong relationships with each other. They get to see what other students across the country are working on – the cutting edge research that’s happening outside of their university.
“And now graduates of Camp Resources are faculty members and are sending their students,” she says. “We have alums at so many research institutions around the country, it’s amazing!”
In fact, one graduate is Taylor herself, who, as an NC State Ph.D. student in economics, presented at the very first Camp Resources, in Beaufort.
Laura Taylor is a North Carolina girl, who grew up in Lexington and loves her hometown barbecue. She graduated from Central Davidson High School, then earned her undergraduate degree in economics from UNC-Asheville and her master’s at Duke before coming to NC State for her doctorate.
“I’m a proud graduate of North Carolina universities,” she says. “I’ve grown to appreciate how much the state of North Carolina gave to me and my family by supporting higher education, so I can have the life that I have now.”
It was at UNC-Asheville that she found her calling. “I took an economics class, not really knowing what that would be like, thinking that it would help me manage the money that I was destined to make one day! I quickly learned that is not at all what it’s like or about. It’s a social science; it’s about how people make decisions. And it was because of a fantastic teacher, Dr. Pamela Nickless, that I just fell in love with the subject area. Actually all the faculty at UNC-A were so supportive.”
It was their mentorship “that led me to the path of going to grad school in economics and truly changed my life,” she says. “Then, here at NC State, Kerry Smith, my dissertation adviser, also was an incredible mentor. He taught me not just about economics; he was a role model in how you mentor students, how you put your heart and soul into the work that not just you are doing but what others are doing. I try to live up to his example daily.”
After earning her Ph.D., she moved to Atlanta and worked for 12 years at Georgia State University in the Andrew Young School of Policy Studies. Then, “I was honored to be able to come back to NC State,” says Taylor. Since returning, she has won the prestigious Leopold Leadership Fellowship, one of just 20 environmental researchers to win the award in 2013.
Now, her ever-busy slate includes participation in the college’s 2015 Stewards of the Future conference, speaking on “Quantifying the Economic Benefits of Water Quality Improvements in North Carolina.” She’s also co-lead on the Sustainable Energy Systems and Technology cluster at NC State that aims to hire four interdisciplinary researchers over the next two years, and the center is taking part in the Global WASH (Water, Sanitation and Hygiene) cluster, as well.
“That’s really an important topic, when nearly a billion people don’t have access to safe water for just basic human needs,” she says. “This also will be an interdisciplinary group when the hires are completed.”
And that, of course, is right in her wheelhouse.
“Economists so often can be such great connectors amongst the disciplines. We’re quantitative social scientists, skilled in both statistics and modeling, and we often dovetail very well with our natural science and engineering colleagues,” she says.
“Think about a Venn diagram: As we each think about an approach to answer environmental questions, our little circles overlap. We begin with a little bit of overlap, and that’s our common ground to start on. Then we work hard to build the bigger overlap.”
And come full circle to smart solutions for the environment.