One of the most effective ways to protect the environment is to make markets work for environmental goals rather than against them, using tools such as tradable permits and payments for ecosystem services. But doing that requires measurements and data: How much of a resource exists, how is it changing, and what is it worth to society? Until recently, that information hasn't been available to the decision-makers developing environmental policy.
A new Caltech lab will soon bridge that gap—combining economics, policy design, and new measurement tools such as satellite imaging and machine learning to inform environmental policy. The lab is being established through a $7 million infusion of funding from the WHH Foundation, a private family philanthropic organization.
"Good environmental policy design requires input from multiple fields," says Prakash Mishra, assistant professor of economics, who will co-lead the lab with Hannah Druckenmiller, assistant professor of economics and a William H. Hurt Scholar. "We need access to remote-sensing data; an understanding of interactions across ecosystems and biomes, which natural scientists supply; and a clear framework for how to trade off the opportunity to develop with the costs of growth on these ecosystems. This lab brings these tools together, with an end goal of proposing policy design."
The new Policy and Environmental Research on Markets, Institutions, and Trade, or PERMIT, Lab will bring together an interdisciplinary team of graduate students, postdocs, and researchers who share the common purpose of exploring environmental policy that strikes a balance between protecting the environment and allowing for development.
"The most exciting thing about the WHH gift is that it will allow us to invest in people over the long term," Druckenmiller says. "We can now support graduate students and postdocs for long enough to build the unique combination of skills in economics, policy, and environmental measurement that make a real impact on environmental policy. That time also helps grow our lab members into leaders in the field."
The WHH Foundation was founded by the late William H. Hurt, a longtime friend of the Institute, member of the Caltech Associates, and former Capital Group Companies executive, who supported research and teaching endeavors at Caltech. For example, he and his wife previously endowed the William H. Hurt Scholars Program to support early-career faculty, like Druckenmiller, and multidisciplinary research. The new grant from their family foundation will provide funding support for 10 years of lab activities.
"We are thrilled to partner with the WHH Foundation on this new HSS initiative," says Tracy Dennison, the Edie and Lew Wasserman Professor of Social Science History and Ronald and Maxine Linde Leadership Chair of the Division of the Humanities and Social Sciences. "Programmatic funding from the foundation will enable the PERMIT Lab to recruit and retain exceptional researchers, helping Hannah and Prakash create the kind of interdisciplinary lab environment that their research requires."
Collaboration is a key focus of the lab; the team plans to work with scientists and engineers at Caltech who have developed or use measurement tools that can help answer policy questions. Druckenmiller and Mishra have active collaborations with faculty and students in the Division of Engineering and Applied Science and the Division of Geological and Planetary Sciences as well as with several groups at NASA's JPL, which Caltech manages for the agency. To build an audience for sustainability policy on campus, they also engage with Caltech's Resnick Sustainability Institute and with the Linde Center for Science, Society, and Policy, which have brought economists and scientists in the sustainability space to campus and funded early-stage research.
"We are also hopeful that, over time, our lab alumni move on to opportunities at universities, policy-facing think tanks, or in government," Mishra says. "The opportunity to keep in touch with this network will open doors to collaborating with organizations outside of Caltech."
Beyond collaboration, Mishra says the long-term investment will allow for researchers—himself and Druckenmiller included—to work on ambitious multiyear projects with large-scale data collection efforts. These efforts may focus on continental land-protection strategies and the US-wide ramifications of regulation or even global forest cover.
"Building expertise at this scale requires long-term thinking and lots of dedicated smart people looking at the same data in order to make informed choices," he says.
Druckenmiller notes that she and Mishra are also committed to ensuring that the lab's work is actually used by decision-makers and not just published in academic journals. Caltech, with its strengths in science and engineering, and its expertise in remote sensing through partnerships with JPL, is the ideal place to do this work, she says.
One example of the work the lab will support is a wetlands project led by Druckenmiller. Wetlands are a valuable resource; they provide water filtration and wildlife habitats, and absorb floodwaters. But, Druckenmiller notes, it is difficult to factor that value into decisions about whether a wetland should be conserved or developed, in large part because it is hard to measure. In collaboration with Caltech's Georgia Gkioxari, assistant professor of computing and mathematical sciences and electrical engineering and a William H. Hurt Scholar, Druckenmiller is developing methods to use AI to estimate the value of ecosystems, location by location, across the entire country, starting with the flood protection value of US wetlands.
"If it works, it will give communities and regulators a clearer picture of what is at stake when an ecosystem is lost," Druckenmiller says.
In another ongoing project, Mishra is trying to understand a deceptively simple question: How much should beef cost? The production of beef involves large environmental costs that include water consumption and the emission of methane, a greenhouse gas. In Brazil, especially, beef production has led to deforestation. But many of these costs don't show up in the price of beef at the meat counter.
"To understand the trade-off, we are working on bringing together global data on cattle stocks, long-run deforestation, and consumers' meat consumption habits both here in the US and around the world," Mishra explains. "This approach allows us to think in the long run about how our meat production system should be designed."
Understanding the incentives to consume meat and how either investments in technology (feedlots or engineered feed) or direct environmental policy (taxing a beef farmer for methane emissions) is a critical sustainability challenge that requires new data and globally consistent measurement, Mishra says.
"As a multigenerational foundation, we recognize how important it is to address climate resilience," says Alyson Sattler, executive director of the WHH Foundation. "Funding the lab is an investment in Hannah and Prakash's leadership and vision, and their ability to propel a new generation of scholars and individuals who will actively pursue solutions by leveraging data and AI to more thoughtfully reframe environmental policy for the future."