Natural Resource Economics Expert to Join YSE Faculty

For economist Karl Aspelund, the most intriguing issues surrounding sustainability and conservation are the trade-offs between societal and private gains and losses and how policy can be designed to meet the end goal of better environmental management.

Aspelund, who will join the faculty at the Yale School of the Environment July 1 as assistant professor of environmental and natural resource economics, examines environmental regulations, with a focus on market-based mechanisms, such as cap-and-trade programs and carbon offset markets, and simulating alternative policy frameworks.

“I came into economics from a concern and fascination with environmental problems,” he said. “I’m interested in examining how you can design effective policy around multiple stakeholders with different goals.”

Aspelund earned a bachelor’s degree in environmental science and public policy from Harvard University and a doctorate in economics from the Massachusetts Institute of Technology. His path to economics, however, wasn’t linear. Born in Iceland, Aspelund moved to Rhode Island when he was young. He formed an appreciation for the beauty of natural environments during summer vacations spent with his grandparents back in Iceland. His academic interests were initially in chemistry and physics, but at Harvard he became interested in the social sciences. He was drawn to the question of why environmental problems were so difficult to solve.

While there, he took classes at the Harvard Kennedy School and interned for Rhode Island Senator Sheldon Whitehouse, where he was exposed to the intricacies and challenges of environmental policymaking.

“Environmental sustainability efforts often have many — sometimes competing — goals underneath them. There are societal marginal damages and private marginal damages. Policies should account for that heterogeneity and our interest in equity,” Aspelund said.

He continued to pursue his interest in policy frameworks while at MIT, examining regulations in environmental markets.

In one study on environmental permit markets in Iceland’s fishery industry, he found that permit trading makes fisheries more efficient but reduces jobs and shifts income to higher paid workers. However, if the regulations require firms that have permits to use them as opposed to leasing them, and trade in permits were limited to specific groups, the market would protect employment and low-income workers while preserving much of the profit gain.

In another study, Aspelund explored additionality in the Conservation Reserve Program. Administered by the USDA Farm Service Agency, the voluntary program pays agricultural landowners and operators to remove land from crop production and to plant species that will reduce soil erosion and restore wildlife habitats. The landowners can bid against others for the payment by listing the amount of money they want to be paid to conserve the land from agricultural use. Additionality is a term for land that would have been conserved anyway by the land manager without any payments.

Aspelund and coauthor Anna Russo, a junior fellow at Harvard, found that about three out of four land managers who were paid to conserve the land would have conserved the land even without a payment. They also found that the program tends to reward land managers who ask for the lower payments. Aspelund and Russo recommended that the auction should consider how much environmental change the payments will promote and not just award the payments to land managers who are asking for the least amount of money.

“Karl's incredibly exciting research examines the nuances of using markets to tackle core questions of environmental sustainability. He'll bring cutting-edge industrial organization tools to bear on a wide range of environmental economics questions,” said Benjamin Olke, TEPCO Professor of Economics at MIT and Aspelund’s advisor.

Aspelund said he was interested in coming to YSE because of its innovations in nature-based climate solutions including forest offsets, soil carbon, and reforestation.

“YSE brings together world experts across science, social science, and humanities, all thinking together about environmental challenges,” he said.

Kenneth Gillingham, the Grinstein Class of 1954 Professor of Environmental and Energy Economics and senior associate dean of academic affairs, said Aspelund’s research is advancing the field of natural resource economics.

“We are thrilled to have Karl Aspelund join us at Yale to share his expertise in the management of natural resources. His models leverage economic theory to provide keen insights and potential solutions to some of the most intractable environmental problems in a way that balances the interests of many stakeholders,” Gillingham said.