Monday, July 14, 2008

Corporate Environmentalism at UCLA

Exciting things are taking place at the UCLA Institute of the Environment. If the existence of a webpage is any sign, we now have an active New Research Center at UCLA focused on Corporate Environmentalism . What will this research center actually do?

Suppose that you work at a company located somewhere in Southern California (i.e metro Los Angeles). Your company might be wondering how AB32 Climate Change legislation will affect your company's profitability? or what new business opportunities California's climate change regulation might offer? Your company may sell products with green features such as LEED certified buildings or organic toothpicks (I'm kidding about this one). Alternatively, pollution may be a byproduct of your cement plant's production process.

We want to be talking to such firms and offering some cheap advice. Why do we want to talk? What is our stake? To quote a Sprite commercial; "what is our motivation?" My environmental economics class has over 100 students right now. I bet that it would have 200 if I uncapped enrollment. Many of my students are fascinated by free market environmentalism. They want to work for firms that are making money and are exciting and are "green". We need to identify business partners seeking smart, ambitious students to work for them.

My own motivation is that I want to learn more about how "real" businesses actually operate and make decisions that have environmental consequences. As I get to know these firms and as they get to know me, I'm hoping that they would trust me to share their data with me and perhaps be willing to run some experiments to learn about what works and what doesn't work in day to day operations. For example, what research have they done in terms of marketing plans and cost analysis in determining whether "green" varieties of their products truly offer profit opportunities? Have they run formal experiments to measure whether their consumers are willing to pay a price premium for green products? Consumers may say that they are willing to in feel good surveys but when they actually face a market choice do they "vote with their wallet"?

What will our Center do in the short run? We are arranging for business leaders to visit our Institute of the Environment to give presentations on what they are doing and what challenges they face in implementing their "green" business plans. Such presentations allow us to learn about such firms and introduce our students to such firms. Los Angeles is a diverse big city and UCLA needs to raise its intellectual profile. I get the sense that people think UCLA = basketball and USC = football. This simple formula vastly undersells both schools.

In the short run, I'm getting ready to go to the NBER Summer Institue next week and then to spend a few weeks in Berkeley, California. The Summer Institute is a good opportunity to remember Boston humidity and to hear some interesting environmental and real estate papers. I'm looking forward to seeing old friends and to work with some of my co-authors. Will it rekindle my love of Boston? I doubt it. I worked at Harvard for 2 years and at Tufts for 6 years. My 8 years in or close to the 02138 zip code were enough for now. California is the place to be. The Internet offers access to the ideas being generated in Cambridge.

Berkeley features my favorite in-laws who are eager to see their grandson. In August, I'll need to clean up a couple of "revise and resubmits" for good journals and get some papers ready for journals. I also have a big think project that I'm not ready to show to my blog readers yet. Just think of it as a poor man's Freakonomics for the greens. Think of Paul Ehrlich meets Milton Friedman in a wrestling cage match.