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Climate change and related environmental challenges already affect economic and financial decisions and are expected to do so even more as the world advances towards decarbonization. While a large economic literature has focused on setting out welfare maximizing policies that promote environmental protection, there is concern that these policies cannot be easily implemented within political systems with agents that differ in preferences and political power. Existing political economy and contract theory literature have shown that political forces have strong impacts on the design of economic policy, and specifically of environmental policy. This project focuses on understanding how political economic forces affect the implementation of environmental policy through a combination of empirical and theoretical methods. I study these issues from two perspectives. First, by proposing a theory of lobbying and electoral incentives in the context of environmental policy. At an initial stage I model policy formation by decision makers that respond to electoral incentives on the one hand and lobbying forces on the other. The model will then be extended by explicitly modeling voting decisions by rational voters and endogenous lobbying in the form of campaign contributions. This will offer a rich setting where the two political forces endogenously influence the environmental political process. Second, I will use the insights of this model to conduct an empirical analysis with detailed United congressional data relating to environmental regulation, allowing for the first time to disentangle both forces in the design and passing of environmental regulation. The insights produced will have important policy implications. Understanding how environmental policy is affected by different political forces has immediate implications for the feasibility of environmental regulation, as well as for the choice of regulative instrument to be used. From a more general perspective, the project will deliver a framework to assess how different outcomes arise depending on features of the political system, which is central to the design of any economic policy.
I hold a PhD in Economics from the European University Institute, in Italy. I have since held a researcher position at the University of Oxford and a research economist post at the London School of Economics, both in the United Kingdom. I am an applied microeconomist with a special interest in environmental economics and political economy. I am interested in developing and applying economic tools and models to study policy relevant questions. At the LSE I worked on several issues related to environmental economics, such as investment in low-carbon technologies, employment impact of environmental policies, and urban climate adaptation. I am currently at the Toulouse School of Economics, where my research agenda concerns the political economy of individual behavior and resulting economic and environmental outcomes. Specifically, I focus on understanding the political economy of the design and implementation of environmental policy through a combination of empirical and theoretical methods. My research aims to answer questions such as “What political factors affect the implementation of environmental regulation?” and “Do monetary campaign contributions have a disproportional impact relative to voters’ preferences in the passing of environmental regulation.
Hooyberghs, H, Verbeke, S, Lauwaet, D, Costa, H, Floater, G, de Ridder, K, 2017 Influence of climate change on summer cooling costs and heat stress in urban office buildings, Climatic Change, 144(4): 721-735.
Costa, H, 2016. Policy Distortions as a Signaling Tool: The Case of US Environmental Expenditures, GRI and CCCEP Working Paper series 225, London School of Economics.
Costa, H, Floater, G, Finnegan, J, 2016. Climate-resilient cities, In Fankhauser, S. and McDermott, T. Eds "The economics of climate-resilient development", Edward Edgar Publishing, July 2016.
Costa, H, Veiga, L, Portela, M., 2015 Interactions in Local Governments' Spending Decisions: Evidence from Portugal, Regional Studies, 49(9): 1441-1456.
Costa, H, Peters, S, Gilmore, A, McKee, M, Stuckler, 2014. Quantifying the Influence of Tobacco Industry on EU Governance: Automated Content Analysis of the EU Tobacco Products Directive, Tobacco Control, 23:473-478.