Ecological Economics

Naturally, before funding an environmental program on a large scale, decision makers would like to know whether or not a program will be successful in terms of, first, ecological efficacy and, second, economic efficiency. With particular focus on methodological issues regarding the evaluation of environmental programs, this paper provides an introductory and didactic survey of experimental and observational approaches to the evaluation of the ecological efficacy, as suggested by modern evaluation research. While the evaluation of environmental programs on the basis of these approaches is standard in the US, this course outlined by other applied fields, such as labor and health economics, is obviously rather unusual in Germany and other EU countries. We would like to emphasize that, whenever possible, one should consider conducting an experimental study: In an ideal experiment with a randomized assignment into treatment and control groups, the simple difference in mean outcomes across both groups would yield an unbiased estimate of the true program effect. When controlled experiments are not a viable option, observational approaches might succeed. In any case, environmental regulators and utilities have to work more closely together with researchers already at the stage of designing the interventions.