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Environmental Economics and Policy

Research cluster

The Environmental Economics and Policy Cluster combines research expertise from different disciplinary perspectives – primarily, but not exclusively, economics and human geography – in order to inform and challenge environmental policy.

Our research draws on a focused array of expertise in geography, political science and economics

Our research agenda addresses issues within and between environmental and development economics, the political ecology of development and the study of environmental governance and regulation.

These are very different perspectives, in turn informed by distinct theories and conceptual frameworks and explored using a range of methodological approaches. Each perspective provides an important lens with which to view an overlapping set of environmental policy challenges.

Common to all of this work, whether it entails quantitative or qualitative approaches, is a commitment to robust evidence-based research that is informed by theory and relevant to the rich set of policy-relevant debates within environmental studies and sustainability science. 

Research focus

Research areas include sustainability and development, human wellbeing and behaviour, as well as environmental justice and environmental security.

Common to all our research is the desire to not only inform the design of public policies for the environment, but also to challenge and improve existing policies and governance options.

We conduct research across the world and at a number of scales of governance, with particular empirical regional expertise in Latin America, the Middle East, and South, East, and Southeast Asia as well as substantial expertise in European environmental and climate policy.

Our work includes understanding how people construct livelihoods, such as in urban communities in the context of global resource chains or rural settings entailing community forest management or adaptation to climate change. It also addresses how nations measure and evaluate long-term development as well as how development prospects are affected by the way in which global resources are governed.

Further examples of what we do links our work not just to public policy and environment but it makes clear the significance of market and civil society actors in our evolving work on sustainable finance and the role of private sector institutions in this context. Fostering connections with concerns in mainstream empirical economics to identify causal relationships is another important strand of our work. In doing so, this permits a richer understanding of the way in which, for example, urban air pollution affects peoples’ life prospects or how environmental policy influences technological change. 


The cluster has attracted substantial grants from the European Commission, British Government, Natural Environment Research Council, Royal Geographical Society and the Alcoa Foundation. The biggest achievement in terms of grant application has been the successful bids for an ESRC Centre for Climate Change Economics and Policy (CCCEP) and the Grantham Research Institute on Climate Change and the Environment

As a result, we enjoy close links with the Grantham Research Institute, chaired by Lord Stern of Brentford, as well as the research programmes of CCCEP. With these awards, LSE has emerged as one of the leading places in the world to research and study the environment and climate change.


See a list of our staff and PhD students on the People page. 

Research projects

Essential infrastructure or ornamental afterthought? Reimagining urban green space planning in the contemporary city

Staff involved: Dr Meredith Whitten 

Funding: ESRC  

Urban green space has risen up the agenda, buoyed by heightened awareness of nature’s role in addressing the two most urgent crises of the 21st century: climate change and public health. A focus on green infrastructure has further elevated urban green space, connecting it with critical urban systems and services, such as urban cooling and flood prevention. Yet, instead of being managed as “critical scaffolding” in a multifunctional, interconnected system of green infrastructure, green spaces are conceptualised as an ornamental amenity detached from the city around them and delivered through a siloed approach pervasive across local authorities.  

This research examines explores strategic green space planning, which is critical for addressing issues such as climate change and biodiversity loss, by exploring whether green space governance is becoming transcending the local level to become more strategic. In particular, the research examines whether two recently created organisations – the GLA’s London Green Spaces Commission and London National Park City Foundation, a grassroots charity – are having an impact on policy and planning approaches to green-space planning. The aim is to establish if these organisations represent a shift towards more integrated, strategic thinking regarding conceptualising, providing and managing London’s green space as an integrated system of green infrastructure.  

Toward a UK fire danger rating system: Understanding fuels, fire behaviour and impacts

Staff involved: Dr Thomas Smith

In collaboration with: Dr Gareth Clay (University of Manchester); Dr Claire Belcher (University of Exeter); Dr Nicholas Kettridge (University of Birmingham); Professor Stefan Doerr and Dr Cristina Santin (Swansea University); and Dr Mark Hardiman (University of Portsmouth).

Funding: Natural Environment Research Council

Wildfires have traditionally been perceived as a threat confined to regions such as Southern Europe or Australia. However, the global wildfire threat is expanding and recognition of wildfire hazard in the UK has grown substantially in recent years. In the eight financial years between April 2009 and March 2017 over 250,000 wildfire incidents were dealt with by the Fire and Rescue Services (FRS) in England alone. Individual events have been spatially extensive, challenging to fight (e.g. Saddleworth Moor, 2018), and have threatened property, transport and other infrastructure, especially in the rural-urban interface (e.g. Swinley Forest, April/May 2011). Response costs alone for vegetation fires in Great Britain have been estimated at £55 million per year, with individual large scale events costing up to £1 million. In response to significant fire seasons (e.g. 2003 & 2011), 'severe wildfire' has been included on the National Risk Register and two cross-sector national Wildfire Forums have been established (England and Wales; Scotland (with Northern Ireland)). These initiatives evidence the need for appropriate fundamental scientific understanding and systems to manage and mitigate the current and future UK wildfire threat. The recent Climate Change Risk Assessment has also highlighted the increased risk of wildfires.

Fire danger is a description of the combination of both constant and variable factors that affect the initiation, spread, and ease of controlling a wildfire on an area. Wildfire Danger Rating Systems (WFDRS) are designed to assess the fuel and weather to provide estimates of flammability and likely fire behaviour under those conditions. These danger ratings can inform management decisions for land managers, direct resourcing plans for FRS teams, and feed into strategic planning for local and national governments.

The UK does not have a WFDRS and we lack the fundamental scientific and end-user understanding to effectively predict the likelihood, behaviour and impact of wildfire incidents in the UK for present and future climate and land use scenarios. England and Wales has the Met Office Fire Severity Index system (MOFSI) operated by the Met Office based on weather forecasts only and this is solely designed to determine if open access land should be closed as defined in the Countryside and Rights of Way Act (2000) during 'exceptional' fire weather.  However, during the 2018 UK drought MOFSI indices did not rise sufficiently to trigger land closures in areas that suffered severe wildfires. Additionally, due to the absence of a WFDRS in the UK, the algorithms underlying MOFSI are also used to inform the Natural Hazard Partnership Daily Hazard Assessment. The insensitivity to recent extreme fire conditions of 2018 are indicative of its inability to properly forewarn government, responders and land owners.

We therefore need a bespoke WFDRS for the UK. This project will undertake the fundamental science and analyses required for building a UK-specific WFDRS, informed by key stakeholders who will act as project partners. This must be designed for UK fuels, its complex land cover mosaics and infrastructure, and changing land use patterns and climate.

Drought and peatland fires in Indonesian Borneo: Understanding drivers and impacts to build resilience through sustainable development

Staff involved: Dr Thomas Smith

In collaboration with: Various partners from University of Exeter, Universitas Indonesia, UPR Indonesia, University of Leeds, University of Leicester, University of Cambridge.

Funding: Natural Environment Research Council Global Challenges Research Fund

Indonesia's Central Kalimantan province on the island of Borneo is home to extensive peatlands. In dry years such as 2015, peat fires burn for months with huge impacts: Exposure to smoke during this period is expected to cause 100,000 premature deaths, caused major economic disruption with a cost of $16.1Bn to the Indonesian economy and, for three months, emitted more carbon than the entire EU. Indonesia's peatland fires were described as 2015's 'worst environmental disaster' (Guardian, 2015) with Central Kalimantan at the epicentre. The majority of fires in this region are started deliberately, primarily to clear forest for small or large-scale agriculture (satellite data indicates that there were close to 40,000 fire hot spots in C. Kalimantan peatlands in 2015), but their frequency, duration and severity are strongly climate linked and facilitated by El Niño droughts, which may become more frequent under global warming. In their intact natural waterlogged, forested state these peatlands rarely burn, therefore fires are concentrated in the (extensive) areas that have dried to some degree due to deforestation and drainage for agriculture and timber extraction. Here, smouldering fires burn down into the underlying peat, can burn for months and are the primary cause of near annual air pollution events affecting SE Asia, which were particularly severe during 2015. Thus the drivers behind the peatland fires are a combination of climatic processes, a legacy of historic land use impacts that ensure a high fuel load, and human activities that provide ignition sources. The resulting huge impacts are, therefore, to a large extent preventable but effective action requires a more detailed understanding of future climate-associated risk, biophysical and socio-economic conditions and human behaviours.

We propose an integrated, multidisciplinary project with three core aims:

1) To better understand the drivers behind the multiple drought- and fire-associated hazards and their spatial distribution in the peatlands of Central Kalimantan Province, Indonesian Borneo

2) To characterise the multiple, cumulative impacts of drought and the biophysical and human behavioural chains leading to them, and identify the population groups/communities most vulnerable to these hazards.

3) Combining information from 1 and 2, identify priority actions and policies for work to reduce the risk of fire and identify the socio-cultural, agro-ecological, physical and economic hurdles to achieving positive outcomes from their implementation within the context of sustainable development that leads to better environmental and socio-economic circumstances for all.

The ultimate aim of this project is to build long term resilience to the multiple hazards associated with drought and fire in Central Kalimantan's peatlands by developing the knowledge, tools and capacity to reduce the current co-drivers (e.g. human land uses) and also to plan ahead for when circumstances (climate, land use) change in the future. Fully understanding the human costs can guide the appropriate action to take to minimise the impacts when a disaster does occur. Our proposed research on building resilience emphasises the need to do this in the context of sustainable development and building positive economic opportunities that will incentivise stakeholders. To ensure the research achieves the maximum impact, the consortium partners include Indonesian government agencies and departments, an NGO with extensive experience of engaging rural communities in the region and equal partnerships between UK and Indonesian universities to develop local research capacity through collaboration and training.

How do tropical peatland greenhouse gas emissions respond in the immediate aftermath of a fire?

Staff involved: Dr Thomas Smith

In collaboration with: Dr Stephanie Evers (Liverpool John Moores University)

Funding: Royal Geographical Society

Southeast Asia is a region where unsustainable forest clearance, drainage of peatlands for agriculture, and ongoing use of fire to ‘manage’ land leads to extensive emissions of greenhouse gases to the atmosphere, and significant disturbance to peatland soils. While research by the PI and Co-I has improved knowledge of direct GHG emissions during fires, there remains a significant gap in our knowledge of the post-fire impact on peat respiration and methanogenesis. For this project we aim to measure immediate post-fire GHG emissions for the first time at tropical peatland sites and investigate the evolution of these emissions through the post-fire recovery period.

The Effectiveness of Community Conservation Agreements in Lore Lindu National Park, Sulawesi, Indonesia

Staff involved: Dr. Charles Palmer

In collaboration with: Prof. Stefanie Engel (ETH Zurich, Switzerland); Prof. Alex Pfaff (Duke University, US); Stability of Rainforest Margins in Indonesia (STORMA), Germany & Indonesia.

Funding: Robert Bosch Foundation, Germany. 

In protected areas in many developing countries, the overexploitation of forest resources is a recurring theme. A major reason for this observed overexploitation and encroachment is that a large part of the benefits from forest protection occurs beyond the local level, e.g., in the form of biodiversity conservation, carbon sequestration, and watershed services. Top-down policies to conserve these have failed due to the lack of appropriate monitoring and enforcement capacities and because considerations of social fairness prevent government authorities from effectively implementing a purely prohibitive approach. Lore Lindu National Park in Sulawesi, Indonesia, was established by the central government in 1993 via such an approach; boundaries were drawn up and communities relocated without consultation or compensation. The ineffectiveness of this approach is demonstrated by the continued use of Park resources by local communities.

An alternative policy is to translate environmental benefits that occur beyond the local level into real economic incentives for local communities. Beginning in 2001, the Park authorities initiated a co-management approach known as 'community conservation agreements' between the Park and communities living in the vicinity of the Park. Since then, conservation agreements have been facilitated in around 40 communities located in around the Park and with historical claims to forest areas inside the Park, by various NGOs, including the Nature Conservancy (TNC) and CARE International. While there appears to be variation across the agreements made, communities typically commit to complying with specified conservation and forest management rules in return for a more explicit acknowledgement of their property rights over the forest inside the Park along with other benefits such as agricultural assistance.

The general objective of the research is to better understand the emergence of conservation agreements and their influence on actual community land use and extraction behaviour. The impacts to be considered are ecological (impacts on forest in LLNP), social and economic (on community welfare and land usage).

Donor Interventions and Water Governance in Basra

Staff involved: Michael Mason

Visit the project website.

The Impacts of Tropical Biofuel Production on Land Use

Staff involved: Charles Palmer

In collaboration with: Saraly Andrade de Sa (Ph.D. Candidate, ETH Zurich, Switzerland); Prof. Stefanie Engel (ETH Zurich); Center for International Forestry Research (CIFOR), Brazil.  

Funding: (1) Professorship in Environmental Policy and Economics, ETH Zurich; (2) Commission for Research Partnerships with Developing Countries (KFPE), Switzerland; (3) Research Fellow Partnership Programme for Agriculture, Forestry and Natural Resources (RFPP), ETH Zurich. 

There are two emerging trends with regards to rising global demand for biofuels and land use. First, the increase in production of biofuel feedstock demands more land thus placing direct pressure on potential agricultural land currently still under forest cover. Second, the reallocation of agricultural land for biofuels along with other factors such as increasing human populations have led to rising demand and hence, higher prices for agricultural commodities and other foodstuffs. Consequently, rising biofuel demand may be indirectly leading to the expansion of food production into forest frontiers.

To date, most research to evaluate biofuels have focused on their merits for reducing greenhouse gas emissions or fossil fuel use. Focusing on emission or energy use, however, ignores the full range of environmental impacts of biofuels particularly where forests are being felled to make way for biofuel crops. Not only is the carbon storage capacities of forests destroyed but also biodiversity and other environmental services are likely to be lost as well. Many of the economically important biofuels, including Brazilian sugarcane ethanol and Indonesian/Malaysian palm-oil diesel, have greater aggregate environmental costs than fossil fuels. However, there are a number of important indirect effects of biofuels, whether environmental or social, e.g. rising food costs. The empirical evidence for these remains poor. This project aims to empirically demonstrate the strength of the direct and indirect effects of biofuel production on land-use at the forest frontier.

First, the economics of land-use will be developed in order to better understand decision-making in the production of commodities. Second, and on the basis of land-use economics, an econometric model will be estimated using secondary market and remote sensing data. Expert interviews will be conducted to complement the quantitative analysis. Given its leading position in biofuel markets, Brazil has been chosen as the research site of interest for this project. The current lack of quantitative analyses on the impacts of biofuel production on land use, deforestation and food production implies that research outputs could potentially contribute not only to the policy debate on the supposed environmental benefits of biofuels as a strategy to help mitigate climate change but also to the food vs. fuel debate.


See also: research programmes undertaken by the Grantham Research Institute on Climate Change and the Environment