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Profile: Visiting Research Scholar and Professor E. Somanathan

E. Somanathan
PEI Visiting Environmental Economist, E. Somanathan
(Photos: Carol Peters)

The 2010-11 Princeton Environmental Institute Visiting Environmental Economist, E. Somanathan, joined us from the Indian Statistical Institute (ISI), New Delhi, India where he is Professor and Head of the Planning Unit. Since earning his Ph.D. from Harvard University in 1995, Professor Somanathan has published extensively on the topic of conservation and environmental equality. He currently serves on the boards of the Bureau for Research and Economic Analysis of Development (BREAD) in Cambridge, Massachusetts, and the Foundation for Ecological Research, Advocacy and Learning in Pondicherry, India.

What are your current research interests?

My research interests lie at the intersection of environment and development economics and evolutionary models of economic behavior involving various elements of environmental conservation, policy, resource management, and global trends. At present my two primary research projects include developing incentive-compatible payment mechanisms to encourage wildlife conservation in southern India and game-theoretic modeling of climate policies. In particular, I am interested in policies designed to stimulate green technologies in order to reduce climate change.

Some of my research with Ashokankur Datta, one of my Ph.D. students at the ISI, looks at how the issue of governments’ inability to commit to a policy years in advance affects the nature of viable policies. We use game theory to derive the conditions under which supply-push policies like subsidies for Research and Development (R&D) will complement demand-pull policies like emissions taxes or carbon cap-and-trade. Some of my other research involves designing appropriate payment schemes to give communities residing in and around forests in southern India a bigger stake in forest and wildlife conservation. Some of these involve auctions for environmental services and others involve community contracts. The important thing here is careful design and refinement to ensure appropriate incentives.

At PEI, two of the problems I am specifically interested in are how people learn to adopt behavior that protects them against environmental risks, such as unsafe drinking water and indoor smoke, and how social norms influence fertility decisions. It is clear that there is a strong social component to these kinds of decisions. How do social interactions tie in with behavioral changes in such domains? This question ties in with my game-theoretic research on the evolution of social norms. I thought it would be interesting to visit PEI since Simon Levin and his research group have overlapping interests. Another of my research interests is in climate policy and clearly, PEI is a good place to be for that.

Did you develop new collaborations while visiting PEI?

While at Princeton I started talking with PEI post-doc Shoibal Chakravarty, Professor Rob Socolow (Mechanical and Aerospace Engineering) and others at PEI about strategic interactions in countries’ climate policies. Chakravarty, Socolow and I are interested in technological spillovers between countries and whether these can be harnessed to make progress in international climate negotiations. I also worked on some of my ongoing research projects, including a book on India’s environmental challenges that I have wanted to write for a long time.

What is the most compelling aspect of your research?

I research the way economic systems work and how they can be used to provide tools for tackling huge problems like climate change. The collaboration I am developing at PEI with Shoibal concerns using game theory to model different countries’ subsidy policies for green energy technologies. These policies increase green technologies’ markets and, over time, lower the costs of these technologies through learning-by-doing and by stimulating R&D. Thus, each country’s policy has an effect on other countries’ costs. So there is a strategic interaction here, or there would be, if governments looked ahead. This can be modeled using game theory. The interesting question is whether an outcome with lower green technology costs can be reached faster, if countries took their effects on each other into account. Our model should tell us more about the prospects for international policy coordination to reduce climate change.

How will significant changes occur in the field of climate and ethics?

We need to do a better job of communicating the science to the public. The climate change problem is too abstract for most people to engage with at more than a superficial level. I'm no expert on communication, but I think the gap between what climate scientists know and what even well-educated people in other fields (like my own, economics) are aware of, is very large. This problem was highlighted in the discussion we had in my seminar on sustainable development last week. After reading a report on global climate change impacts in the United States, and some scientific papers on the impact of climate change on extinctions, and on agriculture in the U.S. and India, the students felt that the science is too indigestible and needs to be conveyed to people in a more immediate, visual, and comprehensible way. There has to be a concerted effort to bring the issues out in a visual way, together with the steps that can be taken to solve the problem.

What are the most important ideas you strive to communicate to your students?

I stress the inter-connectedness of environment and development problems and show them the connections. I also focus on helping the students learn to use mathematical models to structure their thinking without becoming prisoners of the models. I ask them to think carefully about how to disentangle cause and effect in any social phenomenon.

It is always important to me to inspire my students by exposing them to exciting ideas, especially the big picture things. At the same time, I want to show them that ideas really do matter in making public policy and changing society. In particular, I provide many examples to show the meticulous and painstaking research that goes into establishing cause and effect.

For example, in the 1950's and 1960's there was widespread concern that rapidly growing populations in Asia, Africa and Latin America might lead to large-scale impoverishment and famine. That didn't happen, thanks to improvements in agricultural productivity, but it spurred many birth control policies focused on making contraceptive services more available. Later research showed that economic development might have a much larger role to play, and further research showed that more specific factors, namely female education and exposure to media and modern lifestyles were the dominant driving forces in fertility decline. As a result, policy in many developing countries has shifted towards targeting these issues rather than just contraceptive provision or waiting for economic development.

For a phenomenon as complex as the fertility choices of a population, it is hard to uncover the effect of a particular factor such as female education. But careful and painstaking data collection and analysis really do provide a way to measure the force of such a factor. I hope to show students through such examples how the proper use of statistical methods can help us, as a society, reach a better understanding of even so complex a phenomenon and thus make better policy.

Related Courses

Professor Somanathan taught two courses this year; “ENV 528: Topics in Environment and Development Economics” in the fall and during the spring, ENV/ECO 326: Seminar in Sustainable Development. ENV 528 examined common property resources and social norms, the environmental implications of a concern for status, and how distributional considerations affect the valuation of damages from climate change. ENV/ECO 326 used economic theory and statistical methods to analyze the environmental problems of the developing world. While at Princeton Professor Somanathan also delivered a PEI lecture called “Climate Policy and Innovation in the Absence of Commitment.”

Tag(s): ss-2011