Policies for the planet

Why do governments struggle to make polluters pay?

Climate policies are often built on a simple idea: make pollution more expensive, and firms will cut emissions. My research starts from the observation that the real-world effects are more complex. These policies don’t just change how much firms pollute, they also affect which firms operate, where production happens, and how people react.

I focus on three core questions. First, how do climate policies shape markets? Tools like carbon pricing influence not only production choices, but also firm entry and exit. For example, some designs can unintentionally attract polluting firms or discourage cleaner ones. So environmental outcomes depend not only on how firms adjust, but also on the composition of the market.

Second, how do these policies interact with the global economy? Climate policies are not implemented uniformly, so they can affect trade patterns and competitiveness. A central issue is carbon leakage, where emissions are shifted abroad rather than reduced globally. With Stefan Ambec and Federico Esposito, I study how to limit these effects and coordinate climate and trade policies.

Third, how do people respond to climate policies and information? Policies only work if they are understood and accepted. I study how individuals perceive their own environmental impact, how they respond to information like ecolabels, and how these perceptions influence support for climate action.

These questions matter because misunderstandings about how firms and individuals respond can lead to less effective policies and unintended consequences. There is also a fundamental tension between efficiency and distribution: a policy can be economically sound on paper, but if it creates large inequalities across firms, regions, or households, it becomes hard to sustain politically. My goal is to provide evidence to design climate policies that are not only efficient, but effective and socially supported.

How can we get carbon prices to work?

A carbon price makes pollution costly. Firms will then cut emissions whenever it’s cheaper to avoid polluting. Carbon markets set a cap on total emissions and let producers trade permits so reductions occur where they are cheapest. 
Carbon pricing is powerful, but my research shows that design details really matter. For example, giving free permits doesn’t change firms’ incentives to reduce emissions, but it does affect profits. That can lead to more polluting firms entering or staying in the market. 

There is also an international dimension. If carbon pricing differs across countries, emissions can shift abroad instead of falling globally, which is why tools like border adjustments are important. 
Finally, public acceptance is crucial. Perceptions of fairness and understanding play a big role in whether citizens support climate policies.

Why are you in favor of a European climate bond?

Europe faces a large investment gap to finance the green transition, and current public budgets are not enough to fill it. The idea of a European climate bond is to finance these investments at the EU level, using future revenues from carbon pricing. 

In my work with Irene Monasterolo, Marco Pagano, and Carmine Russo, we identify three main advantages. First, it allows for frontloaded investment, accelerating urgent climate action instead of waiting for resources to accumulate. Second, it improves European-level coordination, avoiding the inefficiencies of fragmented policies and localized underinvestment. Third, by pooling resources, it reduces financing constraints and can support growth and stability. 
There are also challenges, particularly around distribution. Countries contribute differently — through the ETS, for example — and face different climate risks. The key is to design the system so that it is perceived as fair, while remaining efficient.

How has TSE shaped your development as a researcher?

I was very lucky in how things came together. I first arrived in 2021 during the second wave of COVID, when visiting was still quite complicated, but TSE welcomed me nonetheless. At that stage of my PhD, I was looking for a place with a leading group in environmental economics and TSE clearly stood out.

During my visit, I attended courses in environmental and public economics, which were extremely stimulating. Crucially, I began to work with Stefan Ambec on questions related to the EU ETS and carbon border adjustment mechanism. That collaboration became my first real research project and a key learning experience about how to structure a project, work effectively in a team, and navigate the publication process. When the opportunity came to return in 2024 as part of the TRADEGREEN project, it felt like a natural continuation.

TSE has this distinctive combination of a very strong research environment and a genuinely supportive, interactive community. Stefan Ambec has played a central role in my development as supervisor, coauthor, and mentor. François Salanié has always been extremely generous with his time, and meeting people like Charlotte De Cannière has mattered a lot to me, both professionally and personally. 

Exchanging ideas with TSE researchers from all over the world shaped how I see research. It’s not an isolated activity, but a very collaborative and evolving process. It also made me realize very clearly that research is what I want to do with my life.

What does winning the IAERE Young Environmental Economist Award mean to you?
 

It means a lot! I see the Italian and European environmental economics communities as a family, so receiving this recognition was a moment of real joy to share with colleagues and friends. It gave me confidence in my work and the direction of my research agenda. 

If you join the judges’ panel in 2036, what will you look for in the next generation?

I would hope to see researchers who combine strong rigor with a clear sense of purpose. I would value work that is technically solid but also driven by the ambition to improve how we understand and address environmental challenges. 
I would also hope to see environmental economics continue to expand as a generalinterest field, interacting more with other areas. Climate and environmental challenges are deeply connected to our economies and daily lives, and the next generation will play a key role in advancing that broader perspective.

What inspired you to take part in the Women in Environmental Economics Workshop in Venice?

Academic careers are long and often uncertain, especially early on, and this can have different implications for women, particularly around timing, stability, and long-term decisions. Having spaces where these issues can be discussed alongside research is extremely valuable. Talking with other women about common challenges, sharing experiences, exchanging feedback, and learning from different paths makes these choices feel less isolating and more informed.
At TSE, I also participated in initiatives by the Women in Econ association, which is largely run by PhD students. They do an incredible job mentoring younger researchers and providing career guidance on how to navigate the structural challenges that women tend to face.

The Venice workshop brought this discussion to an international level. Comparing experiences across countries helps us understand these challenges and think collectively about how to support future generations. I want to contribute to making academic careers more accessible, so that talent is not lost because of barriers that we can address.

FURTHER READING “A European Climate Bond” and “The economics of carbon leakage mitigation policies” by Antonia Pacelli are available to read on the TSE website.