Merrill wins Academy of Management award for paper on impact of environmental regulations

October 14, 2018

fossil fuel

By Matthew Kredell

Ryan Merrill

USC Price School of Public Policy alumnus Ryan Merrill won the prestigious William H. Newman Award from the Academy of Management for his paper on policy-induced acceleration of fossil fuel extraction. The paper was based on the dissertation he completed last year to earn his PhD in Public Policy and Management from the Price School.

The Academy of Management is a professional association for scholars of management and organizations. The Academy contains 25 divisions, including Organizations and the Natural Environment (ONE), from which Merrill’s paper was first chosen to be published in the Proceedings of the Academy of Management, a prestigious honor in itself.

Each division nominates a single manuscript to be considered for the Newman Award, which goes to a paper based on a dissertation addressing a significant organizational phenomenon, yielding information that is both practically and theoretically relevant. ONE nominated Merrill’s paper, which was then chosen as one of two winners across the Academy.

“The biggest thing for me personally was getting nominated out of ONE and winning for ONE,” Merrill said. “It’s the only division focused on sustainability and the natural environment, and I am proud to be part of this community.”

Designing better regulations

Merrill’s paper examines the impacts of environmental regulations on the investment behavior of U.S. oil and gas firms. By exploiting variation in oil revenues and oil reserves to estimate impacts of dynamic policy signaling on U.S. energy majors’ investments from 1991 to 2009, the analysis confirms the Green Paradox hypothesis with evidence of capacity-attenuated risk-induced investment.

The Green Paradox holds that environmental policy that sets increasingly stricter restrictions over time has the unintended consequence of inducing fossil fuel firms to accelerate resource extraction in anticipation of government interventions to fight climate change.

Merrill’s paper has important policy implications for addressing this suboptimal regulatory design if countries are going to reach the targets set by the Paris Climate Agreement.

“The paper shows that the Green Paradox is real, and that policymakers should pay attention to it and call for urgent carbon taxes,” Merrill said. “Good carbon tax starts high and goes low over time. Don’t start at 25 and tell the market you’re going to go 50. Start at 50 and tell the market you’re going to go to 25. That tells oil companies that there’s more profit in keeping oil in the ground and enjoying higher profits later.”

In selecting Merrill for the Newman Award, a member of the five-person committee panel commented: “It stands out for addressing a really important contemporary problem whose elucidation not only carries meaningful conceptual implications for current thinking about organizations but also, and most importantly, holds the potential of informing public policy. The author proposes straightforward, yet carefully developed, hypotheses by drawing on the Green Paradox literature and research on risk management. It is refreshing to see such an ambitious manuscript that engages with an important societal problem while maintaining a sharp conceptual focus.”

Price mentors

Merrill credited USC Price Professor Dan Mazmanian, his dissertation chair, and Associate Professor T.J. McCarthy for making his research possible.

“I couldn’t have done this research if I didn’t have a dissertation chair who believed in the research and used money from his own research budget to support it,” Merrill said of Mazmanian. “He very much helped me develop confidence as a scholar and supported me. And I never would have won this award if it wasn’t for T.J. McCarthy, because my econometrics never would have been strong enough. The paper is a robust empirical assessment of the Green Paradox, and I never could have done that without his mentorship.”

Commitment to sustainable solutions

Merrill is currently working as a postdoctoral research fellow in sustainability, strategy and innovation at Singapore Management University, where he’s conducting research on cryptoeconomic solutions for managing the Earth’s common pool resources and teaches environmental policy in the School of Social Sciences.

“Getting to do innovative research in the business school while teaching environmental policy is a rare opportunity; it is great to really work in a multidisciplinary setting,” Merrill said.

He has also founded an NGO this year called Global Mangrove Trust, building as a platform for using block-chain to link individuals and companies around the world with mangrove projects in Southeast Asia. He is passionate about preserving, protecting and restoring of mangrove forests as the most efficient way to fight climate change.

“In drawing from the often separate arenas of public policy and management theory in an imaginative testing of the Green Paradox, Ryan demonstrated the very best qualities of our Price PhD students,” Mazmanian said. “His dissertation, upon which the Academy paper is based, provides a novel empirical examination of tenets of the Paradox, the results of which underscore the importance of public policy in affecting the direction of the fossil fuels industry, and the implications for climate change.”