Sustainable operations: design and management of environmentally conscious products and production systems

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It is increasingly being recognized that environmental impacts of products over their life cycle can best be managed through goal-oriented and market-based mechanisms that provide flexibility to the targeted parties in choosing compliance levers.  Excellent examples include emissions trading programs and extended producer responsibility (EPR).  In the US, markets for sulphur-dioxide (SO2) permits now account for more than $8 billion a year in trades; in the EU, the Emissions Trading Scheme is the cornerstone of the Kyoto Protocol implementation and affects more than 12,000 producers in 25 countries. Moreover, an increasing number of industries, from electronics to automobiles in countries around the world find themselves responsible for 'closing the loop' on their products, as EPR programs make them responsible for product take-backs post consumer use. As experience in designing and implementing such mechanisms accumulates, policy makers everywhere are exploring market based programs to achieve the goals of environmental sustainability in a variety of areas. Proper design of such mechanisms, however, needs to reflect a better understanding of managerial choices and trade-offs that often weigh profit maximization and economic value of decisions as heavily as social and environmental goals. The objective of this research program is to study the interactions among firm strategies for compliance under market based programs for environmental sustainability, regulators' choice of appropriate levers in design of such programs, and the overall impact on environmental performance as well as firm profitability.  The proposed research agenda is limited to two such mechanisms: cap-and-trade programs for pollutants such as SO2, Carbon-dioxide (CO2) and other greenhouse gases; and, extended producer responsibility programs for durable goods such as automobiles, electronic equipment and domestic appliances.