We have recently presented a manifestly local and general coordinate invariant formulation of a nonlocal approach to the cosmological constant problem. In this article, we investigate quantum effects from both matter and gravitational fields in this formulation. In particular, we pay our attention to the gravitational loop effects and show that the effective cosmological constant is radiatively stable even in the presence of the gravitational loop effects in addition to matter loop effects. For this purpose we need to add the R 2 term and the corresponding topological action as an total action, which should be contrasted with the work by Kaloper and Padilla where the topological GaussBonnet term is added instead of the R 2 term. The advantages of our new formulation compared to that by Kaloper and Padilla are that not only we do not have to assume the scale invariance which is required to render the space-time average of the square of the Weyl curvature vanishing, but also our formulation would lead to the R 2 inflation in a natural manner.