Environmental and Energy Policy and the Economy

Journal Information
ISSN / EISSN : 2689-7857 / 2689-7865
Published by: University of Chicago Press (10.1086)
Total articles ≅ 22
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Tatyana Deryugina, Nolan Miller, David Molitor, Julian Reif
Environmental and Energy Policy and the Economy, Volume 2, pp 157-189; https://doi.org/10.1086/711309

Abstract:
Policies aimed at reducing the harmful effects of air pollution exposure typically focus on areas with high levels of pollution. However, if a population’s vulnerability to air pollution is imperfectly correlated with current pollution levels, then this approach to air quality regulation may not efficiently target pollution reduction efforts. We examine the geographic and socioeconomic determinants of vulnerability to dying from acute exposure to fine particulate matter (PM2.5) pollution. We find that there is substantial local and regional variability in the share of individuals who are vulnerable to pollution both at the county and ZIP code levels. Vulnerability tends to be negatively related to health and socioeconomic status. Surprisingly, we find that vulnerability is also negatively related to an area’s average PM2.5 pollution level, suggesting that basing air quality regulation only on current pollution levels may fail to effectively target regions with the most to gain by reducing exposure.
Shaikh Eskander, Sam Fankhauser, Joana Setzer
Environmental and Energy Policy and the Economy, Volume 2, pp 44-82; https://doi.org/10.1086/711306

Abstract:
There is no country in the world that does not have at least one law or policy dealing with climate change. The most prolific countries have well over 20, and globally there are 1,800 such laws. Some of them are executive orders or policies issued by governments, others are legislative acts passed by parliament. The judiciary has been involved in 1,500 court cases that concern climate change (more than 1,100 of which were in the United States). We use Climate Change Laws of the World, a publicly accessible database, to analyze patterns and trends in climate change legislation and litigation over the past 30 years. The data reveal that global legislative activity peaked around 2009–14, well before the Paris Agreement. Accounting for effectiveness in implementation and the length of time laws have been in place, the United Kingdom and South Korea are the most comprehensive legislators among G20 countries and Spain within the Organization for Economic Cooperation and Development. Climate change legislation is less of a partisan issue than is commonly assumed: the number of climate laws passed by governments of the left, center, and right is roughly proportional to their time in office. We also find that legislative activity decreases in times of economic difficulty. Where courts have gotten involved, judges outside the United States have ruled in favor of enhanced climate protection in about half of the cases (US judges are more inclined to rule against climate protection).
Oliver R. Browne, Ludovica Gazze, Michael Greenstone
Environmental and Energy Policy and the Economy, Volume 2, pp 190-225; https://doi.org/10.1086/711310

Abstract:
In response to the historic 2011–17 California drought, local governments enacted a raft of conservation policies, and little is known about which ones explain the sharp decline in residential water consumption. To answer this question, we use a novel data set of hourly water consumption data for more than 82,300 households in Fresno, California, where water consumption declined by nearly a third, and have three main findings. First, we estimate the price elasticity of demand for water to be 0.16 for marginal rates and 0.39 for average rates. Second, reducing the number of days where outdoor watering is allowable from 3 to 2 substantially decreases water use, despite the availability of opportunities to substitute between permitted and nonpermitted hours, days, and seasons. Third, “bully pulpit” pronouncements about the water crisis increased public awareness of drought conditions but did not contribute to water savings. Overall, higher water prices explain 40%–44% of the changes in residential water use observed during our sample period in Fresno, and reductions in the number of days when outdoor watering is allowable explain 45%–51% of these changes. However, the absence of experimental or quasi-experimental variation in these policies means that we interpret this associational evidence cautiously.
Robert S. Pindyck
Environmental and Energy Policy and the Economy, Volume 2, pp 4-43; https://doi.org/10.1086/711305

Abstract:
There is a lot we know about climate change, but there is also a lot we don’t know. Even if we knew how much CO2 will be emitted over the coming decades, we wouldn’t know how much temperatures will rise as a result. And even if we could predict the extent of warming that will occur, we can say very little about its impact. I explain that we face considerable uncertainty over climate change and its impact, why there is so much uncertainty, and why we will continue to face uncertainty in the near future. I also explain the policy implications of climate change uncertainty. First, the uncertainty (particularly over the possibility of a catastrophic climate outcome) creates insurance value, which pushes us to earlier and stronger actions to reduce CO2 emissions. Second, uncertainty interacts with two kinds of irreversibilities: CO2 remains in the atmosphere for centuries, making the environmental damage from CO2 emissions irreversible, pushing us to earlier and stronger actions and reducing CO2 emissions requires sunk costs, that is, irreversible expenditures, which pushes us away from earlier actions. Both irreversibilities are inherent in climate policy, but the net effect is ambiguous.
Adele C. Morris, Noah Kaufman, Siddhi Doshi
Environmental and Energy Policy and the Economy, Volume 2, pp 83-116; https://doi.org/10.1086/711307

Abstract:
Executive Summary This paper examines the implications of a carbon-constrained future on coal-reliant county governments in the United States. We review modeling projections of coal production and argue that some local governments face important revenue risks. Complex systems of revenue and intergovernmental transfers and insufficiently detailed budget data make it difficult to parse out how exposed jurisdictions are to the coal industry. A look at three illustrative counties shows that coal-related revenue may fund a third or more of their budgets. When extrapolated outside the sample, our regression analysis of 27 coal-reliant counties suggests that the demise of coal could lower these counties’ revenue by about 20%. This does not account for the potential downward spiral of other revenues and economic activity as the collapse of the dominant industry erodes the tax base. Coal-dependent communities have issued outstanding bonds that will mature in a period in which climate policy is likely. Our review of illustrative bonds indicates that municipalities have not appropriately characterized their coal-related risks. Climate policies can be combined with investments in coal-dependent communities to support their financial health. We discuss how a small fraction of revenue from a federal carbon price could fund assistance to coal-dependent communities and workers.
Joseph Aldy, Matthew J. Kotchen, Mary Evans, Meredith Fowlie, Arik Levinson, Karen Palmer
Environmental and Energy Policy and the Economy, Volume 2, pp 117-156; https://doi.org/10.1086/711308

Abstract:
This article considers the treatment of cobenefits in benefit-cost analysis of federal air quality regulations. Using a comprehensive data set on all major Clean Air Act rules issued by the Environmental Protection Agency over the period 1997–2019, we show that (1) cobenefits make up a significant share of the monetized benefits; (2) among the categories of cobenefits, those associated with reductions in fine particulate matter are the most significant; and (3) cobenefits have been pivotal to the quantified net benefit calculation in nearly half of cases. Motivated by these trends, we develop a simple conceptual framework that illustrates a critical point: cobenefits are simply a semantic category of benefits that should be included in benefit-cost analyses. We also address common concerns about whether the inclusion of cobenefits is problematic because of alternative regulatory approaches that may be more cost-effective and the possibility for double counting.
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