Energy and the Environment
Protecting "The Prize": Oil and the U.S. National Interest
Eugene Gholz & Daryl Press
Security Studies, July 2010, Pages 453-485
Abstract:
American national security policy is based on a misunderstanding about U.S. oil interests. Although oil is a vital commodity, potential supply disruptions are less worrisome than scholars, politicians, and pundits presume. This article identifies four adaptive mechanisms that together can compensate for almost all oil shocks, meaning that continuous supply to consumers will limit scarcity-induced price increases. The adaptive mechanisms are not particularly fragile and do not require tremendous foresight by either governments or economic actors. We illustrate these mechanisms at work using evidence from every major oil disruption since 1973. We then identify the small subset of disruptive events that would overwhelm these adaptive mechanisms and therefore seriously harm the United States. Finally, we analyze the utility of U.S. foreign military policy tools in addressing these threats. Our findings suggest that the United States can defend its key interests in the Persian Gulf - the world's most important oil-producing region - with a less-intrusive, "over the horizon" posture.
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Solomon Hsiang
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
Understanding the economic impact of surface temperatures is an important question for both economic development and climate change policy. This study shows that in 28 Caribbean-basin countries, the response of economic output to increased temperatures is structurally similar to the response of labor productivity to high temperatures, a mechanism omitted from economic models of future climate change. This similarity is demonstrated by isolating the direct influence of temperature from that of tropical cyclones, an important correlate. Notably, output losses occurring in nonagricultural production (-2.4%/+1 °C) substantially exceed losses occurring in agricultural production (-0.1%/+1 °C). Thus, these results suggest that current models of future climate change that focus on agricultural impacts but omit the response of workers to thermal stress may underestimate the global economic costs of climate change.
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The Sustainability Liability: Potential Negative Effects of Ethicality on Product Preference
Michael Luchs, Rebecca Walker Naylor, Julie Irwin & Rajagopal Raghunathan
Journal of Marketing, September 2010, Pages 18-31
Abstract:
Manufacturers are increasingly producing and promoting sustainable products (i.e., products that have a positive social and/or environmental impact). However, relatively little is known about how product sustainability affects consumers' preferences. The authors propose that sustainability may not always be an asset, even if most consumers care about social and environmental issues. The degree to which sustainability enhances preference depends on the type of benefit consumers most value for the product category in question. In this research, the authors demonstrate that consumers associate higher product ethicality with gentleness-related attributes and lower product ethicality with strength-related attributes. As a consequence of these associations, the positive effect of product sustainability on consumer preferences is reduced when strength-related attributes are valued, sometimes even resulting in preferences for less sustainable product alternatives (i.e., the "sustainability liability"). Conversely, when gentleness-related attributes are valued, sustainability enhances preference. In addition, the authors show that the potential negative impact of sustainability on product preferences can be attenuated using explicit cues about product strength.
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On the Economic Sustainability of Ethanol E85
Shaun Tatum, Sarah Skinner & John Jackson
Energy Economics, forthcoming
Abstract:
Several studies have considered the sustainability of corn-based ethanol as produced in the US as a major fuel source from a technical perspective. However, not much attention has been paid to the market-based aspects of corn-based ethanol as a sustainable fuel. We address this question by offering an econometric analysis of the E85 (apparently the most viable of the potential substitutes for gasoline) market using demand and supply analysis. Reduced form price equation estimates indicate that the cross elasticity of E85's price with respect to the price of gasoline does not differ significantly from unity, so that any rise in gasoline prices will be matched (in percentage terms) by a corresponding rise in the price of E85. Thus, given the current market, which includes significant government subsidy, the prospect that E85 will ever be price competitive with gasoline is indeed dim.
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A multivariate analysis of the energy intensity of sprawl versus compact living in the U.S. for 2003
Md. R. Shammin, Robert Herendeen, Michelle Hanson & Eric Wilson
Ecological Economics, forthcoming
Abstract:
We explore the energy intensity of sprawl versus compact living by analyzing the total energy requirements of U.S. households for the year 2003. The methods used are based on previous studies on energy cost of living. Total energy requirement is calculated as a function of individual energy intensities of goods and services derived from economic input-output analysis and expenditures for those goods and services. We use multivariate regression analysis to estimate patterns in household energy intensities. We define sprawl in terms of location in rural areas or in areas with low population size. We find that even though sprawl-related factors account for about 83% of the average household energy consumption, sprawl is only 17-19% more energy intensive than compact living based on how people actually lived. We observe that some of the advantages of reduced direct energy use by people living in high density urban centers are offset by their consumption of other non-energy products. A more detailed analysis reveals that lifestyle choices (household type, number of vehicles, and family size) that could be independent of location play a significant role in determining household energy intensity. We develop two models that offer opportunities for further analysis.
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The Price of Gasoline and New Vehicle Fuel Economy: Evidence from Monthly Sales Data
Thomas Klier & Joshua Linn
American Economic Journal: Economic Policy, August 2010, Pages 134-153
Abstract:
This paper uses a unique dataset of monthly new vehicle sales by detailed model from 1978 to 2007, and implements a new identification strategy to estimate the effect of the price of gasoline on individual vehicle model sales. We control for unobserved vehicle and consumer characteristics by using within model year changes in the price of gasoline and sales. We find a significant sales response, suggesting that the gasoline price increase from 2002 to 2007 explains nearly half of the decline in market share of US manufacturers. On the other hand, an increase in the gasoline tax would only modestly raise average fuel economy.
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Public perceptions of energy consumption and savings
Shahzeen Attari, Michael DeKay, Cliff Davidson & Wändi Bruine de Bruin
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
In a national online survey, 505 participants reported their perceptions of energy consumption and savings for a variety of household, transportation, and recycling activities. When asked for the most effective strategy they could implement to conserve energy, most participants mentioned curtailment (e.g., turning off lights, driving less) rather than efficiency improvements (e.g., installing more efficient light bulbs and appliances), in contrast to experts' recommendations. For a sample of 15 activities, participants underestimated energy use and savings by a factor of 2.8 on average, with small overestimates for low-energy activities and large underestimates for high-energy activities. Additional estimation and ranking tasks also yielded relatively flat functions for perceived energy use and savings. Across several tasks, participants with higher numeracy scores and stronger proenvironmental attitudes had more accurate perceptions. The serious deficiencies highlighted by these results suggest that well-designed efforts to improve the public's understanding of energy use and savings could pay large dividends.
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David LePoire
Technological Forecasting and Social Change, forthcoming
Abstract:
There are many theories on why sustainable science, technology, and commerce emerged first in Western Europe rather than elsewhere. A general theory is that the geography of Europe facilitated the development of diverse and independent states and resultant competition among them. Over the past 500 years, the sequence of leading states began with Portugal and the Netherlands on the edge of continental Western Europe, then moved to the British Isles, and finally moved across the Atlantic Ocean to the United States. The transitions of leadership from one state to another occurred about every 100 years. This sequence suggests that leadership moves from smaller states to larger states (although not to the largest existing state at the time), perhaps because larger states have the flexibility to develop more complex organizational processes and adapt new technology. To explore this theory further, this paper analyzes state population data at the beginning and end of each leadership period. The data reveal an accelerating initial population sequence. Further understanding is gained from comparing the populations of the preceding and succeeding states at the time of each transition: the succeeding state's population is usually about two times larger than that of the preceding state.
It is also seen that over time, the new organizational processes and technologies developed by the leading state are diffused and adapted by other states. Evidence of the effects of this diffusion should be seen in the dynamics of relative productivity and energy use (since the relative advantage of new ideas and technology can be maintained for a short period of about 100 years). This paper investigates these trends in population, trade, and resources to provide insight on possible future transitions.
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Zmarak Shalizi & Franck Lecocq
World Bank Research Observer, August 2010, Pages 295-321
Abstract:
Climate change is a new and important challenge to development strategies. In light of the current literature a framework for assessing responses to this challenge is provided. The presence of climate change makes it necessary to at least review development strategies-even in apparently nonclimate-sensitive and nonpolluting sectors. There is a need for an integrated portfolio of actions ranging from avoiding emissions (mitigation) to coping with impacts (adaptation) and to consciously accepting residual damages. Proactive (ex ante) adaptation is critical, but subject to risks of regrets when the magnitude or location of damages is uncertain. Uncertainty on location favors nonsite-specific actions, or reactive (ex post) adaptation. However, some irreversible losses cannot be compensated for. Thus, mitigation might be in many cases the cheapest long-term solution to climate change problems and the most important to avoid thresholds that may trigger truly catastrophic consequences. To limit the risks that budget constraints prevent developing countries from financing reactive adaptation - especially since climate shocks might erode the fiscal base - "rainy-day funds" may have to be developed within countries and at the global level for transfer purposes. Finally, more research is required on the impacts of climate change, on modeling the interrelations between mitigation and adaptation, and on operationalizing the framework.
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Giving Green to get Green? Incentives and consumer adoption of hybrid vehicle technology
Kelly Sims Gallagher & Erich Muehlegger
Journal of Environmental Economics and Management, forthcoming
Abstract:
Federal, state and local governments use a variety of incentives to induce consumer adoption of hybrid-electric vehicles. We study the relative efficacy of state sales tax waivers, income tax credits and non-tax incentives and find that the type of tax incentive offered is as important as the generosity of the incentive. Conditional on value, sales tax waivers are associated with more than a ten-fold increase in hybrid sales relative to income tax credits. In addition, we examine how adoption varies with fuel prices. Rising gasoline prices are associated with greater hybrid vehicle sales, but this effect operates almost entirely through high fuel-economy vehicles. By comparing consumer response to sales tax waivers and estimated future fuel savings, we estimate an implicit discount rate of 14.6 percent on future fuel savings.
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Efficacy of geoengineering to limit 21st century sea-level rise
J. Moore, S. Jevrejeva & A. Grinsted
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
Geoengineering has been proposed as a feasible way of mitigating anthropogenic climate change, especially increasing global temperatures in the 21st century. The two main geoengineering options are limiting incoming solar radiation, or modifying the carbon cycle. Here we examine the impact of five geoengineering approaches on sea level; SO2 aerosol injection into the stratosphere, mirrors in space, afforestation, biochar, and bioenergy with carbon sequestration. Sea level responds mainly at centennial time scales to temperature change, and has been largely driven by anthropogenic forcing since 1850. Making use a model of sea-level rise as a function of time-varying climate forcing factors (solar radiation, volcanism, and greenhouse gas emissions) we find that sea-level rise by 2100 will likely be 30 cm higher than 2000 levels despite all but the most aggressive geoengineering under all except the most stringent greenhouse gas emissions scenarios. The least risky and most desirable way of limiting sea-level rise is bioenergy with carbon sequestration. However aerosol injection or a space mirror system reducing insolation at an accelerating rate of 1 W m-2 per decade from now to 2100 could limit or reduce sea levels. Aerosol injection delivering a constant 4 W m-2 reduction in radiative forcing (similar to a 1991 Pinatubo eruption every 18 months) could delay sea-level rise by 40-80 years. Aerosol injection appears to fail cost-benefit analysis unless it can be maintained continuously, and damage caused by the climate response to the aerosols is less than about 0.6% Global World Product.
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Regulatory Choice with Pollution and Innovation
Charles Kolstad
NBER Working Paper, August 2010
Abstract:
This paper develops a simple model of a polluting industry and an innovating firm. The polluting industry is faced with regulation and costly abatement. Regulation may be taxes or marketable permits. The innovating firm invests in R&D and develops technologies which reduce the cost of pollution abatement. The innovating firm can patent this innovation and use a licensing fee to generate revenue. In a world of certainty, the first best level of innovation and abatement can be supported by either a pollution tax or a marketable permit. However, the returns to the innovator from innovation are not the same under the two regimes. A marketable permit system allows the innovator to capture all of the gains to innovation; a tax system involves sharing the gains of innovation between the innovator and the polluting industry.
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National and Global Origins of Environmental Association
Wesley Longhofer & Evan Schofer
American Sociological Review, August 2010, Pages 505-533
Abstract:
We examine the origins of voluntary associations devoted to environmental protection, focusing on the divergent trajectories of industrialized versus developing countries. We consider a wide range of domestic economic, political, and institutional dynamics that give rise to environmental associations. Developing and extending neo-institutional world polity arguments, we characterize domestic association in the developing world as the product of global cultural models, legitimation, and resources. Using event history and dynamic panel models, we analyze the formation of domestic environmental associations for a large sample of countries in the contemporary period. Among highly industrialized countries, domestic factors-resources and political institutions that afford favorable opportunities-largely explain the prevalence of environmental associations. In contrast, global forces are a powerful catalyst for environmental organizing in the developing world. The environmental movement, which had domestic origins in the West, became institutionalized in the world polity, generating new associations on a global scale. We also find positive effects of democratic institutions and philanthropic foundations. Environmental degradation and societal affluence are not primary drivers of environmental association. We conclude by reflecting on the implications of globally-sponsored voluntary associations, which appear to be common in the developing world.
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Framing and communicating climate change: The effects of distance and outcome frame manipulations
Alexa Spence & Nick Pidgeon
Global Environmental Change, forthcoming
Abstract:
Communications regarding climate change are increasingly being utilised in order to encourage sustainable behaviour and the way that these are framed can significantly alter the impact that they have on the recipient. This experimental study seeks to investigate how transferable existing research findings on framing from health and behavioural research are to the climate change case. The study (N = 161) examined how framing the same information about climate change in terms of gain or loss outcomes and in terms of local or distant impacts can affect perceptions. Text on potential climate change impacts was adapted from the 2007 Intergovernmental Panel on Climate Change report, alongside maps and images of potential flooding impacts. Participants then completed measures of various relevant socio-cognitive factors and questions assessing their responses to the information that they had received. Results indicated that, ceteris paribus, gain frames were superior to loss frames in increasing positive attitudes towards climate change mitigation, and also increased the perceived severity of climate change impacts. However, third variable analyses demonstrated that the superiority of the gain frame was partially suppressed by lower fear responses and poorer information recall within gain framed information. In addition, framing climate change impacts as distant (whilst keeping information presented the same) resulted in climate change impacts being perceived as more severe, whilst attitudes towards climate change mitigation were more positive when participants were asked to consider social rather than personal aspects of climate change. Implications for designing communications about climate change are outlined.
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The traffic in garbage and hazardous wastes: An overview
Don Liddick
Trends in Organized Crime, September 2010, Pages 134-146
Abstract:
The traffic in garbage and hazardous wastes is a huge illicit transnational business that involves a wide array of criminals, including private entities, corrupt public officials, and organized crime groups. The traffic in CFCs and radioactive materials and the chemical by-products of illicit crop cultivation and production are related problems with significant negative environmental and social consequences. Inelastic demand, price differentials among industrialized and developing nations, corruption, incongruent international regulations, a lack of political will, and the emergence of waste brokers are all factors that drive the illegal trade and inhibit law enforcement. While regulatory and criminal justice efforts have been mostly ineffective, technological innovations that reduce waste and the costs of safe disposal may limit opportunities for waste traffickers. The right mix of subsidies and taxation as well as monitoring and compliance at the local level could make legal disposal more attractive, and thus further inhibit criminal opportunities.
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Exporting Air Pollution? Regulatory Enforcement and Environmental Free Riding in the United States
David Konisky & Neal Woods
Political Research Quarterly, forthcoming
Abstract:
Political jurisdictions have incentives to promote pollution spillovers to capture the benefits of economic production within their borders while exporting the environmental costs to their neighbors. The authors examine the extent to which U.S. states engage in this type of free-riding behavior. Studying enforcement of the federal Clean Air Act from 1990 through 2000, the authors employ zero-inflated negative binomial regression to predict the number of state-initiated enforcement actions conducted in counties bordering other jurisdictions. They find that states perform fewer enforcement actions in counties adjacent to international borders but no evidence that states conduct less enforcement in counties that border other states.
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Costly Enforcement of Voluntary Environmental Agreements
David McEvoy & John Stranlund
Environmental and Resource Economics, September 2010, Pages 45-63
Abstract:
We examine the consequences of costly enforcement on the ability of voluntary agreements with industries to meet regulatory objectives, the levels of industry participation with these agreements, and the relative efficiency of voluntary and regulatory approaches. A voluntary agreement can be more efficient in reaching an aggregate emissions target than a conventional emissions tax, but only if: (1) profitable voluntary agreements in which members of the agreement pay for its enforcement exist; (2) members of a voluntary agreement actually bear the costs of enforcing the agreement; (3) the agreement is enforced by a third-party, not the government, and (4) this third-party enforcer has a significant advantage in monitoring technology and/or available sanctions over the government.
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Environmental Liability and Redevelopment of Old Industrial Land
Hilary Sigman
Journal of Law and Economics, May 2010, Pages 289-306
Abstract:
Many communities are concerned about the reuse of potentially contaminated land (brownfields) and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. This article studies state liability rules-specifically, strict liability and joint and several liability-that affect the level and distribution of expected costs of private cleanup. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. The results suggest that liability is at least partly capitalized but does still deter redevelopment.