Energetic
Consumers' Perceptions and Misperceptions of Energy Costs
Hunt Allcott
American Economic Review, May 2011, Pages 98-104
Abstract:
This paper presents three initial stylized facts from the Vehicle Ownership and Alternatives Survey (VOAS), a nationally representative survey that elicits consumers' beliefs about gasoline prices and the relative energy costs of autos with different fuel economy ratings. First, American consumers devote little attention to fuel costs when purchasing autos. Second, consistent with a cognitive bias called "MPG Illusion," consumers underestimate the fuel cost differences between low-MPG vehicles and overestimate the differences between high-MPG vehicles. Third, Americans' mean and median expected future gas prices were above current prices and predictions of the futures market at the time of the survey. Although it is often argued that misperceived energy costs justify policies to encourage the sale of energy efficient durable goods, these results show that misperceptions and expectations that differ from market information could either increase or decrease energy efficiency.
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Climate related sea-level variations over the past two millennia
Andrew Kemp et al.
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
We present new sea-level reconstructions for the past 2100 y based on salt-marsh sedimentary sequences from the US Atlantic coast. The data from North Carolina reveal four phases of persistent sea-level change after correction for glacial isostatic adjustment. Sea level was stable from at least BC 100 until AD 950. Sea level then increased for 400 y at a rate of 0.6 mm/y, followed by a further period of stable, or slightly falling, sea level that persisted until the late 19th century. Since then, sea level has risen at an average rate of 2.1 mm/y, representing the steepest century-scale increase of the past two millennia. This rate was initiated between AD 1865 and 1892. Using an extended semiempirical modeling approach, we show that these sea-level changes are consistent with global temperature for at least the past millennium.
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Retail Redlining: Are Gasoline Prices Higher in Poor and Minority Neighborhoods?
Caitlin Knowles Myers et al.
Economic Inquiry, July 2011, Pages 795-809
Abstract:
This study uses new data on retail gasoline prices in three cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that prices do not vary greatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 10% point increase in poor families relative to middle-upper income families, retail gasoline prices increase by an average of 0.70%. Two-thirds of this differential is explained by cost, competition, and demand characteristics of poor neighborhoods. The remaining differential likely reflects price discrimination in response to lower competition and/or more inelastic demand in poor neighborhoods.
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David Henry, Nicholas Muller & Robert Mendelsohn
Journal of Policy Analysis and Management, Summer 2011, Pages 598-612
Abstract:
The sulfur dioxide (SO2) cap and trade program established in the 1990 Clean Air Act Amendments is celebrated for reducing abatement costs ($0.7 to $2.1 billion per year) by allowing emissions allowances to be traded. Unfortunately, places with high marginal costs also tend to have high marginal damages. Ton-for-ton trading reduces emissions in low damage areas (rural) while increasing emissions in high damage areas (cities). From 2000 to 2007, conservative estimates of the value of mortality risk suggest that trades increased damages from $0.8 to $1.1 billion annually relative to the initial allowance allocation and from $1.5 to $1.9 billion annually relative to a uniform performance standard. With U.S. Environmental Protection Agency (USEPA) values, trades increased damages from $2.4 to $3.2 billion annually compared to the initial allowance allocation and from $4.4 to $5.4 billion compared to a uniform performance standard. It is not clear that the ton-for-ton SO2 cap and trade program is actually more efficient than comparable command and control programs. The trading program needs to be modified so that tons are weighted by their marginal damage.
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Pounds that Kill: The External Costs of Vehicle Weight
Michael Anderson & Maximilian Auffhammer
NBER Working Paper, June 2011
Abstract:
Heavier vehicles are safer for their own occupants but more hazardous for the occupants of other vehicles. In this paper we estimate the increased probability of fatalities from being hit by a heavier vehicle in a collision. We show that, controlling for own-vehicle weight, being hit by a vehicle that is 1,000 pounds heavier results in a 47% increase in the baseline fatality probability. Estimation results further suggest that the fatality risk is even higher if the striking vehicle is a light truck (SUV, pickup truck, or minivan). We calculate that the value of the external risk generated by the gain in fleet weight since 1989 is approximately 27 cents per gallon of gasoline. We further calculate that the total fatality externality is roughly equivalent to a gas tax of $1.08 per gallon. We consider two policy options for internalizing this external cost: a gas tax and an optimal weight varying mileage tax. Comparing these options, we find that the cost is similar for most vehicles.
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School Buses, Diesel Emissions, and Respiratory Health
Timothy Beatty & Jay Shimshack
Journal of Health Economics, forthcoming
Abstract:
School buses contribute disproportionately to ambient air quality, pollute near schools and residential areas, and their emissions collect within passenger cabins. This paper examines the impact of school bus emissions reductions programs on health outcomes. A key contribution relative to the broader literature is that we examine localized pollution reduction programs at a fine level of aggregation. We find that school bus retrofits induced reductions in bronchitis, asthma, and pneumonia incidence for at-risk populations. Back of the envelope calculations suggest conservative benefit-cost ratios between 7:1 and 16:1.
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Ahmad Faruqui & Sanem Sergici
Journal of Regulatory Economics, August 2011, Pages 82-109
Abstract:
The Baltimore Gas and Electric Company (BGE) undertook a dynamic pricing experiment to test customer price responsiveness to different dynamic pricing options. The pilot ran during the summers of 2008 and 2009 and was called the Smart Energy Pricing (SEP) Pilot. In 2008, it tested two types of dynamic pricing tariffs: critical peak pricing (CPP) and peak time rebate (PTR) tariffs. About a thousand customers were randomly placed on these tariffs and some of them were paired with one of two enabling technologies, a device known as the Energy Orb and a switch for cycling central air conditioners. The usage of a randomly chosen control group of customers was also monitored during the same time period. In 2009, BGE repeated the pilot program with the same customers who participated in the 2008 pilot, but this time it only tested the PTR tariff. In this paper, we estimate a constant elasticity of substitution (CES) model on the SEP pilot's hourly consumption, pricing and weather data. We derive substitution and daily price elasticities and predictive equations for estimating the magnitude of demand response under a variety of dynamic prices. We also test for the persistence of impacts across the two summers. In addition, we report average peak demand reduction for each of the treatment cells in the SEP pilot and compare the findings with those reported from earlier pilots. These results show conclusively that it is possible to incentivize customers to reduce their peak period loads using price signals. More importantly, these reductions do not wear off when the pricing plans are implemented over two consecutive summers. Our analyses reveal that SEP participants reduced their peak usages in the range of 18 to 33% in the first summer of the SEP pilot and continued these reductions in the second summer.
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Neal Fann et al.
Risk Analysis, June 2011, Pages 908-922
Abstract:
The U.S. Environmental Protection Agency undertook a case study in the Detroit metropolitan area to test the viability of a new multipollutant risk-based (MP/RB) approach to air quality management, informed by spatially resolved air quality, population, and baseline health data. The case study demonstrated that the MP/RB approach approximately doubled the human health benefits achieved by the traditional approach while increasing cost less than 20%-moving closer to the objective of Executive Order 12866 to maximize net benefits. Less well understood is how the distribution of health benefits from the MP/RB and traditional strategies affect the existing inequalities in air-pollution-related risks in Detroit. In this article, we identify Detroit populations that may be both most susceptible to air pollution health impacts (based on local-scale baseline health data) and most vulnerable to air pollution (based on fine-scale PM2.5 air quality modeling and socioeconomic characteristics). Using these susceptible/vulnerable subpopulation profiles, we assess the relative impacts of each control strategy on risk inequality, applying the Atkinson Index (AI) to quantify health risk inequality at baseline and with either risk management approach. We find that the MP/RB approach delivers greater air quality improvements among these subpopulations while also generating substantial benefits among lower-risk populations. Applying the AI, we confirm that the MP/RB strategy yields less PM2.5 mortality and asthma hospitalization risk inequality than the traditional approach. We demonstrate the value of this approach to policymakers as they develop cost-effective air quality management plans that maximize risk reduction while minimizing health inequality.
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Promoting Recycling: Private Values, Social Norms, and Economic Incentives
Kip Viscusi, Joel Huber & Jason Bell
American Economic Review, May 2011, Pages 65-70
Abstract:
Evidence from a nationally representative sample of households illuminates the determinants of recycling behavior for plastic water bottles. Private values of the environment are influential in promoting recycling, as are personal norms for pro-environmental behavior. However, social norms with respect to the assessment of the household's recycling behaviors by others have little independent effect. Particularly influential are policies that create economic incentives to promote recycling either through state recycling laws that reduce the time and inconvenience costs of recycling or through bottle deposits. Effective policies can have a discontinuous effect at the individual level, transforming non-recyclers into avid recyclers.
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Trade and the Greenhouse Gas Emissions from International Freight Transport
Anca Cristea et al.
NBER Working Paper, June 2011
Abstract:
We collect extensive data on worldwide trade by transportation mode and use this to provide detailed comparisons of the greenhouse gas emissions associated with output versus international transportation of traded goods. International transport is responsible for 33 percent of world-wide trade-related emissions, and over 75 percent of emissions for major manufacturing categories like machinery, electronics and transport equipment. US exports intensively make use of air cargo; as a result two-thirds of its export-related emissions are due to international transport, and US exports by themselves generate a third of transport emissions worldwide. Inclusion of transport dramatically changes the ranking of countries by emission intensity. US production emissions per dollar of exports are 16 percent below the world average, but once we include transport US emissions per dollar exported are 59 percent above the world average. We use our data to systematically investigate whether trade inclusive of transport can lower emissions. In one-quarter of cases, the difference in output emissions is more than enough to compensate for the emissions cost of transport. Finally, we examine how likely patterns of trade growth will affect modal use and emissions. Full liberalization of tariffs and GDP growth concentrated in China and India lead to transport emissions growing much faster than the value of trade, due to trade shifting toward distant trading partners. Emissions growth from growing GDP dwarfs any growth from tariff liberalization.
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Limited potential for adaptation to climate change in a broadly distributed marine crustacean
Morgan Kelly, Eric Sanford & Richard Grosberg
Proceedings of the Royal Society: Biological Sciences, forthcoming
Abstract:
The extent to which acclimation and genetic adaptation might buffer natural populations against climate change is largely unknown. Most models predicting biological responses to environmental change assume that species' climatic envelopes are homogeneous both in space and time. Although recent discussions have questioned this assumption, few empirical studies have characterized intraspecific patterns of genetic variation in traits directly related to environmental tolerance limits. We test the extent of such variation in the broadly distributed tidepool copepod Tigriopus californicus using laboratory rearing and selection experiments to quantify thermal tolerance and scope for adaptation in eight populations spanning more than 17° of latitude. Tigriopus californicus exhibit striking local adaptation to temperature, with less than 1 per cent of the total quantitative variance for thermal tolerance partitioned within populations. Moreover, heat-tolerant phenotypes observed in low-latitude populations cannot be achieved in high-latitude populations, either through acclimation or 10 generations of strong selection. Finally, in four populations there was no increase in thermal tolerance between generations 5 and 10 of selection, suggesting that standing variation had already been depleted. Thus, plasticity and adaptation appear to have limited capacity to buffer these isolated populations against further increases in temperature. Our results suggest that models assuming a uniform climatic envelope may greatly underestimate extinction risk in species with strong local adaptation.