New Frontiers in Environmental Economics
Paper Session
Friday, Jan. 3, 2025 8:00 AM - 10:00 AM (PST)
- Chair: Joseph S. Shapiro, University of California-Berkeley
Land Conservation and the Clean Energy Transition
Abstract
Decarbonization requires a massive expansion of renewable power generation infrastructure. Significant increases in public investment aim to accelerate the deployment of wind and solar projects across the United States. Anecdotal data suggest an emerging “green versus green” conflict between clean energy advocates and land conservationists. This paper studies the impact of conservation easements, a legal and tax structure that permanently restricts development on land. Covering 40 million acres, conservation easements are a major but understudied policy driving land use decisions in the US. Analyzing the universe of proposed renewable projects from 2000-2020, we find that proximity to conservation easements has significantly increased the probability of project failure. In ongoing work, we explore the extent to which the current policy regime is negotiating trade-offs between decarbonization and land conservation goals. A comparison of failed projects impacted by conservation protections and marginal projects that were ultimately deployed reveals no significant differences in measured habitat or conservation values.Size-Based Environmental Regulation: Evidence from Major Clean Air Act Thresholds
Abstract
We study the consequences of size-based environmental regulation, with application to the US Clean Air Act. Under many environmental and other policies, firms exceeding statutory size thresholds face stricter regulation. Size-based regulation can decrease output by reallocating factors away from productive firms. The Clean Air Act designates a new or retrofitted establishment as a “major source” if its potential to emit (PTE) pollution exceeds statutory thresholds. We collect and analyze establishment-level permits that record PTE. These administrative data reveal substantial bunching around major source thresholds, suggesting that firms design establishments to avoid major source regulation. Graphs of actual ex post emissions suggest that major source regulation produces genuine changes in pollution, not merely strategic accounting. Data on fines and other enforcement actions show that firms just above major source thresholds face far stricter regulation. We link PTE to administrative, confidential microdata from the US Census Bureau on establishment-level inputs and outputs. We interpret these data through the lens of a model combining ideas from the environmental and macro-labor literatures: endogenous pollution abatement in response to environmental regulation and a Lucas span-of-control interpretation of misallocation. We quantify the economic cost of Clean Air Act size-based regulation and compare it to monetized values of resulting air quality benefits. We also study the social welfare consequences of replacing size-based thresholds with counterfactual policies, including Pigouvian taxation.A Welfare Analysis of Policies Impacting Climate Change
Abstract
What are the most effective ways to address climate change? This paper extends and applies the marginal value of public funds (MVPF) framework to help answer this question. We examine more than 50 US environmental policy changes studied over the past 25 years. These policies span subsidies (wind, residential solar, electric and hybrid vehicles, vehicle replacement, appliance rebates, weatherization), nudges (marketing and energy conservation), and revenue raisers (fuel taxes, cap and trade). For each policy, we draw upon quasi-experimental or experimental evaluations of causal effects, and translate those estimates into an MVPF. We apply a consistent translation of these behavioral responses into measures of their associated externalities and valuations of those externalities. We also provide a new method for incorporating learning-by-doing spillovers. The analysis yields three main results: First, subsidies for investments that directly displace the dirty production of electricity, such as production tax credits for wind power and subsidies for residential solar panels, have higher MVPFs (generally exceeding 2) than all other subsidies in our sample (with MVPFs generally around 1). Second, nudges to reduce energy consumption have large welfare gains (MVPFs above 5) when targeted to regions of the US with a dirty electric grid. By contrast, policies targeting areas with cleaner grids such as California and the Northeast have substantially smaller MVPFs (often below 1), despite larger treatment effects in those areas. Third, gas taxes and cap-and-trade policies are highly efficient means of raising revenue (with MVPFs below 0.7) due to the presence of large environmental externalities. We contrast these conclusions with those derived from more traditional cost per ton metrics used in previous literature.Discussant(s)
Wolfram Schlenker
,
Columbia University
Matthew Kahn
,
University of Southern California
Maureen Cropper
,
University of Maryland
Juan Carlos Suárez Serrato
,
Stanford University
JEL Classifications
- Q5 - Environmental Economics
- H8 - Miscellaneous Issues