Capped Out
Uncertainty, loss aversion, and markets for energy efficiency
David Greene
Energy Economics, July 2011, Pages 608-616
Abstract:
Increasing energy efficiency is critical to mitigating greenhouse gas emissions from fossil-fuel combustion, reducing oil dependence, and achieving a sustainable global energy system. The tendency of markets to neglect apparently cost-effective energy efficiency options has been called the "efficiency gap" or "energy paradox." The market for energy efficiency in new, energy-using durable goods, however, appears to have a bias that leads to undervaluation of future energy savings relative to their expected value. This paper argues that the bias is chiefly produced by the combination of substantial uncertainty about the net value of future fuel savings and the loss aversion of typical consumers. This framework relies on the theory of context-dependent preferences. The uncertainty-loss aversion bias against energy efficiency is quantifiable, making it potentially correctible by policy measures. The welfare economics of such policies remains unresolved. Data on the costs of increased fuel economy of new passenger cars, taken from a National Research Council study, illustrate how an apparently cost-effective increase in energy efficiency would be uninteresting to loss-averse consumers.
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Climate Trends and Global Crop Production Since 1980
David Lobell, Wolfram Schlenker & Justin Costa-Roberts
Science, forthcoming
Abstract:
Efforts to anticipate how climate change will affect future food availability can benefit from understanding the impacts of changes to date. Here, we show that in the cropping regions and growing seasons of most countries, with the important exception of the United States, temperature trends for 1980-2008 exceeded one standard deviation of historic year-to-year variability. Models that link yields of the four largest commodity crops to weather indicate that global maize and wheat production declined by 3.8% and 5.5%, respectively, compared to a counterfactual without climate trends. For soybeans and rice, winners and losers largely balanced out. Climate trends were large enough in some countries to offset a significant portion of the increases in average yields that arose from technology, CO2 fertilization, and other factors.
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The dragons of inaction: Psychological barriers that limit climate change mitigation and adaptation
Robert Gifford
American Psychologist, May-Jun 2011, Pages 290-302
Abstract:
Most people think climate change and sustainability are important problems, but too few global citizens engaged in high-greenhouse-gas-emitting behavior are engaged in enough mitigating behavior to stem the increasing flow of greenhouse gases and other environmental problems. Why is that? Structural barriers such as a climate-averse infrastructure are part of the answer, but psychological barriers also impede behavioral choices that would facilitate mitigation, adaptation, and environmental sustainability. Although many individuals are engaged in some ameliorative action, most could do more, but they are hindered by seven categories of psychological barriers, or "dragons of inaction": limited cognition about the problem, ideological worldviews that tend to preclude pro-environmental attitudes and behavior, comparisons with key other people, sunk costs and behavioral momentum, discredence toward experts and authorities, perceived risks of change, and positive but inadequate behavior change. Structural barriers must be removed wherever possible, but this is unlikely to be sufficient. Psychologists must work with other scientists, technical experts, and policymakers to help citizens overcome these psychological barriers.
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Marshall Burke et al.
NBER Working Paper, May 2011
Abstract:
A growing body of economics research projects the effects of global climate change on economic outcomes. Climate scientists often criticize these articles because nearly all ignore the well-established uncertainty in future temperature and rainfall changes, and therefore appear likely to have downward biased standard errors and potentially misleading point estimates. This paper incorporates climate uncertainty into estimates of climate change impacts on U.S. agriculture. Accounting for climate uncertainty leads to a much wider range of projected impacts on agricultural profits, with the 95% confidence interval featuring drops of between 17% to 88%. An application to African agriculture yields similar results.
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The Distributional Impact of Climate Policy
Dale Jorgenson et al.
B.E. Journal of Economic Analysis & Policy, April 2011
Abstract:
The purpose of this paper is to present a new methodology for evaluating the distributional impacts of climate policy. This methodology builds directly on the framework introduced by Jorgenson, Slesnick, and Wilcoxen (1992), but generalizes it by including leisure time, as well as goods and services, in the measure of household welfare. We provide detailed results for 244 different types of households distinguished by demographic characteristics. In addition, we evaluate the overall impact of a cap-and-trade system, as represented in Energy Modeling Forum 22. While there is a wide range of outcomes for different demographic groups, the impact on economic welfare is regressive and generally negative but relatively small.
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Cross-country pollution patterns
Don Clark & Alejandro Dellachiesa
Applied Economics Letters, Summer 2011, Pages 799-804
Abstract:
This study investigates the relationship between pollution emissions and levels of economic activity as countries move up the per capita income scale. Previous studies examine the relationships between pollution and per capita income. Pollution emissions are found to be highly concentrated among the lower income countries. Poorer countries account for much more pollution than would be expected from their levels of economic activity. Findings suggest that the proposed US legislation to curb carbon dioxide (CO2) emissions will have a minor effect on global warming. The United States should not attempt costly emission reductions until there is a global agreement on CO2 emissions that includes lower- and middle-income countries.
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Katherine Curtis & Annemarie Schneider
Population & Environment, forthcoming
Abstract:
Significant advances have been made to understand the interrelationship between humans and the environment in recent years, yet research has not produced useful localized estimates that link population forecasts to environmental change. Coarse, static population estimates that have little information on projected growth or spatial variability mask substantial impacts of environmental change on especially vulnerable populations. We estimate that 20 million people in the United States will be affected by sea-level rise by 2030 in selected regions that represent a range of sociodemographic characteristics and corresponding risks of vulnerability. Our results show that the impact of sea-level rise extends beyond the directly impacted counties due to migration networks that link inland and coastal areas and their populations. Substantial rates of population growth and migration are serious considerations for developing mitigation, adaptation, and planning strategies, and for future research on the social, demographic, and political dimensions of climate change.
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The Impact of Pollution on Worker Productivity
Joshua Graff Zivin & Matthew Neidell
NBER Working Paper, April 2011
Abstract:
Environmental protection is typically cast as a tax on the labor market and the economy in general. Since a large body of evidence links pollution with poor health, and health is an important part of human capital, efforts to reduce pollution could plausibly be viewed as an investment in human capital and thus a tool for promoting economic growth. While a handful of studies have documented the impacts of pollution on labor supply, this paper is the first to rigorously assess the less visible but likely more pervasive impacts on worker productivity. In particular, we exploit a novel panel dataset of daily farm worker output as recorded under piece rate contracts merged with data on environmental conditions to relate the plausibly exogenous daily variations in ozone with worker productivity. We find robust evidence that ozone levels well below federal air quality standards have a significant impact on productivity: a 10 ppb decrease in ozone concentrations increases worker productivity by 4.2 percent.
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Methane contamination of drinking water accompanying gas-well drilling and hydraulic fracturing
Stephen Osborn et al.
Proceedings of the National Academy of Sciences, 17 May 2011, Pages 8172-8176
Abstract:
Directional drilling and hydraulic-fracturing technologies are dramatically increasing natural-gas extraction. In aquifers overlying the Marcellus and Utica shale formations of northeastern Pennsylvania and upstate New York, we document systematic evidence for methane contamination of drinking water associated with shale-gas extraction. In active gas-extraction areas (one or more gas wells within 1 km), average and maximum methane concentrations in drinking-water wells increased with proximity to the nearest gas well and were 19.2 and 64 mg CH4 L-1 (n = 26), a potential explosion hazard; in contrast, dissolved methane samples in neighboring nonextraction sites (no gas wells within 1 km) within similar geologic formations and hydrogeologic regimes averaged only 1.1 mg L-1 (P < 0.05; n = 34). Average δ13C-CH4 values of dissolved methane in shallow groundwater were significantly less negative for active than for nonactive sites (-37 ± 7‰ and -54 ± 11‰, respectively; P < 0.0001). These δ13C-CH4 data, coupled with the ratios of methane-to-higher-chain hydrocarbons, and δ2H-CH4 values, are consistent with deeper thermogenic methane sources such as the Marcellus and Utica shales at the active sites and matched gas geochemistry from gas wells nearby. In contrast, lower-concentration samples from shallow groundwater at nonactive sites had isotopic signatures reflecting a more biogenic or mixed biogenic/thermogenic methane source. We found no evidence for contamination of drinking-water samples with deep saline brines or fracturing fluids. We conclude that greater stewardship, data, and-possibly-regulation are needed to ensure the sustainable future of shale-gas extraction and to improve public confidence in its use.
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Frames of Influence: U.S. Environmental Rulemaking Case Studies
Sara Rinfret
Review of Policy Research, May 2011, Pages 231-246
Abstract:
The purpose of this article was to question whether interest group actions during the pre-proposal stage of U.S. federal rulemaking influences the language proposed in natural resource agency rules. The influence of interest groups during this stage was examined across three case studies: (1) the United States Fish and Wildlife Service (USFWS) critical habitat designation for Nebraska's Salt Creek tiger beetle, (2) the USFWS critical habitat designation for the Utah/Arizona Shivwits and Holmgren milk vetch, and (3) the USFWS delisting of the Northern Rocky Mountain gray wolf population from the endangered species list. To analyze these three cases, a frame analysis approach is used and offers evidence to support the proposition that the instructive, expertise, and fiscal feasibility frames that stakeholders used during the pre-proposal stage can shape the language of a Notice of Proposed Rulemaking. These cases suggest the rich potential for careful study of the earliest stages in the regulatory and administrative rulemaking process in the United States and beyond.