February 24, 2008

Climate Change Hysteria and the Supreme Court: The Economic Impact of Global Warming on the U.S. And the Misguided Regulation of Greenhouse Gas Emissi

In the spring of 2007, the U.S. Supreme Court ruled in Massachusetts v. EPA that the U.S. Environmental Protection Agency (EPA) must promulgate automobile tailpipe greenhouse gas emission standards under Section 202 of the Clean Air Act (CAA). American environmentalists hailed the Supreme Court's decision as an important victory in the battle to curb global warming. This article argues to the contrary.

Johnston, J. S. "Climate Change Hysteria and the Supreme Court: The Economic Impact of Global Warming on the U.S. And the Misguided Regulation of Greenhouse Gas Emissions Under the Clean Air Act." Reg-Markets Center, Working Paper 08-06, Feb 2008.

February 17, 2008

Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology.

Federal, state and local governments use a variety of incentives to induce consumer adoption of hybrid-electric vehicles. This paper studies the relative efficacy of state sales tax waivers, income tax credits and non-tax incentives and finds that the type of tax incentive offered is as important as the value of the tax incentive. Conditional on value, sales tax waivers are associated a seven-fold greater increase in hybrid sales than income tax credits. In addition, the paper estimates the extent to which consumer adoption of hybrid-electric vehicles (HEV) in the United States from 2000-2006 can be attributed to government incentives, changing gasoline prices, or consumer preferences for environmental quality or energy security.

Kelly Sims Gallagher and Erich Muehlegger. "Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology." JFK School of Government, Harvard University, Working Paper RWP08-009, Feb 2008.

Adaptation to Climate Change: Do Not Count on Climate Scientists to Do Your Work.

Uncertainty in future climate makes it impossible to directly use climate model outputs as inputs for infrastructure design. Instead of optimizing based on the climate conditions projected by models, therefore, future infrastructure should be made robust to most possible changes in climate conditions. Five methods are examined: (i) introducing long-term prospective exercises; (ii) selecting "no-regret" strategies; (iii) favouring reversible options; (iv) reducing decision time horizons; and (v) promoting soft adaptation strategies.

St├ęphane Hallegatte. "Adaptation to Climate Change: Do Not Count on Climate Scientists to Do Your Work." Reg-Markets Center, Related Publication 08-01. Feb 2008.

Water Marketing as an Adaptive Response to the Threat of Climate Change.

This article suggests that market-based institutions are well suited to address the additional pressures on water supplies due to climate change. Many aspects of water markets, including their flexibility, decentralized nature, and ability to create and harness economic incentives, make them particularly well suited to address the uncertain water forecast. A gradual shift toward water marketing and market pricing will improve the management of water supplies, ensure more efficient allocation of available water supplies and encourage cost-effective conservation measures.

Adler, J.H. "Water Marketing as an Adaptive Response to the Threat of Climate Change." Available at SSRN, Feb 2008.

The Triptych approach revisited: A staged sectoral approach for climate mitigation.

The Triptych approach is a method for allocating future greenhouse gas emission reductions under a future international climate agreement among countries based on technological criteria at the sector level, and accounting for structural differences. The approach presented here is a refinement of earlier work in terms of increased transparency and allowing delayed participation for developing countries.

den Elzen, M.G.J., N. Hohne, P.L. Lucas, S. Moltmann and T. Kuramochi. "The Triptych approach revisited: A staged sectoral approach for climate mitigation." MNP, Report no. 500114008, Sept 2007.

February 9, 2008

Voluntary Corporate Environmental Initiatives and Shareholder Wealth.

This paper provides some first evidence on shareholder wealth effects of voluntary corporate environmental initiatives. Companies announcing membership in Climate Leaders and Ceres - two voluntary environmental programs related to climate change - experience significantly negative abnormal stock returns. The price decline is smaller in carbon-intensive industries, where regulatory actions are more likely, and for high book-to-market firms, suggesting that "green" expenditures crowd out growth-related investments.

Karen Fisher-Vanden , Karin S Thorburn. "Voluntary Corporate Environmental Initiatives and Shareholder Wealth." CEPR DP6698, Feb 2008.

Toward an Efficiency Rationale for the Public Provision of Private Goods.

This paper shows that public provision of private goods may be justified on pure efficiency grounds in an environment where individuals consume both public and private goods. The government's involvement in the provision of private goods provides it with information about individuals' private good purchases that facilitates more efficient revenue extraction for the provision of public goods. This is an example where there is efficiency loss from separating revenue and expenditure problems in public finance, and is therefore of more general interest for the study of optimal taxation.

Hanming Fang, Peter Norman. "Toward an Efficiency Rationale for the Public Provision of Private Goods." NBER Working Paper No. 13827, Feb 2008.

Optimal Provision of Multiple Excludable Public Goods.

This paper studies the optimal provision mechanism for multiple excludable public goods when agents' valuations are private information. For a parametric class of problems with binary valuations, we demonstrate that the optimal mechanism involves bundling if a regularity condition, akin to a hazard rate condition, on the distribution of valuations is satisfied. Bundling alleviates the free riding problem in large economies in two ways: first, it may increase the asymptotic provision probability of socially efficient public goods from zero to one; second, it decreases the extent of use exclusions. If the regularity condition is violated, then the optimal solution replicates the separate provision outcome.

Hanming Fang, Peter Norman. "Optimal Provision of Multiple Excludable Public Goods." NBER Working Paper No. 13797, Feb 2008.

February 7, 2008

Estimating the Impact of Climate Change on Crop Yields: The Importance of Nonlinear Temperature Effects.

This papers pair a panel of county-level crop yields in the US with a fine-scale weather data set that incorporates the whole distribution of temperatures between the minimum and maximum within each day and across all days in the growing season. Yields increase in temperature until about 29C for corn, 30C for soybeans, and 32C for cotton, but temperatures above these thresholds become very harmful. The slope of the decline above the optimum is significantly steeper than the incline below it. The same nonlinear and asymmetric relationship is found whether we consider time series or cross-sectional variation in weather and yields. This suggests limited potential for adaptation within crop species because the latter includes farmers' adaptations to warmer climates and the former does not.

Wolfram Schlenker, Michael Roberts. "Estimating the Impact of Climate Change on Crop Yields: The Importance of Nonlinear Temperature Effects." NBER Working Paper No. 13799, Feb 2008.