September 25, 2011

Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation

by Christopher R. Knittel and Ryan Sandle

- Efforts to reduce greenhouse gas emissions in the US have relied on Corporate Average Fuel Economy (CAFE) Standards and Renewable Fuel Standards (RFS). Economists often argue that these policies are inefficient relative to carbon pricing because they ignore existing vehicles and do not adequately reduce the incentive to drive. This paper presents evidence that the net social costs of carbon pricing are significantly less than previous thought. While our empirical setting is California, we present evidence that the effects may be larger for the rest of the US.

Knittel, C.R. and R. Sandle (2011). "Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation." MIT CEEPR Working Paper No. WP-2011-015, Aug 2011.