By-product
Political ideology affects energy-efficiency attitudes and choices
Dena Gromet, Howard Kunreuther & Richard Larrick
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
This research demonstrates how promoting the environment can negatively affect adoption of energy efficiency in the United States because of the political polarization surrounding environmental issues. Study 1 demonstrated that more politically conservative individuals were less in favor of investment in energy-efficient technology than were those who were more politically liberal. This finding was driven primarily by the lessened psychological value that more conservative individuals placed on reducing carbon emissions. Study 2 showed that this difference has consequences: In a real-choice context, more conservative individuals were less likely to purchase a more expensive energy-efficient light bulb when it was labeled with an environmental message than when it was unlabeled. These results highlight the importance of taking into account psychological value-based considerations in the individual adoption of energy-efficient technology in the United States and beyond.
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Campaign Promises, Democratic Governance, and Environmental Policy in the U.S. Congress
Evan Ringquist, Milena Neshkova & Joseph Aamidor
Policy Studies Journal, May 2013, Pages 365-387
Abstract:
One important criterion for assessing the quality of democratic governance is the extent to which the policy process effectively translates citizen preferences into collective choices. Several scholars have observed a discrepancy between citizen preferences for strong environmental protection and weak policies adopted in the United States, indicating that the United States may fall short on this criterion. We examine one possible mechanism contributing to this discrepancy - legislator defection from campaign promises. Our data indicate that legislators in the U.S. Congress routinely defect from their campaign promises in environmental protection, undermining the link between citizen preferences and policy choice. We also find that legislators are much more likely to defect from pro-environmental campaign promises, which moves government policy toward less stringent environmental programs. Finally, the propensity of legislators to defect from their campaign promises is systematic, with defection affected by partisanship, constituency influence, the influence of the majority party, and the likely consequences of defection for policy choice. These findings contribute empirical evidence relevant to the "mandate theory" perspective on how citizen preferences are translated into collective choices through the policy process. These findings may also complement research in comparative politics concluding that legislatures selected through single member districts adopt less stringent environmental policies than do legislatures chosen via proportional representation in that the mechanism for this effect may go through legislator defection from campaign promises.
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Do economic conditions influence environmental policy? Evidence from the U.S. Senate
Grant Jacobsen
Economics Letters, August 2013, Pages 167-170
Abstract:
This paper investigates whether economic conditions influence environmental policy by examining how policymakers voting on environmental legislation respond to changes in their state's unemployment rate. The outcome of interest is a U.S. Senator's League of Conservation Voters score, which reflects how often a senator voted for the environmentally-favorable outcome on bills related to the environment in a given year. I find evidence that a higher unemployment rate is associated with reduced support for environmentally-favorable policies, and that the estimated response is largest for Republicans. Counterfactual estimates indicate that if each state had experienced its lowest observed unemployment rate throughout the sample, then the proportion of votes taking the environmentally-favorable outcome would have increased from 36% to 41%.
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Getting Liberals and Conservatives to Go Green: Political Ideology and Congruent Appeals
Blair Kidwell, Adam Farmer & David Hardesty
Journal of Consumer Research, forthcoming
Abstract:
The authors develop a conceptual model of how the congruence of political ideology and persuasive appeals enhances sustainable behaviors. In study 1, persuasive appeals consistent with individualizing and binding moral foundations were developed to enhance liberal and conservative recycling. In study 2, individualizing and binding appeals were tested on actual recycling behavior using a longitudinal field study to demonstrate the effectiveness of messages congruent with the moral foundations of liberals and conservatives. Study 3 demonstrated that enhanced fluency represents the underlying psychological process that mediates the relationship between message congruence and intentions. Moreover, study 3 established that spillover effects resulting from increased intentions to engage in sustainable disposition behavior enhances intentions to engage in sustainable acquisition and consumption behaviors. Finally, study 4 ruled out potential message confounds to demonstrate the robustness of the findings. Practical implications for marketers and public policy officials interested in increasing sustainable behaviors are offered.
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How Pro-Poor Growth Affects the Demand for Energy
Paul Gertler et al.
NBER Working Paper, May 2013
Abstract:
Most of the future growth in energy use is forecast to come from the developing world. Understanding the likely pace and specific location of this growth is essential to inform decisions about energy infrastructure investments and to improve greenhouse gas emissions forecasts. We argue that countries with pro-poor economic growth will experience larger increases in energy demand than countries where growth is more regressive. When poor households' incomes go up, their energy demand increases along the extensive margin as they buy energy-using assets for the first time. We also argue that the speed at which households come out of poverty affects their asset purchase decisions. We provide empirical support for these hypotheses by examining the causal impact of increases in household income on asset accumulation and energy use in the context of Mexico's conditional cash transfer program. We find that transfers had a large effect on asset accumulation among the low-income program beneficiaries, and the effect is greater when the cash is transferred over a shorter time period. We apply lessons from the household analysis to aggregate energy forecast models using country-level panel data. Our results suggest that existing forecasts could grossly underestimate future energy use in the developing world.
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Nicholas Newman et al.
Environmental Health Perspectives, June 2013, Pages 731-736
Background: There is increasing concern about the potential effects of traffic-related air pollution (TRAP) on the developing brain. The impact of TRAP exposure on childhood behavior is not fully understood due to limited epidemiologic studies.
Objective: To explore the association between early life exposure to TRAP using the surrogate, elemental carbon attributed to traffic (ECAT), and attention deficit/hyperactivity disorder (ADHD) symptoms at age seven.
Methods: Exposure to ECAT during infancy and behavioral scores at age seven were collected utilizing the Cincinnati Childhood Allergy and Air Pollution (CCAAPS) birth cohort. Children enrolled in CCAAPS had at least one atopic parent and a birth residence either < 400m or > 1500m from a major highway. Children were followed from infancy through age seven. ECAT exposure during the first year of life was estimated based on measurements from 27 air sampling sites and land use regression modeling. Parents completed the Behavioral Assessment System for Children 2nd Edition, at age seven. ADHD and related symptoms were assessed using the Hyperactivity, Inattention, Aggression, Conduct Problems, and Atypicality subscales.
Results: Exposure to the highest tertile of ECAT during the child's first year of life was significantly associated with hyperactivity T scores in the "at risk" range at age seven after adjustment (aOR=1.7; 95% CI: 1.0, 2.7). Stratification by maternal education revealed a stronger association in children whose mothers had higher education (aOR=2.3; 95% CI: 1.3, 4.1).
Conclusions: ECAT exposure during infancy was associated with higher hyperactivity scores in children; this association was limited to children whose mothers had more than a high school education.
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Residential proximity to major roadways and renal function
Shih-Ho Lue et al.
Journal of Epidemiology & Community Health, forthcoming
Background: Living near major roadways has been associated with increased risk of cardiovascular events, but little is known about its impact on renal function.
Methods: We calculated the estimated glomerular filtration rate (eGFR) for 1103 consecutive Boston-area patients hospitalised with confirmed acute ischaemic stroke between 1999 and 2004. We used linear regression to evaluate the association between eGFR and categories of residential distance to major roadway (0 to ≤50, >50 to ≤100, >100 to ≤200, >200 to ≤400, >400 to ≤1000 and >1000 m) adjusting for age, sex, race, smoking, comorbid conditions, treatment with ACE inhibitor and neighbourhood-level socioeconomic characteristics. In a second analysis, we considered the log of distance to major roadway as a continuous variable.
Results: Patients living closer to a major roadway had lower eGFR than patients living farther away (Ptrend=0.01). Comparing patients living 50 m versus 1000 m from a major roadway was associated with a 3.9 ml/min/1.73 m2 lower eGFR (95% CI 1.0 to 6.7; p=0.007): a difference comparable in magnitude to the reduction in eGFR observed for a 4-year increase in age in population-based studies. The magnitude of this association did not differ significantly across categories of age, sex, race, history of hypertension, diabetes or socioeconomic status.
Conclusions: Living near a major roadway is associated with lower eGFR in a cohort of patients presenting with acute ischaemic stroke. If causal, these results imply that exposures associated with living near a major roadway contribute to reduced renal function, an important risk factor for cardiovascular events.
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Vehicle Scrappage and Gasoline Policy
Mark Jacobsen & Arthur van Benthem
NBER Working Paper, May 2013
Abstract:
We estimate the sensitivity of scrap decisions to changes in used car values - the "scrap elasticity" - and show how it influences used car fleets under policies aimed at reducing gasoline use. Large scrap elasticities will tend to produce emissions leakage under efficiency standards as the longevity of used vehicles is increased, a process known as the Gruenspecht effect. To explore the magnitude of this leakage we assemble a novel dataset of U.S. used vehicle registrations and prices, which we relate through time via differential effects in gasoline cost: A gasoline price increase or decrease of $1 alters the number of fuel-efficient vs. fuel-inefficient vehicles scrapped by 18%. These relationships allow us to provide what we believe are the first estimates of the scrap elasticity itself, which we find to be about -0.7. When applied in a model of fuel economy standards, the elasticities we estimate suggest that 13-23% of the expected fuel savings will leak away through the used vehicle market. This considerably reduces the cost-effectiveness of the standard, rivaling or exceeding the importance of the often-cited mileage "rebound" effect.
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Nathaniel Warner et al.
Applied Geochemistry, forthcoming
Abstract:
Exploration of unconventional natural gas reservoirs such as impermeable shale basins through the use of horizontal drilling and hydraulic fracturing has changed the energy landscape in the U.S.A. providing a vast new energy source. The accelerated production of natural gas has triggered a debate concerning the safety and possible environmental impacts of these operations. This study investigates one of the critical aspects of the environmental effects; the possible degradation of water quality in shallow aquifers overlying producing shale formations. The geochemistry of domestic groundwater wells was investigated in aquifers overlying the Fayetteville Shale in north-central Arkansas, where approximately 4,000 wells have been drilled since 2004 to extract unconventional natural gas. Monitoring was performed on 127 drinking water wells and the geochemistry of major ions, trace metals, CH4 gas content and its C isotopes (δ13CCH4), and select isotope tracers (δ11B, 87Sr/86Sr, δ2H, δ18O, δ13CDIC) compared to the composition of flowback-water samples directly from Fayetteville Shale gas wells. Dissolved CH4 was detected in 63% of the drinking-water wells (32 of 51 samples), but only six wells exceeded concentrations of 0.5 mg CH4/L. The δ13CCH4 of dissolved CH4 ranged from -42.3‰ to -74.7‰, with the most negative values characteristic of a biogenic source also associated with the highest observed CH4 concentrations, with a possible minor contribution of trace amounts of thermogenic CH4. The majority of these values are distinct from the reported thermogenic composition of the Fayetteville Shale gas (δ13CCH4=-35.4‰ to -41.9‰). Based on major element chemistry, four shallow groundwater types were identified: (1) low (<100 mg/L) total dissolved solids (TDS), (2) TDS>100mg/L and Ca-HCO3 dominated, (3) TDS> 100mg/L and Na-HCO3 dominated, and (4) slightly saline groundwater with TDS> 100mg/L and Cl >20 mg/L with elevated Br/Cl ratios (>0.001). The Sr (87Sr/86Sr = 0.7097 to 0.7166), C (δ13CDIC = -21.3 to -4.7‰), and B (δ11B= 3.9 to 32.9‰) isotopes clearly reflect water-rock interactions within the aquifer rocks, while the stable O and H isotopic composition mimics the local meteoric water composition. Overall, there was a geochemical gradient from low-mineralized recharge water to more evolved Ca-HCO3, and higher-mineralized Na-HCO3 composition generated by a combination of carbonate dissolution, silicate weathering, and reverse base-exchange reactions. The chemical and isotopic compositions of the bulk shallow groundwater samples were distinct from the Na-Cl type Fayetteville flowback/produced waters (TDS ∼10,000-20,000 mg/L). Yet, the high Br/Cl variations in a small subset of saline shallow groundwater suggest that they were derived from dilution of saline water similar to the brine in the Fayetteville Shale. Nonetheless, no spatial relationship was found between CH4 and salinity occurrences in shallow drinking water wells with proximity to shale-gas drilling sites. The integration of multiple geochemical and isotopic proxies shows no direct evidence of contamination in shallow drinking-water aquifers associated with natural gas extraction from the Fayetteville Shale.
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The Role of Inventories and Speculative Trading in the Global Market for Crude Oil
Lutz Kilian & Daniel Murphy
Journal of Applied Econometrics, forthcoming
Abstract:
We develop a structural model of the global market for crude oil that for the first time explicitly allows for shocks to the speculative demand for oil as well as shocks to flow demand and flow supply. The speculative component of the real price of oil is identified with the help of data on oil inventories. Our estimates rule out explanations of the 2003-2008 oil price surge based on unexpectedly diminishing oil supplies and based on speculative trading. Instead, this surge was caused by unexpected increases in world oil consumption driven by the global business cycle. There is evidence, however, that speculative demand shifts played an important role during earlier oil price shock episodes including 1979, 1986 and 1990. Our analysis implies that additional regulation of oil markets would not have prevented the 2003-2008 oil price surge. We also show that, even after accounting for the role of inventories in smoothing oil consumption, our estimate of the short-run price elasticity of oil demand is much higher than traditional estimates from dynamic models that do not account for for the endogeneity of the price of oil.
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The Simple Economics of Commodity Price Speculation
Christopher Knittel & Robert Pindyck
NBER Working Paper, April 2013
Abstract:
The price of crude oil in the U.S. never exceeded $40 per barrel until mid-2004. By 2006 it reached $70, and in July 2008 it peaked at $145. By late 2008 it had plummeted to about $30 before increasing to $110 in 2011. Are speculators at least partly to blame for these sharp price changes? We clarify the effects of speculators on commodity prices. We focus on crude oil, but our approach can be applied to other commodities. We explain the meaning of "oil price speculation," how it can occur, and how it relates to investments in oil reserves, inventories, or derivatives (such as futures contracts). Turning to the data, we calculate counterfactual prices that would have occurred from 1999 to 2012 in the absence of speculation. Our framework is based on a simple and transparent model of supply and demand in the cash and storage markets for a commodity. It lets us determine whether speculation is consistent with data on production, consumption, inventory changes, and convenience yields given reasonable elasticity assumptions. We show speculation had little, if any, effect on prices and volatility.
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Limits to arbitrage and hedging: Evidence from commodity markets
Viral Acharya, Lars Lochstoer & Tarun Ramadorai
Journal of Financial Economics, forthcoming
Abstract:
We build an equilibrium model of commodity markets in which speculators are capital constrained, and commodity producers have hedging demands for commodity futures. Increases in producers' hedging demand or speculators' capital constraints increase hedging costs via price-pressure on futures. These in turn affect producers' equilibrium hedging and supply decision inducing a link between a financial friction in the futures market and the commodity spot prices. Consistent with the model, measures of producers' propensity to hedge forecasts futures returns and spot prices in oil and gas market data from 1979-2010. The component of the commodity futures risk premium associated with producer hedging demand rises when speculative activity reduces. We conclude that limits to financial arbitrage generate limits to hedging by producers, and affect equilibrium commodity supply and prices.
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Can Household Consumers Save the Wild Fish? Lessons from a Sustainable Seafood Advisory
Eric Hallstein & Sofia Villas-Boas
Journal of Environmental Economics and Management, forthcoming
Abstract:
Conservation organizations seeking to reduce over-fishing and promote better fishing practices have increasingly turned to market-based mechanisms such as environmental sustainability labels (eco-labels) in order to shift patterns of household consumption. This paper presents an analysis of consumer response to an advisory for sustainable seafood adopted by a regional supermarket in the United States. The advisory consisted of a label in which one of three traffic light colors was placed on each fresh seafood product to inform consumers about its relative environmental sustainability. Green meant "best" choice, yellow meant "proceed with caution," and red meant "worst choice". Using a unique product-level panel scanner data set of weekly sales and taking advantage of the random phase-in of the advisory by the retailer, we apply a difference-in-differences identification strategy to estimate the effect of the advisory on overall seafood sales as well as the heterogeneous impact of the advisory by label color and whether the seafood met additional health-related criteria. We find evidence that the advisory led to a statistically significant 15.3% decline in overall seafood sales, a statistically significant 34.9% decline in the sale of yellow labeled seafood, and a statistically significant 41.3% decline in the sale of yellow labeled seafood on a mercury safe list. We find no statistically significant difference in sales of green or red labeled seafood.
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Should we be worried about the Green Paradox? Announcement effects of the acid rain program
Corrado Di Maria, Ian Lange & Edwin van der Werf
European Economic Review, forthcoming
Abstract:
This paper presents the first empirical test of the green paradox hypothesis, according to which well-intended but imperfectly implemented environmental policies may lead to detrimental outcomes due to supply side responses. We use the introduction of the Acid Rain Program in the U.S. as a case study. The theory predicts that owners of coal deposits, expecting future sales to decline, would supply more of their resource between the announcement of the Acid Rain Program and its implementation; moreover, the incentive to increase supply would be stronger for owners of high-sulfur coal. This would, all else equal, induce an increase in sulfur dioxide emissions. Using data on prices, heat input and sulfur content of coal delivered to U.S. power plants, we find strong evidence of a price decrease and of an increase in the sulfur premium, some indication that the amount of coal used might have increased, and no evidence of fuel-switching towards higher-sulfur coal. Overall, our evidence suggests that while the mechanism indicated by the theory might be at work, market conditions and concurrent regulation largely prevented a green paradox from arising. These results have implications for the design of climate policies.
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This Is Only a Test? Long-Run Impacts of Prenatal Exposure to Radioactive Fallout
Sandra Black et al.
NBER Working Paper, April 2013
Abstract:
Research increasingly shows that differences in endowments at birth need not be genetic but instead are influenced by environmental factors while the fetus is in the womb. In addition, these differences may persist well beyond childhood. In this paper, we study one such environmental factor - exposure to radiation - that affects individuals across the socio-economic spectrum. We use variation in radioactive exposure throughout Norway in the 1950s and early 60s, resulting from the abundance of nuclear weapon testing during that time period, to examine the effect of nuclear exposure in utero on outcomes such as IQ scores, education, earnings, and adult height. At this time, there was very little awareness in Norway about nuclear testing so our estimates are likely to be unaffected by avoidance behavior or stress effects. We find that exposure to nuclear radiation, even in low doses, leads to a decline in IQ scores of men aged 18. Moreover, radiation exposure leads to declines in education attainment, high school completion, and earnings among men and women. These results are robust to the choice of specification and the inclusion of sibling fixed effects.
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Discretionary compliance with mandatory environmental disclosures: Evidence from SEC filings
Gary Peters & Andrea Romi
Journal of Accounting and Public Policy, forthcoming
Abstract:
We examine the determinants of adherence to U.S. Securities and Exchange Commission (SEC) mandated disclosures of environmental sanctions. Our sample includes non-superfund U.S. Environmental Protection Agency (EPA) sanctions between 1996 and 2005. Our results suggest that firms are more likely to provide sanction disclosures if they operate in environmentally sensitive industries, are subject to larger penalties and are voluntarily participating in a supplemental environmental project. Our results also suggest that firms are less likely to disclose sanctions involving judicial proceedings. Overall, we find that voluntary disclosure incentives impact compliance with mandatory reporting requirements. Although incentives exist for firms to comply with mandatory disclosures, our results suggest that increases in mandatory environmental accounting disclosures may not be effective under the current regulatory system despite the use of bright-line materiality thresholds. Our study contributes to the current and ongoing debate about the role and effectiveness of environmental risk disclosure mandates in providing information to the marketplace, as well as "mandated disclosure" rules in general. The value attributed to current and potential environmental disclosure regulations cannot be thoroughly understood without examining disclosure compliance with existing regulations. From an environmental and sustainability disclosure perspective, our findings are particularly germane since these disclosures focus on risks, liabilities, or other reputational shortcomings of the firm.
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Re-Evaluating the Role of Energy Efficiency Standards: A Behavioral Economics Approach
Tsvetan Tsvetanov & Kathleen Segerson
Journal of Environmental Economics and Management, forthcoming
Abstract:
The economic models that prescribe Pigovian taxation as the first-best means of reducing energy-related externalities are typically based on the neoclassical model of rational consumer choice. Yet, consumer behavior in markets for energy-using durables is generally thought to be far from efficient, giving rise to the concept of the "energy-efficiency gap." This paper presents a welfare analysis of energy policies that is based on a behavioral model of temptation and self-control, introduced by Gul and Pesendorfer 23 and 24. We find that, in the presence of temptation, (i) Pigovian taxes alone do not yield a first-best outcome, (ii) when viewed as substitutes, energy efficiency standards can dominate Pigovian taxes, and (iii) a policy combining standards with a Pigovian tax can yield higher social welfare than a Pigovian tax alone, implying that the two instruments should be viewed as complements rather than substitutes.
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Do Voluntary Programs Reduce Pollution? Examining ISO 14001's Effectiveness across Countries
Matthew Potoski, Aseem Prakash
Policy Studies Journal, May 2013, Pages 273-294
Abstract:
Voluntary environmental programs have emerged as important instruments of environmental policy. Despite considerable scholarly scrutiny, there remain debates about whether they reduce pollution among participants, and their overall impact at the country level. We present a cross-national analysis of the efficacy of ISO 14001, the most widely adopted voluntary environmental program in the world. While several single country studies have explored the effect of ISO 14001 participation on pollution reduction at the facility level, this is the first article to assess (i) national level pollution reduction effects of ISO 14001 participation levels, (ii) across a large number of countries, and (iii) across two pollutants. We examine whether all else equal, the national level uptakes of ISO 14001 are associated with reductions in air emissions (sulfur dioxide, SO2) and water pollution (biochemical oxygen demand, BOD). Because firms, regulators, and environmental groups tend to focus more on visible types of pollution than less visible ones, we hypothesize that ISO 14001 uptake will be associated with more pronounced reductions in air pollution (visible) in relation to water pollution (less visible). Our analyses of pollution levels for a panel of 138 (72 for BOD) countries for the 1991-2005 period suggest that a 1 percent increase in aggregate levels of ISO 14001 adoption is associated with about a 0.064 percent reduction in SO2 emissions, all else equal. In contrast, we do not find a statistically significant relationship between ISO 14001 adoption levels and changes in water pollution (BOD).
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The Effect of Voluntary Brownfields Programs on Nearby Property Values: Evidence from Illinois
Joshua Linn
Journal of Urban Economics, forthcoming
Abstract:
Brownfields are properties whose redevelopment is hampered by known or suspected contamination and by concerns about associated liability. Because failing to redevelop brownfields may negatively affect welfare and the environment, a number of states have created voluntary programs to reduce liability risks and encourage redevelopment of brownfields. For clean or remediated properties, the state certifies that owners of such sites are not subject to federal or state liability under certain conditions. Certification could increase nearby property values because of decreased contamination risk and amenities associated with redeveloping the brownfield. This paper focuses on the Site Remediation Program in Illinois, and estimates the effect of brownfields certification on nearby property values. Employing several strategies to account for unobserved and time-varying variables that may be correlated with certification, I find that the entry and certification of a brownfield 0.25 miles away raises the value of a property by about 1 percent compared to an otherwise identical property.