Powers That Be
Highway Spending and Induced Vehicle Emissions: Evidence from the US States
Haowei Yu & You Zhou
Resource and Energy Economics, forthcoming
Abstract:
This paper investigates the impact of state and local government highway spending on vehicle emissions. A theoretical framework is constructed to show the effect of government highway spending on passenger and freight vehicle emissions and decompose the effect into a rebound effect, an induced demand effect and an interaction effect. We then develop an empirical strategy and combine state-level data in the US to test the induced CO2 emissions by government highway spending. We find that there are positive and significant total effects of government highway spending on passenger and freight vehicle emissions. The magnitude of these effects, however, significantly differs from one another as the elasticity of freight vehicle emissions with respect to government highway spending is four times larger than that in the passenger sector. The difference can be plausibly explained by the rebound effect and the interaction effect. We argue that policies regarding government spending on highway projects, especially those relying on cost-benefit analysis, should account for the potential difference in induced environmental impacts between passenger and freight vehicles.
The Big Three and Corporate Carbon Emissions Around the World
José Azar et al.
Journal of Financial Economics, forthcoming
Abstract:
This paper examines the role of the “Big Three” (i.e., BlackRock, Vanguard, and State Street Global Advisors) on the reduction of corporate carbon emissions around the world. Using novel data on engagements of the Big Three with individual firms, we find evidence that the Big Three focus their engagement effort on large firms with high CO2 emissions in which these investors hold a significant stake. Consistent with this engagement influence being effective, we observe a strong and robust negative association between Big Three ownership and subsequent carbon emissions among MSCI index constituents, a pattern that becomes stronger in the later years of the sample period as the three institutions publicly commit to tackle Environmental, Social, and Governance (ESG) issues.
Heat and learning in elementary and middle school
Travis Roach & Jacob Whitney
Education Economics, forthcoming
Abstract:
Changing weather patterns and extreme events are not the only outcomes of global climatic change. We investigate the impact of changing weather conditions on human capital development by studying achievement on standardized tests in Math and English/Language Arts for students in grades 3–8. Here we show that increasing average temperature levels and particularly hot days reduce student learning and achievement. We find that achievement decreases as temperatures increase, that this effect is larger in areas with lower average maximum temperatures, and that each additional day above 100∘F decreases student achievement. This study confirms many findings in the received literature on global climate change and human capital acquisition and productivity.
Dissecting Green Returns
Lubos Pastor, Robert Stambaugh & Lucian Taylor
NBER Working Paper, June 2021
Abstract:
Green assets delivered high returns in recent years. This performance reflects unexpectedly strong increases in environmental concerns, not high expected returns. German green bonds outperformed their higher-yielding non-green twins as the "greenium" widened, and U.S. green stocks outperformed brown as climate concerns strengthened. To show the latter, we construct a theoretically motivated green factor — a return spread between environmentally friendly and unfriendly stocks — and find that its positive performance disappears without climate-concern shocks. The factor lags those shocks, curiously, by about a month. A theory-driven two-factor model featuring the green factor explains much of the recent underperformance of value stocks.
Pricing carbon risk: Investor preferences or risk mitigation?
Stefanie Kleimeier & Michael Viehs
Economics Letters, forthcoming
Abstract:
Do banks charge an environmental premium when lending to publicly listed firms? Using a unique and comprehensive database on carbon emissions, we find that higher carbon emissions are associated with higher loan spreads. This effect exists for loans arranged by all lenders suggesting that spread premia are driven by environmental risks rather than investor preferences. Consistent with ex-post risk, companies without appropriate board-level responsibility pay higher spreads. While countries might introduce effective legislation to mitigate the effects of climate change, our results indicate that there is scope for a market-based solution to complement explicit environmental regulation.
Future Paths of Electric Vehicle Adoption in the United States: Predictable Determinants, Obstacles and Opportunities
James Archsmith, Erich Muehlegger & David Rapson
NBER Working Paper, June 2021
Abstract:
This paper identifies and quantifies major determinants of future electric vehicle (EV) demand in order to inform widely-held aspirations for market growth. Our model compares three channels that will affect EV market share in the United States from 2020-2035: intrinsic (no-subsidy) EV demand growth, net-of-subsidy EV cost declines (e.g. batteries), and government subsidies. Geographic variation in preferences for sedans and light trucks highlights the importance of viable EV alternatives to conventional light trucks; belief in climate change is highly correlated with EV adoption patterns; and the first $500 billion in cumulative nationwide EV subsidies is associated a 7-10 percent increase in EV market share in 2035, an effect that diminishes as subsidies increase. The rate of intrinsic demand growth dwarfs the impact of demand-side subsidies and battery cost declines, highlighting the importance of non-monetary factors (e.g. charging infrastructure, product quality and/or cultural acceptance) on EV demand.
Anger Consensus Messaging Can Enhance Expectations for Collective Action and Support for Climate Mitigation
Anandita Sabherwal, Adam Pearson & Gregg Sparkman
Journal of Environmental Psychology, forthcoming
Abstract:
Media coverage of climate protests within the United States and internationally has shown growing public frustration about governmental responses to climate change. But what are the effects of conveying that people are angry? And how do they contrast with more traditional norm messages about climate policy support? Here, we investigate whether social norm messaging about collective anger can impact perceptions of consensus and public support for climate mitigation. In a pilot study and two survey experiments (total N=1529), we find that relative to control messages, normative appeals that convey growing public anger about U.S. inaction on climate change (i.e., dynamic anger consensus messaging) can enhance Americans’ consensus estimates of other Americans’ climate-related beliefs and support for mitigation policy, and expectations for future climate-mitigating collective action. Moreover, exposure to a dynamic anger consensus message led to similar estimates of Americans’ policy support and belief in climate change as messages that explicitly conveyed public support for climate mitigation (Study 1) or consensus belief in anthropogenic climate change (Study 2). When tailored for a cross-partisan audience, anger consensus messaging was also effective in bolstering personal support for climate mitigation (Study 2). Notably, similar effects were observed across partisan groups. These findings suggest that, by signaling shared motivational states, emotion consensus appeals can enhance expectations for social change, with the potential to mobilize bipartisan support for climate mitigation.
Energy intensity: Deindustrialization, composition, prices, and policies in U.S. states
Arik Levinson
Resource and Energy Economics, forthcoming
Abstract:
This paper uses the historical experience of U.S. states to examine the reasons why energy intensity has declined in some places more than in others. In aggregate, U.S. energy per dollar of GDP declined 34 percent between 1997 and 2018, but across states the decline varied from 9 percent in Iowa to 52 percent in Washington State. I show that none of this variation is explained by either deindustrialization or the changing composition of states’ industrial sectors. Although some U.S. state policies are significantly correlated with these changes, they are not correlated in a way that explains the changing overall state energy intensities. Energy intensity declines do not appear to be a result of leakage to other states or countries and have not been associated with slower economic growth.
The burden of heat-related mortality attributable to recent human-induced climate change
Ana Maria Vicedo-Cabrera et al.
Nature Climate Change, June 2021, Pages 492–500
Abstract:
Climate change affects human health; however, there have been no large-scale, systematic efforts to quantify the heat-related human health impacts that have already occurred due to climate change. Here, we use empirical data from 732 locations in 43 countries to estimate the mortality burdens associated with the additional heat exposure that has resulted from recent human-induced warming, during the period 1991–2018. Across all study countries, we find that 37.0% (range 20.5–76.3%) of warm-season heat-related deaths can be attributed to anthropogenic climate change and that increased mortality is evident on every continent. Burdens varied geographically but were of the order of dozens to hundreds of deaths per year in many locations. Our findings support the urgent need for more ambitious mitigation and adaptation strategies to minimize the public health impacts of climate change.
Who Will Pay for Legacy Utility Costs?
Lucas Davis & Catherine Hausman
NBER Working Paper, June 2021
Abstract:
The growing "electrify everything" movement aims to reduce carbon dioxide emissions by transitioning households and firms away from natural gas toward electricity. This paper considers what this transition means for the customers who are left behind. Like most natural monopolies, natural gas utilities recover fixed costs by spreading fees out over time across their customer base. In periods of a shrinking customer base, this can lead to a lack of fixed cost recovery. To shed light on these dynamics, we use historical evidence from growing and shrinking utilities. We show that in the U.S. during the period 1997-2019 there are many growing utilities, but also hundreds of utilities that experienced sustained periods of customer loss. We then study how the loss of customers impacts utility operations and finances. Utilities that lose customers maintain their pipeline infrastructure even as the customer base financing their operations is shrinking. As a result, historical capital cost recovery and some operations and maintenance costs do not decrease. In keeping with this, we observe that utility revenues shrink, but less than one-for-one -- indicating higher bills for remaining customers. We highlight resulting equity implications -- both across income levels and across racial groups -- of the current push for building electrification and other energy transition policies. We conclude by discussing alternative utility financing options, such as recouping fixed costs through taxes rather than rates.
Global vulnerability of crop yields to climate change
Ian Sue Wing, Enrica De Cian & Malcolm Mistry
Journal of Environmental Economics and Management, forthcoming
Abstract:
Using a newly-available panel dataset of gridded annual crop yields in conjunction with a dynamic econometric model that distinguishes between farmers' short-run and long-run responses to weather shocks and accounts for adaptation, we investigate the risk to global crop yields from climate warming. Over broad spatial domains we observe only slight moderation of short-run impacts by farmers' long-run adjustments. In the absence of additional margins of adaptation beyond those pursued historically, projections constructed using an ensemble of 21 climate model simulations suggest that the climate change could reduce global crop yields by 3–12% by mid-century and 11–25% by century's end, under a vigorous warming scenario.
Accelerating deployment of offshore wind energy alter wind climate and reduce future power generation potentials
Naveed Akhtar et al.
Scientific Reports, June 2021
Abstract:
The European Union has set ambitious CO2 reduction targets, stimulating renewable energy production and accelerating deployment of offshore wind energy in northern European waters, mainly the North Sea. With increasing size and clustering, offshore wind farms (OWFs) wake effects, which alter wind conditions and decrease the power generation efficiency of wind farms downwind become more important. We use a high-resolution regional climate model with implemented wind farm parameterizations to explore offshore wind energy production limits in the North Sea. We simulate near future wind farm scenarios considering existing and planned OWFs in the North Sea and assess power generation losses and wind variations due to wind farm wake. The annual mean wind speed deficit within a wind farm can reach 2–2.5 ms−1 depending on the wind farm geometry. The mean deficit, which decreases with distance, can extend 35–40 km downwind during prevailing southwesterly winds. Wind speed deficits are highest during spring (mainly March–April) and lowest during November–December. The large-size of wind farms and their proximity affect not only the performance of its downwind turbines but also that of neighboring downwind farms, reducing the capacity factor by 20% or more, which increases energy production costs and economic losses. We conclude that wind energy can be a limited resource in the North Sea. The limits and potentials for optimization need to be considered in climate mitigation strategies and cross-national optimization of offshore energy production plans are inevitable.
Widespread deoxygenation of temperate lakes
Stephen Jane et al.
Nature, 3 June 2021, Pages 66–70
Abstract:
The concentration of dissolved oxygen in aquatic systems helps to regulate biodiversity, nutrient biogeochemistry, greenhouse gas emissions, and the quality of drinking water. The long-term declines in dissolved oxygen concentrations in coastal and ocean waters have been linked to climate warming and human activity, but little is known about the changes in dissolved oxygen concentrations in lakes. Although the solubility of dissolved oxygen decreases with increasing water temperatures, long-term lake trajectories are difficult to predict. Oxygen losses in warming lakes may be amplified by enhanced decomposition and stronger thermal stratification or oxygen may increase as a result of enhanced primary production. Here we analyse a combined total of 45,148 dissolved oxygen and temperature profiles and calculate trends for 393 temperate lakes that span 1941 to 2017. We find that a decline in dissolved oxygen is widespread in surface and deep-water habitats. The decline in surface waters is primarily associated with reduced solubility under warmer water temperatures, although dissolved oxygen in surface waters increased in a subset of highly productive warming lakes, probably owing to increasing production of phytoplankton. By contrast, the decline in deep waters is associated with stronger thermal stratification and loss of water clarity, but not with changes in gas solubility. Our results suggest that climate change and declining water clarity have altered the physical and chemical environment of lakes. Declines in dissolved oxygen in freshwater are 2.75 to 9.3 times greater than observed in the world’s oceans and could threaten essential lake ecosystem services.
Solar geoengineering can alleviate climate change pressures on crop yields
Yuanchao Fan et al.
Nature Food, May 2021, Pages 373–381
Abstract:
Solar geoengineering (SG) and CO2 emissions reduction can each alleviate anthropogenic climate change, but their impacts on food security are not yet fully understood. Using an advanced crop model within an Earth system model, we analysed the yield responses of six major crops to three SG technologies (SGs) and emissions reduction when they provide roughly the same reduction in radiative forcing and assume the same land use. We found sharply distinct yield responses to changes in radiation, moisture and CO2, but comparable significant cooling benefits for crop yields by all four methods. Overall, global yields increase ~10% under the three SGs and decrease 5% under emissions reduction, the latter primarily due to reduced CO2 fertilization, relative to business as usual by the late twenty-first century. Relative humidity dominates the hydrological effect on yields of rainfed crops, with little contribution from precipitation. The net insolation effect is negligible across all SGs, contrary to previous findings.
Warming enabled upslope advance in western US forest fires
Mohammad Reza Alizadeh et al.
Proceedings of the National Academy of Sciences, 1 June 2021
Abstract:
Increases in burned area and large fire occurrence are widely documented over the western United States over the past half century. Here, we focus on the elevational distribution of forest fires in mountainous ecoregions of the western United States and show the largest increase rates in burned area above 2,500 m during 1984 to 2017. Furthermore, we show that high-elevation fires advanced upslope with a median cumulative change of 252 m (−107 to 656 m; 95% CI) in 34 y across studied ecoregions. We also document a strong interannual relationship between high-elevation fires and warm season vapor pressure deficit (VPD). The upslope advance of fires is consistent with observed warming reflected by a median upslope drift of VPD isolines of 295 m (59 to 704 m; 95% CI) during 1984 to 2017. These findings allow us to estimate that recent climate trends reduced the high-elevation flammability barrier and enabled fires in an additional 11% of western forests. Limited influences of fire management practices and longer fire-return intervals in these montane mesic systems suggest these changes are largely a byproduct of climate warming. Further weakening in the high-elevation flammability barrier with continued warming has the potential to transform montane fire regimes with numerous implications for ecosystems and watersheds.