States of Matter
Economic Implications of the Climate Provisions of the Inflation Reduction Act
John Bistline, Neil Mehrotra & Catherine Wolfram
NBER Working Paper, May 2023
The Inflation Reduction Act (IRA) represents the largest federal response to climate change to date. We highlight the key climate provisions and assess the Act's potential economic impacts. Substantially higher investments in clean energy and electric vehicles imply that fiscal costs may be larger than projected. However, even at the high end, IRA provisions remain cost-effective. IRA has large impacts on power sector investments and electricity prices, lowering retail electricity rates and resulting in negative prices in some wholesale markets. We find small quantitative macroeconomic effects including a small decline in headline inflation, but macroeconomic conditions -- particularly higher interest rates and materials costs -- may have substantial negative effects on clean energy investment. We show that the subsidy approach in IRA has expansionary supply-side effects relative to a carbon tax but, in a representative-agent dynamic model, is preferable to a carbon tax only in the presence of a strong learning-by-doing externality. We also discuss the economics of the industrial policy aspects of the act as well as the distributional impacts and the possible incidence of the different tax credits in IRA.
The Unequal Economic Consequences of Carbon Pricing
NBER Working Paper, May 2023
This paper studies the economic impacts of carbon pricing. Exploiting institutional features of the European carbon market and high-frequency data, I document that a tighter carbon pricing regime leads to higher energy prices, lower emissions and more green innovation. This comes at the cost of a fall in economic activity, which is borne unequally across society: poorer households lower their consumption significantly while richer households are less affected. The poor are more exposed because of their higher energy share and, importantly, also experience a larger fall in income. Targeted fiscal policy can help alleviate these costs while maintaining emission reductions.
Patrick Bolton & Marcin Kacperczyk
NBER Working Paper, May 2023
A growing fraction of companies globally have made commitments to reduce their carbon emissions by a certain date. While the companies that make commitments subsequently reduce their emissions, the effect on overall emissions of companies (including those that do not commit) has been small; the companies that commit, and those that make the most ambitious commitments, tend to have lower emissions; firm commitments are less prevalent in countries where governments have made national commitments. Overall, the commitment movements have been successful in drawing the willing but have found greater resistance from the companies that most need to reduce their emissions.
Persistent effect of El Niño on global economic growth
Christopher Callahan & Justin Manking
El Niño–Southern Oscillation (ENSO) shapes extreme weather globally, causing myriad socioeconomic impacts, but whether economies recover from ENSO events and how anthropogenic changes to ENSO will affect the global economy are unknown. Here we show that El Niño persistently reduces country-level economic growth, attributing $4.1T and $5.7T in global income losses to the 1982–83 and 1997–98 events, respectively. Increased ENSO amplitude and teleconnections from warming cause $84T in 21st-century economic losses in an emissions scenario consistent with current mitigation pledges, but these effects are shaped by stochastic variation in the sequence of El Niño and La Niña events. Our results highlight the sensitivity of the economy to climate variability independent of warming and the potential for future losses due to anthropogenic intensification of such variability.
Distribution of capitalized benefits from land conservation
Corey Lang, Jarron VanCeylon & Amy Ando
Proceedings of the National Academy of Sciences, 2 May 2023
Land conservation efforts throughout the United States sustain ecological benefits while generating wealth in the housing market through capitalization of amenities. This paper estimates the benefits of conservation that are capitalized into proximate home values and quantifies how those benefits are distributed across demographic groups. Using detailed property and household-level data from Massachusetts, we estimate that new land conservation led to $62 million in new housing wealth equity. However, houses owned by low-income or Black or Hispanic households are less likely to be located near protected areas, and hence, these populations are less likely to benefit financially. Direct study of the distribution of this new wealth from capitalized conservation is highly unequal, with the richest quartile of households receiving 43%, White households receiving 91%, and the richest White households receiving 40%, which is nearly 140% more than would be expected under equal distribution. We extend our analysis using census data for the entire United States and observe parallel patterns. We estimate that recent land conservation generated $9.8 billion in wealth through the housing market and that wealthier and White households benefited disproportionately. These findings suggest regressive and racially disparate incidence of the wealth benefits of land conservation policy.
Air Pollution and Cardiovascular and Thromboembolic Events in Older Adults with High-Risk Conditions
Rachel Nethery et al.
American Journal of Epidemiology, forthcoming
Little epidemiologic research has focused on pollution-related risks in medically vulnerable or marginalized groups. Using a nationwide 50% random sample of 2008-2016 Medicare Part D-eligible Fee-for-Service participants in the US, we identified a cohort with high-risk conditions for cardiovascular and thromboembolic events (CTE) and linked individuals with seasonal average zip code level concentrations of fine particulate matter (PM2.5). We assessed the relationship between seasonal PM2.5 exposure and hospitalization for each of seven CTE-related causes using history-adjusted marginal structural models adjusted for individual demographic and neighborhood socio-economic variables as well as baseline comorbidities, health behaviors, and health service measures. We examined effect modification across geographically- and demographically-defined subgroups. The cohort included 1,934,453 individuals with high-risk conditions (mean age 77, 60% female, 87% white). A 1 μg/m3 increase in PM2.5 exposure was significantly associated with increased risk of six out of seven CTE hospitalization types. Strong increases were observed for transient ischemic attack (HR: 1.039 (1.034,1.044)), venous thromboembolism (HR: 1.031 (1.027,1.035)), and heart failure (HR: 1.019 (1.017,1.020)). Asian Americans were found to be particularly susceptible to thromboembolic effects of PM2.5 (venous thromboembolism HR: 1.063 (1.021,1.106)), while Native Americans were most vulnerable to cerebrovascular effects (transient ischemic attack HR: 1.093 (1.030,1.161)).
Flight from Urban Blight: Lead Poisoning, Crime, and Suburbanization
Federico Curci & Federico Masera
Review of Economics and Statistics, forthcoming
In this paper we study the effect of violent crime on residential and firms location decisions and their implications for segregation in cities. We do so by proposing a new instrument to exogenously predict violent crime in city centers. We base our instrument on chemical and medical evidence that links local characteristics of the soil to lead poisoning and aggression. We show that the increase in violent crime between 1960 and 1990 due to lead poisoning moved almost 8 million people to the suburbs. Firms followed by leaving the city centers. We then show that the suburbanization process was characterized by “white flight”.
Exceptional stratospheric contribution to human fingerprints on atmospheric temperature
Benjamin Santer et al.
Proceedings of the National Academy of Sciences, 16 May 2023
In 1967, scientists used a simple climate model to predict that human-caused increases in atmospheric CO2 should warm Earth’s troposphere and cool the stratosphere. This important signature of anthropogenic climate change has been documented in weather balloon and satellite temperature measurements extending from near-surface to the lower stratosphere. Stratospheric cooling has also been confirmed in the mid to upper stratosphere, a layer extending from roughly 25 to 50 km above the Earth’s surface (S25 − 50). To date, however, S25 − 50 temperatures have not been used in pattern-based attribution studies of anthropogenic climate change. Here, we perform such a “fingerprint” study with satellite-derived patterns of temperature change that extend from the lower troposphere to the upper stratosphere. Including S25 − 50 information increases signal-to-noise ratios by a factor of five, markedly enhancing fingerprint detectability. Key features of this global-scale human fingerprint include stratospheric cooling and tropospheric warming at all latitudes, with stratospheric cooling amplifying with height. In contrast, the dominant modes of internal variability in S25 − 50 have smaller-scale temperature changes and lack uniform sign. These pronounced spatial differences between S25 − 50 signal and noise patterns are accompanied by large cooling of S25 − 50 (1 to 2∘°C over 1986 to 2022) and low S25 − 50 noise levels. Our results explain why extending “vertical fingerprinting” to the mid to upper stratosphere yields incontrovertible evidence of human effects on the thermal structure of Earth’s atmosphere.
Human-induced weakening of the Northern Hemisphere tropical circulation
Rei Chemke & Janni Yuval
Nature, 18 May 2023, Pages 529-532
By accounting for most of the poleward atmospheric heat and moisture transport in the tropics, the Hadley circulation largely affects the latitudinal patterns of precipitation and temperature at low latitudes. To increase our preparedness for human-induced climate change, it is thus critical to accurately assess the response of the Hadley circulation to anthropogenic emissions. However, at present, there is a large uncertainty in recent Northern Hemisphere Hadley circulation strength changes. Not only do climate models simulate a weakening of the circulation, whereas atmospheric reanalyses mostly show an intensification of the circulation, but atmospheric reanalyses were found to have artificial biases in the strength of the circulation, resulting in unknown impacts of human emissions on recent Hadley circulation changes. Here we constrain the recent changes in the Hadley circulation using sea-level pressure measurements and show that, in agreement with the latest suite of climate models, the circulation has considerably weakened over recent decades. We further show that the weakening of the circulation is attributable to anthropogenic emissions, which increases our confidence in human-induced tropical climate change projections. Given the large climate impacts of the circulation at low latitudes, the recent human-induced weakening of the flow suggests wider consequences for the regional tropical–subtropical climate.
Rapid, buoyancy-driven ice-sheet retreat of hundreds of metres per day
Christine Batchelor et al.
Nature, 4 May 2023, Pages 105-110
Rates of ice-sheet grounding-line retreat can be quantified from the spacing of corrugation ridges on deglaciated regions of the seafloor, providing a long-term context for the approximately 50-year satellite record of ice-sheet change. However, the few existing examples of these landforms are restricted to small areas of the seafloor, limiting our understanding of future rates of grounding-line retreat and, hence, sea-level rise. Here we use bathymetric data to map more than 7,600 corrugation ridges across 30,000 km2 of the mid-Norwegian shelf. The spacing of the ridges shows that pulses of rapid grounding-line retreat, at rates ranging from 55 to 610 m day−1, occurred across low-gradient (±1°) ice-sheet beds during the last deglaciation. These values far exceed all previously reported rates of grounding-line retreat across the satellite and marine-geological records. The highest retreat rates were measured across the flattest areas of the former bed, suggesting that near-instantaneous ice-sheet ungrounding and retreat can occur where the grounding line approaches full buoyancy. Hydrostatic principles show that pulses of similarly rapid grounding-line retreat could occur across low-gradient Antarctic ice-sheet beds even under present-day climatic forcing. Ultimately, our results highlight the often-overlooked vulnerability of flat-bedded areas of ice sheets to pulses of extremely rapid, buoyancy-driven retreat.
Melt rates in the kilometer-size grounding zone of Petermann Glacier, Greenland, before and during a retreat
Enrico Ciracì et al.
Proceedings of the National Academy of Sciences, 16 May 2023
Warming of the ocean waters surrounding Greenland plays a major role in driving glacier retreat and the contribution of glaciers to sea level rise. The melt rate at the junction of the ocean with grounded ice -- or grounding line -- is, however, not well known. Here, we employ a time series of satellite radar interferometry data from the German TanDEM-X mission, the Italian COSMO-SkyMed constellation, and the Finnish ICEYE constellation to document the grounding line migration and basal melt rates of Petermann Glacier, a major marine-based glacier of Northwest Greenland. We find that the grounding line migrates at tidal frequencies over a kilometer-wide (2 to 6 km) grounding zone, which is one order of magnitude larger than expected for grounding lines on a rigid bed. The highest ice shelf melt rates are recorded within the grounding zone with values from 60 ± 13 to 80 ± 15 m/y along laterally confined channels. As the grounding line retreated by 3.8 km in 2016 to 2022, it carved a cavity about 204 m in height where melt rates increased from 40 ± 11 m/y in 2016 to 2019 to 60 ± 15 m/y in 2020 to 2021. In 2022, the cavity remained open during the entire tidal cycle. Such high melt rates concentrated in kilometer-wide grounding zones contrast with the traditional plume model of grounding line melt which predicts zero melt. High rates of simulated basal melting in grounded glacier ice in numerical models will increase the glacier sensitivity to ocean warming and potentially double projections of sea level rise.
Extent and reproduction of coastal species on plastic debris in the North Pacific Subtropical Gyre
Linsey Haram et al.
Nature Ecology & Evolution, May 2023, 687–697
We show that the high seas are colonized by a diverse array of coastal species, which survive and reproduce in the open ocean, contributing strongly to its floating community composition. Analysis of rafting plastic debris in the eastern North Pacific Subtropical Gyre revealed 37 coastal invertebrate taxa, largely of Western Pacific origin, exceeding pelagic taxa richness by threefold. Coastal taxa, including diverse taxonomic groups and life history traits, occurred on 70.5% of debris items. Most coastal taxa possessed either direct development or asexual reproduction, possibly facilitating long-term persistence on rafts. Our results suggest that the historical lack of available substrate limited the colonization of the open ocean by coastal species, rather than physiological or ecological constraints as previously assumed. It appears that coastal species persist now in the open ocean as a substantial component of a neopelagic community sustained by the vast and expanding sea of plastic debris.