The Costs and Benefits of Environmental Regulation in the United States and China
Sunday, Jan. 7, 2018 8:00 AM - 10:00 AM
- Chair: Michael Greenstone, University of Chicago
Carbon Trading, Firm Emissions, and Air Quality in China
AbstractThe recent debut of China's carbon Cap and Trade program in December 2017 and the lack of reliable data are primary obstacles to studying the most ambitious market-based environmental policy to date. Here we consider China's seven regional carbon trading pilot programs, launched in late 2013. We use independent air quality measures to examine the effect of the pilot program and find little change in visibility after the pilots started. Second, using firm-level trading and emissions data on power plants in Shanghai, we explore whether firm-level emissions correspond to firm-level trading behaviors. In Phase 1 of the program (November 2013 to June 2016), we do not see an obvious relationship between firm emissions and trading behaviors. But at the beginning of Phase 2 (July 2016 to present), there is suggestive evidence that firms which traded large amounts of carbon permits by the end of Phase 1 reduced emissions. While these patterns for the pilot program are largely descriptive, they demonstrate the feasibility of studying China’s incipient national market using reliable compliance measures and conventional tools from applied microeconomics.
The Effects of the Clean Air Act on Productivity in the Electricity Industry: Evidence From the United States 1938-1993
AbstractThe costs of environmental regulations have been widely debated in the U.S. since the passage of the Clean Air and Water Acts in the 1960s. On the one hand, those regulations may raise the overall costs of polluting firms, and may also lower productivity by distorting the mix of inputs used to produce a given level of output. On the other hand, firms under more stringent environmental standards might enhance their productivity through innovation, potentially offsetting adverse effects of the regulations. Recent evidence has shown large productivity losses in manufacturing from air quality regulations. Nevertheless, such analysis has been limited by data availability. Most studies consider sample periods that start after the 1970 Clean Air Act Amendments, therefore estimation might understate the true magnitude of productivity losses resulting from environmental regulations. Indeed, estimated impacts rely on a comparison of productivity among high and low emissions plants. The baseline is less regulation, not the absence of regulation. In this study, we examine the effects of the Clean Air Act and its amendments (1963, 1967, 1970, 1977, 1990) on productivity in the electricity sector, which has been historically a substantial contributor to air pollution and was heavily affected by the Clean Air Act. We provide new evidence by digitizing and analyzing data on steam power electricity plants since 1938. Federal Power Commission data begins in 1938 and is very detailed, allowing analysis of the effects of regulation on steam power plants that burn coal, natural gas, and oil. By following specific plants over time, we can observe fuel switching by existing plants, fuel choices by new plants, and changes in output resulting from regulation-induced technological modifications. These are relevant for understanding productivity impacts in electricity generation in developed and developing countries that are strengthening or beginning to implement air quality regulations.
Does Air Quality Matter in in China? Evidence From 1.7 million Land Transactions and the Huai River Winter Heating Policy
AbstractUsing a novel data set on 1.7 million land transactions from China and quasi-experimental variation in airborne particulate matter concentrations, this paper estimates willingness to pay for air quality in China. The quasi-experiment is based on China's Huai River Winter Heating Policy that produced sustained and discrete differences in PM concentrations north and south of the Huai River. The paper will provide one of the very first estimates of willingness to pay for air quality in a developing country setting.
- Q5 - Environmental Economics
- Q0 - General