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%% Books @book{fds367853, Author = {Grubb, M and Jordan, ND and Hertwich, E and Neuhoff, K and Das, K and Bandyopadhyay, KR and Van Asselt and H and Sato, M and Wang, R and Pizer, WA and Oh, H}, Title = {Carbon Leakage, Consumption, and Trade}, Volume = {47}, Pages = {753-795}, Year = {2022}, Month = {January}, url = {http://dx.doi.org/10.1146/annurev-environ-120820-053625}, Abstract = {We review the state of knowledge concerning international CO2 emission transfers associated particularly with trade in energy-intensive goods and concerns about carbon leakage arising from climate policies. The historical increase in aggregate emission transfers from developing to developed countries peaked around 2006 and declined since. Studies find no evidence that climate policies lead to carbon leakage, but this is partly due to shielding of key industrial sectors, which is incompatible with deep decarbonization. Alternative or complementary consumption-based approaches areneeded. Private sector initiatives to trace and address carbon emissions throughout supply chains have grown substantially but cannot compensate for inadequate policy. Three main price-based approaches to tackling carbon leakage are potentially compatible with international trade rules: border adjustments on imports, carbon consumption charges, and climate excise contributions combined with emissions trading. We also consider standards and public procurement options to tackle embodied emissions. Finally, we discuss proposals for carbon clubs involving cooperation among a limited set of countries.}, Doi = {10.1146/annurev-environ-120820-053625}, Key = {fds367853} } @book{fds194734, Author = {William A. Pizer and Richard Morgenstern}, Title = {Reality Check: The Nature and Performance of Voluntary Programs in the United States, Europe, and Japan}, Publisher = {RFF Press}, Address = {Washington, DC}, Year = {2007}, Key = {fds194734} } @book{fds194735, Author = {William A. Pizer and Raymond Kopp}, Title = {Assessing U.S. Climate Policy Options: A report summarizing work at RFF as part of the inter-industry U.S. Climate Policy Forum}, Publisher = {RFF Press}, Address = {Washington, DC}, Year = {2007}, url = {http://www.rff.org/cpfreport}, Key = {fds194735} } %% Journal Articles @article{fds370983, Author = {Howard, PH and Sarinsky, M and Bauer, M and Cecot, C and Cropper, M and Drupp, M and Freeman, M and Gillingham, KT and Gollier, C and Groom, B and Li, Q and Livermore, M and Newell, R and Pizer, WA and Prest, B and Rudebusch, G and Sterner, T and Wagner, G}, Title = {US benefit-cost analysis requires revision.}, Journal = {Science (New York, N.Y.)}, Volume = {380}, Number = {6647}, Pages = {803}, Year = {2023}, Month = {May}, url = {http://dx.doi.org/10.1126/science.adi5943}, Doi = {10.1126/science.adi5943}, Key = {fds370983} } @article{fds369109, Author = {Li, Q and Zhou, Y and Pizer, WA and Wu, L}, Title = {The unbalanced trade-off between pollution exposure and energy consumption induced by averting behaviors.}, Journal = {iScience}, Volume = {26}, Number = {1}, Pages = {105597}, Year = {2023}, Month = {January}, url = {http://dx.doi.org/10.1016/j.isci.2022.105597}, Abstract = {Behavioral responses to environmental risks create gains and losses. We use high-frequency datasets to elucidate such behavior responses against air pollution and find a "double-peaked" time pattern in reducing outdoor exposure and in increasing electricity consumption. Despite that one standard deviation increase in the Air Quality Index induces 2% less outdoor population and 6% more household electricity consumption at peak, most responses fail to match with the intra-day pollution peaks, implying ineffective exposure avoidance. We find an unbalanced trade-off between health benefits and energy co-damages. The behavior-induced change in annual residential power consumption (+1.01% to +1.20%) is estimated to be 20 times more than that in the population-based exposure (-0.02% to -0.05%), and generates 0.13-0.15 million more metric tons of citywide carbon emissions. Our results imply that by targeting peak pollution periods, policies can shrink the trade-off imbalance and achieve mutual improvements in exposure reduction and energy conservation.}, Doi = {10.1016/j.isci.2022.105597}, Key = {fds369109} } @article{fds367278, Author = {Wang, B and Pizer, WA and Munnings, C}, Title = {Price limits in a tradable performance standard}, Journal = {Journal of Environmental Economics and Management}, Volume = {116}, Year = {2022}, Month = {October}, url = {http://dx.doi.org/10.1016/j.jeem.2022.102742}, Abstract = {Tradable performance standards are widely used sectoral regulatory policies. Examples include the US lead phasedown, fuel economy standards for automobiles, renewable portfolio standards, low carbon fuel standards, and—most recently—China's new national carbon market. At the same time, theory and experience with traditional cap-and-trade programs suggest an important role for price limits in the form of floors, ceilings, and reserves. In this paper we develop a simple analytical model to derive the welfare comparison between tradable performance standards and a price-based alternative. This model works out to be a simple variant of the traditional Weitzman prices-versus-quantities result. We use this result to show that substantial gains—perhaps 50% or more when prices are low—could arise from shifting two programs, China's new national carbon market and the California Low Carbon Fuel Standard, to a price mechanism. This finding will generally be true when the coefficient of variation in the price under a TPS is larger than 50%. We end with a brief discussion of implementation issues, including consignment auctions.}, Doi = {10.1016/j.jeem.2022.102742}, Key = {fds367278} } @article{fds367395, Author = {Rennert, K and Errickson, F and Prest, BC and Rennels, L and Newell, RG and Pizer, W and Kingdon, C and Wingenroth, J and Cooke, R and Parthum, B and Smith, D and Cromar, K and Diaz, D and Moore, FC and Müller, UK and Plevin, RJ and Raftery, AE and Ševčíková, H and Sheets, H and Stock, JH and Tan, T and Watson, M and Wong, TE and Anthoff, D}, Title = {Comprehensive evidence implies a higher social cost of CO2.}, Journal = {Nature}, Volume = {610}, Number = {7933}, Pages = {687-692}, Year = {2022}, Month = {October}, url = {http://dx.doi.org/10.1038/s41586-022-05224-9}, Abstract = {The social cost of carbon dioxide (SC-CO<sub>2</sub>) measures the monetized value of the damages to society caused by an incremental metric tonne of CO<sub>2</sub> emissions and is a key metric informing climate policy. Used by governments and other decision-makers in benefit-cost analysis for over a decade, SC-CO<sub>2</sub> estimates draw on climate science, economics, demography and other disciplines. However, a 2017 report by the US National Academies of Sciences, Engineering, and Medicine<sup>1</sup> (NASEM) highlighted that current SC-CO<sub>2</sub> estimates no longer reflect the latest research. The report provided a series of recommendations for improving the scientific basis, transparency and uncertainty characterization of SC-CO<sub>2</sub> estimates. Here we show that improved probabilistic socioeconomic projections, climate models, damage functions, and discounting methods that collectively reflect theoretically consistent valuation of risk, substantially increase estimates of the SC-CO<sub>2</sub>. Our preferred mean SC-CO<sub>2</sub> estimate is $185 per tonne of CO<sub>2</sub> ($44-$413 per tCO<sub>2</sub>: 5%-95% range, 2020 US dollars) at a near-term risk-free discount rate of 2%, a value 3.6 times higher than the US government's current value of $51 per tCO<sub>2</sub>. Our estimates incorporate updated scientific understanding throughout all components of SC-CO<sub>2</sub> estimation in the new open-source Greenhouse Gas Impact Value Estimator (GIVE) model, in a manner fully responsive to the near-term NASEM recommendations. Our higher SC-CO<sub>2</sub> values, compared with estimates currently used in policy evaluation, substantially increase the estimated benefits of greenhouse gas mitigation and thereby increase the expected net benefits of more stringent climate policies.}, Doi = {10.1038/s41586-022-05224-9}, Key = {fds367395} } @article{fds365138, Author = {Newell, RG and Pizer, WA and Prest, BC}, Title = {A discounting rule for the social cost of carbon}, Journal = {Journal of the Association of Environmental and Resource Economists}, Volume = {9}, Number = {5}, Pages = {1017-1046}, Year = {2022}, Month = {September}, url = {http://dx.doi.org/10.1086/718145}, Abstract = {We develop a discounting rule for estimating the social cost of carbon (SCC) given uncertain economic growth. Diminishing marginal utility of income implies a relationship between the discount rate term structure and economic growth uncertainty. In the classic Ramsey framework, this relationship is governed by parameters reflecting pure time preference and the elasticity of the marginal utility of consumption, yet disagreement remains about the values of these parameters. We calibrate these parameters to match empirical evidence on both the future interest rate term structure and economic growth uncertainty, while also maintaining consistency with discount rates used for shorter-term benefit-cost analysis. Such an integrated approach is crucial amid growth uncertainty, where growth is also a key determinant of climate damages. This results in an empirically driven, stochastic discounting rule to be used in estimating the SCC that also accounts for the correlation between climate damage estimates and discount rates.}, Doi = {10.1086/718145}, Key = {fds365138} } @article{fds364257, Author = {Rennert, K and Prest, BC and Pizer, WA and Newell, RG and Anthoff, D and Kingdon, C and Rennels, L and Cooke, R and Raftery, AE and Ševčíková, H and Errickson, F}, Title = {The Social Cost of Carbon: Advances in Long-Term Probabilistic Projections of Population, GDP, Emissions, and Discount Rates}, Journal = {Brookings Papers on Economic Activity}, Volume = {2021-Fall}, Pages = {223-305}, Year = {2021}, Month = {September}, url = {http://dx.doi.org/10.1353/eca.2022.0003}, Abstract = {The social cost of carbon (SCC) is a crucial metric for inform-ing climate policy, most notably for guiding climate regulations issued by the US government. Characterization of uncertainty and transparency of assump-tions are critical for supporting such an influential metric. Challenges inherent to SCC estimation push the boundaries of typical analytical techniques and require augmented approaches to assess uncertainty, raising important considerations for discounting. This paper addresses the challenges of projecting very long-term economic growth, population, and greenhouse gas emissions, as well as cali-bration of discounting parameters for consistency with those projections. Our work improves on alternative approaches, such as nonprobabilistic scenarios and constant discounting, that have been used by the government but do not fully characterize the uncertainty distribution of fully probabilistic model input data or corresponding SCC estimate outputs. Incorporating the full range of economic uncertainty in the social cost of carbon underscores the importance of adopting a stochastic discounting approach to account for uncertainty in an integrated manner.}, Doi = {10.1353/eca.2022.0003}, Key = {fds364257} } @article{fds355471, Author = {Li, Q and Pizer, WA}, Title = {Use of the consumption discount rate for public policy over the distant future}, Journal = {Journal of Environmental Economics and Management}, Volume = {107}, Year = {2021}, Month = {May}, url = {http://dx.doi.org/10.1016/j.jeem.2021.102428}, Abstract = {The choice of discount rate has a significant impact on net benefit estimates when costs today have benefits over long time horizons. Standard U.S. government practice for cost–benefit analysis is to bound such analysis using two alternative rates. These rates are meant to represent the rate of return paid by capital investment and the rate received by consumers. Previous work has shown this approach legitimately bounds the analysis—but only when future benefits accrue directly to consumers either in a two-period model or as a perpetuity. We generalize to consider arbitrary patterns of future benefits, accruing either directly to consumers or indirectly through future investment. We derive an expression for the appropriate discount rate and show that it converges to the consumption rate for benefits increasingly far into the future. More generally, the bounding rates depend on the temporal pattern of the undiscounted dollars. As an application, we estimate the appropriate discount rate for climate change damages from carbon dioxide, finding it lies in a narrow range ( ±0.5 percent) around the consumer rate of interest.}, Doi = {10.1016/j.jeem.2021.102428}, Key = {fds355471} } @article{fds359867, Author = {Wiener, J and Aldy, J and Felgenhauer, T and Borsuk, M and Pizer, W and Tavoni, M and Belaia, M and Ghosh, A}, Title = {Social Science Research to Inform Solar Geoengineering}, Journal = {Science}, Volume = {374}, Number = {6569}, Pages = {815-818}, Year = {2021}, url = {http://dx.doi.org/10.1126/science.abj6517}, Abstract = {[Figure: see text].}, Doi = {10.1126/science.abj6517}, Key = {fds359867} } @article{fds336244, Author = {Pizer, WA and Prest, BC}, Title = {Prices versus quantities with policy updating}, Journal = {Journal of the Association of Environmental and Resource Economists}, Volume = {7}, Number = {3}, Pages = {483-518}, Publisher = {University of Chicago Press}, Year = {2020}, Month = {May}, url = {http://dx.doi.org/10.1086/707142}, Abstract = {Weitzman shows that the welfare advantage of price versus quantity regulation turns on the relative slopes of marginal costs and benefits when policy is set before uncertain shocks are known. Policy updating over time changes this result. Under intertemporally tradable quantity regulation, permit prices are determined by firms’ expectations about future policy updates, and the advantage of prices versus quantities instead turns on firms’ expectations of policy changes. If firms accurately predict policy changes and the government maximizes welfare, quantity regulation can achieve the first best. Price regulation, lacking an intertemporal link, cannot. The preference tilts back toward prices under more realistic assumptions where governments set policy inefficiently or firms imperfectly anticipate policy changes. In general, the advantage turns on information and expectations, not relative slopes. Given the prevalence of intertemporally tradable permits and policy updates, our results suggest new considerations in the choice between price and quantity regulation.}, Doi = {10.1086/707142}, Key = {fds336244} } @article{fds366511, Author = {Pizer, WA}, Title = {Valuing the Greenland ice sheet and other complex geophysical phenomena.}, Journal = {Proceedings of the National Academy of Sciences of the United States of America}, Volume = {116}, Number = {25}, Pages = {12134-12135}, Year = {2019}, Month = {June}, url = {http://dx.doi.org/10.1073/pnas.1906927116}, Doi = {10.1073/pnas.1906927116}, Key = {fds366511} } @article{fds330471, Author = {Cao, J and Ho, MS and Li, Y and Newell, RG and Pizer, WA}, Title = {Chinese residential electricity consumption: Estimation and forecast using micro-data}, Journal = {Resource and Energy Economics}, Volume = {56}, Pages = {6-27}, Publisher = {Elsevier BV}, Year = {2019}, Month = {May}, url = {http://dx.doi.org/10.1016/j.reseneeco.2017.10.003}, Abstract = {Based on econometric estimation using data from the Chinese Urban Household Survey, we develop a preferred forecast range of 85–143 percent growth in residential per capita electricity demand over 2009–2025. Our analysis suggests that per capita income growth drives a 43% increase, with the remainder due to an unexplained time trend. Roughly one-third of the income-driven demand comes from increases in the stock of specific major appliances, particularly AC units. The other two-thirds comes from non-specific sources of income-driven growth and is based on an estimated income elasticity that falls from 0.28 to 0.11 as income rises. While the stock of refrigerators is not projected to increase, we find that they contribute nearly 20 percent of household electricity demand. Alternative plausible time trend assumptions are responsible for the wide range of 85–143 percent. Meanwhile we estimate a price elasticity of demand of −0.7. These estimates point to carbon pricing and appliance efficiency policies that could substantially reduce demand.}, Doi = {10.1016/j.reseneeco.2017.10.003}, Key = {fds330471} } @article{fds342118, Author = {Newell, RG and Pizer, WA and Raimi, D}, Title = {U.S. federal government subsidies for clean energy: Design choices and implications}, Journal = {Energy Economics}, Volume = {80}, Pages = {831-841}, Year = {2019}, Month = {May}, url = {http://dx.doi.org/10.1016/j.eneco.2019.02.018}, Abstract = {Subsidies for clean energy deployment have become a major component of U.S. federal energy and climate policy. After a surge in spending under the American Recovery and Reinvestment Act of 2009, they are an even larger component but now face increased scrutiny. Given their lasting presence, how does one design these subsidies to be as cost-effective as possible? Surprisingly, the conceptual framework and empirical evidence available to help policymakers identify which subsidies generate the most “bang for the buck” are limited. To help answer this question, we begin with an overview of the justifications for, and the arguments against, subsidizing clean energy technologies. Next, we briefly describe major subsidies. Finally, we summarize key design choices, suggesting an increased focus on upfront cash payments for physical outcomes such as capacity. This contrasts with the considerable focus on tax credits, loan guarantees, production, and cost-based subsidies which have been more prominent to date.}, Doi = {10.1016/j.eneco.2019.02.018}, Key = {fds342118} } @article{fds336242, Author = {Fischer, C and Pizer, WA}, Title = {Horizontal equity effects in energy regulation}, Journal = {Journal of the Association of Environmental and Resource Economists}, Volume = {6}, Number = {S1}, Pages = {S209-S237}, Publisher = {University of Chicago Press}, Year = {2019}, Month = {March}, url = {http://dx.doi.org/10.1086/701192}, Abstract = {Choices in energy regulation, particularly whether and how to price externalities, can have widely different distributional consequences both across and within income groups. Traditional welfare theory focuses largely on effects across income groups; such “vertical equity” concerns can typically be addressed by a progressive redistribution of emissions revenues. In this paper, we review alternative economic perspectives that give rise to equity concerns within income groups, or “horizontal equity,” and suggest operational measures. We then apply those measures to a stylized model of pollution regulation in the electricity sector. In addition, we look for ways to present the information behind those measures directly to stakeholders. We show how horizontal equity concerns might overshadow efficiency concerns in this context.}, Doi = {10.1086/701192}, Key = {fds336242} } @article{fds342570, Author = {Deryugina, T and Fullerton, D and Pizer, WA}, Title = {An introduction to energy policy trade-offs between economic efficiency and distributional equity}, Journal = {Journal of the Association of Environmental and Resource Economists}, Volume = {6}, Number = {S1}, Pages = {S1-S6}, Publisher = {University of Chicago Press}, Year = {2019}, Month = {March}, url = {http://dx.doi.org/10.1086/701515}, Doi = {10.1086/701515}, Key = {fds342570} } @article{fds336243, Author = {Pizer, WA and Sexton, S}, Title = {The Distributional Impacts of Energy Taxes}, Journal = {Review of Environmental Economics and Policy}, Volume = {13}, Number = {1}, Pages = {104-123}, Year = {2019}, Month = {February}, url = {http://dx.doi.org/10.1093/reep/rey021}, Abstract = {Taxes have long been advocated by economists for efficient pollution control, particularly in the energy sector. However, these taxes may enjoy less political support than standards-based regulation at least partly because of the common assumption that they place a greater burden on the poor than the rich. This article evaluates the validity of that assumption by reviewing the literature on the distributional impacts of energy taxes and by analyzing energy consumption surveys in select countries. The evidence suggests that energy taxes need not be as regressive as is often assumed. We find that the incidence (i.e., distributional impact) of such taxes depends upon the energy commodities that are taxed; the physical, social, and climatic characteristics of the jurisdictions in which they are implemented; and the use of energy tax revenues. We also show that the variation in household energy expenditure is greater within income groups than across income groups and that such variation is not easily reduced.}, Doi = {10.1093/reep/rey021}, Key = {fds336243} } @article{fds340746, Author = {Li, Y and Pizer, WA and Wu, L}, Title = {Climate change and residential electricity consumption in the Yangtze River Delta, China.}, Journal = {Proceedings of the National Academy of Sciences of the United States of America}, Volume = {116}, Number = {2}, Pages = {472-477}, Year = {2019}, Month = {January}, url = {http://dx.doi.org/10.1073/pnas.1804667115}, Abstract = {Estimating the impact of climate change on energy use across the globe is essential for analysis of both mitigation and adaptation policies. Yet existing empirical estimates are concentrated in Western countries, especially the United States. We use daily data on household electricity consumption to estimate how electricity consumption would change in Shanghai in the context of climate change. For colder days <7 °C, a 1 °C increase in daily temperature reduces electricity consumption by 2.8%. On warm days >25 °C, a 1 °C increase in daily temperatures leads to a 14.5% increase in electricity consumption. As income increases, households' weather sensitivity remains the same for hotter days in the summer but increases during the winter. We use this estimated behavior in conjunction with a collection of downscaled global climate models (GCMs) to construct a relationship between future annual global mean surface temperature (GMST) changes and annual residential electricity consumption. We find that annual electricity consumption increases by 9.2% per +1 °C in annual GMST. In comparison, annual peak electricity use increases by as much as 36.1% per +1 °C in annual GMST. Although most accurate for Shanghai, our findings could be most credibly extended to the urban areas in the Yangtze River Delta, covering roughly one-fifth of China's urban population and one-fourth of the gross domestic product.}, Doi = {10.1073/pnas.1804667115}, Key = {fds340746} } @article{fds336240, Author = {Bielen, DA and Newell, RG and Pizer, WA}, Title = {Who did the ethanol tax credit benefit? An event analysis of subsidy incidence}, Journal = {Journal of Public Economics}, Volume = {161}, Pages = {1-14}, Publisher = {Elsevier BV}, Year = {2018}, Month = {May}, url = {http://dx.doi.org/10.1016/j.jpubeco.2018.03.005}, Abstract = {At the end of 2011, the Volumetric Ethanol Excise Tax Credit (VEETC), which had subsidized the blending of ethanol in gasoline, was allowed to expire. During its tenure, the subsidy was the subject of intense scrutiny concerning who benefited from its existence. Using commodity price data, we estimate the subsidy incidence accruing to corn farmers, ethanol producers, gasoline blenders, and gasoline consumers around the time of expiration. Our empirical approach contributes methodologically to the event studies literature by analyzing futures contract prices (as opposed to spot prices) when possible. Ultimately, we find compelling evidence that, at the date of VEETC expiration, ethanol producers captured about 25¢ of the 45¢ subsidy per gallon of ethanol blended. We find suggestive, albeit inconclusive, evidence that a portion of this benefit (about 5¢ per gallon) was passed further upstream from ethanol producers to corn farmers. Most of the remainder seems most likely to have been captured by the blenders themselves. On the petroleum side, we find no evidence that oil refiners captured any part of the subsidy. We also find no evidence that the subsidy was passed downstream to gasoline consumers in the form of lower gasoline prices.}, Doi = {10.1016/j.jpubeco.2018.03.005}, Key = {fds336240} } @article{fds332833, Author = {Iyer, G and Calvin, K and Clarke, L and Edmonds, J and Hultman, N and Hartin, C and McJeon, H and Aldy, J and Pizer, W}, Title = {Implications of sustainable development considerations for comparability across nationally determined contributions}, Journal = {Nature Climate Change}, Volume = {8}, Number = {2}, Pages = {124-129}, Publisher = {Springer Nature}, Year = {2018}, Month = {February}, url = {http://dx.doi.org/10.1038/s41558-017-0039-z}, Abstract = {An important component of the Paris Agreement is the assessment of comparability across nationally determined contributions (NDCs). Indeed, game-theory literature on international environmental agreements highlights the need for comparable emission-mitigation efforts by countries to avoid free-riding 1 . At the same time, there are well-recognized links between mitigation and other national priorities, including but not limited to the 17 United Nations Sustainable Development Goals (SDGs) 2-6, which raises the question of how such links might influence comparability assessments. Here, using a global integrated assessment model 7, we demonstrate that geographical distributions of the influence of meeting the domestic mitigation component of the NDCs on a subset of the broader SDGs may not align with distributions of effort across NDCs obtained from conventional emissions-based or cost-based comparability metrics 8-11 . This implies that comparability assessments would be altered if interactions between mitigation and other SDGs were accounted for. Furthermore, we demonstrate that the extent to which these distributions differ depends on the degree to which mitigation activities directly affect broader SDGs domestically and indirectly affect international goals, and whether these effects are synergistic or antagonistic. Our analysis provides a foundation for assessing how comparability across NDCs could be better understood in the larger context of sustainability.}, Doi = {10.1038/s41558-017-0039-z}, Key = {fds332833} } @article{fds327319, Author = {Pizer, WA}, Title = {What's the damage from climate change?}, Journal = {Science (New York, N.Y.)}, Volume = {356}, Number = {6345}, Pages = {1330-1331}, Year = {2017}, Month = {June}, url = {http://dx.doi.org/10.1126/science.aan5201}, Doi = {10.1126/science.aan5201}, Key = {fds327319} } @article{fds317869, Author = {Aldy, JE and Pizer, WA}, Title = {Alternative metrics for comparing domestic climate change mitigation efforts and the emerging international climate policy architecture}, Journal = {Review of Environmental Economics and Policy}, Volume = {10}, Number = {1}, Pages = {3-24}, Publisher = {Oxford University Press (OUP)}, Year = {2016}, Month = {December}, url = {http://dx.doi.org/10.1093/reep/rev013}, Doi = {10.1093/reep/rev013}, Key = {fds317869} } @article{fds328044, Author = {Aldy, JE and Pizer, WA and Akimoto, K}, Title = {Transparency, Policy Surveillance, and the Comparison of Mitigation Efforts}, Year = {2016}, Month = {November}, Key = {fds328044} } @article{fds320241, Author = {Aldy, J and Pizer, W and Tavoni, M and Reis, LA and Akimoto, K and Blanford, G and Carraro, C and Clarke, LE and Edmonds, J and Iyer, GC and McJeon, HC and Richels, R and Rose, S and Sano, F}, Title = {Economic tools to promote transparency and comparability in the Paris Agreement}, Journal = {Nature Climate Change}, Volume = {6}, Number = {11}, Pages = {1000-1004}, Publisher = {Springer Nature}, Year = {2016}, Month = {November}, url = {http://dx.doi.org/10.1038/nclimate3106}, Abstract = {The Paris Agreement culminates a six-year transition towards an international climate policy architecture based on parties submitting national pledges every five years. An important policy task will be to assess and compare these contributions. We use four integrated assessment models to produce metrics of Paris Agreement pledges, and show differentiated effort across countries: wealthier countries pledge to undertake greater emission reductions with higher costs. The pledges fall in the lower end of the distributions of the social cost of carbon and the cost-minimizing path to limiting warming to 2 °C, suggesting insufficient global ambition in light of leaders' climate goals. Countries' marginal abatement costs vary by two orders of magnitude, illustrating that large efficiency gains are available through joint mitigation efforts and/or carbon price coordination. Marginal costs rise almost proportionally with income, but full policy costs reveal more complex regional patterns due to terms of trade effects.}, Doi = {10.1038/nclimate3106}, Key = {fds320241} } @article{fds317867, Author = {Dietz, S and Groom, B and Pizer, WA}, Title = {Weighing the costs and benefits of climate change to our children}, Journal = {Future of Children}, Volume = {26}, Number = {1}, Pages = {133-155}, Publisher = {Johns Hopkins University Press}, Year = {2016}, Month = {March}, url = {http://dx.doi.org/10.1353/foc.2016.0007}, Abstract = {Our efforts to put the brakes on climate change or adapt to a warming climate present a fundamental tradeoff between costs borne today and benefits that accrue to the children and grandchildren of the current generation. In making investments today that affect future generations’ prospects, we need to think carefully about how we value their welfare compared to our own. A common economic formula recommends giving up only 5 cents today for every dollar of benefits 100 years in the future; we call this discounting the future. Underlying this approach is the assumption that future generations will be much better off than our own, just as we are much wealthier than our ancestors were. Would our descendants’ agree with this approach? Are there reasons to put more value on future benefits? William Pizer, Ben Groom, and Simon Dietz discuss three possible reasons that we might put a higher value on future benefits. First, people disagree considerably about the correct discount rate. Other plausible interpretations of society’s preferences or observed data could increase the weight we place on future benefits by as much as a factor of five. Second, we may have failed to correctly value future climate change impacts, particularly those related to the loss of environmental amenities that have no close monetary substitutes. Third, we may not be properly valuing the risk that a warming climate could cause sudden and catastrophic changes that would drastically alter the size of the population. Ultimately, the authors write, many of the choices about how we value future generations’ welfare come down to ethical questions, and many of the decisions we must make come down to societal preferences—all of which will be difficult to extract from data or theory.}, Doi = {10.1353/foc.2016.0007}, Key = {fds317867} } @article{fds343242, Author = {Aldy, JE and Pizer, WA}, Title = {The competitiveness impacts of climate change mitigation policies}, Pages = {565-595}, Publisher = {University of Chicago Press}, Year = {2015}, Month = {December}, url = {http://dx.doi.org/10.1086/683305}, Abstract = {The pollution haven hypothesis suggests that unilateral domestic climate change mitigation policy would impose significant economic costs on carbon-intensive industries, resulting in declining output and increasing net imports. In order to evaluate this hypothesis, we undertake a two-step empirical analysis. First, we estimate how production and net imports change in response to energy prices using a 35-year panel of approximately 450 US manufacturing industries. Second, we use these estimated relationships to simulate the impacts of changes in energy prices resulting from a $15 per ton carbon price. We find that energy-intensive manufacturing industries are more likely to experience decreases in production and increases in net imports than less-intensive industries. Our best estimate is that competitiveness effects—measured by the increase in net imports—are as large as 0.8% for the most energy-intensive industries and represent no more than about one-sixth of the estimated decrease in production.}, Doi = {10.1086/683305}, Key = {fds343242} } @article{fds267328, Author = {Murray, BC and Pizer, WA and Ross, MT}, Title = {Regulating existing power plants under the U.S. Clean Air Act: Present and future consequences of key design choices}, Journal = {Energy Policy}, Volume = {83}, Pages = {87-98}, Publisher = {Elsevier BV}, Year = {2015}, Month = {August}, ISSN = {0301-4215}, url = {http://dx.doi.org/10.1016/j.enpol.2015.03.028}, Abstract = {In June 2014, the U.S. EPA released its proposed rules to regulate carbon dioxide emissions from existing fossil fuel power plants, triggering considerable debate on the proposal's design and its environmental and economic consequences. One question not addressed by this debate is this: What if the EPA regulations turn out to be inadequate to address future mitigation goals? That is, what will the landscape for future policies look like if these regulations turn out to be just an interim measure? This analysis compares potential short- and long-term consequences of several key regulatory design choices, including mass-based versus rate-based standards, tradable versus non-tradable standards, and differentiated versus single standards. It finds that long-term consequences may be significant in terms of the legacy they leave for future policy revisions: tradable standards lead to lower electricity prices and become weaker over time; differentiated tradable standards lead to relatively greater investment in coal retrofits; non-tradable standards lead to relatively greater retirement of coal capacity. It may be the case that key policy choices entail one set of trade-offs if proposed EPA rules are viewed as relatively permanent and final and another set of tradeoffs if the rules are viewed as an interim solution.}, Doi = {10.1016/j.enpol.2015.03.028}, Key = {fds267328} } @article{fds267329, Author = {Pizer, WA and Yates, AJ}, Title = {Terminating links between emission trading programs}, Journal = {Journal of Environmental Economics and Management}, Volume = {71}, Pages = {142-159}, Publisher = {Elsevier BV}, Year = {2015}, Month = {May}, ISSN = {0095-0696}, url = {http://hdl.handle.net/10161/10258 Duke open access}, Abstract = {Links between emission trading programs are not immutable, as highlighted by New Jersey's exit from the Regional Greenhouse Gas Initiative in 2011. This raises the question of what to do with existing permits that are banked for future use-choices that have consequences for market behavior in advance of, or upon speculation about, delinking. We consider two delinking policies. One differentiates banked permits by origin, the other treats banked permits the same. We describe the price behavior and relative cost-effectiveness of each policy. Treating permits differently generally leads to higher costs, and may lead to price divergence, even with only speculation about delinking.}, Doi = {10.1016/j.jeem.2015.03.003}, Key = {fds267329} } @article{fds267332, Author = {Pizer, W and Adler, M and Aldy, J and Anthoff, D and Cropper, M and Gillingham, K and Greenstone, M and Murray, B and Newell, R and Richels, R and Rowell, A and Waldhoff, S and Wiener, J}, Title = {Using and improving the social cost of carbon}, Journal = {Science}, Volume = {346}, Number = {6214}, Pages = {1189-1190}, Year = {2014}, Month = {December}, url = {http://www.sciencemag.org/content/346/6214/1189.full}, Doi = {10.1126/science.1259774}, Key = {fds267332} } @article{fds267333, Author = {Newell, RG and Pizer, WA and Raimi, D}, Title = {Carbon markets: Past, present, and future}, Journal = {Annual Review of Resource Economics}, Volume = {6}, Number = {1}, Pages = {191-215}, Publisher = {ANNUAL REVIEWS}, Year = {2014}, Month = {October}, ISSN = {1941-1340}, url = {http://hdl.handle.net/10161/10262 Duke open access}, Abstract = {Carbon markets are substantial and expanding. There are many lessons from experience over the past 9 years: fewer free allowances, careful moderation of low and high prices, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This architecture sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policy makers must confront how to measure both the comparability of efforts among markets and the comparability between markets and a variety of other policy approaches.}, Doi = {10.1146/annurev-resource-100913-012655}, Key = {fds267333} } @article{fds267330, Author = {Aldy, JE and Pizer, WA}, Title = {Comparability of Effort in International Climate Policy Architecture}, Year = {2014}, Month = {February}, Abstract = {The comparability of domestic actions to mitigate global climate change has important implications for the stability, equity, and efficiency of international climate agreements. We examine a variety of metrics that could be used to evaluate countries’ climate change mitigation effort and illustrate their potential application for large developed and developing countries. We also explain how transparent measures of the comparability of effort can contribute to the design of international and domestic climate change policy along several dimensions. For example, such measures can facilitate participation and compliance in an agreement if they can illustrate that all parties are doing their “fair share.” Second, these measures can inform the bilateral linking of domestic cap-and-trade programs in a manner akin to how nations negotiate the lowering of trade barriers more generally in trade policy. Third, assessments of the comparability of effort can affect whether to implement and, if necessary, the stringency of unilateral border measures (e.g., a border tax). Finally, such assessments demonstrate the need for a well-functioning policy surveillance regime.}, Key = {fds267330} } @article{fds267335, Author = {Arrow, KJ and Cropper, ML and Gollier, C and Groom, B and Heal, GM and Newell, RG and Nordhaus, WD and Pindyck, RS and Pizer, WA and Portney, PR and Sterner, T and Tol, RSJ and Weitzman, ML}, Title = {Should governments use a declining discount rate in project analysis?}, Journal = {Review of Environmental Economics and Policy}, Volume = {8}, Number = {2}, Pages = {145-163}, Publisher = {Oxford University Press (OUP)}, Year = {2014}, Month = {January}, ISSN = {1750-6816}, url = {http://hdl.handle.net/10161/10268 Duke open access}, Abstract = {At a workshop held at Resources for the Future in September 2011, twelve of the authors were asked by the US Environmental Protection Agency (EPA) to provide advice on the principles to be used in discounting the benefits and costs of projects that affect future generations. Maureen L. Cropper chaired the workshop. Much of the discussion in this article is based on the authors' recommendations and advice presented at the workshop. © The Author 2014.}, Doi = {10.1093/reep/reu008}, Key = {fds267335} } @article{fds267336, Author = {Newell, RG and Pizer, WA and Raimi, D}, Title = {Carbon markets: Effective policy? - Response}, Journal = {Science}, Volume = {344}, Number = {6191}, Pages = {1460-1461}, Year = {2014}, Month = {January}, ISSN = {0036-8075}, url = {http://hdl.handle.net/10161/10261 Duke open access}, Doi = {10.1126/science.344.6191.1460-c}, Key = {fds267336} } @article{fds267337, Author = {Cropper, ML and Freeman, MC and Groom, B and Pizer, WA}, Title = {Declining discount rates}, Journal = {American Economic Review}, Volume = {104}, Number = {5}, Pages = {538-543}, Publisher = {American Economic Association}, Year = {2014}, Month = {January}, ISSN = {0002-8282}, url = {http://dx.doi.org/10.1257/aer.104.5.538}, Doi = {10.1257/aer.104.5.538}, Key = {fds267337} } @article{fds267338, Author = {Newell, RG and Pizer, WA and Raimi, D}, Title = {Carbon market lessons and global policy outlook}, Journal = {Science}, Volume = {343}, Number = {6177}, Pages = {1316-1317}, Year = {2014}, Month = {January}, ISSN = {0036-8075}, url = {http://hdl.handle.net/10161/10260 Duke open access}, Abstract = {Ongoing work on linking markets and mixing policies builds on successes and failures in pricing and trading carbon.}, Doi = {10.1126/science.1246907}, Key = {fds267338} } @article{fds317870, Author = {Arrow, KJ and Cropper, M and Gollier, C and Groom, B and Heal, GM and Newell, RG and Nordhaus, WD and Pindyck, RS and Pizer, WA and Portney, P and Sterner, T and Tol, RSJ and Weitzman, M}, Title = {How Should Benefits and Costs Be Discounted in an Intergenerational Context? The Views of an Expert Panel}, Year = {2013}, Month = {December}, Abstract = {In September 2011, the US Environmental Protection Agency asked 12 economists how the benefits and costs of regulations should be discounted for projects that affect future generations. This paper summarizes the views of the panel on three topics: the use of the Ramsey formula as an organizing principle for determining discount rates over long horizons, whether the discount rate should decline over time, and how intra- and intergenerational discounting practices can be made compatible. The panel members agree that the Ramsey formula provides a useful framework for thinking about intergenerational discounting. We also agree that theory provides compelling arguments for a declining certainty-equivalent discount rate. In the Ramsey formula, uncertainty about the future rate of growth in per capita consumption can lead to a declining consumption rate of discount, assuming that shocks to consumption are positively correlated. This uncertainty in future consumption growth rates may be estimated econometrically based on historic observations, or it can be derived from subjective uncertainty about the mean rate of growth in mean consumption or its volatility. Determining the remaining parameters of the Ramsey formula is, however, challenging.}, Key = {fds317870} } @article{fds267341, Author = {Newell, RG and Pizer, WA and Raimi, D}, Title = {Carbon markets 15 years after Kyoto: Lessons learned, new challenges}, Journal = {Journal of Economic Perspectives}, Volume = {27}, Number = {1}, Pages = {123-146}, Publisher = {American Economic Association}, Year = {2013}, Month = {December}, ISSN = {0895-3309}, url = {http://hdl.handle.net/10161/10264 Duke open access}, Doi = {10.1257/jep.27.1.123}, Key = {fds267341} } @article{fds267339, Author = {Arrow, K and Cropper, M and Gollier, C and Groom, B and Heal, G and Newell, R and Nordhaus, W and Pindyck, R and Pizer, W and Portney, P and Sterner, T and Tol, RSJ and Weitzman, M}, Title = {Determining benefits and costs for future generations}, Journal = {Science}, Volume = {341}, Number = {6144}, Pages = {349-350}, Year = {2013}, Month = {January}, ISSN = {0036-8075}, url = {http://hdl.handle.net/10161/10265 Duke open access}, Abstract = {The United States and others should consider adopting a different approach to estimating costs and benefits in light of uncertainty.}, Doi = {10.1126/science.1235665}, Key = {fds267339} } @article{fds218831, Author = {William A. Pizer}, Title = {Carbon Market 15 Years after Kyoto: Lessons Learned, New Challenges}, Journal = {Journal of Economic Perspectives}, Year = {2013}, Key = {fds218831} } @article{fds317871, Author = {Kerr, S and Leining, C and Sefton, J and Montero, J-P and Vicuna, S and Sanhueza, JE and Grasty, M and Lubowski, RN and Sterner, T and Pizer, WA and Dodwell, C and Hobley, A}, Title = {Roadmap for Implementing a Greenhouse Gas Emissions Trading System in Chile: Core Design Options and Policy Decision-Making Considerations}, Journal = {Motu Working Paper}, Number = {12}, Year = {2012}, Month = {December}, Abstract = {Motu and partners were contracted by the World Bank through its Partnership for Market Readiness (PMR) initiative to “Draft a proposal for the implementation in Chile of a Greenhouse Gas Emissions Trading System (ETS)”. The specific objective in the terms of reference is to “Propose a detailed roadmap, including its design elements, to inform decision-making for an advanced model of an ETS in Chile”. This is one of a set of four related reports commissioned to assist the Chilean government in preparing its “market readiness proposal” (MRP) for submission to the World Bank. This report is the first step in a process that aims to clarify how an ETS could work in Chile and what the environmental, economic and social impacts would be. This process will allow the Chilean government and key stakeholders to assess, in a more informed way, whether an ETS would be desirable in Chile, as well as the optimal design of an ETS to achieve policy objectives and priorities. Given that Chile intends to move forward with a climate policy, an ETS presents several environmental, economic, and political advantages relative to other instruments, but also some challenges. This report addresses each of the core components of an ETS: sector coverage; point of obligation for regulated sectors; the level of ambition; linking to other markets and use of (domestic and international) offsets; emissions trading phases; and allocation of units. Cost containment, price stabilisation and potential use of border carbon adjustments are not covered in detail in this report. Design options are analysed from a largely conceptual basis, but drawing on lessons learned in operating schemes and taking account of Chile’s national circumstances to the extent of available information, as well as highlighting critical points of divergence in scheme design depending on the underlying policy goals. The design options are brought together in a decision-making framework out of which we identify a smaller number of central options that appear to make the most sense for Chile. Each of the sections on core components identifies issues where Chile-specific research is needed to better inform key design decisions and technical implementation of the scheme ultimately chosen. Research needs for the next phase of policy development are discussed. We conclude with a high-level discussion of process going forward, both in terms of education and learning to enable an informed national debate, and in terms of developing broad (political, industry, and public) support for more serious consideration of an ETS as an option for Chile. Chile could have several overlapping objectives for an ETS: cost-effectively contributing to global emission reductions; lowering the carbon-footprint of Chile’s exports in anticipation of potential trade restrictions against high-emitting countries and products; driving sustainable development including stimulation of new technology; profiting from sales of units to international buyers; generating co-benefits and avoiding perverse outcomes. The balance among objectives will affect design decisions so clarity about their relative weight and their implications for design is useful. There was a clear signal at the Durban climate change conference (2012) that at some point developing countries will be asked to have commitments. Chile will want to be prepared to respond to this. Greenhouse gas (GHG) emissions trading systems evolved out of domestic cap-and-trade systems that control local pollutants. If there were a global GHG agreement with a cap, Chile would simply be one entity within the global cap-and-trade market. Absent a global GHG agreement with a cap, every ETS is a compromise between a system that contributes cost-effectively to global emissions, and a system that protects local interests in an unstable and uncertain world. The greatest strength of emissions trading is that it encourages private actors to use their own knowledge and skill to find the best mitigation actions, including long-term investments. In a perfect world mitigation is done by the myriad of actors who can influence emissions, at the times and in the places where it is lowest cost. Even in an imperfect global market, if it is possible to link emissions markets across countries, linking facilitates cost-effective location of mitigation effort across countries by equalising prices across markets, and is likely to allow Chile to create a more ambitious system without imposing unacceptable costs on its economy as a whole. In the current imperfect world, with an uncertain long-term price and short-term prices that could be quite different from the long-term price, simply linking to the “international price” without further price stabilisation measures would impose risk and volatility on Chile and would not necessarily move it effectively toward a low-carbon economy. Linking to other ETS (as a seller) may also not be feasible in the near term, since the international market rules post-2012 are still under negotiation in the United Nations Framework Convention on Climate Change (UNFCCC) and bilateral agreements outside this framework are still evolving; linking in order to sell units can be a complex process. However, an ETS can benefit Chile even before international ETS linking is possible. It could facilitate financing for a highly credible Nationally Appropriate Mitigation Action (NAMA) or through Reducing Emissions from Deforestation and Degradation (REDD); send a regulatory and price signal that influences long-lived investment decisions and stimulates new technology development, thus placing Chile on a lower-emission sustainable development pathway; establish Chile as a leader; avoid any negative emissions-related trade repercussions from other countries; generate in-country revenue that can support government policy objectives; and produce additional environmental, economic, and social co-benefits. As international pressure builds for more ambitious global mitigation, Chile will be better prepared to contribute to international climate change agreements and compete effectively in a carbon-constrained global economy. In a world with an agreed global cap-and-trade system, there would be much work involved in designing and negotiating that system, but the domestic implementation would then follow. In our present situation, design involves a series of compromises – essentially domestic negotiations – in terms of the domestic cap, international linking and price control and stabilisation and protection against leakage. The aims when making these compromises are to achieve credibility of emissions reduction effort, a level of carbon price that Chile is comfortable with, and an acceptable overall impact on the Chilean economy. This tension from these compromises arises in each section below. Each offers one or more proposals for specific design decisions. Our final prototype draws on the design considerations specific to each section, and creates a package of coordinated compromises across issues. These are not recommendations but sensible options to consider as starting places for further analysis and discussion among government, researchers, and stakeholders.}, Key = {fds317871} } @article{fds317872, Author = {Ghosh, A and Muller, B and Pizer, WA and Wagner, G}, Title = {Mobilizing the Private Sector: Quantity-Performance Instruments for Public Climate Funds}, Year = {2012}, Month = {September}, Abstract = {In recent years, public sector funding, in general, and for the support of activities in developing countries, in particular, has become more and more “results” and “performance” oriented. There are different methods by which performance can be “indicated” (or even “measured”). The focus of this brief is on activities that are associated with quantitative performance indicators, i.e., performance assessed in terms of measured quantities — such as tonnes (of carbon), kilowatt-hours, or hectares — as carried out by the private sector. The aim of this brief is to review options for the use of such Quantity-Performance (QP) instruments as a way of channeling public funds to mitigate greenhouse gas emissions in a cost-effective way. QP instruments reward quantified mitigation performance, typically measured in tonnes of carbon dioxide-equivalent of achieved emissions reductions. As such, they imply exactly the kind of results monitoring that the current trend in public funding demands. They could be used by governments or multilateral funds, such as the Green Climate Fund, to mobilize the private sector and private sector finance for mitigation activities in developing countries.}, Key = {fds317872} } @article{fds317873, Author = {Branstetter, L and Pizer, WA}, Title = {Facing the Climate Change Challenge in a Global Economy}, Year = {2012}, Month = {July}, Abstract = {Over the past two decades, the international community has struggled to deal constructively with the problem of mitigating climate change. This is considered by many to be the preeminent public policy challenge of our time, but actual policy responses have been relatively modest. This essay provides an abbreviated narrative history of international policy in this domain, with a special emphasis on aspects of the problem, proposed solutions, and unresolved issues that are of interest to international economists and informed observers of the global economic system. We also discuss the potential conflict that could emerge between free trade principles on the one hand and environmental policy objectives on the other.}, Key = {fds317873} } @article{fds267364, Author = {Fell, H and MacKenzie, IA and Pizer, WA}, Title = {Prices versus quantities versus bankable quantities}, Journal = {Resource and Energy Economics}, Volume = {34}, Number = {4}, Pages = {607-623}, Publisher = {Elsevier BV}, Year = {2012}, ISSN = {0928-7655}, url = {http://hdl.handle.net/10161/10276 Duke open access}, Abstract = {Quantity-based regulation with banking allows regulated firms to shift obligations across time in response to periods of unexpectedly high or low marginal costs. Despite its wide prevalence in existing and proposed emission trading programs, banking has received limited attention in past welfare analyses of policy choice under uncertainty. We address this gap with a model of banking behavior that captures two key constraints: uncertainty about the future from the firm's perspective and a limit on negative bank values (e.g. borrowing). We show conditions where banking provisions reduce price volatility and lower expected costs compared to quantity policies without banking. For plausible parameter values related to U.S. climate change policy, we find that bankable quantities produce behavior quite similar to price policies for about two decades and, during this period, improve welfare by about a $1 billion per year over fixed quantities. © 2012 Elsevier B.V.}, Doi = {10.1016/j.reseneeco.2012.05.004}, Key = {fds267364} } @article{fds267367, Author = {Pizer, WA and Morgenstern, R and Shih, JS}, Title = {The performance of industrial sector voluntary climate programs: Climate Wise and 1605(b)}, Journal = {Energy Policy}, Volume = {39}, Number = {12}, Pages = {7907-7916}, Publisher = {Elsevier BV}, Year = {2011}, Month = {December}, ISSN = {0301-4215}, url = {http://dx.doi.org/10.1016/j.enpol.2011.09.040}, Abstract = {Corporate voluntary climate programs have had limited evaluation. The self-selection of participants-an essential element of such initiatives-poses challenges to researchers because the decision to participate may not be random and may be correlated with outcomes. This study aims to gage the environmental effectiveness of the industrial sector elements of two early voluntary climate change programs with established track records, the U.S. Environmental Protection Agency's Climate Wise and the U.S. Department of Energy's Voluntary Reporting of Greenhouse Gases Program (1605(b)). Particular attention is paid to the participation decision and how various assumptions affect estimates of program outcomes using propensity score matching methods applied to plant-level Census data. Overall, the effects are modest: reductions in fuel and electricity expenditures are no more than 10 percent and probably less than 5 percent. Virtually no evidence suggests either program has a statistically significant effect on fuel costs. Some evidence indicates that participation in Climate Wise led to a 3-5 percent increase in electricity costs that vanished after two years. Stronger evidence suggests that participation in 1605(b) led to a 4-8 percent decrease in electricity costs that persisted for at least three years. These results suggest that while voluntary programs can play some role in addressing climate change, they are unlikely to bring about the kinds of steep reductions called for in the current debate. © 2011 Elsevier Ltd.}, Doi = {10.1016/j.enpol.2011.09.040}, Key = {fds267367} } @article{fds343243, Author = {Aldy, JE and Pizer, WA}, Title = {The Competitiveness Impacts of Climate Change Mitigation Policies}, Year = {2011}, Month = {December}, Key = {fds343243} } @article{fds267384, Author = {Aldy, JE and Krupnick, AJ and Newell, RG and Parry, IWH and Pizer, WA}, Title = {Designing climate mitigation policy}, Journal = {Journal of Economic Literature}, Volume = {48}, Number = {4}, Pages = {903-934}, Publisher = {American Economic Association}, Year = {2010}, Month = {December}, ISSN = {0022-0515}, url = {http://hdl.handle.net/10161/7011 Duke open access}, Abstract = {This paper provides (for the nonspecialist) a highly streamlined discussion of the main issues, and controversies, in the design of climate mitigation policy. The first part of the paper discusses how much action to reduce greenhouse gas emissions at the global level is efficient under both the cost-effectiveness and welfare-maximizing paradigms. We then discuss various issues in the implementation of domestic emissions control policy, instrument choice, and incentives for technological innovation. Finally, we discuss alternative policy architectures at the international level.}, Doi = {10.1257/jel.48.4.903}, Key = {fds267384} } @article{fds343244, Author = {Aldy, JE and Krupnick, AJ and Newell, RG and Parry, IWH and Pizer, WA}, Title = {Designing Climate Mitigation Policy}, Year = {2010}, Month = {December}, Abstract = {This paper provides (for the nonspecialist) a highly streamlined discussion of the main issues, and controversies, in the design of climate mitigation policy. The first part of the paper discusses how much action to reduce greenhouse gas emissions at the global level is efficient under both the cost-effectiveness and welfare-maximizing paradigms. We then discuss various issues in the implementation of domestic emissions control policy, instrument choice, and incentives for technological innovation. Finally, we discuss alternative policy architectures at the international level. (JEL Q54, Q58)}, Key = {fds343244} } @article{fds267385, Author = {Blackman, A and Lahiri, B and Pizer, W and Rivera Planter and M and Muñoz Piña, C}, Title = {Voluntary environmental regulation in developing countries: Mexico's Clean Industry Program}, Journal = {Journal of Environmental Economics and Management}, Volume = {60}, Number = {3}, Pages = {182-192}, Publisher = {Elsevier BV}, Year = {2010}, Month = {November}, ISSN = {0095-0696}, url = {http://dx.doi.org/10.1016/j.jeem.2010.05.006}, Abstract = {Because conventional command-and-control environmental regulation often performs poorly in developing countries, policymakers are increasingly experimenting with alternatives, including voluntary regulatory programs. Research in industrialized countries suggests that such programs are sometimes ineffective, because they mainly attract relatively clean participants free-riding on unrelated pollution control investments. We use plant-level data on more than 100,000 facilities to analyze the Clean Industry Program, Mexico's flagship voluntary regulatory initiative. We seek to identify the drivers of participation and to determine whether the program improves participants' environmental performance. Using data from the program's first decade, we find that plants recently fined by environmental regulators were more likely to participate, but that after graduating from the program, participants were not fined at a substantially lower rate than nonparticipants. These results suggest that although the Clean Industry Program attracted dirty plants under pressure from regulators, it did not have a large, lasting impact on their environmental performance. © 2010 Elsevier Inc.}, Doi = {10.1016/j.jeem.2010.05.006}, Key = {fds267385} } @article{fds304221, Author = {Pizer, W and Sanchirico, JN and Batz, M}, Title = {Regional patterns of U.S. household carbon emissions}, Journal = {Climatic Change}, Volume = {99}, Number = {1}, Pages = {47-63}, Publisher = {Springer Nature}, Year = {2010}, Month = {February}, ISSN = {0165-0009}, url = {http://dx.doi.org/10.1007/s10584-009-9637-8}, Abstract = {Market-based policies to address fossil fuel-related externalities including climate change typically operate by raising the price of those fuels. Increases in energy prices have important consequences for a typical U. S. household that spent almost $4,000 per year on electricity, fuel oil, natural gas, and gasoline in 2005. A key question for policymakers is how these consequences vary over different regions and subpopulations across the country-especially as adjustment and compensation programs are designed to protect more vulnerable regions. To answer this question, we use non-publicly available data from the U. S. Consumer Expenditure Survey over the period 1984-2000 to estimate long-run geographic variation in household use of electricity, fuel oil, natural gas, and gasoline, as well as the associated incidence of a $10 per ton tax on carbon dioxide (ignoring behavioral response). We find substantial variation: incidence from the tax range from $97 dollars per year per household in New York County, New York to $235 per year per household in Tensas Parish, Louisiana. This variation can be explained by differences in energy use, carbon intensity of electricity generation, and electricity regulation. © Springer Science + Business Media B.V. 2009.}, Doi = {10.1007/s10584-009-9637-8}, Key = {fds304221} } @article{fds267390, Author = {Pizer, WA and Batz, M and Sanchirico, J}, Title = {Regional Patterns of Household Carbon Emissions}, Journal = {Climatic Change}, Volume = {99}, Number = {1-2}, Pages = {47-63}, Year = {2010}, ISSN = {0165-0009}, url = {http://dx.doi.org/10.1007/s10584-009-9637-8}, Keywords = {Carbon}, Abstract = {Market-based policies to address fossil fuel-related externalities including climate change typically operate by raising the price of those fuels. Increases in energy prices have important consequences for a typical U. S. household that spent almost $4,000 per year on electricity, fuel oil, natural gas, and gasoline in 2005. A key question for policymakers is how these consequences vary over different regions and subpopulations across the country-especially as adjustment and compensation programs are designed to protect more vulnerable regions. To answer this question, we use non-publicly available data from the U. S. Consumer Expenditure Survey over the period 1984-2000 to estimate long-run geographic variation in household use of electricity, fuel oil, natural gas, and gasoline, as well as the associated incidence of a $10 per ton tax on carbon dioxide (ignoring behavioral response). We find substantial variation: incidence from the tax range from $97 dollars per year per household in New York County, New York to $235 per year per household in Tensas Parish, Louisiana. This variation can be explained by differences in energy use, carbon intensity of electricity generation, and electricity regulation. © Springer Science + Business Media B.V. 2009.}, Doi = {10.1007/s10584-009-9637-8}, Key = {fds267390} } @article{fds321873, Author = {Bennear, LS and Olmstead, SM}, Title = {Information Disclosure and Drinking Water Quality}, Journal = {Resources Magazine}, Pages = {88-89}, Publisher = {Routledge}, Year = {2009}, Month = {October}, url = {http://dx.doi.org/10.4324/9781936331253}, Doi = {10.4324/9781936331253}, Key = {fds321873} } @article{fds311238, Author = {Aldy, JE and Krupnick, A and Newell, RG and Parry, IWH and Pizer, WA}, Title = {Designing Climate Mitigation Policy}, Year = {2009}, Month = {June}, url = {http://www.rff.org/Aldy.cfm}, Abstract = {This paper provides an exhaustive review of critical issues in the design of climate mitigation policy by pulling together key findings and controversies from diverse literatures on mitigation costs, damage valuation, policy instrument choice, technological innovation, and international climate policy. We begin with the broadest issue of how high assessments suggest the near and medium term price on greenhouse gases would need to be, both under cost-effective stabilization of global climate and under net benefit maximization or Pigouvian emissions pricing. The remainder of the paper focuses on the appropriate scope of regulation, issues in policy instrument choice, complementary technology policy, and international policy architectures.}, Key = {fds311238} } @article{fds267323, Author = {Hall, DS and Levi, MA and Pizer, WA and Ueno, T}, Title = {Policies for developing country engagement}, Pages = {649-681}, Booktitle = {Post-Kyoto International Climate Policy: Implementing Architectures for Agreement}, Publisher = {Cambridge University Press}, Address = {Cambridge}, Editor = {Joseph Aldy and Robert Stavins}, Year = {2009}, Month = {January}, url = {http://dx.doi.org/10.1017/CBO9780511813207.022}, Abstract = {Introduction: Much of the debate surrounding global climate policy focuses on the appropriate role for developing countries in mitigating global emissions—and on how industrialized countries can best support and encourage that role. Climate change is a global problem that requires all major emitting countries to undertake mitigation efforts; moreover, developing countries account for most of the emissions growth projected over the next century. If current developing countries are going to make significant progress towards greater prosperity while the world simultaneously seeks to stabilize atmospheric greenhouse gas (GHG) concentrations at somewhere between 450 and 750 parts per million carbon dioxide-equivalent (ppm CO2e), developing countries are going to have to develop in a less GHG-intensive fashion than the already-industrialized economies did (Clarke et al. 2007). Yet developing countries face considerable obstacles: they lack resources and place greater priority on economic development relative to environmental protection. At the same time, industrialized countries like the United States are well aware that their own efforts to reduce emissions can be thwarted if, through trade in goods and services, their emitting activities shift to non-participants in a climate agreement, or if their GHG cuts are simply overwhelmed by growth elsewhere. The focus of this chapter is on the intersection of interests between developing and developed countries. How can developed countries—with more resources and, for the most part, a greater sense of urgency— engage developing countries in a cooperative effort to mitigate climate change? Part of the answer is an increasing awareness among developing countries that they themselves are vulnerable to the impacts of climate change, which will tend to make them more willing to seek cooperative solutions.}, Doi = {10.1017/CBO9780511813207.022}, Key = {fds267323} } @article{fds267365, Author = {Murray, BC and Newell, RG and Pizer, WA}, Title = {Balancing cost and emissions certainty: An allowance reserve for cap-and-trade}, Journal = {Review of Environmental Economics and Policy}, Volume = {3}, Number = {1}, Pages = {84-103}, Publisher = {Oxford University Press (OUP)}, Year = {2009}, Month = {January}, ISSN = {1750-6816}, url = {http://hdl.handle.net/10161/6750 Duke open access}, Abstract = {On efficiency grounds, the economics community has to date tended to emphasize price-based policies to address climate change -- such as taxes or a “safety-valve” price ceiling for cap-and-trade -— while environmental advocates have sought a more clear quantitative limit on emissions. This paper presents a simple modification to the idea of a safety valve -- a quantitative limit that we call the allowance reserve. Importantly, this idea may bridge the gap between competing interests and potentially improve efficiency relative to tax or other price-based policies. The last point highlights the deficiencies in several previous studies of price and quantity controls for climate change that do not adequately capture the dynamic opportunities within a cap-and-trade system for allowance banking, borrowing, and intertemporal arbitrage in response to unfolding information.}, Doi = {10.1093/reep/ren016}, Key = {fds267365} } @article{fds267366, Author = {Aldy, JE and Pizer, WA}, Title = {Issues in designing U.S. climate change policy}, Journal = {Energy Journal}, Volume = {30}, Number = {3}, Pages = {179-210}, Publisher = {International Association for Energy Economics (IAEE)}, Year = {2009}, Month = {January}, ISSN = {0195-6574}, url = {http://dx.doi.org/10.5547/ISSN0195-6574-EJ-Vol30-No3-9}, Abstract = {Over the coming decades, the cost of U.S. climate change policy likely will be comparable to the total cost of all existing environmental regulation-perhaps 1-2 percent of national income. In order to avoid higher costs, policy efforts should create incentives for firms and individuals to pursue the cheapest climate change mitigation options over time, among all sectors, across national borders, and in the face of significant uncertainty. Well-designed national greenhouse gas mitigation policies can serve as the foundation for global efforts and as an example for emerging and developing countries. We present six key policy design issues that will determine the costs, cost-effectiveness, and distributional impacts of domestic climate policy: program scope, cost containment, offsets, revenues and allowance allocation, competitiveness, and R&D policy. We synthesize the literature on these design features, review the implications for the ongoing policy debate, and identify outstanding research questions that can inform policy development. Copyright © 2009 by the IAEE.}, Doi = {10.5547/ISSN0195-6574-EJ-Vol30-No3-9}, Key = {fds267366} } @article{fds317874, Author = {Pizer, JEAAWA}, Title = {Issues in Designing U.S. Climate Change Policy}, Volume = {Volume 30}, Number = {Number 3}, Year = {2009}, Key = {fds317874} } @article{fds267389, Author = {Newell, RG and Pizer, WA}, Title = {Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand}, Journal = {Resource and Energy Economics}, Volume = {30}, Number = {4}, Pages = {527-539}, Publisher = {Elsevier BV}, Year = {2008}, Month = {December}, ISSN = {0928-7655}, url = {http://hdl.handle.net/10161/7456 Duke open access}, Abstract = {We estimate a carbon mitigation cost curve for the U.S. commercial sector based on econometric estimation of the responsiveness of fuel demand and equipment choices to energy price changes. The model econometrically estimates fuel demand conditional on fuel choice, which is characterized by a multinomial logit model. Separate estimation of end uses (e.g., heating, cooking) using the U.S. Commercial Buildings Energy Consumption Survey allows for exceptionally detailed estimation of price responsiveness disaggregated by end use and fuel type. We then construct aggregate long-run elasticities, by fuel type, through a series of simulations; own-price elasticities range from -0.9 for district heat services to -2.9 for fuel oil. The simulations form the basis of a marginal cost curve for carbon mitigation, which suggests that a price of $20 per ton of carbon would result in an 8% reduction in commercial carbon emissions, and a price of $100 per ton would result in a 28% reduction. © 2008 Elsevier B.V. All rights reserved.}, Doi = {10.1016/j.reseneeco.2008.09.004}, Key = {fds267389} } @article{fds267386, Author = {Pizer, WA and Popp, D}, Title = {Endogenizing technological change: Matching empirical evidence to modeling needs}, Journal = {Energy Economics}, Volume = {30}, Number = {6}, Pages = {2754-2770}, Publisher = {Elsevier BV}, Year = {2008}, Month = {November}, ISSN = {0140-9883}, url = {http://dx.doi.org/10.1016/j.eneco.2008.02.006}, Abstract = {Given that technologies to significantly reduce fossil fuel emissions are currently unavailable or only available at high cost, technological change will be a key component of any long-term strategy to reduce greenhouse gas emissions. In light of this, the amount of research on the pace, direction, and benefits of environmentally-friendly technological change has grown dramatically in recent years. This research includes empirical work estimating the magnitude of these effects, and modeling exercises designed to simulate the importance of endogenous technological change in response to climate policy. Unfortunately, few attempts have been made to connect these two streams of research. This paper attempts to bridge that gap. We review both the empirical and modeling literature on technological change. Our focus includes the research and development process, learning by doing, the role of public versus private research, and technology diffusion. Our goal is to provide an agenda for how both empirical and modeling research in these areas can move forward in a complementary fashion. In doing so, we discuss both how models used for policy evaluation can better capture empirical phenomena, and how empirical research can better address the needs of models used for policy evaluation. © 2008.}, Doi = {10.1016/j.eneco.2008.02.006}, Key = {fds267386} } @article{fds267387, Author = {Gillingham, K and Newell, RG and Pizer, WA}, Title = {Modeling endogenous technological change for climate policy analysis}, Journal = {Energy Economics}, Volume = {30}, Number = {6}, Pages = {2734-2753}, Publisher = {Elsevier BV}, Year = {2008}, Month = {November}, ISSN = {0140-9883}, url = {http://hdl.handle.net/10161/6628 Duke open access}, Abstract = {The approach used to model technological change in a climate policy model is a critical determinant of its results in terms of the time path of CO2 prices and costs required to achieve various emission reduction goals. We provide an overview of the different approaches used in the literature, with an emphasis on recent developments regarding endogenous technological change, research and development, and learning. Detailed examination sheds light on the salient features of each approach, including strengths, limitations, and policy implications. Key issues include proper accounting for the opportunity costs of climate-related knowledge generation, treatment of knowledge spillovers and appropriability, and the empirical basis for parameterizing technological relationships. No single approach appears to dominate on all these dimensions, and different approaches may be preferred depending on the purpose of the analysis, be it positive or normative. © 2008 Elsevier B.V. All rights reserved.}, Doi = {10.1016/j.eneco.2008.03.001}, Key = {fds267387} } @article{fds267388, Author = {Newell, RG and Pizer, WA}, Title = {Indexed regulation}, Journal = {Journal of Environmental Economics and Management}, Volume = {56}, Number = {3}, Pages = {221-233}, Publisher = {Elsevier BV}, Year = {2008}, Month = {November}, ISSN = {0095-0696}, url = {http://hdl.handle.net/10161/6755 Duke open access}, Abstract = {Seminal work by Weitzman [Prices vs. quantities, Rev. Econ. Stud. 41 (1974) 477-491] revealed prices are preferred to quantities when marginal benefits are relatively flat compared to marginal costs. We extend this comparison to indexed policies, where quantities are proportional to an index, such as output. We find that policy preferences hinge on additional parameters describing the first and second moments of the index and the ex post optimal quantity level. When the ratio of these variables' coefficients of variation divided by their correlation is less than approximately two, indexed quantities are preferred to fixed quantities. A slightly more complex condition determines when indexed quantities are preferred to prices. Applied to climate change policy, we find that the range of variation and correlation in country-level carbon dioxide emissions and GDP suggests the ranking of an emissions intensity cap (indexed to GDP) compared to a fixed emission cap is not uniform across countries; neither policy clearly dominates the other. © 2008 Elsevier Inc. All rights reserved.}, Doi = {10.1016/j.jeem.2008.07.001}, Key = {fds267388} } @article{fds267353, Author = {Tatsutani, M and Pizer, WA}, Title = {Managing Costs in a U.S. Greenhouse Gas Trading Program: A Workshop Summary}, Year = {2008}, Month = {July}, Abstract = {Cost containment has emerged as a major point of contention in the current congressional debate about designing a cap-and-trade program to limit future U.S. greenhouse gas (GHG) emissions. This paper reviews basic concepts and policy options for cost management, drawing on a March 2008 workshop sponsored by Resources for the Future (RFF), the National Commission on Energy Policy, and Duke University’s Nicholas Institute for Environmental Policy Solutions. The different sources and temporal dimensions of cost uncertainty are explored, along with possible mechanisms for addressing short- and long-term cost concerns, including banking and borrowing, emissions offsets, a price cap (or safety valve), quantity-limited allowance reserve, and the concept of an oversight entity for GHG allowance markets modeled on the Federal Reserve. Recognizing that the inherent trade-off between environmental certainty and cost certainty has no perfect solution, the paper nonetheless concludes that numerous options exist for striking a reasonable and politically viable balance between these two objectives. In the effort to forge consensus around a particular set of options, it will be important for policymakers to strive to fit the remedy to the problem they are trying to solve and to preserve the underlying integrity of the overall program in terms of its long-term ability to sustain meaningful market incentives for low-carbon technologies.}, Key = {fds267353} } @article{fds267346, Author = {Pizer, WA}, Title = {A U.S. Perspective on Future Climate Regimes}, Year = {2007}, Month = {February}, Abstract = {Momentum may be building for federal climate change policy in the United States. Assuming this leads to mandatory greenhouse gas regulations, the door will be open for the United States to constructively re-engage other countries concerning an international climate regime. Such a regime will need to recognize that binding international limits are unlikely to attract U.S. participation and, therefore, will require a different approach than the Kyoto Protocol. In particular, a future regime will need to accommodate and encourage, rather than force or constrain, domestic actions to focus more narrowly on major economies and emitting nations, to balance mitigation and technology objectives, and to engage developing countries on as many levels as possible. In place of a heavy emphasis on negotiating commitments in advance, there likely will need to be greater emphasis on evaluating actions in retrospect. Such an approach not only matches recent trends in the United States but arguably follows from broader experience over the decade since the negotiation of the Kyoto Protocol.}, Key = {fds267346} } @article{fds267322, Author = {Morgenstern, RD and Pizer, WA}, Title = {Concluding observations: What can we learnfrom the case studies?}, Pages = {166-185}, Publisher = {Routledge}, Year = {2007}, Month = {January}, url = {http://dx.doi.org/10.4324/9781936331123}, Doi = {10.4324/9781936331123}, Key = {fds267322} } @article{fds267318, Author = {Pizer, WA}, Title = {Practical global climate policy}, Pages = {280-340}, Publisher = {Cambridge University Press}, Year = {2007}, Month = {January}, url = {http://dx.doi.org/10.1017/CBO9780511802027.008}, Abstract = {A meaningful discussion of international climate policy agreement needs to begin by asking the question, what is the goal of the international agreement? What defines success? One way to answer this question is to view the problem through the eyes of a stylized grouping of experts and stakeholders engaged in the issue: economists, environmental advocates, and technologists. Economists would likely describe the goal as maximizing welfare; that is, setting a global policy that balances expected costs and benefits of mitigation. Environmental advocates, and indeed the United Nations Framework Convention on Climate Change (UNFCCC), describe a goal of preventing dangerous interference with the climate system. Like the Clean Air Act in the United States, it suggests first consulting the science to establish a safe standard, then following up with a cost-effective (i.e., least-cost strategy) to achieve it. Alternatively, the goal might be described by technologists as the need to develop and deploy climate friendly technology at a global level, without a heavy emphasis on near-term emission reductions.}, Doi = {10.1017/CBO9780511802027.008}, Key = {fds267318} } @article{fds267325, Author = {Pizer, W}, Title = {Climate policy design under uncertainty}, Volume = {9780521866033}, Pages = {305-313}, Booktitle = {Human-Induced Climate Change}, Publisher = {Cambridge University Press}, Address = {Cambridge}, Editor = {Michael Schlesinger et al.}, Year = {2007}, Month = {January}, url = {http://dx.doi.org/10.1017/CBO9780511619472.030}, Abstract = {The uncertainty surrounding the costs and benefits associated with global climate change mitigation creates enormous obstacles for scientists, stakeholders, and especially policymakers seeking a practical policy solution. Scientists find it difficult to accurately quantify and communicate uncertainty; business stakeholders find it difficult to plan for the future; and policymakers are challenged to balance competing interests that frequently talk past each other. Most emissions trading programs to date have focused on absolute caps that either remain fixed or decline over time. Examples include the US SO2 trading program and NOx Budget Program, the EU Emissions Trading Scheme (EU ETS), Southern California’s NO RECLAIM program, and a host of other regional pollutant trading schemes in the United States. Even the Kyoto Protocol, by most accounts, is viewed as a first step in capping emissions that must then lead to even lower levels in subsequent periods. Yet the uncertainty surrounding climate change suggests that such an approach to regulating greenhouse gas emissions is problematic. On the one hand, we are unsure about what atmospheric concentrations need to be in the long run to prevent dangerous interference with the climate system. And regardless of the stabilization target, considerations of the global economic system and its dependence on fossil fuels suggests that optimal global emissions trajectories will continue to grow for some time (Wigley et al., 1996; Manne and Richels, 1999).}, Doi = {10.1017/CBO9780511619472.030}, Key = {fds267325} } @article{fds267383, Author = {Pizer, WA and Kruger, J and Oates, W}, Title = {Decentralized in the EU ETS and Lessons for Global Policy}, Journal = {Review of Environmental Econimics and Policy}, Volume = {1}, Number = {1}, Pages = {112-133}, Year = {2007}, Key = {fds267383} } @article{fds317875, Author = {Parry, IWH and Pizer, WA}, Title = {Combating Global Warming}, Journal = {Regulation}, Volume = {30}, Number = {3}, Pages = {18-22}, Year = {2007}, Month = {Fall}, Abstract = {The favored federal policy to address climate change is a domestic cap-and-trade system. However, a vocal minority of political leaders have begun arguing in favor of a carbon tax. Carbon taxes seem particularly attractive both for fiscal reasons and because they provide certainty over the price of emissions. But permit systems can be designed to capture the potential advantages of carbon taxes.}, Key = {fds317875} } @article{fds267345, Author = {Pizer, WA}, Title = {Economics versus Climate Change}, Pages = {201-216}, Year = {2006}, Month = {June}, ISBN = {978-0-262-07302-8}, url = {http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000284039600010&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=47d3190e77e5a3a53558812f597b0b92}, Abstract = {This paper argues against the common-sense conclusion that climate change demands a global market-based solution, such as international emissions trading. First, current experience suggests global cooperation is not necessary for initial mandatory actions. Second, when domestic targets vary across nations, there are a variety of reasons why international emissions trading, even though it creates aggregate economic gains for all nations, may not be desirable. These reasons include concerns over legitimizing target variations for future negotiations, real and perceived consequences of capital flows across nations, and distributional impacts within nations. Finally, the underlying need for global technology solutions suggests domestic mitigation policies that balance clear emissions price signals, incentives for technology development and deployment, and mechanisms to finance deployment to developing countries. International efforts, in turn, might focus on encouraging these domestic actions, facilitating the developing country investment mechanisms, and providing credible reviews of national action.}, Key = {fds267345} } @article{fds267380, Author = {Pizer, WA}, Title = {The evolution of a global climate change agreement}, Journal = {American Economic Review}, Volume = {96}, Number = {2}, Pages = {26-30}, Publisher = {American Economic Association}, Year = {2006}, Month = {May}, ISSN = {0002-8282}, url = {http://dx.doi.org/10.1257/000282806777211793}, Doi = {10.1257/000282806777211793}, Key = {fds267380} } @article{fds267348, Author = {Goulder, LH and Pizer, WA}, Title = {The Economics of Climate Change}, Year = {2006}, Month = {January}, Abstract = {Global climate change poses a threat to the well-being of humans and other living things through impacts on ecosystem functioning, biodiversity, capital productivity, and human health. Climate change economics attends to this issue by offering theoretical insights and empirical findings relevant to the design of policies to reduce, avoid, or adapt to climate change. This economic analysis has yielded new estimates of mitigation benefits, improved understanding of costs in the presence of various market distortions or imperfections, better tools for making policy choices under uncertainty, and alternate mechanisms for allowing flexibility in policy responses. These contributions have influenced the formulation and implementation of a range of climate change policies at the domestic and international levels.}, Key = {fds267348} } @article{fds267381, Author = {Pizer, W and Burtraw, D and Harrington, W and Newell, R and Sanchirico, J}, Title = {Modeling economy-wide vs sectoral climate policies using combined aggregate-sectoral models}, Journal = {Energy Journal}, Volume = {27}, Number = {3}, Pages = {135-168}, Publisher = {International Association for Energy Economics (IAEE)}, Year = {2006}, Month = {January}, ISSN = {0195-6574}, url = {http://hdl.handle.net/10161/10266 Duke open access}, Abstract = {Economic analyses of climate change policies frequently focus on reductions of energy-related carbon dioxide emissions via market-based, economy-wide policies. The current course of environment and energy policy debate in the United States, however, suggests an alternative outcome: sector-based and/or inefficiently designed policies. This paper uses a collection of specialized, sector-based models in conjunction with a computable general equilibrium model of the economy to examine and compare these policies at an aggregate level. We examine the relative cost of different policies designed to achieve the same quantity of emission reductions. We find that excluding a limited number of sectors from an economy-wide policy does not significantly raise costs. Focusing policy solely on the electricity and transportation sectors doubles costs, however, and using non-market policies can raise cost by a factor of ten. These results are driven in part by, and are sensitive to, our modeling of pre-existing tax distortions. Copyright © 2006 by the IAEE. All rights reserved.}, Doi = {10.5547/ISSN0195-6574-EJ-Vol27-No3-8}, Key = {fds267381} } @article{fds304220, Author = {Shih, JS and Harrington, W and Pizer, WA and Gillingham, K}, Title = {Economies of scale in community water systems}, Journal = {Journal / American Water Works Association}, Volume = {98}, Number = {9}, Pages = {100-108}, Year = {2006}, Month = {January}, ISSN = {0003-150X}, url = {http://dx.doi.org/10.1002/j.1551-8833.2006.tb07757.x}, Abstract = {Data sets from the US Environmental Protection Agency's 1995 and 2000 Community Water Systems surveys were used to examine the production costs of water supply systems. The authors estimate water supply economies of scale by estimating the elasticities of both the total unit cost and the individual component costs. For total unit cost, they found that a 1 % production increase reduced unit costs by a statistically significant 0.16%. For individual component costs, higher economies of scale in capital, materials, outside services, and other costs and lower, but still positive, economies of scale in labor and energy costs were found. These economies of scale may reflect production economies or suggest that larger systems are better than smaller systems at bargaining and receiving services and materials at a lower unit cost. Importantly, bargaining gains and some production economies do not necessarily depend on water systems becoming physically interconnected. - RSH.}, Doi = {10.1002/j.1551-8833.2006.tb07757.x}, Key = {fds304220} } @article{fds267315, Author = {Pizer, WA}, Title = {Setting energy policy in the modern era: Tough challenges lie ahead}, Journal = {The RFF Reader in Environmental and Resource Policy: Second Edition}, Volume = {156}, Pages = {171-174}, Year = {2006}, url = {http://dx.doi.org/10.4324/9781936331642}, Doi = {10.4324/9781936331642}, Key = {fds267315} } @article{fds267358, Author = {Pizer, WA and Kopp, R}, Title = {Chapter 25 Calculating the Costs of Environmental Regulation}, Journal = {Handbook of Environmental Economics}, Volume = {3}, Pages = {1307-1351}, Publisher = {Elsevier}, Year = {2005}, Month = {December}, ISSN = {1574-0099}, url = {http://dx.doi.org/10.1016/S1574-0099(05)03025-1}, Abstract = {Decisions concerning environmental protection hinge on estimates of economic burden. Over the past 30 years, economists have developed and applied various tools to measure this burden. In this chapter, we present a taxonomy of costs along with methods for measuring those costs. At the broadest level, we distinguish between partial and general equilibrium costs. Partial equilibrium costs represent the burden directly borne by the regulated entity (firms, households, government), including both pecuniary and nonpecuniary expenses, when prices are held constant. General equilibrium costs reflect the net burden once all good and factor markets have equilibrated. In addition to partial equilibrium costs, these general equilibrium costs include welfare losses or gains in markets with preexisting distortions, welfare losses or gains from rebalancing the government's budget constraint, and welfare gains from the added flexibility of meeting pollution constraints through reductions in the use of higher-priced, pollution-intensive products. In addition to both partial and general equilibrium costs, we also consider the distribution of costs across households, countries, sectors, subnational regions, and generations. Despite improvements in our understanding of cost measurement, we find considerable opportunity for further work and, especially, better application of existing methods. © 2005 Elsevier B.V. All rights reserved.}, Doi = {10.1016/S1574-0099(05)03025-1}, Key = {fds267358} } @article{fds336245, Author = {Pizer, W and Newell, R}, Title = {Carbon Mitigation Costs for the Commercial Sector: Discrete-Continuous Choice Analysis of Multifuel Energy Demand}, Year = {2005}, Month = {June}, Abstract = {We estimate a carbon mitigation cost curve for the U.S. commercial sector based on econometric estimation of the responsiveness of fuel demand and equipment choices to energy price changes. The model econometrically estimates fuel demand conditional on fuel choice, which is characterized by a multinomial logit model. Separate estimation of end uses (e.g., heating, cooking) using the 1995 Commercial Buildings Energy Consumption Survey allows for exceptionally detailed estimation of price responsiveness disaggregated by end use and fuel type. We then construct aggregate long-run elasticities, by fuel type, through a series of simulations; own-price elasticities range from ?0.9 for district heat services to ?2.9 for fuel oil. The simulations form the basis of a marginal cost curve for carbon mitigation, which suggests that a price of $20 per ton of carbon would result in an 8% reduction in commercial carbon emissions, and a price of $100 per ton would result in a 28% reduction.}, Key = {fds336245} } @article{fds304222, Author = {Newell, R and Pizer, W and Zhang, J}, Title = {Managing permit markets to stabilize prices}, Journal = {Environmental and Resource Economics}, Volume = {31}, Number = {2}, Pages = {133-157}, Publisher = {Springer Nature}, Year = {2005}, Month = {June}, url = {http://dx.doi.org/10.1007/s10640-005-1761-y}, Abstract = {The political economy of environmental policy favors the use of quantity-based instruments over price-based instruments (e.g., tradable permits over green taxes), at least in the United States. With cost uncertainty, however, there are clear efficiency advantages to prices in cases where the marginal damages of emissions are relatively flat, such as with greenhouse gases. The question arises, therefore, of whether one can design flexible quantity policies that mimic the behavior of price policies, namely stable permit prices and abatement costs. We explore a number of "quantity- plus" policies that replicate the behavior of a price policy through rules that adjust the effective permit cap for unexpectedly low or high costs. They do so without necessitating any monetary exchanges between the government and the regulated firms, which can be a significant political barrier to the use of price instruments. © Springer 2005.}, Doi = {10.1007/s10640-005-1761-y}, Key = {fds304222} } @article{fds267379, Author = {Pizer, WA}, Title = {The case for intensity targets}, Journal = {Climate Policy}, Volume = {5}, Number = {4}, Pages = {455-462}, Publisher = {Informa UK Limited}, Year = {2005}, Month = {January}, ISSN = {1469-3062}, url = {http://dx.doi.org/10.1080/14693062.2005.9685570}, Abstract = {While most of the world has pursued absolute emission limits for greenhouse gases, the Bush administration has proposed an alternative policy formulation based, among other things, on reducing emissions intensity—that is, emissions per dollar of real gross domestic product (GDP). Critics of this formulation have denounced the general idea of an intensity-based emission target, along with its voluntary nature and modest targets. This raises the question of whether intensity-based emission limits, distinct from the other features of the Bush initiative, offer a useful alternative to absolute emission limits. This essay makes the case that they do, based on how emission targets are framed. The argument draws on four key observations: greenhouse gas emissions will continue to rise over the near term; absolute targets emphasize zero or declining emissions growth while intensity targets do not; developing countries' economic development is integrally tied to emissions growth for the foreseeable future; and intensity targets need not be any more complicated to administer than absolute targets. © 2005 Taylor & Francis Group, LLC.}, Doi = {10.1080/14693062.2005.9685570}, Key = {fds267379} } @article{fds267357, Author = {Kruger, JA and Pizer, WA}, Title = {Greenhouse gas trading in Europe: The new grand policy experiment}, Journal = {Environment}, Volume = {46}, Number = {8}, Pages = {8-23}, Publisher = {Informa UK Limited}, Year = {2004}, Month = {October}, ISSN = {0013-9157}, url = {http://dx.doi.org/10.1080/00139150409604401}, Abstract = {The European Union is head and shoulders ahead of the rest of the world as it embarks on its new emissions trading system early next year, but there are still a number of large uncertainties to work out.}, Doi = {10.1080/00139150409604401}, Key = {fds267357} } @article{fds267361, Author = {Newell, RG and Pizer, WA}, Title = {Uncertain discount rates in climate policy analysis}, Journal = {Energy Policy}, Volume = {32}, Number = {4}, Pages = {519-529}, Publisher = {Elsevier BV}, Year = {2004}, Month = {January}, url = {http://dx.doi.org/10.1016/S0301-4215(03)00153-8}, Abstract = {Consequences in the distant future-such as those from climate change-have little value today when discounted using conventional rates. This result contradicts our "gut feeling" about such problems and often leads to ad hoc application of lower rates for valuations over longer horizons-a step facilitated by confusion and disagreement over the correct rate even over short horizons. We review the theory and intuition behind the choice of discount rates now and, importantly, the impact of likely variation in rates in the future. Correlated changes in future rates imply that the distant future should be discounted at much lower rates than suggested by the current rate, thereby raising the value of future consequences-regardless of opinions concerning the current rate. Using historic data to quantity the likely changes and correlation in changes in future rates, we find that future valuations rise by a factor of many thousands at horizons of 300 years or more, almost doubling the expected present value of climate mitigation benefits relative to constant 4% discounting. Ironically, uncertainty about future rates reduces the ratio of valuations based on alternate choices of the current rate. © 2003 Elsevier Ltd. All rights reserved.}, Doi = {10.1016/S0301-4215(03)00153-8}, Key = {fds267361} } @article{fds267378, Author = {Pizer, WA and Newell, R and Zhang, J}, Title = {Managing Permit Markets to Stabilize Prices.}, Journal = {Environment and Resource Economics}, Volume = {32}, Number = {2}, Pages = {133-157}, Year = {2004}, url = {http://dx.doi.org/10.1007/s10640-005-1761-y}, Abstract = {The political economy of environmental policy favors the use of quantity-based instruments over price-based instruments (e.g., tradable permits over green taxes), at least in the United States. With cost uncertainty, however, there are clear efficiency advantages to prices in cases where the marginal damages of emissions are relatively flat, such as with greenhouse gases. The question arises, therefore, of whether one can design flexible quantity policies that mimic the behavior of price policies, namely stable permit prices and abatement costs. We explore a number of "quantity- plus" policies that replicate the behavior of a price policy through rules that adjust the effective permit cap for unexpectedly low or high costs. They do so without necessitating any monetary exchanges between the government and the regulated firms, which can be a significant political barrier to the use of price instruments. © Springer 2005.}, Doi = {10.1007/s10640-005-1761-y}, Key = {fds267378} } @article{fds267372, Author = {Parry, IWH and Pizer, WA and Fischer, C}, Title = {How Large are the Welfare Gains from Technological Innovation Induced by Environmental Policies?}, Journal = {Journal of Regulatory Economics}, Volume = {23}, Number = {3}, Pages = {237-255}, Year = {2003}, Month = {May}, url = {http://dx.doi.org/10.1023/A:1023321309988}, Abstract = {This paper examines whether the welfare gains from technological innovation that reduces future abatement costs are larger or smaller than the "Pigouvian" welfare gains from optimal pollution control. The relative welfare gains from innovation depend on three key factors-the initially optimal level of abatement, the speed at which innovation reduces future abatement costs, and the discount rate. We calculate the welfare gains from innovation under a variety of different scenarios. Mostly they are less than the Pigouvian welfare gains. To be greater, innovation must reduce abatement costs substantially and quickly and the initially optimal abatement level must be fairly modest.}, Doi = {10.1023/A:1023321309988}, Key = {fds267372} } @article{fds267373, Author = {Fischer, C and Parry, IWH and Pizer, WA}, Title = {Instrument choice for environmental protection when technological innovation is endogenous}, Journal = {Journal of Environmental Economics and Management}, Volume = {45}, Number = {3}, Pages = {523-545}, Publisher = {Elsevier BV}, Year = {2003}, Month = {January}, url = {http://dx.doi.org/10.1016/S0095-0696(03)00002-0}, Abstract = {This paper compares, qualitatively and quantitatively, the welfare effects of emissions taxes, auctioned emissions permits, and free (grandfathered) permits, when technological innovation is endogenous. We find that there is no unambiguous case for preferring any of these policy instruments. The relative welfare ranking of instruments depends on the costs of innovation, the extent to which innovations can be imitated, the slope and level of the marginal environmental benefit function, and the number of polluting firms. We illustrate the types of situations when there can be significant welfare discrepancies between the policies and when there are not. © 2003 Published by Elsevier Science (USA).}, Doi = {10.1016/S0095-0696(03)00002-0}, Key = {fds267373} } @article{fds267374, Author = {Newell, RG and Pizer, WA}, Title = {Regulating stock externalities under uncertainty}, Journal = {Journal of Environmental Economics and Management}, Volume = {45}, Number = {2 SUPPL.}, Pages = {416-432}, Publisher = {Elsevier BV}, Year = {2003}, Month = {January}, url = {http://dx.doi.org/10.1016/S0095-0696(02)00016-5}, Abstract = {Using a simple analytical model incorporating benefits of a stock, costs of adjusting the stock, and uncertainty in costs, we uncover several important principles governing the choice of price-based policies (e.g., taxes) relative to quantity-based policies (e.g., tradable permits) for controlling stock externalities. As in Weitzman (Rev. Econom. Stud. 41(4) (1974) 477), the relative slopes of the marginal benefits and costs of controlling the externality continue to be critical determinants of the efficiency of prices relative to quantities, with flatter marginal benefits and steeper marginal costs favoring prices. But some important adjustments for dynamic effects are necessary, including correlation of cost shocks across time, discounting, stock decay, and the rate of benefits growth. Applied to the problem of greenhouse gases and climate change, we find that a price-based instrument generates several times the expected net benefits of a quantity instrument. © 2003 Elsevier Science (USA). All rights reserved.}, Doi = {10.1016/S0095-0696(02)00016-5}, Key = {fds267374} } @article{fds267375, Author = {Newell, RG and Pizer, WA}, Title = {Discounting the distant future: How much do uncertain rates increase valuations?}, Journal = {Journal of Environmental Economics and Management}, Volume = {46}, Number = {1}, Pages = {52-71}, Publisher = {Elsevier BV}, Year = {2003}, Month = {January}, url = {http://hdl.handle.net/10161/9133 Duke open access}, Abstract = {We demonstrate that when the future path of the discount rate is uncertain and highly correlated, the distant future should be discounted at significantly lower rates than suggested by the current rate. We then use two centuries of US interest rate data to quantify this effect. Using both random walk and mean-reverting models, we compute the "certainty-equivalent rate" that summarizes the effect of uncertainty and measures the appropriate forward rate of discount in the future. Under the random walk model we find that the certainty-equivalent rate falls continuously from 4% to 2% after 100 years, 1% after 200 years, and 0.5% after 300 years. At horizons of 400 years, the discounted value increases by a factor of over 40,000 relative to conventional discounting. Applied to climate change mitigation, we find that incorporating discount rate uncertainty almost doubles the expected present value of mitigation benefits. © 2003 Elsevier Science (USA). All rights reserved.}, Doi = {10.1016/S0095-0696(02)00031-1}, Key = {fds267375} } @article{fds267377, Author = {Pizer, WA and Marcu, A}, Title = {Special Supplement on Defining and Trading Emission Targets}, Journal = {Climate Policy}, Volume = {3}, Number = {S2}, Pages = {S3-S6}, Publisher = {Elsevier BV}, Year = {2003}, Month = {January}, url = {http://dx.doi.org/10.1016/j.clipol.2003.10.009}, Doi = {10.1016/j.clipol.2003.10.009}, Key = {fds267377} } @article{fds267376, Author = {Pizer, WA and Newell, R}, Title = {Uncertain Discount Rates and Climate Policy Analysis.}, Journal = {Energy Policy}, Volume = {32}, Number = {()}, Pages = {519-529}, Year = {2003}, Key = {fds267376} } @article{fds267340, Author = {Newell, R and Pizer, W}, Title = {Discounting the Benefits of Climate Change Policies Using Uncertain Rates}, Journal = {Resources}, Number = {146}, Pages = {15-20}, Publisher = {Washington, D.C. Resources for the Future, Inc.}, Year = {2002}, Month = {January}, ISSN = {0048-7376}, url = {http://hdl.handle.net/10161/7075 Duke open access}, Abstract = {Evaluating environmental policies, such as the mitigation of greenhouse gases, frequently requires balancing near-term mitigation costs against long-term environmental benefits. Conventional approaches to valuing such investments hold interest rates constant, but the authors contend that there is a real degree of uncertainty in future interest rates. This leads to a higher valuation of future benefits relative to conventional methods that ignore interest rate uncertainty.}, Key = {fds267340} } @article{fds304219, Author = {Morgenstern, RD and Pizer, WA and Shih, JS}, Title = {Jobs versus the environment: An industry-level perspective}, Journal = {Journal of Environmental Economics and Management}, Volume = {43}, Number = {3}, Pages = {412-436}, Publisher = {Elsevier BV}, Year = {2002}, Month = {January}, ISSN = {0095-0696}, url = {http://dx.doi.org/10.1006/jeem.2001.1191}, Abstract = {The possibility that workers could be adversely affected by increasingly stringent environmental policies has led to claims of a "jobs versus the environment" trade-off by both business and labor leaders. The present research examines this claim at the industry level for four heavily polluting industries: pulp and paper mills, plastic manufacturers, petroleum refiners, and iron and steel mills. Combining a unique plant-level data set with industry-level demand information, we find that increased environmental spending generally does not cause a significant change in employment. Our average across all four industries is a net gain of 1.5 jobs per $1 million in additional environmental spending, with a standard error of 2.2 jobs - an economically and statistically insignificant effect. There are statistically significant and positive effects in two industries, but total number of affected jobs remains quite small. These small positive effects can be linked to labor-using factor shifts and relatively inelastic estimated demand. © 2001 Elsevier Science (USA).}, Doi = {10.1006/jeem.2001.1191}, Key = {fds304219} } @article{fds267370, Author = {Pizer, WA and Morgenstern, R and Shih, J-S}, Title = {Jobs versus the Environment: Is There a Trade-Off?}, Journal = {Journal of Environmental Economics and Management}, Volume = {43}, Number = {3}, Pages = {412-436}, Year = {2002}, ISSN = {0095-0696}, url = {http://dx.doi.org/10.1006/jeem.2001.1191}, Abstract = {The possibility that workers could be adversely affected by increasingly stringent environmental policies has led to claims of a "jobs versus the environment" trade-off by both business and labor leaders. The present research examines this claim at the industry level for four heavily polluting industries: pulp and paper mills, plastic manufacturers, petroleum refiners, and iron and steel mills. Combining a unique plant-level data set with industry-level demand information, we find that increased environmental spending generally does not cause a significant change in employment. Our average across all four industries is a net gain of 1.5 jobs per $1 million in additional environmental spending, with a standard error of 2.2 jobs - an economically and statistically insignificant effect. There are statistically significant and positive effects in two industries, but total number of affected jobs remains quite small. These small positive effects can be linked to labor-using factor shifts and relatively inelastic estimated demand. © 2001 Elsevier Science (USA).}, Doi = {10.1006/jeem.2001.1191}, Key = {fds267370} } @article{fds267371, Author = {Pizer, WA}, Title = {Combining price and quantity controls to mitigate global climate change}, Journal = {Journal of Public Economics}, Volume = {85}, Number = {3}, Pages = {409-434}, Publisher = {Elsevier BV}, Year = {2002}, ISSN = {0047-2727}, url = {http://dx.doi.org/10.1016/S0047-2727(01)00118-9}, Abstract = {Uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently and leads to divergent welfare consequences. Although most of the debate on global climate change policy has focused on quantity controls due to their political appeal, this paper argues that price controls are more efficient. Simulations based on a stochastic computable general equilibrium model indicate that the expected welfare gain from the optimal price policy is five times higher than the expected gain from the optimal quantity policy. An alternative hybrid policy combines both the political appeal of quantity controls with the efficiency of prices, using an initial distribution of tradeable permits to set a quantitative target, but allowing additional permits to be purchased at a fixed "trigger" price. Even sub-optimal hybrid policies offer dramatic efficiency improvements over otherwise standard quantity controls. For example, a $50 trigger price per ton of carbon converts the $3 trillion expected loss associated with a simple 1990 emission target to a $150 billion gain. These results suggest that a hybrid policy is an attractive alternative to either a pure price or quantity system. © 2002 Elsevier Science B.V. All rights reserved.}, Doi = {10.1016/S0047-2727(01)00118-9}, Key = {fds267371} } @article{fds267363, Author = {Clark, JS and Carpenter, SR and Barber, M and Collins, S and Dobson, A and Foley, JA and Lodge, DM and Pascual, M and Pielke, R and Pizer, W and Pringle, C and Reid, WV and Rose, KA and Sala, O and Schlesinger, WH and Wall, DH and Wear, D}, Title = {Ecological forecasts: an emerging imperative.}, Journal = {Science (New York, N.Y.)}, Volume = {293}, Number = {5530}, Pages = {657-660}, Year = {2001}, Month = {July}, ISSN = {0036-8075}, url = {http://www.ncbi.nlm.nih.gov/pubmed/11474103}, Abstract = {Planning and decision-making can be improved by access to reliable forecasts of ecosystem state, ecosystem services, and natural capital. Availability of new data sets, together with progress in computation and statistics, will increase our ability to forecast ecosystem change. An agenda that would lead toward a capacity to produce, evaluate, and communicate forecasts of critical ecosystem services requires a process that engages scientists and decision-makers. Interdisciplinary linkages are necessary because of the climate and societal controls on ecosystems, the feedbacks involving social change, and the decision-making relevance of forecasts.}, Doi = {10.1126/science.293.5530.657}, Key = {fds267363} } @article{fds317876, Author = {Newell, RG and Pizer, WA}, Title = {Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?}, Year = {2001}, Month = {May}, Abstract = {Costs and benefits in the distant future, such as those associated with global warming, long-lived infrastructure, hazardous and radioactive waste, and biodiversity often have little value today when measured with conventional discount rates. We demonstrate that when the future path of this conventional rate is uncertain and persistent (i.e., highly correlated over time), the distant future should be discounted at lower rates than suggested by the current rate. We then use two centuries of data on U.S. interest rates to quantify this effect. Using both random walk and mean-reverting models, we compute the certainty-equivalent rate that is, the single discount rate that summarizes the effect of uncertainty and measures the appropriate forward rate of discount in the future. Using the random walk model, which we consider more compelling, we find that the certainty-equivalent rate falls from 4%, to 2% after 100 years, 1% after 200 years, and 0.5% after 300 years. If we use these rates to value consequences at horizons of 400 years, the discounted value increases by a factor of over 40,000 relative to conventional discounting. Applying the random walk model to the consequences of climate change, we find that inclusion of discount rate uncertainty almost doubles the expected present value of mitigation benefits.}, Key = {fds317876} } @article{fds267369, Author = {Morgenstern, RD and Pizer, WA and Shih, JS}, Title = {The cost of environmental protection}, Journal = {Review of Economics and Statistics}, Volume = {83}, Number = {4}, Pages = {732-738}, Publisher = {MIT Press - Journals}, Year = {2001}, url = {http://dx.doi.org/10.1162/003465301753237812}, Abstract = {Reported expenditures for environmental protection are often cited as an assessment of the burden of current regulatory efforts. However, the potential for both incidental savings and uncounted costs means that the actual burden could be either higher or lower than these reported values. Using a production cost model that considers the possible interaction between environmental and non-environmental expenditures, we directly estimate the dollar-for-dollar incidental savings/uncounted costs arising from a one-dollar increase in reported environmental expenditures. Although recent literature supports the idea that reported expenditures probably understate the actual burden, we find no such evidence in the manufacturing sector based on a large panel of plant-level data. In one industry, we find statistically significant overstatement. In three others, we find no significant deviation in either direction. We conclude that, although cost estimates are not overstated on average, variation and uncertainty exist at the industry level, with some plants experiencing savings and others possibly facing uncounted burdens.}, Doi = {10.1162/003465301753237812}, Key = {fds267369} } @article{fds311239, Author = {Pizer, WA}, Title = {The optimal choice of climate change policy in the presence of uncertainty}, Journal = {Resource and Energy Economics}, Volume = {21}, Number = {4}, Pages = {255-287}, Publisher = {Elsevier BV}, Year = {1999}, Month = {January}, ISSN = {0928-7655}, url = {http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000081101200003&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=47d3190e77e5a3a53558812f597b0b92}, Abstract = {Considerable uncertainty surrounds both the consequences of climate change and their valuation over horizons of decades or centuries. Yet, there have been few attempts to factor such uncertainty into current policy decisions concerning stringency and instrument choice. This paper presents a framework for determining optimal climate change policy under uncertainty and compares the resulting prescriptions to those derived from a more typical analysis with best-guess parameter values. Uncertainty raises the optimal level of emission reductions and leads to a preference for taxes over rate controls. This suggests that analyses which ignore uncertainty can lead to inefficient policy recommendations. © 1999 Elsevier Science B.V. All rights reserved.}, Doi = {10.1016/s0928-7655(99)00005-6}, Key = {fds311239} } @article{fds267368, Author = {Pizer, WA}, Title = {Optimal Choice of Policy Instrument and Stringency under Uncertainty: The Case of Climate Change}, Journal = {Resource and Energy Economics}, Volume = {21}, Number = {(3-4)}, Pages = {255-287}, Year = {1999}, Key = {fds267368} } @article{fds343564, Author = {Pizer, W and Sefton, M}, Title = {Solutions: Derivation of the OLS Estimator Without Using Calculus}, Journal = {Econometric Theory}, Volume = {12}, Number = {2}, Pages = {395-396}, Year = {1996}, Month = {January}, url = {http://dx.doi.org/10.1017/S0266466600006708}, Doi = {10.1017/S0266466600006708}, Key = {fds343564} } %% Chapters in Books @misc{fds336241, Author = {Pizer, WA and Zhang, X}, Title = {China’s New National Carbon Market}, Journal = {AEA Papers and Proceedings}, Volume = {108}, Pages = {463-467}, Publisher = {American Economic Association}, Year = {2018}, Month = {May}, url = {http://dx.doi.org/10.1257/pandp.20181029}, Abstract = {<jats:p> On December 19, 2017, China announced the official start of its national emissions trading system (ETS) construction program. When fully implemented, this program will more than double the volume of worldwide carbon dioxide emissions covered by either tax or tradable permit policy. Many of program's design features reflect those of China's pilot programs but differ from those of most emissions trading programs in the United States and Europe. This paper explains the context and design of China's new carbon market, discusses implications and possible modifications, and suggests topics for further research. </jats:p>}, Doi = {10.1257/pandp.20181029}, Key = {fds336241} } @misc{fds351175, Author = {Pizer, WA}, Title = {Combining price and quantity controls to mitigate global climate change}, Pages = {391-416}, Booktitle = {Climate Change}, Year = {2017}, Month = {November}, ISBN = {9780815388081}, Abstract = {Uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently and leads to divergent welfare consequences. Although most of the debate on global climate change policy has focused on quantity controls due to their political appeal, this paper argues that price controls are more efficient. Simulations based on a stochastic computable general equilibrium model indicate that the expected welfare gain from the optimal price policy is five times higher than the expected gain from the optimal quantity policy. An alternative hybrid policy combines both the political appeal of quantity controls with the efficiency of prices, using an initial distribution of tradeable permits to set a quantitative target, but allowing additional permits to be purchased at a fixed "trigger" price. Even sub-optimal hybrid policies offer dramatic efficiency improvements over otherwise standard quantity controls. For example, a $50 trigger price per ton of carbon converts the $3 trillion expected loss associated with a simple 1990 emission target to a $150 billion gain. These results suggest that a hybrid policy is an attractive alternative to either a pure price or quantity system.}, Key = {fds351175} } @misc{fds267326, Author = {Aldy, JE and Pizer, WA}, Title = {Comparing countries' climate mitigation efforts in a post-Kyoto world}, Pages = {233-252}, Booktitle = {Implementing a US Carbon Tax: Challenges and Debates}, Year = {2015}, Month = {February}, ISBN = {9781138814158}, Key = {fds267326} } @misc{fds200749, Author = {William A. Pizer and Lee Branstetter}, Title = {Facing the Climate Change Challenge in a Global Economy}, Booktitle = {Globalization in an Age of Crisis}, Publisher = {Chicago: University of Chicago Press}, Editor = {Robert Feenstra and Alan Taylor}, Year = {2014}, Key = {fds200749} } @misc{fds370985, Author = {Wiener, J and Stavins, R and Ji, Z and Others, O}, Title = {International Cooperation: Agreements and Institutions}, Booktitle = {Climate Change 2014: Mitigation}, Year = {2014}, Key = {fds370985} } @misc{fds218833, Author = {William A. Pizer and Adam M. Finkel and Christopher Carrigan and eds. , With Joseph Aldy}, Title = {The Employment and Competitiveness Impacts of Power-Sector Regulations. In Cary Coglianese}, Booktitle = {Does Regulation Kill Jobs?}, Publisher = {University of Pennsylvania Press}, Year = {2013}, Key = {fds218833} } @misc{fds218834, Author = {William A. Pizer and With Joseph Aldy and I. Parry and A. Morris and R. Williams}, Title = {Comparing Countries' Climate Mitigation Efforts in a Post-Kyoto World}, Journal = {Carbon Taxes and Fiscal Reforms: Key Issues Facing US Policy Makers}, Publisher = {International Monetary Fund}, Address = {Washington}, Year = {2013}, Key = {fds218834} } @misc{fds370986, Author = {Aldy, JE and Pizer, WA}, Title = {The Employment and Competitiveness Impacts of Power-Sector Regulations}, Pages = {70-88}, Booktitle = {DOES REGULATION KILL JOBS?}, Year = {2013}, ISBN = {978-0-8122-4576-9}, Key = {fds370986} } @misc{fds218835, Author = {Williams A. Pizer and In Roger Guesnerie and Henry Tulkens}, Title = {Economics versus Climate Change}, Journal = {The Design of Climate Policy}, Publisher = {Cambridge: MIT Press}, Year = {2009}, Key = {fds218835} } @misc{fds194737, Author = {William A. Pizer}, Title = {Economics versus Climate Change}, Booktitle = {The Design of Climate Policy}, Publisher = {MIT Press}, Address = {Cambridge, Mass.}, Editor = {Roger Guesnerie and Henry Tulkens}, Year = {2009}, Key = {fds194737} } @misc{fds321874, Author = {Pizer, WA}, Title = {Setting energy policy in the modern era: Tough challenges lie ahead}, Pages = {171-174}, Booktitle = {The RFF Reader in Environmental and Resource Policy: Second Edition}, Publisher = {Routledge}, Year = {2006}, Month = {January}, ISBN = {9781936331642}, url = {http://dx.doi.org/10.4324/9781936331642}, Doi = {10.4324/9781936331642}, Key = {fds321874} } @misc{fds195246, Author = {William A. Pizer}, Title = {A U.S. perspective on future climate regimes. 2005 Sustainability Review}, Publisher = {PARIS: Agence Francaise de. Developpement (AFD) & Institut du developpement durable et des relations internationals (IDDRI)}, Year = {2006}, Key = {fds195246} } @misc{fds195247, Author = {William A. Pizer}, Title = {Practical Climate Policy. Joseph Aldy and Robert Stavins, eds., Architectures for Agreement}, Journal = {Cambridge University Press.}, Publisher = {Cambridge University Press}, Year = {2006}, Key = {fds195247} } @misc{fds195248, Author = {William A. Pizer and Larry Goulder}, Title = {Economics of Climate Change. Larry Blume and Steven Durlauf, eds., The New Palgrave Dictionary of Economics}, Journal = {2nd Edition. Palgrave MacMillan}, Year = {2005}, Key = {fds195248} } @misc{fds195249, Author = {William A. Pizer and Raymond Kopp and Richard Morgenstern and Richard Newell}, Title = {Domestic Climate and Technology Policy. In New Approaches on Energy and the Environment: Policy Advice for the President.}, Journal = {Washington: RFF Press.}, Year = {2004}, Key = {fds195249} } @misc{fds195250, Author = {William A. Pizer}, Title = {A Tale of Two Policies: Clear Skies and Climate Change. In Randall Lutter and Jason Shogren eds, Painting the White House Green.}, Publisher = {Washington: RFF Press}, Year = {2004}, Key = {fds195250} } @misc{fds267314, Author = {Wiener, J}, Title = {Making Markets for Global Forests Conservation}, Pages = {119-140}, Booktitle = {Painting the White House Green: Environmental Economics in the White House}, Year = {2004}, Key = {fds267314} } @misc{fds195251, Author = {William A. Pizer and Raymond Kopp}, Title = {Calculating the Costs of Environmental Regulation. Forthcoming in K.G.-Maler and Jeffrey Vincent eds, Handbook of Environmental Economics.}, Journal = {Amsterdam: Elsevier.}, Year = {2002}, Key = {fds195251} } @misc{fds195255, Author = {William A. Pizer and Raymond Kopp and Frederic Ghersi and Richard Morgenstern}, Title = {Limiting Costs and Assuring Domestic Effort under the Kyoto Protocol. Forthcoming in Ching-Cheng Chang, Robert Mendelsohn, and Daigee Shaw, eds.,}, Booktitle = {Global Warming in Asian-Pacific, Northhampton: Edward Elgar. With Raymond Kopp}, Year = {2002}, Key = {fds195255} } @misc{fds195259, Author = {William A. Pizer}, Title = {Designing Climate Policy to Address Uncertainty. In Designing Climate Policy:}, Booktitle = {The Challenge of the Kyoto Protocol, edited by H. Abele, T. C. Heller and S. P. Schleicher, Vienna: Service Fachverlag.}, Year = {2001}, Key = {fds195259} } @misc{fds195261, Author = {William A. Pizer}, Title = {Choosing Price or Quantity Controls for Greenhouse Gases, Climate Change Economics and Policy}, Booktitle = {Resources for the Future}, Address = {Washington, DC}, Year = {2001}, Key = {fds195261} } %% NBER Working Papers @article{fds218845, Author = {William A. Pizer and Kenneth Arrow and Maureen L. Cropper and Christian Gollier and Ben Groom and Geoffrey M. Heal and Richard G. Newell and Robert S. Pindyck and Paul R. Portney and Thomas Sterner and Richard S. J. Tol and Martin L. Weitzman}, Title = {How Should Benefits and Costs Be Discounted in an Intergenerational Context?}, Journal = {Submitted to Review of Environmental Economics and Policy}, Year = {2013}, Key = {fds218845} } @article{fds218846, Author = {William A. Pizer and Working Paper and Andrew Yates}, Title = {Linking and delinking pollution permit markets}, Year = {2013}, Key = {fds218846} } @article{fds218847, Author = {William A. Pizer and Mark Buntaine}, Title = {Leaders or Followers? Donor Financing of Clean Energy Projects in Developing Countries}, Year = {2012}, Key = {fds218847} } @article{fds218848, Author = {William A Pizer and Joseph Addy}, Title = {How Will Climate Change Policies Affect Domestic Manufactuing?}, Year = {2012}, Key = {fds218848} } %% Other Working Papers @article{fds195290, Author = {William A. Pizer and Joseph Aldy}, Title = {The Competitiveness Impacts of Climate Change Mitigation Policies}, Year = {2009}, Key = {fds195290} } %% Other @misc{fds370984, Author = {Murray, B and Pizer, W and Reichert, C}, Title = {Increasing Emissions Certainty under a Carbon Tax}, Pages = {10 pages}, Publisher = {Nicholas Institute for Environmental Policy Solutions}, Year = {2016}, Month = {October}, Abstract = {To reduce greenhouse gas emissions, some groups have proposed that the United States consider use of a carbon tax. But whether the nation will achieve a specific emissions goal is uncertain because the economy’s response to such a tax is uncertain. Ultimately, there is an underlying tradeoff between certainty about emissions and certainty about prices and costs. To reduce uncertainty about whether a tax will achieve specific emissions goals, additional mitigation measures could be called on if emissions exceed those goals by a given amount. However, such additional measures introduce uncertainty about costs. At the extreme, a commitment to achieve emissions targets at all costs would imply that costs could be quite high. Discussions of policy mechanisms to increase price and cost certainty under several current cap-and-trade programs confronted this same dilemma: how much uncertainty about emissions outcomes is acceptable given reciprocal uncertainty about costs? Viewed through a slightly different lens, mechanisms that balance emissions and cost uncertainty can be viewed as a way to structure a more careful compromise between economic and environmental interests. This policy brief discusses mechanisms that could increase emissions certainty under a carbon tax. It draws from recent discussions between the authors and other policy experts, and its goal is to introduce ideas for further exploration. It begins with a discussion of how to measure emissions performance, or what it means to be achieving or not achieving an emissions goal. This performance would presumably provide the basis for pursuing remedial mechanisms. Next, the brief turns to a taxonomy of such mechanisms and the challenges and opportunities of each. It discusses ideas for initiating these mechanisms, either through some automated or discretionary procedure. The brief concludes with areas for additional research. The brief intentionally raises more questions than it answers—questions will be important to explore in ways that can provide guidance to policy decisions and design.}, Key = {fds370984} } @misc{fds218838, Author = {William A. Pizer}, Title = {How Governments can best use public funds for CDM}, Journal = {Guest Commentary, Carbon Markets Europe}, Volume = {12}, Number = {2}, Pages = {8}, Year = {2013}, Key = {fds218838} } @misc{fds218839, Author = {William A. Pizer and Scott Morris}, Title = {Thinking Through When the World Bank Should Fund Coal Projects}, Year = {2013}, url = {http://www.cgdev.org/publication/thnking-through-when-world-bank-should-fund-coal-projects}, Key = {fds218839} } @misc{fds218842, Author = {William A. Pizer}, Title = {Seeding the market: auctioned put options for certified emissions reductions}, Journal = {Nicholas Institute Policy Brief 11-06}, Year = {2011}, Key = {fds218842} } @misc{fds195274, Author = {William A. Pizer and Joseph Aldy}, Title = {The Competitiveness Impacts of Climate Change Mitigation Policies.}, Journal = {Report by the Pew Center on Global Climate Change.}, Year = {2009}, Key = {fds195274} } @misc{fds195276, Author = {William A. Pizer}, Title = {Climate Change Policy in the United States}, Journal = {Bridges}, Year = {2006}, Key = {fds195276} } @misc{fds195277, Author = {William A. Pizer and Madeleine Baker}, Title = {Understanding Proposed CAFE Reforms for Light Trucks.}, Year = {2005}, url = {http://www.rff.org/rff/News/Features/Understanding-Proposed-CAFE-Reforms-for-Light-Trucks.cfm.}, Key = {fds195277} } @misc{fds195278, Author = {William A. Pizer}, Title = {What Kyoto Means for Oil and Gas.}, Journal = {Horizon 2}, Pages = {52}, Year = {2005}, Key = {fds195278} } @misc{fds195279, Author = {William A. Pizer}, Title = {What is the United States Doing about Climate Change? Everyone Else is Coping with Kyoto}, Journal = {Resources}, Volume = {157}, Pages = {20}, Year = {2005}, Key = {fds195279} } @misc{fds195281, Author = {William A. Pizer and Joe Kruger}, Title = {Regional Greenhouse Gas Initiative: Prelude to a National Program.}, Journal = {Resources}, Volume = {156}, Pages = {4}, Year = {2005}, Key = {fds195281} } @misc{fds195282, Author = {William A. Pizer}, Title = {Mercury Rising: Understanding Global Warming Economics.}, Journal = {Imagine}, Volume = {12}, Number = {3}, Pages = {21}, Year = {2005}, Key = {fds195282} } @misc{fds195283, Author = {William A. Pizer and Joe Kruger}, Title = {The EU Emissions Trading Directive: The New Grand Policy Experiment.}, Journal = {Environment}, Volume = {46}, Number = {8}, Year = {2004}, Key = {fds195283} } @misc{fds195284, Author = {William A. Pizer and Ray Kopp}, Title = {Summary and Analysis of McCain-Lieberman-"Climate Stewardship Act of 2003, S. 139".}, Year = {2003}, url = {http://www.rff.org/McCain_Lieberman_Summary.pdf}, Key = {fds195284} } @misc{fds195285, Author = {William A. Pizer and Dallas Burtraw}, Title = {A Comparison of Two Senate Approaches to Controlling Power Plant Pollution.}, Year = {2002}, url = {http://www.rff.org/multipollutant/}, Key = {fds195285} } @misc{fds195286, Author = {William A. Pizer and Dallas Burtraw and David Lankton.}, Title = {Legislative Comparison of Multipollutant Proposals S. 366, S. 485, and S. 843.}, Year = {2002}, url = {http://www.rff.org/multipollutant/}, Key = {fds195286} } @misc{fds370987, Author = {Newell, R and Pizer, William}, Title = {Discounting the Benefits of Climate Change Mitigation: How Much Do Uncertain Rates Increase Valuations?}, Year = {2001}, Month = {December}, Key = {fds370987} } @misc{fds195287, Author = {William A. Pizer and Richard Newell}, Title = {Discounting the Benefits of Future Climate Change Mitigation: How Much Do Uncertain Rates Increase Valuations?}, Journal = {Report by the Pew Center on Global Climate Change.}, Year = {2001}, Key = {fds195287} } @misc{fds195288, Author = {William A. Pizer and Raymond Kopp and Richard Morgenstern and Michael Toman}, Title = {A Proposal for Credible Early Action in U.S. Climate Policy.}, Journal = {Weathervane}, Year = {1999}, Key = {fds195288} }