%0 Journal Article %J HKS Faculty Research Working Paper Series %D Working Paper %T Learning How to Build Back Better through Clean Energy Program Evaluation %A Joseph E. Aldy %B HKS Faculty Research Working Paper Series %G eng %0 Journal Article %J NBER Working Paper Series %D Working Paper %T The Efficiency Consequences of Heterogeneous Behavioral Responses to Energy Fiscal Policies %A Joseph E. Aldy %A Sebastien Houde %X

The behavioral responses to taxes and subsidies are often subject to various behavioral biases and transaction costs—what we define as “microfrictions.” We develop a theoretical framework to show how these microfrictions—and their heterogeneity across the population and policy instruments—affect the design of Pigouvian policies. Standard Pigouvian pricing still holds with transaction costs, but requires adjustment with behavioral biases. We use transaction-level data from the US appliance market to estimate the heterogeneous behavioral responses to an array of energy fiscal policies and to quantify microfrictions. We then assess optimal fiscal policies and find that it is rarely optimal to couple a Pigouvian tax on energy with an investment subsidy in this context. We also find that energy labels—intended to increase the salience of energy information—can interact in perverse ways with both taxes and subsidies.

%B NBER Working Paper Series %G eng %0 Journal Article %D Working Paper %T Climate Reparations or Redistribution %A Joseph E. Aldy %G eng %0 Journal Article %J Lancet Commission on Investing in Health Working Paper %D Working Paper %T Designing Energy and Environmental Fiscal Instruments to Improve Health %A Joseph E. Aldy %X

Environmental pollution represents a significant cause of morbidity and premature mortality. Nearly seven million people die prematurely around the world each year as a result of air pollution, and hundreds of thousands more die due to unimproved water and sanitation (Lim et al., 2012). The monetized health and productivity damages from air pollution exceed a hundred billion dollars annually in China and the United States (Matus et al., 2012; US EPA, 2011).

In response to the significant impacts of pollution on health, governments traditionally pursued command-and-control regulations. These have delivered significant gains in environmental health, although high costs of regulatory mandates suggest the need for alternative approaches to reducing pollution. This paper focuses on taxes and subsidies as potential means for reducing the health burden from environmental pollution.

Pollution taxes change the business calculus for the sources of pollution (Aldy et al., 2010). Just as higher wages induce firms to invest in labor-saving capital, a pollution tax induces investments that lower pollution. A well-designed tax can ensure that all sources face the same marginal cost of pollution, thereby minimizing the aggregate costs for a given gain in environmental and health quality, and can maximize social welfare by ensuring that the tax equals the marginal benefits of pollution reduction. Raising revenue through a pollution tax could help offset labor and capital taxes, which are distortionary and impose welfare costs as a consequence of raising revenues through these means. Some countries environmentally-related tax revenues comprise 5-10 percent of total tax revenue (OECD, 2011). Taxing fossil fuels in the United States to account for local air pollution and climate change damages would raise revenues equal to about 1.5 percent of GDP (Jorgenson, 2012).

Subsidies in the energy sector can have a profound impact on pollution and health outcomes. Many countries in the developing world subsidize fossil fuels that results in excessive consumption and increased air pollution. Iran’s 2010 subsidy reform illustrates the impact of reducing fossil fuel subsides: fuel prices increases of an order of magnitude reduced carbon dioxide, sulfur dioxide, and nitrogen oxide emissions by 10-20 percent (IMF, 2011). Subsidies for clean energy technologies, by lowering their adoption cost, may displace dirtier sources of energy and produce public health benefits. Subsidizing specific clean energy technologies is typically more costly in aggregate than a pollution tax since it fails to fully exploit the flexibility that a tax offers. For example, a subsidy for an existing set of technologies may not reward innovation like a tax would, nor would it support technologies or process changes that are beyond the scope of the parameters of the subsidy.

The design and implementation of fiscal instruments should account for a variety of realworld considerations. Tax instruments deliver greater certainty for the returns to emission abatement investment, and could drive more abatement and innovation than command-andcontrol regulations or cap-and-trade programs. Such certainty is transparent, which may elicit political opposition since policy-makers typically prefer to impose opaque costs on constituents (Keohane et al., 1998). In some cases, it may be technically or administratively challenging to directly target the pollution externality. For example, India taxes coal as opposed to the more 2 difficult to monitor sulfur dioxide emissions from coal combustion. There are also important interaction effects among multiple policies, such as the prospect of a pollution tax to raise revenue that enables a reduction in labor and capital tax rates. This new revenue source could improve the political palatability of pollution taxes given the fiscal demands in many countries, and a prudent ramping of the policy over time may facilitate broader public support. In countries with subsidized fossil fuel prices, a pollution tax may be ineffective unless the tax can be passed through to consumers. Finally, a pollution tax or fossil fuel subsidy elimination will increase energy prices, and this could raise important distributional questions. Some policy reforms – including the British Columbia carbon tax and the 2005 fossil fuel subsidy reform in Indonesia – have included means-tested unconditional cash transfers to address regressivity concerns.

%B Lancet Commission on Investing in Health Working Paper %G eng %0 Journal Article %D Working Paper %T Evaluating Mitigation Effort: Tools and Institutions for Assessing Nationally Determined Contributions %A Joseph E. Aldy %X

The emerging pledge and review approach to international climate policy provides countries with substantial discretion in how they craft their intended emission mitigation contributions. The resulting heterogeneity in mitigation pledges creates a significant demand for a wellfunctioning transparency and review mechanism. In particular, the specific forms of intended contributions necessitate economic analysis in order to estimate the aggregate effects of these contributions, as well as to permit “apples-to-apples” comparisons of mitigation efforts. This paper discusses the tools that can inform such analyses, as well as the institutional framework needed to support climate transparency. In light of the negotiating challenges with respect to transparency, the paper describes the potential for countries to implement Living Mitigation Plans that include regular updating of domestic mitigation programs with data and analyses on their outcomes. Such Living Mitigation Plans can serve as the foundation for independent, expert review of domestic mitigation programs. Moreover, they can include the inputs necessary to assess the mitigation value of domestic mitigation efforts. Such assessments could inform the linkage of domestic mitigation policies, especially among disparately designed mitigation policies.

%G eng %0 Journal Article %D Working Paper %T Heterogeneity in the Value of Life %A Joseph E. Aldy %A Seamus J. Smyth %X

We develop a numerical life-cycle model with choice over consumption and leisure, stochastic mortality and labor income processes, and calibrated to U.S. data to characterize willingness to pay (WTP) for mortality risk reduction. Our theoretical framework can explain many empirical findings in this literature, including an inverted-U life-cycle WTP and an order of magnitude difference in primeaged adults WTP. By endogenizing leisure and employing multiple income measures, we reconcile the literature's large variation in estimated income elasticities. By accounting for gender- and racespecific stochastic mortality and income processes, we explain the literature's black-white and female-male differences.

%G eng %0 Journal Article %D Working Paper %T If Fossil Fuel Subsidies Are so Bad, Why Are They so Common? %A Joseph E. Aldy %G eng %0 Journal Article %D Working Paper %T The Labor Market Impacts of the 2010 Deepwater Horizon Oil Spill and Offshore Drilling Moratorium %A Joseph E. Aldy %X

In 2010, the Gulf Coast experienced the largest oil spill, the greatest mobilization of spill response resources, and the first Gulf-wide deepwater drilling moratorium in U.S. history. Taking advantage of the unexpected nature of the spill and drilling moratorium, I estimate the net effects of these events on Gulf Coast employment and wages. Despite predictions of major job losses in Louisiana — resulting from the spill and the drilling moratorium — I find that Louisiana coastal parishes, and oil-intensive parishes in particular, experienced a net increase in employment and wages. In contrast, Gulf Coast Florida counties, especially those south of the Panhandle, experienced a decline in employment. Analysis of accommodation industry employment and wage, business establishment count, sales tax, and commercial air arrival data likewise show positive economic activity impacts in the oil-intensive coastal parishes of Louisiana and reduced economic activity along the Non-Panhandle Florida Gulf Coast.

%G eng %0 Journal Article %D Working Paper %T Learning from Experience: An Assessment of the Retrospective Reviews of Agency Rules and the Evidence for Improving the Design and Implementation of Regulatory Policy %A Joseph E. Aldy %G eng %0 Journal Article %J Journal of the Association of Environmental and Resource Economics %D Forthcoming %T Investment Versus Output Subsidies: Implications of Alternative Incentives for Wind Energy %A Joseph E. Aldy %A Todd D. Gerarden %A Richard L. Sweeney %X This paper examines the choice between subsidizing investment or output to promote socially desirable production. We exploit a natural experiment in which wind farm developers could choose an investment or output subsidy to estimate the impact of these instruments on productivity. Using regression discontinuity and matching estimators, we find that wind farms claiming the investment subsidy produced 10 to 11 percent less power than wind farms claiming the output subsidy, and that this effect reflects subsidy incentives rather than selection. The introduction of investment subsidies caused the Federal government to spend 12 percent more per unit of output from wind farms. %B Journal of the Association of Environmental and Resource Economics %8 2022 %G eng %0 Journal Article %J Issues in Science and Technology %D 2022 %T Updating the Social Cost of Carbon %A Joseph E. Aldy %B Issues in Science and Technology %V 38 %P 6-8 %G eng %U https://issues.org/social-cost-carbon-pricing-unknowable-risk-simpson/ %N 3 %0 Journal Article %J Journal of Benefit-Cost Analysis %D 2022 %T How Is the U.S. Pricing Carbon? How Could We Price Carbon? %A Joseph E. Aldy %A Burtraw, Dallas %A Maureen Cropper %A Carolyn Fischer %A Fowlie, Meredith %A Roberton Williams III %B Journal of Benefit-Cost Analysis %V 13 %P 310-334 %G eng %N 3 %0 Journal Article %J Journal of the Association of Environmental and Resource Economics %D 2022 %T The Welfare Implications of Carbon Price Certainty %A Joseph E. Aldy %A Sarah Armitage %B Journal of the Association of Environmental and Resource Economics %V 9 %P 921-946 %G eng %N 5 %0 Journal Article %J Issues in Science and Technology %D 2022 %T Updating the Social Cost of Carbon %A Joseph E. Aldy %B Issues in Science and Technology %V 38 %P 6-8 %G eng %N 3 %0 Journal Article %J Journal of Economic Literature %D 2022 %T Looking Back at 50 Years of the Clean Air Act %A Joseph E. Aldy %A Maximillian Auffhammer %A Maureen Cropper %A Arthur Fraas %A Richard Morgenstern %B Journal of Economic Literature %V 60 %P 179-232 %8 2022 %G eng %N 1 %0 Journal Article %J Issues in Science and Technology %D 2021 %T Solar Climate Intervention %A Joseph E. Aldy %B Issues in Science and Technology %V 38 %G eng %N 1 %0 Journal Article %J Science %D 2021 %T Keep Climate Policy Focused on the Social Cost of Carbon %A Joseph E. Aldy %A Matthew J. Kotchen %A Robert N. Stavins %A James H. Stock %B Science %V 373 %P 852 %G eng %N 850 %0 Journal Article %J Science %D 2021 %T Social science research to inform solar geoengineering %A Joseph E. Aldy %A Tyler Felgenhauer %A William A. Pizer %A Massimo Tavoni %A Mariia Belaia %A Mark E. Borsuk %A Arunabha Ghosh %A Garth Heutel %A Daniel Heyen %A Joshua Horton %A Keith, David %A Christine Merk %A Moreno-Cruz, Juan %A Jesse L. Reynolds %A Ricke, Katharine %A Wilfried Rickels %A Soheil Shayegh %A Wake Smith %A Simone Tilmes %A Gernot Wagner %A Jonathan B. Wiener %B Science %V 374 %P 815-818 %G eng %U https://www.science.org/stoken/author-tokens/ST-153/full %0 Hearing %D 2021 %T The Role of Fossil Fuel Subsidies in Preventing Action on the Climate Crisis %A Joseph E. Aldy %B Environment Subcommittee of the House Oversight and Reform Committee %G eng %0 Journal Article %J The Environmental Forum %D 2021 %T Promoting Energy Efficiency as a Part of Decarbonization Strategy %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N Jul/Aug %0 Journal Article %J The Environmental Forum %D 2021 %T Decarbonizing the U.S. Economy Has Substantial, Impressive Benefits %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N May/Jun %0 Journal Article %J The Environmental Forum %D 2021 %T Modernizing Regulatory Review for Energy, Environmental Policy %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N Mar/Apr %0 Journal Article %J The Environmental Forum %D 2021 %T Trying a Whole-of-Government Approach to Climate Change %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N Jan/Feb %0 Journal Article %J Climate Change Economics %D 2021 %T How Much Could Article 6 Enhance Nationally Determined Contribution Ambition toward Paris Agreement Goals through Economic Efficiency? %A Edmonds, J. %A Yu, S. %A McJeon, H. %A Forrister, D. %A Aldy, J. %A Hultman, N. %A Cui, R. %A Waldhoff, S. %A Clarke, L. %A De Clara, S. %A Munnings, C. %B Climate Change Economics %V 12 %G eng %N 1 %0 Journal Article %J Annual Review of Resource Economics %D 2021 %T Environmental Benefit-Cost Analysis: A Comparative Analysis Between the United States and the United Kingdom %A J. E. Aldy %A Atkinson, G. %A Kotchen, M.J. %B Annual Review of Resource Economics %V 13 %G eng %0 Journal Article %J Review of Environmental Economics and Policy %D 2021 %T The Role of Retrospective Analysis in an Era of Deregulation: Lessons from the U.S. Mercury and Air Toxics Standards %A Joseph E. Aldy %A Mary Evans %A Karen Palmer %A Fowlie, Meredith %A Arik Levinson %A Kotchen, Matthew %B Review of Environmental Economics and Policy %V 15 %P 163-168 %G eng %N 1 %0 Journal Article %J The Energy Journal %D 2021 %T National Climate Policies and Corporate Internal Carbon Pricing %A Joseph E. Aldy %A Nuno Bento %A Gianfranco Gianfrate %B The Energy Journal %V 42 %P 87-98 %G eng %N 5 %0 Book Section %B Environmental and Energy Policy and the Economy %D 2021 %T Co-benefits and Regulatory Impact Analysis: Theory and Evidence from Federal Air Quality Regulations %A Aldy, J. %A M. Kotchen %A Evans, M. %A M. Fowlie %A A. Levinson %A K. Palmer %B Environmental and Energy Policy and the Economy %I NBER and University of Chicago Press %V 2 %G eng %0 Journal Article %J The Environmental Forum %D 2020 %T The Incredible Benefits of the Clean Air Act’s Half Century %A Joseph E. Aldy %B The Environmental Forum %P 13 %G eng %N Nov/Dec 2020 %0 Journal Article %J Case Western Reserve Law Review %D 2020 %T Evaluating Regulatory Performance: Learning from and Institutionalizing Retrospective Analysis of EPA Regulations %A Joseph E. Aldy %B Case Western Reserve Law Review %V 70 %P 971-1006 %G eng %N 4 %0 Journal Article %J The Environmental Forum %D 2020 %T Crafting a Climate-Oriented Stimulus Recovery Program %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N Sept/Oct 2020 %0 Journal Article %J Climate Change Economics %D 2020 %T Rolling the Dice in the Corridors of Power: William Nordhaus's Impacts on Climate Change Policy %A J. E. Aldy %A Stavins, R. N. %B Climate Change Economics %V 11 %P 2040001 %G eng %N 4 %0 Journal Article %J The Environmental Forum %D 2020 %T Employing a Broader Policy Toolkit to Mitigate Climate Change Risks %A J. E. Aldy %B The Environmental Forum %V Jul/Aug 2020 %P 15 %G eng %0 Journal Article %J Southern Economic Journal %D 2020 %T Three Prongs for Prudent Climate Policy %A Aldy, Joseph E. %A Richard Zeckhauser %B Southern Economic Journal %G eng %N DOI: 10.1002/soej.12433 %0 Journal Article %J American Economic Association Papers and Proceedings %D 2020 %T The Cost-effectiveness Implications of Carbon Price Certainty %A Joseph E. Aldy %A Sarah Armitage %B American Economic Association Papers and Proceedings %P 113-118 %G eng %N 110 %0 Journal Article %J The Environmental Forum %D 2020 %T Data from Expanded Surveillance Shows the Value of Information %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N May/June %0 Journal Article %J Science %D 2020 %T Deep Flaws in a Mercury Regulatory Analysis %A Joseph E. Aldy %A Kotchen, Matthew %A Fowlie, Meredith %A Arik Levinson %A Karen Palmer %B Science %G eng %0 Journal Article %J The Environmental Forum %D 2020 %T Markets Don't Deny the Existence or Risks of Climate Change %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N Mar/Apr 2020 %0 Journal Article %J The Environmental Forum %D 2020 %T Managing the Environmental and Cost Uncertainties in Carbon Pricing %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N Jan/Feb 2020 %0 Journal Article %J Review of Environmental Economics and Policy %D 2020 %T Carbon Tax Review and Updating: Institutionalizing an Act-Learn-Act Approach to U.S. Climate Policy %A Joseph E. Aldy %B Review of Environmental Economics and Policy %V 14 %P 76-94 %G eng %N 1 %0 Book Section %B The Handbook on U.S. Environmental Policy %D 2020 %T Pricing Pollution through Market-based Instruments %E David Konisky %B The Handbook on U.S. Environmental Policy %I Edward Elgar Publishing %G eng %0 Report %D 2019 %T Report on the Proposed Changes to the Federal Mercury and Air Toxics Standards %A Joseph Aldy %A Kotchen, Matthew %A Mary Evans %A Fowlie, Meredith %A Arik Levinson %A Karen Palmer %I External Environmental Economics Advisory Committee %P 39 %G eng %0 Journal Article %J The Environmental Forum %D 2019 %T Evaluating Development Given Our Obligation to Future Generations %A J. E. Aldy %B The Environmental Forum %P 17 %G eng %N Nov/Dec 2019 %0 Journal Article %J The Environmental Forum %D 2019 %T Can a Carbon Tax Be Designed to Benefit Low-Income Households? %A Joseph Edgar Aldy %B The Environmental Forum %P 15 %G eng %N Sept/Oct 2019 %0 Journal Article %J The Environmental Forum %D 2019 %T More Study Needed of the Overall Impact of Rules on American Society %A Joseph E. Aldy %B The Environmental Forum %P 15 %G eng %N July/August 2019 %0 Magazine Article %D 2019 %T Future-Proof Your Climate Strategy. %A J. E. Aldy %A G. Gianfrate %B Harvard Business Review %P 86-97 %G eng %N May/June 2019 %0 Journal Article %J Environmental Law Forum %D 2019 %T Benefits Are Benefits — Regardless of How They Are Legally Obtained %A Joseph E. Aldy %B Environmental Law Forum %P 15 %G eng %N May/June 2019 %0 Journal Article %J Journal of Risk and Uncertainty %D 2019 %T Birds of a Feather: Estimating the Value of Statistical Life from dual-earner families %A Joseph E. Aldy %B Journal of Risk and Uncertainty %G eng %0 Journal Article %J The Environmental Forum %D 2019 %T A Few Keys to Saving the Planet Cost-effectively %A J. E. Aldy %B The Environmental Forum %P 50 %G eng %U https://www.dropbox.com/s/ic5s7y96c4urkjw/The%20Debate_FORUM_2019_Mar-Apr.pdf?dl=0 %N March/April 2019 %0 Web Page %D 2018 %T Improving Regulatory Transparency Through Retrospective Analysis %A J. E. Aldy %B The Regulatory Review %G eng %U https://www.theregreview.org/2018/08/31/aldy-improving-regulatory-transparency-retrospective-analysis/ %0 Journal Article %J The Environmental Forum %D 2018 %T Trade Shifts Pollution More than Regs Shift Trade %A Joseph E. Aldy %B The Environmental Forum %P pp. 52 %G eng %N Sept/Oct 2018 %0 Report %D 2018 %T Consumers' Response to State Energy Efficient Appliance Rebate Programs %A Sebastien Houde %A Joseph E. Aldy %B Cato Research Briefs in Economic Policy %G eng %0 Journal Article %J Bulletin of the Atomic Scientists %D 2017 %T Real world headwinds for Trump climate change policy %A Joseph E. Aldy %X It has now been 12 months since Donald J. Trump was elected President of the United States, a man who as a candidate for the job called the scientific evidence for climate change “a hoax,” vowed to deregulate the American economy from what he considered to be onerous oversight, and bring back jobs that he claimed were lost as a result of the effort to combat the rise in global atmospheric temperatures. So, now is a good time to examine the president’s words and deeds regarding climate change – a sort of first-year job performance review or report card. What has he been able to accomplish? Has he laid a foundation for a successful agenda? And what are the most significant challenges to his energy and climate policy objectives? %B Bulletin of the Atomic Scientists %P 1-6 %G eng %0 Journal Article %J Harvard Environmental Law Review Forum %D 2017 %T Resolving the Inherent Uncertainty of Carbon Taxes: Introduction %A Joseph E. Aldy %A Marc Hafstead %A Metcalf, Gilbert E. %A Brian C. Murray %A William A. Pizer %A Christina Reichert %A Roberton C. Williams III. %B Harvard Environmental Law Review Forum %V 41 %P 1-13 %G eng %0 Government Document %D 2017 %T Congressional Testimony to United States House Committee on Energy and Commerce, Subcommittee on Energy, hearing on "Federal Energy Related Tax Policy and Its Effects on Markets, Prices, and Consumers" %A Joseph E. Aldy %G eng %0 Journal Article %J Scholars Strategy Network %D 2017 %T How the United States could Benefit from Eliminating Ineffective Fossil Fuel Subsidies %A Joseph E. Aldy %X

For more than a century, the U.S. federal government has subsidized the production of fossil fuels through the tax code. These tax expenditures – amounting to de facto government spending – lower the cost of investment and increase the revenues from fossil fuel production. However, research shows that the subsidies do very little to increase U.S. fossil fuel production, because the impact of subsidy use on investment decisions depends on other factors such as technological improvements in oil and gas drilling, shifts in energy demand in the global energy market, production decisions by the Organization of the Petroleum Exporting Countries, and unsettling political events in the Middle East. Without achieving much, if any, useful economic impact, fossil fuel subsidies are transferring about $4 billion annually from the pockets of taxpayers into those of fossil fuel producers.

%B Scholars Strategy Network %G eng %U http://www.scholarsstrategynetwork.org/brief/how-united-states-could-benefit-eliminating-ineffective-fossil-fuel-subsidies %0 Journal Article %J Kleinman Center for Energy Policy %D 2017 %T Waiving Environmental Regulations in Response to Fuel Market Disruptions %A Joseph E. Aldy %B Kleinman Center for Energy Policy %G eng %U http://kleinmanenergy.upenn.edu/policy-digests/energy-market-shock-absorbers %0 Journal Article %J Harvard Environmental Law Review Forum %D 2017 %T Designing and Updating a US Carbon Tax in an Uncertain World %A Joseph E. Aldy %X

A carbon tax provides certainty about the price of emissions, but it does so in a context characterized by uncertainty about its environmental benefits, economic costs, and international relations implications. Given current knowledge, suppose that the government sets a carbon tax schedule. In the future, a higher (lower) carbon tax could be justified by the resolution of uncertainty along the following ways: climate change turns out to be worse (better) than current projections; the economic costs of a carbon tax are lower (higher) than expected; other major economies implement more (less) ambitious carbon mitigation programs. This paper describes the design of a predictable process for updating the carbon tax in light of new information. Under this “structured discretion” approach, every five years the president would recommend an adjustment to the carbon tax based on analyses by the Environmental Protection Agency, the Department of the Treasury, and the Department of State on the environmental, economic, and diplomatic dimensions of climate policy. Similar to the expedited, streamlined consideration of regulations under the Congressional Review Act and trade deals under trade promotion authority, Congress would vote up or down on the presidential recommendation for a carbon tax adjustment, without the prospect of filibuster or amendment. This process could be synchronized with the timing of updating of nationally determined contributions under the Paris Agreement in a manner to leverage greater emissions mitigation ambition by other countries in future pledging rounds. The communication of guiding information and the latest data and analysis could serve as “forward guidance” for carbon tax adjustments, akin to the Federal Reserve Board’s communication strategy.

%B Harvard Environmental Law Review Forum %V 41 %P 28-40 %G eng %0 Journal Article %J American Economic Journal - Economic Policy %D 2017 %T Consumers' Response to State Energy Efficient Appliance Rebate Programs %A Sebastien Houde %A Joseph E. Aldy %X

Through an evaluation of the 2009 Recovery Act’s State Energy Efficient Appliance Rebate Program, this paper examines consumers’ response to energy efficiency rebates. The analysis shows that 70 percent of consumers claiming a rebate were inframarginal and an additional 15 percent–20 percent of consumers simply delayed their purchases by a few weeks. Consumers responded to rebates by upgrading to higher quality, but less energy-efficient models. Overall the impact of the program on long-term energy demand is likely to be small. Measures of government expenditure per unit of energy saved are an order of magnitude higher than estimates for other energy efficiency programs.

%B American Economic Journal - Economic Policy %V 9 %P 227-255 %G eng %N 4 %0 Journal Article %J National Tax Journal %D 2017 %T Frameworks for Evaluating Policy Approaches to Address the Competitiveness Concerns of Mitigating Greenhouse Gas Emissions %A Joseph E. Aldy %X

Domestic carbon pricing policies may impose adverse competitiveness risks on energy-intensive firms competing with foreign firms that may bear a lower carbon price. The risks of competitiveness effects include adverse economic and environmental outcomes, which can undermine political support for carbon pricing. Competitiveness policies, such as border tax adjustments, output-based tax credits, and related policies, also carry potential risks: unfavorable distributional outcomes, less cost-effective, and harming international trade and climate negotiations. This paper reviews the theoretical and empirical research on competitiveness risks and the risks posed by competitiveness policies, and presents two alternative frameworks for evaluating competitiveness policy options.

%B National Tax Journal %V 70 %P 395-420 %G eng %N 2 %0 Journal Article %J Nature Energy %D 2016 %T Political Economy of Clinton's Ambitious Energy Program %A Joseph E. Aldy %B Nature Energy %V 1 %8 Oct 2016 %G eng %N 10 %0 Journal Article %J Nature Climate Change %D 2016 %T Economic Tools to Promote Transparency and Comparability in the Paris Agreement %A Joseph El Aldy %A William Pizer %A Massimo Tavoni %A Lara Aleluia Reis %A Keigo Akimoto %A Geoffrey Blanford %A Carlo Carraro %A Leon E. Clarke %A James Edmonds %A Gokul C. Iyer %A Haewon C. McJeon %A Richard Richels %A Steven Rose %A Fuminori Sano %X

The Paris Agreement culminates a six-year transition toward 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 (SCC) and the cost-minimizing path to limiting warming to 2⁰C, 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.

%B Nature Climate Change %8 Aug 2016 %G eng %0 Journal Article %J Review of Environmental Economics and Policy %D 2016 %T Alternative Metrics for Comparing Domestic Climate Change Mitigation Efforts and the Emerging International Climate Policy Architecture %A Joseph E. Aldy %A William A. Pizer %X

The availability of practical mechansims for comparing domestic efforts aimed at mitigating global climate change are important for the stability, equity, and efficiency of international climate agreements. We examine a variety of metrics that could be used to compare countries’ climate change mitigation efforts and illustrate their potential application to large developed and developing countries. Because there is no single comprehensive, measurable metric that could be applied to all countries, we suggest using a set of indicators to characterize and compare mitigation effort, akin to using a set of economic statistics to indicate the health of the macroeconomy. Given the iterative pledge and review approach that is emerging in the current climate change negotiations, participation, commitment, and compliance could be enhanced if this set of indicators is able to show that all parties are doing their “fair share,” both prospectively and retrospectively. The latter, in particular, highlights the need for a well-functioning policy surveillance regime.

%B Review of Environmental Economics and Policy %V 10 %P 3-24 %8 Winter 2016 %G eng %N 1 %0 Journal Article %J Climate Policy %D 2016 %T Comparing Emissions Mitigation Efforts across Countries %A Joseph E. Aldy %A William A. Pizer %A Keigo Akimoto %X

A natural outcome of the emerging pledge and review approach to international climate change policy is the interest in comparing mitigation efforts among countries. Domestic publics and stakeholders will have an interest in knowing if peer countries are undertaking (or planning to undertake) comparable efforts in mitigating their greenhouse gas emissions. Moreover, if the aggregate efforts are considered inadequate in addressing the risks posed by climate change, then this will likely prompt a broader interest in identifying those countries where greater efforts are arguably warranted based on comparison with their peers. Both assessments require metrics of efforts and comparisons among countries. We propose a framework for such an exercise, drawing from a set of principles for designing and implementing informative metrics. We present a template for organizing metrics on mitigation efforts, for both ex ante and ex post review. We also provide preliminary assessments of efforts along emissions, price, and cost metrics for post-2020 climate policy contributions by China, the European Union, Russia, and the United States. We close with a discussion of the role of academics and civil society in promoting transparency and facilitating the evaluation and comparison of efforts.

%B Climate Policy %8 Jan 11 2016 %G eng %0 Journal Article %J The Future of Children, Issue on Climate Change %D 2016 %T Mobilizing Political Action on Behalf of Future Generations: The Case of Climate Change Policy %A Joseph E. Aldy %X

By nearly any perspective, insufficient effort has been undertaken to address the risks posed by global climate change. This failure to mobilize sufficient effort to combat climate change reflects the difficult political economy that characterizes the problem. To grossly simplify the problem, the challenge is that future, unborn generations will enjoy the benefits of climate policy while the current generation, and in particular those reaping substantial returns from a status quo that fails to address climate change, will bear the costs. In this paper, I describe the returns to narrowlydefined business capital and a broad concept of capital – physical capital, human capital, environmental capital, social capital, etc. – to illustrate differences in investment incentives and hence political economy considerations for those engaged in climate policy debates. While the standard economist’s prescription to price the externality could align private and societal investment incentives and ensure that future generations have the opportunities to enjoy a standard of living at least as good as the current generation, it must confront the political economy that the costs of changing prices are borne primarily by the current generation and concentrated among incumbent firms and the benefits are enjoyed disproportionately by future generations and emerging insurgent firms that aim to bring new technologies to market and capture the incumbents’ market share. Tailoring the design of climate policy to mollify the incumbents in opposition and to leverage the potential of the insurgents to build broad political support will be necessary to mobilize successful political action to combat climate change.

%B The Future of Children, Issue on Climate Change %V 26 %8 Spring 2016 %G eng %N 1 %0 Journal Article %J Journal of the Association of Environmental and Resource Economists %D 2015 %T The Competitiveness Impacts of Climate Mitigation Policies %A Joseph E. Aldy %A William A. Pizer %X

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 use historic energy prices as a proxy for climate change mitigation policy. We estimate how production and net imports change in response to energy prices using a 35-year panel of approximately 450 U.S. manufacturing industries. Second, we take these estimated relationships and use them to simulate the impacts of changes in energy prices resulting from a domestic climate change mitigation policy that effectively imposes 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 percent for the most energy-intensive industries and represent no more than about one-sixth of the estimated decrease in production under a $15 per ton carbon price.

%B Journal of the Association of Environmental and Resource Economists %8 Sep 10 2015 %G eng %0 Journal Article %J Climatic Change %D 2015 %T Policy Surveillance in the G-20 Fossil Fuel Subsidies Agreement: Lessons for Climate Policy %A Joseph E. Aldy %X

Inadequate policy surveillance has undermined the effectiveness of multilateral climate agreements. To illustrate an alternative approach to transparency, I evaluate policy surveillance under the 2009 G-20 fossil fuel subsidies agreement. The Leaders of the Group of 20 nations tasked their energy and finance ministers to identify and phase-out fossil fuel subsidies. The G-20 leaders agreed to submit their subsidy reform strategies to peer review and to independent expert review conducted by international organizations. This process of developed and developing countries pledging to pursue the same policy objective, designing and publicizing implementation plans, and subjecting plans and performance to review by international organizations differs considerably from the historic approach under the UN Framework Convention on Climate Change. This paper draws lessons from the fossil fuel subsidies agreement for climate policy surveillance.

%B Climatic Change %8 Sep 11 2015 %G eng %0 Journal Article %J Nature Climate Change %D 2015 %T Pricing Climate Risk Mitigation %A Joseph E. Aldy %B Nature Climate Change %V 5 %P 396-398 %8 Apr 2015 %G eng %0 Book Section %B Carbon Taxes and Fiscal Reform: Key Issues Facing U.S. Policy Makers %D 2015 %T Comparing Countries’ Climate Mitigation Efforts in a Post-Kyoto World %A Joseph E. Aldy %A William A. Pizer %E Ian Parry %E Adele Morris %E Roberton Williams III %B Carbon Taxes and Fiscal Reform: Key Issues Facing U.S. Policy Makers %I Routledge %G eng %0 Journal Article %J Climatic Change %D 2014 %T The crucial role of policy surveillance in international climate policy %A Joseph E. Aldy %X

An extensive literature shows that information-creating mechanisms enhance the transparency of and can support participation and compliance in international agreements. This paper draws from game theory, international relations, and legal scholarship to make the case for how transparency through policy surveillance can facilitate more effective international climate change policy architecture. I draw lessons from policy surveillance in multilateral economic, environmental, and national security contexts to inform a critical evaluation of the historic practice of monitoring and reporting under the global climate regime. This assessment focuses on how surveillance produces evidence to inform policy design, enables comparisons of mitigation effort, and illustrates the adequacy of the global effort in climate agreements. I also describe how the institution of policy surveillance can facilitate a variety of climate policy architectures. This evaluation of policy surveillance suggests that transparency is necessary for global climate policy architecture.

%B Climatic Change %V 126 %P 279-292 %8 Aug 2014 %G eng %N 3-4 %0 Journal Article %J Science %D 2014 %T Using and Improving the Social Cost of Carbon %A William Pizer %A Matthew Adler %A Joseph Aldy %A David Anthoff %A Maureen Cropper %A Kenneth Gillingham %A Michael Greenstone %A Murray, Brian %A Richard Newell %A Richard Richels %A Arden Rowell %A Stephanie Waldhoff %A Wiener, Jonathan %B Science %V 346 %P 1181-1182 %8 Dec 2014 %G eng %0 Book Section %B Does Regulation Kill Jobs? %D 2014 %T The Employment and Competitiveness Impacts of Power-Sector Regulations %A Joseph E. Aldy %A William A. Pizer %E Cary Coglianese %E Adam M. Finkel %E Christopher Carrigan %B Does Regulation Kill Jobs? %I University of Pennsylvania Press %P 70-88 %G eng %0 Book Section %B Handbook of the Economics of Risk and Uncertainty %D 2014 %T Environmental Risk and Uncertainty %A Joseph E. Aldy %A W. Kip Viscusi %E Mark J. Machina %E W. Kip Viscusi %X

Environmental risks may comprise the most important policy-related application of the economics of risk and uncertainty. Many biases in risk assessment and regulation, such as the conservatism bias in risk assessment and the stringent regulation of synthetic chemicals, reflect a form of ambiguity aversion. Nevertheless, there is evidence that people can learn from warnings and risk information, such as Toxics Release Inventory data, consistent with Bayesian models. The fundamental uncertainties with respect to environmental risks are coupled with irreversibilities, making sequential decisions and adaptive behavior desirable. Uncertainties over the benefits and costs of mitigating environmental risks pose challenges for any regulator, but insights drawn from the instrument choice literature can inform the design and implementation of welfare-maximizing environmental pollution control policies. The problem of mitigating climate change risks motivates a series of illustrations of how uncertainty affects policy.

%B Handbook of the Economics of Risk and Uncertainty %I Elsevier %V 1 %G eng %U https://law.vanderbilt.edu/phd/faculty/w-kip-viscusi/articles/325_Environmental_Risk_and_Uncertainty.pdf %0 Book Section %B Toward a New Climate Agreement: Conflict, Resolution, and Governance %D 2014 %T Foreword %A Joseph E. Aldy %E Todd Cherry %E Jon Hovi %E David McEvoy %B Toward a New Climate Agreement: Conflict, Resolution, and Governance %I Routledge %G eng %0 Journal Article %J Oxford Energy Forum %D 2013 %T The Case for a U.S. Carbon Tax %A Joseph E. Aldy %X

Every aspect of economic activity a%ects greenhouse gas emissions and, hence, the global climate. Since individuals and businesses bear virtually no cost for emitting greenhouse gases in the absence of public policy, and thus have no incentive to reduce these emissions, the government has a strong case for climate change policy. US policymakers may choose among three general approaches to drive more climate-friendly economic activity: (1) subsidise businesses and individuals to invest in and use lower-emitting goods and services; (2) mandate businesses and individuals to change their behaviour regarding technology choice and emissions; or (3) price the greenhouse gas externality, so that decisions take account of this external cost. Let’s consider these options in turn.

%B Oxford Energy Forum %V 91 %P 13-16 %8 Feb 2013 %G eng %0 Journal Article %J Review of Environmental Economics and Policy %D 2013 %T A Preliminary Review of the American Recovery and Reinvestment Act’s Clean Energy Package %A Joseph E. Aldy %B Review of Environmental Economics and Policy %P 1-20 %8 Jan 2013 %G eng %0 Journal Article %J Foundations and Trends in Microeconomics %D 2013 %T Risk Regulation Lessons from Mad Cows %A Joseph E. Aldy %A W. Kip Viscusi %X

The mad cow disease crisis in the United Kingdom (U.K.) was a major policy disaster. The government and public health officials failed to identify the risk to humans, created tremendous uncertainty regarding the human risks once they were identified, and undertook a series of policies that undermined public trust. In contrast, the mad cow disease risk never became a major problem in the United States (U.S.). The lead time that the U.S. had in responding to the disease that was first identified in the U.K. assisted in planning the policy response to avert a crisis. The absence of a comparable U.S. crisis, however, does not imply that the U.S. risk management approach was a success. Until recently, there was no systematic assessment of the domestic risks of mad cow disease. Moreover, U.S. government agencies have never undertaken a comprehensive assessment of the benefits and costs of any U.S. regulation dealing with mad cow disease. The absence of a sound economic basis for policy is reflected in the United States Department of Agriculture’s (USDA) ill-considered decision to prohibit the private testing of beef for mad cow disease. This decision disadvantaged companies that sought such testing in order to comply with foreign testing regulations. In the absence of such testing, U.S. beef exports plummeted. One company that attempted to implement a testing program launched a legal challenge to the USDA prohibition and was unsuccessful. The policy failures in both the U.K. and the U.S. provide several lessons for regulating invasive species risks and dealing with emerging risks more generally. We conclude with a series of ten public policy lessons for dealing with similar emerging risks.

%B Foundations and Trends in Microeconomics %V 8 %8 Dec 2013 %G eng %N 4 %0 Book Section %B Handbook of Energy and Climate Change %D 2013 %T Designing a Bretton Woods Institution to Address Climate Change %A Joseph E. Aldy %E Roger Fouquet %B Handbook of Energy and Climate Change %I Edward Elgar %P 352-373 %G eng %0 Book Section %B The Quest for Security: Protection without Protectionism and the Challenge of Global Governance %D 2013 %T Designing the Post-Kyoto Climate Regime %A Joseph E. Aldy %A Robert N. Stavins %E Joseph Stiglitz %E Mary Kaldor %B The Quest for Security: Protection without Protectionism and the Challenge of Global Governance %I Columbia University Press %G eng %0 Book Section %B 15 Ways to Rethink the Federal Budget %D 2013 %T Eliminating Fossil Fuel Subsidies %A Joseph E. Aldy %A Jeremy Patashnik %E Michael Greenstone %E Max Harris %E Karen Li %E Adam Looney %B 15 Ways to Rethink the Federal Budget %I The Hamilton Project, Brookings Institution %P 31-35 %G eng %0 Journal Article %J Science %D 2012 %T Climate Negotiators Create an Opportunity for Scholars %A Joseph E. Aldy %A Robert N. Stavins %B Science %V 337 %P 1043-1044 %8 Aug 2012 %G eng %0 Journal Article %J Journal of Environment and Development %D 2012 %T The Promise and Problems of Pricing Carbon: Theory and Experience %A Joseph E. Aldy %A Robert Stavins %X

Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful reductions in the emissions of greenhouse gases. Due to the ubiquity and diversity of emissions of greenhouse gases in most economies, as well as the variation in abatement costs among individual sources, conventional environmental policy approaches, such as uniform technology and performance standards, are unlikely to be sufficient to the task. Therefore, attention has increasingly turned to market-based instruments in the form of carbon-pricing mechanisms. We examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap-and-trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions.

%B Journal of Environment and Development %V 21 %P 152-180 %8 Apr 2012 %G eng %N 2 %0 Journal Article %J Daedalus %D 2012 %T Using the Market to Address Climate Change: Insights from Theory and Experience %A Joseph E. Aldy %A Robert N. Stavins %X

Emissions of greenhouse gases linked with global climate change are affected by diverse aspects of economic activity, including individual consumption, business investment, and government spending. An effective climate policy will have to modify the decision calculus for these activities in the direction of more efficient generation and use of energy, lower carbon intensity of energy, and – more broadly – a more carbon-lean economy. The only approach to doing this on a meaningful scale that would be technically feasible and cost-effective is carbon pricing, that is, market-based climate policies that place a shadow-price on carbon dioxide emissions. We examine alternative designs of three such instruments – carbon taxes, cap-and-trade, and clean energy standards. We note that the U.S. political response to possible market-based approaches to climate policy has been and will continue to be largely a function of issues and structural factors that transcend the scope of environmental and climate policy.

%B Daedalus %V 141 %P 45-60 %8 Apr 2012 %G eng %N 2 %0 Journal Article %J Nature Climate Change %D 2012 %T Willingness to Pay and Political Support for a U.S. National Clean Energy Standard %A Joseph E. Aldy %A Matthew J. Kotchen %A Anthony A. Leiserowitz %X

In 2010 and 2011, Republicans and Democrats proposed mandating clean power generation in the electricity sector [1,2,3,]. To evaluate public support for a national clean energy standard (NCES), we conducted a nationally representative survey that included randomized treatments on the sources of eligible power generation and program costs. We find that the average American is willing to pay $162 per year in higher electricity bills (95% confidence interval: $128  $260), representing a 13% increase [4], in support of a NCES that requires 80% clean energy by 2035. Support for a NCES is lower among non‐whites, older individuals, and Republicans. We also employ our statistical model, along with census data for each state and Congressional district [5], to simulate voting behavior on a NCES by Members of Congress assuming they vote consistent with the preferences of their median voter. We estimate that Senate passage of a NCES would require an average household cost below $59 per year, while House passage would require costs below $48 per year. The results imply that an “80% by 2035” NCES could pass both chambers of Congress if it increases electricity rates less than 5% on average.

%B Nature Climate Change %V 2 %P 596-599 %8 May 2012 %G eng %0 Journal Article %J Environmental Law Reporter %D 2011 %T Promoting Clean Energy in the American Power Sector %A Joseph E. Aldy %X

Despite bipartisan interest in advancing American energy policy, comprehensive energy and climate legislation fell short in the Senate last year after passing in the House of Representatives in 2009. The difficulty of coming to broad agreement highlights the need for a more targeted and incremental approach. One promising intermediate step would be a technology-neutral national clean energy standard that applies to the U.S. power sector. This paper proposes a standard that would lower carbon dioxide emissions by as much as 60 percent relative to 2005 levels over twenty years, streamline the fragmented regulatory system that is currently in place, generate fiscal benefits, and help fund energy innovation. Through a simple design and transparent implementation, the National Clean Energy Standard would provide certainty about the economic returns to clean energy that would facilitate investment in new energy projects and lower the emission intensity of the power sector. It would also serve as an ambitious bridge to economy-wide energy and climate policy

%B Environmental Law Reporter %V 42 %P 10131-10149 %8 May 2011 %G eng %0 Journal Article %J Vanderbilt Law Review %D 2011 %T Real-Time Economic Analysis and Policy Development During the BP Deepwater Horizon Oil Spill %X

The 2010 BP Deepwater Horizon oil spill posed near-term economic risks to the Gulf of Mexico region and raised questions about appropriate policies to mitigate catastrophic oil spill risks. This essay reviews the Obama Administration’s assessment of the economic vulnerabilities to the spill, the Administration’s May 12, 2010 legislative proposal focused on minimizing the adverse economic impacts to workers and small businesses in the Gulf of Mexico, and the effort to secure an agreement with BP to ensure that those harmed by the spill will receive full compensation. Then, the essay discusses several of the policy reforms advanced by the Administration to reduce the risks of future catastrophic oil spills, including the value of an industry consortium to provide deepwater well containment resources and the need to remove the arbitrary limit on liability for economic damages from offshore drilling. The essay closes with a few policy lessons learned from the spill.

%B Vanderbilt Law Review %V 64 %P 1795-1817 %8 Sep 2011 %G eng %N 6 %0 Journal Article %J Journal of Economic Literature %D 2010 %T Designing Climate Mitigation Policy %A Joseph E. Aldy %A Alan J. Krupnick %A Richard G. Newell %A Ian W. H. Parry %A William A. Pizer %X

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.

%B Journal of Economic Literature %V 48 %P 903-934 %8 Dec 2010 %G eng %N 4 %0 Journal Article %J Journal of Homeland Security and Emergency Management %D 2010 %T Valuing the Risk of Death from Terrorist Attacks %A Lisa A. Robinson %A James K. Hammitt %A Joseph E. Aldy %A Alan Krupnick %A Jennifer Baxter %X

Regulations designed to increase homeland security often require balancing large costs against highly uncertain benefits. An important component of these benefits is the reduced risk of fatalities from terrorist attacks. While the risk to an individual appears small, the benefits may be large when aggregated over the population. U.S. regulatory agencies have well-established approaches for valuing mortality risks, but address risks that differ in significant respects from those associated with terrorism. The best available estimates of the value of small risk reductions, expressed as the value per statistical life (VSL), average about $6.5 million. However, terrorism-related risks may be perceived as more dreaded and ambiguous, and less controllable and voluntary, than the workplace risks underlying many VSL estimates. These factors may increase the VSL appropriate for terrorism risks, possibly doubling the value.

%B Journal of Homeland Security and Emergency Management %V 7 %P Article 14 %8 Jan 2010 %G eng %N 1 %0 Book Section %B Post-Kyoto International Climate Policy: Implementing Architectures for Agreement %D 2010 %T Introduction %A Joseph E. Aldy %A Robert N. Stavins %E Joseph E. Aldy %E Robert N. Stavins %B Post-Kyoto International Climate Policy: Implementing Architectures for Agreement %I Cambridge University Press %P 1-28 %G eng %0 Book Section %B Post-Kyoto International Climate Policy: Implementing Architectures for Agreement %D 2010 %T Lessons for the International Policy Community %A Joseph E. Aldy %A Robert N. Stavins %E Joseph E. Aldy %E Robert N. Stavins %B Post-Kyoto International Climate Policy: Implementing Architectures for Agreement %I Cambridge University Press %P 899-929 %G eng %0 Book Section %B Climate Change, Trade and Competitiveness: Is a Collision Inevitable? %D 2009 %T Comment on Jeffrey A. Frankel’s "Addressing the Leakage/Competitiveness Issue in Climate Change Policy Proposals." %A Joseph E. Aldy %E Lael Brainard %E Isaac Sorkin %B Climate Change, Trade and Competitiveness: Is a Collision Inevitable? %I Brookings Institution %P 83-88 %G eng %0 Book Section %B Post-Kyoto International Climate Policy: Summary for Policymakers %D 2009 %T Introduction and Overview %A Joseph E. Aldy %A Robert N. Stavins %E Joseph E. Aldy %E Robert N. Stavins %B Post-Kyoto International Climate Policy: Summary for Policymakers %I Cambridge University Press %P 1-25 %G eng %0 Book Section %B Post-Kyoto International Climate Policy: Summary for Policymakers %D 2009 %T Lessons for the International Policy Community %A Joseph E. Aldy %A Robert N. Stavins %E Joseph E. Aldy %E Robert N. Stavins %B Post-Kyoto International Climate Policy: Summary for Policymakers %I Cambridge University Press %P 27-55 %G eng %0 Book Section %B Beyond Copenhagen: A Climate Policymaker’s Handbook %D 2009 %T Towards a Post-Kyoto International Climate Policy Regime %A Joseph E. Aldy %A Robert N. Stavins %E Delgado, Juan %E Gardner, Stephen %B Beyond Copenhagen: A Climate Policymaker’s Handbook %I Bruegel Books %P 53-59 %G eng %0 Journal Article %J Review of Economics and Statistics %D 2008 %T Adjusting the Value of a Statistical Life for Age and Cohort Effects %A Joseph E. Aldy %A W. Kip Viscusi %X

To resolve the theoretical ambiguity in the effect of age on the value of statistical life (VSL), this article uses a novel, age-dependent fatal risk measure to estimate age-specific hedonic wage regressions. VSL exhibits an inverted-U-shaped relationship with age. In the year 2000 cross section, workers’ VSL rises from $3.7 million (ages 18–24) to $9.7 million (35–44), and declines to $3.4 million (55–62). Controlling for birth-year cohort effects in a minimum distance estimator yields a peak VSL of $7.8 million at age 46, and flattens the age-VSL relationship. The value of statistical life-year also follows an inverted-U shape with age.

%B Review of Economics and Statistics %V 90 %P 573-581 %8 Aug 2008 %G eng %N 3 %0 Journal Article %J The Energy Journal %D 2008 %T Issues in Designing U.S. Climate Change Policy %A Joseph E. Aldy %A William A. Pizer %X

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.

%B The Energy Journal %V 30 %P 179-210 %8 Jun 2008 %G eng %N 3 %0 Journal Article %J National Tax Journal %D 2008 %T A Tax-Based Approach to Slowing Global Climate Change %A Joseph E. Aldy %A Eduardo Ley %A Ian W. H. Parry %X

In this paper, we discuss the design of carbon dioxide (CO2) taxes at the domestic and international level and the choice of taxes versus a cap-and-trade system. A strong case can be made for taxes on uncertainty, fiscal, and distributional grounds, though this critically hinges on policy specifics and how revenues are used. The efficient near-term tax is at least $5–$20 per ton of CO2 and the tax should be imposed upstream with incentives for downstream sequestration and abatement of other greenhouse gases. At the international level, a key challenge is the possibility that emissions taxes might be undermined through offsetting changes in other energy policies.

%B National Tax Journal %V 61 %P 493-517 %8 Sep 2008 %G eng %0 Journal Article %J Review of Environmental Economics and Policy %D 2007 %T Age Differences in the Value of Statistical Life: Revealed Preference Evidence %A Joseph E. Aldy %A W. Kip Viscusi %X

Revealed preference evidence, especially based on wage-risk tradeoffs in the labor market, provides the primary empirical basis for analyses of the value of statistical life (VSL). This market evidence also provides guidance on how VSL varies with age. While labor market studies have generated conflicting evidence—some showing that VSL rises with age and others showing that VSL declines with age—more refined estimates that take into account the age variation in job fatality risks or life-cycle patterns of consumption show an inverted-U relation between the VSL and age. The value of a statistical life year shows a similar pattern and is not time-invariant. Applying estimates of the VSL-age relationship to an analysis of the Clear Skies initiative illustrates the implications of recognizing the age-VSL relationship.

%B Review of Environmental Economics and Policy %V 1 %P 241-260 %8 Apr 2007 %G eng %N 2 %0 Journal Article %J Journal of Environmental Economics and Management %D 2007 %T Labor Market Estimates of the Senior Discount for the Value of Statistical Life %A W. Kip Viscusi %A Joseph E. Aldy %X

This article develops the first measures of age–industry job risks to examine the age variations in the value of statistical life. Because of the greater risk vulnerability of older workers, they face flatter wage-risk gradients than younger workers, which we show to be the case empirically. Accounting for this heterogeneity in hedonic market equilibria leads to estimates of the value of statistical life–age relationship that follows an inverted U shape. The estimates of the value of statistical life range from $6.4 million for younger workers to a peak of $9.0 million for those aged 35–44, and then a decline to $3.8 million for those aged 55–62. The decline of the estimated value of statistical life with age is consistent with there being some senior discount in the Clear Skies Initiative analysis.

%B Journal of Environmental Economics and Management %V 53 %P 377-392 %8 Feb 28 2007 %G eng %N 3 %0 Book Section %B Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World %D 2007 %T Architectures for an International Global Climate Change Agreement: Lessons for the Policy Community %A Joseph E. Aldy %A Robert N. Stavins %E Joseph E. Aldy %E Robert N. Stavins %B Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World %I Cambridge University Press %P 350-367 %G eng %0 Book Section %B Assessing U.S. Climate Policy Options %D 2007 %T Assessing the Costs of Regulatory Proposals for Reducing U.S. Greenhouse Gas Emissions %A Joseph E. Aldy %E Raymond J. Kopp %E William A. Pizer %B Assessing U.S. Climate Policy Options %I Resources For The Future %P 53-68 %G eng %0 Book Section %B Assessing U.S. Climate Policy Options %D 2007 %T Competitiveness Impacts of Carbon Dioxide Pricing Policies on Manufacturing. %A Joseph E. Aldy %A Richard Morgenstern %A Evan M. Herrnstadt %A Mun Ho %A William A. Pizer %E Raymond J. Kopp %E William A. Pizer %B Assessing U.S. Climate Policy Options %I Resources For The Future %P 95-105 %G eng %0 Journal Article %J Land Economics %D 2007 %T Divergence in State-Level Per Capita Carbon Dioxide Emissions %A Joseph E. Aldy %X

Decisionmakers considering policies to mitigate climate change will benefit from information about current and future distributions of carbon dioxide (CO2) emissions. Examining the emissions dynamics of advanced economies that have experienced income convergence could provide insights about how distributions of country-level emissions may evolve over time if country-level incomes eventually undergo some convergence. This paper addresses the question of whether income convergence is sufficient for per capita CO2 emissions convergence by focusing on a set of advanced economies, the U.S. states. I undertake a variety of cross-sectional and stochastic convergence tests with two novel measures of 1960–1999 state-level CO2 emissions per capita—production (pre-electricity trade) CO2 and consumption (post-electricity trade) CO2—and with income per capita. Although incomes continue to converge, I find stark divergence in production CO2 per capita and no evidence of convergence for consumption CO2 per capita. Forecasts of future distributions show little convergence in emissions.

%B Land Economics %V 83 %P 353-369 %8 Aug 2007 %G eng %N 3 %0 Journal Article %J The Energy Journal %D 2007 %T Energy and Carbon Dynamics at Advanced Stages of Development: An Analysis of the U.S. States, 1960–1999 %A Joseph E. Aldy %X

This paper explores the relationships among economic development, energy consumption, and carbon dioxide (CO2) emissions by focusing on a set of advanced economies, the U.S. states. Energy consumption and emissions grew 50–60 percent on average over the 1960–1999 period. The states’ per capita energy consumption and emissions have grown on average 2 percent annually as income and population growth have outpaced improvements in energy intensity of output and carbon intensity of energy. The energy consumption income elasticity is positive but decreasing in income, although energy production takes an inverted-U shape, reflecting the electricity imports among high income states. The standard CO2 measure, corresponding to energy production, is characterized by an inverted-U environmental Kuznets curve. Adjusting emissions for interstate electricity trade yields an emissions– income relationship that peaks and plateaus. The carbon intensity of energy declines in income for total energy consumption and the industrial, residential, and commercial sectors.

%B The Energy Journal %V 28 %P 91-111 %G eng %N 1 %0 Book Section %B Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World %D 2007 %T Introduction: International Policy Architecture for Global Climate Change. %A Joseph E. Aldy %A Robert N. Stavins %E Joseph E. Aldy %E Robert N. Stavins %B Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World %I Cambridge University Press %P 1-27 %G eng %0 Journal Article %J Environmental and Resource Economics %D 2006 %T Per Capita Carbon Dioxide Emissions: Convergence or Divergence? %A Joseph E. Aldy %X

Understanding and considering the distribution of per capita carbon dioxide (CO2) emissions is important in designing international climate change proposals and incentives for participation. I evaluate historic international emissions distributions and forecast future distributions to assess whether per capita emissions have been converging or will converge. I find evidence of convergence among 23 member countries of the Organisation for Economic Co-operation and Development (OECD), whereas emissions appear to be diverging for an 88-country global sample over 1960–2000. Forecasts based on a Markov chain transition matrix provide little evidence of future emissions convergence and indicate that emissions may diverge in the near term. I also review the shortcomings of environmental Kuznets curve regressions and structural models in characterizing future emissions distributions.

%B Environmental and Resource Economics %V 33 %P 533-555 %8 Apr 2006 %G eng %N 4 %0 Book Section %B Painting the White House Green: Rationalizing Environmental Policy Inside the Executive Office of the President %D 2004 %T Saving the Planet Cost-Effectively: The Role of Economic Analysis in Climate Change Mitigation Policy %A Joseph E. Aldy %E Randall Lutter %E Jason F. Shogren %B Painting the White House Green: Rationalizing Environmental Policy Inside the Executive Office of the President %I Resources For The Future %P 89-118 %G eng %0 Journal Article %J Climate Policy %D 2003 %T 13+1: A Comparison of Global Climate Change Policy Architectures %A Joseph E. Aldy %A Barrett, Scott %A Robert N. Stavins %X

We critically review the Kyoto Protocol and thirteen alternative policy architectures for addressing the threat of global climate change. We employ six criteria to evaluate the policy proposals: environmental outcome, dynamic efficiency, cost-effectiveness, equity, flexibility in the presence of new information, and incentives for participation and compliance. The Kyoto Protocol does not fare well on a number of criteria, but none of the alternative proposals fare well along all six dimensions. We identify several major themes among the alternative proposals: Kyoto is “too little, too fast”; developing countries (DCs) should play a more substantial role and receive incentives to participate; implementation should focus on market-based approaches, especially those with price mechanisms; and participation and compliance incentives are inadequately addressed by most proposals. Our investigation reveals tensions among several of the evaluative criteria, such as between environmental outcome and efficiency, and between cost-effectiveness and incentives for participation and compliance.

%B Climate Policy %V 3 %P 373-397 %8 Mar 3 2003 %G eng %N 4 %0 Book Section %B Beyond Kyoto: Advancing the International Effort Against Climate Change %D 2003 %T Addressing Cost: The Political Economy of Climate Change %A Joseph E. Aldy %A Richard Baron %A Laurence Tubiana %B Beyond Kyoto: Advancing the International Effort Against Climate Change %I Pew Center on Global Climate Change %P 85-110 %G eng %0 Journal Article %J Journal of Risk and Uncertainty %D 2003 %T The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World %A Joseph E. Aldy %A W. Kip Viscusi %X

A substantial literature over the past thirty years has evaluated tradeoffs between money and fatality risks. These values in turn serve as estimates of the value of a statistical life. This article reviews more than 60 studies of mortality risk premiums from ten countries and approximately 40 studies that present estimates of injury risk premiums. This critical review examines a variety of econometric issues, the role of unionization in risk premiums, and the effects of age on the value of a statistical life. Our meta-analysis indicates an income elasticity of the value of a statistical life from about 0.5 to 0.6. The paper also presents a detailed discussion of policy applications of these value of a statistical life estimates and related issues, including risk-risk analysis.

%B Journal of Risk and Uncertainty %V 27 %P 5-76 %8 Feb 2003 %G eng %N 1 %0 Book Section %B The Kyoto Commitments: Can Nations Meet Them with the Help of Technology? %D 2000 %T Can Annex I Countries Meet Their Emissions Targets at Modest Costs? %A J. E. Aldy %E C.E. Walker %E M.A. Bloomfield %E M. Thorning %B The Kyoto Commitments: Can Nations Meet Them with the Help of Technology? %I American Council for Capital Formation %C Washington, DC %P 67-73 %G eng