We analyze technology adoption decisions of manufacturing plants in response to governmentsponsored energy audits. Overall, plants adopt about half of the recommended energy-efficiency projects. Using fixed effects logit estimation, we find that adoption rates are higher for projects with shorter paybacks, lower costs, greater annual savings, higher energy prices, and greater energy conservation. Plants are 40% more responsive to initial costs than annual savings, suggesting that subsidies may be more effective at promoting energy-efficient technologies than energy price increases. Adoption decisions imply hurdle rates of 50-100%, which is consistent with the investment criteria small and medium-size firms state they use.

We use hedonic analysis of home transaction data from the Minneapolis-St. Paul metropolitan area to estimate the effects of proximity to open space on sales price. Importantly, we allow the effects of proximity to vary spatially with many covariates, such as population density and neighborhood income.

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▪ Abstract  Carbon capture and storage (CCS) technologies remove carbon dioxide from flue gases for storage in geologic formations or the ocean. We find that CCS is technically feasible, with current costs of about $200 to $250 per ton of carbon. Although currently a relatively expensive mitigation option, CCS could be attractive if we have a stringent carbon policy, if CCS turns out unexpectedly inexpensive relative to other options, or if it is otherwise desired to retain fossil fuels as part of the energy mix while reducing carbon emissions. Near-term prospects favor CCS for electric power plants and certain industrial sources with storage in depleted oil and gas reservoirs as opposed to aquifers. Deep aquifers may provide an attractive longer-term-storage option, whereas ocean storage poses greater technical and environmental uncertainty. CCS should be seriously considered for addressing climate change, alongside energy efficiency and carbon-free energy, although significant environmental, technical, and political uncertainties and obstacles remain.

We gratefully acknowledge financial support from the California Energy Commission. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Small, and a referee for very helpful comments on an earlier draft. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Estimating the cost of regulation is difficult. Firms sometimes reveal costs indirectly, however, when they exploit loopholes to avoid regulation. We apply this insight to fuel economy standards for automobiles. These standards feature a loophole that gives automakers a bonus when they equip a vehicle with flexible-fuel capacity. Profitmaximizing automakers will equate the marginal cost of compliance using the loophole, which is observable, with the unobservable costs of strategies that genuinely improve fuel economy. Based on this insight, we estimate that tightening standards by one mile per gallon would have cost automakers just $9-$27 per vehicle in recent years. (JEL L51, L62, Q48)

We show that oil production from existing wells in Texas does not respond to price incentives. Drilling activity and costs, however, do respond strongly to prices. To explain these facts, we reformulate Hotelling's (1931) classic model of exhaustible resource extraction as a drilling problem: firms choose when to drill, but production from existing wells is constrained by reservoir pressure, which decays as oil is extracted. The model implies a modified Hotelling rule for drilling revenues net of costs and explains why production is typically constrained. It also rationalizes regional production peaks and observed patterns of price expectations following demand shocks.