Fiscal federalism and interjurisdictional externalities: New results and an application to US Air pollution

Banzhaf, H. Spencer; Chupp, B. Andrew

doi:10.1016/j.jpubeco.2012.01.001

Cited by 74 publications

(44 citation statements)

References 31 publications

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“…54 Under the assumption that the NO X and SO 2 caps remain nonbinding, short-run reductions in NO X and SO 2 will represent real, long-run reductions in aggregate emissions. To estimate the external benefits provided by reductions in these pollutants, I use social cost estimates from Banzhaf and Chupp (2012). The authors use a Tracking and Analysis Framework (TAF) to predict the social costs that accrue from a marginal increase in NO X or SO 2 from each state.…”

Section: External Benefits Of Renewable Investmentsmentioning

confidence: 99%

Valuing the Wind: Renewable Energy Policies and Air Pollution Avoided

Novan

2015

American Economic Journal: Economic Policy

152

107

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Exploiting variation in the hourly production from wind turbines, this paper quantifies the heterogeneity in the marginal impact of renewable electricity on pollution. The results reveal that output from competing renewable capacity additions-e.g., wind turbines versus solar panels-provide different marginal external benefits. This finding suggests that, if governments continue to subsidize renewables, an emphasis should be placed on designing policies that internalize the heterogeneous benefits. More generally, my results highlight that, by incorrectly assuming renewable electricity is a homogenous good, we will understate the relative efficiency of the first-best pollution prices. (JEL L94, L98, Q42, Q48, Q51, Q53, Q58) T he United States generates 70 percent of its electricity from fossil fuels. As a consequence, the electric sector is a major source of several pollutants, including 40 percent of CO 2 , 23 percent of NO X , and 67 percent of SO 2 emitted in the United States. 1 These pollutants increase the risks posed by climate change, lead to the formation of smog and acid rain, and cause severe health problems. To efficiently reduce the flow of pollution, economists have consistently argued that prices should be placed on each pollutant (Pigou 1920;Dales 1968;Montgomery 1972;Baumol and Oates 1988). 2 In practice, however, emission prices have received limited use. 3 Instead, policymakers are focusing on increasing generation from renewable energy sources. For example, 29 states have adopted renewable portfolio standards that mandate minimum levels of renewable generation. In addition, the federal government provides sizable production and investment tax credits for renewables. Combined, these policies have driven a recent surge in investment in renewable capacity (Hitaj 2013). 1 The US Energy Information Administration provides generation and pollution statistics. 2 Palmer and Burtraw (2005) and Fischer and Newell (2008) focus solely on the electric sector. 3 In the US, cap-and-trade programs only cover a subset of pollutants, and often only apply to certain regions or during specific times of the year. Furthermore, when cap-and-trade programs are used, the caps are frequently set at inefficiently high levels.

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Section: External Benefits Of Renewable Investmentsmentioning

confidence: 99%

Valuing the Wind: Renewable Energy Policies and Air Pollution Avoided

Novan

2015

American Economic Journal: Economic Policy

152

107

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“…Chupp (2011) shows that U.S. states take local conditions into account when regulating air pollution. Banzhaf and Chupp (2012) simulate the tradeoffs between decentralized versus uniform centralized control of air pollution from the U.S. electricity sector. The centralized policy outperforms the state policy because inter-state spillovers are more important than interstate heterogeneity, and because of the shape of the marginal cost functions.…”

Section: Introductionmentioning

confidence: 99%

Environmental decentralization and political centralization

Fredriksson

Wollscheid

2014

Ecological Economics

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“…In general, centralization of decision making is a means of addressing spill-over effects (or positive and negative externalities) between smaller units. For instance, Banzhaf and Chupp (2012) show that in the case of US air pollution, a centralized approach on the federal level significantly outperforms decentralized approaches on the states' level. The main reason is that pollutants do no only produce damages in the state where they are emitted but also in neighboring states.…”

Section: Centralization?mentioning

confidence: 99%

Towards a general "Europeanization" of EU Member States� energy policies?

Strunz

Gawel²,

Lehmann³

2015

EEEP

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract It is often argued that energy policy is too fragmented across EU Member States and should be "Europeanized" to pave the way towards an efficiently organized European power system, which rest on the internal market for energy and a pan-European super-grid. However, this view neglects i) the factual heterogeneity of European energy policies in terms of harmonization and centralization, ii) economic arguments in favor of decentralization and iii) legal as well as political-economic obstacles against centralization of decision making. In this vain, we point out that a plea for a stronger role of the EU needs to be made with care and differentiation. Terms of use: Documents in

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Fiscal federalism and interjurisdictional externalities: New results and an application to US Air pollution

Cited by 74 publications

References 31 publications

Valuing the Wind: Renewable Energy Policies and Air Pollution Avoided

Valuing the Wind: Renewable Energy Policies and Air Pollution Avoided

Environmental decentralization and political centralization

Towards a general "Europeanization" of EU Member States� energy policies?

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