nep-res New Economics Papers
on Resource Economics
Issue of 2023‒05‒15
three papers chosen by
Maximo Rossi
Universidad de la República

  1. The Value of Electricity Reliability: Evidence from Battery Adoption By Brown, David B.; Muehlenbachs, Lucija
  2. Commodity windfalls, political regimes, and environmental quality By Olayinka Oyekola; Lotanna E. Emediegwu; Jubril Olayinka Animashaun
  3. Transportation Taxes and Energy Transitions: Alternative Policy Designs for Funding US Road Infrastructure and Pricing Externalities By Linn, Joshua; McConnell, Virginia; Pesek, Sophie; Raimi, Daniel

  1. By: Brown, David B.; Muehlenbachs, Lucija (Resources for the Future)
    Abstract: To avoid electric-infrastructure-induced wildfires, millions of Californians have had their power cut for hours to days at a time. We show that rooftop solar-plus-battery-storage systems increased in zip codes with the longest power outages. Rooftop solar panels alone will not help a household avert outages, but a solar-plus-battery-storage system will. Using this fact, we obtain a revealed-preference estimate of the willingness to pay for electricity reliability, the Value of Lost Load, a key parameter for electricity market design. Our estimate, of around $4, 300/MWh, suggests California's wildfires-prevention outages resulted in losses from foregone consumption of $322 million to residential electricity consumers.
    Date: 2023–04–18
  2. By: Olayinka Oyekola (Department of Economics, University of Exeter); Lotanna E. Emediegwu (Department of Economics, Policy and International Business, Manchester Metropolitan University); Jubril Olayinka Animashaun (Department of Economics, University of Manchester)
    Abstract: There are considerable differences in greenhouse gas emissions across countries, with little consensus on the extent to which political regimes affect environmental outcomes. This paper shows that the incentives that resource endowments and prices generate are key to understanding the influence of political regimes on emission outcomes. We analyze the relationship between commodity windfalls and CO2 emissions in a model of stratified political regimes, identifying the limits of democracies for environmental quality. To study the impact of international commodity prices on CO2 emissions, we use a panel of 179 countries covering the period 1970 to 2018. We then explore democracies and autocracies as channels for the heterogeneous effects of commodity windfalls on environmental quality. Our panel fixed effects estimation strategies account for the rich dynamics of contemporaneous emissions. Our baseline results show that commodity windfalls increase CO2 emissions in the long run. Similarly, countries with above threshold scores by measures of democratic institutions, such as executive recruitment, executive constraints, and political competition, have a significantly higher levels of CO2 emissions than those with lower scores. These results are robust to several sensitivity checks.
    Keywords: commodity windfalls, democracy, environmental quality, carbon emissions
    JEL: Q56 Q33 O13 H87 H11
    Date: 2023–04–17
  3. By: Linn, Joshua (Resources for the Future); McConnell, Virginia (Resources for the Future); Pesek, Sophie (Resources for the Future); Raimi, Daniel (Resources for the Future)
    Abstract: Federal and state tax policies designed to fund the construction and maintenance of transportation infrastructure rely almost exclusively on excise taxes levied on petroleum products. But as the United States and the world seek to reduce greenhouse gas emissions, boosting fuel economy and electric vehicle (EV) sales will reduce the demand for petroleum and associated public revenues. In this analysis, we use an economic model of the US household vehicle market to estimate the effects of three alternative revenue policies: one that adjusts tax rates for internal combustion engine (ICE) vehicles and adds a new per-mile fee for EVs to maintain the performance of US roadways, a second that levies a per-mile fee on all vehicles in lieu of the gasoline tax, and a third that charges all motorists for the external costs of driving, including greenhouse gas emissions, “local†air pollution, traffic accidents, and congestion. We also examine the effects of extending fuel economy standards beyond their current levels. We find that current tax policies are insufficient by tens of billions of dollars per year to fund roadways and that either higher taxes on gasoline or a per-mile fee of $0.03 levied on all passenger vehicles could achieve the target revenue. Tightening fuel economy standards lowers the cost of operating ICE vehicles and reduces tax revenues. Imposing a per-mile fee on EV owners has virtually no effect on EV adoption because of interactions with other policies but does slightly reduce EV miles driven. We produce an updated estimate of the external costs of driving, averaging $0.16 per mile for gasoline vehicles ($3.85 per gallon) and $0.06 per mile for EVs, with large differences between urban and rural counties. Applying fees at this rate dramatically accelerates EV adoption, increases driving costs (especially for ICE vehicles), slightly reduces overall driving, and raises tax revenues well beyond the level needed to maintain roadway performance.
    Date: 2023–04–13

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