Bush v. Gore and the Effect of New Source Review on Power Plant Emissions

New Source Review (NSR) is a Clean Air Act regulation that requires electric utilities to meet emission standards when making modifications to existing power plants. The regulation increases the cost of replacing worn out parts, and limits the firm’s scope of potential capital investments. Such restrictions may lead to greater retirements and lower utilization, adversely affecting profits. Prior to the 2000 presidential election, investors expected Bush to have a narrower interpretation of NSR than Gore. Therefore, we use changes in stock prices to estimate the effect on profits of differences in NSR policy. Our results indicate that investors expected the average boiler to be $38 million more valuable under the Bush administration. Over the boilers’ lifetimes, the additional utilization will have increased emissions by 19 million tons of sulfur dioxide, 5.9 million tons of nitrogen oxides and 980 million tons of carbon dioxide, relative to natural gas generation.      

Estimating the social cost of pesticide use: An assessment from acute poisoning in Brazil

The intensive use of pesticides in countries like Brazil has ignored structural and institutional shortfalls, such as the lack of workforce training for the new, difficult to implement technologies, and the institutional vulnerability of the environmental protection, health, and safety sectors. As a result we have “invisible” or social, environmental and health costs which end up being socialised with the farmer, in general, having no incentives to recognise and internalise them. This study is intended to review and develop this problem in the light of the Brazilian reality. To this end, we make use of an empirical exercise to illustrate estimation of the social cost associated with acute poisoning by pesticide using the PREVS/IBGE data (Harvest Forecast Research) in the state of Paraná, Brazil. The results suggest that, for maize, the costs of acute poisoning could represent 64% of the benefits of using herbicides and insecticides, and, in the best of hypotheses, when some risk factors are eliminated, they may reach 8% of the benefits of the use of these products. Similarly, when we examine future scenarios for five and ten years, we find less encouraging results, as in ten years the costs of acute poisoning could reach around 85% of the benefit of using insecticides and herbicides for maize. However, there is the encouraging news that, if preventive measures were taken during this time, the gains would be considerable, about 6.5 times greater. We conclude that an assessment of the real benefits involved with pesticides in Brazil is required, principally in regard to the smallholder, where farmers need more training in the use — or even the elimination — of these hazardous substances. There are sustainable technological options available which are economically efficient, especially if we consider the social, environmental and health costs. In this context it is worth highlighting the role of regulatory measures as a mechanism which can reorient generation of negative external costs through the reduction of current incentives in the socialisation of private costs.     

K. William Kapp's theory of social costs and environmental policy: Towards political ecological economics

The paper analyzes the contribution of K. William Kapp, widely considered one of the founders of Ecological Economics. This paper will demonstrate how K. William Kapp developed his theory of social costs into a framework for environmental policy development, i.e. the basis for Political Ecological Economics. The latter provides the most comprehensive and non-utilitarian alternative to the main neoclassical approaches provided by Arthur Pigou and Ronald Coase. Kapp determined basic human needs to be necessary values operational for policymaking via politically derived and scientifically determined social minima (criteria) and socio-ecological indicators. This “rational humanism” was inspired by Weber's concept of substantive rationality and informed by John Dewey's pragmatic instrumentalism. The paper concludes that Kapp's contribution is important enough to cement its place in the broader school of Ecological Economics.     

Spatial and supply/demand agglomeration economies: State- and industry-linkages in the U.S. food system

Cost-impacts of spatial and industrial spillovers on economicperformance are evaluated by incorporating activity level measures for nearby states and related industries into a cost function model. We focus on localization and urbanization economies for state level food processing industries, from activity levels of similar industries in neighboring states, agricultural input suppliers, and final product demand. We find significant cost-savings from proximity to other food manufacturing centers, and areas with high purchasing power. Cost savings from locating near an agricultural area are also evident, although it seems costly to be located within a rural agricultural state, implying thin market diseconomies. Marginal production costs instead appear higher in more urban, and lower in more rural, areas. These spillover patterns also have input composition implications; materials demand responses are the most closely tracked by the agglomeration cost effects, and capital and labor impacts vary.     

Macroeconomic conditions in the U.S. and congressional voting on environmental policy: 1970-2008

Using the Environmental Scorecard ratings of Congressmen and Senators published annually by the League of Conservation Voters, we explore empirically whether political support for pro-environment legislation, aggregated across each legislative body, is sensitive over time to changing economic conditions — that is, whether there is a political trade-off between economic conditions and the environment. Using LCV scorecard ratings from 1970 to 2008, we find evidence, consistent across both the House and Senate, that political support for the environment is related to per capita income, but this general tendency can be decomposed into sharp differences by party.     

Implementing technology-forcing policies: The 1970 Clean Air Act Amendments and the introduction of advanced automotive emissions controls in the United States

Technology forcing is a strategy where a regulator specifies a standard that cannot be met with existing technology, or at least not at an acceptable cost. Using the 1970 U.S. Clean Air Act for controlling automobile emissions as a baseline example, we demonstrate the importance of the regulatory implementation process if regulations are to foster technological change. The 1970 legislation required steep emissions reductions for new 1975 and 1976 automobiles, which presented automakers with major technical and economic challenges. Nevertheless, the U.S. Environmental Protection Agency successfully forced the adoption of two marquee control technologies—the catalytic converter in 1975 and the three-way catalyst in 1981. We focus on three factors critical to the implementation process: agency credibility to enforce standards, competitive pressures to drive industry research and development, and uncertainty about technological development.     

曼哈顿工程与美国科技制度变迁:一个“社会运动”的诠释

基于资源动员理论、政治过程理论和社会结构理论的整合分析框架,将二战期间的美国"曼哈顿工程"视作由政府、军队、科学家、工程师和工业企业家等自上而下联合发动的一场社会运动。这场运动得以实现的原因在于领袖、参与者与支持者的转换,并在特定的历史条件下导致了强政治机会结构的出现和强内生组织的形成。这场运动的后果是解放了社会对科学家与科学技术应用的认知,推动了社会结构的变迁,使得美国的科技制度从"小科学"进入到"大科学"。在新的社会结构下,美国的经济增长模式从"资源依赖"转变为"以知识为基础"。     

U.S. Equity Markets and Environmental Policy. The Case of Electric Utility Investor Behavior During the Passage of the Clean Air Act Amendments of 1990

We examine electric utilityinvestor reaction surrounding twenty-twomilestones associated with the passage of theClean Air Act Amendments of 1990. Resultssuggest that investors did not react sharply tothe passage of the Amendments. To the extentthat statistically significant effects wereobserved, we interpret the results as moreindicative of investor concern over resolutionof uncertainty surrounding the politicalprocess and resulting provisions than ofconcern over the expected costs of compliancefollowing passage of the Amendments. Weobserved little, if any, difference betweenutilities subject to Phase I restrictions andthose not subject to Phase I. Finally, changesin monthly excess returns appear to haveresulted from changes in U.S. interest ratesand investor concern over power industryderegulation. We view our results as importantbecause any wealth effects due to environmentalregulations represent a real economic costassociated with their implementation. In thissense, we view the results as good news forU.S. environmental policy makers.     

Welfare under friction and uncertainty: General equilibrium evaluation of temporary employment in the U.S.

Temporary contracts usually fall outside of employee protection litigation, thus they are often cheaper than permanent contracts and are offered on-demand by firms. In the last two decades, there has been a sharp growth in such contracts in the U.S. labor market. This paper investigates the welfare consequences of offering temporary contracts in the U.S., an environment with low employee protection litigation and high production risk for firms. Employee protection litigation creates firing rigidity in regular labor markets. Pairing firing rigidity with high production risk, firms reduce employment and output, which generates welfare loss. The inexpensive and flexible nature of temporary contracts offers firms a buffer strategy in making employment decisions under risk and navigating the firing rigidity of the regular labor sector, thereby reducing welfare loss. However, temporary contracts cannot fully compensate for the efficiency cost from rising firing rigidity and risk.     

Technological change under residual risk regulation: The case of coke ovens in the U.S. steel industry

An engineering-economic model is used within a dynamic setting to determine the least cost mix of investment and import activities as the U.S. steel industry faces successively tighter controls on coke oven emissions over the next 10 years. In response to Maximum Achievable Control Technology (MACT) standards proposed for 1995, U.S. steel producers would likely export their toxic pollution by importing 6 million tons of coke per year. About 4 million tons of coke oven capacity is retrofit and about 1 million tons of annual coke consumption is replaced by new iron technologies, such as Corex. The Lowest Achievable Emission Rate (LAER) standards proposed for 1998 roughly double the coke oven retirements estimated to occur under MACT. Coke imports also are substantial but are no higher than under MACT because the additional time allows the industry to invest in more coke-saving blast furnaces and in new less toxic coke-making technologies, such as the Jewell process. The LAER standards in conjunction with higher capital costs, however, force coke imports to more than 8 million tons per year and sharply increase imports of semi-finished steel. Such a situation could exacerbate existing disputes on international steel trade.The authors are associate professor, instructor, and graduate student, respectively. This research was performed under the sponsorship of the U.S. Department of Interior, Bureau of Mines Distinguished Young Scholar Award Administered by Oak Ridge Associated Universities for the Bureau of Mines. Naturally, the usual disclaimer applies.     

Harnessing rivers of wind: A technology and policy assessment of high altitude wind power in the U.S.

This paper provides an assessment of the commercialization potential for high altitude wind power (HWP). Several technological and policy barriers are identified that may affect the development and deployment of the technology in the US. Technical barriers include electrical transmission from high altitudes and the development of viable methods of energy storage to address intermittency. Non-technical barriers include the lack of a carbon price in the US, which provides an advantage to embedded technologies and widens the ‘valley of death.’ A variety of stakeholders are analyzed in order to understand potential impacts upon the development of HWP. Many fossil fuel producers and utility companies have been leveraging political authority to lobby against a carbon tax, which could be crucial for broad deployment of renewable energy technologies. The combination of technical and non-technical barriers indicates that commercialization of HWP is unlikely in the short term. Commercialization would require major policy shifts at the federal level and advances in S&T. Recommendations are provided to increase federal investment in applied research through additional funding for the Advanced Research Projects Agency—Energy (ARPA-E). It is also recommended that ARPA-E create a matching fund to assist in the commercialization of renewable energy technologies.     

Control of SO2 emissions from power plants: A case of induced technological innovation in the U.S.

This paper investigates how the details of government actions induce innovation—the overlapping activities of invention, adoption and diffusion, and learning by doing—in “environmental technology,” products and processes that either control pollutant emissions or prevent emissions altogether. It applies multiple quantitative and qualitative measures of innovation to a case subject to several “technology-push” and “demand-pull” instruments: sulfur dioxide control technology for power plants. The study employs analyses of public R&D funding, patents, expert interviews, learning curves, conference proceedings, and experience curves. Results indicate that: regulation and the anticipation of regulation stimulate invention; technology-push instruments appear to be less effective at prompting invention than demand-pull instruments; and regulatory stringency focuses inventive activity along certain technology pathways. Increased diffusion of the technology results in significant and predictable operating cost reductions in existing systems, as well as notable efficiency improvements and capital cost reductions in new systems. Government plays an important role in fostering knowledge transfer via technical conferences, as well as affecting the pattern of collaborative relationships within the technical research community via regulatory changes that affect the market for the technology. Finally, the case provides little evidence for the claim that cap-and-trade instruments induce innovation more effectively than other instruments.     

Manufacturing Wage Differentials and Employment in Some Scandinavian Countries, the U.S. and the U.K.: An Analysis of Variance Approach

This paper presents some empirical evidence on the factors determining changes in wage differentials between skilled and unskilled workers and in their employment. An ``analysis of variance' (ANOVA) model is estimated using UN data for five OECD countries in order to assess the relative importance of industry-specific, country-specific and international shocks (as well as interactions between industry and country effects). It is found that both international shocks and national policies affect wage differentials over the whole sample, whilst skill-biased technical change (SBTC) was a significant factor in the seventies. Employment responds mainly to international shocks, although national policies and SBTC were important determinants in the seventies and eighties respectively. Some of the results are found to be sensitive to the technology level of the industries considered.     

The Onset and Persistence of Secular Stagnation in the U.S. Economy: 1910-1990

Human relations involve a balance of substitution and complementarity. In economics, substitution is stressed and complementarity ignored. An economics of substitution will lead to competitive fragmentation. An economics of complementarity supports a case for cooperation and organizational health. If complementarity outweighs substitution, what are the implications? A shift to common needs enters new realms of social design. If wellbeing is social — if our benefits are aligned — the lack of conflict invites community. Here, competitive values cause strife and harm. In this paper, I depict the culture of complementarity in economics. I offer a key to achieving community, replacing substitution with complementarity in our basic assumptions. To move beyond a myopic culture resulting from competition, we need an economics of complementarity.     

Taxesversus tradable discharge permits: A review in the light of the U.S. and European experience

The U.S. and West European environmental protection programs have incorporated different economic instruments for controlling pollution. The U.S. has made extensive use of tradable permits of several forms but has never used direct pollution taxes. The countries of the European Community have long used an array of pollution taxes but have never used tradable permits. A review and critique of these experiences and an analysis of the attributes of taxes and tradable permits seeks identify the strengths and weaknesses of each instrument and to provide guidelines for the successful implementation of each system.     

U.S. foreign direct investment in Latin America and the Caribbean: a case of remittances and market size

This article investigates the effect of remittances on U.S. foreign direct investment (FDI) flows to Latin America and the Caribbean (LAC). It covers 26 countries for the period 1983–2010. The results show a positive and significant impact of remittances on U.S. FDI flows. However, this effect depends upon the level of gross domestic product (GDP) per capita of the host country. On average, the results show that increasing remittances by one standard deviation increases U.S. FDI flows by 0.44 percent a year. Also, host country demand positively affects U.S. FDI flows, which supports the market size hypothesis.     

Trade liberalization in the presence of domestic regulations: public policies applied to EU and U.S. wine markets

Wine is the highest valued product in the agricultural, food, and beverage sector traded between the United States and the European Union (EU) and wine faces a range of tariffs that are differentiated by country and product category. In addition, the production of wine grapes is heavily regulated within the EU and there are complicated state-level policies in the United States designed to limit the retail availability of wine. There continues to be economic and political pressure for reform to the tariffs between the United States and the EU, and to the domestic regulations in each region. We carefully develop parameters to characterize the effects of tariffs and domestic regulations that affect production and consumption of wine in the two regions. Simulation results show that reductions in tariffs would have relatively small effects in EU and U.S. wine markets, whereas reductions in EU domestic policies that affect wine grape production would have much larger trade and welfare implications.     

The rise of 3D printing and the role of user firms in the U.S.: evidence from patent data

3D printing has been heralded as one of the key technologies for the Fourth Industrial Revolution but empirical analysis is still sparse. This paper provides empirical evidence by proposing a robust approach to identifying 3D printing inventions. Findings indicate the inventive activity has been rapidly growing since 2011 and is mainly led by user firms. The development of 3D printing has taken place in a variety of industrial sectors, not merely a specific sector. This implies 3D printing can be considered as a general purpose technology. Interestingly, the diffusion patterns of 3D printing vary across technological categories. User firms are divided into incumbent and new firms to examine how patent activities vary by the type of firm and time. Incumbent firms exploit 3D printing earlier than new firms do but new firms tend to enter into 3D printing space more than incumbent firms after the technology becomes prevalent.     

Fiscal financing and the efficacy of fiscal policy in Korea: An empirical assessment with comparison to the U.S. evidence

This paper aims to assess the empirical implications of fiscal financing in Korea and study how they differ from those of the U.S. We estimate two versions of the dynamic stochastic general equilibrium (DSGE) model—a small open economy (SOE) model for Korea and its closed economy counterpart for the U.S.—in which the former nests the latter as a special case. The fiscal policy specification posits that government spending, lump-sum transfers, and distortionary taxation on labor income, capital income and consumption expenditures respond to the level of government debt and the state of economic activity. Analysis of the data from 2000 to 2015 shows that distortionary capital taxes play a critical role in stabilizing government debt in the U.S., whereas non-distorting fiscal instruments are the primary means of fiscal adjustment in Korea. Regarding the magnitude of debt-financed fiscal stimuli, the substantial trade openness of Korea is significant in that it produces relatively smaller government spending and transfer multipliers compared to the U.S.     

Inequality of Income and Consumption in the U.S.: Measuring the Trends in Inequality from 1984 to 2011 for the Same Individuals

This paper examines the distribution of income and consumption in the U.S. using one dataset that obtains measures of both income and consumption from the same set of individuals. We develop a set of inequality measures that show the increase in inequality during the past 27 years using the 1984–2011 Consumer Expenditure Survey. We find that the trends in income and consumption inequality are similar between 1984 and 2006, and diverge during and after the Great Recession. For the entire 27‐year period we find that consumption inequality increases almost as much as does income inequality.