Lucas W. Davis

The Effect of Driving Restrictions on Air Quality in Mexico City

In 1989, the government of Mexico City introduced a program, Hoy No Circula, that bans most drivers from using their vehicles one weekday per week on the basis of the last digit of the vehicle’s license plate. This article measures the effect of the driving restrictions on air quality using high‐frequency measures from monitoring stations. Across pollutants and specifications there is no evidence that the restrictions have improved air quality. Evidence from additional sources indicates that the restrictions led to an increase in the total number of vehicles in circulation as well as a change in composition toward high‐emissions vehicles.

The Effect of Health Risk on Housing Values: Evidence from a Cancer Cluster

This paper measures the impact of an outbreak of pediatric leukemia on local housing values. A model of location choice is used to describe conditions under which the gradient of the hedonic price function with respect to pediatric leukemia risk is equal to household marginal willingness to pay to avoid risk. This equalizing differential is estimated using property-level sales records from a county in Nevada where residents recently experienced a severe increase in pediatric leukemia. Housing prices are compared before and after the increase with a nearby county acting as a control group. The variation in health risk over time makes it possible to control for unobserved differences across locations. In addition, because many houses were sold repeatedly during the sample period it is possible to control for property-specific heterogeneity. The results indicate that housing values decreased 15.6 percent during the period of maximum risk. Results are similar for different measures of risk and across houses of different sizes. Using lifetime estimates of risk derived from a Bayesian learning process the results imply that the statistical value of pediatric leukemia is

The Effect of Power Plants on Local Housing Values and Rents

5.6 million. These estimates provide some of the first market-based estimates of the value of health for children.

Contribution of air conditioning adoption to future energy use under global warming

This paper uses restricted census microdata to examine housing values and rents for neighborhoods in the United States where power plants were opened during the 1990s. Compared to neighborhoods with similar housing and demographic characteristics, neighborhoods within 2 miles of plants experienced 3%–7% decreases in housing values and rents, with some evidence of larger decreases within 1 mile and for large-capacity plants. In addition, there is evidence of taste-based sorting, with neighborhoods near plants associated with modest but statistically significant decreases in mean household income, educational attainment, and the proportion owner-occupied.

Do Housing Prices Reflect Environmental Health Risks? Evidence from More than 1600 Toxic Plant Openings and Closings

Significance The use of air conditioning is poised to increase dramatically over the next several decades as global temperatures go up and incomes rise around the world. In this paper, we use high-quality microdata from Mexico to characterize empirically the relationship between temperature, income, and air conditioning. We describe both how electricity consumption increases with temperature given current levels of air conditioning, and how climate and income drive air conditioning adoption decisions. We then combine these estimates with predicted end-of-century temperature changes to forecast future energy consumption. Overall, our results point to air conditioning impacts being considerably larger than previously believed. As household incomes rise around the world and global temperatures go up, the use of air conditioning is poised to increase dramatically. Air conditioning growth is expected to be particularly strong in middle-income countries, but direct empirical evidence is scarce. In this paper we use high-quality microdata from Mexico to describe the relationship between temperature, income, and air conditioning. We describe both how electricity consumption increases with temperature given current levels of air conditioning, and how climate and income drive air conditioning adoption decisions. We then combine these estimates with predicted end-of-century temperature changes to forecast future energy consumption. Under conservative assumptions about household income, our model predicts near-universal saturation of air conditioning in all warm areas within just a few decades. Temperature increases contribute to this surge in adoption, but income growth by itself explains most of the increase. What this will mean for electricity consumption and carbon dioxide emissions depends on the pace of technological change. Continued advances in energy efficiency or the development of new cooling technologies could reduce the energy consumption impacts. Similarly, growth in low-carbon electricity generation could mitigate the increases in carbon dioxide emissions. However, the paper illustrates the enormous potential impacts in this sector, highlighting the importance of future research on adaptation and underscoring the urgent need for global action on climate change.

An economic perspective on the EPA's Clean Power Plan

A ubiquitous and largely unquestioned assumption in studies of housing markets is that there is perfect information about local amenities. This paper measures the housing market and health impacts of 1,600 openings and closings of industrial plants that emit toxic pollutants. We find that housing values within one mile decrease by 1.5 percent when plants open, and increase by 1.5 percent when plants close. This implies an aggregate loss in housing values per plant of about

The Effect of Power Plants on Local Housing Values and Rents: Evidence from Restricted Census Microdata

1.5 million. While the housing value impacts are concentrated within 1/2 mile, we find statistically significant infant health impacts up to one mile away.

Saturday Driving Restrictions Fail to Improve Air Quality in Mexico City

Cross-state coordination key to cost-effective CO2 reductions In June, the Obama Administration unveiled its proposal for a Clean Power Plan, which it estimates would reduce carbon dioxide (CO2) emissions from existing U.S. power plants 30% below 2005 levels by 2030 (see the chart). Power plant emissions have declined substantially since 2005, so the plan is seeking reductions of about 18% from current levels. Electricity generation accounts for about 40% of U.S. CO2 emissions.

The Distributional Effects of US Clean Energy Tax Credits

Current trends in electricity consumption imply that hundreds of new fossil-fuel power plants will be built in the United States over the next several decades. Power plant siting has become increasingly contentious, in part because power plants are a source of numerous negative local externalities including elevated levels of air pollution, haze, noise and traffic. Policymakers attempt to take these local disamenities into account when siting facilities, but little reliable evidence is available about their quantitative importance. This paper examines neighborhoods in the United States where power plants were opened during the 1990s using household-level data from a restricted version of the U.S. decennial census. Compared to neighborhoods farther away, housing values and rents decreased by 3-5% between 1990 and 2000 in neighborhoods near sites. Estimates of household marginal willingness-to-pay to avoid power plants are reported separately for natural gas and other types of plants, large plants and small plants, base load plants and peaker plants, and upwind and downwind households.

An Economic Perspective on Mexico's Nascent Deregulation of Retail Petroleum Markets

Policymakers around the world are turning to license-plate based driving restrictions in an effort to address urban air pollution. The format differs across cities, but most programs restrict driving once or twice a week during weekdays. This paper focuses on Mexico City, home to one of the oldest and best-known driving restriction policies. For almost two decades Mexico City’s driving restrictions applied during weekdays only. This changed recently, however, when the program was expanded to include Saturdays. This paper uses hourly data from pollution monitoring stations to measure the effect of the Saturday expansion on air quality. Overall, there is little evidence that the program expansion improved air quality. Across eight major pollutants, the program expansion had virtually no discernible effect on pollution levels. These disappointing results stand in sharp contrast to estimates made before the expansion which predicted a 15%+ decrease in vehicle emissions on Saturdays. To understand why the program has been less effective than expected, the paper then turns to evidence from subway, bus, and light rail ridership, finding no evidence that the expansion was successful in getting drivers to switch to lower-emitting forms of transportation.