Stephen P. Holland

What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's Nox Trading Program

A perceived advantage of cap-and-trade programs over more prescriptive environmental regulation is that enhanced compliance flexibility and cost effectiveness can make more stringent emissions reductions politically feasible. However, increased compliance flexibility can also result in an inequitable distribution of pollution. We investigate these issues in the context of Southern Californias RECLAIM program. We match facilities in RECLAIM with similar California facilities also located in non-attainment areas. Our results indicate that emissions fell approximately 24 percent, on average, at RECLAIM facilities relative to our counterfactual. Furthermore, we find that observed changes in emissions do not vary significantly with neighborhood demographic characteristics.

Extraction capacity and the optimal order of extraction

The least-cost-first extraction rule for deposits with different extraction costs previously has been shown to be invalid in general equilibrium. This paper demonstrates that this rule also does not hold in partial equilibrium when extraction capacity is limited. Necessary and sufficient conditions for several surprising extraction orders are presented. If extraction from a high-cost resource is constrained, it may be optimal to begin extraction from a high-cost deposit (or backstop) strictly before extracting from a lower-cost deposit. If extraction from a low-cost resource is limited, it may be optimal to exhaust a high-cost deposit strictly before the low-cost deposit is exhausted or to abandon extraction temporarily from a high-cost deposit and then to exhaust it later. The analysis demonstrates how extraction constraints affect the order of extraction and shows that certain cost reversals are caused by limited extraction capacity rather than by the general equilibrium definition of extraction costs.

Cadillac Desert Revisited: Property Rights, Public Policy, and Water Resource Depletion

Imperfect property rights and government subsidies are pervasive sources of inefficiency in water resource development in the American West. To alleviate central Arizonas dependence on groundwater, the federal government subsidized construction of the Central Arizona Project to import up to 1.287 million acre-feet of water per year from the Colorado River. In return for the subsidy, Arizona groundwater law was reformed to eliminate the common-property pumping of groundwater and to ban groundwater mining after the year 2025. We build a model of Arizonas water problem to quantify the welfare effects of alternative CAP construction dates and Arizona groundwater laws. We reach two general conclusions. First, properly timed, CAP would have increased social surplus by a modest

When to Pollute, When to Abate? Intertemporal Permit Use in the Los Angeles Nox Market

69 million compared to the situation where central Arizona had no access to Colorado River water and extracted its groundwater eficiently. However, because of the federal subsidies, Arizona successfully pressed for early construction of CAP. CAP was thus completed 71 years too early, in 1987, at a deadweight loss of

Damages and Expected Deaths Due to Excess NOx Emissions from 2009 to 2015 Volkswagen Diesel Vehicles

1.323 billion relative to optimal timing. Ironically, construction in 1987 yielded lower surplus than never constructing CAP. Second, the explicit political exchange of state groundwater reform for federal subsidies and sub-optimal timing introduced a greater loss (

Set-up costs and the existence of competitive equilibrium when extraction capacity is limited

1.323 billion) than it corrected (

Economics of Peak Oil

0.988 billion). Thus, this political exchange---which was initiated as a new federal policy---was worse than doing nothing at all.

Greenhouse Gas Reductions Under Low Carbon Fuel Standards

We study intertemporal trading of nitrogen oxides permits in Southern California’s RECLAIM program. We model RECLAIM’s distinct intertemporal features: two overlapping permit cycles and two overlapping compliance cycles. In the model, competitive equilibrium is cost-effective, and firms have an incentive to delay abatement. From 1994 to 2006, RECLAIM facilities traded intertemporally by using permits of the opposite cycle. We test two theoretical propositions—delayed abatement and trading across cycles—with a difference-in-differences estimator and show weak, though inconclusive, support of the theory. The theoretical and empirical results are relevant to cap-and-trade programs with potential for overlapping permit cycles. (JEL Q58)

Is Real-Time Pricing Green?: The Environmental Impacts of Electricity Demand Variance

We estimate the damages and expected deaths in the United States due to excess emissions of NOx from 2009 to 2015 Volkswagen diesel vehicles. Using data on vehicle registrations and a model of pollution transport and valuation, we estimate excess damages of

The Short-Run Effects of Time-Varying Prices in Competitive Electricity Markets

430 million and 46 excess expected deaths. Accounting for uncertainty about emissions gives a range for damages from