Tsvetan Tsvetanov

The Economic Value of Delaying Adaptation to Sea-Level Rise: An Application to Coastal Properties in Connecticut

The magnitude and frequency of coastal storms are expected to increase with rising global sea levels, which necessitates evaluating coastal flood adaptation measures. This study examines an important issue in the context of coastal flood protection, namely, the decision when to adopt protection measures. For any given coastal region, our benefit-cost framework allows us to determine the optimal timing of initiating protection that maximizes expected net benefits. We present an application of this framework to a coastal area in Connecticut. Our results suggest that the optimal timing of adopting protection may vary across different census blocks within the study area. We find that using a relatively low discount rate in the benefit-cost analysis implies greater heterogeneity in the timing decisions and earlier overall adoption, whereas, with higher discount rates, the timing decisions are reduced to a choice between early protection and no protection at all. If possible negative environmental and aesthetic impacts of sea barriers are taken into account, delaying protection would become more desirable, with the extent of delay being sensitive to the relative magnitude of one-time costs (e.g., loss of ocean view and recreational opportunities) vs. continuous costs (e.g., shoreline erosion and loss of wetlands).

The Welfare Effects of Energy Efficiency Standards When Choice Sets Matter

Existing studies point out various factors that might contribute to an “energy efficiency gap” but do not consider the potential effect of choice sets on behavior. In an earlier paper, we developed a theoretical model of the purchase of energy-using durables in which the choice set matters if consumers face price-driven temptation and self-control costs. In this paper, we use refrigerator market data to illustrate that, under such a preference structure, energy efficiency standards can have larger overall welfare benefits than previously recognized, suggesting the importance of considering choice sets in welfare analyses of standards.

Hurdles and Steps: Estimating Demand for Solar Photovoltaics

This paper estimates demand for residential solar photovoltaic (PV) systems using a new approach to address three empirical challenges that often arise with count data: excess zeros, unobserved heterogeneity, and endogeneity of price. Our results imply a price elasticity of demand for solar PV systems of −0.65. Counterfactual policy simulations indicate that reducing state financial incentives in half would have led to 9% fewer new installations in Connecticut in 2014. Calculations suggest a subsidy program cost of

Nudging Energy Efficiency Audits: Evidence from A Field Experiment

364/tCO2 assuming solar displaces natural gas. Our Poisson hurdle approach holds promise for modeling the demand for many new technologies.

CLIMATE CHANGE AND LAND USE IN SOUTHEASTERN U.S.: DID THE “DUMB FARMER” GET IT WRONG?

This paper uses a randomized field experiment to test how information provision leveraging social norms, salience, and a personal touch can serve as a nudge to influence the uptake of residential energy audits. Our results show that a low-cost carefully-crafted note-card can increase the probability of a household to follow through with an already scheduled audit by 1.1 percentage points on a given day. This implies a boost of the audit uptake rate for our sample by 20 percentage points. The effect is very similar across individuals with different political views, but households in rural areas display a substantially greater effect than those in urban areas. Our findings have important managerial and policy implications, as they suggest a cost-effective nudge for increasing energy audit uptake and voluntary energy efficiency adoption.

Re-evaluating the role of energy efficiency standards: A behavioral economics approach

The assumption of a fixed amount of land remaining in agriculture regardless of changing climate conditions — one of the features of the “dumb farmer scenario” — is likely to bias the estimated social welfare impacts of climate change. In order to quantify this bias, we employ a demand-supply framework to determine both the amount of land allocated to agricultural and nonagricultural uses as well as the social welfare associated with this allocation choice when no market distortions exist. We present an application of our model to the Southeastern United States and simulate the effects of changing climate conditions on land allocation in the region between 2007 and 2040. We find a very modest welfare bias when maintaining current farmland preservation policies and a more substantial bias if we assume that additional land policies are instituted which have spillover welfare effects in other land-using sectors.