Browsing by Author "Newell, RG"
Now showing 1 - 20 of 37
Results Per Page
Sort Options
Item Open Access A discounting rule for the social cost of carbon(Journal of the Association of Environmental and Resource Economists, 2022-09-01) Newell, RG; Pizer, WA; Prest, BCWe develop a discounting rule for estimating the social cost of carbon (SCC) given uncertain economic growth. Diminishing marginal utility of income implies a relationship between the discount rate term structure and economic growth uncertainty. In the classic Ramsey framework, this relationship is governed by parameters reflecting pure time preference and the elasticity of the marginal utility of consumption, yet disagreement remains about the values of these parameters. We calibrate these parameters to match empirical evidence on both the future interest rate term structure and economic growth uncertainty, while also maintaining consistency with discount rates used for shorter-term benefit-cost analysis. Such an integrated approach is crucial amid growth uncertainty, where growth is also a key determinant of climate damages. This results in an empirically driven, stochastic discounting rule to be used in estimating the SCC that also accounts for the correlation between climate damage estimates and discount rates.Item Open Access A tale of two market failures: Technology and environmental policy(Ecological Economics, 2005-08-01) Jaffe, AB; Newell, RG; Stavins, RNMarket failures associated with environmental pollution interact with market failures associated with the innovation and diffusion of new technologies. These combined market failures provide a strong rationale for a portfolio of public policies that foster emissions reduction as well as the development and adoption of environmentally beneficial technology. Both theory and empirical evidence suggest that the rate and direction of technological advance is influenced by market and regulatory incentives, and can be cost-effectively harnessed through the use of economic-incentive based policy. In the presence of weak or nonexistent environmental policies, investments in the development and diffusion of new environmentally beneficial technologies are very likely to be less than would be socially desirable. Positive knowledge and adoption spillovers and information problems can further weaken innovation incentives. While environmental technology policy is fraught with difficulties, a long-term view suggests a strategy of experimenting with policy approaches and systematically evaluating their success. © 2005 Elsevier B.V. All rights reserved.Item Open Access Asset pricing in created markets(American Journal of Agricultural Economics, 2007-05-01) Newell, RG; Papps, KL; Sanchirico, JNWe investigate the applicability of the present-value asset pricing model to fishing quota markets by applying instrumental variable panel data estimation techniques to 15 years of market transactions from New Zealand's individual transferable quota (ITQ) market. In addition to the influence of current fishing rents, we explore the effect of market interest rates, risk, and expected changes in future rents on quota asset prices. The results indicate that quota asset prices are positively related to declines in interest rates, lower levels of risk, expected increases in future fish prices, and expected cost reductions from rationalization under the quota system. © 2007 American Agricultural Economics Association.Item Open Access Automatic detection of solar photovoltaic arrays in high resolution aerial imagery(Applied Energy, 2016-12) Malof, JM; Bradbury, K; Collins, LM; Newell, RG© 2016 Elsevier Ltd The quantity of small scale solar photovoltaic (PV) arrays in the United States has grown rapidly in recent years. As a result, there is substantial interest in high quality information about the quantity, power capacity, and energy generated by such arrays, including at a high spatial resolution (e.g., cities, counties, or other small regions). Unfortunately, existing methods for obtaining this information, such as surveys and utility interconnection filings, are limited in their completeness and spatial resolution. This work presents a computer algorithm that automatically detects PV panels using very high resolution color satellite imagery. The approach potentially offers a fast, scalable method for obtaining accurate information on PV array location and size, and at much higher spatial resolutions than are currently available. The method is validated using a very large (135 km 2 ) collection of publicly available (Bradbury et al., 2016) aerial imagery, with over 2700 human annotated PV array locations. The results demonstrate the algorithm is highly effective on a per-pixel basis. It is likewise effective at object-level PV array detection, but with significant potential for improvement in estimating the precise shape/size of the PV arrays. These results are the first of their kind for the detection of solar PV in aerial imagery, demonstrating the feasibility of the approach and establishing a baseline performance for future investigations.Item Open Access Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade(2008-07-15) Murray, BC; Newell, RG; Pizer, WAItem Metadata only Carbon Markets 15 Years after Kyoto: Lessons Learned, New Challenges(JOURNAL OF ECONOMIC PERSPECTIVES, 2013) Newell, RG; Pizer, WA; Raimi, DItem Open Access Carbon markets: Past, present, and future(Annual Review of Resource Economics, 2014-01-01) Newell, RG; Pizer, WA; Raimi, D© 2014 by Annual Reviews.Carbon markets are substantial and expanding. There are many lessons from experience over the past 9 years: fewer free allowances, careful moderation of low and high prices, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This architecture sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policy makers must confront how to measure both the comparability of efforts among markets and the comparability between markets and a variety of other policy approaches.Item Open Access Carbon mitigation costs for the commercial building sector: Discrete-continuous choice analysis of multifuel energy demand(Resource and Energy Economics, 2008-12-01) Newell, RG; Pizer, WAWe estimate a carbon mitigation cost curve for the U.S. commercial sector based on econometric estimation of the responsiveness of fuel demand and equipment choices to energy price changes. The model econometrically estimates fuel demand conditional on fuel choice, which is characterized by a multinomial logit model. Separate estimation of end uses (e.g., heating, cooking) using the U.S. Commercial Buildings Energy Consumption Survey allows for exceptionally detailed estimation of price responsiveness disaggregated by end use and fuel type. We then construct aggregate long-run elasticities, by fuel type, through a series of simulations; own-price elasticities range from -0.9 for district heat services to -2.9 for fuel oil. The simulations form the basis of a marginal cost curve for carbon mitigation, which suggests that a price of $20 per ton of carbon would result in an 8% reduction in commercial carbon emissions, and a price of $100 per ton would result in a 28% reduction. © 2008 Elsevier B.V. All rights reserved.Item Open Access Chinese residential electricity consumption: Estimation and forecast using micro-data(Resource and Energy Economics, 2017-11) Cao, J; Ho, MS; Li, Y; Newell, RG; Pizer, WA© 2017 Elsevier B.V. Based on econometric estimation using data from the Chinese Urban Household Survey, we develop a preferred forecast range of 85-143 percent growth in residential per capita electricity demand over 2009-2025. Our analysis suggests that per capita income growth drives a 43% increase, with the remainder due to an unexplained time trend. Roughly one-third of the income-driven demand comes from increases in the stock of specific major appliances, particularly AC units. The other two-thirds comes from non-specific sources of income-driven growth and is based on an estimated income elasticity that falls from 0.28 to 0.11 as income rises. While the stock of refrigerators is not projected to increase, we find that they contribute nearly 20 percent of household electricity demand. Alternative plausible time trend assumptions are responsible for the wide range of 85-143 percent. Meanwhile we estimate a price elasticity of demand of -0.7. These estimates point to carbon pricing and appliance efficiency policies that could substantially reduce demand.Item Open Access Climate change and forest sinks: Factors affecting the costs of carbon sequestration(Journal of Environmental Economics and Management, 2000-11-30) Newell, RG; Stavins, RNThe possibility of encouraging the growth of forests as a means of sequestering carbon dioxide has received considerable attention, partly because of evidence that this can be a relatively inexpensive means of combating climate change. But how sensitive are such estimates to specific conditions? We examine the sensitivity of carbon sequestration costs to changes in critical factors, including the nature of management and deforestation regimes, silvicultural species, relative prices, and discount rates. (C) 2000 Academic Press.Item Open Access Cost Heterogeneity and the Potential Savings from Market-Based Policies(Journal of Regulatory Economics, 2003-01-01) Newell, RG; Stavins, RNPolicy makers and analysts are often faced with situations where it is unclear whether market-based instruments hold real promise of reducing costs, relative to conventional uniform standards. We develop analytic expressions that can be employed with modest amounts of information to estimate the potential cost savings associated with market-based policies, with an application to the environmental policy realm. These simple formulae can identify instruments that merit more detailed investigation. We illustrate the use of these results with an application to nitrogen oxides control by electric utilities in the United States.Item Open Access Cost-effectiveness of electricity energy efficiency programs(Energy Journal, 2012-08-20) Arimura, TH; Li, S; Newell, RG; Palmer, KWe analyze the cost-effectiveness of electric utility ratepayer-funded programs to promote demand-side management (DSM) and energy efficiency (EE) investments. We specify a model that relates electricity demand to previous EE DSM spending, energy prices, income, weather, and other demand factors. In contrast to previous studies, we allow EE DSM spending to have a potential longterm demand effect and explicitly address possible endogeneity in spending. We find that current period EE DSM expenditures reduce electricity demand and that this effect persists for a number of years. Our findings suggest that ratepayer funded DSM expenditures between 1992 and 2006 produced a central estimate of 0.9 percent savings in electricity consumption over that time period and a 1.8 percent savings over all years. These energy savings came at an expected average cost to utilities of roughly 5 cents per kWh saved when future savings are discounted at a 5 percent rate. Copyright © 2012 by the IAEE. All rights reserved.Item Open Access Deconstructing the energy efficiency gap: Conceptual frameworks and evidence(American Economic Review, 2015-01-01) Gerarden, T; Newell, RG; Stavins, RNItem Open Access Designing Climate Mitigation Policy(2009-06) Aldy, JE; Krupnick, AJ; Newell, RG; Parry, IWH; Pizer, WAItem Open Access Discounting the distant future: How much do uncertain rates increase valuations?(Journal of Environmental Economics and Management, 2003-07-01) Newell, RG; Pizer, WAWe demonstrate that when the future path of the discount rate is uncertain and highly correlated, the distant future should be discounted at significantly lower rates than suggested by the current rate. We then use two centuries of US interest rate data to quantify this effect. Using both random walk and mean-reverting models, we compute the "certainty-equivalent rate" that summarizes the effect of uncertainty and measures the appropriate forward rate of discount in the future. Under the random walk model we find that the certainty-equivalent rate falls continuously from 4% to 2% after 100 years, 1% after 200 years, and 0.5% after 300 years. At horizons of 400 years, the discounted value increases by a factor of over 40,000 relative to conventional discounting. Applied to climate change mitigation, we find that incorporating discount rate uncertainty almost doubles the expected present value of mitigation benefits. © 2003 Elsevier Science (USA). All rights reserved.Item Open Access Energy, the environment, and technological change(Handbook of the Economics of Innovation, 2010-12-01) Popp, D; Newell, RG; Jaffe, ABWithin the field of environmental economics, the role of technological change has received much attention. The long-term nature of many environmental problems, such as climate change, makes understanding the evolution of technology an important part of projecting future impacts. Moreover, in many cases, environmental problems cannot be addressed, or can only be addressed at great cost, using existing technologies. Providing incentives to develop new environmentally friendly technologies then becomes a focus of environmental policy. This chapter reviews the literature on technological change and the environment. Our goals are to introduce technological change economists to how the lessons of the economics of technological change have been applied in the field of environmental economics, and suggest ways in which scholars of technological change could contribute to the field of environmental economics. © 2010 Elsevier B.V.Item Open Access Environmental and technology policies for climate mitigation(Journal of Environmental Economics and Management, 2008-03-01) Fischer, C; Newell, RGWe assess different policies for reducing carbon dioxide emissions and promoting innovation and diffusion of renewable energy. We evaluate the relative performance of policies according to incentives provided for emissions reduction, efficiency, and other outcomes. We also assess how the nature of technological progress through learning and research and development (R&D), and the degree of knowledge spillovers, affects the desirability of different policies. Due to knowledge spillovers, optimal policy involves a portfolio of different instruments targeted at emissions, learning, and R&D. Although the relative cost of individual policies in achieving reductions depends on parameter values and the emissions target, in a numerical application to the U.S. electricity sector, the ranking is roughly as follows: (1) emissions price, (2) emissions performance standard, (3) fossil power tax, (4) renewables share requirement, (5) renewables subsidy, and (6) R&D subsidy. Nonetheless, an optimal portfolio of policies achieves emissions reductions at a significantly lower cost than any single policy. © 2007 Elsevier Inc. All rights reserved.Item Open Access Environmental policy and technological change(Environmental and Resource Economics, 2002-06-26) Jaffe, AB; Newell, RG; Stavins, RNThe relationship between technological change and environmental policy has received increasing attention from scholars and policy makers alike over the past ten years. This is partly because the environmental impacts of social activity are significantly affected by technological change, and partly because environmental policy interventions themselves create new constraints and incentives that affect the process of technological developments. Our central purpose in this article is to provide environmental economists with a useful guide to research on technological change and the analytical tools that can be used to explore further the interaction between technology and the environment. In Part 1 of the article, we provide an overview of analytical frameworks for investigating the economics of technological change, highlighting key issues for the researcher. In Part 2, we turn our attention to theoretical analysis of the effects of environmental policy on technological change, and in Part 3, we focus on issues related to the empirical analysis of technology innovation and diffusion. Finally, we conclude in Part 4 with some additional suggestions for research.Item Open Access Fishing quota markets(Journal of Environmental Economics and Management, 2005-05-01) Newell, RG; Sanchirico, JN; Kerr, SIn 1986, New Zealand responded to the open-access problem by establishing the world's largest individual transferable quota (ITQ) system. Using a 15-year panel dataset from New Zealand that covers 33 species and more than 150 markets for fishing quotas, we assess trends in market activity, price dispersion, and the fundamentals determining quota prices. We find that market activity is sufficiently high in the economically important markets and that price dispersion has decreased. We also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices, ecological variability, and market interest rates. Controlling for these factors, our results show a greater increase in quota prices for fish stocks that faced significant reductions, consistent with increased profitability due to rationalization. Overall, this suggests that these markets are operating reasonably well, implying that ITQs can be effective instruments for efficient fisheries management. © 2004 Elsevier Inc. All rights reserved.Item Open Access Indexed RegulationNewell, RG; Pizer, WASeminal work by Weitzman (1974) revealed prices are preferred to quantities when marginal benefits are relatively flat compared to marginal costs. We extend this comparison to indexed policies, where quantities are proportional to an index, such as output. We find that policy preferences hinge on additional parameters describing the first and second moments of the index and the ex post optimal quantity level. When the ratio of these variables' coefficients of variation divided by their correlation is less than approximately two, indexed quantities are preferred to fixed quantities. A slightly more complex condition determines when indexed quantities are preferred to prices. Applied to climate change policy, we find that the range of variation and correlation in country-level carbon dioxide emissions and GDP suggests the ranking of an emissions intensity cap (indexed to GDP) compared to a fixed emission cap is not uniform across countries; neither policy clearly dominates the other.