Category Archives: US environmental policy

Becker and Posner on gasoline taxes in the US

Becker and Posner offer a stimulating discussion on gasoline taxes and comment the article by Harrington, Parry, and Walls, “Automobile Externalities and Policies” published in the Journal of Economic Literature, 2007, pp 374-400 (abstract, an earlier version as a RFF Discussion Paper can be downloaded here).

Advertisements

Availability Heuristics and Anecdote-driven Environmental Legislation

In the article A Behavioural Approach to Economics and Law, Jolls, Sunstein and Thaler (1988, 1518-1521) discuss the role of availability heuristics in leading to environmental over-regulation.

Availability heuristics indicates the systematic overestimation of the likelihood of an event when instances of that event materializing come easily to mind. Two main factors affect how easily an event comes to mind: its observed frequency and its salience. Salience will be greater the more recently the event materialized and the more intense was its media coverage.

Joss et al. (1998) argue that when the probability of an environmental harm is judged inaccurately due to the availability heuristics, legislation will tend to become anecdote-driven and may lead to over-regulation of more easily available environmental hazards while others less available may end up being under-regulated.

As an example of anecdote-driven regulation, the authors take the Superfund legislation. Superfund legislation, they argue, is better explained by the public pressure determined by the availability heuristics rather than than by the conventional economic theory of interest groups. The issue of abandoned hazardous waste dumps had become highly salient following the active media coverage in 1978-1980 of the Love Canal case (a case of leaks of chemical waste into the Canal between 1943 and 1952). High salience led to an overestimation by the public of the environmental hazard posed by abandoned hazardous waste dumps and led to intense public concern and pressure for legislative intervention.

Reference

Jolls, Christine, Sunstein, Cass R., and Thaler Richard (1998) A Behavioural Approach to Economics and Law, Stanford Law Review 50: 1471- 1550.

Available from here.

Bad ethanol

Shifting from gasoline to E85 (85% ethanol fuel, 15% gasoline) may be bad both for your health and air quality.
In the article Effects of Ethanol (E85) versus Gasoline Vehicles on Cancer and Mortality in the United States just published on the Journal Environmental Science and Technology Mark Jacobson reports discusses the potential cancer risk and ozone-related health consequences of a large-scale conversion from gasoline to ethanol.
He finds that

E85 (85% ethanol fuel, 15% gasoline) may increase ozone-related mortality, hospitalization, and asthma by about 9% in Los Angeles and 4% in the United States as a whole relative to 100% gasoline. Ozone increases in Los Angeles and the northeast were partially offset by decreases in the southeast. E85 also increased peroxyacetyl nitrate (PAN) in the U.S. but was estimated to cause little change in cancer risk. Due to its ozone effects, future E85 may be a greater overall public health risk than gasoline. However, because of the uncertainty in future emission regulations, it can be concluded with confidence only that E85 is unlikely to improve air quality over future gasoline vehicles. Unburned ethanol emissions from E85 may result in a global-scale source of acetaldehyde larger than that of direct emission.

Science Friday 20 April 2007 features an interview with Jakobson.

On ethanol see also Aplia econ-blog post on the impact of the increase of US corn based ethanol production on tortillas’ prices in Mexico.

Supreme Court Decision in Massachusetts et al vs. EPA

On April 2, 2007 the Supreme Court released its ruling in the case of the state of Massachusetts vs. the Environmental Protection Agency. Massachusetts and eleven other states, along with several local governments and non-governmental organizations (petitioners), sued the EPA for not regulating the emissions of four greenhouse gases, including carbon dioxide (CO2), from the transportation sector. The petitioners claimed that human-influenced global climate change was causing adverse effects, such as sea-level rise, to the state of Massachusetts. In a 5-4 decision, the court ruled in favor of Massachusetts et al, finding that EPA has the authority to regulate CO2 and other greenhouse gases. The decision was written by Justice Stevens and was signed by Justices Kennedy, Souter, Bader Ginsburg, and Breyer. Chief Justice Roberts and Justices Alito, Scalia, and Thomas dissented. ” (Read more from Pew Center Global Climate Change).
Listen to Science Friday podcast on the ruling.