Unintended Consequences from Nested State & Federal Regulations: The Case of the Pavley Greenhouse-Gas-per-Mile Limits / Lawrence H. Goulder, Mark R. Jacobsen, Arthur A. van Benthem.

Format:

Book

Author/Creator:

Goulder, Lawrence H.

Contributor:

National Bureau of Economic Research.

Jacobsen, Mark R.

van Benthem, Arthur A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15337.

NBER working paper series no. w15337

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Unintended Consequences from Nested State & Federal Regulations

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2009.

Summary:

Fourteen U.S. states recently pledged to adopt limits on greenhouse gases (GHGs) per mile of light-duty automobiles. Previous analyses predicted this action would significantly reduce emissions from new cars in these states, but ignored possible offsetting emissions increases from policy-induced adjustments in new car markets in other (non-adopting) states and in the used car market.

Such offsets (or "leakage") reflect the fact that the state-level effort interacts with the national corporate average fuel economy (CAFE) standard: the state-level initiative effectively loosens the national standard and gives automakers scope to profitably increase sales of high-emissions automobiles in non-adopting states. In addition, although the state-level effort may well spur the invention of fuel- and emissions-saving technologies, interactions with the federal CAFE standard limit the nationwide emissions reductions from such advances. Using a multi-period numerical simulation model, we find that 70-80 percent of the emissions reductions from new cars in adopting states are offset by emissions leakage.

This research examines a particular instance of a general issue of policy significance - namely, problems from "nested" federal and state environmental regulations. Such nesting implies that similar leakage difficulties are likely to arise under several newly proposed state-level initiatives.

Notes:

Print version record

September 2009.