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Aldy, Joseph

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Author's Publications: search.filters.isAuthorOfPublication.5908def3-3aa1-4982-a7cc-1ac7301e7dfd

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Now showing 1 - 10 of 26
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    Learning How to Build Back Better through Clean Energy Policy Evaluation
    (Harvard Kennedy School, 2022-08) Aldy, Joseph
    The Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act authorized and appropriated unprecedented spending and tax expenditures to decarbonize the American economy. In the spirit of “build back better,” this paper examines how integrating evaluation in the design and implementation of these new clean energy policies can facilitate the learning necessary for policymakers to make policy better over time. It draws lessons from two case studies: (1) on institutionalizing evaluation based on the experience with regulatory review, and (2) on conducting evaluation based on the research literature assessing the 2009 Recovery Act’s clean energy programs. The paper identifies in recent legislation the programs and their characteristics amenable to various evaluation methodologies. The paper closes with recommendations for a clean energy program evaluation framework that would enable implementation of climate-oriented learning agendas under the Evidence-Based Policymaking Act.
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    How Is the US Pricing Carbon? How Could We Price Carbon?
    (Harvard Kennedy School, 2022-10) Aldy, Joseph; Burtraw, Dallas; Fischer, Carolyn; Fowlie, Meredith; Williams, Roberton C. III; Cropper, Maureen L.
    Economists have for decades recommended that carbon dioxide and other greenhouse gases be taxed—or otherwise priced—to provide incentives for their reduction. The United States does not have a federal carbon tax; however, many state and federal programs to reduce carbon emissions effectively price carbon—for example, through cap-and-trade systems or regulations. There are also programs that subsidize reductions in carbon emissions. At the 2022 meetings of the American Economic Association, the Society for Benefit-Cost Analysis brought together five well-known economists—Joe Aldy, Dallas Burtraw, Carolyn Fischer, Meredith Fowlie, and Rob Williams—to discuss how the United States does, in fact, price carbon and how it could price carbon. Maureen Cropper chaired the panel. This paper summarizes their remarks.
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    The Environmental Justice Dimensions of Climate Change
    (Mary Ann Liebert, 2011) Miranda, Marie Lynn; Hastings, Douglas Andrew; Aldy, Joseph; Schlesinger, William H.
    Nations around the world are considering strategies to mitigate the severe impacts of climate change predicted to occur in the twenty-first century. Many countries, however, lack the wealth, technology, and government institutions to effectively cope with climate change. This study investigates the varying degrees to which developing and developed nations will be exposed to changes in three key variables: temperature, precipitation, and runoff. We use Geographic Information Systems (GIS) analysis to compare current and future climate model predictions on a country level. We then compare our calculations of climate change exposure for each nation to several metrics of political and economic well-being. Our results indicate that the impacts of changes in precipitation and runoff are distributed relatively equally between developed and developing nations. In contrast, we confirm research suggesting that developing nations will be affected far more severely by changes in temperature than developed nations. Our results also suggest that this unequal impact will persist throughout the twenty-first century. Our analysis further indicates that the most significant temperature changes will occur in politically unstable countries, creating an additional motivation for developed countries to actively engage with developing nations on climate mitigation strategies.
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    Belt and Suspenders and More: The Incremental Impact of Energy Efficiency Subsidies in the Presence of Existing Policy Instruments
    (2014) Houde, Sebastien; Aldy, Joseph
    The effectiveness of investment subsidies depends on the existing array of regulatory and information mandates, especially in the energy efficiency space. Some consumers respond to information disclosure by purchasing energy-efficient durables (and thus may increase the inframarginal take-up of a subsequent subsidy), while other consumers may locate at the lower bound of a minimum efficiency standard (and a given subsidy may be insufficient to change their investment toward a more energy-efficient option). We investigate the incremental impact of energy efficiency rebates in the context of regulatory and information mandates by evaluating the State Energy Efficient Appliance Rebate Program (SEEARP) implemented through the 2009 American Recovery and Reinvestment Act. The design of the program -- Federal funds allocated to states on a per capita basis with significant discretion in state program design and implementation -- facilitates our empirical analysis. Using transaction-level data on appliance sales, we show that most program participants were inframarginal due to important short-term intertemporal substitutions where consumers delayed their purchases by a few weeks. We find evidence that some consumers accelerated the replacement of their old appliances by a few years, but overall the impact of the program on long-term energy demand is likely to be very small. Our estimated measures of cost-effectiveness are an order of magnitude higher than estimated for other energy efficiency programs in the literature. We also show that designing subsidies that reflect, in part, underlying attribute-based regulatory mandates can result in perverse effects, such as upgrading to larger, less energy-efficient models.
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    Pricing Climate Risk Mitigation
    (Nature Publishing Group, 2015) Aldy, Joseph
    Adaptation and geoengineering responses to climate change should be taken in account when estimating the social cost of carbon.
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    Heterogeneity in the Value of Life
    (2014) Aldy, Joseph; Smyth, Seamus J
    We develop a numerical life-cycle model - with choice over consumption and leisure, stochastic mortality and labor income processes, and calibrated to U.S. data - to characterize willingness to pay (WTP) for mortality risk reduction. Our theoretical framework can explain many empirical findings in this literature, including an inverted-U life-cycle WTP and an order of magnitude difference in prime-aged adults WTP. By endogenizing leisure and employing multiple income measures, we reconcile the literature's large variation in estimated income elasticities. By accounting for gender-and race-specific stochastic mortality and income processes,we explain the literature's black-white and female-male differences.
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    Comparing Emissions Mitigation Efforts across Countries
    (2015) Aldy, Joseph; Pizer, William A.; Akimoto, Keigo
    A natural outcome of the emerging pledge and review approach to international climate change policy is the interest in comparing mitigation efforts among countries. Domestic publics and stakeholders will have an interest in knowing if peer countries are undertaking (or planning to undertake) comparable efforts in mitigating their greenhouse gas emissions. Moreover, if the aggregate efforts are considered inadequate in addressing the risks posed by climate change, then this will likely prompt a broader interest in identifying those countries where greater efforts are arguably warranted based on comparison with their peers. Both assessments require metrics of efforts and comparisons among countries. We propose a framework for such an exercise, drawing from a set of principles for designing and implementing informative metrics. We present a template for organizing metrics on mitigation efforts, for both ex ante and ex post review. We also provide preliminary assessments of efforts along emissions, price, and cost metrics for post-2020 climate policy contributions by China, the European Union, Russia, and the United States. We close with a discussion of the role of academics and civil society in promoting transparency and facilitating the evaluation and comparison of efforts.
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    Evaluating Mitigation Effort: Tools and Institutions for Assessing Nationally Determined Contributions
    (Harvard Project on Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School., 2015) Aldy, Joseph
    The emerging pledge and review approach to international climate policy provides countries with substantial discretion in how they craft their intended emission mitigation contributions. The resulting heterogeneity in mitigation pledges places significant demands for a well-functioning transparency and review mechanism. In particular, the specific forms of intended contributions necessitate economic analysis in order to estimate the aggregate effects of these contributions as well as to permit "apples-to-apples" comparisons of mitigation efforts. This paper discusses the tools that can inform such analyses as well as the institutional needs of climate transparency. In light of the negotiating challenges with respect to transparency, the paper describes the potential for countries to implement Living Mitigation Plans that include regular updating of domestic mitigation programs with data and analyses on their outcomes. Such Living Mitigation Plans can serve as the foundation for independent, expert review of domestic mitigation programs. Moreover, they can include the inputs necessary to assess the mitigation value of domestic mitigation. Such assessments could inform the linkage of domestic mitigation policies, especially among disparately designed mitigation policies. This paper builds in part on the proceedings of a research workshop conducted May 7–8, 2015 at the Harvard Kennedy School, "Comparison and Linkage of Mitigation Efforts in a New Paris Regime." For more information on the workshop and links to most presentations, see here. The author and the Harvard Project on Climate Agreements acknowledge the support and collaboration of the International Emissions Trading Association and the World Bank Group's Networked Carbon Markets Initiative, with regard to the workshop, the paper, and a related side-event panel to be conducted at the Twenty-First Conference of the Parties of the United Nations Framework Convention on Climate Change in Paris in December 2015.
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    Comparing emission mitigation pledges: Metrics and institutions
    (Fondation pour les Etudes et Recherches sur le Developpement International. CEPR Press, 2015) Aldy, Joseph; Pizer, William A.
    A key element in the emerging international architecture will be practical mechanisms to compare domestic efforts to mitigate global climate change. How do countries decide whether and to what degree pledges by their peers – often expressed in different forms that stymie obvious apples-to-apples comparison – are sufficient to justify their own actions now and more ambitious actions in the future? We describe a number of desirable features of metrics that might be used for ex ante comparisons of proposed pledges and ex post assessments of subsequent actions delivering on those pledges. Such metrics should be comprehensive, measurable, and universal. In practice, however, no single metric has all these features. We suggest using a collection of metrics to characterise and compare mitigation efforts, akin to employing a suite of economic statistics to illustrate the health of the macroeconomy. We illustrate the application of a suite of metrics to several countries’ mitigation pledges (their intended nationally determined contributions in the UN climate talks). In the pledge and review model emerging in the climate change negotiations, participation, compliance, and ambition can be enhanced if this collection of metrics can illustrate comparable actions among peers, both prospectively and retrospectively. The latter, in particular, highlights the need for a well-functioning policy surveillance regime.