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Reposted by Joseph Shapiro

John Bistline @bistline.bsky.social · 20d

Cool new AER paper uses data from Clean Air Act offset markets to assess the efficiency of air pollution regulation. The analysis finds that marginal benefits of abatement exceed mean offset prices more than ten-fold, across most regions and pollutants.

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Aug 28

Thanks!

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Aug 28

Excited to see our paper in print! 'Is Air Pollution Regulation Too Lenient? Evidence from US Offset Markets.' www.aeaweb.org/articles?id=...

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Reposted by Joseph Shapiro

Nils Redeker @nilsredeker.bsky.social · Aug 6

Stunning chart from a great paper by @joseph-s-shapiro.bsky.social: the IRA’s “leasing loophole” - which let foreign-made EVs qualify for tax credits - sent US leasing numbers soaring.

EU exporters were likely among the main winners - and will be among the first to feel the hit as the IRA unravels.

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Reposted by Joseph Shapiro

Steve Cicala @stevecicala.bsky.social · Jul 9

🚨 Call for papers:

Environment week at LSE will be Sept 22-25th.

Submissions are due soon (July 14)!

www.lse-environment-week.com/environment-...

LSE Environment Week 2025 — LSE Environment Week

www.lse-environment-week.com

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Why it matters: 🌎⚖️

Designing optimal policies for externalities (smoking, innovation, pollution…) requires marginal costs and benefits, which are hard to estimate.

Offset markets help measure marginal policy costs, so can help design optimal policy.

7/7

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Robust findings: 🛠️📑

Other ways of aggregating offset price data give similar conclusions: marginal benefits of air pollution control ≫ marginal costs in most US regions

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Striking result: 🚨

Average benefit of NOₓ control > $40,000/ton Average cost <= $4,000/ton

That’s 10× gap. VOCs yield similar findings.

Some markets are more lenient than others:

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Then we compare: 📈📉

We compare control costs estimated from pollution offsets against model-based health benefits (AP2, AP3, InMAP, EASIUR) to estimate the net gains from reducing pollution.

One input from AP3 model: marginal benefits of cutting NOₓ by location 🗺️ 👇

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

How offsets work:⚖️

New factories in polluted cities must “offset” emissions by paying existing plants in same region to reduce pollutant.

On margin, firms should equate offset prices to marginal cost of pollution control 💵

ERC = emissions reduction credit = offset

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Approach: 🔍

We use prices from air pollution offset markets to estimate marginal costs of pollution control.

Each pollutant × region has own market.

100s of separate markets, distinct from cap-and-trade 🗺️📊

Example offset:

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Is US air pollution regulation too lenient? 🏭💸

We find marginal benefits of pollution control exceed marginal costs by >10×.

New evidence from dozens of US pollution offset markets.

📄forthcoming at AER, w/ Reed Walker: joseph-s-shapiro.com/research/IsA...

1/🧵

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Striking result: 🚨

Average benefit of NOₓ control > $40,000/ton

Average cost <= $4,000/ton

That’s 10× gap. VOCs yield similar findings.

Some markets are more lenient than others:

5/

Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Then we compare: 📈📉

We compare control costs estimated from pollution offsets against model-based health benefits (AP2, AP3, InMAP, EASIUR) to estimate the net gains from reducing pollution.

One input from AP3 model: marginal benefits of cutting NOₓ by location 🗺️ 👇

4/

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

How offsets work:⚖️

New factories in polluted cities must “offset” emissions by paying existing plants in same region to reduce pollutant.

On margin, firms should equate offset prices to marginal cost of pollution control 💵

ERC = emissions reduction credit = offset

3/

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jun 27

Approach: 🔍

We use prices from air pollution offset markets to estimate marginal costs of pollution control.

Each pollutant × region has own market. 100s of separate markets, distinct from cap-and-trade 🗺️📊

Example offset:

2/

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Reposted by Joseph Shapiro

AEA Journals @aeajournals.bsky.social · Jun 25

Forthcoming in the AER: "Is Air Pollution Regulation Too Lenient? Evidence from US Offset Markets" by Joseph S. Shapiro and Reed Walker. www.aeaweb.org/articles?id=...

Is Air Pollution Regulation Too Lenient? Evidence from US Offset Markets

(Forthcoming Article) - We develop a framework to estimate the marginal cost of air pollution regulation to assess the efficiency of air quality regulations. We utilize a provision of the Clean Air Ac...

www.aeaweb.org

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Reposted by Joseph Shapiro

Journal of Public Economics @jpube.bsky.social · May 24

Just published in @jpube.bsky.social:

"Cleaner water and higher housing prices: Evidence from China"

By Run Ge, Jialin Huang, & Xinzheng Shi

www.sciencedirect.com/science/arti...

#econsky

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Apr 25

🌎 PhD students: apply to 2025 Berkeley/Sloan Summer School in Environmental/Energy Economics!

🔗 Info + application: www.auffhammer.com/summer-school

📅 Deadline: May 14 | Program: Aug 18–22 at Berkeley

w @auffhammer.bsky.social @severinborenstein.bsky.social, TCarleton, MFowlie, KJack...

summer school — Maximilian Auffhammer

www.auffhammer.com

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Apr 2

🌍 Free 1hr webinar today: Globalization & The Environment

📅 Apr 2, 6pm PT US | Apr 3, noon Australia

🔗https://esacentral.org.au/event/58402/globalization-and-the-environment-online-only

- How globalization affects the enviro
- How enviro policy reshapes trade

Host: Economic Society of Australia

Globalization and the Environment - ONLINE ONLY

Globalization and the Environment - ONLINE ONLY ESA - Central Council

esacentral.org.au

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Reposted by Joseph Shapiro

Catherine Wolfram @cwolfram.bsky.social · Mar 17

Looking forward to this, especially the lunchtime panel I get to do with @kylemeng.com and @chadbown.bsky.social!

Joseph Shapiro @joseph-s-shapiro.bsky.social · Mar 17

🚨Incredible lineup at @nber.org conference this Thurs/Fri 3/20-21: **Energy Markets, Decarbonization, and Trade**

📑Agenda www.nber.org/conferences/...

🎥 Webstream www.youtube.com/nbervideos

Organized w Natalia Ramondo, supported by @sloanfoundation.bsky.social

Energy Markets, Decarbonization, and Trade, Spring 2025

www.nber.org

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Mar 17

🚨Incredible lineup at @nber.org conference this Thurs/Fri 3/20-21: **Energy Markets, Decarbonization, and Trade**

📑Agenda www.nber.org/conferences/...

🎥 Webstream www.youtube.com/nbervideos

Organized w Natalia Ramondo, supported by @sloanfoundation.bsky.social

Energy Markets, Decarbonization, and Trade, Spring 2025

www.nber.org

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jan 28

Great! Hope you/students find it useful. Slides are online in case they are helpful joseph-s-shapiro.com/research/SEE...

joseph-s-shapiro.com

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jan 28

I think of spatial autocorrelation as a general issue, not specific to environment. Re:publication outlets, this is always a relevant question but we are squeezed for space and I find it challenging to give general advice on this kind of question without knowing the specific context.

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Joseph Shapiro @joseph-s-shapiro.bsky.social · Jan 28

Thanks Ariel! Re:unobservables/uncertainty, what did you have in mind? We talk about some spatial research designs and place-based environmental policies. As to spatial inference, we try to focus on spatial issues particular to the environment or environmental issues specific to spatial settings...

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