Costs
Slides [link]Lecture 1
Costs of Environmental Regulation
Required reading
- KO pages 35-44
Response questions
- Pages 38-39 discuss a highly influential cost curve constructed by McKinsey. Compared to the cost curves we typically draw in economics, what is unusual about this one (KO figure 3.1)?
- President Biden recently suspended all drilling in the Alaskan National Wildlife Reserve (NY Times). What are the costs of this ban? How would you quantify them? (one paragraph)
Additional material
- More thorough discussion of the incidence of taxation in these public economics slides by from Emmanuel Saez
- For a more formal treatment of calculating the costs of environmental regulation, see this paper by Pizer and Kopp.
- From McKinsey, a discussion of the original CO2 abatement curve is here.
Lecture 2
Incidence and Jobs
Required
- Read “Do regulations kill jobs?” from The Atlantic.
- Read this RFF blog post on Job Killing Carbon Taxes
- Watch two totally opposite takes on the jobs and environmental regulations from various GOP Senators and Ed Markey
Response questions
- There are now many studies by academic economists on the relationship between jobs and environmental regulation. Describe on study referenced in the two readings. Do the job effects sound small or large to you? (1 paragraph)
- Given this, why do you think there is so political attention paid to this issue? (1 or 2 sentences)
Additional material
- Can regulation increase competitiveness? This question was famously posed in in Porter (1991). Recent review of the evidence in Dechezleprêtre and Sato (2017)
- John Oliver on coal
Key Points
- Engineering vs opportunity costs
- Statutory vs economic incidence
- Net vs gross job losses, and long vs short run employment effects
- Generally speaking, jobs are a "cost" not a "benefit"