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Electric Utility Regulation Under Enhanced Renewable Energy Integration and Distributed Generation
The economic environment for electric utilities is changing in the United States given increased penetration of distributed generation and limited rooms for sales growth. This paper reviews the recent development of relevant policies in the United States and their economic impacts. This review indicates both challenges and opportunities in improving the policies to enhance distributed generation, and in finding the directions in which electric utility regulation should be reformed.
Health and Health Inequality during the Great Recession: Evidence from the PSID
We employ granular information on local macroeconomic conditions from the Panel Study of Income Dynamics to estimate the impact of the Great Recession on health and health-related behaviors. Among working-aged adults, a one percentage point increase in the county-level unemployment rate resulted in a 2.4-3.2% increase in chronic drinking, a 1.8-1.9% decrease in mental health status, and a 7.8-8.9% increase in reports of poor health. Notably, there was heterogeneity in the impact of the recession across socioeconomic groups. Particularly, obesity and overweight rates increased for blacks and high school educated people, while there is weak evidence that they decreased for whites and the college educated. Along some dimensions, the Great Recession may have widened some socioeconomic health disparities in the United States.
Do Natural Disasters Make Sustainable Growth Impossible?
We consider the prospects for sustainable growth using expected utility models of optimal investment under threat from a natural disaster. Extension of a discrete, two-period model, to continuous time over an infinite time horizon permits the analysis of sustainability under uncertainty regarding adverse events, including both one-time and recurrent disasters. Natural disasters, with destruction of productive capital, disrupt the optimal consumption and utility paths, but the Arrow et al. (2004) sustainability criterion is still satisfied even without adding strong or weak sustainability constraints. We also consider a separate natural resource sector and show that, except for extreme cases, the optimal steady state level of the renewable resource is not affected by the possibility of natural disasters. In the case of catastrophic events, however, damage to the resource system may be severe enough to push the system below a critical value tipping point, undermining the prospects of long-run sustainability.
Global Value Chains and Changing Trade Elasticities
The trade collapse of 2008-2009 and the anemic trade growth since then raise the question of whether trade elasticities may be undergoing fundamental structural change. A potential source of such change is the spread of global value chains (GVCs), which have brought a marked increase in the use of intermediate goods and changes in the nature of trade competition. We review the recent literature on the impact of GVCs on measured trade elasticities and the ways in which their emergence may affect how we estimate and interpret trade responsiveness. We then draw out a few implications of recent research for global modeling.
Estimating the Opportunity for Load-Shifting in Hawaii: An Analysis of Proposed Residential Time-of-Use Rates
Hawaii’s largest electric utility, Hawaiian Electric Company (HECO) and its subsidiaries recently proposed a Time of Use (TOU) pricing scheme for residential rates. The TOU scheme has three tiers of prices: daytime, on-peak, and nighttime. The proposed rates have the highest cost during the on-peak period from 5pm to 10pm. For Oahu, the lowest cost is at nighttime, from 10pm to 9am. The difference between high and low rates is $0.33/kWh. For Maui and Hawaii Island, the lowest cost is during the daytime, 9am to 5pm. The difference between high and low rates are $0.35/kWh and $0.50/kWh, respectively. It is not stated whether the rates will be implemented as an opt-in, opt-out or mandatory program. This report summarizes literature on time varying pricing for residential rates to inform Hawaii’s electricity stakeholders, including ratepayers and policy-makers, of the potential impacts and considerations regarding the potential for TOU pricing in Hawaii.
Electric Vehicle Greenhouse Gas Emission Assessment for Hawaii
This study estimates greenhouse gas (GHG) emissions of electric vehicles (EVs) compared to that of other popular and similar cars in Hawaii, by county over an assumption of 150,000 miles driven. The GHG benefits of EVs depend critically on the electricity system from which they derive their power. The analysis shows that EVs statewide are an improvement in GHG emissions over similar and popular internal combustion engine vehicles (ICEVs). Due to Oahu’s relatively high dependence on fossil fuels, including coal-burning, however, hybrid electric vehicles (HEVs) offer an improvement over EVs. Notably, Oahu also has the most EVs on the road. Hawaii Island, where there are few EVs on the road, shows a clear GHG benefit from EVs because of its high penetration of low carbon sources for electricity. This difference in benefits suggests that policies supporting EV uptake should consider impacts per island, based on available types of electricity generation. For example, because EVs on Hawaii Island provide near to mid-term GHG benefits, there should be assessment of provision of fast-charging stations to overcome potential range anxiety. Until Oahu substantially transitions towards greater penetration of renewable sources for electricity, it may be too early to tout EVs on Oahu as a GHG emissions reduction strategy. This of course depends on the type of vehicle from which drivers switch to EVs. If EV drivers largely pull from potential HEV consumers, as is suggested in prior studies, then there is no gain in GHG emissions reduction. On the other hand, if EV consumers switch from ICEVs, there are GHG emissions savings. Oahu’s electricity generation mix must become similar to that in carbon intensity of Kauai and Maui to make high performing EVs at least comparable to high performing HEVs in GHG emissions.
Read the full report at the Electric Vehicle Transportation Center.
Identifying Peer Effects Using Gold Rushers
Fishers pay attention to where other fishers are fishing, suggesting the potential for peer effects. But peer effects are difficult to identify without an exogenous shifter of peer group membership. We propose an identification strategy that exploits a shifter of peer group membership: gold rushes of new entrants. Following an exchange-rate-induced gold rush in an American fishery, we find that new entrants are strongly influenced by the location choices of their peers. Over-identification tests suggest that the assumptions underlying identification hold when new entrants are inexperienced but identification is lost as new entrants start to potentially influence their peers.
By the Time I Get to Arizona: Estimating the Impact of the Legal Arizona Workers Act on Migrant Outflows
In 2007, the State of Arizona passed the Legal Arizona Workers Act (LAWA) which required all employers to verify the legal status of all prospective employees. Replicating existing results from the literature, we show that LAWA displaced about 40,000 Mexican-born people from Arizona. About 25% of these displaced persons relocated to New Mexico indicating that LAWA had externalities on adjoining states.
How Hawaii’s State Government Shares Transient Accommodation Tax Revenues With Its Local Governments
Many states in the U.S. give unrestricted financial support to their local governments. The reasons some state governments provide aid and others do not, and why a particular mode of revenue sharing is adopted remain unclear. This paper examines Hawaii’s recent effort at developing a model to allocate the state’s transient accommodation tax revenues between the State and the county governments. The paper documents the process and explains the rationale behind the model.
Filipino 2040: Environmental Resources, Shocks, and National Well-Being
The contribution of the environmental-resource sector to national well-being is the sum of natural resource depletion and environmental degradation. Inasmuch as existing resource stocks are below efficient levels, better enforcement of existing laws as well as policies that incentivize sustainable use are needed. Similarly, progressive royalty assessment of mineral resources can incentivize exploration without transferring the bulk of resource rents to private interests. In the case of pollution, the key is to face firms with the full costs of their production, e.g. through emission taxes and/or cap and trade systems. Calculating total depletion and degradation (TDD) will facilitate the calculation of green national income (GNI), a more inclusive metric of national well-being. In the same way, simultaneous optimization of disaster management policies in the face of climate change can facilitate a further improvement in national well-being, this time measured as comprehensive national income (CNI).
Sustainable Agriculture Irrigation Management: The Water-Energy-Food Nexus in Pajaro Valley, California
The water-energy-food (WEF) nexus is quickly becoming one of the most critical global environmental challenges of the twenty first century. However, WEF systems are inherently complex; they typically are dynamic and span multiple land or agro-ecosystems at a regional or global scale. Addressing this challenge requires a systems approach to optimal and sustainable resource management across multiple dimensions. To that end, using Pajaro Valley (California) as a case study, our research aims to (1) highlight synergies and tradeoffs in food and water production, (2) build a dynamic framework capable of examining intertemporal resource relationships, and (3) detail the steps required to develop incentive-compatible financing of the resulting management plans when benefits are not distributed uniformly across users. Using a stylized model, we find that in the long run, inland growers benefit from the halting of seawater intrusion (SWI) due to overpumping of groundwater. We also calculate that the water provided by the proposed College Lake Multi-Objective Management Program—a plan designed to halt SWI and support sustainable water and agricultural development in the region—will generate net revenue of $40-58 million per year, compared to an annualized cost of less than $3 million. An equal cost-sharing plan would be desirable if the benefit of the project exceeded $1,268 per year for each well owner. Since this may not necessarily be the case for smaller well owners, one possible alternative is to allocate costs in proportion to expected benefits for each user.
A Review of the Current State of Research on the Water, Energy, and Food Nexus
The idea of the water-energy-food nexus was launched in earnest since at least the Bonn2011 Nexus Conference, when the German Federal Government organized the international Conference “The Water Energy and Food Security Nexus – Solutions for the Green Economy” to contribute to the United Nations Conference on Sustainable Development (Rio+20). According to the background paper prepared by Hoff for the Conference, the concept of the water-energy-food nexus emerged in the international community in response to climate change and social changes including population growth, globalization, economic growth, and urbanization (Hoff 2011). These issues are causing increased pressure on water, energy and food resources, presenting communities with an increasing number of tradeoffs and potential conflicts among these resources which have complex interactions. For example, demands for water, energy and food are estimated to increase by 40%, 50% and 35% respectively by 2030 (US NIC 2012). Although various nexus-related conferences, research initiatives and projects have been held around the world under such circumstances, water-energy-food nexus policy has not yet been initiated in Japan.
The Economic Value of Groundwater in Obama
Worldwide, freshwater is important not only for direct consumption but also for its role in the production of a variety of goods and services. For example, water is used for cooling nuclear reactors and as an input for the production of energy via hydroelectric processes. Freshwater also is essential for the production of food, including crops and livestock. Recognizing these synergies and identifying tradeoffs are key components of water-energy-food (WEF) nexus research (Taniguchi et al., 2013; Loring et al., 2013; Giampietro et al., 2014). In this study, we focus on Obama City, Japan, where groundwater is used directly for domestic and commercial consumption and for melting snow. Stored groundwater also provides an indirect benefit: submarine groundwater discharge (SGD) from the aquifer supports the nearshore ecology, including a locally important fishery. Using this case study, we document some common challenges that arise when undertaking WEF research and outline an example of an integrated approach that combines multiple modes of analysis to overcome those obstacles.
Cost-Benefit Analysis of Disaster Mitigation Infrastructure: The Case of Seawalls in Otsuchi, Japan
Disaster management problems often pose the same types of challenges that environmental governance problems do; they involve decision-makers at various levels and can transcend political boundaries. We conduct a benefit-cost analysis of a disaster adaptation strategy in Otsuchi, which was undertaken shortly after the 2011 Tohoku earthquake and tsunami devastated the region. Results indicate that present value net benefits from the planned seawall are positive, even if expected damages are low, provided that the wall is capable of reducing damage by at least 50%. A hybrid method of governance may, however, be effective at increasing the benefit-cost ratio.
Creating Tourism Improvement Districts to Raise Stable Funding for Destination Marketing and Promotion
Tourism Improvement Districts (TIDs), modeled after the more well-known Business Improvement Districts (BIDs), are increasing rapidly in the U.S. With enabling legislation from state and local governments, TIDs allow hoteliers in a tourist destination to ban together to impose compulsory assessments on nearly all the hotels in the district in order to raise money to fund destination marketing. To date, research on TIDs have come almost exclusively from destination marketing organizations (DMOs), travel associations, TIDs, and consultants with vested interest in the formation and expansion of TIDs. This paper synthesizes information from available reports and attempts to provide a more balanced view of the role of TIDs in destination tourism marketing and promotion.