[MCN] Press release: Energy taxes put less of a burden on poor people than efficiency standards

[Lance Olsen]

Energy taxes put less of a burden on poor people than efficiency standards

In “Energy Efficiency Standards Are More Regressive Than Energy Taxes <https://www.journals.uchicago.edu/doi/full/10.1086/701186>,’” published in the Journal of the Association of Environmental and Resource Economists <https://www.journals.uchicago.edu/toc/jaere/current>, Arik Levinson demonstrates that energy taxes place less of a burden on the poor relative to energy efficiency standards.

For nearly 100 years, economists have endorsed taxes as a cost-effective means of reducing pollution. Despite that, the United States has chosen to not impose carbon or gasoline taxes, opting instead for energy efficiency standards for appliances and fuel economy standards for cars. An often cited reason is that energy taxes are regressive—that is, they put a disproportionate burden on poor people. But while research has shown that energy taxes and efficiency standards both can have this negative effect, Levinson’s is the first study to analyze which approach is more regressive.

“I contrast two public policies: a tax on energy, and a tax on inefficient appliances and cars,” Levinson writes. “This simple framework generates a stark result: an energy tax would be both more cost-effective and less regressive.” 

Using a static, two-good, theoretical model, where consumers differ only by income, Levinson finds that for any “energy-using durable”—cars, air conditioners, lightbulbs, washing machines, even entire houses—richer households purchase more energy efficiency and more energy. “The framework lends itself to empirical corroboration,” Levinson writes. “It predicts that richer households purchase more efficient appliances and vehicles, and use more energy operating them.”

Levinson then tests this theoretical prediction on automobiles in the U.S., using Corporate Average Fuel Economy (CAFE) standards and data from the 2009 National Household Travel Survey. The survey includes information for about 150,000 households divided by income group, including their annual average household gasoline use, number of cars, and miles driven.

For the test, Levinson frames CAFE standards as an “inefficiency tax,” that is paid either at the time of purchase or annually as part of car registration. By treating both policies as revenue-equivalent taxes, Levinson is able to compare how every income group would be affected. “To compare the distributional consequences of the two policies, we can think of the fuel economy standard as a tax on the gallons per mile of the vehicles owned by each household and see how its static incidence stacks up against that of the gas tax,” he writes.

Levinson shows that an inefficiency tax would result in less tax revenue being collected from rich households and more from poor households, meaning that a gasoline tax would be less regressive than an inefficiency tax.

Levinson also examines a 2011 update to CAFE known as the “footprint based” standards. Whereas pre-2011 CAFE standards applied equally to all cars, the new standards favor larger cars, as measured by the square footage their four tires, their “footprints.” Translating the new footprint-based CAFE standards into a tax, Levinson compares it on a revenue-equivalent basis to both the theoretical gas tax and the pre-2011 CAFE standards. He finds that the footprint-based changes exacerbated the regressivity of the U.S. CAFE standards.

Despite the results favoring gas taxes over efficiency standards, Levinson makes clear that his analysis only measures the relative regressivity of the two approaches. Whether any tax is truly progressive or regressive depends on how the generated revenue is spent. “If revenues are spent on government services for rich households, or wasted entirely, both taxes would be regressive,” he writes. “But if revenues are spent on services for poor households, or refunded as an equal payment for every household, both taxes would be progressive.”

As the official research journal of the Association of Environmental and Resource Economists <http://www.aere.org/>, JAERE publishes papers that are devoted to environmental and natural resource issues. The journal’s principal mission is to provide a forum for the scholarly exchange of ideas in the intersection of human behavior and the natural environment. Focusing on original, full-length research papers that offer substantial new insights for scholars of environmental and resource economics, JAERE presents a range of articles that are relevant for public policy, using approaches that are theoretical, empirical, or both.

++++++++ Hot, dry and Windy Index  ++++++

Basic fire science is still fairly simple. 

If it’s hot, and dry, and you get a spark, you’ve got fire. 

If it’s hot, and dry, and windy, and you get a spark, you’ve got a fire that spreads far, and fast

The Hot-Dry-Windy Index (HDW) | Northwest Fire Science Consortium <http://nwfirescience.org/tools/hot-dry-windy-index-hdw>
nwfirescience.org/tools/hot-dry-windy-index-hdw <http://nwfirescience.org/tools/hot-dry-windy-index-hdw>
Oct 5, 2018 - A new fire-weather prediction tool based on the key atmospheric variables that affect wildland fire: temperature, moisture, and wind.

The hot-dry-windy index: A new fire weather index <https://www.nrs.fs.fed.us/pubs/56562>
https://www.nrs.fs.fed.us/pubs/56562 <https://www.nrs.fs.fed.us/pubs/56562>
Aug 8, 2018 - We define a new fire weather index called the Hot-Dry-Windy Index (HDW). HDW uses the basic science of how the atmosphere can affect a ...

Hot-Dry-Windy Index - Northern Research Station - USDA Forest Service <https://www.nrs.fs.fed.us/disturbance/fire/hdw/>
https://www.nrs.fs.fed.us/disturbance/fire/hdw/ <https://www.nrs.fs.fed.us/disturbance/fire/hdw/>
Feb 28, 2019 - In order to simplify the problem, we have defined a new fire weather index called the Hot-Dry-Windy Index (HDW) that can be used to assess ...

[PDF]
The Hot-Dry-Windy Index - Southern Research Station - USDA <https://www.srs.fs.usda.gov/pubs/ja/2018/ja_2018_goodrick_001.pdf>
https://www.srs.fs.usda.gov/pubs/ja/2018/ja_2018_goodrick_001.pdf <https://www.srs.fs.usda.gov/pubs/ja/2018/ja_2018_goodrick_001.pdf>
AF Srock - ‎2018 - ‎Cited by 2 <https://scholar.google.com/scholar?rlz=1C5CHFA_enUS737US737&um=1&ie=UTF-8&lr&cites=12763361008682718259> - ‎Related articles <https://scholar.google.com/scholar?rlz=1C5CHFA_enUS737US737&um=1&ie=UTF-8&lr&q=related:M9Sa1jaRILG-IM:scholar.google.com/>
Jul 19, 2018 - We define a new fire weather index called the Hot-Dry-Windy Index (HDW). ... HDW is defined and then compared with the Haines Index (HI) for four historical fires. The Climate Forecast System Reanalysis (CFSR) is used to provide the meteorological data for calculating the indices.

Comparing the Haines Index with the Hot-Dry-Windy Index - Wildfire ... <https://wildfiretoday.com/2019/02/20/comparing-the-haines-index-with-the-hot-dry-windy-index/>
https://wildfiretoday.com/.../comparing-the-haines-index-with-the-hot-dry-windy-inde... <https://wildfiretoday.com/2019/02/20/comparing-the-haines-index-with-the-hot-dry-windy-index/>
Feb 20, 2019 - In a comment on the earlier post about the Hot-Dry-Windy Index (HDW), Brian Potter, a research meteorologist with the U.S. Forest Service, ..
.
Development and application of a hot-dry-windy index (HDW ... <https://www.frames.gov/catalog/56291>
https://www.frames.gov/catalog/56291 <https://www.frames.gov/catalog/56291>
Aug 7, 2018 - In this paper, we describe and analyze a climatology of the Hot-Dry-Windy Index (HDW), with the goal of providing fire-weather forecasters with ...






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