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Local Standards, Behavioral Adjustments, and Welfare: Evaluating California's Ocean-Going Vessel Fuel Rule

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Abstract

We examine how behavioral adjustments by regulated vessels affect welfare outcomes of a local fuel sulfur standard targeting particulate matter pollution from maritime transport. Our analysis combines one-minute scale data of vessel locations with location-specific marginal damages to obtain voyage-level measures of welfare outcomes. Exploiting the introduction of California's Ocean-Going Vessel Fuel Rule, we find sharp reductions in fuel consumption in the regulated area and a considerable emission spillover in unregulated waters. Despite these adjustments, the rule generates net benefits of close to $1 billion over 29 months because the emission spillovers occur in low marginal damage areas.

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  • Klotz, Richard & Berazneva, Julia, 2020. "Local Standards, Behavioral Adjustments, and Welfare: Evaluating California's Ocean-Going Vessel Fuel Rule," Working Papers 2020-02, Department of Economics, Colgate University, revised 15 Jun 2020.
    • Handle: RePEc:cgt:wpaper:2020-02
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    File URL: https://digitalcollections.colgate.edu/islandora/object/islandora%253A4741
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    Keywords

    local environmental policy; behavioral adjustments; local air pollution; emission control areas;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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