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Green Waste

Author

Listed:
  • Ingvil Gaarder
  • Morten Grindaker
  • Tom G. Meling
  • Magne Mogstad

Abstract

We test for and measure green waste: the misallocation of public subsidies for green investment projects. Our context is a major Norwegian program for green investment subsidies. We develop a model of subsidy allocation and apply it to detailed project-level data on carbon emissions and subsidy amounts for both marginal and inframarginal projects. We find that decision-makers could have achieved the same level of emission reductions at less than half the cost. To isolate the sources of this green waste, we use data on both ex-ante expected and ex-post realized emission reductions for each project. We find that decision-makers are able ex-ante to identify the projects with the highest ex-post emission reductions but unwilling to select them.

Suggested Citation

  • Ingvil Gaarder & Morten Grindaker & Tom G. Meling & Magne Mogstad, 2026. "Green Waste," NBER Working Papers 34649, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34649
    Note: EEE PE
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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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