Green Waste

Ingvil Gaarder, Morten Grindaker, Tom G. Meling and Magne Mogstad

No 34649, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D61 H23 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2026-01
Note: EEE PE
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