Environmental Benefits from Driving Electric Vehicles?
Stephen Holland (),
Erin Mansur (),
Nicholas Muller and
No 21291, NBER Working Papers from National Bureau of Economic Research, Inc
Electric vehicles offer the promise of reduced environmental externalities relative to their gasoline counterparts. We combine a theoretical discrete-choice model of new vehicle purchases, an econometric analysis of the marginal emissions from electricity, and the AP2 air pollution model to estimate the environmental benefit of electric vehicles. First, we find considerable variation in the environmental benefit, implying a range of second-best electric vehicle purchase subsidies from $3025 in California to -$4773 in North Dakota, with a mean of -$742. Second, over ninety percent of local environmental externalities from driving an electric vehicle in one state are exported to others, implying that electric vehicles may be subsidized locally, even though they may lead to negative environmental benefits overall. Third, geographically differentiated subsidies can reduce deadweight loss, but only modestly. Fourth, the current federal purchase subsidy of $7500 has greater deadweight loss than a no-subsidy policy.
JEL-codes: D62 H23 Q53 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-ene, nep-env, nep-res and nep-tre
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Published as Holland, Stephen P., Erin T. Mansur, Nicholas Z. Muller, and Andrew J. Yates. 2016. "Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors." American Economic Review, 106 (12): 3700-3729. DOI: 10.1257/aer.20150897
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