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Transportation and EV

Paper Session

Friday, Jan. 6, 2023 8:00 AM - 10:00 AM (CST)

New Orleans Marriott, Galerie 1
Hosted By: Association of Environmental and Resource Economists
  • Chair: Carolyn Fischer, World Bank

The Electric Vehicle Rebound Effect

Beia Spiller
,
Resources for the Future
Kenneth Gillingham
,
Yale University
Marta Talevi
,
Vrije University Amsterdam

Abstract

Electric vehicles (EVs) are a promising technology for the decarbonisation of transportations. EVs are different from internal combustion engines (ICEs) in several ways, most notably they are cheaper to drive but more expensive to purchase, and may cause range anxiety.

Due to the lower cost per mile, a rebound effect may occur as households shift miles driven to the EV. Policies changing the relative cost per mile may also cause reshifting of VMT within the household fleet. Understanding the substitutability between EVs and ICEs within a fleet is therefore crucial as we move towards pricing policies that internalize externalities of gasoline consumption.

The aim of this paper is to look at how households adjust their total VMT and the allocation of VMT between vehicles in response to the purchase of an EV, as well as in response to changes in gasoline prices and electricity rates. These results will also help us estimate to what extent EVs can offset the use of existing ICE vehicles.

To answer these questions, we compile household level fleet data in Massachusetts to perform an event-study and difference-in-difference analysis, comparing miles driven after new vehicle purchases across EVs and ICEs. We distinguish between EVs purchased as additions to the fleet vs replacement vehicles, and use propensity score matching to find an appropriate control group.

We further estimate the elasticity of VMT to changes in gasoline prices for households with and without BEVs, using a fixed effect model and instrumenting for the price of gasoline with the price of crude oil in the international markets.

We find that EV households shift VMT to EVs when gasoline prices increase, although the increase in driving after the purchase of a new vehicle does not differ across fuel type, suggesting the absence of a rebound effect.

Electric Vehicle Usage, Pollution Damages, and the Electricity Price Elasticity of Driving

Cody S. Nehiba
,
Louisiana State University

Abstract

I study battery electric vehicle (BEV) usage and ownership characteristics with fundamental implications for transportation’s electrification. Using data covering the entire BEV population in New York, I quantify BEV mileage, pollution damages, and environmental justice concerns that vehicle charging exports pollution from high- to low-income areas. Finding that mileage is a greater contributor to pollution damages than vehicle efficiency or local characteristics, I estimate the price elasticity of BEV driving. A 10% increase in per-mile electricity costs reduces mileage by 1%, but responsiveness falls as public charging stations—where prices are often decoupled from electricity costs—become available.

The Last Mile Problem: Addressing a Grand Transportation Challenge in Urban America

Peter Christensen
,
University of Illinois-Urbana-Champaign
Lewis Lehe
,
University of Illinois-Urbana-Champaign
Adam Osman
,
University of Illinois-Urbana-Champaign

Abstract

Ridehailing services, such as Uber, have the potential to raise ridership on existing services without major capital investments. We estimate the degree of complementary between Uber services and existing public transit services using a field experiment that addresses the ‘last mile problem,’ which is considered one of the most intractable public transit problems in the United States. Our study is designed to ask three main questions: (1) What is the demand response to ridehailing subsidies that target linkages to metro/rail services, as measured by changes in: (a) public transit ridership, (b) transit-linked Uber usage, and (c) total mobility? (2) Do reductions in travel cost differentially affect riders that are underserved by existing public transit networks (live/work in less accessible zones)? (3) What are the impacts of the subsidy program on city level congestion? Our experimental findings will advance the state of economics and policy understanding of the effects of ridehailing services as complements/substitutes to public transit. By integrating a field experiment with structural methods, we will contribute to the literature on the effects of transport policy on city-level congestion externalities.

Emissions Standards and Electric Vehicle Targets for Passenger Vehicles

Joshua Linn
,
University of Maryland

Abstract

In the United States, California and other states implement the zero-emission vehicle (ZEV) program, which essentially sets minimum market shares for plug-in vehicles. At the same time, federal regulators set greenhouse gas standards for passenger vehicles.

This paper examines interactions between the ZEV program and federal fuel economy and greenhouse gas standards for passenger vehicles. I argue that because of the policymaking progress, tighter ZEV standards may cause federal regulators to adopt tighter emissions standards. At the same time, tighter ZEV standards are likely to be more regressive than emissions standards alone because high-income consumers are more likely than other consumers to buy ZEVs.

I test these predictions using a computational model of the passenger vehicle market that endogenizes manufacturer choices of vehicle prices, fuel economy, and horsepower. Parameters of the model are estimated using observed consumer and manufacturer choices between 2010 and 2018. A key result is that low-income consumers highly undervalue fuel cost savings, meaning that they are willing to pay far less than one dollar for a dollar of future fuel cost savings; high-income consumers have nearly full valuation.

Simulating a range of ZEV and fuel economy standards covering the years 2012 through 2022 yields three main results. First, emissions standards enacted between 2012 and 2022 increased social welfare. Second, the ZEV program increased the likelihood that federal agencies adopted more stringent emissions standards. Third, the ZEV program has been regressive in isolation, whereas the fuel economy standards have been progressive. The latter result follows from the estimated undervaluation for low-income consumers. Overall, the combined ZEV and fuel economy standards have been progressive because the fuel economy standards have had larger welfare effects than the ZEV standards.

Discussant(s)
Shanjun Li
,
Cornell University
Stephen Holland
,
University of North Carolina-Greensboro
Matthew Tarduno
,
Harvard University
Carolyn Fischer
,
World Bank
JEL Classifications
  • Q5 - Environmental Economics
  • Q4 - Energy