Saturday, April 05, 2014

Suburbanites Vote Against Carbon Pricing

Here is a sensible letter published in the Sacramento Bee that argues that a carbon tax bundled with a recycling of the revenue back to households would achieve the "win-win" of incentivizing behavioral change without penalizing suburbanites for their high fossil fuel use for driving and generating electricity.   The author glosses over the point that the refund of the revenue collected from a carbon tax would be likely to be a per-capita refund and so suburbanites would still be transferring income to their center-city counterparts.

I would like to make a new point.  Folks should read my new NBER paper joint with Matt Holian.  We study the voting patterns on Prop 23 in California in the year 2009.  This proposition would have ended California's AB32.  We use block-group level data and document that suburbanites oppose this regulation. So what?      AB32 is the nation's major "green guinea pig" effort to demonstrate that low carbon regulation can simultaneously lower a state's carbon emissions while still allowing economic growth to continue.  No other state or even nation is running such a field experiment.  While liberal greens often hint that the green economy is a "free lunch", we don't know whether this optimistic statement is true or not. To its credit, California is now running this field experiment but the politicians in charge need suburban support for these programs and we find that such support is tenuous.

Permit me to make several points.

Point #1:  In AB32's current cap and trade, revenue collected is not recycled back to the public. Instead, the California treasury keeps a chunk of it and much of the revenue actually goes back to the polluters themselves to incentivize them not to leave California to areas that don't have carbon pricing.

Point #2;    Our finding that center city residents are much more likely to support AB32 (and thus to vote against Prop 23) is robust even controlling for the block group's average income and the fact that liberals disproportionately live in center cities.   So, we find that Republicans oppose AB32 and we find that suburbanites tended to oppose AB32.

Point #3: While my paper with Matt Holian only focused on California voting, my work with Mike Cragg and co-authors found that at the national level that Representatives in high carbon districts (which often are in the suburbs) are more likely to vote against national carbon mitigation legislation.

Point #4:  It is not a law of physics that suburbanites must oppose carbon pricing but the rational voter will compare the benefits versus the costs.  Liberal center city residents are likely to have higher personal benefits from supporting the regulation (i.e visions of saving the world) and to be exposed to lower costs from carbon pricing (they are already eating tofu and riding public transit) than their meat eating, SUV driving, air conditioning blasting suburban peers.  The suburbanites are likely to perceive lower private benefits and higher private costs from cap and trade policies and thus vote against it.  The center city liberals should thus consider paying the suburbanites to join their coalition.  This is Coasian logic once we agree on the initial property rights.

Here is the conclusion of our paper, take a look at the final sentence and think about it.


Conclusion

In recent years, California’s voters have had the opportunity to repeal the low carbon AB32 regulation and to choose whether to go forward with investing in costly High-Speed Rail.  In both cases, the voters chose the low carbon choice but there was significant spatial variation in the support for these measures.  Controlling for standard demographics such as ethnicity, education and income, we have focused on the role of political affiliation and geography as correlates of low carbon voting.  We find that political liberals consistently support low carbon initiatives. 
All else equal, those who live further from the city center are more likely to oppose low carbon policies.   The U.S is a suburban nation with the median metropolitan area resident living 9.9 miles from the city center and 25% of the population living at least 17.1 miles away from the city center in the year 2000.   Relative to nations with more urbanized populations, people in the U.S drive more, live in larger homes and consume more electricity.  This fossil fuel driven lifestyle raises the short run price of voting in favor of carbon mitigation regulation.   
 Our findings mirror nationwide findings concerning the correlates of Congressional voting on low carbon legislation such as the 2009 American Clean Energy and Security Act concludes that Representatives whose districts are rich, liberal and low carbon are much more likely to vote in favor of carbon mitigation (Cragg et. al. 2013).  
            Together these results highlight that even within a well known “Blue State” such as California that there is both an ideological divide and a city versus suburb divide on carbon mitigation policy efforts. While economists have stressed the insurance benefits from avoiding “known unknown” fat tail risks (Weitzman 2009, Pindyck 2011), subsets of voters are rejecting this vision.  
Past political economy studies have stressed that voters will oppose environmental regulations that threaten their jobs (Kahn and Matsusaka 1997).   This paper has presented new evidence on the role that residential lifestyle choices and ideology play in determining low carbon voting patterns.    Given existing technologies, our results suggest that the suburbanization of the median voter poses a challenge for policy makers who seek to have the United States lead in international efforts to sign a global carbon treaty.   


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