Dirty Boats – Energy Institute Blog

Cleaning up the dirtiest mode of transport is hard, but worth it.

You were probably expecting some snarky, humor-filled blog post addressing the heedless attack of the judiciary on the EPA’s ability to fight climate change from power plant gunk, but for that I will refer you to brilliant legal minds commenting here, here and here. I am in a deep funk about our prospects to do something meaningful to save our butts, so I did what I do when I need to snap out of it: read some cool new papers and decided to tell you about one I loved. 

Did you know that maritime ship traffic (think boats bringing your 75’’ TV from Asia to SF) emits as much as half of all the fine particulate matter (=the bad stuff) from global road traffic? Did you know that these big boats along the US coastline are allowed to use fuel that has 3,500 times (!!!) the sulfur content than that allowed in vehicles? This is of course bad news for folks living near ports, but what I did not know is that these dirty vessels are responsible for 20% of sulfur dioxide emissions on the west coast and a whopping 38% on the East Coast! I learned these facts from a cool new paper by my UC Davis colleague Jamie Hansen-Lewis and her coauthor Michelle Marcus. 

They point out that efficiently regulating emissions from ships is really tricky. If you have many moving sources of pollution (boats) and many receptors (humans, plants, soils and lakes) things get challenging – especially when the air quality chemistry is complicated and transport of the pollutant is influenced  by wind, sun and precipitation.To further complicate this regulatory calculation, the air pollution emitted by ships does more than pollute the air.   These aerosol emissions have a cooling effect on the surface, in many places offsetting the effects of global warming. In some areas this reduced warming can be a good thing, while for others (like agriculture) there is complicated chemistry involving raindrop and cloud formation resulting in a double whammy bad thing. One hypothesis is that you really want to reduce pollution near shore to reduce negative health effects in coastal populations, but maybe not so much on the open ocean to offset some of the warming (although I am not sold on the latter). 

The paper examines the first regulation of maritime pollution, called emission control areas (ECAs) imposed in 2012. This regulation required all commercial ships to use low sulfur fuel within 200 miles of the US coast. Alternative options were to install abatement equipment or pay fines. In 2020 the International Maritime Organization imposed similar standards globally, at an estimated cost to shippers of US$10-60 billion globally. These are not peanuts, or “seanuts” in terms of costs. Hansen-Lewis and Marcus decided to check whether the  policy actually worked. 

The econometric identification strategy is clever and as good as you are going to get in this tricky empirical setting. The data work is first rate as well. They find that the policy led to a “4 percent decrease in the population-weighted average fine particulate matter across U.S. counties within 200km of heavy ship traffic”. That is not peanuts either. Employing a true “fate and transport” model that properly figures out how pollution forms and travels (instead of being lazy like the rest of us and using distance), they find that the policy results in a 1.7 percent average reduction in the incidence of low birth weight and a 3.5 percent decline in infant mortality. 

But Max, how does this compare to the cost of the policy for those poor shippers? Turns out the infant health results alone equal 90% of the annual costs of the policy. Add to this the effects on old people like me or exercise nuts like Meredith and you easily get a benefit cost ratio exceeding one. So in short, the policy worked! 

What else did we learn from this paper? Here at the Energy Institute we have long harped on the fact that ex ante estimated benefits from future regulations often drastically overestimate the benefits from proposed regulation (how much weight you hope to lose after the holidays is usually a bigger number than the weight loss realized by, say, March). As a species, we spend way more time telling stories about the anticipated effects of future regulations instead of checking ex post (fancy Latin for looking the rearview mirror) whether they worked. I was part of a team with people way cooler than me, doing a survey of this for the Clean Air Act. 

In this same spirit, the paper by Hansen-Lewis and Marcus does a lovely comparison for this policy and finds that the ex post realized benefits are much smaller than the ex ante predicted benefits. They show credible evidence for why this is. First off, boats changed their routes to avoid being subject to the policy. Second, they show evidence that improvements were smaller in counties with better air quality (far from the NAAQS from the Clean Air Act). Third, individuals spent more time outside after the policy and were still subject to air pollution from other sources. 

In sum, this is a beautifully executed paper that makes a number of important steps forward in the literature on policy evaluation. However, I note that this sector is severely understudied and that future work would be particularly valuable.  I also recommend you read this paper and if you enjoy it as much as I did, send the authors a note sharing your appreciation! The ratio of (nasty referee reports+ twitter snark) over nice random notes from readers is a number much greater than one!