Document Type

Working Paper

Publication Date

6-16-2020

JEL Codes

D62, L51, Q51, Q52, Q53, Q58, R41

Working Paper Number

2020-02

Abstract

We examine how behavioral adjustments by regulated vessels affect welfare outcomes of a local fuel sulfur standard targeting particulate matter pollution from maritime transport. Our analysis combines one-minute scale data of vessel locations with location-specific marginal damages to obtain voyage-level measures of welfare outcomes. Exploiting the introduction of California's Ocean-Going Vessel Fuel Rule, we find sharp reductions in fuel consumption in the regulated area and a considerable emission spillover in unregulated waters. Despite these adjustments, the rule generates net benefits of close to $1 billion over 29 months because the emission spillovers occur in low marginal damage areas.

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