Susanna B. Berkouwer, an assistant professor of business economics and public policy at the University of Pennsylvania's Wharton School, will give the talk, "Green subsidies with demand distortions," at noon on Wednesday, April 8, in 157 Hosler Building at Penn State University Park. The event is part of a spring seminar series hosted by the Initiative for Energy and Environmental Economics and Policy (EEEPI). Talk is free and open to the public.
Green subsidies, financial incentives provided by governments, are designed to promote environmentally friendly activities, particularly in the energy sector. They encourage private-sector climate action, but risk leaving developing and emerging economies behind, according to the World Economic Forum.
Externalities are the unintended costs or benefits experienced by third parties when a good or service is produced or consumed, and they can be positive or negative, according to Investopedia.
"Standard Pigouvian theory predicts that externalities should be corrected at the margin; however, demand distortions such as credit constraints or behavioral biases create a wedge between marginal benefit and marginal cost," Berkouwer said. "While these distortions can lower aggregate abatement, they can increase the efficiency of green subsidy spending. In theory, this happens through two channels: by shifting the marginal adopter toward higher private and social benefits and by increasing demand elasticity."
Berkouwer tested these theories by cross-randomizing fixed cost subsidies, marginal cost subsidies and loan access for an induction stove among 2,100 charcoal users in Kenya; they will discuss their findings in this talk.
About Berkouwer
Berkouwer's research spans environmental economics and development economics, with projects studying energy efficiency adoption, carbon offsets, electricity grids and air pollution from energy usage.
They are a faculty research fellow with the National Bureau of Economic Research. They are also a faculty affiliate with the Abdul Latif Jameel Poverty Action Lab (J-PAL), a global research center working to reduce poverty by ensuring that policy is informed by scientific evidence, and with the Bureau for Research and Economic Analysis of Development, a professional association composed of leading researchers in development economics. They are also an associate editor of the Journal of Development Economics.
Berkouwer holds a doctorate from UC Berkeley and a master of arts from Yale University and teaches microeconomics in the Wharton MBA program.
About EEEPI
Established in 2011, EEEPI operates as a University-wide initiative at Penn State with support from the Earth and Environmental Systems Institute and the Institute of Energy and the Environment. EEEPI seeks to catalyze research in energy and environmental systems economics across the University and to build a world-class group of economists with interests in interdisciplinary collaboration.
