Environmental Free Riding in Renewable Portfolio Standards

Sammanfattning: The aim of this paper is to empirically assess the hypothesis on free riding in the implementation of environmental policies. The screening model COBRA is used in order to translate changes in concentrations of particulate matter into health impacts. This is then further converted into health costs to generate a panel data set describing the development of pollution related health costs from 2008 to 2012. The panel data on health costs together with data on renewable energy investments is then used to determine whether the US states engage in free riding in the implementation of the Renewable Portfolio Standards policy. The relationship between the health costs and investments in renewable energy is studied in order to evaluate if later implementation of the policy is less costly in terms of pollution related health costs. The results are contrary to what free riding hypothesis predicts with no evidence of free riding identified in the data. The implications for the future are that there could be a need for greater collaboration in order to take advantage of knowledge spillovers.