Title: Beggar-thy-neighbor environmental policy? Evidence from California’s Truck and Bus Regulation 

Joint with Fiona Burlig, Michael Greenstone, Olga Rostapshova

Abstract: Incomplete environmental regulation can threaten or even reverse regulatory benefits through two channels. First, regulated actors, facing new costs, may attempt to evade the regulation entirely. Second, regulations can cause emissions “leakage:” an increase in emissions in a foreign jurisdiction in response to a new domestic regulation. We study these channels in the context of the California Truck and Bus Regulation (TBR). Transportation is a major contributor to particulate matter pollution, the greatest threat to human health globally. The goal of the TBR is to reduce emissions by requiring that trucks driving in California have relatively new, and thus clean, engines. The stringency of the regulation has increased over time. We leverage TBR’s phased-in rollout and extensive registration data in a difference-in-differences analysis to study the effects of TBR on leakage. Preliminary results suggest that TBR had a substantial impact on vehicle de-registration, especially for older trucks. To assess the extent of evasion, we use twenty-seven million records of random inspections from the Federal Motor Carrier Safety Administration to identify trucks who still drive in the state despite de-registering.