When an auto manufacturer produces a vehicle, the resulting air pollution is what economists call an environmental “externality,” a cost that affects the public or a third party who did not choose to incur that cost.
As an energy and environmental economist, Berkeley-Haas Asst. Prof. Reed Walker works to not only understand the social costs of environmental externalities—negative or positive—but also how regulations to limit these externalities contribute to gains and/or losses to society.
In recognition of his research, Walker was named a 2017 Sloan Research Fellow by The Alfred P. Sloan Foundation. The Sloan Fellowships honor promising young scholars whose research is expected to have major impact on scientific research in the future. Forty-three former fellows have received a Nobel Prize in their respective fields.
Walker is one of 126 fellows—and one of five UC Berkeley scholars—to receive the $60,000 prize. At Berkeley, he is joined by Ren Ng (computer science), Pierre Simon (mathematics), Daniel Weisz (physics), and Michael Yartsev (neuroscience).
Walker says he is humbled and honored to be a Sloan fellow. “As researchers, we work on questions and ideas that we find personally interesting and inspiring. It is not always clear that others feel the same way about our work. The Sloan Fellowship provides a unique sort of validation, and I am grateful that others see my work as important too,” says Walker.
UC Berkeley and the Haas School of Business are home to leading researchers in the field of energy and environmental economics, and Walker cites this as a key reason he came to the university in 2012.
Walker is a member of the Business and Public Policy Group at Haas and the Department of Economics, a research associate at the Energy Institute at Haas, and the co-director of the Climate and Environment Initiative at UC Berkeley’s Opportunity Lab.
“The Energy Institute at Haas is an amazing conduit for connecting research to policy and vice versa,” says Walker. “At the same time, it is an important resource for supporting and training the next generation of graduate students who go on to become leaders in the field.”
His current study, co-authored by Sharat Ganapati and Joseph Shapiro of Yale University, aims to understand how changes in U.S. manufacturers’ energy costs translate into higher prices for the goods they produce. “The ‘pass-through’ rate is a useful lens for understanding how a carbon tax or other increase in energy costs may differentially affect a producer’s profits versus a consumer’s pocket book going forward,” says Walker.
In another study, Walker explores the underlying factors that have significantly reduced pollution emissions in manufacturing since 1990. “Despite U.S. manufacturing output increasing by more than 30% in the past 20 years, emissions have fallen by more than 60%,” he says. “The question is why?”
Walker finds that most of the emissions reductions can be explained by changes in the technology used to produce different products, rather than by changes in the types of products produced. This move to cleaner production technologies seems to be primarily driven by increases in environmental regulatory stringency over this time period.