Are We Worse Off After Policy Repeals? Evidence from Two Green Policies

Abstract

Implementation of public policies sometimes results in spillover effects on nontargeted outcomes. When policy makers repeal these policies due to industry pressure and community resistance, do the spillover effects from the policy persist after a repeal? Specifically, the authors ask (1) whether these spillovers induced by policy, when present, carry on after a repeal (i.e., become “carryovers”); (2) how these carryovers evolve over the short and medium term; and (3) what benefit thresholds the policy must meet to offset spillovers during implementation and carryovers after repeal. To address these questions, the authors examine two pro-environment policies that were later repealed: a ban on single-use plastic grocery bags and the imposition of a fee. They find that the increase in trash bag sales, which began during policy implementation, persisted for several months after repeal. A break-even analysis suggests that the net effect on plastic bag savings is likely positive even after repeal. Only modest reductions in grocery bag use would be needed to break even, suggesting a favorable outcome for the environment. This study alerts policy makers and firms to potential carryovers from policy repeals that can persist well after a repeal.