Airing It Out
How Do Pocketbook and Distributional Concerns Affect Citizens’ Preferences for Carbon Taxation?
Liam Beiser-McGrath & Thomas Bernauer
Journal of Politics, forthcoming
Abstract:
We shed new light on a long-standing question in political science: when confronted with costly policy-choices, do citizens form their preferences based on material (economic) concerns or other-regarding motivations, such as the distribution of costs, and how these are moderated by political ideology. Using the case of carbon taxation, a widely advocated policy solution to climate change, we conducted survey experiments in Germany and the United States to assess the relative importance of these forms of preferences. The results show that individuals are primarily concerned with how a carbon tax would impact their individual income. There are also important cross-national differences with high-income German respondents being more receptive to redistributive policy design, especially in contrast to high-income Democrats who significantly decrease support for carbon taxation. These findings highlight how the constituencies generated by new policies can significantly alter the distribution of mass support for action upon emerging societal problems.
Divestment and Engagement: The Effect of Green Investors on Corporate Carbon Emissions
Matthew Kahn, John Matsusaka & Chong Shu
NBER Working Paper, October 2023
Abstract:
This paper studies whether green investors can influence corporate greenhouse gas emissions through capital markets, either by divesting their stock and limiting polluters’ access to capital, or holding polluters’ stock and engaging with management. We focus on public pension funds, classifying them as green or non-green based on which political party controlled the fund. To isolate the causal effects of green ownership, we use exogenous variation caused by state-level politics that shifted control of the funds and portfolio rebalancing in response to returns on non-equity investment. Our main finding is that companies reduced their greenhouse gas emissions when stock ownership by green funds increased and did not alter their emissions when ownership by non-green funds changed. We find evidence that ownership and constructive engagement was more effective than confrontational tactics such as voting or shareholder proposals. We do not find that companies with green investors were more likely to sell off their polluting facilities (greenwashing). Overall, our findings suggest that (a) corporate managers respond to the environmental preferences of their investors; (b) divestment in polluting companies may be counterproductive, leading to greater emissions; and (c) private markets may be able to address environmental challenges without explicit government regulation.
Air quality and employee performance in teams: Evidence from the NFL
Brad Humphreys & Jane Ruseski
Economics & Human Biology, December 2023
Abstract:
Emerging research documents the impact of poor air quality on employee performance in a number of settings, including sport. Unlike other settings, sports teams have limited ability to influence previously scheduled games, making air quality exogenous to unobservable factors affecting game outcomes. We link play-level data from National Football League (NFL) games to data from air quality monitoring stations located near NFL stadiums. Results using data from about 90,000 offensive plays in 900 NFL games indicate that yards gained per offensive play increase with PM2.5 concentration. Defensive players are relatively more affected by air quality than offensive players.
Unavoidable future increase in West Antarctic ice-shelf melting over the twenty-first century
Kaitlin Naughten, Paul Holland & Jan De Rydt
Nature Climate Change, forthcoming
Abstract:
Ocean-driven melting of floating ice-shelves in the Amundsen Sea is currently the main process controlling Antarctica’s contribution to sea-level rise. Using a regional ocean model, we present a comprehensive suite of future projections of ice-shelf melting in the Amundsen Sea. We find that rapid ocean warming, at approximately triple the historical rate, is likely committed over the twenty-first century, with widespread increases in ice-shelf melting, including in regions crucial for ice-sheet stability. When internal climate variability is considered, there is no significant difference between mid-range emissions scenarios and the most ambitious targets of the Paris Agreement. These results suggest that mitigation of greenhouse gases now has limited power to prevent ocean warming that could lead to the collapse of the West Antarctic Ice Sheet.
Market Power in Coal Shipping and Implications for U.S. Climate Policy
Louis Preonas
Review of Economic Studies, forthcoming
Abstract:
Economists have widely endorsed pricing CO2 emissions to internalize climate change-related externalities. Doing so would significantly affect coal, the most carbon-intensive energy source. However, U.S. coal markets exhibit an additional distortion: the railroads that transport coal to power plants can exert market power. This article estimates how coal-by-rail markups respond to changes in coal demand. I identify markups in a major intermediate goods market using both reduced-form and structural methods. I find that rail carriers reduce coal markups when downstream power plant demand changes due to a drop in the price of natural gas (a competing fuel). My results imply that decreases in coal markups have increased recent U.S. climate damages by $11.9 billion, compared to a counterfactual where markups did not change. Incomplete pass-through would likely erode the environmental benefits of an incremental carbon tax, shifting the tax burden towards upstream railroads. Still, a non-trivial tax would likely increase welfare.
The long-term effects of early-life pollution exposure: Evidence from the London smog
Stephanie von Hinke & Emil Sørensen
Journal of Health Economics, forthcoming
Abstract:
This paper uses a large UK cohort to investigate the impact of early-life pollution exposure on individuals’ human capital and health outcomes in older age. We compare individuals who were exposed to the London smog in December 1952 whilst in utero or in infancy to those born after the smog and those born at the same time but in unaffected areas. We find that those exposed to the smog have substantially lower fluid intelligence and worse respiratory health, with some evidence of a reduction in years of schooling.
Institutions, Comparative Advantage, and the Environment
Joseph Shapiro
NBER Working Paper, October 2023
Abstract:
This paper proposes that strong financial, judicial, and labor market institutions provide comparative advantage in clean industries, and thereby improve a country's environmental quality. Five complementary tests support this hypothesis. First, industries that depend on institutions are disproportionately clean. Second, strong institutions increase relative exports in clean industries, even conditional on environmental regulation and factor endowments. Third, an industry's complexity helps explain the link between institutions and clean goods. Fourth, a quantitative general equilibrium model indicates that strengthening a country's institutions decreases its pollution through relocating dirty industries abroad, though increases pollution in other countries. Fifth, cross-country differences in the composition of output between clean and dirty industries explain more of the global distribution of emissions than differences in the techniques used for production do. The comparative advantage that strong institutions provide in clean industries gives one under-explored reason why developing countries have relatively high pollution levels.
The Effects of Air Quality on Housing Prices: Evidence from the Aliso Canyon Gas Leak
Anna Choi, Pureum Kim & Abraham Park
Journal of Housing Economics, forthcoming
Abstract:
Causal studies on the effect of air quality on house prices, specifically focusing on a large metropolitan area, are rare and difficult to obtain because of potential endogeneity from residential sorting. In this study, we use the Aliso Canyon gas leak as a natural experiment to examine the effect of air quality on housing prices of Los Angeles City. Using a spatial difference-in-differences model, we estimate that houses within the 5-mile radius of the gas well experienced a 8.6% discount in price during the leak, and an additional 13.1% discount after the well was sealed and the air quality was restored. The decrease in price lasted beyond 18 months, with houses closer to the leak suffering higher discounts. We conclude that air quality degradation has a direct and longer term negative impact on house prices.
Discovery of Unregulated Contaminants in Drinking Water: Evidence from PFAS and Housing Prices
Michelle Marcus & Rosie Mueller
NBER Working Paper, September 2023
Abstract:
Our understanding of individuals' response to information about unregulated contaminants is limited. We leverage the highly publicized social discovery of unregulated PFAS (per- and polyfluoroalkyl substances) contamination in public drinking water to study the impact of information about unregulated contaminants on housing prices. Using residential property transaction data, we employ a difference-in-differences research design and show that high profile media coverage about PFAS contamination significantly decreased property values of affected homes. We also find suggestive evidence of residential sorting that may have worsened environmental inequality.
Global evidence of rapid urban growth in flood zones since 1985
Jun Rentschler et al.
Nature, 5 October 2023, Pages 87–92
Abstract:
Disaster losses are increasing and evidence is mounting that climate change is driving up the probability of extreme natural shocks. Yet it has also proved politically expedient to invoke climate change as an exogenous force that supposedly places disasters beyond the influence of local and national authorities. However, locally determined patterns of urbanization and spatial development are key factors to the exposure and vulnerability of people to climatic shocks6. Using high-resolution annual data, this study shows that, since 1985, human settlements around the world -- from villages to megacities -- have expanded continuously and rapidly into present-day flood zones. In many regions, growth in the most hazardous flood zones is outpacing growth in non-exposed zones by a large margin, particularly in East Asia, where high-hazard settlements have expanded 60% faster than flood-safe settlements. These results provide systematic evidence of a divergence in the exposure of countries to flood hazards. Instead of adapting their exposure, many countries continue to actively amplify their exposure to increasingly frequent climatic shocks.
Rising Coastal Groundwater as a Result of Sea-Level Rise Will Influence Contaminated Coastal Sites and Underground Infrastructure
Kristina Hill et al.
Earth's Future, September 2023
Abstract:
Sea-level rise (SLR) will cause coastal groundwater to rise in many coastal urban environments. Inundation of contaminated soils by groundwater rise (GWR) will alter the physical, biological, and geochemical conditions that influence the fate and transport of existing contaminants. These transformed products can be more toxic and/or more mobile under future conditions driven by SLR and GWR. We reviewed the vulnerability of contaminated sites to GWR in a US national database and in a case comparison with the San Francisco Bay region to estimate the risk of rising groundwater to human and ecosystem health. The results show that 326 sites in the US Superfund program may be vulnerable to changes in groundwater depth or flow direction as a result of SLR, representing 18.1 million hectares of contaminated land. In the San Francisco Bay Area, we found that GWR is predicted to impact twice as much land area as inundation from SLR, and 5,282 additional state-managed sites of contamination may be vulnerable to inundation from GWR in a 1.0 m SLR scenario. Increases of only a few centimeters of elevation can mobilize soil contaminants, alter flow directions in a heterogeneous urban environment with underground pipes and utility trenches, and result in new exposure pathways. Pumping for flood protection will elevate the saltwater interface, changing groundwater salinity and mobilizing metals in soil. Socially vulnerable communities are disproportionately exposed to this risk at both the national scale and in a regional comparison with the San Francisco Bay Area.
Greatly enhanced risk to humans as a consequence of empirically determined lower moist heat stress tolerance
Daniel Vecellio et al.
Proceedings of the National Academy of Sciences, 17 October 2023
Abstract:
As heatwaves become more frequent, intense, and longer-lasting due to climate change, the question of breaching thermal limits becomes pressing. A wet-bulb temperature (Tw) of 35 °C has been proposed as a theoretical upper limit on human abilities to biologically thermoregulate. But, recent—empirical—research using human subjects found a significantly lower maximum Tw at which thermoregulation is possible even with minimal metabolic activity. Projecting future exposure to this empirical critical environmental limit has not been done. Here, using this more accurate threshold and the latest coupled climate model results, we quantify exposure to dangerous, potentially lethal heat for future climates at various global warming levels. We find that humanity is more vulnerable to moist heat stress than previously proposed because of these lower thermal limits. Still, limiting warming to under 2 °C nearly eliminates exposure and risk of widespread uncompensable moist heatwaves as a sharp rise in exposure occurs at 3 °C of warming. Parts of the Middle East and the Indus River Valley experience brief exceedances with only 1.5 °C warming. More widespread, but brief, dangerous heat stress occurs in a +2 °C climate, including in eastern China and sub-Saharan Africa, while the US Midwest emerges as a moist heat stress hotspot in a +3 °C climate. In the future, moist heat extremes will lie outside the bounds of past human experience and beyond current heat mitigation strategies for billions of people. While some physiological adaptation from the thresholds described here is possible, additional behavioral, cultural, and technical adaptation will be required to maintain healthy lifestyles.