Natural Capital

Kevin Lewis

April 12, 2023

Traffic-Related Air Pollution and Ultrasound Parameters of Fetal Growth in Eastern Massachusetts, USA
Michael Leung et al.
American Journal of Epidemiology, forthcoming 


Previous studies have examined the association between prenatal nitrogen dioxide (NO2) -- a traffic emissions tracer -- and fetal growth based on ultrasound measures. Yet, most have used exposure assessment methods with low temporal resolution, which limits the identification of critical exposure windows given that pregnancy is relatively short. Here, we used NO2 data from an ensemble model linked to residential addresses at birth to fit distributed lag models that estimated the association between weekly-resolved NO2 exposure and ultrasound biometric parameters in a Massachusetts-based cohort of 9,446 singleton births from 2011-2016. Ultrasound biometric parameters examined included biparietal diameter (BPD), head circumference, femur length, and abdominal circumference. All models were adjusted for sociodemographic characteristics, time trends, and temperature. We found that higher NO2 was negatively associated with all ultrasound parameters. The critical window differed depending on the parameter and when it was assessed. For example, for BPD measured after week 31, the critical exposure window appeared to be weeks 15-25; 10-parts per billion higher NO2 sustained from conception to the time of measurement was associated with a lower mean z-score of -0.11 (95% CI: -0.17, -0.05). Our findings indicate that reducing traffic emissions is one potential avenue to improving fetal and offspring health. 

The economic value of clarifying property rights: Evidence from Water in Idaho's Snake River Basin
Oliver Browne & Xinde James Ji
Journal of Environmental Economics and Management, forthcoming 


This paper exploits a novel reform in Idaho to measure the economic value created by clarifying property rights for water. Between 1987–2014, the Snake River Basin adjudication determined who had legal rights to use water, covering 139,000 water rights and 90% of Idaho’s water use. Using differences in the timing of adjudication between different sub-basins, we find that adjudication caused a 140% increase in the frequency of water right trades and transfers; that these trades and transfers moved water to parcels of land more suitable for irrigated agriculture; that water-use intensity remains unchanged after adjudication; and that adjudication prompts irrigators, especially those owning surface water rights, to shift from lower-value to higher-value land uses. These changes create benefits with a present value of at least $402.7 million, outweighing the one-time fixed cost of $94 million Idaho spent on adjudication.

Symptom or Culprit? Social Media, Air Pollution, and Violence
Xinming Du
Columbia University Working Paper, February 2023 


This paper provides the first causal evidence that hostile activities online lead to physical violence. Given the recently documented relationship between pollution and social media, I exploit exogenous variation in local air quality as the first step to instrument for online aggression. In an event study setting, I find volatile organic compounds (VOCs) increase by 7% when refineries experience unexpected production outages. Together with higher air pollution, I find more aggressive behaviors both online and offline, as well as worse health outcomes near refineries. A one standard deviation increase in surrounding VOCs leads to 0.16 more hate crimes against Black people and 0.23 more hospital visits per thousand people each day. Second, I consider how emotional contagion spreads through social networks. On days with pollution spikes, surrounding areas see 30% more offensive and racist tweets and 12% more crimes; those geographically distant but socially networked regions also see offensive and racist tweets increase by 3% and more crimes by 4.5%. Nationally, overlooking spillovers would underestimate crime effects of pollution by 24%. My findings highlight the consequences of social media hostility and contribute to the public debate on cyberspace regulation.

Analyst Coverage and Corporate Environmental Policies
Chenxing Jing et al.
Journal of Financial and Quantitative Analysis, forthcoming 


Exploiting two quasi-natural experiments, we find that firms increase emissions of toxic pollution following decreases in analyst coverage. The effects are stronger for firms with low initial analyst coverage, poor corporate governance and firms subject to less stringent monitoring by environmental regulators. Decreases in environmental-related questions raised in conference calls, an increased cost of monitoring to institutional shareholders, reductions in investment abatement technologies and the weakening of internal governance related to environmental performance are channels through which reduced analyst coverage contributes to increases in firm pollution. Our study highlights the monitoring role analysts play in shaping corporate environmental policies.

Blowin' in the Wind of an Invisible Killer: Long-Term Exposure to Ozone and Respiratory Mortality in the United States
Ziheng Liu, Xi Chen & Qinan Lu
University of Wisconsin Working Paper, March 2023 


In light of the low public awareness of ozone pollution and the potential health threats posed by long-term ozone exposure, this study estimates the causal effect of long-term ozone exposure on respiratory mortality. By employing an instrumental variable based on the long-distance transmission of ozone from upwind neighbor counties, we discover that an increase of one standard deviation in the average concentrations of ozone in the preceding five years increases respiratory mortality by 0.062–0.066 standard deviations. The findings indicate that long-term ozone exposure increases mortality from both acute and chronic respiratory diseases and has significant adverse effects on vulnerable groups. Furthermore, we discover that the respiratory mortality rate responds to long-term ozone exposure nonlinearly, and that there is a critical threshold at which the adverse effects of ozone exposure commence. Our bootstrap simulation results suggest that if ozone concentrations in the preceding five years decrease by 10 percent, 11,391 deaths from respiratory diseases could be avoided in the United States annually, with resulting health benefits valued at around $106.85-113.67 billion. Our further estimates suggest that, consistent with general respiratory diseases, long-term ozone exposure also contributes to deaths from COVID-19 during the pandemic.

Timing Matters: Intra-day Shifts of Economic Activity and Ambient Ozone Concentrations
David Adler & Edson Severnini
NBER Working Paper, March 2023 


Ground-level ozone has been shown to have significant negative health externalities from short-term exposure, and as such has been regulated by the U.S. Clean Air Act since the 1970s. Ozone is not emitted directly; instead formation occurs due to a complex Leontief-like combination of air pollutants, under sunlight and warm temperatures, that results in high levels mid-day and low levels at night. Despite this known relationship, EPA regulations mostly consider the total emissions of ozone precursors and not when these emissions occur. Using hourly data on ambient ozone from 1980-2017 near the U.S. time zone borders, we provide evidence that the 1-hour time difference on either side of a border leads to a nontrivial change in ozone levels in certain hours of the day. We then examine a cap-and-trade program targeting ozone precursor emissions – the NOx Budget Program – finding that while it reduced ozone overall it did not have an economically significant effect on the timing of those emissions. We conclude by outlining a possible policy approach to account for the time-varying value of reductions in ozone precursor emissions.

The Canary in the Coal Decline: Appalachian Household Finance and the Transition from Fossil Fuels
Josh Blonz, Brigitte Roth Tran & Erin Troland
NBER Working Paper, March 2023 


The energy transition away from fossil fuels, despite its substantial overall climate benefits, presents significant transition risks for communities historically built around the fossil fuel industry. This paper uses the decline in the Appalachian coal industry between 2011 and 2018 to understand how individuals are harmed by a reduction in local fossil fuel extraction activity. We use individual-level credit data and exogenous variation in coal demand from the electricity sector to identify how the coal mining industry’s decline affected the finances of Appalachian households. We find that the decline in demand for coal caused broad-based negative impacts, decreasing credit scores and increasing credit utilization, delinquencies, amounts in third party collections, bankruptcy rates, and the number of individuals with subprime status. These effects were broad based and cannot be explained solely by individuals who lost coal mining jobs. Individuals with the lowest pre-period credit scores were more likely to end up in financial distress and experienced a greater deterioration in credit scores. Quantile regressions show that the drop in credit scores from the coal decline was most pronounced between the 30th and 50th percentiles of the credit score distribution. Our results provide evidence that people living in fossil fuel extraction regions are likely to experience declines in financial well-being from the energy transition even if they do not directly work in the affected industry.

Input Subsidies and the Destruction of Natural Capital: Chinese Distant Water Fishing
Gabriel Englander et al.
NBER Working Paper, March 2023 


Input subsidies in natural resource sectors are widely believed to cause depletion of the natural capital on which those sectors rely. But identification and data challenges have stymied attempts to empirically estimate the causal effect of subsidies on resource extraction. China’s fishing fleet is the world’s largest, and in 2016 the government changed its fuel subsidy policy for distant water vessels to one that increases with predetermined vessel characteristics. The policy features 25 thresholds at which subsidies discontinuously increase. Using a regression discontinuity design, we estimate that a 1% increase in fuel subsidy increases hours of fishing by 2.2%. Reducing Chinese distant water fuel subsidies by 50% could eliminate biological overfishing in several ocean regions.

Joining Forces: The Spillover Effects of EPA Enforcement Actions and the Role of Socially Responsible Investors
Sudipto Dasgupta, Thanh Huynh & Ying Xia
Review of Financial Studies, forthcoming 


We find that firms reduce toxic emissions at their local plants following EPA enforcement actions against nearby plants operated by peer firms that compete in the same product market. These reductions are more pronounced for plants located near socially responsible mutual funds (SRMFs) that hold these plants’ parent firms’ shares. Close proximity to SRMFs is associated with real investment in abatement measures to mitigate emissions. While plants increase emissions again in the long run, such reversals do not occur in plants located near SRMFs. Taken together, our results suggest that local SRMFs complement EPA enforcement in influencing plants’ emissions.

Identifying the regulator’s objective: Does political support matter?
Zach Raff
Public Choice, March 2023, Pages 277–295 


This paper relies on an incidence of environmental disaster to examine the specific objective of a regulatory agency. Leveraging the Tennessee Valley Authority’s Kingston Fossil Plant coal ash spill of 2008 as a natural experiment, I compare the public interest theory of regulation—maximization of net social benefits—with public choice theory, which here is the maximization of net political support. I estimate the effect of the environmental disaster on Clean Water Act monitoring in Tennessee to test one posited objective against the other. I find that regulated facilities proximate to the spill are subject to closer state-administered monitoring after the spill than regulated facilities away from the spill, even though the additional wastewater inspections do not produce positive marginal benefits for controlling coal ash. Additionally, the difference in monitoring soon normalizes to pre-spill levels, consistent with the public’s interest in the event. The empirical results supply evidence that the studied regulatory agency maximizes net political support.


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